Volume 43 Number 12
Getting it Right with Water-Right’s Gruetts
Hard times during a recession nearly 20 years ago convinced Kurt Gruett to drop out of the University of Wisconsin after his freshman year and join the family business, Water-Right Inc. It was early in the Reagan Administration and things had gotten worse before they were to get better with double-digit unemployment across large swathes of the Midwest.
“We lost three of our five largest wholesalers due to them going out of business. We also lost key personnel in the manufacturing end. So I decided to stay on and help the business struggle through it. That was a rough period for us. I’m sure other companies went through similar troubles at the time,” said Gruett, now vice president and secretary/treasurer of the family owned business.
Born in 1960 and incorporated three years later, Water-Right was another garage-based operation that grew into a substantial business in the point-of-use/point-of-entry water treatment industry. It was founded by Kurt’s father, Glenn, who sold softeners to local plumbers and well drillers. In 1967, he began the switch to wholesalers with his first distributor, Kretchmer-Tredway, of Dubuque, Iowa.
The product line revolves around zeolites, a crystal gel media with good filtration and softening properties that was the basis of the early water conditioning industry. It was supplied by Arizona Mineral, a California subsidiary of Culligan, until 1985, when Culligan’s then-parent, Beatrice Corp., decided to close down production because of environmental problems.
Since Water-Right was the largest outside customer, it bid on the company and acquired it in 1986, renaming it Mineral-Right and moving production to Phillipsburg, Kan., where the Crystal-Right media is still produced. Other media with oxidative and other water treatment properties also are processed at the 17-acre production facility. But the company is kept separate from Water-Right. Both are wholly owned by the Gruetts.
In 1998, Water-Right introduced the Sanitizer softener, which includes a proprietary valve incorporating on-site chlorine generation to disinfect the media bed during regeneration. It also brought on Mike Hamberger, previously of Alamo Water Refiners, to launch a national dealer network that now numbers nearly 300, not including customers of wholesale clients. Employing 28 people, Water-Right has since doubled in size to $10 million-plus in revenue.
Another 15 people work at Mineral-Right, which Glenn Gruett oversees and has revenues roughly 30 percent of Water-Right’s but that are growing more rapidly. Shipments to a European distributor, for instance, have grown 25 percent a year. Kurt, 38, said he expects Water-Right to be about half that this year. He said the company’s focus on problem water in rural areas and unique attributes of zeolite media and a disinfection valve help distinguish it from competitors.
“Of course, Sept. 11 hurt everybody,” he said. “The phones quit ringing that week. Since then, it’s picked up. We’re having a good year. We’re ahead of last year’s sales. We’re going to be probably 12 percent up over last year. From what our vendors tell us, that’s good because the industry might be down a little bit.”
Gruett also discusses challenges of material safety for small manufacturers, growing up in the water treatment industry, working with family, the importance of educating distributors and dealers and expanding in China.
Before we get to the full interview, here's a little breakdown on the company:
And now for the interview:
WC&P: Let's start off with you giving me and the readers of WC&P a little background on Water-Right, how it got started and the progress that it's made in getting to the point where it is today.
Gruett: My father started the business in 1960 and, in 1963, he incorporated under the name Water-Right. He basically started out of the garage. He sold softeners locally to the plumbing and heating contractors in the local area here in Appleton, Wis.
WC&P: Your father being Glenn Gruett, correct?
Gruett: Yes. From there, it grew to where he went to distributors, to the local plumbing wholesalers. And in 1967, I believe, he signed with his first wholesaler in Dubuque, Iowa. That was Kretchmer-Tredway. That was the first wholesaler and that was kind of the direction that he took the business, was through the plumbing and well drilling trades. The company itself, Water-Right, grew up in the dirty water business. We consider ourselves the problem water people. And because we worked with plumbers and well drillers out in the rural areas, most of the water that we encountered were high iron, manganese, low-pH bearing waters. And Glenn at the time designed our systems around those waters using zeolite, which at the time was produced by Arizona Minerals.
WC&P: Now, zeolite may be something some readers may not be familiar with. You guys have kind of built your name around it, though. You may want to explain what it is.
