Monday, Jul. 26, 1982
Rub-a-Dub-Dub
A tub-and-toilet dynasty
With the homebuilding industry in a long-running slump, profits in the plumbing fixtures business have been swirling swiftly down the drain. For companies that make tubs, toilets, sinks and showers, it would seem a time to retrench.
Not so for the privately held Kohler Co. of Kohler, Wis., creator of the Infinity Bath, the Super Spa and other exotica for people who want their bathrooms to be fun as well as functional. Says Chairman Herbert Kohler Jr., 43, heir to the century-old plumbing dynasty: "In times of recession, we don't pull back." Even though Kohler has had to lay off 300 of its 6,000 workers because of slow sales of some products, the company is going ahead with its most ambitious capital spending program ever. This year Kohler will invest $50 million, more than 10% of its expected sales of $400 million. The plans include a big expansion of its factories in Brownwood, Texas.
Unlike most American executives, who are often criticized for trying to boost short-run profits at the expense of long-range investment, Herbert Kohler can afford to disregard the short-term bottom line. His family and relatives own or control 90% of the Kohler stock. While the typical U.S. company reinvests 60% of its earnings, Chairman Kohler claims to put 90% of his profits back into the firm.
Kohler views a recession as a grand opportunity to increase his share of the kitchen and bathroom business. Because of the slump, he points out, some building materials cost less than they did in 1980, and thus the construction of new factories is comparatively inexpensive. During the recession in 1973-75, Kohler expanded its facilities enough to overtake American Standard as the largest manufacturer of luxury plumbing fixtures in the U.S.
Aggressive expansion has been the hallmark of the Kohler Co. ever since 1873, when Herbert's grandfather John Michael Kohler and a partner opened a foundry to make farm implements in a small town north of Milwaukee. In the early 1880s, Kohler had the idea of coating cast-iron horse troughs with enamel and offering them to farmers as bathtubs.
Soon the company was importing top craftsmen from Europe to design elegant plumbing fixtures. In 1929 several Kohler products, including a black enamel lavatory with a marble counter top, were displayed at New York City's Metropolitan Museum of Art. In the mid-1960s, the company brought bold colors to the bathroom with tubs and toilets in deep shades of red, blue and avocado. Nonetheless, when Herbert Kohler became chairman in 1972, he decided that plumbing had not reached its potential. Says he: "I felt we could innovate with shapes and colors to change the whole function of the bathroom and make it something stimulating, possibly even social."
The company has since introduced the Infinity Bath, a kidney-shaped tub for two (price: $2,000), and the Super Spa, a giant whirlpool ($4,000) that can come with a built-in table for those who, for example, want to play poker as they soak. Kohler's masterpiece is the $12,500 Environment, a pleasure chamber that pampers bathers with "tropic rain, jungle steam, chinook winds and Baja sun," all accompanied by soothing stereo music.
Though plumbing fixtures are rarely mentioned in the same breath with computers or robots, Kohler is convinced that the bathroom business has considerable growth potential. He expects to see the day when whirlpools are virtually standard in middle-class homes.
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