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December 2001: Volume 43, Number 12

Part 2, Getting it Right with Water-Right’s Gruetts
by Carlos David Mogollón, WC&P Executive Editor

The following is a continuation of our interview with Kurt Gruett, vice president of Appleton, Wis.'s Water-Right:

WC&P: And the pharmaceutical uses, those are for high-end for ultrapure water applications?

Gruett: For high quality type waters, that's correct.

WC&P: I assume they use it as a polisher.

Gruett: Or as pretreatment, correct.

WC&P: We look forward to hearing more about details of that.

Gruett: As soon as we feel comfortable about that technology, you will be hearing about that also.

WC&P: When did you actually get involved in the business?

Gruett: Well, just like a lot of the small family businesses, I got involved at a very early age. I worked back in the shop. Even before that, my father and I would make program wheels for the old 2500 valve. They still use program wheels.

WC&P: What's a program wheel?

Gruett: You've got to put the little pins in to tell the unit when to cycle or how long to regenerate...

WC&P: Kind of like my lawn irrigation system?

Gruett: Correct, except these would have a series of pin spaces and you'd have very small pins and you'd have to pound them in. I'm sure a lot of the readers know what I'm talking about in that it's a very tedious and time-consuming task. And we would get paid about a penny a program wheel. At the time, we thought we were getting rich, but really we were just wearing out our fingers. So, you know, we started early. In the summertime, we always had a job. We would sweep floors or do whatever or help assemble water treatment equipment.

WC&P: Since you were age 9 or 10?

Gruett: Right. Me and all of the boys. I have two brothers in the business. We all worked in the business in some facet while we were going to school.

WC&P: So, you came on full time when?

Gruett: I went to college for a year. This is back in the early '80s when there was a pretty big economic slowdown. As a matter of fact, we lost three of our five largest wholesalers at that time due to them going out of business.

WC&P: Wow. How did you handle that?

Gruett: It was tough. At the same time, we also lost some key personnel in the manufacturing end. So, after that first year of college, I decided to stay on and help the business struggle through those times. It was a rough period for us.

WC&P: This was in '82?

Gruett: This was in '82-'83.

WC&P: So it was during that recession at the beginning of the Reagan Administration, when things were a lot harder than they are now.

Gruett: Correct. I'm sure other companies went through similar troubles at the time.

WC&P: Today, you're vice president. How long have you been that?

Gruett: Like I say, we throw titles around loosely here. My official title is secretary/treasurer. My two brothers are vice presidents. Assuming the day-to-day operations, that's sort of evolved over the last 10 years, let's say. I happen to be the oldest son and it was just sort of natural for me to assume this position.

WC&P: Your two brothers are?

Gruett: Greg and Guy. Greg actually lives near Harrisburg, Pa., and he covers the East Coast for us. Guy works out of the Appleton office.

WC&P: So, how does this work with it being an All in the Family affair, so to speak? How is the day-to-day working relationship? And are there other key people you'd like to mention as well?

Gruett: Oh, yeah. A little over three years ago, when the Sanitizer was coming out, we were lucky enough to hire Mike Hamberger, who a lot of people in the industry know. He was with Alamo, he was with Fleck for quite a long period and -- I don't want to age him -- but he's probably got about 35 years of water treatment experience. He's really helped develop this dealer network and done a very, very good job for us.

WC&P: Where in the Midwest are you at? By that, I mean I know you're based in the Midwest, but how far and wide does your market go?

Gruett: We do a very good job east of the Rockies. We're a little sparse down in the Southern states. We do very well in Florida. We do distribute the Sanitizer valve and the medias to Western Water, Dan Robey's group out in California, and they distribute the Sanitizer throughout Washington, Oregon and California. Up in Canada, we distribute through Water-Rite of Winnipeg. Now, it was FilterSoft, which has been absorbed into Water-Rite -- so it's kind of ironic that we distribute through another Water-Rite up in Manitoba.

WC&P: That's not a subsidiary?

Gruett: No, no, that's Water-Rite -- R-I-T-E. They are an independent OEM in the Canadian market.

WC&P: So, a sister company only loosely related in name...

Gruett: Correct.

WC&P: How does China come into play?

Gruett: Well, as a matter of fact, I don't even know if they have the material yet. But, we've worked with several companies in China and, again, we don't really know where it's going to lead to yet. They are going to use the Crystal-Right materials in their water treatment over there in the Chinese market. The company that we're selling to is big into the boiler type treatment applications. It's been a very recent development. Like I said, I don't even think they have the material in stock at this point.

