ECR International focuses on innovation

UTICA — To cavemen, an open fire was high tech. The Greeks brought added comfort when they invented central heating, and the Romans perfected it by hollowing out channels inside floors and walls to circulate the warm air from the fires in a lower level. In the 13th century, Cistercian monks in Aragon, Spain crafted a central system using hot water that created steam, an idea they garnered from the Syrians. It wasn’t until the 1800s, when James Watt invented the first practical steam engine for commercial use, that hot-water, central-heating systems became common. Commercial air-conditioning was only developed in the 20th century.

Today, heating, air conditioning, and refrigeration have evolved to become a major industry in America. “AHRI (Air-Conditioning Heating & Refrigeration Institute) represents 314 member companies with over a million U.S. workers,” says Ronald J. Passafaro, the president & CEO of ECR International, Inc., headquartered in Utica. He is also the new chairman of the Hydronics Institute, the boiler sub-section of AHRI.

“ECR has grown with the HVAC (heating, ventilation, air-conditioning) industry. In 1928, Earle C. Reed founded the Utica Companies (Utica Boiler) and at the same time started Dunkirk Radiator Corp. in Dunkirk, N.Y. His first customer was Sears Roebuck, and Sears is still our customer 86 years later,” Passafaro notes.

ECR is a major Mohawk Valley manufacturer and now employs 310 in its two locations. The plants cover more than 400,000 square feet, and the business owns all of the real estate. The company stock is held by approximately 100 shareholders who are mostly descendants of the original investors in 1928. The Business Journal estimates ECR generates annual revenue of $80 million, with most of it coming from residential boiler sales. ECR designs, manufactures, and markets hydronic and HVAC equipment for residential, commercial, institutional, and hospitality markets.

“This company has evolved as demand and the industry have changed,” notes Passafaro. “We are a boiler company first and foremost, but we also manufacture ductless air-conditioning units, through-the-wall PTACs (Packaged-Terminal Air Conditioners) for the hospitality and lodging industries, indirect water heaters, and oil furnaces. Our growth has been fueled both organically and by strategic acquisitions over the years.”

In the 1950s, Dunkirk Radiator bought the Sanitary Receiver Co., and in 1992 expanded its boiler market by acquiring Ultimate Engineering. Dunkirk Radiator purchased the boiler assets of Pennco in 1998. Utica Boiler was also active in acquiring companies that could both broaden and diversify the product lines. Utica bought EMI of Rome, which produced ductless units, and Oneida Royal Furnace, which had been manufacturing home heating since 1822. In 1999, Dunkirk Radiator and Utica Boiler merged to form ECR International (the initials are in honor of the company founder, Earle C. Reed), and post-merger, acquired Olsen Technology, Inc. of Canada and Argo Technology in Hartford, Conn., which manufactures HVAC heating-system controls.

Where it took millennia to develop heating and cooling systems, the pace of change is now approaching warp speed. “I have been in this industry for 25 years,” avers Passafaro, “and the changes are amazing. Everything today is about efficiency. Any boiler more than 10 or 15 years old is wasting energy and performing inefficiently. The new boilers are lower mass and higher-pressure drop, which simply means we are heating a smaller amount of boiler water very quickly and converting more of the energy from the fuel to usable heat. These units now convert 90-plus percent of the fuel into heat, which reduces exhaust temperatures from 380 degrees Fahrenheit (F) to as little as 150 degrees F. The 230 degree F pick-up is now heating your house rather than being wasted as chimney-flue losses and unwanted emissions of carbon dioxide to the atmosphere.”

To stay ahead of the competition, ECR focuses on innovation. “R&D is extremely important, and that is why, unlike our North American competitors, we chose to own our critical-to-success technology,” notes the company’s president. “A few years ago, ECR invested $14 million to upgrade our facilities. This included building a world-class research and development lab for hydronic, warm-air, and cooling-equipment testing. About 30 percent of the salaried staff is focused on research and development, and more than a dozen employees have degrees and Ph.D.s in mechanical and electrical and even in nuclear engineering.

