Volume 43 Number 5
Brainstorming with Flowmatic’s Scott Brane
Current president and general manager Scott Brane says he sees a big difference in the industry from when he was a kid touring industry convention halls with his grandfather, Earl Brane, who seemed to know everybody in the room back then. Today, Earl-at age 85 and still designing equipment for the company-knows only a few people and it's Scott glad-handing customers and colleagues.
Doug Brane, Scott's father, is Flowmatic's CEO, but Scott, 28, has been president since 1999. Scott says their working relationship is ideal because they think alike and he's learned a lot from his father, who started Flowmatic in 1980. Shortly before that, Earl sold Brane Services to Bruner, which was among the companies for which he designed water softening valves. He also designed the valve for Hague's Water Boss.
With Doug at the helm of Flowmatic, they developed an RO membrane housing that could be opened with a cap and built a product line from that. Continuously adding new offerings from year to year, they expanded from Largo, Fla., to Clearwater, Fla., and in 1997 moved into a new 42,000-square-foot building on 26 acres, two hours north in Dunellon. They've sinced doubled staff size and anticipate construction to double the size of their facility with a new warehouse later this year.
Although he'd worked at Flowmatics since he was a middle-schooler, Scott didn't go full-time until after he'd graduated from the University of South Florida in 1994 with a business degree in advertising. At that point, the company had annual sales of $4 million. He spearheaded a new international sales department and a couple of years ago they brought on board Greg Willis, of Harmsco, and Neal DeLettre, of Shelco, to promote a new venture into commercial/industrial water treatment and better market the company's products. Last year, sales were $10 million. This year, $12 million is expected.
Today, Flowmatic's products are sold primarily through wholesalers in 82 countries, with Eastern Europe and Latin America showing the most growth and promise, Scott said. Among its customers are CUNO, Omni and Ametek. Among those it distributes product for are Omnipure, Hydroflow, KX Industries, Amtrol, John Guest USA, Jaeco, Filmtec and Osmonics. He sees price pressure from "big box" retailers and lower-priced Asian products affecting residential competition in the United States, but stresses that greater personal contact and customer service often can make the difference.
Before getting to the interview itself, here are a few details on Flowmatic:
Flowmatic Systems Inc.
WC&P: Give readers a little background if you would on Flowmatic, how it got started, where it is today and your philosophy about doing business?
Brane: Sure. Well, basically, this is a three-generation business. We got into the softening business first-water conditioning. My grandfather was in that, Earl Brane. He designed valves for numerous companies. One of them was Bruner. He also designed the Water Boss for Hague. That wasn't related to Flowmatic, but that's kind of what led us into this industry. At some point, I believe it was Bruner asked us to make a membrane housing that could be opened and closed with a cap. About 20 years ago, we developed that product for them. Just over the last 20 years, we've developed new products each year and built it up to what we have now, which is a complete line of products.
WC&P: What year did the company get started?
Brane: Flowmatics was started in 1980. Prior to that, we had another company called Brane Services. That was the company that manufactured the valves, brass water softener valves.
WC&P: That was the one your grandfather had started?
Brane: Right, my grandfather and father were in on that.
WC&P: When did that business start?
Brane: That was started in the late '60s. Earl started that. My dad joined Brane Services in 1971.
WC&P: Why did Brane Services stop and Flowmatic start?
Brane: I think that was mostly my dad's doing. He basically took over that part of the business. My grandfather, he's basically the designer, the engineering mind of the company.
WC&P: When he was designing valves for Bruner or Hague's Water Boss was he working for Bruner or Hague?
Brane: No, we actually wound up selling that company to Bruner, Brane Services. They bought the valve and all the equipment and everything. So, we started our own thing.
WC&P: I take it that was roughly around 1980.
Brane: Actually, it was 1984. Earl went to work for Bruner at that point. Later, he started working for Hague and developed the Water Boss valve for them. My dad didn't want to move north and stayed with Flowmatic.
WC&P: How did you get involved in the business?
Brane: I began working for my dad, starting as an assembly person as far back as middle school. I'd come by after school, screws things together for him, load and unload trucks, y'know. So, I've been around the business a long time and got to know all the customers. We've got a lot of customers now that we've had for 15 years or more. I got to know all the products from basically the ground floor up. I've put them all together. I've done every aspect of what gets done here at the company. So when I came aboard here in 1994, I was already pretty familiar with everything. It was pretty easy to step in and take on more responsibility.
WC&P: Did you graduate from college in 1994?
Brane: Yes, I went to the University of South Florida. I got a degree in advertising.
WC&P: So, sort of a good background in advertising, marketing and promotion...?
Brane: Yeah, I kind of knew I was going to get into the family business and knew that would be something I could utilize. There's a lot of business courses involved and I gravitated toward that direction.
WC&P: At what point did you become president?
Brane: I believe that was toward the end of 1999.
WC&P: When you first got started going as Flowmatic, you were manufacturing what?
Brane: The heart of our business has always been residential RO components. That's still a big part of our business. We started out with a few products and a few customers and, over the years, we've just kind of read the demand. Things that our customers asked for, we've made them, building up a the good line over a 20-year period.
