Irrigation entrepreneur Edwin J Hunter was already a leading pioneer in his field when he set up Hunter industries with his three children. Now, the Hunters are faced with twin challenges of implementing a family council and getting the next generation on board, as Bruce Love finds out
Under the warm Southern Californian sun, just north of San Diego, it is little wonder that you come across one of the most innovative irrigation companies in the world. Cradled between the Pacific Ocean and the vast American desert, water here is often in short supply, requiring ingenious solutions to feed California's gardens', golf clubs' and ballparks' insatiable thirst.
The region is home to Hunter Industries, a family-owned and operated manufacturing company founded in 1981 by industry pioneer Edwin J Hunter, his two sons and daughter – Paul, Richard and Ann.
The company offers golf irrigation products throughout the world and is a major player in turf and landscape irrigation. It works with cities irrigating parks and common areas and supplies equipment for some of the best ball parks and soccer stadiums in the world, such as Qualcomm Stadium in San Diego and Invesco Field at Mile High, home of the NFL's Denver Broncos.
By the time Ed started the company in 1981, he had already achieved legend status after being in the irrigation industry for nearly 30 years. He introduced the first plastic, pop-up gear-driven sprinklers in the early 1960s and through his lifetime held over 150 patents for many landscape irrigation products, including rotary sprinklers, valves and controllers.
But the Hunter predisposition for innovation and independence – a trait that still exists to this day – was visible well before Ed turned his hand to irrigation. He grew up in Riverside, east of Los Angeles, where his father ran a foundry (later to be called Hunter Engineering). Ed worked at the foundry in his younger years, producing bronze and grey iron castings.
In 1937, Hunter Engineering Co began making machinery and developing a manufacturing process for Venetian blinds. Ed handled the introduction of new production and assembly techniques.
During the Second World War, the company retooled as part of the war effort, producing tooling for aircraft parts and machinery tools. The firm merged with the Douglas Machine Company in 1944, becoming Hunter Douglas – now one of the world's largest suppliers of window coverings and home decor accessories.
But by 1952 Ed had found a new interest: irrigation. Specifically, how to build a sprinkler system that knew when grounds needed watering. He also felt that plastics would be far more durable, versatile and cheaper than the more commonly-used brass. He engineered his first irrigation product – the Moist-O-Matic – which caught the eye of Minneapolis-based lawn equipment firm, The Toro Company. Ed sold his business to Toro in 1962 and stayed on as director of design and development until the birth of Hunter Industries.
Today, Ed's son Richard is company president and CEO and his daughter Ann is chairman of the board. Ann and Richard are presently the majority owners.
From the very beginning, Hunter Industries experienced immediate growth, but according to Ed's daughter – Ann Hunter-Welborn – the four family members who founded the company performed most of the business functions.
"We had a small staff and the administrative staff especially was very small. We did everything ourselves and divided functions up as we grew," she said. "I started out hiring, taking orders, shipping, and was also the credit manager. As we grew, I would peel off the functions that I didn't like doing and concentrate on functions I enjoyed. It was really fun to create my own job."
As chairman of the board, Ann says her priorities have not changed much since the early days of the company. "I have always been interested in the international sales because I love the travel and exposure to other cultures," she says. "But my major interest in the company has always been more inward focused in terms of employees and the company culture. We have always been famous for our culture of hard work, a lot of fun and good support. I really want to see it stay that way even though we continue to grow."
Creating a family council
Over the last few months, Hunter Industries has decided to expand the board. "Until now, we've had a very small board, consisting of myself, my husband, my brother and his wife, and our previous VP of sales," explains Ann. They have recently recruited three family members from the next generation and two "outsiders".
"We recruited these two individuals because of their entrepreneurial experience. With both the new people on the board, we now have investment experience and two entrepreneurs." She says board selection was a very informal process and was necessary for further growth in the company.
"Because we had a small board made up of relatives and spouses, we've lacked formal procedures. Due to market conditions, we've had a difficult 18 months and all of us finally came to the conclusion that with a more professional board we would have better information and an ability to make more informed decisions."
Ann says that the evolution of the company meant that now was the right time to make these alterations to management: "We had two major issues – wanting to get the next generation more involved and wanting more counsel from outside, objective people."
Within the family, there are nine cousins between the ages of 24 and 40-something. These family members are all gradually getting married and many of them now have children with varying levels of ownership in the company.
The Hunters have formed a family council and are finding implementation a new challenge. "But it's important," says Ann. "We hope that the business will remain a family business and that the next generation will maintain their interest in overseeing the organisation. But that's not going to happen unless they are allowed to be involved and become educated about the business.
"That's why we started the family council. Once the family council was operational, that was when we realised that simply being part of the family council wasn't enough. We needed to make the board a truly functioning, real and professional board."
As the company grows, more members of the family are beginning to take more senior roles. Richard's son has just recently been promoted to vice president of marketing. Although their brother Paul is no longer involved with the company – he sold his shares some time ago – his son Danny works in the engineering department. And Richard's son-in-law has just started working in quality control.
"What we wanted from the family council was for those family members not working in the company to gain exposure to the organisation as a whole, as well as an understanding of the business of the company.
"It's important that everybody understands how much responsibility there is involved in business," she continues. "We need to make sure that the next generation can comfortably handle any issues, such as succession and management of the business," says Ann.
The Hunters are independent and innovative by nature. The major marketing thrust for Hunter Industries has always been the "irrigation innovators". The company presently holds around 250 patents, many of which still hail from Ed's innovative work in the early days of his career.
"The challenge has been to keep that innovation going to this day," says Ann. "It's a combination of knowing what the market wants and then shaping the market as much as you can."
She explains that with some of the most innovative products, a company needs risk takers among its customers that are willing to be the first person to use the new product – to try something new: "We have an innovative team of designers and great customers. It's a winning combination. We have a really good relationship with our customers and they trust us. If something doesn't work, we fix it and make it right."
Many of Hunter Industries' competitors are also family or privately-owned companies and Ann agrees that being family owned gives companies a different way of looking at the world.
The next generation of irrigation
It has been 10 years since Ed, the Hunter patriarch, passed on and with the family still growing, the questions surrounding the next generation are becoming more important than ever.
Ann says the next generation is having a completely different experience of Hunter Industries to the first and the second: "We were there for the initial growth. Growing a company is very different from running a mature company and sustaining excitement in a mature company is very different. I think it's much more of a challenge than the enhanced adrenalin you feel when there is explosive growth."
One of the ways that Ann believes the present generation can help instil a sense of family unity to the next generation is through their philanthropic efforts.
"Mostly Hunter's philanthropy is local and that's something that the board needs to visit. We match both our family member's and our employee's gifts – this encourages the next generation to participate and it's also something that we can do as a group. But presently we don't have a full philanthropic philosophy. We are very philanthropic but Richard has his causes and I have my causes – Hunter Industries often supports the causes we support personally. We're presently looking at the idea of having some kind of philosophy for the family, based around the company."
"We've talked about the possibility of choosing charities where we can really make a huge difference instead of smaller donations here and there but we have yet to articulate a philosophy."
But the Hunter streak of individuality is also reflected in family member attitudes to philanthropy. "Everybody pretty much operates on their own," says Ann. "We all do what we're interested in but there isn't much crossover. For instance, my husband and I are very involved in environmental issues, but that is not something that my siblings and nieces are nephews are too interested in. So for us to try to do something together might be a little difficult."
As the business evolves, Ann is encouraged by the good work they have already accomplished. Independent the Hunters may be, but as a family of innovators and entrepreneurs, she is confident they will continue to be sun-blessed.