I understood that the most serious competitor would be the "black heat" convector marketed by the Northern Electric Co. at $23, but on making enquiries I found that whilst the market had been flooded with supplies during last season, large quantities had stuck and in a number of instances retailers were selling these off at about 50% of list price.
The convector which had gained the most ground appeared to be the "Cozette" made by John English & Co., Toronto, retailing at $18.95. This consisted of a "black heat" element with expanded metal grill, rated at 1320 watts, approximately 15" long x 12" high x 8" wide; the case being constructed of 18 or 20 gauge steel, and finished in ivory.
An effort was made to obtain a WHITTIE Steam heater but none were available, due to production having been suspended whilst modifications were introduced, the retail price will be approximately $33 and the heater is expected to prove popular, due to its unusual features.
A visit was paid to their Chicago works when details of design and construction were obtained; briefly the heater consisted of a fan, a cylinder in which is mounted an ordinary immersion heater (the cylinder contains 3 pints of water) a finned radiator and a pressure control, all housed in a well designed case.
When the steam reaches the necessary pressure a valve opens and the steam passes up into the radiator and this warms the air which is circulated by the fan (Further details with Mr. Cleland).
One so-called convector was being retailed at $7.90.
The only English competition encountered was the Unity convector selling at $49.80 but this was loaded at 1320 watts against our 1000 watts.
The average selling price of heaters (mainly 1320 watts) appears to be around the $20 mark with a low of $7.90. and the highest I saw being $29.50.
There does not appear to be a heater marketed similar to the Thermotube, except the tubular heaters which are being imported by Unity Heating, Southampton, and in fact whenever tubes were mentioned, the people immediately responded with the word "Unity" much as one encounters "Hoover" over here when referring to vacuum cleaners. The Unity "Grey Book" was much in evidence.
A very strong preference was expressed for a dual heater, that is, incorporating both heating element and a fan so that the same capital outlay, the customer can have heating in the winter and cooling in the summer.
The quality of the electric heating appliances was in the main, extremely low – much worse than the poorer quality on the home market. However, these appear to satisfy the customers' requirements as when purchasing supplementary heating, the public look for an article which is efficient but low priced, so that they can purchase fairly frequent replacements and thus keep up with change in styling.
This mental outlook is one of the fundamental differences between selling in Canada as distinct from this country, as is that of the retailer who shows a greater tendency to handle an article which is likely to bring a fairly steady replacement market, rather than a satisfied customer who will not return for years.
To obtain bulk sales in Canada it will be necessary to offer a convector with built in Thermostat at around $30, or alternatively, a heater incorporating a fan and retailing at not more than $20-22.
Without exception, the people contacted expressed doubts as to the advisability of using a Bakelite cabinet for a heater, which of course is quite a new departure in Canada, and the doubts are only a repetition of those originally expressed when we introduced Thermovent to the home market in 1937. Otherwise, there was nothing but praise for the excellent design, styling and workmanship put into the heater; the chief criticism being that, for the Canadian market at any rate, the Thermovent was far too good in view of the desire for constant changes referred to above.
It was not possible to arouse any interest in the Inset model, mainly due to initial capital cost, and it is recommended that we take no further action in connection with this model, apart from constantly reminding our distributor that these models are available, as the necessary publicity to awaken interest would be costly and unlikely to be economic.
The above remarks apply equally to Canada or the United States, except that in America there is no evidence of any British competition and tubular heating does not appear to be used. It should be borne in mind that whilst the duty into Canada is 15% less a preferential 50%, the duty to America is straight 25% which makes it uneconomic to import from this country.
As far as Marine architects and builders have been brought up in the steam tradition that no manufacturer appears to have considered the market worth while to develop a specially-designed electric heater.
However, from favourable comments passed by the architects and ship-builders who saw the portable model and photographs of the marine versions, it would appear that with adequate representation we should be able to secure a fair amount of business, but this would naturally be very small in the beginning whilst the idea was being put over. It is, however, likely to increase.
(a) because of the increase in ship-building in Canada which is attracting a number of senior personnel from the British shipbuilding industry, who are more open-minded on this question of electric heating
(b) the increase in the number of diesel ships which are being built, it being much more economic to heat this type of ship by electricity
(c) there is a large Naval project which it is proposed shall be the joint responsibility of the British, Canadian and United States governments, the view in Canada being whilst the U. S. portion would be built in that country, the British and Canadian portion would for political reasons be built in Canada. These briefly are the bulk of the expenditure would be borne by the United States, who are expecting to object to the building actually being carried out in Great Britain for fear of the programme being interrupted by a third party.
The feeling at present is that the British contribution will be the supply of certain material and technicians. It was not possible to obtain details of the number of craft involved but it was understood this would be considerable, although not likely to reach the design or ordering stage for another 18 months to 2 years.
