September 2002: Volume 44, Number 9
A Moment with Enting’s Mel Entingh
by Carlos David Mogollón, WC&P Executive Editor
A year shy of his silver jubilee in water treatment, Mel Entingh, chairman of Enting Water Conditioning Products, smiles wryly at what he and his wife have wrought in the form of a successful business now run by their five children.
"I gave my wife half the stock in the company about 10 years ago and, from there, we've been slowly gifting it away… to our children… to the point where they own pretty close to half the business now," Mel said.
The siblings are led by Dan Entingh, president and chief operating officer, and daughter Karen Matson, who is office manager.
Mel, who started selling softeners in 1953 while a college student, began his own business called the Perma-Soft Co. in Dayton, Ohio, and was joined by his father three years later. They became a Culligan franchise in 1957, which they ran until just before 1965, selling it to form Enting Water Conditioning while assembling their own product for retail and wholesale distribution.
Enting was founded in Middletown, but moved to Dayton after a two-year, non-compete contract with Culligan expired. In incremental steps, the business continued to grow. It moved into a 43,000-square-foot building in 1987, roughly the same time a series of eight dealer acquisitions began whereby its retail service area expanded dramatically in southwest Ohio. After consolidations, it now has dealerships in Springfield, Urbana and Greenville, and roughly 5,000 rental customers.
For wholesale, product gets distributed much farther through a network of 1,200 domestic and foreign independent dealers. U.S. sales are largely in the Midwest and Northeast with dealers also in California and Florida. One of the company's best dealers, though, is a business in the Ukraine. Others are from Jordan, Lebanon, Puerto Rico, the Philippines, Mexico and Canada. Shipments also have gone to China, France, Germany, Italy, Russia and South America. And this will be the first year Enting exhibits at the Aquatech expo in Amsterdam, the largest water industry event in the world.
The business is split 46 percent retail and 54 percent wholesale, of which international makes up four or five percent. Softeners remain the mainstay as is to be expected, Entingh said: "Everybody that ever got into this business got in because of softeners. I might tell you we have one real nice size recent order. It's a $70,000 contract, which is the largest single order I think we've ever had. It's going to Michigan."
He's a bit concerned about the long-term impact of mass merchandisers on the industry, although he hasn't been impressed with GE's foray into selling softeners. He keeps an eye on Home Depot, Lowes and others, but hasn't perceived any threat yet. His eyebrows were raised recently, however, when sent an ad for new System Saver softening units from Morton Salt highlighted on Morton's website.
"They showed these compact cabinet softeners and both of them were under $400… And they're being sold by Wal-Mart," he said. "That's a bit unsettling."
Still, Entingh admits to being a bit old-fashioned in thinking water treatment remains a wide-open business wherein anyone with a garage and a pickup truck can easily earn a decent living. A former Water Quality Association Board member, he also has been active with the Ohio WQA.
Before getting to the interview itself, here are a few details on Enting Water:
Enting Water Conditioning Products
3211 Dryden Road
Dayton, OH 45449-0546
Tel: (800) 735-5100 or (937) 294-5100
Fax: (937) 294-5485
Management: Mel Entingh, chairman/CEO
Dan Entingh, president/COO
Revenue: $6.12 million, up 10 percent
Products: With a catalog of nearly 10,000 items, assembles and distributes a variety of water treatment equipment including softeners, deionizers, RO, filters, coolers, chemical feeders, UV, tanks, cabinets and assorted components, chemicals and media for residential, commercial and industrial applications.
To find out why there's no "h" in the company name, how water treatment is akin to microwave ovens and bronze baby shoes, and other heart-stopping anecdotes, read on:
WC&P: How long have you been in the business and how did you get started?
Entingh: I started in 1953. I was a student at Cedarville College, which is a small college here in Ohio. I started selling softeners, without any other job openings. I'd sold softeners for a short while in Cleveland, Ohio.
WC&P: For who?
Entingh: E. Horton Hall Co.
