By Carlos David Mogollón, WC&P Executive Editor
Neil Oliver just took over as president of his family-run company, Aquest Inc., in January. As the third generation in the water treatment business, he has big shoes to fill and is excited about the opportunity.
His grandfather—C.B. Oliver—founded Everpure in the 1930s. His father—Bruce—took over the filtration company in the 1950s and became a Culligan vice president after selling it to the POU/POE industry’s biggest name in 1967. Bruce later founded Aquest in 1983 largely to fill an unfilled niche for an alternative to leaded-brass and other metal faucets that might leach or corrode with more aggressive water. Neil was one of his first employees.
“He was very concerned about making sure faucets were made from the right materials that were safe and inert,” the younger Oliver said of Bruce. “That was one of the reasons he started this. Another was he got into monitor faucets fairly early because he also was concerned there was no way to let a customer know when it was time to change a filter cartridge or an RO membrane or some other serviceable components.”
Now, it’s Neil’s turn. He’s revamping Aquest’s website. He’s gearing up for new instrumentation to enhance monitors with smart technology and sensors offering better analysis of water quality and, thus, control of treatment processes. He sees these as important now with greater demands—due both to regulatory pressure and public perception—to provide more details about water quality and system performance because of confusing bacterial questions, potential bioterrorism threats and probable remote monitoring requirements of community water systems using POU/POE for Safe Drinking Water Act compliance.
The 48-year-old graduate of North Central College in Naperville, Ill., says just as the smaller focus of that school allowed him to get hands-on experience from business professionals that doubled as professors—he’s been able to learn more from working at Aquest than if he’d started at a big corporation.
“It was exciting to be right out of college and right there with top management and top executives with companies—the decision-makers and whatnot—making the pitch right to those guys,” Oliver said. “That’s the kind of experience you only get in a small company where you’re wearing a lot of hats.”
The company now brings in slightly less than $3 million a year and has experienced 15-20 percent growth on average over the past five years—although a little slower in the last two. Its most recent innovation, the Millennium faucet line, focuses on quick installation with advanced monitoring and air gap assembly. Oliver notes one challenge the company faced is its faucets are lighter than traditional ones—a fact he sees as positive.
“That’s because in the plumbing industry, like it or not, weight connotes quality. We prefer to laugh—or try to joke—about the fact that our faucets are light, but they don’t get any lighter because they don’t dissolve,” he said.
As such, Aquest was able to help out a number of companies affected by a series of class action lawsuits over leaded-brass faucets in California a few years back.
For more of Oliver’s thoughts on family businesses, factors affecting the water treatment business and future opportunities for the industry with additional regulatory requirements such as with respect to arsenic and radium—read on.
Before getting to the interview itself, though, here are a few details on Aquest:
604 E. North St.
Elburn, IL 60119
(630) 365-2525; Fax: (630) 365-5092
Neil A. Oliver, President and COO
Bruce J. Oliver, Chairman and CEO
Revenue: About $3 million annually
Operations: Specialty filter and RO faucet systems with advanced instrumentation to monitor for TDS breakthrough or “calendar clocks” to alert end-users when cartridges, membranes or components need to be changed. All components for undersink, countertop and cooler systems that are in contact with water are made of corrosion-resistant, inert materials such as 304 stainless steel and EPDM rubber. They’re also all NSF-certified.
And now for the interview:
WC&P: How long have you been in business and how did you get started?
Oliver: How long have I been with this company?
Oliver: Since it started.
WC&P: Tell me a little about how the company got started.
Oliver: Let’s see, Bruce started it. As you know, his father, my grandfather founded Everpure. He ran Everpure in the ’50s and ’60s and sold to Culligan in about ’67. And he moved up into Culligan. He’d stayed at Everpure as president, then—in 1974—he became a vice president at Culligan and was president of Culligan Europe for about four years. He retired in ’79, did some consulting business out in California and then a guy got together with him—an engineer he had hired from Bell & Howell who’d come up with a new valve concept. They designed a faucet around it and that’s how they got started in 1983. The main thing was he was concerned that they were using unsafe materials in faucet manufacture—leaded brass and things like that, which were dangerous in situations like ROs and distillers where you have very pure aggressive water. He was very concerned about making sure that faucets were made from the right materials that were safe and inert. That was one of the reasons why he started this. Another reason was he got into monitor faucets fairly early because he was concerned there was no way to let a customer know when it was time to change a filter cartridge or an RO membrane or some other serviceable components.
