California Faucets: Spouting Innovation

Aug 15, 2023

Huntington Beach Firm Emulates Dell's PC Building Model; 'You Can Still Manufacture and Be Successful in California'

A Huntington Beach manufacturer of kitchen and bathroom faucets is emulating computer manufacturer Dell.

On the website of California Faucets, a consumer can order handcrafted faucets with solid brass construction that can range from contemporary to traditional industrial designs. A drainage can match the style of showerheads and nearby faucets. The company will scratch new faucets to give a home an old-school charm. The handles can be changed. Like Dell, California Faucets doesn't make products until they are ordered.

In fact, California Faucets even hired a former Dell manufacturing expert to build its factory.

"It's a completely different way in an old-school industry," owner and Chief Executive Jeff Silverstein told the Business Journal during a tour of the company's factory.

As opposed to mass production, "We’re saying, ‘what's the design you want in your home?’ You can mix and match components to get exactly what you want. You’re not stuck with what the manufacturer says you must have."

"The design community loves it because it gives them flexibility."

That strategy of making customizable products has worked well for California Faucets, which has doubled its employee count to 300 in the last two years and now works out of four buildings totaling 100,000 square feet at 5271 Argosy Ave. in Huntington Beach.

In addition to making faucets for residential use, it makes a variety of decorative drains, shower systems and other kitchen and bathroom products.

California Faucets declined to reveal its annual revenue run rate. ­

The company last month launched the "Christopher Grubb Bath Collection," its first faucet design series created alongside an interior designer.

"The designs echo the luxury and quality that emanates while driving through Beverly Hills—a place where celebrity homes designed by top architects can be found in every style from contemporary to traditional to transitional," said Christopher Grubb, who has been creating baths through his design firm, Arch-Interiors Inc., for nearly 30 years.

Crazy Idea

California Faucets was founded in 1988 by Fred Silverstein, who had spent a career as a salesman of faucets.

"He decided he want to be a manufacturer in California—it was absolutely crazy," said his son Jeff Silverstein. "He had no experience, no background. He knew the plumbing side, but not the manufacturing side. My dad was a character and real raconteur."

His father picked the name without any sophisticated research because "he thought it sounded good," Silverstein said. The choice was fortuitous because it's now considered "the leading edge of anything new and exciting."

"It has international cache," he said.

His father emphasized delivery, quality and service, three areas where the industry had a notoriously poor reputation.

In 1997, his father called Jeff, who by that time had spent 15 years as a summer campdirector as well as an English teacher in junior high school and high school on the East Coast.

"He said, ‘The company is small but I think it can grow. I need some help. Will you come help me for a year?’" recalled Silverstein. "That was 25 years ago."

At the time, the company employed seven people working in three states. It became a true family business as Jeff's siblings Sue and Tina and cousin Noah Taft all work at the company.

"We immediately started growing the company significantly,"

During its first few years, it had products similar to its competitors. When the 2008 recession struck, company executives made a strategic decision to differentiate itself.

The first product was turning a simple drain into a style icon that would match other parts of the bathroom.

"Prior to style drains, the drain in the shower was just a non-decorative hole in the floor,"

Silverstein said. "We basically created the space of a decorative shower drain with interesting designs that fit the vision of the homeowners.

"You’ve got beautiful shower fittings, gorgeous tiles—why would you have a little ugly drain cover? Nothing existed in the industry. In the middle of the recession, people were flocking to us."

Then it designed and engineered a shower valve with its own thermostat so a user could dial in his or her own water temperature.

"We priced it at $299, which was about a third of the going rate. It really opened up the market," Silverstein said.

"Those two products propelled us from the depths of the recession."

Fragmented Industry

The faucet industry is relatively fragmented, as Silverstein can name about 50 competitors, including some big dominant multinationals like Kohler Co. and Moen Inc.

"You’ve got these big multinationals and it's all about mass production," Silverstein said. "They pump it out and it's all one flavor. That's the way it's always been done."

California Faucets executives knew they needed to grow in a different way.

"There are quite a few companies that didn't invest and have been left behind," he said.

"We knew we needed someone to take us from the moms and pops to the next level.

"We wanted to customize to move from small to scale up. Nobody in our industry was doing it. We couldn't get the talent inside our industry, so we went outside."

That's when Silverstein found Brian Hunt, who has worked manufacturing in an array of companies, most notably Dell, where he developed processes to enable customized, made-to-order production on a mass scale.

"When we saw Brian, the guy worked at Dell. People asked, ‘What does Dell have to do with faucets?’ It has everything to do [with it]," recalled Silverstein about hiring Hunt.

Hunt, who joined in 2013 and is the chief operating officer, built a computer system to track thousands of orders each with different components.

"The challenge is the same" as at Dell, Hunt said while speaking on the floor of his factory. "Making the orders, getting the parts, assembling them at the last minute and then getting it to the customer as fast as you can. It's a very similar challenge. It's just a different product.

"It's fun to do stuff that nobody's done before."

Flexible

The company designs, engineers, assembles and tests the faucets at its Huntington Beach facilities. It leaves the forging to overseas partners.

It can provide products as diverse as a 19-inch-wide shower head, or finishings in 28 different colors.

"We view ourselves as David and Goliath," Silverstein said. "We’re David and we’ve turned it on its head by asking ‘how do you want it?’

"Because of the way we manufacture, we’re very flexible. We don't build to stock. We build to order."

California Faucets sells nationally, mostly on the mid-to-high end of the market. It doesn't plan to expand abroad because those countries have different plumbing requirements.

While manufacturing has its share of well-known regulatory issues in California, the company intends to stay in Huntington Beach.

"It's challenging but if you run your company properly and invest wisely, you can still manufacture and be successful in California.

"Some of the environmental regulations, while they make things challenging for manufacturers, are probably the right thing for society."

Silverstein often gets calls from private equity, to which he responds no by telling them, "We’re having fun."

"We’re still in the first inning. What's interesting here is we’ve invested in a way that will allow us to continue to grow and to scale. It's never been done before. It's quite complex and anyone who has tried to do it hasn't been able to.

"The market is huge. We could very easily double in size over the next five-to-seven years."

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