issue: November 2003 APPLIANCE Magazine
Carrier Corporation - A Special Report
The Indoor Weather Experts
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by Diane Ritchey, Editor
Carrier Corporation and its residential operations continue to be the world leader in the manufacture and sale of heating, ventilating, air-conditioning (HVAC) systems, and products.
When Dr. Willis Carrier launched the air-conditioning industry in 1902, little
did he know the tremendous impact it would have on daily lives. The power to
control an indoor environment makes all the difference in the way people feel
on the job, in the classroom, at home, and on the go.
is the Carrier WeatherMaker(R) Infinity furnace produced at Carrier
North American Residential's Indianapolis manufacturing facility.
Headquartered in Farmington,
CT, U.S., with 40,000 employees in more than 171 countries with products
designed in 20 key engineering centers and manufactured in 81 plants spread
across 6 continents,
Carrier Corporation combines its global HVAC and refrigeration expertise
with the responsiveness of its local operations to lead nearly every geographic
Its HVAC product lines include: air handling units, compressors, condensers, unitary packaged and split-system air-conditioners, transport and commercial refrigeration equipment, room air-conditioners, packaged terminal air-conditioners, central station air-conditioners, hermetic absorption and centrifugal water chillers, open drive centrifugal chillers, hermetic screw chillers, reciprocating air and water cooled chillers, dehumidifiers, single-packaged and split-system heat pump pumps, electronic control systems, and air cleaners.
On the transport and refrigeration side, products include truck/trailer "reefers"; container, Gensets, and bus/rail air-conditioning systems, as well as dairy and frozen food display cases; frozen yogurt, ice cream, and milkshake machines; commercial deep fryers; and coffee makers.
According to APPLIANCE magazine's Portrait of the U.S. Appliance Industry for 2002, (September 2003), Carrier had a 30-percent market share in unitary air-conditioners and heat pumps and a 32-percent share in gas, warm-air furnaces, leading both categories.
Cook, president of Carrier's North America Residential Business unit.
Opened in 1969, Carrier's Indianapolis, IN, U.S. facility is the largest gas manufacturing plant in the world. The site is also home to Carrier's North America Residential business unit and an extensive Engineering Center. To date, the Residential business unit represents the largest part of Carrier Corporation. In 2002, Carrier Corporation revenues were U.S. $8.8 billion, of which 43 percent was from North America HVAC, 11 percent from Europe/the Middle East/Africa, 12 percent from Asia, and 5 percent from Latin America. North America Residential has seen its most recent growth in the last 2 years through the acquisitions of International Comfort Products (ICP) and its exclusive retail partnership with Sears, Roebuck & Co.
Carrier Corporation brands include: Carrier, Bryant, Payne, and ICP brand names Airquest, Arcoaire, Comfortmaker, Heil, KeepRite, and TempStar.
Just because the business unit has been successful does not mean that it will rest on its laurels. In fact, North America Residential has significant plans to further add to its product lines. First, it sees the future in Internet connectivity of HVAC/R products and has been working with local utilities for several years to measure the current loads of its air-conditioners, in particular.
According to Halsey Cook, president of North America Residential, "This is an opportunity for us to grow the markets the industry serves. Today it is viewed as complex and sophisticated. We need to make it simple and affordable."
Adds Frank Hartman, vice president of Marketing and Sales, North America Residential, "There are two avenues to take with connectivity. First is where utilities have the opportunity to monitor usage. If a utility had an agreement with the homeowner, they could raise the temperature of the air-conditioning system in a home while the owner is away to prevent high-energy bills. The second is in higher-end homes, such as second homes or vacation homes, where, again, a home's temperature could be monitored by us, perhaps. I see the whole area leaning towards a full-service type of installation."
Through its ComfortChoice program, Carrier has several web-enabled programs running in Long Island, NY, San Diego, CA, and Seattle, WA, along with New York, NY, Philadelphia, PA, and Pittsburgh, PA, U.S., so it's not really new to the appliance connectivity arena at all. "We've actually had pilot programs running as long as 15 years," Mr. Cook adds. "The barrier for entry has been end-user cost, but we find that's less of an issue today than the barriers of expansion and complexity. Web-enabled connectivity will be a required feature. Soon the consumer will be able to call his air-conditioner to make sure it's operating properly, or better yet, the air-conditioner will call the servicing dealer and/or homeowner to report a potential or real service problem. Assuming that these systems are cost effective, simple to use, and easy to operate, consumers will accept them."