WC&P: This is recent as of when?

Gruett: In the last two months.

WC&P: Who spearheads these type of things for you?

Gruett: We met this individual at WQA at the show and it's been since March that we've been talking and negotiating to them trying to put this thing together.

WC&P: Well, there's a little extra value and incentive for people to go to the WQA convention and trade show, eh?

Gruett: Oh, yeah. At the WQA show, it's all business. It's been wonderful to us, especially in the introduction in the beginning of the Sanitizer. As I mentioned, it's something new and unique to this industry that you don't see a lot of entirely different things a lot. In this industry, from year to year, you can say there is kind of a status quo out there. And the Sanitizer was very well received.

WC&P: Are there tricks there? What are some of the challenges in dealing with a country as far away as China and with the different sort of economic system that they have?

Gruett: Well, of course, with the different economic system, there's tricks. I don't know that we've learned them all yet. Everything is secured through letters of credit and those types of things. But, no, we're still taking lessons with the Chinese market. We're learning as we go.

WC&P: Are there other markets that you guys are working on? For instance, Glenn, your dad, once wrote an article for us, a "World Spotlight" on the Ukraine and Russia.

Gruett: That's all handled through our European distributor, the Poellet Water Group. They distribute through all of Western and Eastern Europe. We've done quite a bit of work in Poland. The European market is quite unique in that a lot of countries have municipal water throughout the rural areas. They have treated water. But what they've found, especially in agricultural areas is that water is so expensive to feed to the cattle, or livestock, if you will -- that they are now starting to drill wells to try to avoid the cost. Once they drill the wells, they realize they have iron and manganese and so forth and that they have to treat the water. It's been just the opposite of what's been happening here in America. Here, we see the tendency for people to try to push rural water systems; and, over there, they're starting to get away from it.

WC&P: Going the opposite direction.

Gruett: Yes, it's just too costly.

WC&P: You mean trying to push long pipe solutions that extend municipally treated water into rural areas...

Gruett: Correct.

WC&P: You mentioned the WQA earlier; what are things that you see that have affected the industry that you see as important? What are things you've felt the impact of -- based on trends, etc. -- and proved a challenge for Water-Right and how has it overcome those?

Gruett: I think the biggest thing we're aware of or concerning ourselves with is on the regulation end of the component side of the equipment.

WC&P: You mean materials safety?

Gruett: Materials safety and how that's all going to end up being played out. In Wisconsin, we have to have all of our equipment state certified. Anything that we state has to be state-approved. Anything that we put into writing has to be approved by the state. The claims that we make, the iron removal, the manganese, all that has to be state approved.

WC&P: I take it you know the Department of Health very well.

Gruett: The Department of Commerce is who's in charge of this. We work very closely with Glenn Schluter (sp?) down there. But because of our equipment, because we don't fall under per se set standards... Our unit does multiple things. It removes hardness, iron, manganese. It will raise pH. So, there isn't the protocol developed for that type of certification. And it's very difficult.

WC&P: How do you handle it?

Gruett: Well, right now, we're observing and trying to see where the component end of this will go -- if they will validate by component issues. If this component is approved, can we validate a complete system upon approved components.

WC&P: You're referring to the whole issue that's been under negotiation with NSF for the past few years regarding the Standard 61 materials safety determination: How exactly is the test done and will they accept a list of components that have passed individually to validate an entire system?

Gruett: Exactly. Ultimately, I hope that's what goes through. And, it'd be nice to have. You know, right now, you have different states requiring different things and it's very difficult to keep track of because of the geographical area that we cover. Everybody wants different things. It'd be nice to see one set thing throughout the whole country.

WC&P: Well, the four states that are always mentioned are Wisconsin, Iowa, Massachusetts and California. And you're located in one and doing business in all of those.

Gruett: Yes, it's an issue that we do watch closely.

WC&P: What about other issues that may be more macroeconomic related to the market -- i.e., acquisitions, consolidations, supply chains and how those are affected? You mentioned you work primarily with Clack and Pentair...

Gruett: Those are some of our bigger vendors, correct. The consolidation within the industry, especially with the Pentair and Structural, yes, it's had an effect on us.

WC&P: In what way?

Gruett: We're a very loyal company, not so much to products as to people. And, obviously, we can buy components from anybody. We just don't jump for the sake of jumping to a different manufacturer. We've bought Structural tanks since day one. And, I know that -- well, I don't want to say there's pressure out there -- but it's something that we're not real comfortable with, making a change...

