Volume 43 Number 7
ResinTech’s Mike Gottlieb Goes Mobile
Mike Gottlieb likes to joke that one day he'll be as smart as a Culligan dealer -- a tribute to entrepreneurial ingenuity of those who built the point-of-use/point-of-entry water treatment industry flagship on the dedication of multiple generations.
With sons Larry and Jeffrey, his company, ResinTech Inc., now has two generations of Gottliebs. He's as proud of the aptitude they've shown in the business as of the team he's assembled over the past 15 years, since leaving the safe harbor of Sybron Chemical where he was ion exchange marketing vice president. A number of other names at ResinTech that you'll be familiar with because they also write technical articles for trade journals such as WC&P: Peter Meyers, Frank DeSilva, Dick Chmielewski...
That exhibition of technical expertise is important to ResinTech as a smaller, niche player in one of the most competitive segments of the water treatment industry -- ion exchange resins. Gottlieb calls it "consultational service," where you aren't just selling a commodity but knowledge of the best way to apply resin and system configuration to solve a customer's problem. Honing his reputation as an ion exchange authority at Sybron, Crystal Labs, Betz and Permutit, he said, by the mid-'80s, he felt somewhat stifled by corporate environments. With agreements with overseas manufacturers to make resin to his specifications, he set out on his own as a one-man show.
"It's funny. Some people thought I was crazy. I really just wanted to be able to express my creativity. I didn't do it for money. Money's just the scorecard. You go to a show and people ask how you're doing. You say, 'I just want to be creative.' They say, 'What a putz.' That's the motivation to make money. In the end, though, you've got to have the freedom to be creative," Gottlieb said.
His style of leadership, he says, is to offer that freedom to his staff, which translates to steady growth. ResinTech added activated carbon to its product offerings a few years back "by accident," he notes. And it's also made four acquisitions in 1-½ years:
* December 1999 -- two business lines from Osmonics Inc., its Vaponics Aries DI Loop and related disposable cartridges.
* October 2000 -- Hydro Components, a cartridge division of Electro Pure Inc., in Laguna Hills, Calif.
* April 2001 -- Chicago's Ion Exchange Products, a cartridge maker for hospitals, pharmaceuticals, laboratories and other specialty high purity water applications.
ResinTech consolidated those as the Aries Division at its Cherry Hill, N.J., headquarters near Philadelphia where the company has two buildings totaling nearly 30,000 square feet. A move is in the works this summer to a 50,000-square-foot-plus facility in West Berlin, N.J. -- almost doubling current space. In January 2001, it also bought out a PEDI regeneration facility it was a part owner of for five years -- ACM Co. -- and moved it from Wilmington, Del., to Forest Hills, Md.
Gottlieb comments freely on competition among ion exchange resin players, market commodification, increased softener efficiency pressure and other trends. Before getting to the interview itself, though, here are a few details on Resintech itself:
1980 Old Cuthbert Road
And now for the interview:
WC&P: I generally start out these interviews asking the person to give me an overview of who their company is, what all it encompasses and how did it get to where it is today. This isn't so much for me as it is a backgrounder for readers of WC&P who may not be as familiar with ResinTech as we are here. You started out doing what?
Gottlieb: I started in my basement. I left my job at Sybron in 1986 after securing a toll manufacturing agreements with foreign suppliers, foreign factories or source plants, to make products to my specifications for me under my name. And then I quit Sybron and started ResinTech. It started in my basement as a one-man company to fill the needs of a very, very small market -- the value-added or consultational sales market -- where I could use my applications technology together with excellent, quality products to provide products that would meet user expectations.
WC&P: What kind of customers were you working with at that point?
Gottlieb: With anybody that would buy resin from me.
WC&P: How long had you been with Sybron?
Gottlieb: I'd been with Sybron for 13 years.
WC&P: Was that your first company?
Gottlieb: No, I had been in ion exchange since 1965, so I already had 21 years of experience. I started at the Permutit Company designing demineralizers and softeners.
