The Bathtub Episode: How the Pandemic Disrupted Plumbing

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, do you remember our episode from, I guess it was probably a little over a month ago now, about how difficult it is to buy or to build a home in America right now?

Tracy Alloway (0:30)

I know there's a lot going on, but yes, I remember the episode from a month ago. It was a great episode.

Joe Weisenthal (0:35)

Yeah, so I kind of think of housing as the culmination of so many different themes right now. And of course, we talk about lumber shortages and the lumber market's actually cooled back off quite a bit since we talked about it, but land constraints and interest rates and demographics, and of course, labor, everything kind of rolls up into housing, I would say.

Tracy Alloway (1:00)

Yeah, that's exactly right. And I remember one of the themes that emerged in that conversation was just the idea of how difficult it is to build new supply at the moment. So you had the ongoing lumber shortage, which had sent prices really, really high. They've come down a lot since we had that conversation actually.

But beyond lumber, there were all these sorts of other components that go into a house that were also in short supply. So things you might not necessarily even think about as you're building a house. But I remember one thing in particular that got mentioned, and that was bathtubs.

Joe Weisenthal (1:39)

Yeah, exactly right. And of course, you could have everything. You can build the frame of the house. You could have the sink, and you could have the windows, and you could have everything else. But obviously, every last piece needs to be there for the house to actually sell, for the house to actually be ready to move into. And so all it takes is one thing missing, like, say, a bathtub or a sink or any other piece of plumbing, and it's impossible to move into the house.

And so when you have shortages in everything all at once, which our guest, Ellie Wolf, pointed out, that basically means major headaches for the homebuilders.

Tracy Alloway (2:18)

Yeah, and tight supply and higher prices for what is actually out there. I would say, though, I would pay a higher price for a bathtub. I haven't had a bathtub in the apartments that I'm renting for years now, and I really miss it.

Joe Weisenthal (2:32)

Yeah, bathtubs are pretty great. Well, so actually, at the end of that episode, I think we half-joked, we were like, well, let's do a bathtub episode, and let's just really drill down into one, and it took us a while, but I think we're finally ready to do the bathtub episode. We might expand it a little bit to all of plumbing, per se, but I think we're ready to really drill down, because this is an area, it's not commodities, per se, it's not land, it's not labor, but it is a critical component, and I think we can learn a lot by drilling down into one specific component and learning about how this extraordinary moment in the economy and supply chains is really affecting that.

Tracy Alloway (3:10)

Totally.

Not only do I feel passionately about bathtubs, I feel passionately about supply chain issues that manifest themselves in housing shortages. So let's do it.

Joe Weisenthal (3:20)

I am very excited. We have the perfect guest today who knows the space very well. We're gonna be speaking with Trey Northrup. He's the America's leader of the company Lixil, which operates under multiple brands, including American Standard, Grohe, DXV.

He's a longtime veteran of the industry. Previously, he was at Whirlpool doing appliances, and he is going to speak to us about bathtubs and plumbings in this extraordinary year and a half of selling those things in the middle of this crisis. So Trey, thank you so much for joining us.

Trey Northrup (3:55)

Sure. Thanks, Joe. Thanks, Tracy. I'm really excited to be here.

Joe Weisenthal (3:58)

Absolutely. So why don't you just start us off? Why don't you tell us what is Lixil? What is it you sell? Who are your customers? Give us the basic overview of your business.

Trey Northrup (4:09)

Sure. We're a fully integrated end-to-end supplier of plumbing products, anything from toilets to bathing to shower systems, faucets, vanities, et cetera. If it has to do with plumbing, it exists in your bathroom or your kitchen, we provide it.

Tracy Alloway (4:28)

So I guess just to step back for one second, is the business of bathroom supplies and plumbing, is that unique in any way to other manufacturing businesses? Are there specific aspects of the business that make it unique?