Jacuzzi Brands Inc. - Company Profile, Information, Business Description, History, Background Information on Jacuzzi Brands Inc.

777 South Flagler Drive, Suite 1100 West
West Palm Beach, Florida 33401

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At Jacuzzi Brands, our mission is to develop great brands and great p roducts so that we are the company of choice to drive our customers' success.

History of Jacuzzi Brands Inc.

Jacuzzi Brands Inc. operates as a leading manufacturer and distributo r of bath and plumbing products, including whirlpool baths, spas, sho wers, sanitary ware, and bathtubs. The company also offers profession al grade drainage, water control, commercial faucets, and various oth er plumbing products to customers in residential, commercial, and ins titutional markets. Jacuzzi has several brands in its arsenal, includ ing its namesake, Sundance, Zurn, and Astracast. The company is the o riginator and one of the world's largest manufacturer of whirlpool ba ths, with which its name has become synonymous. Jacuzzi was founded i n 1915 and remained a family owned and operated company until 1979 wh en it was bought by Kidde Inc. The latter company was subsequently pu rchased by the huge British conglomerate Hanson plc, which later spun off a number of its American subsidiaries as U.S. Industries (USI). USI sold off many of its businesses during the early years of the new millennium and changed its name to Jacuzzi Brands in 2003.

Company Origins in the Early 20th Century

Jacuzzi was founded by seven brothers who emigrated from Italy to Cal ifornia in the early 1900s. Engineers by trade, the brothers produced a variety of aviation-related innovations including a pitched propel ler developed for the American government and the first enclosed cabi n monoplane, which was used to carry mail and passengers for the U.S. postal service. According to certain accounts, the Jacuzzis' mother was unhappy with the risks involved in aviation and asked her sons to work on something more down to earth. The Jacuzzi Brothers family fi rm began to design hydraulic pumps and eventually became one of the w orld leaders in the engineering and production of agricultural pumps used for irrigation.

The Invention of the Whirlpool Bath in the Late 1940s

The company's hallmark product, the Jacuzzi whirlpool bath, was inven ted in the late 1940s as a personal project of one of the second gene ration of Jacuzzi company managers, Candido Jacuzzi. Candido's son Ke nneth, stricken with rheumatoid arthritis, had been receiving hospita l hydrotherapy treatment and, as Kenneth would later relate in Peo ple Weekly, "as good Italian parents do, my folks thought more is better." A team of Jacuzzi engineers were put to work to develop a h ome version of the hydrotherapy pump. The result was the J-300, a sma ll portable pump that could be placed in a bathtub to create a soothi ng hydromassage. In 1956, Jacuzzi began marketing the therapeutic dev ice to hospitals and schools, developing a small but solid niche in t he surgical supplies market. Kenneth, who continued to battle the phy sical challenges of rheumatoid arthritis, went on to found his own su ccessful software company and the Jacuzzi pump that was invented for him achieved its own fame as the plaything of celebrities.

By the mid-1950s the privately owned Jacuzzi Brothers was being run b y the second generation of Jacuzzis. In addition to its market-leadin g agricultural pumps and the J-300, the company patented and produced a large variety of products that made use of their expertise in hydr aulic technology, including water jet propulsion motors for a growing recreational motor boat industry as well as swimming pool equipment and a wind machine that helped protect crops from frost.

In 1968, Roy Jacuzzi, a member of the third generation of Jacuzzis to work for the company, graduated from college with a degree in indust rial design and joined the family firm as head of the research divisi on. Searching for new applications for the company's products, Roy st ruck upon the idea of marketing the J-300 hydrotherapy device to the growing leisure and fitness market. In order to create enough room to accommodate a more relaxing soak, Roy developed and patented the fir st bathtub with a built-in whirlpool system. Dubbed the Roman Bath, t his unit made it unnecessary to place a portable pump into the tub, a llowing the bather the full interior of the tub in which to enjoy the hydromassage. The self-contained unit was marketed as a replacement for the standard bathroom tub and could be used with or without the h ydromassage feature. Although, by his own admission, the senior gener ation of Jacuzzis thought he was "a little weird," Roy set out to cre ate a market for the Roman Bath by displaying it at country fairs and housing trade shows.