WC&P: It seems as if everybody in ion exchange early on has been with Permutit at one time or another.
Gottlieb: I can't think of a better place to have started. They taught you in their design section or in their manuals. And I don't know that they understood those manuals were such wonderful teaching tools, but to me they were. They laid out all the logical reasons why you make certain decisions when you design a piece of equipment, both from a kinetic point of view and from an equilibrium standpoint. Now, I happen to love ion exchange, so perhaps I got more out of those design manuals than most. I took them home and studied them. But that was I think a very good foundation. I left Permutit and went to Betz Laboratories. Before they started the separate consulting division, I was part of a six-man senior consulting group. I was the youngest person in it.
WC&P: How old were you at that time?
Gottlieb: It was 1967 and I was therefore 26 years old. I know the date because the Arab-Israeli war broke out while I was there. I left Betz and went to Crystal Labs in Hartford, Conn., a small company that made demineralizers for steam irons and also competed with Culligan at the time. They were the only other people we knew of at the time in the PEDI business. But they were a PEDI supplier and I worked as their technical director. My job was to prepare specialty resin formulations for various laboratory demineralizers, to build their regeneration plant for the PEDI business, to test incoming materials, to test the finished products. I did everything. I actually built the equipment, I ran the equipment, I mixed the resin, I tested the resin, I went upstairs and checked the people making the cartridges to make sure they were being done correctly. I was about 28 years old when I took that job.
WC&P: So, roughly 1969?
Gottlieb: Yeah. Then, I left them in 1973 and went to work for Sybron. By the time I'd left, I was executive vice president and general manager of the company [Crystal Labs]. When the founder died, there was a problem with the estate and I left. At Sybron, I started as their product manager and 13 years later I was their SBU vice president for ion exchange.
WC&P: SBU -- strategic business unit?
Gottlieb: Yeah. Along the way… well, Sybron had different structures that were not fixed in stone. They changed. At one point I was SBU vice president for five strategic business units, which was essentially the same as being president of five small companies. At another point, I was vice president of marketing for the ion exchange business. And I felt that I had gone as far as I could go with the management with Sybron. There were philosophical differences. We parted on friendly terms. I'm still on very friendly terms with all the people. But I had a love and desire for technology. And we had a stated marketing policy that said we could do related things for technology, but in fact implementation was a lot different than the theory. So, I quit and started ResinTech so I could carry out a business plan based on combining technology with quality products. Also, I could overcome a frustration that I had had in getting products that I thought we could. I felt I could get better products made for me to my specifications than I could working at one company.
WC&P: Was this kind of scary for you? You're going from big corporate shelter to out on the wild seas of commerce by yourself...
Gottlieb: I was surprised when I started at Sybron. It was the Ionac Chemical Company then. And I thought it was a really big company, but I realized there were very few people in their ion exchange division. When I started, I looked forward to learning quite a bit about ion exchange. I was really amazed to find out that I was the one who knew the most. I didn't accept that at first and it took about a year to sink in that I knew more than they did. I ended up writing papers using others people's names on the papers to make it look like it was bigger than a single person. I remember one occasion where we took one of my "co-authors" out to the International Water Conference and he had not read the paper yet. He had nothing to do with the paper other than he was the fellow in the lab who carried out the work. I went to his boss -- and at that time Ionac had a suite in Room 1490 at the William Penn Hotel -- and said if somebody comes into our suite and mentions the paper and he says, "I wouldn't know; I've never read it," I'm going to throw him out the window. So, before we got to the water conference, needless to say, the fellow had read the paper. But I did a lot of that -- so leaving Sybron and starting a small company was really leaving a company whose ion exchange department I'd created to start my own again. It was a very natural thing to do. There was nothing I was doing for myself I hadn't already done for them. I started to write papers, I started to hire and train other people and, 15 years later, here we are.
