By Carlos David Mogollón, WC&P Executive Editor
On the downside of 30 years in water treatment, Gary Kruse contemplates readying his business, Krudico Inc., of Auburn, Iowa, for his son, Jerry, to take over.
As such, his reflections on the industry that’s provided a livelihood for him and his family are of hard work, quiet success and casual friendships among competitors. He also has a great sense of humor, especially about the company’s remote location.
“[We’re] right between New York and San Francisco. You can’t miss us,” Kruse jokes. “I used to say I got into the water treatment business because nobody would hire me and I had to have something to do. That’s tongue in cheek, of course.”
A Nebraska native, he moved to Iowa in 1959 and joined Wallace Soft Water, of Odebolt, as a salesman in 1963. He launched Krudico in 1966. At first, it was both retail and wholesale, the second based on assembly of components for softeners and well water chlorinators. In 1975, he sold the retail operation.
Krudico has grown from $35,000, Kruse’s first year in business, to $2.5 million. With a dealer client list of more than 500 today, his product line has expanded to include filter, softener, RO and UV equipment; nitrate and arsenic reduction systems; iron, manganese and sulfur reduction systems; chlorine (granular and pellet) and chlorinators; and municipal/industrial water treatment systems.
He’s made a name for himself as an expert on rural applications that include agricultural and municipal applications, particularly dealing with nitrate, arsenic and uranium. Clients include hog farms, chicken ranches, Indian tribes and small cities, and frequently involves working with design engineers and consultants.
Three quarters of his business is in Iowa and surrounding states. With representatives across the country, though, its second biggest sales market outside of Iowa is Canada. He employs 11 people and likes to hire part-time or ex-farmers since they have a good work ethic and are often mechanically inclined.
Kruse, who served on the WC&P Advisory Committee in 1989-90, sees arsenic as a major opportunity for the industry. He’s involved in projects with a Paiute Reservation in Nevada and the New Jersey Geological Survey. In New Jersey, Krudico has been involved for the past year on an arsenic pilot study to evaluate different media such as greensand, ion exchange, RO, alumina and GFH™ in reducing arsenic. Other interesting work he’s done includes research on eradicating the Guinea worm in Africa, and supplying a Mount Everest expedition and a Catholic orphanage in Mexico.
A former Water Quality Association Education Committee chairman, Kruse was just awarded the Key Award at the WQA’s New Orleans convention in March. New dealers, he said, should focus on getting all the education and training they can, starting with the WQA Certified Water Specialist program. They shouldn’t be afraid of niche markets such as commercial/light industrial or applications such as arsenic, nitrates and radium. Not hesitating to ask those in the industry who may have more experience and knowledge is a good idea and WQA seminars serve as a good platform to network among those people. He sees financing as the biggest challenge to new businesses.
In 2004, Kruse plans on retiring with his wife, Myrna, and letting his son, Jerry, take the wheel at Krudico. The son spent 10 years in the nuclear waste industry before joining the company five years ago, so he’s got a firm foundation to build on, Kruse said.
Before getting to the interview itself, here are a few details on Kruse’s company:
308 E. Fourth
Auburn, IA 51433
Tel: (800) 211-1369 or (712) 688-2284
Fax: (712) 688-2263
Email: [email protected]
Management: Gary H. Kruse, president; Jerry Kruse, vice president
Products: Krudico nitrate, arsenic, iron, manganese & sulfur reduction systems, filters, softeners, etc.; Pell-Chlor dry chlorine pellets; Easy-Chlor water disinfection system; Sentry I chlorinators; Air Charger aeration systems, ROs and UV systems.
Suppliers: Fleck, Autotrol, CUNO/Water Factory Systems, R-Can, Park International, Structural Fibers, Clack, Alamo, DuPage, GLI
And now for the interview:
WC&P: Tell me a little about yourself and your company, how you got in the industry and the position your company has in the marketplace, if you would?
