Water Pik Technologies, Inc. History

Company Perspectives:

Our Mission: To be the first choice of our global customers for innovative, high-value devices that enhance health and hygiene. Our Values: Integrity, Teamwork, Innovation, Leadership, Profitability. Key Dates:

Key Dates:

1960:

Teledyne begins manufacturing semiconductors.

1962:

Water Pik is founded.

1967:

Teledyne acquires Water Pik.

1974:

Water Pik becomes the market leader in showerhead technology.

1975:

Water Pik changes its name to Teledyne Water Pik.

1996:

Teledyne merges with Allegheny Ludlum Corporation; Teledyne Water Pik purchases Jandy.

1998:

Teledyne Water Pik acquires the assets of Trianco Heatmaker, Inc.; launches aggressive ad campaign.

1999:

Allegheny Teledyne spins off Water Pik Technologies.

Company History:

Water Pik Technologies, Inc. has been developing and manufacturing personal healthcare products&mdash⁄owerheads, filters and oral health products--under the Water Pik brand name for more than 35 years. The company's swimming pool and spa heaters, controls, valves, and water features, many of which have been manufactured for more than 40 years, are sold primarily under the Laars and Jandy brand names. The company's residential and commercial water-heating systems, which have been manufactured for more than 50 years, are sold primarily under the Laars brand name. Water Pik's extensive distribution network allows it to make use of various channels to reach a broad audience of consumers from its manufacturing facilities located in the United States and Canada.

Teledyne Acquires Aqua Tec: 1967

In 1960, Henry E. Singleton and George Kozmetsky each put up $225,000 and launched Los Angeles-based Teledyne, a maker of semiconductors. Singleton, who had received his doctorate in electrical engineering at Massachusetts Institute of Technology, is credited with developing the inertial guidance system used worldwide in commercial and military aircraft. Before founding Teledyne, he had worked for Hughes Aircraft, North American Aviation, and Litton Industries, where he had been in charge of the electronic equipment division from 1954 to 1960. Kozmetsky, also a Litton alumnus, bowed out of management of Teledyne in 1966 to become dean of the College of Business Administration at the University of Texas.

Singleton was an innovator in both the corporate and engineering worlds and soon became a leading corporate merger guru; throughout the 1960s, he specialized in finding companies with undervalued stock, taking them over, and turning a major profit for Teledyne's shareholders. As CEO of Teledyne, he annexed a staggering number of companies&mdash⟩proximately 150 between 1961 and 1970--expanding Teledyne's product base from high technology to include stereo speakers, pilotless aircraft, and consumer durables. Consequently, Teledyne grew from a tiny contractor with sales of $4.5 million to a $1.3 billion giant with earnings of $58 million; it led the Fortune 500 in both earnings and earnings-per-share growth for the ten years ending in 1971 and was the biggest gainer on the New York Stock Exchange in 1976.

One of Singleton's acquisitions in 1967 was a company called Aqua Tec, founded in Fort Collins, Colorado, in 1962 by engineer John W. Mattingly and dentist Gerald Moyer. Mattingly and Moyer were makers of the Water Pik Oral Irrigator, which they patented in 1967. As a subsidiary of Teledyne, Water Pik introduced the Original Shower Massage, the first pulsating showerhead, in 1974. This new invention drew on the technology of the Water Pik by combining the pulsating sprays of ten oral irrigators. The Shower Massage immediately became the market leader in showerheads. It was also a success in Canada, where it garnered 65 percent of total sales in its category shortly after its introduction. Water Pik further expanded its product base when it developed its first end-of-faucet water filter in the mid-1970s. It changed its name to Teledyne Water Pik in 1975.

Water Pik proved to be one of Teledyne's star acquisitions. Sales of the Water Pik oral irrigator steadily grew, peaking at about one million units in 1975, and contributing to a $13.1 million profit for the company's consumer products group. The Shower Massage became one of the hottest gift items for the several years after its introduction; its sales grew to nine million units. But the company's meteoric growth faltered when it introduced a string of new products that flopped. The Nurtury food grinder failed to attract the attention of parents, who preferred to use household blenders to pulverize their babies' food, and an electronic counter of a dieter's bites that signaled how fast to chew was dubbed 'one of the most absurd consumer products ever devised,' according to a 1982 Business Week article. The same article described the One Step at a Time cigarette filter, rolled out in the mid-1970s, as 'barely profitable.' By the early 1980s, the flow of successful new items at Water Pik had dried up, and sales had dropped about 50 percent to about $65 million annually.

From Slump to Surge in Sales: 1980s

Industry observers attributed the reasons for Water Pik's problems largely to Teledyne's--and Singleton's--management style. Manufacturing units had an apparent autonomy in devising their own plans, but the ingrained, tacit imperative at Teledyne was that profit was all that counted, according to one former head of Water Pik quoted in Business Week in 1982. Expenditures for research and development tended to get short shrift in order to meet the bottom line. By the early 1980s, Water Pik discontinued product development spending and drastically cut advertising and marketing support. Teledyne, meanwhile, facing shortfalls in others divisions, began to siphon cash from its Water Pik subsidiary.