WC&P: Let's talk about what's going on right now and then jump back to that interim period. But in the last year or two, ResinTech has been buying up a number of smaller players. It looks kind of like a niche strategic buying spree. Talk to me about what you've bought in the last year to two years and what your philosophy has been. Can you tell me who you've bought and what you were thinking when you've approached those companies?
Gottlieb: We've been buying up small cartridge companies. We don't sell through distributors because of the way we sell. Not that we don't have distributors, but it's not our major channel. If you're in a consultational mode, it's hard to sell through a distributor when you have to provide the technical support direct. So, when we sell through a distributor, we generally sell on a commodity basis and it's not the same channel for us. But a lot of our regular customers and also some of our distributors have come to us asking us if we could sell cartridges. We were supplying some of the cartridge companies with resin and, in some cases, they were asking us if we would make cartridges for them. As the consolidations were occurring in the industry, a lot of our customers were finding themselves orphaned. They were no longer able to get from their parent franchise organization all the product line that they used to get and there were more pressure or requests put on us to provide cartridges or help people who made cartridges supply them.
WC&P: I want to make sure I'm clear on this. The reason was because -- with all the acquisitions and mergers -- it had cut off supply lines?
Gottlieb: Yes. When a parent company buys a franchise and then tells other franchises: "We're changing our marketing and distribution. Cartridges are now going to be done in-house, not through franchises." You now have a bunch of franchises who are unable to get their source of cartridges. And a lot of our people were regional, service-oriented, ion exchange suppliers, i.e., PEDI guys. They call on Haas, they call on laboratories, they call on a lot of small industries where they use a lot of laboratory demineralizers. Just in the middle of this -- while all of this is going on -- Ed Fierko calls us up and asks us if we were interested in buying the Vaponics or the Aries Division of Osmonics that was part of the Vaponics Corp. that was being dissolved. They had purchased Vaponics and decided that it as an entity -- I can't say this officially, but my surmise is -- they felt there was duplication of product line, they were consolidating within themselves and they disbanded Vaponics by selling off the pieces. We bought the Aries and Vaponics pieces. They Vaponics piece -- Vaponics cartridge business -- was a series of ion exchange cartridges that included ones made for the Aries unit, which they also built and we bought also. So now, we were making cartridge demineralizers and the systems that held them. The neat thing about Vaponics is that Verity Smith had been general manager of Barnstead and right after the purchase of Barnstead by Fottler/Permutit, which later became Sybron, he quit and started Vaponics. The first thing, of course, he did was to make cartridges that were compatible with the Vaponics line. By the time we purchased that business, Vaponics cartridges are interchangeable. They have cartridges that are interchangeable with the complete range of competitive cartridges, those made by USFilter, Barnstead, Millipore. Our customers, at that time, were asking us if we had anything they could use in USFilter, in Vaponics, in Barnstead… And when Ed Fierko made that phone call, we realized the answer could be, "Yes." So, we had a demand and it fit. I had come from the cartridge business. I knew how to personally make cartridges. I had worked for seven years as a manufacturer of cartridges as a head technologist at a small company. But 30 years later, I still had that knowledge plus the experience I'd gained since. It made good sense for us. We went up. We took a look at it. My son Jeffrey, is business manager, and Larry, who runs the Vaponics business and is kind of our top mechanical engineer here; everything they were doing we understood and saw areas where we could make a contribution to the success of that line, not just take something and milk it. It made sense to bring it into our company. There would be synergism, marketing and technical as well as product. We were a supplier to Vaponics. We supplied them with their resins.
WC&P: Is Barnstead the one that 's now part of Thermolyne?
