Carlos David Mogollón, WC&P Executive Editor
The following is a continuation of our interview with Better Water Industries’ Lennie Burkhardt:
Burkhardt: We’re still doing a lot of testing. We’re doing really well with radon and, like I say, we’ve got a little more work to do. But, we’ve got many, many units out doing a good job. I mean you get up into the 70,000 picocuries per liter and getting 98-99 percent reduction.
WC&P: This is in Carolina?
Burkhardt: Well, this is basically a lot of it being done in New Hampshire and Vermont and that area.
WC&P: Wow, 70,000 picocuries.
Burkhardt: Yeah, and they’ve got places got a million picocuries a liter of radon in the water. There’s some nasty stuff up in there. I tested my own in my water in my well and that was like 870 and that’s not considered high. Three hundred is kind of the area they want you below. So, this is in Minnesota. I haven’t done much testing here because you got to send it all off to a lab. It’s get pricey to do that.
WC&P: There’s been some arguments about that level, 300 picocuries per liter; and an alternate level of 4,000 for communities with a multimedia mitigation, or 3M, program.
Burkhardt: Yeah, there’s two sides of it. Nobody’s really sat down and knows what it’s all about. I’ve got a nephew who’s a nuclear physicist. He might be able to grasp it.
WC&P: I always thought it was interesting that the alternate level at 4,000 was called a multimedia program, which made me think oh, you’re going to have carbon and other things in there to remove it. But multimedia simply means an educational program. It has nothing to do with carbon or any filtration media at all. It means basically a public awareness program to alert people to the importance of treating their water for radon. That, I guess, is par for a government explanation of things. Now, you and I have talked from time to time about alternative uses of the chlorinators, in particular referring to agricultural markets and the benefits there. Address that a little if you could, please.
Burkhardt: We’ve done a bunch of stuff on that. Your hog confinements and hog setups, they just love chlorine. They really do good on it.
WC&P: Why is that?
Burkhardt: The sanitation of it. They’re more susceptible to bacteria than like feeder cattle, just because it’s the nature of them. Any of them, we do. People are starting to understand today more the importance of sanitizing water. I always go back and sell it on that principle.
WC&P: I was reading something about the importance of providing cleaner water, safer water for cattle primarily because of E. coli and the issue of if it’s a cow that’s going to be slaughtered for meat. If you can reduce the amount of E. coli that might be present in the gut of the cattle, then that lessens the risk of E. coli contamination in any food that’s processed from that meat.
Burkhardt: I would think so. Especially in the process of dressing the cattle, if it happened to rupture something in there, then that’s how that happens a lot of the time.
WC&P: There was an excellent sort of expose for you in the TV program “Law and Order” recently where they were dealing with just that problem, an E. coli event because of poor hygiene in the slaughterhouse. It was fictional obviously, but it was an interesting story that had me paying a little more attention. It’s one of my wife’s favorite programs. She likes Sam Waterston. The other thing we’ve talked about a lot is just the idea that, for instance, in dairy cattle, they’ll drink more water if it’s cleaner. They can recognize it.
Burkhardt: Taste is important. It’s almost like a soda pop affect with people. If it tastes good, you’ll drink more.
WC&P: And they’ll produce more milk… or in the case of beef cattle or hogs for slaughter, put on more weight.
Burkhardt: You can just about inevitably count on it. A chlorination or sanitation system would never cost anybody any money that has livestock. It’s always a payback. If you’ve got drinking cups or drinking fountains, they stay clean. Say you have a sick cow and she goes up and sticks her nose into a drinking fountain. There probably wouldn’t be enough chlorine in there to kill all the bacteria, but it would keep it from growing. It wouldn’t allow it to sit and breed and grow. You would keep it in check, so you wouldn’t pass as much disease or illness on from cow to cow.
WC&P: How much business are you doing in the livestock area?
Burkhardt: That has went down tremendously, just because of the small farmers being all out. Now, we have big consignments so you don’t have as many people.