Gruett: These zeolites are the first water treatment media ever produced. Emmit Culligan, of Culligan, that's how his company got its start -- around the zeolite that he produced.
WC&P: Are you in an area where zeolites are prominent or how did you continue to link your business to this?
Gruett: No, zeolites are actually a manufactured material. It's not a mined material like a lot of people would think. It's actually sodium alumno silicate. It's a sand material that has ion exchange capabilities so it's an excellent filter medium along with a softening capacity. It does a very good job at removing the iron and manganese and correcting those types of problems, yet it's a little denser, you can backwash the material and kick the iron off the material. So, we don't have the fouling problems that you do with typical resins on, let's call it, the problem waters. That's how the company evolved. That's how we got started. And Glenn at that time, let's just say '67 through the early '80s, the company was basically wholesale driven. We did have some salesmen in Wisconsin in proximity to Appleton, where we did sell directly to the local dealer. We always maintained that base. But, for the most part, it was always done wholesale. So, as the company grew in the Midwest, we were always very strong in Minnesota, Iowa, Illinois and Wisconsin -- you know, the Midwest states -- working with the contractors, the drillers, the plumbers, etc., on the rural water problems. Our theory was that if we could handle the bad waters, the good waters would come naturally. And that's how the business evolved.
WC&P: The good waters being those that needed just a little tweaking...?
Gruett: A little hardness removal and things of that nature. Something a simple water treatment system could solve, a water softener...
WC&P: So, what were some of the initial water treatment products that you guys had developed then?
Gruett: Well, the company back in 1963 again, Glenn met Andy Fleckenstein and...
WC&P: Of Fleck Controls.
Gruett: Yes. When Andy came out with the 1500 valve, Glenn bought several of the first valves Andy every produced. And what we did was we designed the system around the valve at that time. Prior to '63, when Glenn was selling door to door, he was selling manual equipment because there wasn't the control valve that could backwash the zeolites properly. And that's how Culligan basically got started. They sold it in the PE (portable exchange) tanks. They came back and batch-regenerated it, because there wasn't the controllers available back then. So, when Andy came up with that valve, we designed the systems around that 1500 valve; and, when we had an automated system that could handle these kind of waters, we had something that indeed was in the rural, Midwest areas.
WC&P: The other thing I was noticing on the history page of your website was that, while you were getting your zeolites from Arizona Minerals, it was actually a California company.
Gruett: That's correct.
WC&P: And it was closed by Culligan in about '85.
Gruett: Yes. In 1985, Culligan, I believe, was owned by Beatrice Corp. and they closed the plant because of some environmental problems. Let's just say that. We, because we were Culligan's single outside user, felt it was kind of natural for us to just assume the company. At first, they didn't want to sell it, but our company depended upon zeolite and this identity we'd created with the problem waters. And, through negotiations, Glenn ended up purchasing the company.
WC&P: Is that when Crystal-Right was born?
WC&P: You may want to explain to readers what Crystal-Right is?
Gruett: OK, Crystal-Right is a separate company owned by the same family. Both companies, Water-Right and Mineral-Right, are closely held. We own both companies. We spun that off into a separate entity. It's located in Phillipsburg, Kan. Their production for the Crystal-Right facility is a separate entity that distributes to Water-Right. Water-Right would buy from Crystal-Right just like any other company. I should say Mineral-Right, because the company name is Mineral-Right.
WC&P: The product name is Crystal-Right.
Gruett: Yes. Mineral-Right evolved back in 1985. And the sole customer at that time was Water-Right.
WC&P: What about now?
Gruett: Water-Right distributes all over the place. It's basically become worldwide. We have a distributor over in Europe and Belgium, the Poellet Water Group. They do a very nice job. They distribute the zeolites through all of Europe for us. Recently, we have a new distributor in China. And we keep expanding the Mineral-Right, I should say, growth. We are limited somewhat in growth. The media itself, it takes a long time to make this. The plant now down in Kansas covers 17 acres.
WC&P: Is it grown from a certain size?
Gruett: Yes, it's grown. It's basically a grown crystal.
WC&P: Is there a holding company that owns both Mineral-Right and Water-Right?
Gruett: No. They're both independently owned.