Kruse: Well, I started in business in 1963 as a retail salesman and formed my own company in 1966.
WC&P: Who were you working for as a salesman?
Kruse: It was Wallace Soft Water out of Odebolt, Iowa.
WC&P: Where is that near?
Kruse: Uh, nowhere.
WC&P: You’ve at least got a couple cornfields around there?
Kruse: Yeah, that’s about it. It’s right between New York and San Francisco. You can’t miss us. We’re about 90 miles from Omaha to the northeast.
WC&P: What was the line you used on how you got into this business?
Kruse: I used to say I got into the water treatment business because nobody would hire me and I had to have something to do. That’s tongue in, cheek of course.
WC&P: Now, are you a native of Iowa?
Kruse: I’m originally from Nebraska. I moved to Iowa in 1959.
WC&P: How did Krudico come to be?
Kruse: It started out as a retail and wholesale OEM operation. As we kept on going, I sold out my retail side in the early ‘70s and pursued the wholesale end.
WC&P: What exact year did you sell it?
Kruse: It would’ve been 1975.
WC&P: Who owns that business now?
Kruse: It was resold to a couple of other people and just sort of dissolved eventually.
WC&P: What type of retail business were you doing?
Kruse: Mostly softeners, chlorination and filtration sales and rentals.
WC&P: Just to the local area?
Kruse: That’s correct.
WC&P: What was the thing that prompted you to form Krudico?
Kruse: As a wholesale company?
Kruse: I liked the idea of not having to go out every day and get a new sale. I could have dealers call me up. But, it took a lot of traveling — I put on up to 75,000 miles a year on my cars.
WC&P: And what did Krudico start out doing?
Kruse: Basically, assembly and selling water softeners and chlorinators.
WC&P: What about the particular area that you live in — what are some of the typical water treatment problems that prompted some of your products?
Kruse: In those days, all we really had was hardness to worry about, iron and manganese and some odor and bacteria. So, that’s what we parlayed forward with…
WC&P: These are rural areas, I’d imagine.
Kruse: Right, it was all rural and agriculture.
WC&P: So a lot of well water?
Kruse: Yes, and we did a lot of livestock.
WC&P: Such as?
Kruse: Chlorination, some nitrate reduction, but chlorination was the main thing to eliminate bacteria.
WC&P: What type of agricultural applications?
Kruse: Predominantly, it was poultry and swine operations.
WC&P: Well, Iowa does have a lot of pigs — or hogs, I should say.
Kruse: Yes, we do. And the bacteria will give the hogs scower, so it was quite a good way to help the farmers out.
WC&P: How has the company progressed through the years?
Kruse: As the industry changed, we changed with it. All of the sudden, consumers demanded better quality water, and the industry wasn’t really ready for it about 20 years ago. But, we progressed to the point that our niche markets presently are nitrate reduction, arsenic reduction, uranium reduction — things that we never even thought of 15 years ago.
WC&P: When you first started out, what were your sales like that first year?
Kruse: About $35,000.
WC&P: What have they evolved to today?
Kruse: Oh, we’d be sitting around $2.5 million.
WC&P: As far as the area that you served when you first started out vs. now?
Kruse: Originally, when I started out retailing, I did a 30-mile radius. And then when I started wholesaling, I went to a five-state area. That included Iowa and parts of the four states around it, Minnesota, Nebraska, a little bit in South Dakata (not much), Missouri and some in Illinois.
WC&P: How about staffing? When you first started it was you and who else?
Kruse: It was me and me. I did everything.
WC&P: And how has that changed.
Kruse: Today, we have 11 employees.
WC&P: Are they all in Iowa?
Kruse: Yes. I should point out, though, that our greatest change was when we started in 1993 to work with municipalities. And, presently, we are putting in, oh, last year, it was about eight or nine systems for municipalities in and around Iowa, either a totally new systems or repairing an existing system.