WC&P: You mean the growth of the corporate farm.
Burkhardt: Yeah, you don’t have very many small producers any more because they can’t afford to do it. They can’t compete with these big places. That type of deal has been down a lot, dealing with smaller farmers for their treatment of water. We see bigger systems going in because of the bigger hog confinements and bigger cattle operations.
WC&P: And there are those that specialize in those bigger systems.
Burkhardt: Well, you have to. Everything’s that way today. If you’re not bigger, you’re not going to be there. We lost a lot of the family farms. We were just a talking about that here the other day. You look at a platte book here in Minnesota and we are predominantly — at least in the area where I am — agricultural. We figured that I doubt if there’s 25 percent of the people that are living on farm sites that are actually farmers.
Burkhardt: Yeah, it’s gotten (that way) even out in rural Minnesota. Most of the people that have moved out of town are working in town some place and they do not farm. Or they quit farming or went broke or something. They just live in their building or home and took a job in town.
WC&P: Kind of goes against the grain of that whole concept of farm subsidies.
Burkhardt: Yup. If you’re not farming at least a couple thousand acres nowadays, even in the are I am, you’re not going to be in business. The ones farming a thousand acres like that have been in it a long time and probably got most of it paid for. The profit margins are way, way down on agriculture anymore.
WC&P: How do you break down your business in terms of percentages?
Burkhardt: I just guess we never really done it. I’ve just got it all in my head. I look at where we’re going. I would say the bulk of the business is being done around metro areas because when they put up a new building development or someone puts in a development, it’s usually on wells for the first 10 or 15 years before they get incorporated into the city. We do a lot of business through them. And we do a lot with just people moving out into the country. A lot of it, somebody will buy some acreage out in the country and they’ve gotten used to nice clean city water. They move out to the country and these people that live in the country probably didn’t know any different. They had this nasty water all their life. They just put up with it.
WC&P: Or they were just used to it and it seemed like good water to them.
Burkhardt: Or they knew it and just never had the money or spent the money to do anything about it. They just didn’t do it. And now, somebody moves out. A guy talks his wife into moving out into the country because it looks so pretty. All of a sudden, they get this nasty water and: “Yuck! We gotta do somethin’.” So, they do. I don’t know if we’re seeing more and more water problems throughout the country or people are more in tune with taking care of their water problems. That’s probably the correct way to say it. I don’t know if the water’s getting any worse. We’re probably drilling more holes in more places than we wouldn’t have drilled before. The well drillers know that’s bad water over there, so they’d probably have told somebody not to build a house in there if you’d asked them first of all. Nobody does that. They go out and find a nice little spot. First thing is they put up a house. Then, they drill a well. They get nasty water and can’t find anything else, so you’ve got to take care of it.
WC&P: How many employees do you have?
Burkhardt: I’ve got seven.
WC&P: We always see in some of the smaller businesses there’s often family involved. Is that the case with Better Water Industries?
Burkhardt: There hasn’t been. But my son is going to start working with me this spring. He’s just going to graduate from electrical engineering and is going to come in with me. Otherwise, it’s been pretty much just me.
WC&P: What’s your son’s name?
WC&P: And I’m trying to remember the name of your guy we’ve spoken to previously there who used to work for PJD. Talk to me about some of the expertise you have in-house, if you could, please.
Burkhardt: Well, the ones I’ve got now, basically, fairly new help… my back group I’ve had for quite a while, but my office help we had kind of a change last year. I had Cary Wise working for me; I think that’s who you were talking to. He no longer works for me. At that same time, I had another gal who worked for me and had been with me since I started the business — before I started, really. She got married and moved on to another job — a different thing with her husband. That type deal. That was kind of a crushing blow last year. Both of them left me.
WC&P: How do you deal with that? How did you replace them?