“The company has also joined with Yankee Scientific, Inc. of Medfield [Massachusetts] to form a joint-venture called Climate Energy, LLC, in order to produce a green alternative in home heating and power generation. Climate Energy is focused on micro-combined heat and power technology. The company has a couple hundred systems installed that marry a high-efficiency gas furnace or boiler to a generator which produces electricity while [simultaneously] heating the home. The U.S. Environmental Protection Agency has designated this as one of only two technologies called ‘Climate Choice.’ Climate Energy holds multiple patents on the technology and application of micro-combined heat and power.”

Passafaro says the company’s success is mostly attributable to the management team. In addition to Passafaro as president and CEO; Paul Totaro is a vice president and CFO, which includes overseeing IT, HR, purchasing, and China operations; Jim McKallip is the director of engineering and quality; Mitch O’Connor is director of manufacturing; Michael LaFreniere is director of administration and responsible for accounting and human resources; and David Walsh, is director of sales. ECR also relies on regional professionals for support: Phillips Lytle of Buffalo offers legal counsel; Fust, Charles, Chambers LLP of Syracuse handles the accounting; and insurance and risk-management are provided by Gilroy, Kernan & Gilroy of New Hartford.

“Real success will come not just because of our great employees, R&D, and quality products,” asserts Passafaro, “but because it is our aim to know more about our customers than do our competitors. We need to connect with our distributors and dealers; we need to understand their business to help make money for them. That means ECR needs to be engaged, and we do this in large part through our training center, where we hold classes for our staff and customers. To educate the staff, we bring in customers to train our people about their businesses so ECR can better understand their needs and thus meet them. The education for our customers is key, because these dealers only sell and install product they feel comfortable supporting. Our motto around here is, ‘Teach them, and they will buy.’”

The ECR training and education center is located at corporate headquarters in Utica. The center offers a wide range of programs that explain and demonstrate the principles of HVAC as well as product installation, maintenance, and operation. The company features hands-on training exercises with live-fired equipment to demonstrate proper setup and trouble shooting. ECR has recently invested $75,000 in an audio-visual simulcast system to conduct web-based training sessions.

ECR prides itself on being part of the communities in which it operates. “We have had three generations of Reeds in the business and many third-generation workers in the factory,” Passafaro notes. “We’re a company with family-based values that prides itself on helping area not-for-profit corporations. [Perhaps] … the best example is when the founder’s grandson, Earle, decided to celebrate the company’s 50th anniversary in 1978 by creating the [Utica] Boilermaker. He wanted to do something that would give back to the community. Reed brought together a committee of local runners who organized a 15k race. From a modest 930 runners in 1978, the Boilermaker now attracts nearly 20,000 runners and generates thousands of dollars not only for charities but also millions to support the local economy.” Tim Reed, also a third-generation Reed and past president of ECR, now leads the Boilermaker.

Passafaro, a native of Fredonia, graduated from Le Moyne College in 1982. His early employment was in the Boston area in sales and marketing. A conversation in 1989 brought him back to Upstate to join Dunkirk Radiator with the mission of starting a new distribution model, managing the brands, and developing the sales network. Passafaro, 54, rose to become ECR’s vice president of sales and marketing and oversaw engineering. He became president in December 2010. He lives in Clinton with his wife Paula.

Central heating has clearly changed our lives. We no longer huddle around a central fireplace, but move comfortably from room to room, armed with individual room controls. It created a fashion industry, since ladies have shed their Buffalo robes and now wear gowns and dresses in the winter. Air conditioning has opened vast areas that were formerly not conducive to comfortable living and spawned new industries. In short, HVAC is a basic component of modern living.

ECR is well-positioned to grow and profit in this period of high-tech change.

Contact Poltenson at poltenson@cnybj.com