WC&P: OK. Two quick questions—one, what was your grandfather’s name?
Oliver: C.B. Oliver, that’s how he was always known.
WC&P: And were you the first to introduce monitors on faucets?
Oliver: Yes. We had the very first “smart” faucet patents approved in 1987.
WC&P: Describe how these function, if you could, please.
Oliver: They—in the case of a filter system—are flow switch activated and they work by time and flow. Basically, most systems are rated at a certain flow rate and the cartridges are rated at a certain capacity…
WC&P: i.e., gallons per whatever…
Oliver: Yes, gallons per minute and then total gallons. There’s a little timer in there that counts down as the user is drawing water. It counts down to zero and then the light changes from green to yellow or red or whatever is desired to alert the customer that it’s time to change the component.
WC&P: I imagine that there’s been some generational enhancements made as the product has matured. Can you tell us a little bit about your company in terms of that and what’s new?
Oliver: We’ve been involved in making monitors for a lot of different equipment, for pressure coolers, for countertop filters and RO, for faucet tap filters that screw on the end of your faucet, etc. And the monitors include features such as the calendar clock that let’s the person know in so many months in case they haven’t used the capacity if they want to make sure the cartridge gets changed. The calendar clock override feature allows, if the capacity hasn’t been used, signal to be sent to the user in 12 months that it’s time to replace the component.
WC&P: Even if it hasn’t reached its rated capacity based on gallons?
Oliver: Yes, they might consider it detrimental to leave it in any longer depending on what the water conditions are. For instance, they could be concerned about bacteria in the water and want to get it out of there in 12 months or less.
WC&P: Which of these are the most recent products that you’ve introduced?
Oliver: The most recent has been the Millennium faucet line, which is very user friendly, the easiest faucet in the industry to install and built-in John Guest fittings. It has what we call a “Speedy Nut,” just ¾ stem, and it goes in very fast for quick installation—no tools needed. It also has a self-cleaning cam valve and the monitor versions have all the electronics in the top of the faucet, so everything is accessed above the sink. They’re operated by coin-cell batteries. We also have enhanced the RO quality monitors with a very good differential monitor—a TDS monitor…
WC&P: By that, you mean… how does that work?
Oliver: Basically, it’s got two probes and it measures the incoming water and the product water to make sure it’s operating within a certain ratio. NSF says that ratio should be within 75 percent and so we have a 75 percent default setting for it to make sure that it’s operating in that mode. If not, it lets the user know that, gee, the TDS has risen pretty high. The advantage of that is if you’re incoming water source could change like it does in California—they might be on a pond one day and then underground water the next, then an aquifer another day; in Eureka, the TDS can change significantly—this allows the system to differentiate what’s going on based on the incoming water. It has some other nice features. It would probably take too long to go into all of them, but there are lots of good, little enhancements that make it a very valuable monitor.
WC&P: Now, tell me a little bit about the why. Why instrumentation to this degree? I know that I’ve got a system in my house without a monitor on it. What’s the driving factor, therefore, for you?
Oliver: The driving factor is twofold. In the case of filter systems, it’s making sure the customer is assured of good water all the time. And also it helps the dealer and the manufacturer. It assures them of replacement cartridge business. Many dealers have said that their cartridge sales have gone up tenfold since they began using monitor faucets. In the case of the RO, if your system is making health claims, you certainly want to know if there’s some breakthrough going on and your TDS is starting to rise. That’s an indication the membrane is failing. Depending upon what the health claims are they’re making, that could be very serious.