WC&P: What's included in the line now?
Brane: Everything from fittings to cartridges, basically anything to do with residential RO. And, in addition in the last several years, we've expanded further away from that to get into more of a commercial/industrial line of products in reverse osmosis.
WC&P: How has that grown?
Brane: It's grown quite a bit actually. When I first came on board, I think we were at $4 million. And now, we'll probably be at about $12 million this year.
WC&P: Just C&I?
Brane: No, that's overall. But I attribute a lot of that growth to the expansion of product line that we've done.
WC&P: What do you anticipate for next year?
Brane: As far as new products.
WC&P: No, as far as revenues.
Brane: This year, I expect it to be $12 million. Last year, it was $10 million. I would anticipate similar growth beyond that.
WC&P: What are some of the recent products you've added?
Brane: Commercial RO.
WC&P: When was that added?
Brane: That was last year, but this year is going to be the big marketing push for that. It was introduced last year, though.
WC&P: How do you approach marketing that? What type of customers are you approaching? Do you have a particular tack you take? Does your product go to an end-user or through a dealer to an end-user?
Brane: No, we're strictly wholesale. We sell through the dealers, through other distributors. Oftentimes, there are several hands that have handled our product before it reaches the end-user. It's also a little bit different on the commercial side that -- as we got into it -- we found there are a few sales to end-users, such as factories and things like that, which will call you directly. Occasionally, there are some end-user sales on that side of the business.
WC&P: Can you give me some examples where you may have gotten some calls from an end-user and maybe even name the companies and what they wanted?
Brane: I can't think of any off the top of my head, but I don't take those calls directly.
WC&P: What type of applications were they?
Brane: It could be anything from an electronics operation that has process water and requires high-purity water where they make circuitboards and stuff like that. It could be ice companies that manufacture ice. We've sold equipment to companies that just make ice all day and require RO for their product water.
WC&P: How much of the business is commercial/industrial vs. residential?
Brane: Oh, a large part of our business is still the residential. The commercial/industrial for us has only been the past couple of years. I'd say it's probably only 20 percent of our business maybe.
WC&P: But I assume it's where you're forecasting growth will be on a higher scale in the future?
Brane: I think so because it's the new line for us and we're coming out with a lot of new products. And the thing we like about the commercial side is on a lot of the residential side, the products have just been turned into commodities and there's a lot of price battling. It's difficult to make margins. There's a lot of competition and price wars. We're trying to get away from the price wars and look toward different markets to expand.
WC&P: In other words, the residential market is maturing to the point where the difference between products is often more on price than performance?
Brane: Yes, definitely. There's no question that it's all based on price now often.
WC&P: So, while it's a good healthy market, where you're going to see more growth is going to be in other areas sometimes.
Brane: In other areas and, even in that residential market, just in other places -- outside of the country in some of the new markets opening up. We're looking for growth there.
WC&P: Well you and I really only got to know each other at the AquaTech 2000 trade show in Amsterdam last fall. So, what was your focus there?
Brane: Just basically look for new distributors overseas. The Amsterdam show for us is a good place to meet with international customers. It's difficult to make calls on all these guys that are all around the world. That's a show that everybody attends and we get to meet face to face with a lot of our international customers that otherwise we wouldn't see. So, more than just a sales point, that's kind of a socialization and catch up on sales meetings with current distributors and customers.
WC&P: Make the personal contacts that maintain and continue to build relationships.
Brane: Yeah, we really try. Beside having competitive pricing, it's important to have good service and a personal relationship with our customers. We think it's important to sit down and meet with them face to face, let them put a face with the voice on the phone and get to know them beyond just the business side of our relationship.
WC&P: Now, where all are you selling your product internationally?
Brane: All over. I think we sell to about 82 countries now. Basically, everywhere.
WC&P: Is there a particular area you have strengths or you see growth increasing moreso?
Brane: We're pretty strong in certain areas in Europe. Eastern Europe has been particularly good over the past few years. But we're looking for additional growth in markets in Latin America and South America over the next couple of years. I think those are going to be excellent markets that are going to be opening up.
WC&P: Why do you say that?
Brane: I get the feel from the market that they're either learning more about the industry; there's interest there, maybe more disposable income. I'm not sure what all is fueling that economy, but it looks promising.
WC&P: A little more stability lately overall?
Brane: It must be because we're getting a lot more calls from those marketplaces. We're trying to put more marketing effort in those places and it seems to be turning on.
WC&P: Any particular countries -- Brazil, Mexico...?
Brane: Brazil's been good. Mexico has always been good for us; I don't really include them in there. Argentina, despite their slow economy, Ecuador, even some of the countries in Central America, they've all taken a little more interest in our industry and its products, it seems.
WC&P: What about Asia?
Brane: Asia really hasn't come back for us. Fortunately, it wasn't a huge part of our business anyway so we weren't really hurt by it.
WC&P: Comeback since the Asian Flu?
Brane: Yeah, that was about three years ago. We really haven't seen the business that we lost from that come back but we're not really looking for huge expansion there.