WC&P: Was it just a local dealer?
Entingh: Yes, he sold Eversoft out of Pittsburgh and he also sold a softener made up in Marble Lake, Mich., near Coldwater. The name of the company was General Manufacturing & Distributing Co. They were big in the business of making water heaters for trailers. That's essentially what they were doing. And they had a hot dip galvanizing pit and they rolled the steel and made tanks and dipped them in their pit and screwed on a solo valve and sold it as a water softener. That was my beginning.
WC&P: How old were you then?
Entingh: I was 24. I'm currently 73 and I've been in business now… it will be 50 years next year.
Entingh: Thank you. Our business has been expanding now -- it's not been an overnight success, but we've been growing slowly and steadily over the years. In 1965, we started this business. Prior to that, my dad and I had been Culligan dealers. We sold that operation at the end of 1964 and then started, in January 1965, assembling softeners to sell to dealers, as well as to the retail public. It's grown to about 54% of our business is selling to dealers and about 46% would be retail.
WC&P: So you sell to the end-user as well?
Entingh: Yes, we do. And currently we have about 5,000 rental customers. I've bought eight companies in the last nine or so years. Each one of these companies approached us with an interest to sell their companies. This is something that's happening really quite often nowadays because a lot of the guys that started up right after the WWII have reached retirement age. I actually wasn't old enough to serve in the war. Being 73 now, you can understand we're kind of going over the hump in that marketing.
WC&P: I take it they were dealerships that you bought?
Entingh: Yes, they're all dealerships. And the only reason I had any interest in any one of them -- and I've got to say that some of them were very small and others that were fairly large; we bought a company in Springfield, Ohio, for instance, that was a pretty good size company and a pretty good amount was paid for them -- was that there was no one else to take them over. I'll tell you another kind of a side story with a little interest to it. That is that when we bought the company in Greenville, which is the first one we bought, within two months, the owner had a heart attack. He didn't die, but he did have a heart attack.
WC&P: Was he still running the business for you?
Entingh: No, we did hire the lady who was his office manager. Then, his brother, some years later, I bought his business up in Troy, Ohio. And before we closed, he had a heart attack. Then another company I bought up in Urbana, Ohio, the wife -- who was working in the company (I did retain the husband and the wife when I bought it) -- she was driving home and unexpectedly had a heart attack and died. And then, just about two weeks ago, there was another company that I had an interest in buying and I called the owner of the company, who said he had a casual interest in selling. That's the first company I'd ever approached. Everyone before had approached me. That was on a Tuesday and, on the following Monday, I received a call. I thought I was talking to the owner, but I was really talking to the son. Their voices were very similar. He said, "I'm sorry we didn't call you back. We had a little disruption. My father died last week." I said, "You've got to be kidding. I just talked to him on Tuesday."
WC&P: You know this does not bode well for people that might want to approach you about buying their business.
Entingh: You got that right.
WC&P: That sort of answers another question we typically ask in interviews: Tell us an interesting anecdote about your experience in water treatment. That would definitely qualify. You mentioned to me that your business was clearing about $6.5 million…
Entingh: Not quite, $6 million and an eighth -- $6.125 million.
WC&P: What did it take to get to that level? That's a pretty good size business.
Entingh: A lot of salt.
WC&P: What was the major challenge in that and how did your company meet it?
Entingh: Well, my major challenge right now is keeping busy. My son has a share of the business and my daughter does also.
WC&P: What are their names?
Entingh: Dan, he's the president of the company and COO, chief operating officer. I'm the chairman and CEO. My daughter's name is Karen Matson, just like the Matt-Son you know except for one "t." She's office manager, but she started working for me when she was 16 years old cleaning the office -- actually, even before then. And I've got another daughter who does all the buying for us, Yvonne Entingh. Our name has an "h" on the end of it.
WC&P: I know. It's always kind of a trick to keep in mind because it's different from the company name.
