By Carlos David Mogollón, WC&P Executive Editor
In January, Good Enterprises and Custom Water Systems, both of Fullerton, Calif., and International Water Warehouse (IWW) Inc., of Santa Barbara, Calif., merged to form Good Water Warehouse, one of—if not—the largest independent U.S. distributors of point-of-use/point-of-entry (POU/POE) water treatment equipment.
Custom Water was founded in 1992 by Philip Whitesell. IWW Inc. was established in 1996 by past Water Quality Association president Pat Dalee, who had sold his other company PJD International two years earlier. Good Enterprises was founded in 1989 by Jim Good, who is now president of Good Water Warehouse. Dalee is vice president of sales and marketing. Whitesell is vice president of operations.
Good graduated from the Wharton School of Business at the University of Pennsylvania in 1981 and began his career with Regal Ware Inc., the Wisconsin-based housewares manufacturer, where he was international sales director through 1986. He moved to California to start an international trading company, specializing in sourcing products for international multi-level marketers. With the strong interest in residential water treatment products in the Far East, he established Good Enterprises in 1989 and sales doubled annually for a number of years. The business moved to its current site in 1991 and now encompasses 53,000 square feet there. It’s since broadened its focus to other areas such as Europe and Latin America, and expanded into commercial/light industrial applications — which make up about 20 percent of sales volume.
With the merger, Good Water Warehouse also has locations in Santa Barbara, Indianapolis and Calgary, Canada. Good said a challenge is to communicate advantages of the larger organization as a full-stocking distributor that also can handle custom orders, globally or domestically. Custom Water, for instance, brings expertise in supplying private-branded, fully assembled water treatment equipment. IWW brings its focus on the North American POU/POE dealer market. And Good Enterprises brings its global product sourcing relationships to bear. Initially an exporter exclusively, the larger business is ironically now one of the largest U.S. importers of water treatment product.
“We also found the same (single-source) approach in the domestic market to be a tremendous value-added service here, to where our business progressed from initially 100 percent foreign sales to where now it’s pretty much 50 percent foreign-50 percent domestic,” Good said. “We currently import and distribute products manufactured in more than 10 different foreign countries… And we now have active sales in over 40 different countries and all 50 states. Our (overall) product line has grown to over 15,000 active products from more than 100 different manufacturers.”
This prompted Good Water Warehouse to develop its first full-line catalog — 150 pages — which will be available in August. The catalog also will be presented in CD-ROM as well as on the company website. In addition, Good plans to make the website fully customer interactive with e-commerce and order tracking capabilities by the fourth quarter of this year. He said he sees improving on such information technology issues as a key focus of the industry in coming years — along with ongoing regulatory concerns.
Before getting to the interview itself, here are a few details on ‘company name’:
Principals: James Good, Patrick Dalee & Philip Whitesell
Revenue: More than $25 million
And now for the interview:
WC&P: How long have you been in business and when did you get started?
Good: Well, I graduated from the Wharton School of Business at the University of Pennsylvania in 1981. And, after graduation, I worked for Regal Ware Inc., the Wisconsin based housewares manufacturer of appliances, cookware — those types of products. I became their director of international sales through 1986. After that, I moved to California and started an international trading company, sourcing and supplying products to various international multi-level sales companies. There was a strong interest in residential water treatment products that developed in the late-’80s, particularly in the Far East. And, in 1989, I established Good Enterprises to focus 100 percent on water treatment products for the international marketplace. The company moved its headquarters to Fullerton, Calif., in 1991, and we’ve been here and taken over a lot of buildings since.
WC&P: Now, tell us a little bit more about your company in terms of what’s new there, if you could?
Good: Well, initially, the customer base for Good Enterprises was 100 percent international. We found that the international marketplace wasn’t being serviced very well for water treatment products. Customers found it difficult to distinguish between who the manufacturers or OEMs or dealers actually were in trying to source product. It was difficult for them to obtain product to the proper specification that may be unique to their different customers or geographic area. And it was very costly to consolidate different products, communicate with different companies, consolidate freight costs, etc. The cost of banking and international commerce was very costly when you potentially would have to contact typically seven or eight different manufacturers to get all the parts you needed to build a single piece of equipment.
WC&P: So, your formula for solving that was?
Good: Therefore, we decided to become a full-line stocking distributor for water treatment components, replacement parts and fully assembled systems.
WC&P: Describe what you mean by international?
Good: It simply means outside the U.S.
WC&P: With strengths where?