WC&P: With Pentair and Clack, you're sitting on a situation where Clack just switched from Structual to Park tanks, which is now owned by Sta-Rite.

Gruett: Correct. And we never buy tanks from Clack anyway. We've always bought from Structural, even though they were a big distributor for Structural. And I don't envision us buying tanks from Clack -- we would buy directly from Park, if that were ever the case. But, right now, I don't see any advantage in switching.

WC&P: But I take it there are some competitive pressures being put on a company like yours and you're being solicited constantly for new business?

Gruett: Oh, sure. We're always been solicited.

WC&P: Has that solicitation level increased or decreased, since that's telling about how competitive the marketplace is right now?

Gruett: I would say it has increased. Pretty much, though, this is a small industry. I mean Water-Right knows what the Hellenbrands are doing, what the Bret Pettys (Aqua Systems) are doing. Everybody knows what everybody's doing. There's no secrets out there.

WC&P: I've heard that before.

Gruett: It's a people business. You buy from people who you are comfortable with. And, right now, we're at a comfort level with our current suppliers -- and that may change. I can't look into the crystal ball. God knows, there's been a lot of changes going on in this industry. But, like I say, we're very loyal, maybe to a fault. Maybe we should switch a little to keep people on their toes. I don't know.

WC&P: What are some of the competitive issues that you feel?

Gruett: Certainly, in the residential water softening market, i.e., hard water, that's a very competitive business. There's a lot of "me too" types out there. That's why the Sanitizer has been important to us. It gives us our identity as the problem water people. Like I stated earlier, we'll take the good waters but we really specialize in the bad water.

WC&P: You were mentioning one of the growth areas might be expanding into some of the municipal areas. Is that where you feel that?

Gruett: In commercial/industrial or residential?

WC&P: In residential?

Gruett: Yes. Certainly, there's lots of opportunities there. But that's not our specialty. We're good at training people. We're good at the bad waters. We want to concentrate on what we're good at. Our forte is the problem waters. Certainly, there is a market there. You've got some of the "Big Box" people going after that. And we don't really concern ourselves a whole lot with that... I shouldn't say we're not concerned. We don't actively pursue hard water areas in the country.

WC&P: Does that free you from some of the price pressures that others may complain about in the market?

Gruett: It does to a point. We would like to be able to sell to a lot more of that, normal water softening treatment. But because of the price points and let's call it the mail catalog type shops that are out there, the margins are just not there. Other people can do that. They're geared up for that. If you wanna buy a plane Jane water softener for "X" amount of money, we're probably -- I shouldn't say probably -- we're not going to be the cheapest out there. Along with the Water-Right products comes a lot of training, a lot of education and that all takes time and money. We don't get down there and I don't want to say wallow in the mud. We can be competitive, but to a point.

WC&P: I was curious, how big is Mineral-Right compared to Water-Right?

Gruett: Volume-wise or, let's say, dollar-wise -- 30 percent. I'm not going to give you dollar amounts on what they do...

WC&P: Is Mineral-Right's growth comparable?

Gruett: Oh, yes. If not faster.

WC&P: How many employees are there between the two different companies?

Gruett: I believe we're at 43 right now.

WC&P: Combined?

Gruett: Yes.

WC&P: How many do you have with Water-Right?

Gruett: 28. Mineral-Right, because it is somewhat seasonal, in the wintertime, they shut down production and some people do take some time off then.

WC&P: Who heads up management?

Gruett: Glenn heads it up. The person who's in charge of the day-to-day operations are Gary Steffens and Camie Schnieder. Camie's more the controller and Gary's the plant manager.

WC&P: Who's directly underneath you?

Gruett: We have a management team that consists of Mike Hamberger, Ben Bartol and Vicki Van Stratten. Ben is in charge of customer service. He was brought up and has been with us almost 10 years now. He started with us as shop manager and production manager and moved up to more of a service role for us, heading up the phone and customer service functions. Mike, as I mentioned, is more of a sales manager tending toward the dealer sort of things. Vicki is the office manager.

WC&P: She keeps everything together.

Gruett: She keeps us all in line. She is the mother hen. I think every company has one of those.

WC&P: Where do you see the company going in the future?

Gruett: The future is going to be more dealer-geared. What you're going to see and what we're in the process of developing is a dealer program that supports them more comprehensively.

WC&P: Three hundred is a lot in that short a period of time.

