COLUMBIA, S.C. - When you get a chance to meet people who tell you privately that they are trying to find themselves, it usually means they have tried a few options and haven’t quite decided who they want to be when they grow up. Businesses sometimes fall victim to the same gyrations: flitting left, then right, then back to the middle in search of the magic.

Allied Air Enterprises does not have that problem. The people who run the company have figured out the magic.

Oh, the company has had its share of mergers and acquisitions in previous life forms, but the mission has not wavered: “We will achieve our vision and grow our market share through people, products, and performance.”

Lofty words on a wall plaque often sound … well, lofty. A few hours spent with the Allied Air executive staff makes the words resonate as being more deliberate, simple, and attainable.

Allied Air is perhaps best known by its marquee brand, Armstrong Air, a Lennox International Inc. company that was located in Bellevue, Ohio. Armstrong Air dates back to 1928.

Its last major transformation was completed in 2007 when the Bellevue plant and offices closed and a three-year integration and physical consolidation culminated with six brands that are operated under the Allied Air Enterprises corporate umbrella. The company’s brands include: AirEase, Armstrong Air, Concord, Allied Commercial, Ducane Air Conditioning and Heating, and Magic-Pak.

Today, the company’s two-step distribution philosophy is steadfastly pronounced by the company faithful, many who have witnessed vast changes in the industry during their careers.

Vice President and General Manager Dan Seaman took over the helm of Allied Air in 2003, when the company was still operating as two independent equipment divisions (Armstrong and Excel) which had some significant overlaps, and immediately prior to the 13 SEER mandate.

“Over the next two years, virtually our entire cooling product line had to be re-engineered at the same time as we were working through the organizational consolidation that preceded the Ohio closures and the physical consolidation in our South Carolina facilities,” Seaman said. “And, now, of course, we are working through the HCFC refrigerant changeover, as is everyone else.”

Seaman suggested that regulations would always be a springboard for change within the industry. He appears to even good-naturedly welcome the opportunities of the upcoming refrigerant change as he touted the Allied Air family’s ability to cope with such changes.

“One of our greatest strengths is the close relationship we maintain with our distributors. Being associated with the quality people that our distributors are and with the team of people that I work around every day truly make this job a delight,” said Seaman.

Andrea Dopp, director of marketing, said, “The biggest challenge faced by our industry’s distributors is that vertical integration is at its highest level in years. The middle is getting squeezed, and I think other manufacturers are trying to define who they are.”

Seaman said, “It is obvious that there is a continued consolidation leading to fewer and larger distributors. There are competitors moving in both directions. Several manufacturers have developed a hybrid model, which takes them both into one-step and two-step. They may believe they can reap better control, but at the end of the day it’s the quality of relationships that you value the most.”

“We are committed to the two-step approach and rely heavily on our distributors’ strength. We get the benefit of the distributors’ local presence and their relationships; it would certainly be tough for us to build that on a national basis on our own. Another benefit is that our distributors not only sell equipment, but complementary items such as parts and supplies, sheet metal, plumbing and/or electrical supplies, giving the contractor a one-stop shop,” said Seaman.

Doc Michel, CEO of the R. E. Michel Co. Inc., stated that his company began working with Allied brands in 1994, and now carries them in a variety of locations throughout its 24-state territory. Seaman said, “Working with a sophisticated distributor like R. E. Michel has pushed us to create more efficient and effective processes and programs, which has benefited us and all our customers.”

In its history, Allied Air had already experienced the changes associated with integration and is comfortably entrenched in two-step distribution.

Dopp’s perspective is that “If a localized presence for a competitor changes to merely a regional presence, then service to dealers may suffer. We have a great opportunity at Allied Air as vertical integration continues at other industry manufacturers.”

Mark Rakowski, director of engineering, said, “I think the nimblest companies will adapt and survive the market squeeze that is going on today.”

In a land of giants, Allied Air is nothing if not nimble. A unique talent of the company is the ability to manage multiple brands and to manage various distribution channels.

THE PEOPLE

When the headquarters and plant in Bellevue relocated to South Carolina, there were many new people who joined the company - and there were more than a few corporate veterans who were in search of a sunnier disposition. However, Karen Bunting, manager of sales and marketing development, said that the company’s customers adopted the move right in stride. “There is a real history and sense of belonging among our family of distributors. Some have been with us more than 60 years,” said Bunting.

The company targets the dealer-independent distributor channel and the over-the-counter channels. Dopp said, “The manufacturing, engineering, and distribution are really transparent to our customers. But, at the point of contact it is different. Our sales and marketing touch points are unique to each brand. In our two-step process, we dedicate a lot of people to customer service and technical service.”

Allied Air utilizes both manufacturers’ reps and employed sales people to call on their various distributor locations, and an extensive network of distributor service representatives to service their customers’ technical needs. Joe Leonard, technical services manager, said, “Distributors, dealers, and even consumers seek assistance from our technical support group.” Though they never turn anyone away, tech support guides many requests back to the distributors. “We provide additional authority to our local distributors so that they can solve customer problems as quickly as possible.”

Leonard and Jerry Anderson, also in technical support, are two of the Allied Air employees who carry a North American Technician Excellence (NATE) certification. Both provide training that can result in continuing education credits for customers who may require them.

