On-Q Restructures to Target MDU, Commercial and Homebuilding Markets

With all those acquisitions in the custom electronics industry, a lot of people are talking about synergy, but never really realizing it. Well, maybe they're consolidating some manufacturing and accounting functions, but not a whole lot more.

Legrand is launching a serious attempt to make its acquisitions pay off. Legrand North America -- which owns On-Q, Vantage, WattStopper, Ortronics, WireMold, and Pass & Seymour -- announced Wednesday that it is consolidating sales and marketing forces among various brands to target specific market segments.

"We're trying to leverage products and channels that we have, so we don't duplicate nine different companies' products and channels," says Doug Fikse, CEO of On-Q/Legrand, the No. 1 or No. 2 residential structured wiring and home-controls manufacturer that was acquired by Legrand in 2005.

On-Q is leading Legrand's consolidation charge. This could be bigger than OnQ changing its name to On-Q!

For starters, Legrand plans to up its involvement in the MDU (multi-dwelling units) and light-commercial markets, taking On-Q beyond its usual residential realm. On-Q co-founder and VP of sales Jim Devin is heading up those initiatives as VP of business development.

At the same time, the company is enhancing its production-homebuilder efforts by adding other Legrand brands to the product mix. On-Q is looking for an exec (ideally a builder) to lead that initiative.

So the On-Q sales team will be split across market segments, with one group pushing sales to commercial markets, another to homebuilder markets, and yet another to installing dealers, distributors and other low-voltage professionals. The latter group will be headed by On-Q's former Northeast sales director, Bob Fallert, who is now VP of low-voltage distribution.

The structure is not entirely new to Legrand, which has implemented a similar thing on the electrical side of its business. There, for example, many of the Legrand products being sold through electrical contracting houses are now being sold through a single group, now known as Electrical Wiring Systems. On that side, Pass & Seymour took On-Q, Wiremold, Ortronics and other Legrand brands under its wings to push those products through electrical channels.

"I've been asked to do something similar in the low-voltage channel," Fikse says.

Can On-Q Pull it Off?

On-Q has built an enviable homebuilder program, complete with an aggressive sales force, dealer partners, marketing materials, online tools and of course low-voltage products.

"Our builder sales team is currently on the market very aggressively engaging builders for home systems," says Devin. "The next logical step is to work to specify other devices in the builder programs."

Fikse suggests that products like WattStopper's occupancy sensors "are doing very well for energy management. ... Those things present an opportunity for the residential market."

Wire chases from Wiremold might also make sense. "They're starting to build products for the residential market, like wire management for mounting TVs," Fikse says.

And On-Q also plans to sell electrical gear from Pass & Seymour, from lighting products to GFCI outlets.

If you're wondering, no, the On-Q team won't be selling Vantage/Legrand lighting control systems. They're a little too pricey for the production community.

Devin says On-Q isn't taking the approach of the-more-products-you-use-of-mine- the-bigger-the-rebate. "We go to the builders and say this is what should be in the house as standard, and here are the opportunities to earn more through upgrades. ... When we talk about upgrades, for example, we can talk about energy savings."

Will they be able to pull it off? Companies with far greater offerings, like GE and Honeywell, have gone there before, with limited success.

Prospects for On-Q are far brighter, insists Devin. "A GE or a Honeywell can be very successful at getting in front of the builder because the builder is always interested in marrying product portfolios, and gaining efficiencies," he says. "That message rings true to builders, but the real challenge is the continuity of the program. We are successful today. We've done some of it for about a year in isolated areas. Structurally, we have it organized, and Legrand is behind it. We believe we have the format that works."

Makes sense to me. The giant corporations get side-tracked. The new manager of the the GE ppliance business maybe doesn't care to sell GE's structured wiring system when selling washers and dryers to builders. And does Honeywell really care if its security and HVAC groups work together?

Then there's Leviton (remember the almost-merger?) That company seems to have done a decent job of cross-selling its electrical products and low-voltage cabling. It helps that the company actually manufactures both, so it can match the aesthetic of the light switches to the multimedia outlets to the GFCI outlets.

Aesthetic Synergies

On-Q has started to do some of that with On-Q wallplates that match Pass & Seymour switches, but Fikse says the cooperation will go much farther than that. In Europe, he says, Legrand is highly regarded for its industrial design. "They really push design and style," he says. "They have styles that go across the product sets. It is very well thought out."

The long-term vision, Fikse says, is to match all Legrand products in terms of styles and options. Not only that. The company expects to be the trend setter in the U.S.

"If you look at the plumbing industry, all you could buy [in the past] was a chrome faucet," Fikse says. "Now you have all the different looks. That's what we believe will happen in our industry over the next five to 10 years. Legrand is a leader in that. Here we're still stuck in toggle switches and basic decorator switches."

He says Legrand has a huge design team in Europe, and that Legrand North America will set up its own design house in the U.S., reporting to the overseas office.

Look out for the CEDIA Expo in September. "We'll take the current On-Q design to the next level," he says.

What Does it Mean for Dealers?

It should be all good news for On-Q dealers, as far as I can tell. You already know the bang-up job On-Q does in the homebuilding market. Hopefully their story is compelling enough to get builders to use On-Q more often.

For On-Q dealers who are electrical contractors as well as low-voltage integrators, you should be particularly happy. Maybe On-Q will send some electrical business your way.

The really big question is this: Will On-Q change Wiremold's name to Wire-Mold?