While Carrier Residential has a worldwide network of hundreds of distributors and thousands of dealers who sell, install, and service its products, it has not ignored the potential of the traditional retail channel. Last year, for example, Carrier established an important relationship with appliance retailer Sears, Roebuck & Co. to sell its air-conditioners and furnaces. For both Carrier and ICP, the Sears relationship is structured so that it offers opportunities for dealers and distributors to participate and earn a profit. Sears, in turn, has 560 associates throughout the U.S. dedicated to Carrier HVAC sales.
"We're very excited about our relationship with Sears," says Mr. Cook. "We believe it will add numerous benefits across our business and the channel."
Mr. Cook also points out that the agreement with Sears is designed to increase the total number of Carrier systems sold, not to replace dealer sales with sales from Sears.
"The Carrier brand has always been sold exclusively through our independent dealer base, representing some of the finest dealers in the business," he adds. "By virtue of their positioning in the market and the traditional customer base they serve, we believe the Carrier brand - and Carrier dealers - stand to benefit from a huge increase in exposure."
WeatherMaker(R) 8000 furnace is shown. After 4 years of development
by dealers, engineers, and marketers through Carrier's Partners
in Development Program, the furnace's new design was completed.
Nearly 100 units were installed around the U.S. to undergo
field testing, along with 32 units that underwent reliability
testing in the Indianapolis Engineering Center. All told, it
was one of the largest field trials Carrier has ever conducted
in both number of units and scope of geography.
That bump in awareness comes as a result of the approximately 1.3 billion
impressions a year, achieved through Sears' newspaper inserts, credit card
inserts, direct mail, in-store displays, Internet exposure, and television
and Yellow Pages advertising.
Sears quickly embraced the Carrier relationship and we've been pleased with what they have done," says Mr. Hartman. As a result of the Sears/Carrier relationship, three other HVAC manufacturers were displaced.
Carrier has long recognized the value of its sales chain in developing new products and refining existing ones. For example, last summer Carrier launched its next-generation Carrier WeatherMaker(R) 8000 and Bryant Plus gas furnaces, which incorporate many new design elements, patented technologies, and a compact design that the company says will enhance its 80-percent Annual Fuel Utilization Efficiency (AFUE) offering in the residential market, setting a new standard for low sound levels and simplified installation and service.
Through its Partners in Development program, Carrier dealers and distributors worked as a team with the factory to design the furnace. The result: a newly designed vent elbow with three easy-to-access screws is the only adjustment necessary to convert any of the unit's 13 multi-poise positions. This, says the company, also enables distributors and dealers to inventory fewer models/SKUs, while enabling more applications. The new platform was designed to simplify access to key components within the system, including the control panel, vent elbow, and burner, via a patented deeper front door that allows for easy side access.
What will the future hold for Carrier North America Residential? The company won't say exactly at this point, but it is working on a ground-breaking product launch expected in early 2004. Carrier expects the launch will make it easy for dealers to sell high-end products.
While some companies may lean toward expanding a brand portfolio, especially after an acquisition or just to gain market share, Mr. Cook says that the North America Residential business unit doesn't have plans to do so, but rather, will continue to focus on its current brands in order to successfully support them. "An attractive acquisition not withstanding, we believe that we have the right number and mix of brands already," Mr. Cook says. "For us, differentiation of our existing brand portfolio is key to gaining market share because we're better able to support the pricing structure and the distribution channels."
Hartman, vice president of Marketing and Sales, North America Residential.
Manufacturing in Indianapolis
In addition to housing the Carrier North America Residential headquarters, manufacturing at the Indianapolis facility includes 600,000 sq ft of manufacturing space to produce gas furnaces and fan coils for use in residential applications. There's also a 248,000-sq-ft warehouse where Carrier products are kept for no more than 2 weeks; ICP products are shipped to a centralized distribution center in Tennessee.
Approximately 1,400 workers at the factory work 2, 10-hr shifts, 4 days a week on 7 assembly lines. The factory's layout is based on just-in-time production. Assembly lines produce finished goods without backup shops and, therefore, don't require parts to be pre-built, stored, retrieved, and sent to assembly.