Beginning in 1979, to address falling sales, Water Pik attempted to revamp its marketing program, changing itself from an engineering-directed to a marketing-oriented firm. New television commercials deemphasized the gift value of the Shower Massage, focusing instead on the appliance's importance as a self-indulgence and its water and energy conservation. Advertising for the Water Pik oral irrigator changed from suggesting its health benefits to emphasizing its importance in 'doing something for yourself.'

When Frank Marshall moved from Teledyne's Laars subsidiary to take over the helm at Water Pik in May 1984, there had not been a new Water Pik product introduction since 1979. Marshall set out to change this, as well as to develop merchandise that was 'counter seasonal' and would sell throughout the year. Under his direction, the company introduced the Ultraviolet Sensor in 1985. The Sensor, a handheld device that measured the amount of ultraviolet rays striking the skin, met with such great demand that its distribution, at least initially, was limited to the West Coast. In addition, Marshall began to explore marketing Water Pik's products through drugstore chains. By 1985, the company's Shower Massage, Water Pik's largest single category, was said to hold about 65 percent of its market, and the Oral Irrigator to have about a 90 percent share of its category. The subsidiary as a whole generated about $100 million in sales annually.

Mel Cruger joined Water Pik as president in 1986, determined to build the business with the company's established products and to expand its revenues via line extensions. Unlike Marshall, he did not have prior experience working at Teledyne, but instead had a 20-year history in marketing packaged goods. Cruger focused on the health-oriented aspects of his company's products and on understanding his customer base better.

Product Expansion, Reorganization, and Merger: 1990s

Responding to the needs of an aging population and the health- and environmentally-conscious spending patterns of middle-aged baby boomers during the first half of the 1990s, Cruger oversaw the introduction of a series of products designed to 'meet and exceed consumer needs for protection and enhancement of their well-being,' such as the Automatic Toothbrush, introduced by the Oral Health Division in 1990. This product won first prize in the American Society on Aging's second annual design competition for its large handle, which enabled easy use by those with a disability; its 'Touchtronic motion' which started the machine when touched to the teeth; and its elliptical brushing movement that simulated the most effective way to clean teeth. The next year, the company's Shower Division updated its market-leading showerhead for the first time since that product's introduction in 1974. Combining 'green' marketing and German hydraulics, the new showerhead conformed to new water conservation standards by adding a water-saving feature which used only 2.5 gallons of water per minute. In 1995, the Oral Health Division also updated its toothbrush with the SenSonic Plaque Removal Instrument, which had an internal computer and delivered 30,000 strokes a minute.

Another market area that Cruger and Teledyne Water Pik set out to exploit in 1995 was that of purified water. More than $3 billion was spent annually on bottled waters and an estimated $50 million on filtration products in the mid-1990s. Water Pik introduced a new line called the Pour-Thru Water Filter, which removed 98 percent of lead, 95 percent of chlorine, and 67 percent of pesticides as well as sediment, bad taste, and odors. The filter won two gold medals for quality and performance from the American Tasting Institute in 1996, the same year the company, working in a different vein, customized an Oral Irrigator for use on animals with the help of trainers and veterinarians at Sea World in Florida.

Singleton had resigned from day-to-day management of Teledyne in 1990, leaving oversight of operations to George Roberts, a longtime friend. Before Singleton stepped down, he had begun spinning off entire divisions of his company. By the early 1990s, Teledyne had cut back to about 20 companies in aviation and electronics, specialty metals, and industrial and consumer products. Teledyne Water Pik took over management of two other company units, Teledyne Getz and Teledyne Hanau, both of which manufactured dental products, such as adhesives, oral analgesics, toothpaste, and professional materials. Teledyne Mecca, manufacturer of plastic drinkware and other products, was also assigned to Water Pik. Cruger, interviewed in an article in HFD in 1993, praised the reorganization for consolidating 'Teledyne's three highest growth-potential consumer companies into one organization.' In 1994, Teledyne also moved to consolidate operations by closing three manufacturing plants, including the Hanau facility. It also, temporarily as it turned out, put its Water Pik subsidiary up for sale.

In 1996 Teledyne Inc. merged with Allegheny Ludlum Corporation and formed Pittsburgh-based Allegheny Teledyne Inc., the world's top specialty metals producer, a move that set off another two-year consolidation effort for the conglomerate as a whole. Wayne Brothers, who had joined Teledyne in 1977 as a systems designer in operations, became president of Water Pik, now a subsidiary of Allegheny Teledyne, taking over the reigns from Mel Cruger. Under his leadership, the company set a course to achieve a continuous flow of innovative consumer products within the firm's existing categories and to focus upon growth through acquisition.

The following year, Teledyne Water Pik rolled out its five-year plan to increase its worldwide presence and market share through product development, acquisitions, partnerships, and increased global marketing. With 25 percent of the retail market share in the United States for massaging showerheads and a focus on achieving market leadership in the showerhead, water, and oral care categories, Water Pik began rolling out new products. In 1998 it introduced its Flexible Shower Massage and debuted a new end-of-faucet filtration unit. The Teledyne Water Pik Electronic Faucet Filter took advantage of the move toward greater health consciousness in the United State. In 1999, the company applied its filtering technology to its showerhead, debuting the Shower Filter, designed to remove chlorine from bath water in the interest of softer skin and hair.

