Company News|Manufacturing

By Lily Rutman In the much-earlier days of Calif.-based company Waterstone Faucets, a banker told founder Chris Kuran something entrepreneurs tend to hear often: You’re probably not going to make it. “I had been told by a bank, ‘You’re under-capitalized… we don’t think you’re going to succeed,” said Kuran, recalling when he tried to get conventional bank financing many years ago. A U.S. Naval Academy grad and Marine Corps veteran, Kuran has never been known to be a quitter. With some help from two SBA loans, he has since grown Waterstone Faucets into a leader in high-end kitchen faucets in the nation, attracting the business of the well-heeled and well-known. The more recent SBA loan was 504 real estate financing provided by CDC Small Business Finance, with the help of senior loan officer Merri Adams. Now in its 20th year in business, the U.S. manufacturer employs more than 140 people, pumping economic activity into their home base of Murrieta, Calif. “We figured out a way to just get it done; we don’t quit,” said Kuran, as he walked among the heavy hum of faucet production at his 42,000-square-foot manufacturing plant on a recent weekday. MAKING THE BEST FAUCETS IN THE WORLD Founded by Kuran in 1999, Waterstone Faucets was at first in the business of selling parts and finished components to large filtration companies that made and sold drinking water systems. After clients asked Waterstone to make small institutional drinking water faucets in custom finishes, that’s when Kuran spotted a niche opportunity. Waterstone pivoted toward the production of top-notch filtration faucets in several finishes, and in 2005, Waterstone added kitchen faucets to its line-up. Since that pivot, Kuran — with business partner and Vice President of Manufacturing Steve Kliewer who joined in 2001 — has been laser-focused on “making the best faucet in the world,” he said. COMMITMENT TO MADE IN THE U.S.A., EXPANSION Today, Kuran is proud of the fact every single faucet is made by machine and hand from start to finish at the Murrieta production plant. “When we started I knew I wanted a product that was made in the U.S.,” Kuran said. Everything from plating to curing to polishing is all done inside the 42,000-square-foot facility, which Kuran purchased in 2014 with an SBA 504 loan through CDC Small Business Finance. (They were originally under a lease agreement with an option to purchase the facility.) Waterstone’s previous digs were significantly smaller, at 13,000 square feet. Why move into a space more than three times the size? Kuran and his team wanted to bring the faucet finishing work in-house, which required more room for machinery and workers. They had previously contracted out the finishing work. So by bringing that function in house, Waterstone was able to control both cost and quality. Demand for Waterstone products has only accelerated since moving to the new space, thanks largely to word-of-mouth referrals from architects and high-end home designers. To meet demand, they’ve since brought on new machinery to increase capacity and switched to a “lean” production system that allows every team member to easily visualize where components are in the production line, which has increased efficiency. In all, they track about 750 components, so the lean system has proven to be invaluable, Kuran said. HOW AN SBA 504 LOAN PAVED THE WAY FOR GROWTH After realizing buying commercial property would be advantageous, Waterstone explored doing so with the help of an SBA 504 loan. It’s financing for real estate and major equipment that comes with a rate that’s fixed and affordable. Perhaps the best part: You only need to put 10 percent down. Getting an SBA 504 loan provided Kuran and his company several benefits including: Savings: His mortgage was less than what he paid in rent. Stable monthly payments: SBA 504 rates are fixed so you know exactly what you’ll owe every month. No surprises. Investing in your future. You are building equity in your own asset. “It was the edge we needed,” Kuran said. “I’m living proof that SBA loans do help small business entrepreneurs get off the ground.” Merri Adams, a senior loan officer at CDC Small Business Finance, helped Waterstone get their SBA 504 loan. “Using the SBA 504 loan program, they purchased the building with 10% down and leveraged a low fixed rate,” Adams said. “The low fixed rate translates into stable monthly payments that do not increase over time, driving increased profitability and stability for companies.” “It’s a labor of love,” Kuran said. HOW CDC HELPED Provided SBA 504 loan to buy 42,000-square-foot building in Murrieta, Calif. Loan provided an affordable, fixed rate for stable monthly payments. Mortgage was less than what the borrower had been paying in rent. Pave the way for hiring, with total employee count at 145. WHAT’S NEXT FOR WATERSTONE FAUCETS? Now that Waterstone has a strong foothold on the luxe kitchen-faucet market, they’ve got their sights set on a bathroom line. They’re currently working on the new designs, which are slated to go live around 2020. Waterstone Faucets’ expansive building houses its production, warehouse and offices in Murrieta, Calif.

