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Hearth & Home March 2019

Joe Burns, president of Bernard Dalsin.

Meet Joe Burns

By Richard Wright

The incoming chairman of the HPBA is president of Bernard Dalsin Manufacturing, a family-owned business making chimney and venting products in Farmington, Minnesota.

Many incoming chairmen of the Hearth, Patio & Barbecue Association (HPBA) enter with a pet project in mind. It could be a goal of increasing membership in the association, as it was for the past two chairmen.

Joe Burns is no different, but his project of choice is to set up a network of succession professionals to help retailers get their businesses ready for sale, and a network of brokers to help with the sale.

Hearth & Home: How did you get into this very nice industry called hearth?

Joe Burns: “When I first got out of college I began my career in a company that marketed consumer insurance products via direct mail. That company partnered with some of the world’s largest insurance companies to underwrite their products and, in turn, they would partner with some of the world’s largest banks to market those products to their customer base.

“I was in the business development role in that company, and early in my career I really had no interest in working for the family business; it wasn’t something that I was thinking about until, in 1997, a position opened up for a Sales and Marketing manager at BDM. At that time, I had realized that the insurance world wasn’t for me, so I decided to take a leap of faith and interviewed for the position.

“Back then, BDM primarily sold chimney liners, top-sealing dampers, and chimney caps mainly to chimney sweeps and to a few hearth retailers; we were primarily selling regionally back then. The more I learned about venting and the hearth industry as a whole, I began to see a lot of opportunity to grow BDM’s line of venting products and expand the customer base.

“Today, BDM has a customer base of over 400 specialty retailers and several hearth appliance manufacturers. We sell throughout the U.S. and Canada. We do sell some to chimney sweeps, but that is primarily through two-step distribution channels.”

You have other channels as well, correct?

Burns: “Yes. Basically BDM sells through three channels. We sell direct to specialty hearth retailers; we sell to chimney sweeps through two-step distribution, and then what we classify as our OEM channel, which is selling venting and component parts to industry manufacturers.”

So, your competition is all the rest of the chimney people?

Burns: “Chimney and venting, yes.”

There’s a lot of competition out there.

Burns: “There is, yes, it is a competitive environment, but the industry is such that I think there is room for all of us to succeed.”

Is the largest part of your business going through the specialty retail channel?

Burns: “Yes. Generally speaking, about 60% of our sales are through specialty retailers, 30% are through the OEM channel, and 10% through two-step distribution.”

That’s a nice break. In terms of your background, is there anything else we should know about you?

Burns: “My role, beginning with BDM and throughout my career with the company, has always been in Sales and Marketing. My role has evolved over time as BDM continued to grow and expand its product lines, and with that growth came increasing responsibilities, of course, including product management, new product development, leading a network of sales representatives, and general management of the company. As of April of last year, I was promoted to president of the company.”

Do you go to the show, the Expo, every year with your company?

Burns: “Yes. BDM has been a member of HPBA since 1980 or so, and has been to every Expo since the mid ’80s. In my 21 years here, we have exhibited every year.”

The two prior chairpersons of the HPBA, Ingrid Schroeter and Amie Ryan, both wanted to increase the number of members in the association. Are you aware of whether those efforts were successful?

Burns: “I believe it was. I think the two of them promoted the benefits of membership, both from a manufacturing perspective and retailers, through the affiliates. I think there have been some successes along those lines. In terms of HPBA membership and manufacturers, there are challenges with consolidation and other pressures for the industry, and we’re always looking for new ways to reach potential members and increase that pool.

“One thing that took place last year is that the HPBA made a new membership category for startups, making it more economical for new companies that don’t have a tremendous amount of revenue coming in because they are a startup; the new category makes it more viable for them to become a member of HPBA right from the beginning.

“As far as affiliates are concerned, I was a chairperson of the Affiliate Leaders Committee for a while, and I know a tremendous amount of work and collaboration has taken place at the affiliate level to try to increase membership within the retailer segment.”