By 1970 sales of the built-in whirlpool bath were promising enough to justify the introduction of a larger model, the Adonis, and within t wo years the company was manufacturing a two-person unit, dubbed the Gemini, available in a wide range of colors and styles. The Gemini li ne was followed by even larger models called spas, which were produce d complete with filters and water heaters to obviate the necessity of filling and emptying them with every use. The laid-back culture of C alifornia in the 1970s turned out to be the perfect launching ground for the leisure-oriented product and by the middle years of the decad e owning a "Jacuzzi" had become a symbol of the mellow California lif estyle. With the endorsement of high-profile movie stars, sales of th e units took off and soon the whirlpool bath division was Jacuzzi's b iggest profit maker. As the sole supplier of the patented system, the Jacuzzi brand name was synonymous with the whirlpool baths. Although Candido Jacuzzi, the conservative inventor of the original J-300 pum p, was reportedly embarrassed about their sybaritic associations, the company's whirlpool baths and spas, and the Jacuzzi name, became ide ntified with indulgent relaxation.

Bought by Kidde Inc. in 1979

In 1976 Jacuzzi moved its corporate headquarters from Berkeley to Wal nut Creek, California. By the late 1970s, thanks both to sales of whi rlpool baths and the growing export market for the company's irrigati on pumps, Jacuzzi Brothers sales reached about $90 million. The c ompany, which by then employed about 100 members of the Jacuzzi famil y, became the subject of family disagreement, however, and in 1979 th e privately owned firm began to look for a buyer. After merger talks with Textron broke down, Kidde Inc., a conglomerate that manufactured products ranging from consumer appliances to hydraulic cranes, bough t Jacuzzi Brothers for about $70 million.

Under Kidde, Jacuzzi lost most of its family-run quality as many fami ly members left the firm. The notable exception was Roy Jacuzzi, who remained in charge of the company's whirlpool bath division. Although only a tiny part of Kidde's huge operations, both of Jacuzzi's main product lines, agricultural pumps and whirlpool baths, continued to t hrive. The company was operated as two separate subsidiaries: Jacuzzi Brothers, with headquarters in Little Rock, Arkansas, manufactured p umps and pumping equipment for use in agriculture and swimming pools; and Jacuzzi Whirlpool Bath, run out of Walnut Creek, California, man ufactured the company's renowned jetted baths as well as a variety of more conventional bathroom faucetry and equipment.

For both Jacuzzi subsidiaries foreign sales showed particularly stron g growth. The company's water pumping equipment was in great demand i n the developing countries of Central America, which were looking to develop small, efficient irrigation systems. In 1984 the company sign ed an agreement to become Nicaragua's sole supplier of water pumping equipment, although the subsequent American-imposed trade embargo on Nicaragua meant that products had to be shipped via the company's Spa nish and Canadian branches. The European market for whirlpool bath an d bathroom fixtures began to take off in the 1980s and Jacuzzi's pres ence in Italy and Spain assured the company a strong showing in this area. By 1987, Jacuzzi's whirlpool products alone were garnering some $57 million in sales.

Through the 1980s the trend in both America and Europe was for bathro oms to get larger and bathroom fixtures to be designed for appearance as well as function. Jacuzzi's product line expanded to dozens of mo dels available in a huge assortment of colors and with a variety of o ptional features. Some options available on the more luxurious models included the "Water-Rainbow" waterfall-like fill spout, programmable massage jets, underwater lights, and built-in mirrored vanity cases. Roy Jacuzzi was personally responsible for designing many of the fea tures of the new product lines; by 1987 Roy held 160 patents for inno vations in whirlpool design and technology.