Entingh: But it's difficult to pronounce with the "h" on the end. It's like Pittsburgh.
WC&P: That's why you dropped it?
Entingh: Yes, exactly. I'd searched the thesaurus and gave an awful lot of thought to what kind of a name should we come up with. And we finally decided that, because we were going to be brand new (that was back in 1965), by using our own name, people would understand that we intended to stay here and be behind the product we sell. I might say I produced a document a couple of years ago that lists all the companies that have come and gone in the water softener business in our town. I know the number is over 25, although I couldn't give it to you exactly right now. It's an unbelievable number that have come and gone, with a lot of orphans stuck out there. Anyway, that's the way it goes. I tell you, you have to be enthusiastic about what you do. I enjoy what I'm doing, although anymore I'm more involved in playing with the stock market and options and futures… (since the kids are in charge).
WC&P: Tell me a little bit about what were some of the transition points for your business?
Entingh: I suppose one of them would be the fact that, after we left Culligan, we went to Middletown, because we had a non-compete agreement in Dayton, Ohio. And so, in order to observe that convenant, we actually opened our business down in Middletown. Then, we went from there to the day after the two-year covenant was up, when we moved back to Dayton, Ohio. We had a very small building we were in -- nothing to shout about. Then we moved in and bought a place that was literally 2,000 square feet plus an office beside that. Then, we moved to a 4,000-square-foot building. Then we moved to about 8,000 square feet. Now, we own our own building and it's 43,000 square feet and we lease out about half of it and occupy the rest of it.
WC&P: This was a building you had built for yourselves?
Entingh: Actually, it had already been built and was owned by a paper company that would distribute paper that it would cut, produce and furnish to clients.
WC&P: So, when did you move in there?
Entingh: We've been here now about 14 years. I gave my wife half the stock in the company about eight to 10 years ago. And from there, we've been gifting it away. We've got five children and we've been gifting stock in the company to them to the point where they own pretty close to half the business and then we own the other half. Beside that, we've established a thing called Entingh Family Enterprises LLC to own a couple of buildings that we own. We own the building in Springfield and we built a new building up in Urbana, which we've occupied for about 1-1/2 years now.
WC&P: How many cities are you in now?
Entingh: Four -- Dayton, Springfield, Urbana and Greenville.
WC&P: Tell me geographically where your business is split in terms of assembling things.
Entingh: Well, we're in Dayton, Ohio. That's where we assemble everything. We're in southwest Ohio about 40 miles north of Cincinnati, probably 65-70 west of Columbus.
WC&P: How far and wide are you operating as far as sales?
Entingh: About a 50-mile radius.
WC&P: What percent of your sales would that make up?
Entingh: I mentioned our retail sales represent about 46% of our company.
WC&P: So, of the remainder, where all do you business? All over the world?
Entingh: Yes, actually, we aspire to be international. We're not setting any records, but one of our best customers is over in the Ukraine. But we have others in Amman, Jordan, and Lebanon and Puerto Rico, the Philippines. And we have another dealer in the Midwest that sells overseas, that we know of, but I have no idea where.
WC&P: Is there a difference in doing business overseas vs. in the U.S.?
Entingh: Well, the key difference would be that you have to get your money. The way we operate, it has to be cash in advance.
WC&P: What percent of the business on the wholesale side is overseas?
Entingh: I would say it would represent about 2 or 3 percent out of our total, which would represent about 4 or 5 percent from wholesale, I suppose.
WC&P: And, in terms of the domestic market, do you have geographical strengths in the Midwest or all over?
Entingh: Mostly the Midwest. We have some in California, but I think it's very small. We have one down in Florida. Everyone else goes anywhere (in between). Because of the type of water that's found in the Northeast part of the country, we sell a lot of filters up in that area.
WC&P: Iron filters?
Entingh: Yes, and acid filtration.
WC&P: For pH normalization.
WC&P: Now, what type of products are you working on in addition to iron filters and pH stabilizers?