Do you have any great ideas on how to increase membership of retailers?

Burns: “That is a challenge all affiliates are facing – gaining new members as well as retaining the members that they have. I believe the key is promoting the benefits of membership and really driving home the message that supporting this industry is good for your business as a retailer. I think a lot of retailers and manufacturers who are not members are missing the main benefit of having an industry association that is working diligently to protect our industry and to promote our industry. The key to both new membership and retention of members is continually driving that message and specifically showing what this industry does to help their business.”

Another chairman said he really wanted to do something to increase attendance at the Expo. So not just the membership, but also how do you get people to the show? I think attendance in Nashville was a little over 8,000, and the peak prior to the Lehman downturn was slightly better than 12,000. How do you get all those people back on board? Any thoughts?

Burns: “I have been on the Expo committee now for the past year and have seen firsthand all of the avenues that the Expo committee and Kelly (VanDermark) look into when trying to increase show attendance. I’ll start out by saying the trade show is stable. In fact, the registration for attendees is within about 15% when compared to registrations at this time last year, and it is up 41% from two years ago. Registrations are really starting to pick up now, so it’s looking like Dallas is going to be a great show.

“The Expo committee has started bringing in keynote speakers. They started last year, and this year they are bringing in a celebrity speaker, Mike Holmes, who has his own show on HGTV. I think that is going to drive some more attendance. People always like to hear external ideas on how to help their business.

“We’re really excited about trying Dallas as a trade show location. Just based on registrations, at this point it has proven that people have an interest in it and we’re hopeful that this is going to be a very successful show and can become part of our rotation. I hate to keep saying it, but it’s about promotion – promoting benefits and going to the show.

“The education program this year is spectacular. The registrations for that are up significantly from this time last year. So getting the information out to retailers is key, that they can come to the show and see the innovative products and new products from manufacturers. They will have the chance to hear a keynote speaker, and it’s really nice to be able to get some business-building ideas.”

What about any of the key issues? Do you want to weigh in on, say, California’s Net Zero, which is due to kick in 2020?

Burns: “The 2020 residential energy code in California will mandate that new homes achieve zero net energy for all electricity generation and usage – specifically, it will require the installation of photovoltaic cells. It will not include natural gas usage in that calculation, but it’s a strong possibility in future revisions to the energy code. If this happens, it would significantly increase the cost of adding a fireplace as it would necessitate the addition of more solar panels to offset the usage calculation.”

Joe Burns in his office.

But it looks like it’s going to work. The major builders figured out how to make it work about a few years ago. As usual, California is leading the way and I think a lot of other states will follow suit.

Burns: “I agree. What California does is looked at very closely by other states, and almost without exception, it spreads into other states. So it’s something that we as an industry definitely need to watch. We have to work with jurisdictions that have authority for these regulations to make sure that natural gas remains a part of their plans going forward.”

That’s a compelling reason why retailers who haven’t signed up ought to become members. They probably don’t know it, but their livelihood depends on how well the HPBA can do its job.

Going a little north in California up to British Columbia, Vancouver seems to be a bit of a problem. They have even flatly stated they wanted to be entirely electric by 2050, but meanwhile there is a lot going on up there. I think it has been a victory for the HPBA in the city of Vancouver. Am I correct on that?

Burns: “I wouldn’t go that far with it. I think the situation is still very fluid with respect to the phase out of natural gas for new construction. I do know that HPBA and HPBA Canada have been working with a local public affairs group to bring public pressure to change the regulations, effectively making sure that the public in Vancouver understands what the net effect of that regulation would mean for their lifestyle.”

Is there anything new with wood? Any other locales banning wood that I am not aware of?

Burns: “To my recollection, there is nothing too terribly new on that front as far as specific locales. Of course, on top of everybody’s mind is the NSPS and the effective date of new requirements that are coming next year in 2020. With that, of course, there is a proposed rulemaking out there right now that was submitted by the EPA allowing a sell-through on hydronic heaters and warm air furnaces.