THE PRODUCTS

Allied Air Enterprises manufactures oil and gas furnaces, air conditioning and heat pumps, and package units in two South Carolina factories. The Orangeburg plant produces gas furnaces, a/c, and heat pump products for the Armstrong Air and AirEase brands, all brands of residential packaged equipment, and the Magic-Pak products. Orangeburg also houses an adjacent distribution center for warehousing and distribution.

The Blackville, S.C., plant produces gas furnaces, a/c, and heat pumps for the Ducane and Concord brands, and all brands of oil furnaces. Allied also markets light commercial products as well as coils and air handlers, all of these provided by sister divisions.

While Allied Air Enterprises provides their distributors with a full line of residential and commercial products, they are industry leaders in two specific market segments. Their oil furnace products have been strong performers for years, offering a wide variety of configurations and capacities. And then there’s Magic-Pak.

This ducted through-the-wall unit has been around since the early 1960s, and Allied Air speaks with pride about the huge installed base it has built throughout North America. The classic Magic-Pak, with its slide-out cooling chassis, and the newer Magic-Pak designs are popular with architects, engineers, and building owners because they are free of the external visual clutter that comes from using split systems and allow for individual apartment or condo control and utility billing.

With regard to the new line of products that will carry HFC refrigerants, Seaman said, “Most of our R-410A products have launched already, and we will be 100 percent ready for the change - early. Our intention is that the market will take us to R-410A when the market is ready. However, the endgame for R-22 is still somewhat undecided by the market. Will there be a last-time buy as with the recent efficiency change? How fast or how slow will dealers and contractors convert to R-410A during 2009? There are no ready answers to these questions, but our efforts are designed to be prepared to go wherever the market takes us.”

THE PERFORMANCE

Allied Air is constantly looking for opportunities to improve and enhance ways to effectively manage its customer demand. “From the point of order, we used to have a goal of five days to ship to a customer. Now,” said a smiling Kim Stormer, director of demand management, “we are at three days and very often faster than that.”

One trend Stormer talked about is that the HVAC industry, as with all industries, is becoming more feature specific, and “flexibility in manufacturing is a key. For example, in our Orangeburg factory all lines can now quickly shift from one model to another without long setups.” However, pursuing lean manufacturing philosophies, Allied Air has a goal to streamline the operations even more. “We must have even more capability for shorter runs in order to respond to the market. That is what our customers expect of us, and we have to deliver,” he said.

In addition to the watchful eyes of run test operators, built-in process controls, and the multiple points where leaks can be detected, perception checks are an important aspect of the Orangeburg plant’s PQL (Product Quality Level) audit program. The PQL check takes into account more than the standard operating tests; it includes aesthetic fit and form and cosmetic considerations. For example, if a screw is not mounted flush with the metal, 15 demerit points are tallied in the PQL score. PQL result trends are then tracked and issues prioritized for problem solving and continuous improvement. Employees pride themselves on their work and take seriously the challenge of steadily improving their PQL scores.

Perhaps key to the success in the Orangeburg plant can be summed up by Plant Manager Paul Larkin who said that the quality control in the plant starts with the quality control of the people in the plant. “If we make sure we take care of our people as well as our processes, good quality will be the result.”

Changes at Allied Air have not been limited to factory improvements. Part of the relocation saw Allied Air consolidate its research and development functions into its Columbia headquarters, with Allied Air lab employees constructing and installing all their test rooms themselves. According to Rakowski, nearly all research and development for Allied products now takes place in this facility which is only an hour from either plant, enabling fast and accurate communications and a strong linkage between design and manufacturing.

People, products, and performance: a recipe for the makings of a very nimble company.

For more information, visit www.alliedair.com.

Sidebar: Getting Along Famously for Many Years

“We’ve been with them since the beginning of Famous,” said Marc Blaushild, president and CEO of Famous Enterprises, one of the top 10 distributors in the country of the Armstrong Air brand of heating and air conditioning equipment. The beginning for Famous Supply was 1933, and Armstrong Air was born in 1928. Blaushild’s grandfather was a Russian immigrant who had a vision and a knack for picking the right people to work with. Seventy-five years and three generations later, the Blaushild family still believes he made the right choices.

“There has been a tremendous amount of loyalty between Armstrong Air and Famous. Even though they have had some big changes in recent years - the move from Bellevue, Ohio, to Columbia, S.C., was a massive undertaking - Allied Air made a decision that they believe is preparing them for the future. In that they are definitely one of our most important partners in the HVAC industry, we support them every step of the way,” said Blaushild. Famous carries the Armstrong, Concord, and Magic-Pak brands.

Blaushild said Famous has developed a tremendous amount of new business with the Allied Air brands, and has had a lot of success in getting customers to change over to the brands that the company carries.
“We are more focused, add more value to our customers in regard to training and business development, and our Web technologies and online commerce provide more opportunities for customers,” he said.

Allied ships direct to the Famous central distribution center (CDC) in Sebring, Ohio, and will ship direct to any of the 24 Famous branches in Ohio, western Pennsylvania, and West Virginia. “I think our customers are feeling very good about the Allied product lineup and the direction the company is going.”

The focus at Famous has always been one that values doing the right thing all the time for their people. Blaushild said, “Allied has great people that have integrity and character. It starts at the top. Dan Seaman is a stand-up guy. Because of that, and the way they are building their entire team, it has created a positive experience. They don’t dictate how we have to work with them, we work together in a give-and-take format which is mutually beneficial for both organizations.”

Publication date: 12/15/2008