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Hearth & Home November 2018

L to R: Cory Iversen, Sales, Paul Erickson, Owner, and Mark Esterhuizen, Operations.

Pioneer, Innovator, Survivor

By Bill Sendelback

Paul Erickson and Pacific Energy are an integral part of the history of the hearth industry.

With the oil shortages of the late ’70s, the demand for wood stoves exploded overnight. Crude oil prices rose from $3 a barrel in 1973 to $30 a barrel in 1980. Almost anyone with a cutting torch and a welding machine began making wood stoves in their garage or basement. That, in turn, gave rise to scores of small manufacturers such as Earth Stove, Fisher, Buck, Craft, and many, many more.

But wood stoves also gave us wood smoke, so particulate emissions regulations by the state of Oregon in 1984, followed by emissions regulations from other states and then the U.S. Environmental Protection Agency in 1986, gave rise to required emissions limits and expensive stove testing. That put the brakes on the sale of wood stoves. Most of these small wood stove manufacturers simply packed it in. Some were merged into larger hearth products companies, but few of these early wood stove pioneers and innovators exist today.

One of those is Pacific Energy Fireplace Products, and it not only has survived, it has thrived in the hands of its founder, Paul Erickson, now president and still owner. This year Pacific Energy celebrates its 40th anniversary, headquartered in Duncan, British Columbia, on Vancouver Island about 30 miles north of Victoria.

“Back in the late ’70s, the price of heating oil was increasing monthly and becoming a major concern,” Erickson explains. “I had just bought my first house, and my heating oil bills had become greater than my mortgage payments. That really got my attention!”

At the time, Erickson was working for a metal fabrication company, so he had the tools and materials, and apparently the ability, to build a wood stove. “Necessity is the mother of invention,” he says. Erickson’s first wood stove was installed in his basement, and soon he was selling them one at a time to friends.

Employee assembling a pellet stove.

Distribution goes worldwide from the company’s Vancouver Island warehouse.

Pacific Energy is North America’s only hearth manufacturer with an in-house porcelain enamel plant.

Crafting Town & Country fireboxes using continuous-seam welding techniques.

“I worked until midnight and all day Saturday and Sunday, and I loved every minute of it,” he says. “After two years it was time for me to decide to hang it up or make something of this venture.”

In 1978, Erickson made Pacific Energy his full-time passion. “There was no textbook in 1978 on how to build a wood stove, so I just kind of winged it. We were all just making five-sided steel boxes with a door.”

Over those 40 years things have become a lot more professional, efficient, and complex for Erickson. Today his company employs 200 people in a 100,000 sq. ft. plant. He now has three brands of hearth appliances including gas, wood, and pellet stoves and inserts, and gas fireplaces.

The Pacific Energy brand is Erickson’s original, flagship brand of mid-priced wood and gas stoves and inserts. It was in this brand that in 1980 Erickson introduced the industry’s first glass-front wood stove complete with an air wash to keep the glass clean. A sub brand in the Pacific Energy line now is the Alderlea line, cast-iron wood stoves with a steel firebox. Another sub brand is the Tofino line of high-efficiency gas fireplace inserts and zero-clearance fireplaces.

In 2002, the company started a hearth industry revolution with its high-end Town & Country Luxury Fireplaces, the industry’s first clean-faced gas models. “This has been a great line for us, a solid sales performer right through the recession, and sales continue strong,” says Erickson. “It’s not a high-volume line, but a high-priced, luxury fireplace going into very expensive new home construction, and commercial and hospitality installations.”

Architectural Series by Town & Country.

The Town & Country line includes linear and portrait styling all with the clean-faced look pioneered by Pacific Energy. “At the 1995 Las Vegas HPBExpo, architects and designers asked us why all fireplaces looked alike. They wanted a cleaner look. So we went with edge-to-edge glass and got rid of all the hardware that then was typically on fireplaces. Since then clean-face fireplaces have become an industry category.”

Finally, in 2010, the company introduced its value-priced True North line of basic wood and pellet stoves designed to retail for around $1,000. “We don’t sell to mass merchants,” Erickson says, “but we wanted to give our specialty hearth dealers a product to compete with the products offered by the Big Box stores. When a customer comes in after shopping at Lowe’s or Canadian Tire, now the dealer has a product to compete to keep that customer from walking out the door. Quite often we find that this starts a conversation with the customer, giving the dealer a great opportunity to up-sell the customer to our mid-line, our Pacific Energy products.”