Burkhardt: Well, I basically restructured my business and took some of the day-to-day business the way I was doing it — which was taking some of my time up — and I went to marketing more. I spend more time marketing than doing the service end. I got a new guy coming in who’s really doing a good job. He’s been here not quite a year and has picked up on a lot of stuff.
WC&P: What’s his name?
Burkhardt: Chad Ensted. Then we have a Kay Wooge, she does the office work and is basically the receptionist, hitting the phone on first rings.
WC&P: Now, how has your revenue done in recent years? What sort of numbers do you throw out?
Burkhardt: What do you mean? What do you want me to tell you?
WC&P: We generally put in some sort of idea on the revenue that people are doing and what sort of growth they’re seeing in that.
Burkhardt: In my business?
Burkhardt: Like I say, I’ve been doing in the last six years probably between 10 and 25 percent growth each year. And this year, we started out real good. Last year, I think I had about a 22 percent gain. We’re not a huge, huge business, but we’re doing a good job.
WC&P: If you had to toss a dollar amount at it, what would you say? You can give me a range, if you’d like. For instance, the question could be do you do between $750,000 and $1 million?
Burkhardt: Yeah, you could say that. But why do you do that? Is that beneficial to me? Some guy say they do $4 million. This year, I should crack $1 million in sales. I often wonder that. I see it put in there and I don’t mind reading it, but I don’t know if it’s good or bad.
WC&P: It’s just sort of a thing we’ve done to categorize a business and where it’s going on that level. We’ve always done it. It gives a better indication of the size of a business. It’s also a way of expressing how a business has grown. For instance, when you first started out, how much did you do that first year?
Burkhardt: Oh, wow. I don’t even remember. If we did $100,000, it would have been pretty good. You know, you start out a new business brand new from scratch. The only thing we sold was a chlorinator and some chlorine tablets. It’s built up in 15 years to a million dollars in sales, you might say almost. I think I’ve done pretty good. Up until this last year, I ran two businesses. I just sold my water conditioning business a year ago.
WC&P: Who’d you sell it to?
Burkhardt: One of my employees, Ray Swanson. It’s a Kinetico dealership is what it is, an independent one.
WC&P: What prompted you to do that?
Burkhardt: I just couldn’t handle it anymore. He was a partner. About six years ago, he bought about 25 percent of it so I could get somebody to run it. He seen me taking money out of it and I didn’t have enough time to work with it anymore.
WC&P: You also had the personnel changes too.
Burkhardt: That didn’t affect it. That was just at Better Water. That was part of it. But even before that, I didn’t have any time to put into the business.
WC&P: To help it grow…
Burkhardt: Yeah, I was signing the checks and doing that stuff and overseeing the business. But, as far as physically putting anything into it, no, I wasn’t doing that. And he’s looking at I was taking money out because I owned 75 percent of it and getting a wage. He looks at that and says, “You’re not doing nothing. I could take the money you’re taking and buy it from you and pay you back. It wouldn’t cost me anything and I’m already doing the rest of it.” So, it was kind of a no-brainer on his end. And you can’t hang on to anything forever. My family didn’t want it, so there was no sense in me hanging onto it.
WC&P: So, when exactly was it you sold that?
Burkhardt: About a year ago in April.
WC&P: What sort of things are you going to be looking at over the next year or two, maybe five years?
Burkhardt: Well, right now, I’m dealing on doing new tanks. I’ve been buying — my tank people, they’re bidding it anyway, so I guess it’s OK — Bryant tanks and making my Open-Air Systems. I’ll have a proprietary tank that will be more suited to what I’m doing. I’m also looking into getting some more molds made for some of the stuff I’m doing.
WC&P: Is this through K&M?
Burkhardt: Some of it’s through K&M, some will be through Royal Plastics. I’m working with K&M and some other people too, but they’re the ones I’m buying tanks from right now. And basically, (I’m) getting my son wound up in the business and ready to run the business and me doing more of the sales and marketing end of it. I do that real well and I like that…
WC&P: And he’s got to learn.
