Lancaster County-based Burnham Holdings Inc. in April transitioned a new CEO into the role held by the previous leader for about four decades.
Doug Brossman took over the position of president Jan. 1 and also became CEO April 23. Former head of the company Albert Morrison III remains chairman of the board.
The holding company operates 14 subsidiaries, which manufacture boilers and other heating, ventilation and air conditioning-related products.
Brossman began his career working as a civil engineer in the Lancaster area after getting a bachelor’s degree from Penn State University.
He went to law school and practiced law in Maryland for almost a decade, focusing on environmental and land-use cases. He also worked heavily in mergers and acquisitions, he said.
He furthered his education at The University of Pennsylvania Wharton School, getting a master’s in business administration and working at Armstrong World Industries Inc. as both legal counsel and in the treasury and floor division in non-legal roles, he said.
In 2008, he took a job at Burnham as general counsel.
“The beauty of working here and being in a company of our size: We have an incredibly strong management team, we don’t bucket ourselves,” he said. The team atmosphere allowed Brossman to demonstrate his leadership skills, which led to his promotion.
Burnham has products in thousands of commercial and residential locations, including a heating system on the 82nd floor of the world’s tallest building in Dubai, to heat a pool, he said.
Its shares trade on the Pink Sheets under the symbol BURCA.
Q: Tell me about Burnham Holdings Inc.
A: We are primarily in the hydronics heating business. We also have other related products in the (heating, ventilation and air conditioning) space, primarily on the heating side. We have what we think is the broadest product offering in the hydronic heating industry for both residential and commercial. We are the holding company and we operate through subsidiaries: three operating commercial subsidiaries in three distinct brands and five subsidiaries in the residential market. 2011 consolidated sales were just shy of $200 million. (We’ve had) operating income growth on a (first in, first out) basis of 25 percent over 2010 and 50 percent over 2009; we’ve shown consistent growth since the contraction of our industry in 2008, related to the economic downturn. We acted quickly, maintained our profit margins and have the lowest debt we’ve had in 14 years.
The company has been around for more than 100 years. How does the company remain viable and successful?
At the end of the day it’s the ability of our employees to provide the best products at the best price and the best value — all the way from production employees down to management. We have a tremendous expertise in providing products. Our oldest subsidiary, Burnham LLC, dates back to the 1850s. It was originally a greenhouse company, which made several greenhouses at Longwood Gardens. They started making boilers for inside the greenhouses in the 1870s. From the very beginning, a very nimble management team, ready to grow opportunities and shed business plans that aren’t growing. The way we’re structured with each individual business, each brand having its own individual distinct product, lends an individual function.
Burnham Holdings is a publicly traded company, but it’s registered with an over-the-counter system instead of the New York Stock Exchange or the Nasdaq. Can you tell me why the company is set up like that?
We are not a Securities and Exchange Commission-registered company — that imposes a structure on those companies. We’ve chosen to maintain our Pink Sheet trading status as a nonregistered company. There are a number of brokers out there that create a market in our stock, which gives us liquidity in our stock orders.
How does the company fit into the Lancaster County business community, which has many rural and family-owned businesses?
It comes back to treating our employees right. We have about 850 employees through our subsidiaries. About half are located here, with most of the balance located in Philadelphia. Over 35 percent of employees have been with us for over 20 years. Twenty-five percent have been with us over 25 years, and 10 percent over 35 years. It gives us a tremendous amount of experience — both from a customer-relationship and from a manufacturing standpoint, these guys have been building our products for years. Our engineers helped build the industry — we drive the industry as opposed to follow.
You took over from a president and CEO that had been a part of the company for about 40 years. What are the pros and cons of taking over from such a longtime leader?
The advantages to that are that Al is a tremendous leader, he’s remaining on as chairman of our board. He told the shareholders (recently) that he thinks he’s got the strongest management team that he’s ever had. We have a focus on the voice of the customer, building the right product for our customer and moving forward.
Tell me about some challenges and trends in your industry.
Our industry bounces between 300,000 and 400,000 residential units per year sold. You could track it to new home sales, existing home sales or unemployment; our market generally tracks with the economy’s activity. There’s a tremendous installed base of boilers out there, all of which are getting old, all of which will eventually need (to be) replaced. The economic downturn was a challenge, but as home sales improve, commercial and construction renovation improve, school district spending improves, that will affect us positively.
Residential is a big part of our business. We sell to a distributor, who sells it to a contractor, who sells it to a homeowner. Our sales are two steps removed. It’s difficult to generate brand loyalty with the homeowner. We have to focus on a product that meets the distributors’ needs, the contractors’ needs and the homeowners’ needs. Our ability to win in the marketplace is to be able to get the voice of all of those customers incorporated into a product and then give them the adequate training so that they understand how to use our product.
What are some changes Burnham Holdings has gone through in the last few years?
Smarter customers have really driven a demand for more sophisticated products. Almost 20 percent of our sales are in new products that didn’t exist 20 years ago. That’s a strong statement to our practice of not sitting still.
We consolidated a lot of our residential manufacturing facilities into a facility here in Lancaster, which gives us the ability to provide unmatched service times to our distributor customers by shorter lead times.
The high energy prices and the availability of natural gas haven’t changed Burnham, but they have had an impact on our industry. There are a lot of alternative energy products out there making a lot of claims on efficiency and performance. Where natural gas is available, we make the best equipment on the market.