Entingh: Everybody that ever got into this business got in because of softeners. That's our major product. I might tell you we have one real nice size recent order. It's a $70,000 order, which is the largest single order I think we've ever had. It's going up into Michigan. I don't think I want to say much more. You could identify the company, if I said where it went. It's being sold to a dealer up in the southeast part of Michigan.
WC&P: What type of product?
Entingh: They're large softeners.
WC&P: What's your product line called? Do you sell private label equipment or customized labels?
Entingh: We do that. We have a number of pieces of literature that we've created -- four pages. We have a 440-some page catalog too that you may be aware of.
WC&P: So, that's a lot of product.
Entingh: Yes, we try to represent the entire water conditioning industry. We are not into ozone, but everything else, yes. Chlorination, ultraviolet and DI -- we don't supply any mixed bed DI; we just have single-tank systems. I should call it twin tank systems. And we sell all the components. We sell all the valves and all the replacement parts for the valves. I think it's more than 9,000 items in our catalog, which means we represent an awful lot of parts. And the parts do represent a pretty good share of our business.
WC&P: From your perspective in the market, where do you see the industry going? What are some pressures that have affected you or that you see affecting others? This could be anything from consolidation to pricing to regulations, etc.
Entingh: Well, I know that Eco is making softeners for General Electric and now they're getting into Wal-Mart. I'm only an outsider and this is only a personal observation, but I don't believe the GE deal is being very successful. The Builders Square and…
WC&P: Lowes, Meijers, Home Depot…
Entingh: I haven't seen anything in Meijers, but Home Depot and Lowes we do. But a lot of those are in these little boxes that they make into a water softener. I think they have a fair amount of return on these things, although I'm not sure I want to be quoted on it.
WC&P: How does that fit into where you see the industry going?
Entingh: At the moment, I don't see it as detrimental to us. Like I said, our sales are up this year. Last year was down, but this year is up beyond last year.
WC&P: Any impact from the economy or 9/11?
Entingh: The economy is what hit last year. And with 9/11 -- I could give you the numbers, but I'd have to pull out the books to do it -- anyway, we did see a drop in the latter part of September and October. Still, we ended up with a very good January and February, which were quite good.
WC&P: What kind of growth are you looking at this year?
Entingh: Well, at the moment, it looks as if we're going to top 10 percent or, at least, be right at 10 percent. In this operation, right here, we're up 10.4 percent, but altogether we're at about 9.7 percent including the other companies. We're just seeing some nice activity. I have every reason to believe we'll be up 10 percent this year.
WC&P: If you had to pick out one hot-button issue that's facing water treatment dealers or the industry in general that you think will have the most impact over the next few years, what would you say it would be?
Entingh: I can't say I know what the outcome is going to be, but I was a little concerned when I saw an ad. I was sent a copy of an ad, I should say, so I don't know what publication it appeared in. But it was from Morton Salt Co., who was then producing water softeners that they listed in the ad -- two different sizes. They showed these compact cabinet softeners and both of them were under $400. One was like $379 and the other was $329. And they're being sold by Wal-Mart. Wal-Mart also is going to be distributing their salt. I can't say they weren't doing that before, but now they're also going to be selling their softeners. That's a bit unsettling.
WC&P: From Morton Salt? That's interesting…
Entingh: Yes, it's an ad that I sent a copy of to Cargill. I was talking to them about salt and have been wanting to obtain a distributorship. But we have a very good salt supplier through whom we get Cargill salt, Duracube and solar salt; so, at the moment, I don't think we'd gain anything by becoming a distributor. Anyways, we've been a pretty good size mover of salt in the past, but have lost some of that business because of the movement of municipal water from Dayton out to the southern suburbs, which have been really good softener markets in the past but aren't nearly so good anymore. Most of our sales come through smaller towns and out through the country.
WC&P: Not as many sales then in the urban markets at all?
Entingh: It's not the market it used to be. We still make sales in the urban market, but not like it has been.
