Kohler was a brand caught squarely in the bursting of the U.S. housing bubble a few years ago. But it's only because of that debacle that the Wisconsin-based maker of bathroom fixtures now is busy supplying a still-promising boom in demand for its most expensive toilets by upper-middle-income consumers in China.
The century-old company made porcelain, mainly in Wisconsin, and became a multi-billion-dollar brand by supplying it for homes and businesses as the American building boom continued from after World War II to a few years ago. Along the way, the family that owned the privately held company was able to build up a five-star resort in its hometown, an elaborate "toilet museum" nearby, and world-class golf courses such as Whistling Straits, on the banks of Lake Michigan several miles a way.
But Kohler sales fell from about $5.5 billion in 2008 to about $5 billion last year largely because of the U.S. housing bust, forcing a cut in the Wisconsin manufacturing workforce to about 1,800 people from about 2,700 people. And that's where the silver lining comes in.
"We wouldn't have had the capacity, perhaps, to export, but now because of the recession, we have capacity," Herbert V. Kohler Jr., the company's chairman and CEO, told the Wall Street Journal.What Kohler is doing with all that capacity in Wisconsin, in a Texas plant and at 11 factories in China is attempting to keep up with skyrocketing demand by mainland Chinese consumers for high-end toilets such as its Numi model.
The brand's most advanced toilet, Numi comes with everything but a personal valet. It boasts a remote control, leg-warming porcelain, a built-in stereo system and three bidet settings.
Kohler is one of dozens of Western brands benefiting mightily from high-end consumer demand that remains strong in China despite a recent slowdown in the overall economic growth rate and slackening demand in certain upscale segments, such as luxury cars. It's also not alone in booming in China while fighting for market share at home — witness Yum Brands' KFC disconnect, recounted in the current issue of Bloomberg Businessweek.)
"People who buy things for their homes like to tell people about what they're buying," Yuval Atsmon, a partner in McKinsey & Co., told WSJ. "People who buy things for their homes like to tell people about what they're buying. Brands that have managed to stand out as premium brands have done very well." Even — or perhaps especially — when it comes to boasting the world's priciest looky (at me) loo.