Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

The profits are flowing


Brian Ward of Water Solutions moves water lines through the ceiling with the help of his son Russ, right, while installing a water-filtration system in the Washington Trust Building on Wednesday. 
 (Christopher Anderson / The Spokesman-Review)

Sandpoint-based Pure Health Solutions Inc. has tapped a lucrative market with its water-purification devices for businesses.

The company expects revenues of roughly $20 million this year, up from $4 million in 2003, said Craig Story, PHSI president.

PHSI has expanded from a 12-person outfit three years ago to employ about 65 today.

The company recently incorporated abroad with plans to tackle the European market, and it’s investigating a first-ever retail version of its products for sale at “big box” stores.

But achieving that growth has meant moving manufacturing overseas to a plant in South Korea — a major change for a company that until recently boasted about staying local.

“We did everything we could to stay here, but material prices went through the roof,” Story said. “We determined for certain that we were not going to China, where a lot of people have gone, and that is a whole different deal.”

Story said labor and tax laws for the PHSI plant in Pyeongtaek, South Korea, resemble those here. But materials there are cheaper than when PHSI used Liberty Lake-based manufacturer Altek Inc., Story said, because suppliers offer a consistent price regardless of a firm’s size.PHSI produces several types of water-filtration and purification systems designed to replace the traditional office water cooler. The systems connect to normal tap water supplies and use technology — such as filters, ultraviolet light or injections of “activated oxygen,” also called ozone — to strip bacteria, chemicals and heavy metals.

The result: both warm and cool water Story touts as much cleaner than that in a plastic jug.

“The 5-gallon bottle market is archaic, but those guys have really set up the market for us,” Story said.

The company offers three product lines tailored for specific demographics: top-of-the-line Pure Water Technology for businesses, Purlogix for office coffee services and Interpure for European and residential clients.

PHSI provides sales and technical training to independent dealers, which buy units and rent them to clients for about $30-$80 a month, Story said. PHSI has sold about 60,000 total units since 1998, he said.

The devices retail for about $1,800-$3,600, Story said.

Story attributes the company’s rapid growth to reducing production costs and unveiling new products. PHSI bought the production facilities in Pyeongtaek about 18 months ago, revamping the Korean company’s product into Purlogix.

The Interpure 1 line is just going into full production, he said, and PHSI already has a few hundred thousand dollars of orders waiting to be filled.

Interpure 2, designed for home use, will carry an estimated price of $395, he said.

PHSI relies on dealers, such as Water Solutions Inc. of Rathdrum, to distribute its goods.

Water Solutions has about 400 PHSI coolers throughout Eastern Washington, North Idaho and Western Montana, said company president Bryan Ward. The four-employee firm rents an average of two units per client, which range from large hotels to overnight delivery services to Spokane medical clinics, he said.

Employees visit customers, most of whom sign a 60-month contract, on a quarterly basis, Ward said.

Water Solutions this week installed 10 PHSI devices in the Washington Trust Bank building downtown. The bank switched from bottled-water coolers to eliminate bottle storage and to have cleaner water, said Keith Erhart, a bank vice president.

“Basically, the water isn’t sitting in a bottle,” he said. “It’s a continuous supply of bacteria-free water.”

Erhart said the price was “very competitive” with bottled water.

PHSI initially used a company in Columbus, Ohio, for production, but later moved assembly to Altek. But Altek only did final assembly, adding its plastic covers to frames and compressors shipped from overseas, said Mike Marzetta, president of the manufacturer.

“They probably didn’t try hard enough,” Marzetta said. “It’s an easy out for companies to, you know, go chase the cheap labor.”

PHSI still uses filters made in Caldwell, Idaho, and touchpads manufactured in Spokane, Story said.

Story said PHSI primarily faces competition from United Kingdom-based Waterlogic International Ltd., which sells similar products through two U.S. subsidiaries.

Although Waterlogic has a head start, PHSI recently signed deals with European customers, Story said.

“You have to have feet on the street, you have to be there, you have to be incorporated to really prove you’re serious about the business,” he said.

PHSI may add a handful of employees in Sandpoint this year and more next year, Story said.Long-term, Story hopes PHSI’s business will flow into Canada, South America and Mexico, where the company recently sent units for testing.

“It’s huge; we’re not scratching the surface out there,” Story said.