October 2001: Volume 43, Number 10
Breaking the Ice in Canada: Reaching for Stratus Water Inc., of Caledon East, Ontario
by Ronald Y. Pérez, WC&P Senior Editor
Looking to make his mark in the water treatment industry, Gian D’Angelo, of Canadian-based Stratus Water Inc., has hung his prospects for the future squarely on the shoulders of the residential market. The president and owner of Stratus Water relies on that particular sector of the market for 99 percent of his business. Realizing he’s a new kid on the block -- the Caledon East, Ontario, business was launched in 1999 -- D’Angelo knows the next couple of years could make or break him.
“The longer we’re here, the more people trust us. People want to see if we intend to stay around,” he says. “We try to make them feel comfortable. That’ the whole reason we opened up a storefront.” The locale was inaugurated in August 2000, along with a complete product line.
Roots in the family
Before, D’Angelo admits to “dabbling in (the business).” This consisted of investing in a bottled water company along with other members of his family. D’Angelo says his father, Gian Sr., served as a “mentor” who made a living in the real estate and home building business. Their first names are pronounced like “John.”
“We’ve always had a stake in water,” the 25-year-old, who graduated from the University of Guelph, Ontario, with a bachelor’s degree in marketing and business administration, says. “We were investors in a bottled water company. When I came out of the university, the opportunity was there to head this company. I chose to take it and I’m not regretting it one bit.”
Speaking with D’Angelo, one gets the impression that the idea of a storefront is one he took very seriously -- and still does. He says it brings a sense of legitimacy to his business in an industry that’s often marred by those who work out of a makeshift “store.”
“I don’t mind competition from the guys who have a place of business. But you have a lot of guys working out of their garage. They’re low-balling equipment. With those guys, it’s hard to compete,” he says.
“In the beginning, we tried to give people a break on the price. But I learned quickly that we don’t have to do that. People that would only buy based on the price, I don’t want their business” since they often don’t tend to be loyal customers.
A place to call home
Currently, D’Angelo conducts business transactions out of his 1,000-square foot facility, with 40 percent of the space dedicated to inventory. The majority of his equipment centers on water softeners, reverse osmosis (RO) and ultraviolet (UV) systems. He uses products from USFilter; R-Can Environmental (also of Guelph); CUNO Inc.; Fleck Controls; and Puretech.
Aware of other companies who have expected growth too soon and hired more people than necessary, D’Angelo has been very cautious in this regard. Including D’Angelo, Stratus has two full-time employees; the other is a service technician. Last June, he was compelled to bring on two part-time salespeople. D’Angelo is uncertain how long it’ll take for them to become full-time hires. The caution flag is definitely out.
“We started with two people. We started small for a reason,” he says. “We didn’t want to blow our brains out for the first half of the year and not be able to handle it.” The strategy seems to be working. D’Angelo expects Stratus to experience a 75-to-100 percent increase in 2001 over last year.
An influx of players
Of course, there are many other obstacles facing D’Angelo as he works to establish his place in the industry. Each passing day, he sees the infusion of plumbers, well drillers and the ubiquitous “big box” retailers becoming more apparent in the water treatment market.
“You have the big box retailers who are getting into (the industry) a lot heavier up here. It’s kind of discouraging. They are starting to carry UV, RO and water softeners. But people forget that someone has to install and service them,” he says.
“You’ll always have people who buy at Home Depot just based on price. But you’re also going to have 1,000 people for every 100 people who buy there, who want to come to a water treatment dealer. They’re looking for someone with knowledge. I would rather have a small customer base and service those customers once a year than have a price war with Home Depot.”
Pass it on
So, how does D’Angelo minimize the potential business lost to others who aren’t water treatment dealers? Mostly, word-of-mouth. Door-to-door is completely out of the question. He instead banks on referrals, yellow pages listing, direct mail (fliers are delivered monthly) and sign postings. He expects to pursue commercial accounts substantially more this year. In the meantime, D’Angelo says he’s meeting his previously stated goal of two to three new residential customers per week.
A member of the Water Quality Association who’s studying to become a certified water specialist, D’Angelo encounters his share of problems with water, be it from municipal or private sources. Public water systems usually have hardness with chlorine frequently hovering around 2 to 3 parts per million (ppm). He recommends a carbon solution in the basement for a whole house solution, or an RO unit for drinking water purposes. On the other hand, East Caledon is a rural area -- about an hour north of Toronto -- that has 2,200 homes, according to D’Angelo. Brutal winters translate into a huge amount of salt being used on the roads. As a result, well infiltration from runoff is rampant. He says spring is the worst time of year for runoff.
“We have a lot of old wells, some are 50 years old and not kept up,” he says. “Salt on the roads causes a lot more runoff. To me, UV is the most efficient way. Of course, certain parameters have to be met. The water has to be soft and it has to be iron-free.” Otherwise, D’Angelo will not sell a UV system just to make a sale.
In this respect, D’Angelo gets an assist from the provincial government, an entity that has come under great scrutiny in the aftermath of the E. coli outbreak earlier this year in Walkerton, Ontario (see Extra). He explains, “In Ontario, the health department tests for bacteria on private wells for free. So, we already know when we go out there if UV will be necessary. Hardness and iron are the major problems. In most instances, you are looking at three pieces of equipment -- a pre-filter, softener and a UV system.”
Even though D’Angelo has barely gotten his feet wet in the business, he’s already looking toward the future with great promise. “We want to branch out into several regional offices -- one main office and four or five other offices spread around Ontario. A third of Canada’s population resides within a 100-kilometer radius of Toronto. We also want to get into rentals. If you can do that, that’s where the money is.” It looks like Stratus’ two part-time employees might become permanent sooner rather than later.
Stratus Water Inc.
15964 Airport Road
Caledon East, ON LON 1E0 CANADA
Tel: (905) 584-5110
Fax: (905) 584-5112
Owner and president: Gian D’Angelo
Founded: Incorporated in 1999; present location opened in August 2000
Staff: 4; one service technician and two part-time salespeople
Sales: Revenue in 2001 expected to be 75-to-100 percent increase over last year
Quotable: “There’s really a mix of (customers). You have the people that are concerned with health and drinking water. They understand basic concepts like hardness. With other people, it all comes down to price. They would rather go buy a piece of equipment at Sears. But with the (higher) price comes service and the fact that it’s coming from a water treatment dealer.”
Extra—Sharing the Load in Walkerton
The judge leading the inquiry into Canada’s worst E. coli outbreak admonished all involved parties recently for arguing over who was responsible for monitoring the safety of Ontario’s drinking water. According to the Associated Press, Justice Dennis O’Connor found it “disturbing” what he saw as unwillingness by the Ontario government, the town’s water manager—Stan Koebel—and others to shoulder responsibility. O’Connor said he was confounded by the suggestion that Koebel’s dangerous manner in which he ran the town’s water system went undetected. The Environment Industry, public health authorities and the utilities commission have insisted Koebel fooled them. In August, the provincial government blamed the disaster entirely on Koebel.