Earlier this year, Carrier transitioned manufacturing of ICP's residential and light commercial heating and air-conditioning systems from its Lewisburg, TN, U.S. plant to its Indianapolis, Tyler, TX, and Collierville, TN, U.S. facilities (see "Leadership in Tennessee.")
Currently, the integration with the ICP acquisition is complete. "The acquisition and integration is a case study of how a company can consolidate and not lose product lines," Mr. Cook says. "All of the ICP lines are now in our factories and it's a 'factory within a factory' concept. Factory associates who understand furnaces are making furnaces, and they're making them with a passion for that concept."
While Carrier furnaces are being manufactured in the same plant as ICP furnaces, there are completely different designs, yet there is also a lot of synergy in plant management, the supplier base, and marketing management.
Approximately 400 workers were hired in Indianapolis to accommodate the new ICP production lines. To prepare those workers, an extensive orientation was held to reinforce safety and quality, among other topics. Phil Grady, plant manager for Indianapolis says, "We introduced them to the [factory] floor and gave them an opportunity to really see what it is like. Aside from the orientation, each employee receives specific training and instruction at each workstation. We also explain to them why their specific task is important to our customers.
"Everyone here is empowered to stop a [production] line, if necessary, to produce a quality unit," he adds. "All employees are encouraged to provide input regarding safety, quality, or process improvements. We recognize that people on the floor are our best sales persons, and quality starts with them."
Facing world-class competition in the U.S. market for gas furnaces and fan coils, best practices/processes are imperative to the Indianapolis facility. As with all Carrier and parent company United Technologies Corporation plants, the Indianapolis facility employs ACE, or Achieving Competitive Excellence, to control and improve safety, quality, and production.
The ten ACE tools employed at Indianapolis, as they are with all Carrier manufacturing facilities, focus on employee responsibility and preventive and corrective measures to maintain the high-quality standards that Carrier expects. They include:
The new 6s - the visual work place, or sort, straighten, shine, standardize,
sustain, and safety;
- Total Productive Maintenance - cleaning/inspecting and predictive
- QCPC or Quality Control Process Clinic - continuously analyze processes;
- Root Cause Analysis - persistent pursuit of fundamental breakdowns;
- Mistake Proofing - providing methods and devices to allow personnel to
do their job 100-percent defect-free, 100-percent of the time;
- Process Certification - ensures a process is in control (predictable and
- Set-Up Reduction - reduces the total time it takes to changeover a machine
or process from the last good part;
- Standard Work - work is simplified and structured;
- Market Feedback Analysis - finding out what is causing customers the most
- Passport - integrates structured checkpoints for program review.
The Indianapolis facility is currently an ACE Silver-level facility, with future goals of reaching the elite, world-class Gold status. As a Silver-level facility, the Indianapolis factory has mastered the ACE tools. The factory is utilizing the 10 ACE tools to drive business improvements that focus on customer and employee satisfaction.
Furthermore, the facility is extending its continual improvement methodology to its suppliers. From conferences focusing on cost improvement, manufacturing systems information, and new product introductions to extensive reviews of Carrier's quality manual, suppliers to the facility are relied upon to serve roles as prominent as any internal entity. They are accountable for the upside and the downside.
Qualification of all suppliers of materials and components is strict. There are currently 85 suppliers, reduced from 120 a few years ago. Along with qualification, all suppliers are assessed with ongoing audits, are trained, and are required to have duplicate test equipment in the facility so that materials and components are given two checks before use - one by the supplier and the other by Carrier.
All suppliers access the facility's requirements through the Supplier Link web site, where the daily MRP is posted, along with quality data. A supplier uses the web site each day to see the current production for all assembly lines at the facility (up to 1 month out), and can download requirements. Suppliers then upload shipments collaboratively to ensure part demand is available at Carrier's facility for consumption on its just-in-time assembly lines.
"It's a way for them to check the current status of where our production is and whether there are any problems with their components or materials," says Mr. Grady. "They can view their shipment history and issue corrections via the web site."