WC&P: What's your position with Water-Right and/or Mineral-Right?
Gruett: Actually, I'm the vice president. My dad is the president. Titles are kind of loosely held around here. I am responsible for the day-to-day operations of Water-Right. Glenn oversees the Mineral-Right operation.
WC&P: Tell me a bit about the revenues of Water-Right and how they've grown through the years, if you could.
Gruett: For Water-Right, up until that point in 1985, it was slow growth. One thing that we do is -- because we're in the bad waters -- it takes a lot of education and, going through the wholesale trades, a lot of education is needed by the local plumbers and well drillers. Certainly, some are well versed in water treatment now, but back in the '70s, it took a lot of education and that kind of limited our growth. Because we're on the bad waters, you have to be very careful in how you apply the equipment. Otherwise, it's not going to work.
WC&P: Why don't you explain to us who your customers are? That might help us understand where you're coming from in that discussion.
Gruett: OK. Basically, Water-Right's got two channels of distribution. One would be through the wholesale trade. The other would be through the professional dealer channel -- or the independent dealer channel, if you want to call it that. That happened with the birth of the Sanitizer, which we'll probably discuss later. So, we had this wholesale distribution, which is very training intensive and that's something we're very good at.
WC&P: And in which areas are these? Are they in rural areas?
Gruett: In the rural areas. In each area of the country, as you know, you have different problems. So, we have to critique our schools...
WC&P: For instance, you have naturally soft water in areas in the Northeast as well as Northwest. Then, you've got a lot of highly saline or brackish water in the West and Southwest...
Gruett: That's correct. You go into the Northeast and you've got a lot of low TDS, low hardness type waters and a lot of iron and manganese...
WC&P: And in the Southeast and Florida, in particular, you've got natural organics and high tannins in the water...
Gruett: Again, that's correct. So, we have to tailor the schools around these geographical areas. Now, we do have large schools down here at Water-Right. As a matter of fact, this weekend, we have 40 dealers coming in from all over the country. And we do these three-day seminars on a regular basis in the wintertime. Normally, when people are a little slower, when they can pull away from their business, we have them on a Saturday, Sunday, Monday so it doesn't take from their normal day-to-day business so much during the week.
WC&P: Been doing this from the get-go?
Gruett: Ah, the three-day schools have kind of evolved in the last 10 years, but we've always done a lot of the one-day seminars out in the field. That is something Glenn was always very strong on that we have to educate them in how to treat the water properly. It's not like going into Chicago and a softener is going to work. You have to apply the proper piece of equipment to the right type of water.
WC&P: What about some specific problem contaminants we've heard a lot about in the news lately. For instance, you're in an area where there's a naturally higher level of radium or radon in that geological strip through the upper Midwest there. Talk to me maybe about how some of the specific water problems in the area where most of your business is concentrated effects how you maybe do some education for your wholesalers or how you may have designed your product line around certain things.
Gruett: With the water treatment equipment, the point-of-entry type stuff, we do stay away from health claims. Even though radium may be removed, it's not a certified type product for that. We have a lot of concerns for arsenic. We're on an arsenic bed right here. That's a big deal right now. And we've done a lot of work with the DNR (Department of Natural Resources) and the EPA here in Wisconsin on arsenic. We were doing some of the studies with them with this water. As far as the health aspects go with the Sanitizer, it's strictly cosmetic -- the secondary type contaminants. In our local water, and I'm talking in within a 30-mile radius, we have arsenic levels of 1,500 parts per billion. It's not uncommon. I should say it's uncommon -- we see a lot of 100 and 200 ppb arsenic levels here...
WC&P: These are just natural deposits?
Gruett: Correct. And it just happens we just happen to be in one of these hot spots. We did a lot of work with the state and put a lot of equipment out to see what worked and what didn't, especially with our medias we manufacture. And in some cases we were successful and in some cases not so good. It's not something we emphasize. There's certainly better technologies out there, better ways to handle the primary contaminants than with a water conditioner.
WC&P: Now, the Sanitizer is a water conditioner with a disinfection step in it. When was this introduced?
Gruett: This was introduced in about 1998. That was our first year of production of the Sanitizer.
