Hot to trot | Bangor's Nyle Special Products has big expectations for its new cold climate heat pump

It is early on a recent Friday afternoon and Duane Hallowell, the fresh-faced general manager of Nyle Special Products LLC, sits in his cluttered Bangor office, feet kicked up on his desk, fielding phone calls from distributors interested in his company's newest product. The 13,000-square-foot building is otherwise a maze of empty rooms. Water stains discolor the drop ceilings, stacks of unmarked boxes litter the vacant lobby and in the back room, sitting absolutely still on rolling racks, are the skeletons of what Nyle Special Products touts as the most revolutionary product to hit home heating since geothermal technology turned ground water into warmth.

It's called the cold climate heat pump and, according to the small article tacked up on the empty lobby wall, its proven efficiency has earned it the Environmental Protection Agency's Energy Star seal. According to Hallowell, the CCHP can maintain its home-heating efficiency in temperatures as cold as negative 15 degrees Fahrenheit. In fact, Hallowell says, the unit has been tested to temperatures as low as negative 70. Since all other heat pumps begin to compromise efficiency at 30 degrees above zero, the CCHP could be something huge in the heat pump world. And since more customers nationwide are considering alternatives to environmentally menacing and expensive oil heating options, Nyle's patented CCHP could be something huge to the entire heating industry.

"We picture this unit operating in blizzard temperatures all the time," says Hallowell, who worked as a cryogenic engineer in the U.S. Navy and at the international Copeland Corporation before joining Nyle. "Prior to the cold climate heat pump, the geothermal [heat pump] was the only environmentally friendly option for the green thumbs, the tree huggers. For the state of Maine, this is a really difficult thing to market unless you're in the refrigeration industry. On the East Coast, heat pumps don't have a great name because people here tend to have a higher electric rate. [The pumps are powered electrically.] They don't know what we do here."

What Nyle Special Products does is manufacture the cold climate heat pump and Nyle's own version of a commercial hot water heater at its facilities in an industrial park on the outskirts of Bangor. In June, Nyle Corp., of which Nyle Special Products is a subsidiary, negotiated with officials from nearby Brewer for a piece of land in that town to build a new, larger facility, in large part to house the new heat pump manufacturing plant, which Nyle Corp. believes is going to become a significant part of the company in years to come. The company expects the new facility to be completed by late 2005.

These days, however, the heat pump is in the early stages of its commercial life. Following the official market launch in January, the company has sold just over 200 of the pumps, mainly to people Hallowell describes as "tree huggers" in western states such as Washington, Minnesota, North Dakota and Idaho. Hallowell says heat pumps are more common in these states than in the Northeast because the West tends to be more environmentally progressive and also enjoys relatively cheaper electricity rates.

Presently, Nyle Corp. has directed Nyle Special Products to slowly phase in its once 80-strong workforce following layoffs during product development last year. The phasing in will continue until the new product is comfortably established in the market, a process that Steve Konstantino of Freeport-based EnerKon Corporation says could take about three years. The product is so revolutionary, explains Konstantino, who has been hired to market and distribute the CCHP, that potential customers haven't even conceived of it. Which is why Hallowell, sitting in an empty warehouse steps away from the newest heating revolution, shares his excitement only with voices on the phone. Nyle Special Products, the company some say is poised to make a killing on the market with its heat pump, currently employs just five part-time workers.

Marketing the revolution
Konstantino has plenty of experience explaining the inner workings of the heat pump in layman's terms. "A good example is your refrigerator," he says. "Everybody has one. It works by drawing heat out of the space inside the refrigerator and releasing that heat outside. That's what makes it cold. You can't transfer cold, you can only transfer heat."

All heat pumps work according to this concept. The pump is installed outside a building with ducts connecting to the interior. Simply put, a heat pump squeezes heat out of the outside air and circulates it inside. The colder the air outside, the harder the pump has to work to extract the heat. This is why heat pumps, which run on electricity, go from an average coefficient of performance ˆ— a measure of efficiency ˆ— of 3.0 during spring and fall to a weak 1.8 during the winter, making heat pumps a great option for heating above 30 degrees but terrible bang for your buck below freezing.

The CCHP is unique because it has an extra booster compressor that kicks in when the temperature falls below freezing. This extra booster doubles the unit's capacity at a time when all other heat pumps start to struggle. Nyle's heat pump also is enhanced by an economizer, which reclaims any waste heat and recycles it back into the unit. These extra features make the CCHP competitive, with average efficiency rates of 2.0 at temperatures as low as 15 below zero.