Gottlieb: That's correct. Now, we had been calling on some of these other companies and had gotten tremendous test results… over the 10 or 12 years before purchasing it… from competitors over competitors products at several of the cartridge manufacturers. But, see, we weren't getting anywhere. We were told we set a new record for reaching a low TOC. Even though we weren't a regular supplier, they tested things from their regular inventory for their exchange tank business that we were supplying for some of these people and found that our everyday products were better than the best they were getting from competitors. And yet, we could never get in there. They had a marketing reason. They had a contractual reason. And yet, it was clear that we would have to be selling on a commodity basis to do that. When it became an opportunity, it was an opportunity meeting a need. It really made sense. Everything came together. We bought the product and Ed Fierko was a real gentleman to deal with. It was like buying a new car or house -- it was the first time I bought a company. And Ed helped me through it. He was a very nice, honorable guy. I can't say enough nice things about him. Of course, I've always had good relations with Osmonics. I've always had respect for Dean Spatz. I just felt comfortable doing it. So, we bought that business and the next thing we found out was we were able to make certain changes that were favorable. The results were rewarded by increased growth and sales. The next thing we had to do was hire more people to help us run it.
WC&P: Were there any sort of differences or challenges in integrating that? This is your first acquisition. I mean I would think there would be a little bit of a learning curve in there somewhere. Correct?
Gottlieb: Yes, there was, but not as much as you'd think. First of all, before we bought this business, I took our top management team up. It was Peter Meyers -- our technical manager, myself, Larry Gottlieb, Jeffrey Gottlieb. We all went up there at different times and sometimes together -- I think three different times -- and stayed for a few days working in their business with different assignments. And our instructions were that I gave to everyone including myself -- I looked in the mirror and gave these to myself -- you will not make any comments, you will study what they are doing, you will learn what they are doing. Our goal was that we were going to move the entire facility down; I think five or six trailer loads of equipment came down over the Christmas holidays and that by Jan. 4 of that next year, 2000, we would be in business. Our goal was to start making cartridges that morning. We have some people who have some ideas like everyone else about how we could always make some improvements. I said let's make the improvements later. Right now, let's assume that we don't as much as we think we do and they know more than we think they do. Let's go down with that attitude and make sure we can do it at least the way they can do it. That's what we did. We started out making cartridges exactly the way they made them. There were one or two changes in the process. From my 30 years ago experience, I was able to help them solve a problem they had. By the time we took the line over, a problem that had plagued them with leakages had disappeared. They made the change in the process of us buying them and, by the time we got it, we had zero defects and zero problems and were able to avoid those going into the future. It was all positive. We started out with what they did and made some small changes and continue to make small changes. Today, the cartridges are made here with happy little dwarves working in an area that we call the Bat Cave, which is where the cartridges are made. As a result of buying that and some other companies, we outgrew our facilities and are now in the process of moving to West Berlin, N.J.
WC&P: When is that going to be complete?
Gottlieb: We expect to have some people over there this summer and have our production facilities moved over there by October.
WC&P: How long have you been at your current location?
Gottlieb: About 10 years. I'm in Building 1 of ResinTech. There's two buildings. Building 1 is about 11 years old. Building 2 is about 5 to 7 years old. We outgrew Building 1 and bought Building 2, which is about twice the size of Building 1. And the new one we're moving into is about 50 percent -- no, it's about 200 percent of the combination of the two.
WC&P: How much space do you currently have?
Gottlieb: We have between 25,000 and 30,000 square feet. And the new building is going to be something over 50,000 square feet. It also has much higher ceilings. It's a real manufacturing building. Ceilings are 30 feet high.
WC&P: How big are Building 1 and 2?
Gottlieb: Building 1 is a little under 10,000 and Building 2 is something under 20,000 square feet.
WC&P: Are you adding 50,000 square feet to what you're doing?
Gottlieb: No, we're going to be moving over there. We have an agreement for somebody to purchase both of our buildings.
WC&P: The 50,000-plus building is an existing building?
Gottlieb: Yes. It's approximately eight miles from this location.
WC&P: The other businesses that you bought, tell me a little about the transition to those, please.
Gottlieb: After we bought the Vaponics line and things went very smoothly -- it fit into our line beautifully -- our existing customer base wanted " in on the action." We, of course, had their customer base and were immediately selling them. Our old customers immediately started buying. So, we kinda doubled the business.
Gottlieb: Well, I don't want to give specific numbers. We are a privately held company. Let's just say we increased sales significantly.
