In the last couple of years, Herz UK has undergone a fundamental change. Now, as well as just the valves, it wants to supply the complete solution – everything from the boiler to the radiator. The Austrian parent took some convincing but the changes have been so successful the policy has been adopted as a world strategy. Shaun Cronin (left), managing director and Mark Goodson, technical manager, (right) talk to Paul Braithwaite about the rise and rise of Herz UK
HERZ is probably best known in the industry for its radiator valves.

However, Shaun Cronin, managing director of the UK subsidiary of the privately-owned Austrian-based company, insists there is a whole lot more in the product portfolio.

'The past two years have seen a step change for Herz UK. The enlarged range has allowed the company to branch out into cooling, domestic water heating and, recently, even valves which help prevent legionella.'

About seven years ago Herz bought a company called Ipa, a fittings manufacturer making pipe-to-valve connections for different pipes such as copper, precision steel and plastic.

Last year the Austrian parent acquired substantial shares in Armatura, a Romanian cast-iron foundry, meaning the UK subsidiary now offers balancing and isolating valves up to 300mm.

Herz also owns a company in Slovenia called Kovina which makes ball valves and fittings together with Unitas which produces a range of sanitary taps and accessories.

In all, the company has some 4,000 product lines but, as it supplies more than 100 countries worldwide, obviously many of them are country-specific.

The UK subsidiary offers about 2,000 lines with some 1,500 stock items in the Guildford, Surrey warehouse.

Further, Shaun maintains that when the UK needs a product, then the Austrians listen - and being a privately-owned company tend to make quick decisions - and generally come up with the goods.

Herz UK has at least two deliveries a week from Austria so those 500 extra lines are usually available within a week to 10 days.

All of Herz UK's products are sold direct. Shaun says the company made a conscious decision some years ago not to go exclusively through wholesalers, but it is a strategy that is reviewed regularly!

This brings its own problems.

'Because we deal direct with our customers we have to carry the stock because we have to respond to our customers, who can be very demanding - and rightly so! Valve companies which distribute though wholesalers obviously have stock in branches so they do not need to hold so much.

Herz is at the quality end of the market. This quality, Shaun adds, is underlined by the five-year guarantee on all Herz products.

'At the moment, some of the product lines are supplied by partners and these are not covered by the five-year guarantee,'

However, Shaun adds, it is Herz' intention to source all its products from its own firms as soon as possible - as a Pro-European manufacturer.

'Austria is a land-locked country in Europe. The policy is to source from Europe as it makes sense for us - and there are plenty of manufacturing opportunities in countries such as Romania, Poland and the Czech Republic and other former Eastern European States,' Shaun adds.

From the Herz head office in Vienna, should there be any manufacturing issues, a trouble-shooter can get to all the manufacturing plants within two hours.

Three years ago, there was a fire in a unit near the Herz UK warehouse and £250,000 of Herz products was destroyed by smoke damage. Austria responded and was able to replace the stock within two weeks.

With Herz being an acquisitive firm, the buying hasn't stopped yet.

'We are always on the look-out for opportunities.'

Shaun believes the company will be sourcing all its products from its own manufacturing companies within two years.

'If it does not happen, then I believe we will have missed some great opportunities.'

And talking of opportunities, Shaun says he is trying to come to grips with the underfloor heating market which has firmly established itself over here. Herz produces all the components required for a complete system and he would like to see it as a contender.

'What is now becoming standard practice for us here, in some cases, is old technology for Europeans who have been in the underfloor heating market for many years. What we need to do - and quickly - is decide how to approach the industry. This will be the next new market for Herz UK.'

But Shaun is not expecting it all to come good immediately.

'It will take a some years for Herz to have real impact on the underfloor heating market. Nevertheless, with our share of the market at 0%, the only way is up!'

But isn't that moving away from just valves?

Yes, says Mark Goodson, technical manager, 'However, it is where we want to be eventually. Effectively, Herz would like to be the company which supplies all the equipment between the boiler and the terminal unit (such as the radiator).'

Shaun believes he has to embrace the commercial specification market, offering the complete package, with approved installers, trained by Herz if necessary.

So while Herz is expanding its market on the one hand, its traditional radiator valve sector is shrinking because of underfloor heating, convectors, fan coils and even air conditioning.

'If we don't change, we will not survive.' says Shaun.

Hence, the company has also moved into the commissioning valve arena, which includes the recent introduction of automatic balancing valves to minimize commissioning time.

New innovations such as the anti-vandal valve - called the Herzcules - which is designed to stop people tampering with it, is used extensively in schools, colleges, prisons, hospitals, police stations and pubs and yet can give some adjustment for the user.

'We are adding new lines all the time.'

Currently, Herz UK has 19 staff in a close and dynamic team but Shaun expects this to increase in the next four years. He also expects to add an application engineer to help with the push into underfloor heating systems.

Mark as the technical manager is undertaking this role at present. He also oversees the ongoing training of eight sales engineers who are able to offer technical expertise in all areas.

And often it is a case of 'what does the customer want?' with Herz UK offering a solution which could be very different from the one the client thought he wanted.

Recently, Herz UK recruited two new sales engineers, one for London and the other for the Midlands. Shaun had difficulties finding good sales engineers who know the business and admits the skills shortages has taken its toll throughout the industry,

However 'Kevin Sweeney, for London, and Tony Jackson, for the Midlands, have both brought the experience and skills that we need to develop across broad areas of the industry. We can help them to develop their skills further in an exciting opportunity for us all.'

The company has recently moved into a warehouse which is five times the size of the previous one. But, Mark adds, Herz UK has not just increased stock numbers by five.

'We are becoming more involved in projects and this means that sometimes many lorry-loads of stock will come straight from Austria just for one job. This has to be stored before despatch as and when required to site.'

Shaun adds that moving to more project work was a conscious decision.

'Probably the most radiator valves, for instance, required at one time on a job would be a pallet-load.

'For projects, there are not just TRVs but commissioning valves, pipes, skirting boards, and fittings. This will be more than one load with deliveries coming from different group companies at different times.'

Shaun adds that, in June, Herz UK started three ongoing projects and this could equate to about 30% of its projected business this year. And this was from a standing start two years ago. He would welcome more project work but that can also bring its problems.

'We have to plan better for them. For instance, deliveries of larger valves could be protracted unless higher stock levels are considered at these times.'

However Shaun adds lead times on large projects can be as high as 12 weeks and even with three or four projects running at a time, they can, and must, replace depleted stocks quickly.

'We have to be light on our toes to succeed.'



Change of emphasis

HERZ business in the UK has grown progressively each year for the last 12 years.; when Herz bought the agency, Ellis Miller, under which name the company traded until three years ago when it changed to Herz Valves UK. This change has had the positive effect of giving clients the confidence that they are dealing directly with the manufacturer!

And within the next three-to-five years managing director Shaun Cronin hopes to turn over some £9 million which is no mean target for the company.

But with a change of emphasis, this should be attainable.

Now Herz UK has the breadth of products and has raised the profile of the range across the UK, Shaun believes the business will continue to grow substantially – and more rapidly.

Shaun has spent the last three years convincing his Austrian colleagues this is the right route for the UK company. This policy has now been adopted as a world strategy by Herz head office.

The figures are starting to prove how right they were to give Shaun his head.