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On-Q/Legrand Acquires UStec
UStec will close N.Y. offices, but sales team remains intact.
In a move that further consolidates the structured wiring market, On-Q/Legrand has acquired UStec. Financial details of the purchase are not immediately available. According to Legrand's corporate Web site, UStec had $12 million in sales last year.
According to Steve Schoffstall, director of marketing at On-Q, the acquisition will help On-Q make inroads into the higher-end semi-custom and luxury builder markets.
It also gives On-Q access to a loyal base of 750 custom-oriented dealers that buy direct from UStec. Schoffstall says that the UStec brand name will be maintained and the product line will continue to be sold directly to dealers.
UStec is the second structured wiring brand that has merged into the On-Q business. In 2001, On-Q parent Legrand acquired Greyfox, four years before it acquired On-Q. Eventually, On-Q absorbed the Greyfox products, branding and personnel.
The UStec acquisition is different. There is more product differentiation between the On-Q and UStec lines than there was between On-Q and Greyfox. For example, UStec offers some very high-capacity structured wiring enclosures that On-Q does not already offer.
Furthermore, the form factor of the UStec system differs significantly from On-Q's grid-based system that has become the industry standard. UStec is largely seen as a provider of higher-end structured-wiring panels while On-Q is viewed as mainstream.
As a custom-oriented provider, UStec complements Vantage Controls, the lighting-controls manufacturer that Legrand acquired last year. (Officially On-Q, not Legrand, acquired UStec).
At some point, On-Q CEO Doug Fikse envisions an organization with some kind of division between custom and production businesses, but "they're not going to be divided that way right now," he says.
"My goal is to start positioning ourselves as doing better in custom. On-Q is mainly seen as mainstream," adds Fikse. "One of the reasons we picked up UStec was to start building this channel."
Indeed, thousands of dealers do business with On-Q, which sells through multiple distributors and other channels. "There might be On-Q customers that are lost in the noise," Fikse says. "They might find a potential home with UStec."
As for products, Fikse says On-Q has no plans to change the lineup immediately, even though there are overlaps especially at the lower end. On-Q, however, will likely take advantage of its economies of scale, and start manufacturing UStec product overseas. UStec was one of the last vendors to build products locally.
Currently, there is no plan to revive tecStream, the HD networking system that UStec launched in 2005 and discontinued last year, according to Schoffstall.
UStec's field sales force will be maintained under the leadership of Alex Weaver, but its facility in Victor, N.Y. will close by the end of February.
"Through this acquisition we believe we can obtain significant double-digit growth," Fikse said in a news release.
According to the 2006 CE Pro Brand Awareness Study, more than 9 percent of integrators cite UStec as their most frequently used structured wiring system, compared to nearly 28 percent who report using On-Q/Legrand products.
In a letter to customers, UStec's Bill Thompson says that after 15 years, "While I will ultimately pursue other business opportunities in the near future, I'm committed to working closely with Doug Fikse, president of On-Q, to ensure a successful transition for all UStec customers."
Here is the complete version (pdf) of the letter to UStec's customers:
According to Steve Schoffstall, director of marketing at On-Q, the acquisition will help On-Q make inroads into the higher-end semi-custom and luxury builder markets.
It also gives On-Q access to a loyal base of 750 custom-oriented dealers that buy direct from UStec. Schoffstall says that the UStec brand name will be maintained and the product line will continue to be sold directly to dealers.
UStec is the second structured wiring brand that has merged into the On-Q business. In 2001, On-Q parent Legrand acquired Greyfox, four years before it acquired On-Q. Eventually, On-Q absorbed the Greyfox products, branding and personnel.
The UStec acquisition is different. There is more product differentiation between the On-Q and UStec lines than there was between On-Q and Greyfox. For example, UStec offers some very high-capacity structured wiring enclosures that On-Q does not already offer.
Furthermore, the form factor of the UStec system differs significantly from On-Q's grid-based system that has become the industry standard. UStec is largely seen as a provider of higher-end structured-wiring panels while On-Q is viewed as mainstream.
As a custom-oriented provider, UStec complements Vantage Controls, the lighting-controls manufacturer that Legrand acquired last year. (Officially On-Q, not Legrand, acquired UStec).
At some point, On-Q CEO Doug Fikse envisions an organization with some kind of division between custom and production businesses, but "they're not going to be divided that way right now," he says.
"My goal is to start positioning ourselves as doing better in custom. On-Q is mainly seen as mainstream," adds Fikse. "One of the reasons we picked up UStec was to start building this channel."
Indeed, thousands of dealers do business with On-Q, which sells through multiple distributors and other channels. "There might be On-Q customers that are lost in the noise," Fikse says. "They might find a potential home with UStec."
As for products, Fikse says On-Q has no plans to change the lineup immediately, even though there are overlaps especially at the lower end. On-Q, however, will likely take advantage of its economies of scale, and start manufacturing UStec product overseas. UStec was one of the last vendors to build products locally.
Currently, there is no plan to revive tecStream, the HD networking system that UStec launched in 2005 and discontinued last year, according to Schoffstall.
UStec's field sales force will be maintained under the leadership of Alex Weaver, but its facility in Victor, N.Y. will close by the end of February.
"Through this acquisition we believe we can obtain significant double-digit growth," Fikse said in a news release.
According to the 2006 CE Pro Brand Awareness Study, more than 9 percent of integrators cite UStec as their most frequently used structured wiring system, compared to nearly 28 percent who report using On-Q/Legrand products.
Bill Thompson Bids Adieu
In a letter to customers, UStec's Bill Thompson says that after 15 years, "While I will ultimately pursue other business opportunities in the near future, I'm committed to working closely with Doug Fikse, president of On-Q, to ensure a successful transition for all UStec customers."
Here is the complete version (pdf) of the letter to UStec's customers:
To Our Valued Customers,
Fifteen years ago, UStec was founded by Dick McGavern, David Marshall and me. We had a clear idea of the products we wanted to develop and the kind of company we hoped to build. We also had a clear vision about growth, and, with your help, we've achieved many of our goals. At this 15-year mark, it is in everyone's interest to take the next important step in the company's development.
Today, UStec becomes part of On-Q/Legrand. Being acquired by On-Q/Legrand will provide additional resources to develop and market our next generation of award-winning UStec branded products. This is truly an important milestone for the company and for you because of the new sales and growth opportunities it presents. You will continue to see UStec branded product sold by On-Q/Legrand.
While I will ultimately pursue other business opportunities in the near future, I'm committed to working closely with Doug Fikse, President of On-Q/Legrand, to ensure a successful transition for all UStec customers. The high level of personal service you have received will remain unchanged, and you will be working with many of the same people. On-Q/Legrand is committed to the success of our dealer direct channel customers.
The bottom line of the acquisition is that you are now a member of a bigger team, which has greater resources and a strong emphasis on expanding its market share. The On-Q/Legrand team looks forward to the great things that will be accomplished together. Please feel free to contact me if you have any questions.
Warmest wishes,
William Thompson
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About the Author
Julie Jacobson, Editor-at-large, CE Pro
Julie Jacobson is co-founder of EH Publishing and currently spends most of her time writing for CE Pro, mostly in the areas of home automation, networked A/V and the business of home systems integration. She majored in Economics at the University of Michigan, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. Julie is a washed-up Ultimate Frisbee player with the scars to prove it. Follow her on Twitter @juliejacobson.
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