WC&P: What type of systems are we referring to?
Kruse: Predominantly, these are nitrate reduction systems. We probably have more systems installed than anyone in the country for municipalities. Then also, we’ll do aeration, iron filtration, organic removal, water softening, manganese and some sulfur treatment.
WC&P: How has your expertise level been required to advance? You were talking about how, when you started out, hardness was the primary issue you were dealing with. I’d imagine that as these other issues emerged — they likely were there already and it was just that awareness of them grew — how did you have to expand on your expertise?
Kruse: I got to know a lot of people that had more expertise than me and I got on the phone a lot to get their opinions. I did a lot of research, a lot of study, attended seminars, etc. Then, I got to the point where I was giving seminars.
WC&P: These are Water Quality Association seminars and what other kind of seminars?
Kruse: Well, I’ve worked with the AWWA, the (National) Rural Water Association, the WQA, naturally — all on state, regional and national levels. I chaired the education committee about six or seven years ago as well.
WC&P: You also, I should point out, were a member of the WC&P Advisory Council — which preceded the current Technical Review Committee.
Kruse: That’s correct.
WC&P: When was that?
Kruse: It was the late-‘80s, early-‘90s.
WC&P: Now, how are your markets split up? Say, for instance, if you look at them as commercial/industrial and some of the residential dealers that you work with?
Kruse: Residentially — and I should say private installations, point-of-use, mostly point-of-entry — is about half of our business. The other half would be for municipals now. As for market drivers, the biggest one that’s coming up, of course, is arsenic.
WC&P: Before we get into that, you also are doing a lot of commercial work as well, correct?
Kruse: That’s correct. Now, that we do through our dealer network.
WC&P: So, it’s not something that you have a good breakdown as far as inclusion in that 50 percent?
Kruse: Now, that would be — I’m going to have to say — with the point-of-entry systems.
WC&P: Do you have any idea of what percentage that might be of your business?
Kruse: It’d be about 50-50. Or, if you just want commercial/commercial, it would be about just 15 percent.
WC&P: Fifteen percent of… ?
Kruse: The total.
WC&P: So, if we were to say that you’ve got 50 percent in municipal, 50 percent in residential dealers–of that 50 percent in residential dealers, 15 percent is in commercial/industrial?
Kruse: That is correct.
WC&P: How many dealers do you work with?
Kruse: We have on our mailing list, active, 520 dealers across the U.S. and Canada.
WC&P: How does that work as far as you being located in Iowa?
Kruse: It doesn’t really make any difference. The town I work out of is a population 223.
WC&P: Everybody knows everybody.
Kruse: True. And the companies from New York and Chicago keep asking, “How in the heck can you work out of a little town like that?” Well, we got FedEx, we got UPS, we got parcel post, we got five truck lines that stop in every day. So, it’s no problem. We don’t have the overhead of the big cities.
WC&P: Low rent and low taxes, I’d imagine.
Kruse: That’s correct.
WC&P: Tell me a little bit about the characteristics of your business. For instance, the majority of your business is in what geographic area?
Kruse: Naturally, Iowa would be our largest. But then, after Iowa, Canada would come in strong. In the Northeast, we have good representation. We’re weak in the Southeast. We have representation in the Southwest and a fair amount into California. But, probably, 75-80 percent would be within 300 miles of Iowa.
WC&P: What are some of your goals for the company and expansion plans, either geographically or with respect to particular market segments?
Kruse: Well, my goal right now is to retire in 22 months. My son, Jerry Kruse, is going to take it over.
WC&P: How long has Jerry been involved with the business?
Kruse: He was in the nuclear waste industry for 10 years and he came back to join me five years ago. He’s been a big asset as far as municipalities go because that’s where he had really become an expert in his own field for large procedures, installations, putting it all together, etc.
WC&P: I’d imagine Jerry had to have, not necessarily a rocket science degree, but a pretty good educational background to get into the nuclear waste industry. Where did he go to school? How did he get into that?