WC&P: And you mentioned that this coincided with Water-Right establishing the independent dealer network...
Gruett: Yes. How the Sanitizer evolved was when we were out on real high iron -- you know 10-plus or 5-plus parts per million of iron; and in a lot of cases you had iron bacteria associated with it -- because of the zeolites nature as a basically sand crystal, we can chlorinate the zeolites and it won't be detrimental to the crystal structure...
WC&P: Whereas, at the same time it oxidizes arsenic or iron or a number of other like contaminants into more easily filterable forms...
Gruett: No, no. What we like to do -- and this is all part of the training -- is to keep the iron, the manganese, everything in solution. Now, the zeolites will filter. They are an excellent medium. They'll do as well as greensand will, as far as particulate side. However, a lot of what happens is, when you have precipitated iron, you get that -- I don't want to say submicron iron, but that half a percent that bleeds through. That's very, very hard to catch. And part of the training with the dealers is we want to keep the iron and manganese in solution. Don't let it precipitate out. We can ion exchange it off of the media a heck of a lot easier and we will take care of those problems...
WC&P: During regeneration...
Gruett: Correct, with the normal salt regeneration. When we run into a precipitated iron situation -- and we have visual tests for this -- there are tests you can employ to see if the unit will work or not because of this half a part or a third of a part that will leak through. That's one of the things that we like to state. For a lot of our dealers, especially when we're going through the wholesale channel exclusively, the idea of putting a conditioner in was to put it in and, hopefully, you never hear from the people again. And when you get out into these bad waters, they have to be able to identify what type of water to apply the equipment to, otherwise they're going to have callbacks. And that's always been the key to it -- is the education.
WC&P: But the Sanitizer has a disinfection step in it, does it not?
Gruett: Correct. Now, when we ran into an iron or bacteria problem, sometimes it would give us odors. What we told the homeowner to do was, when they were adding salt, to through a couple cups of bleach into the brine tank. That seemed to take care of it. And we've done that for 20 years.
WC&P: This would include when they would run into hydrogen sulfide smells or just a general biological growth?
Gruett: You kind of get that organic, septic smell. It's hard to distinguish from hydrogen sulfide. And that's something we do talk quite a bit about in the training process of applying these things. What we've found is if the homeowner did that -- if they chlorinated the unit -- then the smell tended to go away. Now, if it was true hydrogen sulfide, no, then the Crystal-Right medias are not real good about removing hydrogen sulfide. That's not their intention. We manufacture another mineral material down at Mineral-Right called MAZ. That is a true oxidizer that's a lot like greensand. That we use for true oxidation. Then, back in the mid-'90s, as I was saying, the DNR brought up some concerns that these media beds are becoming biologically contaminated on these bad waters.
WC&P: This is the same argument that erupted in Europe at roughly the same time which has led to the HPC Conference in Geneva in April, correct?
Gruett: Correct. Now, again, we're doing this more for cosmetic reasons. That's what the Sanitizer is designed for. What happened was, in talking with the state, they indicated they would like to see some type of means of chlorinating some of this equipment. That kind of evolved into the idea of why don't we generate chlorine from the brine during the regeneration process intead of having to rely on homeowners to pour it in. The technology has been out there and what we did was incorporate a chlorine generator onto the equipment which produces chlorine from the brine as we're drawing it in.
WC&P: So, you're not adding to, rather you're electrochemically creating chlorine...
Gruett: Correct. We do it in very small amounts and under a very controlled environment. Obviously, you can make a lot of chlorine. The more juice you give her, the more chlorine. We limit the amount that we can make...
WC&P: I noticed that you are marketing this in Europe also, which is where they've had some controversial views on common bacteria such as heterotrophic bacteria that we mentioned that's led to that conference next spring, which is sponsored by the World Health Organization and NSF International. How are the sales in Europe for the Sanitizer?
Gruett: The sales in Europe are very good. We are in joint venture with the Poellet Water Group on the Sanitizer valve.
WC&P: Same spelling as Charlye Poellet of K&M Plastics in Chicago?