It was surprising to find such a large amount of ship-building being carried out in Canada, and at the present time ships under construction for the Argentine, Chinese and French governments, in addition to local requirements. Whilst two years ago it was felt that this was a passing phase, and immediately British shipyards had caught up the arrears, the work would normally revert to England. The view is now taken that this is not so, as profiting their experience in the last few years, the Canadian shipbuilders are reducing their prices and delivery periods, whereas in England prices and delivery are still increasing, so that Canadians feel that they have now almost bridged the gap and will shortly be able to compete on fairly favourable terms. We should cultivate the Canadian marine market in anticipation of this view proving correct.
In the United States there is very little shipbuilding being carried out on vessels of approximately 5000 tons. In fact, the trade is beginning to get rather worried as to its position in a year or so's time, apart from the Naval contract mentioned above. From preliminary investigations we would appear to have a reasonable chance of obtaining a small number of orders for this conversion work but of course it would be necessary to do a fair amount of spade work.
(2) Domestic Distribution
One of the chief difficulties in finding a suitable outlet was the necessity for typing up with a person or concern who were quality-concious, prepared and able to carry out the intensive selling necessary for an article remaining at approximately $48 when the nearest competitor is under $30 and the average selling price around $20.
A number of possibilities were explored without success.
Except the Wilkinson Engineering Agencies of Montreal, who were the sole Canadian distributors for Unity Heating, Southampton; and Masco Electric Co., Ltd., of Toronto.
It was ultimately decided that the more suitable of these two was Wilkinson Engineering Agencies as Mr. Arthur Wilkinson, the owner, is a member of the American Society of Heating and Ventilating Engineers and only interested in distributing quality appliances; whereas the Masco people are quite well-connected but without the advantage of being able to cater for schemes and whilst at present these are very low due, it is to be hoped, to the temporary restriction of 4 k.w's maximum demand per consumer., without a penalty of $1 per k.w. per month, it is likely to have a bearing upon the number of Thermovents and particularly Thermotube sold.
Mr. Wilkinson appeared to be very well respected in the heating world and has excellent connections with the Hydro and Utility Companies in Eastern Canada, leading jobbers (wholesalers), and departmental stores so that he is able to give us quite a wide distribution.
After considerable discussion and a thorough examination of the Thermovent and Thermotube samples, Mr. Wilkinson agreed in principle that he would withdraw from his Unity representation and handle our heaters instead.
He was won over partly on the question of quality but mainly by emphasising the backing which he would get from the Company, particularly in respect of deliveries, the point here being that Mr. Wilkinson had been successful in disposing of approximately 350 Unity convectors each year, plus 5 or 6 thousand feet of tubing, but he felt that his sales had been restricted due to the manner in which the business had been conducted, inability to maintain delivery promises, and difficulties due to goods being badly packed.
A number of problems arose. Mr, Wilkinson offered an opening order of 20 Thermovents as samples to test the market, plus 3000" of tubular heating. These he wished to purchase on a 'cash in 90 days' basis and also wanted full representation not to be entertained; first, as it was considered that the quantity was insufficient to enable him adequately to test the market and secondly, that we did not consider him suitable to handle our Marine models.
Eventually, agreement was reached on the basis of Wilkinson Engineering Agencies placing a firm order for 100 FC1's to USA requirements, they to fix an approved cord and plug, and 300 ft. of tubular heating, payment cash against documents.
It was unfortunate that on the day of these final discussions, Wilkinson Engineering Agencies received an Advice Note from Unity for 5000" of tube; this explained why it was necessary to except such a low quantity of tubular heating.
This was an opening order to enable them to test out the market, it being understood that providing these 100 were delivered to Montreal by the end of August or early September, a further order would follow in September. A request was made for us to supply the FC1's loaded at 1320 watts and the Thermostat setting altered to give a top reading of 80°F instead of the present 70°F. It was explained that whilst we were prepared to investigate this, it was not possible to carry out the necessary development work in time to have these changes incorporated in the first shipment. In any event, according to the CSA ruling, we would have to submit a further sample if we wished to increase the loading above the 1000 watts.
It was therefore agreed that we should supply the FC1's in 1000 watts but should proceed through the necessary development and approval stages with a view to giving the Canadian market the highest loading possible, utilising standard 1 k.w. Cases.
The above arrangements apply only to Eastern Canada.
Western Canada has already been placed under the care of Overseas Commodities, Vancouver, under the terms of our letter dated 30th November, 1946. This arrangement expires at the end of the present year and in view of lack of support from these people and the fact that it was not possible to obtain any definite assurance from them following two telephone conversations, it is recommended that we notify Overseas Commodities that as from the 1st January, 1948, we shall regard ourselves as free to make fresh allocations for the territory, this to be offered to Wilkinson Engineering Agencies, with whom tentative discussions have already taken place – Mr. Wilkinson expressing his keen desire to represent us throughout the whole of the Dominion.