WC&P: In the past two years?
Gottlieb: No, I meant in the first year. We've sustained that growth rate. I don't know the exact numbers off hand, but let's just say we've had nice growth both years.
WC&P: So, what kind of revenues does ResinTech pull in?
Gottlieb: Let's just say between $10 million and $25 million… That's a broad enough range isn't it? We've had a healthy growth rate in each year since we've started the company. We've always had a significant growth every year... It's always been better than 10 percent. In the last few years, we've had sustained growth of better than 20 percent.
WC&P: You're anticipating similar rates for next year and so on?
Gottlieb: Oh, yes. On the way, the people who we were supplying resin to who made cartridges were suffering from their own problems. For one reason or another, they came to us and asked us if we would make cartridges for them. And we said certainly. The one thing I want to stress is there's two things I'm proud of about my company. We have a reputation for excellence and we have a reputation for integrity. That people who we supplied resin to that were making cartridges came to us and asked us to make cartridges for them is one of the best compliments I've ever had. And we did that. In fact, one of them later asked if we would mind buying his business. It was his idea, so we said, "Sure, why not." And we reached an agreement to purchase his business. That was how we bought one of the companies. Again, it was just a cartridge company. It was the Ion Exchange Products Company. That was the last of the acquisitions. In between, one of our tech reps, Dick Chmielewski, out on the West Coast, came across a company that wanted to sell off one of their smaller product lines. They didn't think it fit in well with what they were doing and had heard we were getting into the cartridge business now. Would we be interested? So, Jeff Gottlieb went out and looked over the business and thought it was a good fit and purchased the business. He did call me and discuss it with me and his brother and our other senior managers, but I'm kind of proud to tell you my son Jeff bought the business. He did it with dad's money, but he bought the business.
WC&P: It's a little different from borrowing the car, but…
Gottlieb: Yes. Actually, I should say Jeff and Larry, because although Jeff was leading the way, he and Larry spent more time on this than I did.
WC&P: What's this ACM Company that I see listed as a "sister" company on your website?
Gottlieb: Oh, that's a PEDI regeneration operation that we bought into about five years ago. It's a resources recovery and waste treatment company that offers regeneration services for metals containing waste such as plating, circuit board rinsing and other chemical processes. It was located in Wilmington, Del. We got invited into ACM because of our technical prowess and wound up owning it. We closed it in December, took over in January and moved it to Maryland. I don't think we ever sent out a news release about that.
WC&P: That would make four acquisitions then, yes?
WC&P: How did all these acquisitions affect personnel? For instance, say two years ago, how many people did you employ?
Gottlieb: I couldn't tell you. I'd have to sit back and calculate it, but I would guess that, today, we probably have about 50 percent more people than we did two years ago.
WC&P: How many people do you employ today?
Gottlieb: Something around 50, round numbers.
WC&P: This is with three acquisitions?
Gottlieb: Correct. But of the last two, on one of them, we did add one person in our cartridge business. I mentioned that we've made some changes in the way the cartridges are made. We've modernized it and, when you take something that wasn't modernized and modernize it, you're talking increases on the order of magnitude increases in production rates… and productivities. So, our biggest reason for having to move was inventories. Our biggest bottleneck is getting things in and out of our plant. About two months ago, we produced over 1,000 feet of regenerated resin, enough to make almost 2,000 feet of mixed bed. And we did it in 16 hours here. By that, I mean we started production and shipped within 16 hours. So, why would we have to move to a bigger plant? I think that production rate is probably equivalent to the U.S. market for mixed beds because, in order to get everything in and out of our plant, it looked like a Cecil B. DeMille movie. You had all the people moving around moving stuff in and out. It was just too many physical space bottlenecks.
WC&P: You're going to make this move starting this summer. When do you anticipate having it completed?
Gottlieb: I don't know. The current owner of the building in the contract had the right to hold back for one month and has exercised that right. We also have an agreement with them as tenants, just as we have with the people who will be leasing our building. We will be leasing from them in the interim. So, the actual move date is up in the air. Our new building will be leasing to the new owners until we get everything signed. It's like musical chairs.