Gruett: Correct, no connection though. We took our ideas to our vendor, at the time, Fleck Controls, and we incorporated this into a new product which they assemble for us now. Poellet Water Group buys from Fleck or Pentair just as we would. So, it was kind of a joint venture in this valve. We in turn, through Mineral-Right, sell the media which can be used with this valve in the European markets.
WC&P: What kind of growth have you had over there?
Gruett: I don't have access to those numbers. I know how much media we ship to them. It's grown continuously, I would say probably 25 percent per year.
WC&P: Wow, that's pretty good.
Gruett: Yes, business has been very good.
WC&P: How has that compared with growth you've experienced in the United States?
Gruett: In the United States, since the development of the Sanitizer three years ago, I think it's fair to say the company size has almost doubled. The dealer acceptance of the Sanitizer has been very good. It offers some unique capabilities. Not only do we have a specialty media or medias that we use, now we have a special control valve that is very unique to the industry also. It's been very good.
WC&P: What revenue range are you in?
Gruett: As we talked about earlier, I don't like to give out numbers, but let's say $10 million-plus.
WC&P: And, again, that's doubled since 1998.
Gruett: Correct, it would be fair to say that in the last four years, we've doubled in size.
WC&P: Are you anticipating similar growth now or how have recent economic issues affected you?
Gruett: Well, of course, Sept. 11 hurt everybody. The phones quit ringing that week. Since then, it's picked up. We're having a very good year. We're ahead of last year's sales. We're going to be probably 12 percent up over last year. From what our vendors tell us, that's good because the industry might be down a little bit.
WC&P: And your vendors include who?
Gruett: Pentair and Clack, those are the two big ones.
WC&P: How many dealers do you have now? What kind of growth in that have you seen since launching that in 1998?
Gruett: Since 1998, to the independent dealers, we have gained approximately 300 dealers. It's very hard for me to get a wholesale count on that because, going through wholesale trades, obviously, I don't have all the dealers that they sell to -- all the plumbers and well drillers. We have a lot of small dealers that do a very good job for us.
WC&P: Are the 300 ones you work directly with?
Gruett: The 300 would be since the Sanitizer has evolved. I think we're just a little shy of that right now.
WC&P: Has your wholesale business grown?
Gruett: Yes. The emphasis has been on the dealer end of it for the last three years. But the wholesale side is still the majority part of our business.
WC&P: By how much, like say percentage-wise?
Gruett: Boy, I don't have the wholesale to dealer breakdown, but I would say, with residential water softeners, it would be 70-30.
WC&P: Are there other areas you are in as far as commercial/industrial?
Gruett: Yes. Out of our total revenues, the C&I business would account for about 25 percent of our sales. It's not something that we actively pursue. Our strength is the problem water, the rural waters. The C&I business lends itself more toward the municipal-type waters, where it's relatively easy to treat.
WC&P: They come to you, in other words, based on word of mouth?
Gruett: That's correct. We do have some specialty companies that we do sell to, some engineering firms, that we do specialize in working with -- but those are very few.
WC&P: Are you familiar with any of the specific kind of projects or type of applications in the C&I section that are employing your products? For example, could you cite this company or this industry using it for this particular application?
Gruett: We do have some major corporations. I prefer not to give out their names at this point. It's some new applications geared more toward the Crystal-Right end of it. We have found, for instance, that Crystal-Right does a wonderful job of removing ammonia.
WC&P: I would assume these might be in agricultural applications, being in rural areas...
Gruett: Agricultural, pharmaceutical type applications where it's very critical to remove ammonia from the water. But, as far as long term, we're a bit cautious on that. As I said, these are relatively new...
WC&P: Within the last year or before?
Gruett: Within the last year.
WC&P: This being agriculture and rural, the thing that's popping into my mind are hog farms, chicken and dairy farms -- things like that. Some of these over the last decade with the industrialization of livestock production have grown to be almost small towns in and of themselves. It's no longer a case necessarily where every farm has a few so much as the industry's almost reached manufacturing stage, with huge amounts of animal waste produced and requiring innovative treatment to allow local ecosystems to compensate for it...
Gruett: No, we're more gearing it -- in the case of ammonia removal -- more toward where there's a chloramine issue and trying to remove the chlorine and ammonia. The zeolites do a very good job of softening and removing the ammonia at the same time.
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