This year Waterco celebrates 25 years in the pool and spa industry. Splash! asked founder Soon Sinn Goh about the past, present and future for this key Australian company. - Splash! article

Way back in March 1981, a small company was established to import and distribute pipe and fittings. The company, set up by Soon Sinn Goh, was destined to become Waterco – a business which now claims a third of the Australian residential swimming pool equipment market, and employs 650 people worldwide.

This year, Waterco is celebrating its 25th year.

Goh, an accountant by profession, had returned to Malaysia in 1974 to help with his father’s construction business building reservoirs, water treatment plants and sewerage treatment plants for the government and large developers. While he was there he saw the synergy with the pool building industry and set up a swimming pool construction company.

“In 1980 I migrated to Australia and started a company distributing PVC pipe and fittings in 1981 called Dronaco,” says Goh. “A handful of people out there will remember that name. At the time the industry was dominated by four companies – Hume, Vinidex, Iplex and Hardie.

“They had the market to themselves and prices were high. So with some of these skills I’d developed working with the family business, I was able to bring in some pipes and fittings from overseas, recognising there was a good margin for us at the time.”

In business, every year brings a new challenge. And soon the new company faced the problem of the falling Australian dollar. “The imported costs got higher and higher,” says Goh. “So we changed the way we did business and today we’re still changing. That’s how we’ve survived 25 years.”

Waterco expanded the product line to include valves and filters, though at this stage the company was still just trading as a wholesaler. In 1986 they bought Zane Solar Systems.

Then they were approached by Weir Engineering, a company which had the distribution rights for Sta-Rite pumps and were also selling Lacron filters.

“Weir came to us. They wanted to quit the market… Sta-Rite was undergoing some changes and they’d lost the distribution because of some corporate changes. But the key reason they were giving up the business was there was no margin to import pumps and filters into the Australian market.

“They said, check over our inventory – you can have the business,” says Goh.

“So that was the start for us. It built up gradually, layer upon layer, item upon item, we added to the range. We started manufacturing when we bought the Aquahealth business from Gary Adams in Perth.

“We managed to buy Sta-Rite wet-ends, and coupled them with locally made Australian motors.”

In 1988 , Waterco took the next step: the purchase of SwimWorld which had ten pool shops. SwimWorld became Swimart, while Wholesale Park became Waterco Queensland. That year Waterco had a presence in Western Australia, Victoria, and Queensland and gained national distribution when they established an office in Adelaide.

The following year Waterco listed on the stock exchange. The next acquisition was Fulham.

“We had come up with a compact version of Fulham’s skimmer box, more practical and cheaper to make,” says Goh. “The lid was interchangeable and the basket was quite close too, so when we bought Fulham we achieved economies of scale by combining the two skimmer boxes.”

During the consolidation of the early 90s, more acquisition opportunities arose.

“The market was rather flat – if you put aside inflation – Australia has been building an average of 20,000 pools per year. That number has gone up and down, but not really changed materially,” says Goh.

“What increased was the growth of the pool population. If you look at adding 20,000 pools per year, the population of pools would have to be increasing. So the maintenance market was growing, but the builders’ market was reasonably flat.

“So when times were bad, suppliers felt it even more. So there were acquisition opportunities.”

In 1990 Waterco offered Lacron, a UK-based company, the opportunity to join them in a venture to manufacture filters in Malaysia.

“They said ‘we’re happy to just sell the filters to you’, so we said alright we’ll have to do it ourselves,” recalls Goh.

The venture was a success, and a few years ago Waterco bought out Lacron.

“I guess it’s just that times change, and Lacron’s processes had not kept up with the times. So you tend to find that if that happens, in any business for that matter, you’re really starting to feel the pressure.

“At one stage we were importing pump wet-ends from Sta-Rite and ITT Marlow from the US to build pumps here, today we’re exporting wet-ends to the US.”

In the early years, Waterco focussed on buying businesses and consolidating. The company would take up the profitable part and leave any redundant products.
“We did that for a while, and after that it didn’t really work too well, because the product lifecycle was coming to an end. So we decided to set up our own engineering team,” says Goh.

“It’s taken a long time but we’ve learnt to make pumps and we have developed a team of engineers who understand pumps very well and – with some outside help as well – we’ve developed a pump which the market likes.”

Waterco learned to make products better and cheaper. To be competitive, the company had to make products at a lower price and with better features, both for pumps and filters.

“Sometimes it’s not difficult to make a product,” says Goh. “But what makes it difficult is to make it at a price the market will like.”

Technological changes led to new manufacturing methods, and as the quantities increased, manufacturing process also had to change again.

“That’s why I said, from the beginning the business changed every day and we have to be on our feet, so we can follow through with that change.”

One of the changes was to introduce filament winding technology to the Lacron business in the UK, to replace the resin transfer moulding (RTM) method of manufacture.

The purchase of Lacron was important to establish a base in the UK and also to send a message that Waterco is in Europe for the long haul.

“The Lacron name has been around a long time, but more important for the market is that Waterco is there to stay,” says Goh.

“We’re not like somebody who’s trying to sell to them half a world away. If they have a problem they can always ring up in their local time and that’s important.”

It took Waterco a long time to become established in the US. But the effort and time was worth it. When asked to describe the highlight of his 25 years in the industry, Goh quickly replies it was when the US operation finally turned a profit. That was four years ago.

“We were losing money year after year. When it turned around, that was a year of significance.

“It took probably 10 years. We had a lot of pain. We thought there would be a day when it would be worthwhile, but it was a long time coming. We could get products that we thought would suit the market, but we couldn’t get them to the price that the market liked; and when we did get it to the price the market liked they said they’d prefer it to be cheaper, because we don’t seem to have a base in the US, though we had a warehouse and a few people working there. It took a long time to be accepted in the US.

“It’s very natural that they prefer to have somebody there that they know will be there for a long time to come. They don’t like to deal with a company they’re not sure will still be there, in case there’s a problem with their products a few years later. Similarly, Americans find it very tough to break into the Australian market.

“We expect to earn more than one million dollars from the US this year.”

And the future?

The commercial sector, while currently a small percentage of the business, is growing.

“We’re working hard at building up one of the best commercial pump and filter ranges of world class standard,” says Goh. “Pumps that at the moment go up to 15hp, made from a combination of 316 stainless-steel and corrosion-free composite.”

Waterco has come a long way in the past 25 years. Now a company with annual revenue of $95m, Waterco has become a global entity with a presence in 40 countries, employing 650 people around the world including approximately 200 in Australia. The company has equipment and chemical retail networks throughout Australia and New Zealand, the Zane national solar network in Australia and a Malaysian network of household filter dealers.

Waterco has manufacturing and R&D operations in Australia, the US, the UK, Canada, China and Malaysia, and distribution operations in New Zealand and Indonesia.

At this rate, it’s hard to imagine just how far Waterco can grow over the next 25 years.