“But, unfortunately, that proposed rulemaking did not provide sell-through for pellet- and wood-burning appliances, but they have opened up a comment period for the inclusion of those two products. The HPBA, as well as several manufacturers and retailers, has submitted comments on that promoting or advocating for a sell-through period of two years to be included in the rule.

“It’s important to point out, as with any proposed change to regulations, nothing changes until the rulemaking is finalized – as of today, there is a hard-and-fast prohibition on the sale of all Step 1 products on May 15, 2020.”

The incidence of fireplaces in new construction of single-family homes is plummeting precipitously. For decades, it lingered at 60%, six out of every 10 new single-family homes had a fireplace. Then, about two years ago, it dropped down to 51%; today it is at 45%, and it probably won’t stop there. This will impact every person and company in the hearth industry. That is where all the large numbers are. A lot of it is tract housing, but a lot of it is custom homes as well. Is that a great concern to you, and how in heck do we stop this slide?

Burns: “It is certainly a concern to us. Obviously venting goes exactly along with the number of appliances that are sold, so it is something that concerns us greatly. The bottom line is that new construction of homes has become more and more expensive, and what used to be a standard option, may not be an option at all. Sometimes it wasn’t even an option, depending on the builder; it was just put in. So consumers are forced to make choices and trade-offs.

“We need to make sure, as an industry, that we are promoting our products and the lifestyle of having a hearth product in their home, and that it is more important than, perhaps, an expensive entertainment center or theater room or granite countertops. Once again it comes down to promoting our hearth products.

“Our industry is full of manufacturers that have come up with very innovative products and designs. For example, linear gas fireplaces with extensive options were a great development. But one thing that I think could be done more is really promoting the lifestyle a hearth product provides. We’ve started to lose the emotional tie to fireplaces. Whereas Baby Boomers were definitely emotionally tied to hearth products; they grew up with a stove or fireplace in their home, and so they wanted it in theirs.

“That followed suit with the Gen X group. But with the Millennial generation that emotional tie may not be there any longer because they may not have grown up with a hearth appliance in their home. Those are all things working against having a hearth product put in new construction.

“Once again, promoting it, promoting the lifestyle, and promoting the entertainment features and factors of our products is key. If we can get that promotion through in the right ways, with the right messaging and, of course, doing it with multiple media – digital media, social media, print, we could be successful. I think HPBA can help with that, and I know they are starting to work with new promotions on the hearth side of things to try to increase the incidence rates of fireplaces going into new construction.”

Many of the past chairmen (and women) have had pet projects they wanted to work on during their year. Do you have any such projects?

Burns: “Well, membership is definitely important to me, and promoting our industry certainly is. But one issue close to my heart is succession planning for retailers. As we all know, the recession took out a lot of retailers and those retailers were not replaced. There are also many of our retailers who are reaching retirement age and beginning to think about getting out of the business and retiring. Some just close their doors; others sell their retail location. That is a problem for the industry. We don’t want to be losing the number of retailers we have.

“What I would like to focus on is the HPBA coming up with a network of brokers that can help these retailers find buyers and sell their businesses. One step further is having a network of succession professionals who can come in and get these businesses ready for sale, or get these business owners ready to take the necessary steps to make sure that they are planning for a sale, and able to pass the business on to new generations or new people.”

That’s an excellent area to concentrate on. We’ve done a few articles on succession planning, but we probably should do more. I will put that on my agenda and see if we can help out. If you come up with anything that you think would be apropos for a magazine like ours, give me a call and maybe we can run it for you.

Burns: “I appreciate that, and I’ll definitely do that once we start digging into it. Obviously some research is necessary, but I’m hopeful that we can start to come up with some programs that are beneficial.”

What would you like to get out that we haven’t discussed?

Burns: “We are looking forward to the Dallas venue this year. I think the venue is going to work out very nicely, and the educational seminars are terrific with great speakers. My parting words are, if you are not registered for the Expo, get registered.”

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