At Indianapolis, a furnace is manufactured every 6 sec. The manufacturing process begins with the main production area, where cabinet backs and sides are made from pre-painted steel coils. The coil is then fed into a press, then is blanked and sides are formed on a rollformer. The steel then moves to end formers to produce the leading and trailing ends. The blank is bent into its final cabinet shape, with back and sides. Completed cabinets go into a queuing area.
Use of pre-painted steel was chosen to fit into the continuous flow scenario the factory employs, since a post-painted part would have to go off line for painting, creating in-process parts and inventories. "Ten years ago or so before that casing got to the assembly line it was touched by 42 people with the powder coating, stacking, process, fabrication, etc. Today, only 20 people touch a part before it gets to assembly," Mr. Grady adds.
The assembly line features asynchronous conveyors, which allow workers more control over the time spent on an assembly step. If a problem develops at one assembly station, it quickly becomes evident, as the incomplete assemblies will back up. The final assembly line receives its subassemblies from nearby subassembly spurs.
One such spur assembles the heat exchangers and inside front panels, which are delivered via conveyor from a washing system. These parts are manually placed together along with insulation, and put through a computer-controlled assembly system. The system screws the assembly together and completed assemblies proceed through a short queue into the main assembly area.
Another assembly area produces blowers. Blower cases are crimped together in an automated operation.
Gas igniters and burners are each given a computer-controlled operation test before going to the assembly line. Operators enter data into a touch-screen panel, while the panel sets test parameters and determines whether a unit is acceptable. Other subassemblies also use computer-controlled testing before reaching the final assembly line. Quality information is available on a real-time basis through a system and custom-designed software.
As with Carrier's Collierville, TN, U.S. facility, 100-percent testing is performed on all units at 10 test stations. A 2-1/2-min test with full functional electric tests is performed on each unit, along with a high-pressure leak test and helium test for fan coils.
Mr. Grady says that most of the factory is automated, except for assembly, although even some of those tasks are beginning to be automated. "We have the volume, which helps to justify the investment in automation," he says.
To further monitor and control quality, a system places a "license plate" on the inside of the casing that has the product's information in it, such as model number, serial number, date, and production time. It also tells an operator or group leader what product number the line is working on and the goal for that line for that particular shift. This information is used to ensure accurate product assembly.
Carrier's Engineering Center
Carrier North America Residential's Engineering Center, located just a few feet from the manufacturing facility, is the product development center for all of the Carrier, Bryant, Payne, and ICP products. In addition to developing gas furnaces, oil furnaces, and boilers, engineers also work on split-systems, air-conditioners, and heat pumps, even though those products are manufactured in Collierville.
The building is presently undergoing a major expansion to add about 40-percent more space, according to Fred Keller, vice president of Engineering. "Within this center a large portion of our time is spent on engineering," he says. "But we also house a number of support groups, as well, such as field support groups that take calls from customers. Directly across the hall from them is a group of engineers who solve the more technical questions from service engineers."
Carrier leads the industry in the number of HVAC patents presently in its portfolio. Its engineers are encouraged to document and patent new ideas through a generous patent award program.
In the Design Services area of the Engineering Center, long gone are the days of drafting tables and physical drawings. "It's all electronic now," Mr. Keller says. "Most of our work, of course, is done in 3D solid model programs, which is linked to our model shop and manufacturing. We provide electronic data to our tooling suppliers in order to reduce tooling lead times."
A "quiet room" is used to test vibration levels on new products using, for example, slow motion and accelerometer analysis. "Every new model that is produced in our plant must be evaluated in this facility for a final validation of all the vibration characteristics before we produce it," Mr. Keller says. In addition, an incline tester, drop tester, and cyclic transit tester can simulate the stress that a unit will endure as it is transported to all parts of the U.S. and Canada in trailer trucks.
"What is driving us over the next 2 to 3 years are changes in federal minimum efficiency standards," Mr. Keller tells APPLIANCE. "Currently on the air-conditioning and heat pump products, our focus is re-designing products to meet the new minimum standards. However, this also provides an opportunity to insert a significant amount of new technology into our products in order to improve performance, cost, and durability.
"In addition," he adds, "we're working hard to improve sound levels. For consumers, the sound level of a product creates a significant perception about the quality of a new product, so we're working to significantly reduce noise coming from the unit.