Acquired by Hanson in 1987

In late 1987, the huge British conglomerate Hanson PLC bought out Kid de Inc. and its 100 subsidiaries, including Jacuzzi, for $1.7 bil lion. One of Hanson's first moves in its reorganization of the acquir ed businesses was to appoint Roy Jacuzzi as president and CEO of Jacu zzi Inc., an umbrella company headquartered in Walnut Creek that was to control the management of both the pump and filter products of Lit tle Rock-based Jacuzzi Brothers and the bathroom and whirlpool produc ts of Jacuzzi Whirlpool Bath. The newly organized company employed a workforce of 1,843 and had annual revenues of about $160 million.

Under Hanson Jacuzzi continued its international expansion and its ne w product introductions. Chief among the company's innovations in the 1990s was the development of the J-Dream steam shower system. With t he J-Dream, Jacuzzi hoped to transform the nature of showering as the whirlpool bath had transformed bathing. The shower system, available to accommodate either one or two users, featured molded seats, progr ammable hydrotherapy jets, multifunction shower heads, and steam ther apy as well as luxurious options such as built-in CD players, cascade waterfalls, and waterproof concealed closets to store bathrobes and towels.

Spun Off As U.S. Industries in 1995

Although Jacuzzi remained solidly profitable through the early 1990s, Hanson decided to sell off a number of its American businesses to ra ise cash for further British acquisitions. Although analysts speculat ed that Jacuzzi, with its widely recognized brand identity, would be spun off as an independent public company, it was decided that 34 of Hanson's American holdings would be rolled together as a unit to be c alled U.S. Industries (USI), a public company with a listing on the N ew York Stock Exchange. Other companies that were to join Jacuzzi as part of U.S. Industries included well-known brands such as Farberware Cookware, Tommy Armour Golf, Rexair Vacuum Cleaners, and Ertl Toys.

The year after the spinoff operating income for Jacuzzi Inc. rose to $55 million on revenues of $332 million. Almost 80 percent of this revenue was contributed by the company's bath products, includi ng whirlpool baths, spas, shower systems, and non-jetted baths. The r emainder came from sales of the water systems and swimming pool equip ment that had been the foundation of the company since its early year s. In April 1996 this segment was strengthened with the purchase of H augh's Products Ltd., a leading Canadian manufacturer of above-ground swimming pools and equipment with estimated annual sales of more tha n $11 million.

As Jacuzzi entered the final years of the 1990s international sales a ppeared to be the major arena of future growth for the company. By 19 96 international markets, including Europe, South America, the Middle East, and the Pacific Rim, accounted for about 46 percent of Jacuzzi 's sales and analysts predicted that this sector would increase into the next century as the popularity of large, elaborate bathrooms spre ad worldwide. Plans for a new facility in Singapore that would manufa cture products specifically designed for Asian consumers were under w ay in 1997 and promised to deliver a significant new share of this ma rket.

Streamlining Operations Leading to a Name Change in 2003

While Jacuzzi worked to strengthen its market share in the late 1990s , USI struggled to shore up positive financial results and was burden ed with major debt. The company was forced to rethink its strategy in order to cut costs and reduce its growing debtload. As such, the com pany set plans in motion to streamline its operations. Beginning in e arly 2000, USI launched a series of selloffs that would dramatically reshape the company. One of its most significant divestitures came la ter that year when Citicorp's venture capital firm Vectura Holdings L .L.C. agreed to buy its Diversified division in a $600 million de al. USI retained an 18.6 percent interest in the division, which incl uded a host of different companies, such as Garden State Tanning, Leo n Plastics Inc., EJ Footwear Corporation, Lehigh Safety Shoe Company, Huron Inc., Bearing Inspection Inc., Bilt Best Products Inc., Native Textiles Inc., and Jade Technologies Singapore Ltd.