Erickson’s product line obviously is a far cry from the simple, black, home-made wood stoves he pioneered 40 years ago. But his leadership with products ahead of the cutting edge of hearth appliance aesthetics and technology continues to pay off. Pacific Energy sales are up 10% over the last three years, and this year sales are up 20% through August.

“A lot of companies say their sales are up dramatically over the years,” says Erickson, “but if you look at their numbers, acquisitions are a big part of that growth, not real sales growth.” Bottom line for Erickson is that “business is good.”

Between his North American sales and those of Pacific Energy’s Australian distribution operation, the company maintains its manufacturing year ’round. “Our North American demand tapers off a bit in November, but by then we are starting to produce for the Australian market,” he says. North America is 85% of Erickson’s sales with the remainder sold in Australia, Japan, and Eastern Europe.

Pacific Energy sells exclusively through two-step distributors. “Our distributors have boots on the ground, so they know the dealers and they select the right ones,” Erickson says. “We obviously go after A dealers, but we would rather be number one in a B dealer than number four in an A dealer.”

One reason for the success of Pacific Energy is the company’s core values that Erickson says guides him and his staff. “Pacific Energy exists for one purpose, and that is to provide the finest products backed by a tradition of trust, integrity, and reliability. In fact, those are the core elements of our company’s mission statement.”

While so many other hearth products manufacturers have jumped on the gas bandwagon, Erickson believes that one of Pacific Energy’s big competitive advantages is that the company still is very strong in wood-burning products. “More than 50% of our sales are from wood-burners,” he says.

True North 20 Wood Stove by Town & Country.

“Our strength is that we have so much talent and so much industry knowledge in wood-burning. Just between me, our Technical Support manager John Francisty, and our Sales manager Cory Iversen, we have a combined hundred years of industry experience. Our whole company is an amazing group. We’ve all been through the many changes in this business, and with the recent addition of Mark Estherhuizen as Operations manager, we are well positioned for the future. Wood stoves are our core business, and it’s a huge advantage having all this talent in-house.”

As if to emphasize this, Erickson points out that already 90% of the company’s wood-burners are tested and certified to the 2020 NSPS 2.0 gph standard, all non-catalytic. Only two low sales volume models have yet to be certified. “Some in the industry think it’s not possible to meet this standard without going catalytic. It’s not every company that can pull this off. We did.”

Pacific Energy always has been innovative, e.g., with its industry-first glass-door wood stoves, and the first clean-faced gas fireplaces. That innovation continues today. In its Town & Country line, ceramic “disappearing” glass is featured. “This glass is clear, not tinted like most ceramic glass used in our industry,” Erickson explains. Most ceramic glass has a green tint to it, giving the logs and wall panels a green look, especially with the fire off. It doesn’t look natural. Our glass is different – it is truly transparent.”

The Town & Country line also offers a Power Vent Wall Termination that allows the power vent to be framed into the outside wall of the house, making the termination flush. Recent innovations allow the power venting to track the flue gas temperatures to change the power venting motor speed, and to keep the unit as quiet as possible.

Tofino i40.

Brand new in the Town & Country line is the Architectural Series, a high-end, semi-custom line built in two-foot increments to allow installations “as long as you like.” The full line includes single sides, see-throughs, peninsulas, and bays. The company is controlling distribution with very slow introductions to selected dealers to make absolutely certain the models are ready to go to market. The company is installing dealer display units and is training dealer staffs on installations. With retail prices starting at $7,000 for the smallest units, the Architectural Series is featured with multiple installations in the current New American Home.

In the Pacific Energy product line, the patented EBT or Extended Burn Technology is a totally automatic combustion air control, says Erickson. “There is no user interface needed. It senses the amount of draft in the stove, which is proportional to the stove temperature. When the draft falls, it allows more combustion air.”

Erickson recognizes all of his 200 employees as being a major part of the company’s success. “Our average length of service is probably 15 years, but we have more than 70 people who have been here for 10 years, and a couple dozen have been here more than 20 years. We’re a major employer in our small town, so most people who come to work for us stay with us.”

With so much consolidation continuing in the hearth product industry, and so few old timers still owning and running their companies, it’s realistic to wonder why Pacific Energy remains a privately-held company. “Yes, there has been interest in us from inside and outside our industry,” Erickson explains. “I’m not 25 anymore, but I still come to work most every day. We have a very strong management team that can run this company quite nicely, so this leaves my options open.

 “Quite often I think to myself, what else could I be doing that would be as much fun.” To date, the answer appears to be – nothing.

The Pacific Energy factory on Vancouver Island.

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