"By 2010, we will have successfully converted all of our products over to HFC (Hydrofluorocarbon) non-ozone depleting refrigerants," he continues. "We actually began implementing non-ozone depleting refrigerants back in 1996 with the introduction of our Puron(TM) product, well ahead of the mandated phaseout of HCFCs (Hydrochloroflurocarbons). In 2010, we will complete that transition when all of our residential products will use Puron."
What drives those who work on the design of its new products, says Mr. Keller, is Carrier's unequivocal goal to continue to be the best. "Since 1994, we have performed extensive field testing of our Puron products using instrumented units that we installed around the country," he says. "Those units gave us data several times each day, and what we learned is that the units tend to operate well outside what we would consider the normal boundaries of what a unit is expected to do. When we studied the data, we learned that we needed to design even more stringent tests to qualify our products before they get to the consumer."
As with all Carrier manufacturing facilities, the Indianapolis plant is very involved in the local community. In fact, Carrier Indianapolis has been called "one of the best kept secrets" and a top 20 employer within the Indianapolis area.
Among the programs Carrier North America Residential supports is the local United Way and donation of equipment to local vocational schools for training.
The company is a big supporter of the Indianapolis chapter of Habitat for Humanity, contributing not only HVAC systems to new homes, but also the labor to build the homes as well.
Its partnership with Indiana and Purdue Universities includes the Willis Carrier Scholarship for young minority students interested in engineering as a future career. Internships are also offered and former interns are often hired. A minority engineering achievement program within the program, or MEP, works to get young minority students in middle and high schools interested in engineering. Anyone interested can tour the Indianapolis facilities, meet with engineers, ask questions, and find out how an engineer might spend a typical day at work.
The UTC Employee Scholarship Program is especially noteworthy, because it provides, at no charge, employees tuition and books for a college degree as long as they maintain a "C" average. Participants also are permitted 3 hr per week (during regular work hours) to study. In the U.S., 3,200 Carrier employees have participated in the program since 1996, and 551 have received degrees to date. Once an employee graduates, he or she receives a stock reward from Carrier - $5,000 for an associate degree and $10,000 for a bachelor's degree. "We offer our employees a wide range of resources," says Rejeana Pendleton, North America Residential Human Resources Manager. "We have a lot of hourly employees interested in pursuing higher education as a result of this program. It's an excellent attractor for us when we hire.
"Being a part of the community is important because our employees make up a community," she adds. "The more that we are involved in it, the more ownership our employees will have. And it helps us to make sure that we quality employees and that we continue to promote the Carrier brand and all the other products that we produce."
In addition, says Ms. Pendleton, after Carrier North America Residential found through consumer studies was that women gather 80 percent of the information needed for a HVAC purchase decision 50 percent of the time, it was decided to look at the organizational structure and to make a conscious effort, when hiring to always have a slate of candidates that include women and people of color. "What was interesting is that we ended up hiring women or people of color 75 percent of the time," she says. "The hires were incredible in the sense that they started building more of a diverse base. It was so important to us."
She adds, "We're also beginning to pay strict attention to evaluating our ability to participate in the Hispanic market as it continues to grow and evolve. That was an eye-opener for us here in Indianapolis. Two years ago, nearly 10 percent of the population in Indianapolis was Hispanic. But it's not just 'the right thing to do.' These types of efforts also make good business sense."
"The largest growth across the last century has been North America, Japan, and to a lesser extent Western Europe," says Mr. Cook. "The big growth markets of the next century are emerging markets of high population, commonly found between 35 degrees North and 35 degrees South latitudes, where incidentally it's hot most of the year. We believe we're going to see a good deal of growth in those areas where you also see the fastest population growth.
"We are in a fundamentally growing industry, and we are making investments," he adds. "We have deep roots as the industry leader, as Carrier invented the industry in 1902 and has been leading it ever since. We have a broad product offering that covers residential, commercial, refrigeration, and product transport, and we're the only major HVAC manufacturer with a comprehensive global reach in distribution. Environmental issues will drive the market and we have leading technologies in refrigerants and efficiency.
"What are we going to do in the future? Keep our customers comfortable and deliver the innovation expected of the industry experts. I think that it's more appropriate to ask, 'What aren't we going to do?'"