Burkhardt: Yup, he’s got to learn the business if he’s going to take it over, if he wants to.
WC&P: Who does your pellets for you?
Burkhardt: We do our own. Yeah, we run our own machine. We have a rotary press. It’s like a big aspirin machine. I just bought a new one of them. The new one will do about 375 pounds an hour. My old one would do 100 pounds an hour. It can’t hardly keep up anymore.
WC&P: Is that very involved? Where do you get supply from?
WC&P: It seems like you’d be in competition with PPG too, because they do the Accu-Tab.
Burkhardt: Yeah, but see mine is 3/8 inch, so it’s no competition whatsoever. Theirs is a 3-inch Accu-Tab and mine is only 3/8-inch in diameter with actually very little crossover competition. We buy a lot of chlorine and they’ve been doing it for about pretty close on to 10 years now. It might be more than that, come to think of it.
WC&P: Did you start out with them?
Burkhardt: PPG, yes, I’ve always been with them. Then you have to have all the certifications and they’re a good, big company.
WC&P: Does NSF have a certification for that?
Burkhardt: Yes, we are NSF Standard 60 Food Grade certified for about two years now.
WC&P: That’s pretty important isn’t it?
Burkhardt: Well, it’s just a feather. I mean we had the EPA and the USDA Food Grade designation, so it’s basically just an upgrade. It’s important if you’re doing government work. They know it’s a third party validation is all it is and that they charge a huge amount of money for it.
WC&P: So you can tell your customers you’re certified.
Burkhardt: Yes, it’s California. Selling into there. I was kind of forced into it. I was doing it before that, but they wanted it. You know, FDA Standard 60 certification. So, I did that. And I kind of forced my competition and all into doing it, as a result.
WC&P: Other than Osmonics, who are your other competitors?
Burkhardt: B&B Chlorination out of Albert City, Iowa, and Krudico — Gary Kruse.
WC&P: We just did an executive profile with him.
Burkhardt: Yup. Gary’s a nice man. He used to make a chlorinator that was kind of a derivative of the B&B. He kind of designed it. Well, they designed it and he took it and made it work for them. Then they had a personnel clash, so Gary buys chlorinators from me.
Burkhardt: But he makes tablets too. There’s four of us that make tablets. There’s only three chlorinators. And I’m probably the leading person. I don’t know the numbers that Autotrol has, but I don’t know if they sell more than me.
WC&P: It’s cutting it kind of close?
WC&P: They can buy more mass quantity.
Burkhardt: There’s mass quantity. Buying isn’t so much different, but they’ve got people out there marketing all the time. They’ve got travel. They’re huge. They got more people out there. They’ve sold valves and different things to different people. They got more contacts, I guess that’s what you ought to say. But I’m gaining share all the time, I’m sure.
WC&P: Are there industry issues that come up for you as far as that level of competition between people and companies in your niche? About suppliers, consolidation and how things get affected from that? Or are there questions about even WQA issues and how they might relate?
Burkhardt: The only thing I really have a problem with on issues like that is when Carol Browner from the EPA gets up and says that chlorine is a carcinogenic, THMs are bad and all of that stuff. She doesn’t state the whole reason. Chlorine itself is not a carcinogenic.
WC&P: It’s the byproducts and under certain conditions.
Burkhardt: Yeah, and it’s on river water and pond water. If she’d state that, that it isn’t on well water, you do not create a carcinogenic from well water by treating it with chlorine. It’s when you treat pond and river water (or surface water and how the disinfectant reacts with their inherently higher level of organics, etc.) with chlorine.
WC&P: This I would assume is a big customer issue if you go to market on people’s general reaction about chlorine.
Burkhardt: That would be my biggest competition. The rest of my competition I don’t look at as competition. I mean, they’ve got to keep up with me.
WC&P: We should probably point also that Carol Browner is the old EPA administrator under the Clinton Administration. The current administrator is former New Jersey Gov. Christine Todd Whitman.
