Hotstart Inc., the big Spokane Valley-based manufacturer of diesel engine pre-heaters, is riding a brisk wave of growth and says it expects to post record revenues this year.

Terry Judge, CEO of the 69-year-old company, says Hotstart is anticipating its sales will increase by $6 million due to the recent launch of several new products and the debut later this year of two new sales offices—in Houston and Japan. It also opened an international sales office in Germany last year, and Judge says the company hopes to garner $2 million in sales through that office alone by the end of this year.

He says most of Hotstart's biggest customers are starting to bounce back from the recession, which is one factor that's led to the big projected increase in sales, to $42 million this year from $36 million in 2010. If the projection holds up, it would be the second consecutive year that Hotstart has increased its revenue by $6 million.

The company designs and manufactures diesel engine pre-heating components for a variety of industries, including makers of standby generators, heavy machinery equipment, trucks, buses, ships, trains, and the oil and gas markets, Judge says.

"All those markets are growing; it's a broad-based rebound and everyone is up," he says.

To accommodate growth in product sales, the company is expanding its sales office space by constructing a new two-story, 9,200-square-foot office space within its existing 120,000-square-foot headquarters at 5723 E. Alki. Judge says the new offices will give Hotstart adequate space to continue staffing up its sales department here, which is expected to continue growing over the next several years.

Along with the sales office expansion, he says, the company will remodel and update 24,000 square feet of older office space to match the new space. The entire project is estimated to cost about $667,000, Judge says, and is expected to be completed before the end of this year.

The contractor for the project is Spokane-based Haskins Co., and the architecture firm that designed it is Steven A. Meek Architects, also of Spokane.

Judge says this is the third expansion the company's headquarters has undergone in the last three years. Last fall, Hotstart completed a small expansion of about 2,000 square feet in its production area, and in 2008, it completed a 44,000-square-foot addition to its manufacturing floor, he says.

Hotstart currently employs 154 people, Judge says, and in the last two years has added a total of 15 employees here and at its overseas office in Seigburg, Germany, which it opened in September of 2010. Judge says Hotstart expects to hire about 15 more people this year in various departments, including quality assurance, engineering, and sales, and is looking for people who are fluent in multiple languages to assists it foreign customers.

Besides its recent employment growth, Hotstart also recently went through a management transition. CEO Rick Robinson retired earlier this year after more than 25 years with the company and 23 years as its leader. Judge stepped into Robinson's role in March, having formerly served as Hotstart's director of sales and marketing. Trond Liaboe, who's been with Hotstart for close to 10 years, took over for Judge in that position. Liaboe formerly was the company's international market manager.

Entering new markets

In addition to its recently opened sales office in Germany, which is staffed by four people, the company hopes to soon have a sales presence in Japan.

"Japan is going to be the logical place for Asia because of its engineering work on diesel engines in that part of the world," Judge says of the company's decision to expand there.

A Hotstart employee who's a native of Japan will be moving there from Spokane later this year to establish the new sales office, Judge says, and the company wants to have it up and running by the end of this year.

In an effort to have a presence closer to its oil and natural gas customers, the company also will be setting up an office in Houston this year, Judge says. That industry, he adds, accounts for just over 20 percent of the company's overall sales, second to the generator industry. Hotstart currently is looking at potential locations in Houston for the planned sales office, he says.

Each of the two new offices initially will employ three or four people, Judge says.

Hotstart's projected increase in sales this year is due not only to the company's plans to establish a physical presence in a couple of new markets, but also to a number of products it's introduced during the last few years.

One of its newest innovations is called the HOTflow series of engine heaters, which Judge says are designed to distribute a more even flow of heat in diesel-powered engines through the use of a pump-driven circulation system.

He says that Hotstart, in conjunction with Spokane-based Avista Corp., has been researching the use of a pump-driven engine heater versus one without a pump—commonly known as a thermosiphon style heater—for the last three years. The HOTflow heater has an energy savings of up to 30 percent because the heat is distributed more equally and thus results in a need for fewer heating cycles to maintain a constant temperature.

The most common application of the new HOTflow system, as well as its predecessors without a pump, is in standby generators used in industries that rely on a secondary source of power to kick in nearly immediately during a power outage, Judge says.

The study of the new product line has resulted in Avista offering a new program to its commercial customers, called the Standby Generator Block Heater Program, to encourage them to implement the new HOTflow technology, Judge says. Through that program, Avista customers who replace their heaters with a HOTflow system receive a $400 rebate for each component replaced, he says.

One distributor of Hotstart's new engine heaters here is Meridian, Idaho-based Western States Equipment Co., which also sells and services a number of other Hotstart products. Ken Delanoy, an electrical power generation technician with Western States' Spokane outlet, says that since the beginning of this year, the company has installed around 15 of the new HOTflow systems at various commercial locations here that have backup electric generator systems. Some of those users include Spokane Eye Clinic, Premera Blue Cross, Spokane's KAYU-TV Fox affiliate, and Northern Quest Resort & Casino, Delanoy says.

He says the heaters range in price between $850 for Hotstart's smaller model, and around $1,800 for a larger model that would accommodate an engine with a capacity greater than 20 liters. Those prices, however, don't include the $400 rebate from Avista, he says.

Judge says that Avista currently is the only utility in the area that's offering a rebate incentive for its customers who replace their engine heaters with the HOTflow system, but he adds that the Bonneville Power Administration currently is looking into a similar program.

Another recent introduction to Hotstart's product lineup is geared toward another of its larger end-user customers—the railroad industry.

A new version of Hotstart's locomotive engine pre-heater, called the Hotstart Auxiliary Power Unit, or APU, was introduced about 1 1/2 years ago, and since then has been a top seller with railroads across the U.S., including BNSF Railway Co. and Missoula-based Montana Rail Link, among others, Judge says.

The U.S. Environmental Protection Agency recently awarded a grant to several railroad companies operating in the northeastern U.S. that will use it to purchase about $800,000 worth of APUs from Hotstart, Judge says.

This is the eighth time an EPA-funded grant designed to reduce emissions in the railroad industry specifically has been used to purchase products from Hotstart, he adds. The most recent EPA-funded grant before that, and Hotstart's largest grant-funded order, provided $1 million worth of the APUs last year to Montana Rail Link, he says.