A new ad campaign featuring all of the Water Pik products accompanied the new introductions. 'The primary purpose of increasing our advertising commitment is to support the launch of significant new product development initiatives,' the company's vice-president of marketing and sales was quoted as saying in a 1998 HFN article. Teledyne Water Pik spent $15 million in advertising in 1998 and doubled that investment over the next three years.

Teledyne also aimed to expand its product lines and increase its revenues through acquisition. In 1996, it purchased Jandy Industries, Inc., one of the leading producers of electronic pool and spa products. In 1998, it acquired the assets of Trianco Heatmaker, Inc., a manufacturer of high-efficiency gas and oil-fired water-heating products, and in 1999, it acquired substantially all the assets of Les Agences Claude Marchand, Inc., a pool accessories manufacturer and distributor, which did business in Canada as Olympic Pool Accessories.

Partnerships were another means to increased market presence for Teledyne Water Pik. In 1997 with consumers spending $1.7 billion on bottled water and in-home filtration grossing $480 million or more, the company formed an alliance with Pfister, which led to the development of the Price Pfister Pfilter Pfaucet, which incorporated a Water Pik filter. This collaboration was followed by a similar alliance with Rubbermaid Incorporated when in 1998 Teledyne agreed to manufacture filtration cartridges for Rubbermaid's water filtration pitcher systems.

In keeping with its emphasis on conservation, Teledyne Water Pik Canada partnered in 1998 with Tree Canada Foundation to plant new trees to replace thousands destroyed by ice storms. In 1999, the subsidiary joined forces with the Susan G. Komen Breast Cancer Foundation in another activist-oriented effort to fight breast cancer. Packages marked with a pink ribbon offered consumers the choice of receiving a rebate or sending a donation directly to the Komen Foundation.

Spinoff of Water Pik Technologies: 1999

By 1997, Teledyne Water Pik and Teledyne Laars together accounted for seven percent of Allegheny Teledyne's sales and eight percent of its operating profit. The Water Pik, Laars, and Jandy brands generated sales of $235 million in 1998. However, depressed prices for stainless steel forced Allegheny Teledyne to consider cost-cutting measures, including layoffs and early retirement for its workers, in order to continue to turn a profit. Driven by management's desire to focus on its core metals business, the company made the decision to spin off its consumer products businesses as independent entities. In November 1999, Water Pik Technologies, Inc., combining dental equipment, showerheads, water filtration systems, and pool spa products, was spun off to Allegheny Teledyne shareholders at the ratio of one share of the new company for each 20 shares of Allegheny Teledyne's common stock. The new company, so named because management viewed Water Pik as its flagship brand, came under the direction of CEO and President Michael Hoopis, who formerly had held the top position at Allegheny Teledyne's consumer segment. Allegheny also spun off four aerospace and electronics divisions which united to form Teledyne Technologies Inc.

Hoopis continued the direction set by his predecessors. At the start of 2000, the company aimed to represent itself as both more entrepreneurial and more responsive to customers and their needs with the continued introduction of new products. In March 2000, it introduced its new automatic flosser, bringing it into direct competition with Braun. It also piloted the Misting Massage Showerhead, further developing its shower line. By the summer of 2000, the company had eliminated the name Teledyne from its packaging in a move to capitalize on its well known brand name in a highly competitive marketplace. Additionally, it aimed to increase its international business in new and existing markets and to build more strategic alliances.

Principal Divisions: Personal Healthcare Products (Waterpik); Pool Products and Heating Systems (Laars, Jandy, Olympic).

Principal Competitors: Clorox Company (Brita); Proctor & Gamble Co. (PUR); Essef Corporation; Gillette Company (Braun) Optiva (Sonicare); United Dominion Industries.

Further Reading:

• 'Co-founder of Teledyne Dies at 82,' Associated Press, September 3, 1999.
• Ehrbar, A.F., 'Henry Singleton's Mystifying $400-Million Flyer,' Fortune, January 16, 1978, p. 66.
• Ellis, Beth R., 'Teledyne's Health Plan,' HFD, June 8, 1987, p. 1.
• Fields, Robin, 'Allegheny Teledyne Plans Spinoffs,' Los Angeles Times, September 15, 1999, p. C2.
• Murray, Thomas J., 'The Trouble at Teledyne,' Dun's, April 1972, p. 66.
• 'A Strategy Hooked to Cash Is Faltering,' Business Week, May 31, 1982, p. 58.
• 'Teledyne Investing in a Brand Push,' HFN, August 31, 1998, p. 52.
• 'The Teledyne Turnaround,' HFD, November 25, 1985, p. 62.
• Zaczklewicz, Arthur, 'Water Pik Dives into Transition,' HFN, December 6, 1999, p. 35.
• ------, 'Water Pik Spinoff Drops Teledyne Name,' HFN, October 4, 1999, p. 66.

Source: International Directory of Company Histories, Vol. 34. St. James Press, 2000.

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