Gruett: Yes. They old 80-20 Rule applies, I'm sure.

WC&P: In what sense?

Gruett: In that, out of the 300, 20 percent are going to do 80 percent of the sales. But we do have a lot of people interested. And, again, the Sanitizer is relatively new. A lot of people are trying it. They're dabbling. And in this industry, as you know, there's a lot of gidgets and gadgets out there that claim everything. It's buyer beware. The Sanitizer does run into those problems. People don't believe you.

WC&P: Have you done any certifications through third-party organizations?

Gruett: Oh, yeah. It's all third-party validated through a local lab here. And it is all state-approved in the state of Wisconsin.

WC&P: We should point out that Wisconsin is one of the hardest states to get approval in...

Gruett: Correct, it is the hardest state for that as far as your secondary contaminants, iron, manganese, etc. So, the Sanitizer, the equipment itself has been approved. Prior to the Sanitizer, we've always taken care of the iron and manganese and low pH problems.

WC&P: You do a lot more than the Sanitizer. What are the breadth of products that you carry?

Gruett: Some of the trade names we have would be the Sanitizer, we have the Crystal-Right medias. We also have the FS-series, CCR-series, the Eclipse RO line. We do have a line of UVs. So, if it's anything to do with water, we do have it in the arsenal.

WC&P: Who's your supplier for UVs?

Gruett: Currently, we get a UV that is private labeled for us by Ideal Horizons.

WC&P: Now, WEDECO. How long have you been with Ideal? Since Jesse Rodriguez was at the helm?

Gruett: Yes, WEDECO and Jesse. That's been going on for the last three or four years.

WC&P: And I assume that Eclipse is a private label through Clack?

Gruett: Yes, we actually handle two different ROs through them. They're actually both four stages. The Eclipse is your high-end unit with the monitor, conductivity meter and all that. The other one is more of a bare-bones, competitively priced unit.

WC&P: And the FS- and CCR-series?

Gruett: They're again more or less generic water softeners. In the filter series, we do sell greensand and iron-removal systems.

WC&P: How's working with your dad -- and your brothers, I should say?

Gruett: Actually, the family gets along very well. I may be responsible for the day-to-day goings on, but if there's a big decision -- it's always talked out among the four of us. We do have regular meetings. We're always in regular contact. Even though I have one brother out in Pennsylvania, I talk to him three or four times a day. Everyone knows what's going on, financially and product-wise.

WC&P: You're not an old guy. At 38, you're basically my same age. Yet, you've been in the industry since you were 19 or so, as far as working full-time with the company.

Gruett: Oh, directly with the company I've been here a long time, but I grew up in the industry. I grew up with Andy Fleckenstein and his kids. I know John and Mark and Caroline. That's back in the old days. It was back when my father started out when you had the Horners and the Fleckensteins and the Bill Clacks. Now, you're starting to see the second and third generation taking over in these companies. And, I want to say unfortunately, the industry has changed to where you've got big corporate people in there. It's no longer pick up the phone and get something done. You've got to go through the politics and...

WC&P: The hierarchies.

Gruett: Yes.

WC&P: Well, one of the things this column seems to do -- since we do go over the histories of the companies we do interviews with -- is give those people who may be new to the industry a bit of background on the field they've entered and how far things have come.

Gruett: That's true.

WC&P: Are there concerns you have for the industry and where things are going for different segments?

Gruett: I don't know that the industry -- and I know that there are people who'll disagree with me -- has changed a whole lot. Sure, we've got the Big Box guys coming into it. That's going to be some competition on the municipal-type waters. At least for us, water treatment is a state-of-the-art. It's not a science. And the Big Box people are not going to be able to apply a one-type water softener to take care of all the water problems.

WC&P: That's because most municipal supplies are treated to a certain quality, whereas in rural areas where many people may be on well water -- that's not the case.

Gruett: Correct. For hard water softeners, there's always been that market out there. The home owners themselves if they're capable of buying it and installing it -- I firmly believe you're eventually going to see the $200 water softener. If it doesn't work, you take it out, throw it away and buy another. That probably will happen. Somebody's going to come up with the cost economies for it.

WC&P: But you're not going to be able to do in areas where this industry has had it's strengths.

Gruett: Exactly. Where you have multiple problems and more specialized needs, there's always going to be that need for the independent dealer, the local contractor, the plumber or the well driller to come in and take care of those water problems.

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Next month in this column, read our interview with Dave Nelsen, who is vice president of Nelsen Corp. of Norton, Ohio.