We caught up with Dux CEO Simon Terry to discuss the handover of Dux from GWA to Noritz and what it means for the future of the brand and the hot water market in Australia.

Making a big business decision, such as finding a prospective buyer to take a company into a new direction, does not happen overnight; however, in 2014, the GWA Board completed a strategic review of the business. The review concluded that GWA’s focus should be on the core Caroma business and as Simon explains, it was the right move.

“In contrast to what can often be the case when a business changes owners, the staff and management team were very understanding and in fact supportive of the decision.

“GWA had been great owners since they took over the business from Hardies in 1997, but there hadn’t been much focus on the Dux business in recent times. When you’ve got a stable of brands like Caroma, Dorf, Clark etc., it’s understandable. I think the staff at Dux and GWA both thought it was the right call.”
There was no shortage of prospective buyers either, thanks to the brand’s rich history and proven reputation.

“There aren’t too many manufacturing businesses in Australia with a 100 year-old heritage and operating out of a brand new $24m factory. Dux is a strong trade brand with a quality product and some deep customer relationships, so there was incredible interest both in Australia and overseas. There were plenty of companies interested in buying the Dux business both in Australia and from overseas, but ultimately Noritz won out.”

Noritz is a serious global player in hot water. They were established in 1951 and have operations in Japan, Brazil, China, Hong Kong, USA and now Australia.
“Last year, globally they sold in excess of 2 million water heaters with sales of $2.4billion (AUD). They’ve got nearly 10,000 employees around the world and a clear focus on water heaters. They have 15 production facilities in 3 countries so for Dux Hot Water the scale of this business is just enormous,” Simon explains.
As stated in the previous article, Japan dominates the market for storage and instantaneous heaters and for good reason too.

“Per capita, Japan is probably the highest user of hot water in the world. Whereas Australians typically have showers each day, most Japanese have a bath. For them its a little luxury and a time to unwind and enjoy ‘the simple comforts of life’, which is the motto of Noritz in Japan. Like others, they’ve successfully taken their hot water technology to the world.”

Noritz is currently in expansion mode with a real focus on growing their business internationally.

“They thought Dux was a very good fit within the group and it absolutely appears to be the case. Noritz quickly realised that continuous flow and commercial hot water had been weaknesses for Dux, where the core Dux capability was always in storage tanks. Now that we have one of the world leaders in continuous flow and commercial hot water standing behind us, those old weaknesses are new strengths.”

Simon recently returned from a trip to Japan where he was given an extensive tour of the Japanese continuous flow factory. Needless to say, he was thoroughly impressed with their extensive facilities and approach to their daily work activities.

“We were given an unbelievable reception by the Noritz team. We met with the 88 year old founder of the business and got to meet the Noritz Board. While it is publicly listed, the founder is still a significant shareholder and active in the business. We had a great chat with him.

“The scale of the factory is something I’ve never seen before. To say it is massive would be an incredible understatement. You can’t see it all in a day and this is just the main factory. It has a series of multi-storey buildings spread across 30 acres. There were 17 production lines in the main factory alone and you think to yourself that Noritz has got another 14 factories around the world.

“We were so impressed with their manufacturing capability and their undeniable commitment to quality. Customers in Japan told us that it regarded as the premium brand over there. Justifiably, Noritz has got an incredible amount of pride in both their product and their operations. They’re simply world class,” Simon exclaims.

With that in mind, it’s obvious that Dux will leverage from their sheer scale. They will also begin to supply continuous flow and a range of commercial hot water products that they have previously lacked. It’s a win-win situation at the end of the day.

“They have over 500 R&D engineers and a five storey R&D centre at the Akashi site. We walked through it with our jaws on the floor. It was like the Disneyland of hot water. Nothing was off limits to us and let me tell you that they have some amazing products in development.

“We also spent a lot time with the factory teams. It seemed like every corner we turned around exposed us to another piece of machinery worth millions, which we had always wanted, but couldn’t afford because of our smaller size. Now we can leverage that scale to support better built products.

They don’t just bring size and technology to the party either as their work ethic and communication approach is second to none too. And it is in the areas of communication and employee engagement whereby Simon believes Dux management can learn and adopt new practices.  

“On their first trip, the senior management addressed the whole Dux factory. They stood at the door and introduced themselves to every worker on the shop floor as they entered and then gave a short presentation on their plans. The factory stood up and cheered at the end. Dux is a pretty big employer in regional NSW and our workers have a lot invested in our business. Like me, they think that Noritz is the best possible partner for Dux in Australia.”
So what can we expect from the company in the coming future?

“It’s very much business as usual,” Simon explains.

“They bought the shares of the company so that everything like ABNs and business names are completely unchanged. They have a long term view of the market and want to work closely with our key customers, suppliers and employees to grow the business. The focus is very much about leveraging Noritz’s technical capabilities to build better and more competitive tanks in Australia and also to introduce new and better water heaters.
“It’s a very exciting time and we’re thrilled that it coincides with our 100 year anniversary in 2015.”