The Milwaukee Post

hires the "best teams of peo- ple who live up to the val- ues." Founded by Charles Jeremiah Smith in 1874, the company from the beginning was based on strong values and focused on innovation. Three sons eventually took over the company and its name was changed to A.O. Smith. Although now a pub- licly traded company, two members of the original fam- ily remain on the board of directors and their influence is still felt, Rajendra said. "We say it's in our DNA — we must invest in innova- tion," he said. One of the most conse- quential innovations A.O. Smith created was a way to fuse glass to steel, which eventually led to the creation of glass-lined water heaters that prevented corroding. During the 20th century, A.O. Smith had strong automotive and electrical products, which it eventually sold off in order to focus on the water industry. China connection Rajendra said the A.O. Smith brand has become prominent in China due to the way water heaters are used in the country. They are generally smaller, stored in living spaces such as the kitchen or living room and are considered a household appliance. In contrast, resi- dents of the United States generally don't know what brand of water heater they own. In 2008, A. O. Smith began to market residential and commercial water heaters in India, one of the first U. S. companies to participate in this market, according to its website. That same year, the company began to sell water purification systems in China under the name A. O. Smith (Shanghai) Water Treatment Products Co. Ltd. Rajendra said the compa- ny had built such a highly regarded brand in China that it capitalized on it with the water purification sys- tems. In fact, A.O. Smith is considered a high-end brand that provides consumers with premium services. The Chinese consumer will do significant research before purchasing a water heater or purification system so the company has opened several A.O. Smith retail locations, in addition to selling its products at other stores. To get into the water purification industry in China, A.O. Smith purchased a Chinese company that cre- ated a low-end product. After two years of innovation, A.O. Smith was ready to move for- ward with its higher-quality system, Rajendra said. It was also good timing, he said, because that segment is pro- jected to grow 30 to 40 per- cent per year for the next five years. In 2015, five years after launching the system, it is expected to generate more than $100 million. When creating the water purification system, A.O. Smith wanted to make sure it was creating a product equal to its reputation, so it asked certain questions: "Why are we the leader? And why are we high priced, high quality, high reliability, first to market with innova- tion and most importantly a high level of trust." Recently, A.O. Smith started to market its water purification systems in India, but Rajendra said it will be more difficult to grow in that market as there is more well-established com- petition. Rajendra predicts more growth to occur in China even with the economy there taking a downturn recently. He said one Chinese factory A.O. Smith built in 2013 has already been expanded. A.O. Smith has an innova- tion and research facility in China. While some American manufacturers have kept their technology stateside in order to protect it, Rajendra said they have brought it overseas. So far, he said, the company has been successful in defending its patents in China. Glass used in its water heaters is made in Kentucky before being shipped to China to control its quality, Rajendra said. Finished products are then sold in Asia and not exported to the U.S. Looking ahead Going forward, A.O. Smith will continue to focus on emerging markets and maintain a small footprint in Europe, Rajendra said. Some products that are made in China are shipped to Vietnam and the company recently made a small acqui- sition in Turkey. Africa also holds possibilities for A.O. Smith. Even though a lot of A.O. Smith's growth is in China, its roots are in Milwaukee. Rajendra said the Milwaukee area and Wisconsin region are business friendly and there is a good pool of talent locally. The question Rajendra has is what can be done to enhance that pool of talent. He pointed to the Global Water Center as a great place to facilitate inno- vation in Milwaukee. www.aosmith.com Email: kmichalets@conleynet.com September 18, 2015 • Milwaukee County Post • 3 Submitted photo A.O. Smith senior lab technician David Morris works in the company's Milwaukee technology center. A.O Smith: Innovation lies in company's DNA, going back to 1874 continued from Page 1 246123052 1303 N. 4th Street (2 Blocks North of Bradley Center) New Store Hours Mon-Fri 9-7, Sat 9-6, Sun 10-5 This Location Only! 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