Arthur Hunt is a senior engineer at J&P Engineers in New Jersey and a former consultant for the American Society of Heating, Refrigerating and Air-Conditioning Engineers. Hunt has been an engineer for 30 years and has never heard of a heat pump that can maintain efficiency above 2.0 at temperatures lower than 15 degrees.

"It's quite impressive, that part of it," says Hunt. "If it's doing what they say it's doing, yeah, it's revolutionary. But there's the obvious question of economics ˆ— what are its operating costs going to be compared to other ways of heating and cooling the same space?"

According to Konstantino, a Nyle heat pump that can warm and cool an average home costs between $4,000 and $5,000. The estimated heat-cost savings, according to Nyle Special Products, is about 40% compared to oil and fossil fuels, depending on the price of electricity. "Most people initially don't believe it," says Konstantino.

Konstantino says his marketing and distribution campaign has so far been limited to encouraging electric utilities companies and energy co-ops to sponsor test sites in their coverage areas. This method has worked to sell some units in states including Oregon, Idaho and Minnesota. Konstantino says he's been advised by Nyle Corp. not to market the product to mass-media outlets like trade magazines and commercial publications because Nyle Special Products currently doesn't have the capacity to be "swamped with orders."

Over the next few years, and once the new facility in Brewer is completed, Konstantino and officials at Nyle Corp. hope to sell 30,000-50,000 heat pump units a year. In the early months after the product launch in January, however, Konstantino has struggled with the slow turnaround of a staff depleted by months of product testing and a market largely ignorant of the product's details. "The sales cycle [for the CCHP] is long," he says. "The [regional] distributor has to promote it, installers need to learn how to [install] it and people need to learn about it. Anyone who bought one of the full production units really hasn't gone through the winter yet."

Michael Davis of Bucksport is one of 24 Mainers who have purchased the CCHP. Davis found the product on the Internet and installed it in his vacation home in Waldo County. He uses the heater to take the chill off of summer nights and to keep the home warm through the winter. Davis was interested in the CCHP because of its energy efficiency relative to other heat pumps and because his vacation home, located at the end of a rural winding road in Stockton Springs, was difficult for the oil company to access. Davis estimates he spends about $300 a month to use the heat pump, which was installed last January. The unit and installation fees cost him around $11,000. The upcoming winter, which the Farmer's Almanac predicts will be an especially frigid one, will be the true test of Davis' CCHP.

"I'm hoping it doesn't get to negative 30 degrees, but it will work if it does," says Davis. "It was quite cold last January but it kept the house warm, so I have great confidence in it."

The next big thing
Don Lewis, co-founder of Nyle Corp., sits in his Bangor office wearily sorting through a stack of papers piled up after his week away on business. Autographed pictures of former presidents Ronald Reagan (a distant fraternity brother) and George H.W. Bush hang on the wall beside his desk next to certificates of recognition for Nyle Corp. The company, co-founded in 1977 by Lewis and Sam Nyer, is world renowned for its patented commercial and industrial wood-drying systems.

Today, Lewis and Nyer have grown Nyle Corp. into Nyle International Corp., the parent company of both Nyle Corp. and Nyle Special Products and the company holding a controlling interest in the Nasdaq-traded Nyer Medical Group, all based on one innovative wood-drying kiln created by Lewis. Companies including Boeing, General Electric and Hammond Lumber hold contracts with Nyle Corp. for the use of this technology.

Lewis is therefore a man experienced in hinging his company on the next big thing. And his gut is telling him that the heat pump and Nyle Special Products' hot water heater ˆ— which is already on the market ˆ— will lead the company into the future. While Lewis plans to increase his current staff of 20 at Nyle Corp. to about 30 in the planned Brewer facility, he expects Nyle Special Products will need to hire at least 70 people in the next three years as demand for the heat pump grows. By the third year of marketing, Lewis expects Nyle Special Products' annual revenues to balloon from today's $3 million to $10 million - $25 million, mostly because of the heat pump.

Lewis purchased the patent for the pump in 2002 from David Shaw, a engineer for air conditioner, heating and refrigeration company Carrier Corp. He has invested roughly $2 million in testing and marketing the heat pump. "I've been in the business for 45 years, so I knew if somebody came up with a cold climate heat pump it would be a pretty saleable market item," says Lewis.

Lewis committed to the 35,000-square-foot facility in Brewer, double the size of Nyle Special Products' current facility, to allow space to manufacture thousands of heat pumps a year for distribution in Canada and the northern United States.

"We had the opportunity to expand into a new market and we've got to grow," says Lewis. "Right now, we're selling a few [CCHPs] a week. It takes time for market acceptance, for people to get trained. It's a big country."