Story and illustrations by Mackenzie Manley What is it? Lean manufacturing is manufacturing in its most simple, elegant form. Inspired by Toyota’s Production System, Lean employs pull systems and visual tools to align efforts across the organization which helps to drive out waste and inefficiencies. One such tool, called Kanban (meaning “card, or signal”) was inspired by the shelf restocking process in Super Markets – what is sold is quickly restocked. Toyota adapted this process to its factories and supply chain, and others successful manufacturers, including Waterstone Faucets, have followed suit. So How Exactly Does it Work? The best way to think about Kanban is to look at it like a Pull System. When you need an individual part you “pull” it from the bins that has been labeled specifically for that part. The bins have been stocked with exactly the amount you need that day to create products. A creative example of a Kanban system or lean manufacturing system is your local burrito joint! Let’s look at the process step by step: Step 1. Let’s say you are on your lunch break and craving a delicious burrito. The burrito shop you prefer happens to make the burritos in front of you and allows you to choose your own ingredients. There are many ingredients to choose from and each bin holding the ingredient is stored in its’ own bin. The bins are not very large, they probably have enough ingredients to last through the lunch rush. Step 2. As you choose your ingredients, Mike the burrito maker grabs each ingredient (or part) that he needs to complete your burrito (or product). Some of the ingredients are low in the bins but as you come to the cheese, Mike realizes that the cheese has ran out. Step 3. Mike takes the empty cheese bin back into the kitchen and exchanges it for a full bin of cheese. That full bin of cheese was prepared by Mike, who was noticed several customers earlier that the cheese bin was running low. Mike was able to quickly shred the cheese to fill the bin because the cheese, cheese shredder, and gloves are all kept in the kitchen in the exact same spots to help Mike find the tools he needs to shred the cheese quickly. Step 4. Mike takes the cheese container back, replacing it where it belongs and continues on with creating the burrito. Once you have chosen all of your ingredients, Mike wraps the burrito and places it in a container for you to take back to work. The transaction for the burrito is placed and you are pleased that the order was completed quickly and accurately! The Kanban System at Waterstone: Just like a Burrito shop, Waterstone utilizes this Kanban system in their inventory system. Instead of bins of ingredients, Waterstone has bins of faucet parts. All of the parts are milled in our factory in Southern California so that the bins can be replenished when they run out. When the customer orders the faucet or suite they desire, then the Kanban or lean manufacturing system starts up. Waterstone also incorporates the practice of organization. Every tool has its own place, and a well organized shop helps to encourage a more efficient and faster production rate so that you can get what you ordered faster! Waterstone’s president Chris Kuran was hesitant to make that jump from the complex system that Waterstone had been using to the simpler Kanban or lean manufacturing system. “I didn’t realize that there was an easier and better way to run the inventory system. When I learned about the benefits of Kanban , I knew that it would be the right fit for Waterstone since we are a smaller business and produce everything here in our own factory.” The Kanban system solved a very complex problem with a very simple solution. Waterstone has taken advantage of the Japanese wisdom to solve our own big problems, but Kanban can also be used on a much smaller scale, perhaps even in your own kitchen! Stick around and soon you will find out how using the Kanban system (with Waterstone’s help) can simplify your own kitchen experience!

We love what we do! Waterstone is proud be be the only American made kitchen faucet company. Every member of our crew has a small, but important part in the creation of our outstanding kitchen faucets. We believe in quality craftsmanship and take pride in their little part of the manufacturing process. And of course, Made in the USA!