WC&P: You mentioned Cargill. Who are some of your other suppliers that you'd like to mention?
Entingh: Well, I can mention anybody -- Osmonics/Autotrol, of course, and Pentair/Fleck and Stuctural Fibers, Clack Corp., almost anybody that you can think of in the industry that's a major supplier, such as Purolite. I might just brag a little bit on our credit rating. We have not missed a discount, where they offer 1 percent 10 days or 2 percent for 10 days. We haven't missed one in probably 30 years and we make something on the order of $4,000 a month, literally, that falls to the bottom line with the discount items we buy. We have a Dun & Bradstreet number and I get a write-up where they analyze the business and so on in reports and compare it with other companies in our SIC area.
WC&P: Your company type and range.
Entingh: Yes. I might also mention this, our industry does not have its own SIC number -- standard industry classification. That's bothersome. We are located in one of two SICs and the one is for retail/dealers and the other is for manufacturers. And the one for manufacturers is in an SIC that includes microwave ovens, literally. I have the book.
WC&P: How do you lobby to get your own SIC code?
Entingh: I've written the WQA about it twice in the past, although it's some years ago now. I wonder who's holding it up. I don't recognize any purpose in not having an SIC number. People that manufacture pumps have SIC codes for maybe ¾- and 1-inch pumps and larger size pumps, just for an overview.
WC&P: What I've heard in the past is you can manufacture a softener or an RO or other equipment for residential, but oftentimes that same equipment can be used for commercial or light industrial applications. So, there's some confusion over where to put it. I don't know how valid that issue is.
Entingh: Anything like a 14-inch tank and up is probably always going to be a commercial or industrial type product. Anything 13-inches on down would probably fall into a residential category. But, the thing is, then the people in the retail business are in the same category as bronzing baby shoes. That is not an exaggeration. That's the actual truth.
WC&P: How many employees do you have?
Entingh: About 35. Forty, actually.
WC&P: How has that changed?
Entingh: Well, as you grow, you add to that.
WC&P: So, say 10 years ago, how many might you have had?
Entingh: I'm going to say 25, but that's just a guess.
WC&P: Have there been any economic ups and downs that you've felt? How do you measure the economy?
Entingh: I remember a presentation put on by Duane at Spectrum Labs…
WC&P: Doc Nowlin?
Entingh: Yes. He showed some slides and it illustrated how the water conditioning industry followed the home building industry. As home building went up, the sale of water softeners went up. When it went down, the sale of softeners went down. I tell you, we have a good market today for homes. I can't say that our business has followed it, because I think home building is probably up more than 10 percent. Anyways, I know that some other people themselves who are higher as we are. I think it has a lot to do with the economy. Water softeners, I think they're necessary, but not everybody thinks that way.
WC&P: I want to pull this to a close soon, but you've been in the business for going on 50 years now. What sort of changes have you seen and, if you could talk to somebody getting into the business now, what advice would you have for them?
Entingh: I've always felt that someone could get in this industry and operate out of their garage as long as you have a small truck. Or, as I did when I started out, I had an automobile; I laid the softener in the back seat and carried the other equipment in the trunk. But I don't think the industry has evolved a whole lot from that. A guy may have a difficulty earning a good living, but he can make a reasonable living at the outset and slowly -- as he builds a following and reputation and is honest and does everything he says he's going to do -- then he should be able to grow. I could have people that would question my wisdom on any number of things, and that might be one of them. I'm sure that somebody that would start out with a number of trucks and a number of people and the rest of it would do quite well. Still, I've had former employees that have gone into business for themselves and they're not setting the world on fire, but they're making a living. You know, it takes some knowledge and experience. A guy ought to at least be a salesman. If he's a plumber or a good handyman, he might have another advantage. That's because people tend to trust their service man and do what he recommends sometimes. I don't know that that's made for much of a good interview, but it's food for thought.
WC&P: I think it sounds reasonable.