Good: As I mentioned, we primarily started our focus in the Far East and that’s where the base of our business began from. Our business, after starting there, doubled for many successive years and we found that this single-source concept was very well received by foreign-based OEMs, distributors or dealers. As we went along, though, we also found that the same approach in the domestic market turned out to be a tremendous value-added service here, to where our business progressed from initially 100 percent foreign sales to where now it’s pretty much 50 percent foreign-50 percent domestic.
WC&P: I assume the foreign sales also generated some sourcing on products that kind of helped toward that end?
Good: Yes. Actually, we found that — as the market demand for possibly less expensive but adequate quality products increased — we also had to use our contacts and resources internationally to both source products as well as sell products. Over the last several years, you know we’ve also aggressively expanded into the light commercial and industrial markets, whereas we started out 100 percent purely on the residential side. And now, that light commercial/industrial market represents about 20 percent of our current sales volume, internationally and domestically. The upside of that is we have more to offer.
WC&P: Did any issues come up with that? I’ve heard occasionally some controversy from pump manufacturers, for instance, about product manufactured overseas…
Good: Well, ultimately, our business and our growth was customer-driven rather than vendor-driven. We didn’t necessarily take on any single product line without having done research and found a viable customer base for that product line. So, if a particular customer, you know, we’re dealing with a wide range of both domestic and foreign customers who either have a good sense of the market and what their product requirements are or need assistance. And those who have a good sense of what they want can ask for a very specific product manufactured from a particular manufacturer or a particular geographical area and that is a product we would work toward securing a good distributor price on.
WC&P: How about the “what’s new” part of that question, since there was a merger of sorts between your company and a couple others you’d had a long-standing relationship with recently?
Good: Right. At the beginning of this year, we consolidated all of the activities of Good Enterprises with IWW Inc. — the International Water Warehouse — and Custom Water Systems. And we renamed the company Good Water Warehouse Inc.
WC&P: Now, I’m more familiar with IWW Inc., because Pat Dalee was the former Water Quality Association president, but tell me about the other company, please. You can speak to your relationship with Pat Dalee as well, if you’d like.
Good: The other company, Custom Water Systems, was established in 1992 by Philip Whitesell, primarily focused on supplying custom-designed or private-branded fully assembled water treatment equipment, both domestically and internationally. They’re also based out of Fullerton, Calif. Again, they focus primarily on either the direct sales company or a retailer that was looking for a specific piece of equipment built to their specification rather than purchasing a standard product line offered by some other OEM or manufacturer.
Again, on that newsstand point, obviously, in merging those three companies, we have a more significant presence as a whole than individually. We currently now have active sales in over 40 different companies and all 50 states. Our product line has grown to over 15,000 active products from more than 100 different manufacturers. We’ve got a 53,000 square foot facility here in Fullerton, with sales and distribution offices in Santa Barbara, Calif., Indianapolis, Ind., Calgary, Alberta, Canada, and we have a highly trained and dedicated staff of 45 employees now that the company has grown to.
WC&P: Tell us an interesting anecdote or story about your experience in water treatment throughout all of this?
Good: Well, it kind of touches a little bit on the question you’d asked before. The initial focus of the business when it was established was to market domestically produced products to the foreign marketplace. Thus, our primary activity was that of an exporter. Well, with the tremendous increase in the availability and demand for quality foreign-produced products, we’ve had to unexpectedly also assume the role of importer. And, we currently import and distribute products manufactured in more than 10 different foreign countries. But this unplanned transition has allowed us to more completely service our customer demands for a wide range of products and availability at varying price points. Ironically, we started out with a defined path of being an exporter and have become probably the industry’s largest importer.
WC&P: Where do you fit in the industry anyway?
Good: Oh, I don’t know if there are any real numbers out there that put anybody in some kind of ratings scale. But I think I can confidently state that we’re probably the largest full-line stocking distributor for this industry, as far as the number of manufacturers that we represent and the full product line that we represent for those manufacturers.
WC&P: What sort of growth have you seen?
Good: Well, the bigger you get the harder it is to grow with big numbers. As I mentioned before, our initial years were pretty significant, where we were doubling (in size) for many years in a row. We’re still seeing double-digit, 20-percent plus growth.
WC&P: What’s the major challenge that you or your company has faced and how have you overcome it?