WC&P: I would imagine that considering the debate that’s been going on the past few years regarding POU/POE equipment as “best available technology” as designated by the USEPA to meet SDWA requirements, that would seem to be a big positive for your business, would it not?
Oliver: Very much so.
WC&P: How has it been reflected in what you’ve seen in the market?
Oliver: Not so much in the arsenic issue, which has been the big one. I think that’s what’s going to drive whether it really sends the POU business through the roof. If you can imagine the situation right now where they read your water meter on your house very month, they’re going to want some sort of control over the quality and performance of the system. So, there’s likely going to be some type of monitor on there, whether it’s going to be something where the customer calls in or it’s going to be a dial-up modem or an RF transmitter where the guy drives by in the car and reads from a distance what your system is telling it. There’s a lot of possibilities out there and the municipal water suppliers are going to be very diligent in making sure they’re in control of the safety because they’re ultimately going to be responsible for it. Due to that, they’re going to make sure they’re aware at all times how the system is performing. Monitoring, therefore, is going to be very big in those applications.
WC&P: Tell us if you could an interesting anecdote or story about your experience in water treatment. This could be a story about your father or grandfather, an amusing story, an offbeat story or something interesting.
Oliver: Wow, good question. Can we come back to that in a while and I’ll let it rattle around in my head.
Oliver: Good, because there’s so many.
WC&P: We can come back to it. I’m sure you’ve got plenty. What’s a major challenge that you or your company faced and how did you overcome it?
Oliver: I think the most major challenge we’ve had is we’ve made our faucet out of materials that are safe and inert, and that means there’s a lot of plastics involved. Y’know, for instance, all the materials that come in contact with the water are either plastic or EPDM rubber and the spouts are made out of 304 stainless. So, ours are lighter than say a Touch-Flo or other brass-type construction or even a stainless steel faucet that’s out there. Ours are lighter because of that, and that was probably the hardest thing to overcome. That’s because in the plumbing industry, like it or not, weight connotes quality. We prefer to laugh—or try to joke—about the fact that our faucets are light, but they don’t get any lighter because they don’t dissolve.
Oliver: That’s a hard one to overcome and I always have a great appreciation for the guys who were able to bring PVC pipe into the plumbing industry. I’m sure that was a real tough battle for them.
WC&P: I imagine it ties into the fact that people generally think weight connotes durability—and not just in plumbing.
Oliver: That’s right. They think weight connotes durability and ultimately quality and value. They haven’t grasped yet that technological improvements in construction materials negates that argument now such that lighter is often better today.
WC&P: As we’ve seen with faucets, in particular, that extra weight also brought along a lot of problems. How did you deal with the whole issue of the leaded-brass leaching a few years ago that resulted in all the lawsuits in California?
Oliver: We were in a good position to help out a lot of companies that got in trouble. We helped out several OEMs that were able to switch over to our Millennium line, which was a lower cost faucet that was really designed for retail and had to be able to compete with the imports that were coming in and were made of just terrible materials. We wanted to have something that people could switch over to quickly and meet all the requirements of EPA/NSF/Prop. 65 in California and not have to worry about that. They had a very quick fix to their problem.
WC&P: I take it you’ve got lots of certification with respect to NSF 61 and materials safety extraction tests…
Oliver: Right. On everything.
WC&P: You mentioned exports coming in—what sort of competition do you get?
Oliver: Well, you know, it’s really hard to read how your competition is because there’s so little reported about what’s going on, but we’re aware that there are a lot of distributors out there distributing products that are made in China. We know that they have a very low cost, so they’re probably able to make a pretty good margin on it yet still be able to bring it in to the industry at a very low cost. What we’re trying to build on, if we’ve been successful in that, is integrated quick-connect fittings that are very easy to install. We might be slightly more costly than those imports but we have a lot more value and we get the installer in and out of the job site faster. And we’re NSF-certified to Standard 58, which is the most stringent extraction testing of all the standards because that one is for RO systems, which is very aggressive water. We wanted to make sure we had ours certified to the toughest standard. We have zero lead in our faucets. We’re not even a little bit pregnant.
