Hotstart Inc., the Spokane-based engine heating equipment manufacturer, has reported a steady increase in employment and sales this year, bolstered by a recent influx of product orders as a result of Superstorm Sandy.
Hotstart CEO Terry Judge says a number of the company's customers are experiencing a surge in demand, stemming from a need for generators, which equates to an increase in orders for the manufacturer's products.
Judge says since the hurricane, the company has seen a jump in orders for diesel engine heaters from customers that build backup generators, including Caterpillar, Generac and Kohler. Judge says Kohler Power, a subsidiary of Wisconsin-based Kohler Co., who placed a large number of orders for heaters at the end of October is just one of its customers placing large orders for its engine heaters.
"We had another major event, and that's going to spur the whole industry," Judge says.
Judge says it's not uncommon to see a rise in demand for products used to help in disaster relief industrywide including those manufactured at Hotstart after a natural disaster hits; spikes were noted after the likes of Hurricane Irene in 2011 and the 2010 earthquake in Haiti.
Generac Power Systems Inc., a Hotstart customer that manufacturers generators for homes and small- to mid-sized businesses, is being singled out by investors for generator demand post-hurricane, Judge says. As of Oct. 31, the Wisconsin-based company's share value had risen more than 32 percent in a five-day period to a historic high of $34.
Judge says the late demand will raise the company's year-end revenue expectations slightly. He says emergency generator demand could mean the company will end 2012 closer to $50 million in sales, rather than slightly above $49 million, as previously forecasted. Last year, Hotstart reported $43 million in sales.
Judge expects sales to continue to grow in 2013. Projected sales for Hotstart next year are at $53 million.
Judge says employment at Hotstart has risen as well. Last year, the company reported having 166 full-time employees in November. Currently, Hotstart employs 190 people full time. Judge projects that the company will hire an additional 14 workers next year, and he says it already is advertising for five of them.
The rise in employment is due in part to the company opening three national and international sales offices. The most recent new office, in Japan, opened a year ago. Judge says the company doesn't have any immediate plans to open more sales offices.
"We're expanding quickly with these last three," Judge says. "We need to make sure they're solid and successful."
Judge says those offices' sales have been good. The Japan office is receiving new business from big-name companies such as Mitsubishi, which deals in large engine manufacturing. He says a Hotstart office in Germany recently hired an additional salesperson who has close ties to the marine power industry.
"The U.S. doesn't do a lot of marine power," Judge says, adding that there are several large European companies that handle marine power. "Those are the target customers for us, and we have a small but growing market share with them."
Hotstart manufactures engine heating systems for trucks, locomotives, gas pipeline compressors, heavy-duty industrial equipment and ships.
Recently, Hotstart exhibited a new 144-kilowatt coolant heating system for use on ships at a German trade show in September. The system is a larger version of another marine system already produced by Hotstart, which ranges in size from 2 kilowatts to 36 kilowatts. The heating system is designed specifically for large engines and stationary power applications, such as large generators on marine vessels.
"We're going to be getting our order for our first system here to go to Europe, which is exciting," Judge says.
Hotstart currently occupies a 128,000 square-foot facility at 5723 E Alki in Spokane Valley. Judge says in terms of expansion, the factory is at its capacity, but internal methods of making production lines more efficient have freed some space up.
"Physically, we're okay now, but we're always expanding our product line," he says.
Hotstart ramped up a new production line last week for its HOTflow engine heaters, decreasing the floor space needed to put together the product.
The production line was a year in the making. Judge says the line was developed by production operators and lean-manufacturing technicians.
Used commercially in backup generators, HOTflow engine heaters work by using a pump to circulate coolant through an engine.
Judge says HOTflow heaters reduce energy costs compared with a more conventional "thermosiphon" heater that requires the coolant to be raised to a higher temperature in order for it to circulate.
The new production line allows workers to swivel the heater to allow easier visibility and accessibility, as opposed to working with the product in an immobile vice. Judge says it makes it less strenuous on workers and reduces needed floor space by consolidating material storage.
Judge says once workers get used to the new setup, he anticipates it will lead to faster and more efficient production of the HOTflow heater.
The heater was developed in partnership with Avista Utilities in May 2011. Judge says since that partnership was formed, interest at other utility and power companies using the heaters in their generators has grown. He says federal utility Bonneville Power Administration, and Seattle City Light recently have started marketing the heaters to their customers to help businesses decrease energy consumption. He says Seattle City Light plans on doing an installation of a HOTflow heater at the Fred Hutchinson Cancer Research Center in Seattle this year.
"That's what gets really exciting is how this is moving out of Spokane and down the West Coast," Judge says.
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