USI continued to shape itself into a plumbing and bath products conce rn over the next two years by selling its lawn and garden and lightin g businesses. The company jettisoned its Ames True Temper landscaping tools business, Spear & Jackson, SiTeco Lighting, Lighting Corpo ration of America, and Selkirk Group. Overall, nearly $600 millio n in assets was sold. Company headquarters were moved from New Jersey to West Palm Beach, Florida, in 2002 as part of its cost reduction p rogram.

When the dust settled on USI's streamlining efforts, Jacuzzi stood as one of its major holdings. The final step in USI's transformation wa s the adoption of the Jacuzzi Brands name for its corporate moniker i n 2003. Jacuzzi was one of the top 25 most recognizable brands in the world and company management hoped to capitalize on its status. Late r that year, Jacuzzi Brands formed a partnership with home improvemen t retailer Lowe's, which put the Jacuzzi product line in nearly 900 s tores across the United States.

At first glance, the company's strategy appeared to pay off. Sales an d profits were on the rise in 2004 and Jacuzzi controlled 24 percent of the domestic market, with competitors American Standard and Kohler trailing behind it. Trouble proved to be lurking around the corner, however, and in May 2005 the company hired investment firm Lazard Fre res & Co. to look into strategies that would improve shareholder value. Once again, Jacuzzi Brands began selling assets to improve its bottom line. Majority interests in vacuum cleaner subsidiary Rexair Inc. and sanitary ware manufacturer Eljer Plumbingware Inc. were sold that year.

By this time, Jacuzzi and Zurn--the company's major plumbing brand--w ere the two largest divisions in its arsenal. Analysts began to specu late that one of the brands would be sold. Zurn's operations proved s uccessful but costs were climbing at the Jacuzzi division. Chief Oper ating Officer Donald Devine, slated to take over the CEO position lat er in the year, was fired just before the company announced significa nt losses in the third quarter of 2005. Alex Marni, president of the plumbing division, was named Devine's successor. While management wor ked to stabilize Jacuzzi Brand's earnings, the future of one of the m ost recognizable brands in the world remained up in the air.

Principal Subsidiaries: Asteria Company; Astracast GmbH (Germa ny); Astracast plc; Bathcraft Inc.; BB Investments Ltd.; Eljer Indust ries, Inc.; Eljer Plumbingware, Inc.; Gatsby Spas, Inc.; Jacuzzi Bran ds, Inc.; Jacuzzi do Brasil Industria e Commercio Ltda. (Brazil); Jac uzzi Europe SpA; Jacuzzi France S.A.S.; Jacuzzi Inc.; Jacuzzi (Chili) S.A.; Jacuzzi Investments Ltd.; Jacuzzi Singapore Pte Ltd.; Jacuzzi UK Group plc; Jacuzzi Universal S.A. (49%); Jacuzzi Whirlpool Bat h, Inc.; Jacuzzi Whirlpool GmbH (Germany); JBI Holdings Ltd.; JUSI Ho ldings, Inc.; KLI, Inc.; Les Aeliers de la Motte S.A.; PH Property De velopment Company; Redmont, Inc.; Rexair Holdings, Inc.; Rexair, Inc. ; Silverdale Ceramics Ltd.; Spring Ram Bathrooms plc; Spring Ram Corp oration Overseas Ltd.; Stainless Steel Products Ltd.; Sundance Spas, Inc.; The Spring Ram Corporation plc; USI American Holdings, Inc.; US I Atlantic Corporation; USI Canada Inc.; USI Capital, Inc.; USI Mayfa ir Ltd.; USI Overseas Holdings Ltd.; USI Plumbing plc; USI Properties , Inc.; Val Industria e Commercio Ltda.; Zurco, Inc.; Zurn Industries Ltd.; Zurn Industries, Inc.; Zurn Pex, Inc.

Principal Competitors: American Standard Companies Inc.; Kohle r Co.; Moen Inc.


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