WC&P: There's a lot of producers there...
Brane: There are. They tend, especially when the market's not good, to stay local. Right before that happened, about four years ago, they were starting to want to have more products made in the USA and search for stuff from here. But when the financial crisis happened, they kind of turned back to the locally produced product and I haven't seen them come back this way strongly.
WC&P: There's been frequent talk from time to time in the industry about, oh, knockoffs or copycat products from Asian companies that were very difficult to compete with on price. Has that factored in at all?
Brane: It makes a difference. It's difficult. There's no question that a lot of competitors from Asia, even when you go to the show, you see a lot more Asians there -- WQA in particular. But, you know, it's part of business. There's plenty of business for everybody. We try to differentiate ourselves with service and having things on hand at all times so we can ship what customers need right away -- not just compete on price. You just have to adjust and market your product in a different way -- give them something more than just a product and a price.
WC&P: And also go back to the personal contact as well.
Brane: No doubt. I think that's really important, having a good personal relationship with the customer and good service so they know what they can expect from you. It keeps them from shopping around. Even if you're a little higher, if they know the service is going to be good, there's not going to be many mistakes and they get they're stuff when they ask for it -- there's no reason for them to shop around.
WC&P: Tell me some particulars about your business there in Dunellon. Are you in a new building, an old building and how big is it? What's the role of your father? And how do you run your business in-house there?
Brane: Yes, my father is still involved as chairman. We moved into this building about three years ago. It's 42,000 square feet. We've got 26 acres here, so we've got pretty of room to expand. We moved up here actually from Clearwater. We were in Clearwater for the last 10 years. That's two hours south of here. When we went to expand and move again, Clearwater was just built out. There wasn't any place to go. We looked north where there was more open land and were able to find something.
WC&P: Where were you prior to Clearwater?
Brane: We were always in that area. Clearwater, Largo, it's all the same area within miles of each other. So every time we expanded, it was just into another building in that general area. But this last expansion, we outgrew the area. We wanted to build something ourselves to have exactly what we needed and we just couldn't find the land in Clearwater. So, we moved north, found a nice piece of property and have plenty of room to expand up here. Hopefully, we won't have to move again anytime soon.
WC&P: How do you have things split up there with residential and commercial/industrial?
Brane: Right now, we've got everything in one building, but we've got plans for expansion this year to build another probably 40,000 square feet onto our building. That's going to give us the ability to split things out a little bit and get into things we haven't been able to stock in the past. You know, the commercial/industrial products take up quite a bit more space because of their size.
WC&P: Who heads up that division for you?
Brane: Greg Willis, our national sales manager, his background is from more the commercial/industrial side. He used to work at Harmsco.
WC&P: I noticed in your ad you've also brought on board Neal DeLettre, who was with Harmsco and then Shelco more recently, as well. How does Neal figure into things?
Brane: Neal basically handles most of our marketing and just does some other corporate advising for us. And with Greg's background at Harmsco, he's more familiar with the commercial/industrial products and has been heading that for us.
WC&P: With what's going on in the United States, what are some of your strong areas here and how do you view this market and factors affecting things?
Brane: The U.S. market, it's been great. It's expanded a lot. There's been a lot more competition though.
WC&P: What about the economy? Lately, that seems to be a big issue, with a lot of worries percolating in some corners... mostly high-tech.
Brane: We haven't seen anything from that yet. But I expect if the economy continues on a downturn, you're going to see some growth slowing and it's eventually going to affect us.
WC&P: You frequently hear that Wall Street's the one having the heart attack and the rest of the economy seems to be doing fine. In other words, the contradiction of financial pundits forecasts and job projections -- the whole thing about the employment rate not dropping despite layoffs because we were almost at a zero employment economy where there were more jobs than people anyway. Now those people that weren't able to fill positions have people to fill them. What do you anticipate for the rest of this year?
Brane: I expect things to pick back up, especially if they continue to cut interest rates and come through with Bush's tax rate cut. I think that will jump-start the economy again. Still, I agree with you that the stock market people definitely have a heart attack over things happening lately. We haven't seen the slowing in purchasing. If it continues as it is, it's gotta catch up. People are going to stop buying and start saving. They're not going to keep on their spending fury if the markets keep going down and their investments keep disappearing.
WC&P: In terms of new products you've introduced as of late other than the commercial side, how do you approach that? Are you making changes to existing lines or introducing new products?
Brane: We're always trying to improve products that we have, while at the same time coming out with new products and things that nobody else has. We're always trying to read the market, getting feedback from customers -- "Y'know, if you just changed it this way..." If we hear that enough times then we know there's some demand for it and we'll develop a product to meet that demand.
WC&P: Do you do any custom or proprietary, private-label equipment for customers?
Brane: Yes, definitely. That's been a pretty big part of our business in the last couple of years. OEMs, they require custom stuff, colors, sizes or whatever is necessary. If the volume is there, we can give them a competitive price and supply them.
WC&P: Who are a few of your customers in that area?
Brane: We sell to a lot of the big guys like CUNO, Omni, Ametek even.
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