Burkhardt: That’s true. They’ve made some pretty bold statements at EPA before. Christine, I haven’t heard that she’s made any similar statements (on chlorine).
WC&P: She’s been kind of busy with arsenic and radium and power plant emissions, etc.
Burkhardt: They get involved in another area. What they’re not saying is that, hey, the water is so polluted in all these rivers and lakes that when you put the chlorine in it… Chlorine has still saved more lives than any medical invention or anything else in this country. And they’re not willing to say that.
WC&P: I believe the American Society of Civil Engineers — or it could have been the National Academy of Sciences — named use of chlorine in drinking water treatment as one of the greatest advances of the 20th Century for improving the quality of life in the United States, maybe the world.
Burkhardt: Yes. Ozone is a very strong sanitizer. It’s very good. It does a good job. But, it does not carry a residual. Iodine is a very good bactericide, but it’s not an oxidizer; and you can’t feed it in any amount to pregnant women `cause it’s got a lot of nasty… There’s a lot of other things it will sanitize. Still, chlorine remains the safest way of doing it. It carries a residual and, especially, when we pelletize it in our tablets, it’s very stable. It’s not near as bad as like a liquid or gas. And it’s very easy to remove. Carbon just removes it very easily.
WC&P: Are you doing anything with the carbon people at all?
Burkhardt: I do some. I don’t get into selling filters. I design filters for people. I tell them how to build them. I don’t directly work with carbon people. I try to stay out of filtration because I sell a lot to the EcoWaters, Culligans and Kineticos, and I don’t want to sell a filter that competes with their slate (of products). So, what I do is I take their valves and whatever they’re using with their dealers and I tell them how to build filters with my equipment. That way Kinetico endorses and sells my products through their line, EcoWater’s basically endorsing my product line, and I sell a lot to Culligan.
WC&P: About how many of your dealers are independent vs. say with a Culligan, EcoWater, Kinetico or RainSoft?
Burkhardt: Independents are getting less and less all the time. That’s a good question. You start going between the pump people and how many we sell there to how many we sell … I would say most of them are sold through not certified dealers, but the franchise dealers.
WC&P: If you were to throw a percentage at it, what would you say?
Burkhardt: Shew, I would say at least 60 percent goes through a franchise dealer.
WC&P: How does that compare to five or 10 years ago?
Burkhardt: I would say it was probably more independent back then, 60 percent independent. I didn’t have the program set up to show people how to market a chlorinator through a sales organization. Nobody was doing that. I do a lot of sales seminars teaching salesmen how to market a chlorinator. And these bigger companies were all scared of problem water so they wouldn’t address it. Well, I’ve made it easy enough for them to address it. That’s where the Ma-and-Pa organization, they would take that problem water because nobody else was doing it. They could make good money doing it. But we’re seeing it switching a little more…
WC&P: We’ve talked in recent years a little bit more about that switch. There seems to be a little bit more growth of the megadealer, for instance, C.R. Hall, who was last year’s WQA president. He has bought at least three or four dealers in the last couple of years. Now, he’s not only in Kansas, but he’s in Missouri, he’s in Ohio…
Burkhardt: Mainly, that’s just in the Culligan line. The reason that’s the case is Culligan has always had a strong rental business. And, when you buy a water conditioning business, the rental income is basically the stable end of it in the Culligan world. You get into Kinetico or EcoWater and stuff, EcoWater is strong in your rental stuff too, but not as strong as Culligan with its exchange tanks and all that. Without that, you don’t see too many dealerships that buy a sales orientated dealership and try and run two or three of them because it’s tough. Water is different each place you go. You see these Culligan companies too where they buy them up, but they’ll leave the management intact. They don’t try to take the management out or change it so they all sell the same product and they all do the same thing. They know every territory has its characteristics of water.
WC&P: Nuances in the water analysis.
