Industry Joint Ventures are Win-Win-Win
Originally published: 05.01.18 by Pete Grasso
Earlier this year, Ingersoll Rand, parent company of the Trane and American Standard brands, and Mitsubishi Electric Corporation, a manufacturer of ductless and variable refrigerant flow (VRF) systems, entered into an agreement to establish an equal partnership joint venture to expand distribution and offer more contractors an expanded ductless portfolio
As big of an announcement as this is for the industry, it’s also the latest in a line of similar joint ventures and partnerships between U.S. manufacturers nd Asian ductless companies.
Last fall, Carrier announced a joint venture with Chinese manufacturer Midea that combined Carrier’s U.S. distribution with Midea’s ductless expertise. A year prior to that, Rheem and Fujitsu General announced a strategic collaboration to expand product portfolios for both companies. And, while not a joint venture along the same lines as these, I’d be remiss if I didn’t mention Daikin’s 2012 purchase of Goodman Manufacturing.
What’s immediately clear from all of these business dealings is that U.S. manufacturers are evolving and doing everything they can to make sure contractors have the best products for their customers.
It’s certainly a win for both manufacturer parties involved — but it’s also a big win for the industry and especially you, the contractor, and your customers.
So, what does this latest announcement from Ingersoll Rand and Mitsubishi mean? I spoke with Dave Regnery, executive vice president of Ingersoll Rand, and Mark Kuntz, senior vice president for Mitsubishi Electric, to get the lowdown.
How did this JV come about?
Kuntz: We originally came up with the idea through one of our mutual customers. One of our distributors, who also sell the Trane and American Standard brands, brought it to our attention that there is a really good fit here in terms of philosophy, quality, approach and innovation.
What is the main point of this JV?
Regnery: The new joint venture will include marketing, sales and distribution of ductless and VRF heating and air conditioning systems through Ingersoll Rand’s Trane and American Standard commercial and residential channels, and existing Mitsubishi Electric distributors and representatives in the United States and select countries in Latin America.
So, these ductless products will be co-branded?
Regnery: The joint venture will distribute products with the Trane or American Standard brand and the Mitsubishi Electric corporate logo to Ingersoll Rand channels.
Kuntz: We will also continue to furnish the Mitsubishi-only branded products to our current customers, so the folks that have been working with us in ductless and VRF since its inception. We expect to continue to grow and thrive.
What does this mean for the contractor?
Regnery: A contractor wants to make sure they don’t disappoint their end customer. They want to make sure they can do the job right the first time, so they don’t get a call back. With the combination of the Trane expertise that already exists today, and the compliment of Mitsubishi’s technical expertise, this is going to be very powerful for them.
Kuntz: All of that support, infrastructure and the knowledge Mitsubishi has gained over 30 years in the business are now spread across the entire IR channel, accessible to their customers.
Is this another giant step forward in the U.S. for ductless manufacturers?
Kuntz: Yes, this is a stamp of approval from a major U.S. manufacturer that ductless and VRF is going to be part of the mainstream in the U.S. market. Our sense is that, despite our 30-plus years of growth in the U.S., our products are still largely seen as niche or for specialized applications. This partnership signals ductless and VRF are going mainstream.
Regnery: It’s got a growth rate right now that — while certainly not as high as people predicted three or four years ago — is still attractive. This JV ensures Trane and American Standard dealers have the right product for the customer.
Are there any plans for future product collaboration?
Kuntz: Co-development of new technology has certainly been a big part of the discussion. We’ve built in the U.S. what we call our engineering center, which is populated by Japanese engineers and U.S. engineers and is co-located with us in Atlanta. That will continue to be co-located, but it will be carved out and remain with Mitsubishi. That entity is fully expected to cooperate and coordinate with IR to develop things like hybrid VRF systems and/or hybrid multi-split systems, not directly as a part of this joint venture but as a follow-on activity that will provide products that the joint venture can sell.