Kruse: Actually, he only went to college for two years and he got into that and he was trained on site.
WC&P: Which college did he go to?
Kruse: Iowa State.
WC&P: Who did he start out with where he got his training?
Kruse: Chem Nuclear. They’re located in Barnsfield, N.C.
WC&P: So, he’s been around the country a bit.
Kruse: Right. He’s seen to quite a few different states and quite a few different sights.
WC&P: What’s his title these days at Krudico?
Kruse: Vice president of sales.
WC&P: Come 22 months, he’ll become the president?
Kruse: That’s correct.
WC&P: Tell me about, if you could, the expertise that you have in-house with some of your people. He’s got a big cache in industrial areas, from what you’ve mentioned. What are some of your other staff strengths?
Kruse: Well, we normally split it out. I do most of the design work for the large installations as to how big it has to be, what the flow rates are, etc., etc. I turn it over then to Jerry to order the tanks, get the plumbing. We have an in-house person we use for electronics. And, then, I have a couple of roving techs that go out and oversee installation.
WC&P: Any names you’d like to mention with those people?
Kruse: One is Tom Grafft, although he has just left me; he was my electrician. Actually, he was also my step-grandson. Quite a bit of our business is family.
WC&P: Where did he go?
Kruse: He joined an engineering firm in Storm Lake, Iowa, just a couple of weeks ago. His wife got a job teaching a bit further away. That’s why they had to move, darn it.
WC&P: What about some of the other people you’ve got involved?
Kruse: Wesley Drost is our install technician. Those would be the main ones in position points.
WC&P: Who would be the other family members involved in the business?
Kruse: Well, my step-daughter, Vicki Grafft, was and she just left this week to go to Texas.
WC&P: Anybody else?
Kruse: My wife Myrna. She is semi-retired, but she’s our bookkeeper.
WC&P: We hear that a lot. If only my wife were an accountant… What sort of growth have you seen and in what particular markets or product areas has it been strong? What are areas you’d like to work on still?
Kruse: Again, the niche areas, the nitrate and arsenic are two of the main ones we’re focusing on.
WC&P: Now, what kind of companies would you be working with on that?
Kruse: Right now, I’m doing a lot of design work for engineering firms.
WC&P: That are doing work for who?
Kruse: They have, let’s say, a project for a city or one right now is a Paiute Reservation in Nevada. They need arsenic reduction, so their engineers have called us up and asked us what they need to take the arsenic out. We’re also working on a plant in Texas and one in New Jersey.
WC&P: The plant in Texas and New Jersey, these are municipal?
Kruse: Yes. The engineering firms, of course, they’re a little bit in the dark as to arsenic yet. We’ve done and are presently doing a full scale testing with the New Jersey Geological Survey with a Steve Spade. And we’ve been doing this for about 15 months at the present time.
WC&P: What all does this involve?
Kruse: Well, we started out with column tests on different medias that were claiming to remove arsenic from water.
WC&P: Such as?
Kruse: It was greensand filtration, ion exchange, reverse osmosis, granular ferric hydroxide out of Germany, and activated alumina — to list just a few of them.
WC&P: The one out of Germany, that’s GFH, which Culligan has exclusive rights on, correct?
Kruse: Yes, USFilter. But once we got through with the column tests, we found several of them — I don’t want to mention which — that didn’t work. We excluded them from future tests. And, now, we’ve gone into a full-scale pilot test with one cubic foot units.
WC&P: When did that start?
Kruse: That started about 8-9 months ago.
WC&P: And this is going on in New Jersey?
Kruse: In New Jersey.
WC&P: Who’s heading up that project for you?
Kruse: That’s Steve Spade of the New Jersey geological department. He’s a hydrogeological expert out there.
WC&P: And are you the one that’s working directly with him?
Kruse: I’m working directly with him. I gave him some of the original technical information as to how to run the test and supplied him with much of the product.