Negotiations were hampered by a report that the 50% preference granted to British goods was to be withdrawn and it was later confirmed that this preference ends on September 30th so that from October 1st duty will be the full 15% plus the Sales Tax of 8%.
U.S.A. reaction was not so favourable as Canadian, all parties contracted, whilst appreciating the quality, were of the opinion our prices were too high to make Thermovent a proposition, as cost of the publicity necessary to awaken interest would be far too great for an article with such limited sales possibility. The remarks of Mr. Trevarrow (Macy) were typical – when given the nett landed cost plus duty he replied "I could not sell a heater at that figure, but as a point of interest what discounts would you give me off these prices".
(3) Marine Market
From preliminary enquires it appeared that the best centre in Eastern Canada for marine activity was Montreal, and a number of possible outlets were investigated. Finally the choice lay between
(a) A.E. Watts Ltd., of Montreal, a company of some 10 years standing, President: Mr. A.E. Watts, formerly Assistant Electrical Engineer to the Canadian Pacific Railway. Mr. Watts formed his present company with the object of manufacturing and sales unit, consisting of some 80-100 people, special fittings for marine oil units and other special fittings for marine requirements. Mr. Watts is regarded as an
Authority on ship construction and is frequently consulted by some of the leading marine architects in Canada.
(b) T.M. Hall Ltd., also Montreal, who represent several Companies in Deck Machinery, Diesel Engines, etc. and are very well-connected with marine architects, the Canadian Steamship Co. and Marine Industries Ltd., etc. Mr. T. Hall, the President, has excellent social connections in Ottawa, where the main decisions will be made in connection with the forthcoming Naval Programme.
Mr. Watts was against taking Dominion, particularly in view of the fact that quite a number of the shipyards in British Columbia were building ships designed by architects in Montreal. It was explained to Mr. Watts that we were committed with Overseas Commodities to the end of the year but agreed that if he would handle the marine side for us in Eastern Canada to the end of the year, we would let him have the whole of the Dominion as from the 1st January, 1948, providing he showed satisfactory results. He expressed his willingness to commence on this basis and asked for samples of each model to be forwarded immediately so that he could get them to interested people in time to source orders for some of the ships at present under construction for the Argentine, Chinese and French governments.
After careful investigation and consideration, it was decided to link up with A.E. Watts Ltd., it being felt that his practical experience in Marine work and electrical engineering would be a great advantage, whilst he was prepared to carry stocks of our standard heaters and make any necessary minor modifications to suit individual requirements. Furthermore, if the volume of trade ultimately increased as both parties hoped, Mr. Watts was quite prepared to consider manufacturing at his own plant.
Unfortunately, after this decision had been reached it was not possible to get both Mr. Watts and Mr. Hall together with a view to them coming to some arrangement, as Mr. Watts left for Vancouver and Mr. Hall was due to leave for England. This possibility has been discussed with Mr. Hall who expressed his willingness, and he is awaiting an approach from Mr. Watts on his return to Canada.
(It is understood that already an enquiry has been received from Quebec shipyard in respect of four ships, it being anticipated that the requirements of each ship would be between 30/40 Thermovents).
The above applies to Canada but the position on marine sales is rather confused, the extent of which was only fully realised whilst in New York. In a number of instances, ships being built in Canada are designed and the specifications issued by United States naval architects. There are also one or two isolated instances where Canadian architects are responsible for ships being built in the United States, so that it would be rather difficult to draw a very clear dividing line, and it is recommended that consideration be given to the possibility of extending to A.E. Watts Ltd. Complete representation for the whole of America with the request that he makes whatever arrangements he can with some American contact.
It is known that Mr. Watts has good connections with shipbuilders on the West coast of America and Messrs. T.M. Hall Ltd., are known to have good contacts in New York, so that if these two companies could come to some joint arrangements, we would be extremely well covered in Canada and reasonably well covered in the U.S.
I did make contact with a firm, J.R. Groundwater, Inc. of New York, who expressed willingness to undertake our representation on a commission basis, but I was not fully satisfied with this Company and have asked the British Consulate to forward a report. I have also instituted some private enquiries in New York and am awaiting details.
Incidentally, whilst in New York I had the opportunity of meeting a Mr. MacKinley (a native of Clydeside), who was largely responsible for the design of the s.s. "America". He was quite impressed with Thermovent and although he is now semi-retired, is still regarded as one of the authorities in America on ship-building. His opinion was that we should be able to secure a small but growing volume of marine business.