Good: Well, the biggest challenge that we’re still working on completing is the consolidation of Good Enterprises, IWW and Custom Water Systems as Good Water Warehouse. The three companies had a little bit different focuses as far as market segments and customer base. Good Enterprises primarily focused on the high-volume distribution of water treatment components and replacement parts to the foreign and domestic market. IWW’s focus was primarily on the large dealer base in North America. This company was established by Pat Dalee, as you mentioned, in 1996, as a highly aggressive and visible sales and marketing company. Again, it was primarily focused on the dealer base. And then Custom Water Systems, as we discussed, provided a wide range of fully assembled water treatment equipment. This company was established by Philip Whitesell in 1992 and provided customers with private-branded, custom-designed systems. So, the challenge has been to convey to our combined customer base and the water treatment industry what we feel is the tremendous value-added ability that we now have consolidated as Good Water Warehouse. That and our continued work with critical vendors, we plan, will allow us to become a true fulfillment company for a wide range of customer types and industries. We will have a full line customer catalog for distribution in August — the first one. This will be nearly 150 pages and will represent a wide range of competitively priced products spanning many water-related industries. We’ll be making it available by CD-ROM and online. Our website, which is www.goodwaterwarehouse.com, will be set up as a tremendous source for information and will be active as an e-commerce site for customers to place orders by the third or fourth quarter of this year. So, this consolidation and growth is the ongoing challenge. We’re confident in our ability to provide quality products, service and support at competitive prices. It’s not a challenge we’ve 100 percent overcome yet. It’s kind of ongoing. But, by the response we’ve gotten from our customers and vendors, we think we’re on the right path.
WC&P: From your perspective on the market, where do you see the industry going?
Good: We believe there will definitely continue to be an aggressive consolidation trend in the drinking water industry. Speaking to ourselves specifically, we’re always exploring opportunities to expand our geographical presence and multi-industry presence. I believe this and vertical integration efficiencies are a common interest amongst larger companies in this industries. Obviously, if you’re a manufacturer of a finished product, your ability to either internally manufacture or competitively source those components that increase your efficiencies and cost effectiveness toward the cost of your finished product — whatever you can do in that regard is the exercise you go through in looking at possible acquisition targets. I think we also see exponential growth continuing in the foreign marketplace, both in sales and product procurement.
WC&P: Is there a difference in the growth rate domestically and internationally?
Good: We see the growth rate internationally being significantly higher. A lot of it has to do with what we see as Third World countries begin to see some growth and prosper. The opportunities for consumer products increases and, because we are also focused on the light commercial and industrial side, we have all of those ongoing industrial opportunities in foreign markets that are available to us as well.
WC&P: Any concerns on the current economy and when there might be a broader recovery?
Good: Well, fortunately, because of our diversification in geographical areas and industry and customer types, when we do see an economic crisis take place in a certain geographic area or within a certain industry, we’ve been fortunate enough to have a solid enough base in other areas where our growth rates are significant to where our corporate business as a whole will not take a downturn. If the Far East is down, South America is up. And if the Eastern Bloc is down, Southeast Asia might be up. Those are the things we’ve experienced year after year.
WC&P: Is there anything you haven’t said that you’d like to say?
Good: I think the other thing is just on this issue of where we see the industry going. I think that regulation is going to play a key factor in the future. Our ability to work with our trade associations and negotiating favorable regulations will directly impact the future success of many different companies with whatever limitations on product or certification that may be necessary as a standard appliance.
WC&P: This would be the one hot-button issue that you see?
Good: No, I don’t think that’s a hot button; I just see it as an ongoing issue. We see it obviously more on a regional basis state by state. And, because we distribute as much as we do internationally, we do see various compliance issues in the international marketplace where have to be prepared to be flexible with the type of equipment that we sell or the type of components that we design so that they are compliant.
WC&P: What then would be the one hot-button issue that you see facing the industry and dealers, which will have the most impact over the next few years?
Good: I think it’s related to information technology. At least, that’s a pretty high priority for us. We think with instant access to information through the Internet, we have to be prepared to provide access to a comprehensive and valuable resource to our customers. Our ability to provide accurate and complete information in real time will be critical, such as product specifications, links to our critical vendors, real-time access to inventory levels and product availability for customers, as well as ability of customers to get quotations, to place, modify and track orders, to be notified of specials, etc. We’re going to continue to conduct these activities through our aggressive direct mail, advertising and trade show participation, but feel that the Internet will be the critical sales, information and marketing tool for us in the future.
WC&P: And you’re anticipating that being up and operational by the third quarter?
Good: The site is up now, but it will be updated with the introduction of our catalog in August and then the ability of our customer to obtain the type of information we just discussed will be in the third or fourth quarter of this year.
Next month in this column, read our interview with Robin Barna, who is vice president and general manager of Pro Products LLC., a North American water treatment chemicals producer and distributor based in Fort Wayne, Ind.