WC&P: How did you get involved in that?
Kruse: He actually happened to find me over the Internet and called in one day, wanting some information. We got to talking and, pretty soon, we’d joined forces.
WC&P: That sounds like something — as far as projects — that would be a good calling card for a lot of different areas with the experience you’re developing there, correct?
Kruse: Yes. In fact, I’m giving a roundtable talk at the convention.
WC&P: WQA in New Orleans in early March?
Kruse: Yes. I’ll have some of the graphs there showing the curves of what Steve’s been able to come up with in the past few months.
WC&P: Are these applications for big cities, for small cities?
Kruse: Steve originally wanted to get into it for point-of-entry/point-of-use systems for several counties in New Jersey that had high arsenic. Once he got involved in it, now he’s starting to look at the larger scope — larger systems too.
WC&P: There’s been a lot of debate over arsenic and what the benefits of POU/POE have been to help meet the new rule; some of that has involved regulatory hindrances as well as regulatory acknowledgements as to its efficacy on arsenic. What’s been your experience as far as what you’ve seen?
Kruse: We started marketing some of both, POU and POE, about 7-8-9 months ago. Everything that we market, we put either a metering system on or some safeguard so the consumer knows, “Hey, I’ve got a problem.” It’s time to change media. It’s time to do this. It’s time to do that. But our sales were not great until this year when the MCL officially got lowered. Prior to that, everybody looked at it and said, “Yes, we’ll probably have to do something, but we’ll wait.” But now, it’s really taking off.
WC&P: What are the arsenic levels you’re looking at in some of these test markets and what are some of the results that you’re seeing?
Kruse: Well, we’ve got anything from 10 parts per billion (ppb) up to a couple cases where there’s 5-6 parts per million (ppm), so it’s extremely high.
WC&P: What are areas where this is occurring, New Jersey?
Kruse: No, it really doesn’t make a whole lot of difference. Wisconsin has an area with high arsenic. For a while, it was thought — and I haven’t got a confirmation on this — but the Iowa DNR said that, if they dropped the MCL to 5 ppb, 30 percent of our community wells would not pass in the state. We also have quite a bit of interest from Alaska. The Northeast, of course, is strong. The Southwest, into Nevada, Arizona and California, has quite a bit of arsenic. So, it’s not just one little general area.
WC&P: What do you see for the future of your company with this?
Kruse: I foresee that probably within 3-5 years, arsenic reduction will be at least 20 percent of our business.
WC&P: Wow. What is it currently?
Kruse: It’s less than 1 percent right now.
WC&P: What about nitrates, which you mentioned also?
Kruse: Nitrates, right now, probably represents about 25 percent of our business.
WC&P: Are you working with some of the big hog “manufacturing” operations, the poultry industry and things like that?
Kruse: We have done some, yes.
WC&P: Say, Tyson Foods?
Kruse: No, it wouldn’t be anything that’s a conglomerate, but big. We’re talking farmers that raise anywhere from 3,000 to 10,000 swine at a time or maybe up to 5-6 million chickens — in that area.
WC&P: I can’t imagine walking into someplace with 5-6 million chickens.
Kruse: You don’t like the smell, but it’s not as bad as 5,000 hogs.
WC&P: That’s becoming an increasing problem in the past 10 years, as I understand it. I used to be a reporter for a newspaper in Muncie, Ind., that was a major agricultural area for the state. I grew up in Indianapolis. And, at that point, they were talking about how, in years past, it used to be that every farm had 5, 10, 20, 50 hogs, a certain head of cattle, some chickens, etc. Now, it’s more the case where there’s been a big corporatization of this industry such that you have populations that rival some major cities, if you count just individual animals. And the issue of how waste from some of those operations can overwhelm the local ecology has become increasingly politicized in the farm belt. What’s your perspective on that and the role the water treatment industry can serve there?