WC&P: Do you anticipate having to hire additional people? If you're anticipating growing another 100 percent in a year or two…
Gottlieb: Oh, yeah.
WC&P: Where do you see the company being in terms of personnel at the end of 2002?
Gottlieb: I don't know because there's a couple of things we're working on that can reduce labor requirements. But, as the business grows, you have more diverse customer lists, more diverse customers, more diverse selling tasks… so, we think we'll be getting much more productivity out of our plant in the new location and that will slow down the growth in personnel. But selling the way we do requires a lot of effort. One of our biggest expenses is selling our product, because our sales reps in the field are all experienced technologists. They're respected technologists and they make certain that our products meet the customers' expectations. I can't state that more strongly. If you buy a Cadillac or a luxury car and take it into the woods to go hunting, it may get you there -- but is it the best use of the vehicle… The right product for the right application. You take our best product, our most expensive product, and use it in a home water softener -- it won't work. You take a home water softener resin and use it in a home water softener, it works beautifully. Now, that's a simplification, but we deal mostly in the industrial and specialty application markets. In these markets, there are specific goals at each specific location that vary by location. In a softener market, they just want soft water. They may want an efficient softener, but that's the softener manufacturer's job more than the resin's.
WC&P: Let me stop you for a second because that analogy you drew happened just as I was turning the tape over. In it, you were saying that you could drive a Cadillac into the woods to go hunting, but it's not necessarily going to be the best vehicle for the job.
Gottlieb: That's right. In fact, it could be the worst vehicle for the job. The best vehicle would be a very inexpensive 4-wheel drive car with big wheels and an ugly look. Our people go into an industrial application where the fellow has a chemical process or process line or he's treating the water for making a product. And the specifications are the water has to have a certain degree of maximum concentration of certain ions and certain other parameters. And he's got a temperature limitation he has to be higher than. And he needs a resin that will perform at those levels. It's not the same selling as in the more commodity markets.
WC&P: Let's talk about that two things real quickly. One of them is obviously this would be a good segue for discussing the team that you've assembled; but also going back to what you mentioned earlier about improving efficiencies and modernizing certain procedures. I would assume that means you've put in some instrumentation and automation into your production processes and those of a couple of companies you've bought that make growing personnel less a factor in future growth. Correct?
Gottlieb: Could you say that again?
WC&P: I thought you might say that. Basically, with modernization, instrumentation and automation, you've effectively improved production processes such that you don't necessarily need to add more people to continue to grow the company.
WC&P: In what ways have you done that? I'm only making an assumption. In what ways has this been reflected at ResinTech as well as the companies you've been assimilating?
Gottlieb: I'm not going to answer that question directly. I'll answer very indirectly. What we've done is we've had our best people out in the plant looking at how we make products. We've had our best people hitting the books as far as theoretical approaches to achieving better quality or production rates. We've had our people sit down and discuss and plans. We've had assignments to one- or two-person teams to keep it small and flexible and come up with solutions that we've then tried. And this involved everybody right up to and including myself. So, what have we done? I call it leadership. Not that my people need me to stand there and say, "Follow me, guys." But it sure avoids having me sitting in an office and saying, "Who's doing this? Why are you going to do that? Let's hold a meeting. I want a full financial and technical review of what your approaches will be." Those are bureaucratic speed bumps to progress. In our company, we don't have those. What we have is a management that gets involved in what we're doing and participates. By the very act of participation, I am providing leadership, even though I may not be leading. Peter Meyers may be leading that particular phase of it. But the fact that I'm participating is a form of leadership that you just don't see in bigger companies.
WC&P: Peter, again, being -- for the readers?
Gottlieb: Our technical manager. For 20 years before he joined ResinTech, Peter was the technical manager for L.A. Water Treatment. At the time, I think they were the largest industrial water treatment company in the world. Anyway, we're fortunate to have Peter with us.
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