Burkhardt: Yeah, it’s tough to do. I’ve watched a lot of people buy up companies like that and then go broke because they wanted to change it to the way they were doing business in their area. On the new water, their equipment wasn’t working.
WC&P: Is this a myth then? We’ve heard about the decline of the family dealership. Is it happening or is it just been a turnover of dealerships?
Burkhardt: I think the dealerships have gotten bigger. I think you can handle more. The turnover, I guess I didn’t quite follow what you mean.
WC&P: If you want to draw an analogy with what you were talking about earlier with respect to the family farm vs. the corporate farm. There are more larger dealerships out there and there’s been some discussion over dealership bases and is that base declining? Or is it more a matter of turnover among dealers running the dealerships?
Burkhardt: I don’t think the dealership base is declining. I think maybe one owner may own all these dealerships, but they don’t ever lock the door on them. They don’t say, go 50 miles away and buy a dealership over here; they usually leave that dealership intact the way it was working; you might drop one major manager of it or centralize bookkeeping and stuff. But the dealership stays there. The buildings are there; the number of dealers may be less. I see where you’re coming from, but I don’t think there’s less buildings where the dealerships are at.
WC&P: They’re all still doing business, they may just be part of a larger entity.
Burkhardt: Yeah, they’re all under one heading, kind of like Dan Driessen up here in Minnesota who owns 15 dealerships.
WC&P: He’s a great grandchild or grandchild of Emmitt Culligan, right?
Burkhardt: I believe so. He just owns a bunch of dealerships, so they don’t show up as that many dealerships as a voting… Culligan instead of having 500 dealerships, now they have 375.
WC&P: That doesn’t affect your business?
Burkhardt: No, because each one of these companies are still doing business as they always did, only you don’t have as many privately owned ones. The building is still there and most of the people are still there. I see where you’re coming from and, yeah, you see more and more people trying to run two businesses or three of them. You see the Culligan and EcoWater people doing it, but primarily it’s Culligan.
WC&P: How would you like to close this interview? What sort of things would you like to tell your customers and clients where Better Water Industries will be in five or 10 years?
Burkhardt: Well, Better Water Industries is going to get stronger. We’re going to be looking more into the radon. That’s our biggest thing right now. And that’s going to bring in very big sales in the future. We’ll do more of the water aeration type treatment. I see that as growing big time. And I think sanitation, when people are realizing the reason you’re sanitizing isn’t just because you’ve got real bad water, you should sanitize for sanitation reasons. I would say in the future, we’ve been moving forward — definitely into the aeration end of it — and will continue to do so. Taking different things out of your water…
WC&P: Through oxidation…
Burkhardt: Yeah, and basically your gasses, degassification — that’s an area we’re moving into more and more.
Burkhardt: Here’s the deal with chlorine the way I do it. It covers more bases. Like you go out with a potassium-iron filter or you’ve got an air injection iron filter, there’s a lot of areas where they won’t work. Where, when I go out with my chlorination and aeration, I may cover 98 percent of the places as opposed to these others that maybe cover 70 percent where they’re effective and work great. It’s tough to do something without sanitation because you get so many bacteria growths these days. You pull it out of the air, you pull it anywheres and pretty soon things get slimed up and they don’t work. That’s where our forte has been has been I guess in the sanitation end of it.
WC&P: I want to come back to one thing before we go and that is if you could sort of give me a better idea of the number of dealers that you work with?
Burkhardt: Well, I just redone my dealer manual and I wish Kay was here because she could tell me right off the top of her head, but she took the afternoon off. I would say we probably have 450 active accounts doing monthly business with us and 700 that do occasional business with us. But, again, most people buy a little bit. I got a few accounts that do a good job, but most buy a few chlorinators here and there.
WC&P: What percentage would be based in that upper Midwest area?
Burkhardt: I would say probably, oh, 65-70 percent’s going through from Maine all the way across to Washington. One of my best newer guys is a distributor in Roanoke, N.C., we’ve been working with for about three years now, Lyle Hartmann.