Oliver: People go out there and they can call themselves “lead free,” and they can have as much as 1 percent lead in content, which I think is just… We weren’t happy when that was allowed on Standard 61. We think that was just an absolute disaster that NSF buckled on that and allowed that to happen. It’s just not right. You’re either lead free or you’re not. So, we differentiate ourselves from the competition by saying, “We’re zero lead!”
WC&P: That’s pretty good. From your perspective in the market, where do you see the industry going?
Oliver: The gobbling up that’s going on is just unbelievable. I think the one strength of this industry is still the independent dealer. I think that those companies that learn how to cater and supply or fill the needs of the independent dealer are always going to do well. No matter how big these companies get, there’s always going to be the independent dealer out there that’s going to be a huge market. But there’s a lot going on in this industry—that’s just a microcosm of it really. There’s just so much going on. I think that in the next five years there’s going to be just some very interesting innovation. We’re working on things ourselves in the area of monitoring, in the area of identifying what’s in water, being able to specifically identify and alert if there’s problems with water on a much more detailed level. The science is going to be awesome.
WC&P: That seems to tailor into the next question, which is what’s the one hot-button issue facing water treatment dealers or the industry that will have the most impact in the next few years, in your opinion.
Oliver: I think probably, for manufacturers, it’s going to be foreign competition. And I think, for dealers, it’s going to be, gosh, probably how they benefit from a better educated customer. As far as the challenges and whatnot, I think the same challenges we have now are always going to be there. You know, we’ve got concerns about terrorism, and that’s not going to go away. I think everybody pretty much agrees on that. There’s a lot of things we’re going to do to protect ourselves and make things safer, but I think the concern is always going to be on people’s minds. I think that we’ve seen kind of a greater awareness on the public’s part about water, and what’s happened since 9/11 has borne that out quite a bit. That’s what’s keeping this industry very healthy. That’s going to continue.
WC&P: Even through the economic swings to and fro, I assume you’ve been doing well despite the most recent stagnation in the economy.
Oliver: Yes. You know, we’d certainly like to be doing better, but we’re not complaining under the circumstances. There’s just a lot of industries that are suffering right now. We’re one that’s really not. We’re, you know, marching along here and that’s just because water’s so darn important. It’s just a great industry to be in. And if we’re hanging in here at the rate we are with the economy like this, when we pull out of this recession… I mean it’s just going to be gangbusters. It really is.
WC&P: How has the economy affected different regions where you do business? Do you do business internationally as well?
Oliver: We do internationally. We’re selling some monitors overseas and we’re not seeing anything negative. As a matter of fact, we’re seeing some surging going on over there.
WC&P: When you say overseas, you mean…
Oliver: Well, in Europe. We’re seeing some surging there. The Asian markets are pretty flat right now. What we’ve noticed just recently is we sell into the recreational vehicle, or RV, industry and that’s starting to slow a little bit because the price of gas was up and the general state of the economy is such that they’re finally starting to see a slowdown in that industry.
Oliver: Sure, sure. But, at the same time, you have that lag time where the buying slowed down, but it’s not really reflected in the manufacturing sector for a while. Once it is affected, there’s going to be a period where the rubber band stretches again and pulls it back in the other direction. And I think it’s not going to be that long because the gas prices are likely to certainly come down significantly here in the near future.
WC&P: One would assume that since the Iraq conflict is over for the most part.
Oliver: Right. That should help industry a lot. And I think generally the economy is just going to bounce back. It always does after a war is over. And if this thing goes with the rate of success it’s been going at and things continue forward—people’s confidence is going to go up and industry is going to do well.
WC&P: It seems somewhat as if over the last few years, the whole saying that the markets don’t like uncertainty and the uncertainty of whether we were going to go to war in Iraq has held the markets sort of in stasis, in limbo.
Oliver: That’s right. And you’re talking about investment markets. But also people base their purchases in the same way. Yet nobody stopped buying bottled water. As a matter of fact, that went up, I’m sure. Still, whether or not they make a decision to make a couple-hundred-dollar filter or RO system—they may delay that for a while, but not for much longer. This thing turns around and picks up and people will be buying again.
WC&P: Somewhat the bioterrorism fears—regardless of how it’s played by our industry or not—also tends to be a driver there as well, at least moreso recently.
Oliver: I think so.
WC&P: Shall we get back to the anecdote?
Oliver: Yes. Gosh, there’s an awful lot of good ones. It’s tough.
WC&P: Reach back there.
Oliver: How far back should I go?
WC&P: Like when you got started in ’83. You’re about my age, I would imagine.
Oliver: I’m 48.
WC&P: A little older, but what were you doing prior to ’83?
Oliver: I actually was finishing up college at that time. I went away from college, took a few years and went to work for an engineering firm for about six years and then came back and finished up college. Just as I was doing that, Bruce got this thing started and I was helping him out part time. Then when I graduated in 1984 is when I went full time. That was just about a year after Aquest started.
WC&P: So how was it working with your dad?
Oliver: It was fun. It was exciting sitting in conferences with presidents of companies pitching the faucet to them. I remember one thing I could tell you that was pretty funny. We were sitting in the conference room with the bigwigs at Culligan at the time and we had Don Mahlstedt in there. We had the faucet completely covered with a velvet bag. And Don couldn’t see it and he was going crazy. He just wanted that bag off that faucet. It was driving him nuts.
WC&P: Sort of like waiting for the unveiling of a statue, so to speak…
Oliver: He just couldn’t stand it. He was so funny. His whole body movement, his gestures and everything—he just had us in stitches. He just couldn’t take it. And we were trying to make our pitch. Poor Don he didn’t want to hear it. He just wanted that bag off of there. He wanted to see it.
WC&P: Now, what was Don’s position?
Oliver: I’m pretty sure he was the vice president of marketing at the time. He’s obviously pretty well known in the industry. It was exciting to be right out of college and to be right there with top management and top executives with companies, the decision-makers and whatnot—and to be making the pitch right to those guys. That’s the kind of experience you only get in a small company where you’re wearing a lot of hats. That was pretty exciting.
WC&P: We should be about finished. Is there anything else you wanted to add?
Oliver: I can probably think of a few more anecdotes for you now that you’ve planted the seed.
WC&P: Go ahead. Go for it.
Oliver: The only thing I’d like to add is that the thrill for me has been—obviously, working with my dad has been great. You know, family businesses are tough but, on the good side, you learn so much.
WC&P: We should mention that you just became president as well.
Oliver: Yes, in January. You learn so much but you get so much experience. I mean, I’ve done everything. I’ve done production, purchasing, marketing and sales, engineering, customer service. I mean you name it—you do it.
WC&P: As opposed if you went to work for a conglomerate right off the bat where you’re basically making coffee…
Oliver: Right. Or you’re thrown in some little office in some microcosm as an assistant to somebody’s assistant and it’s a long way up. A lot of people can move up pretty fast, but the experience that you get at a smaller company makes you become a better person. You think on your feet a lot faster than you would otherwise because you get into situations where you just have to perform. You really don’t have a lot of support there. You’ve got to do it yourself. It’s kind of like learning on the streets. It’s that “hard knocks” education.
WC&P: Street smarts.
Oliver: Yes. I also came out of a small college in Naperville, Ill., called North Central College and I was very glad to have gone there because the experience I got there was very real-life experience. All my major classes were taught by men in business. They were in business during the day and taught at night. So, the experience that we got in everything from sales to management to finance was from guys who’d learned it all in the trenches.
WC&P: It was more hands on, more realistic, more practical to everyday realities.
Oliver: Yes, we weren’t just sitting in lecture halls. We were actually performing. We were broken into groups and competing against one another in our marketing class. It was a great experience and that really helped me a lot.
WC&P: I take it you have a marketing degree.
WC&P: Well, I think that should about wrap this up.
Next month in this column, read our interview with Paul Jacuzzi, who is president of Waterite Technologies Inc. of Winnipeg, Canada.