Review & Rating
241 Covington Drive
Bloomingdale, IL 60108
1226-1230 Lakeshore Rd
E. Mississauga, ON L5E 1E9
58675 Hemer, Germany
Footnotes:1. Grohe warrants "all mechanical parts [and finishes] to be free from manufacturing defects in materials and workmanship .. for as long as the original purchaser owns their (sic) home."
This Company In Brief
Today it is the subsidiary of a giant Japanese building products conglomerate that manufactures faucets for the North American market in Mexico and China.
The staid, but reliable, engineer-driven bathwares company of the 20th century is gone. In its place is a new company that is very bottom-line oriented with a crushing need to greatly increase revenue in the short term even at the expense of brand viability in the long term, and with few options for doing so that do not affect product quality.
In the not too distant past, Grohe was a family-owned German faucet company selling well designed, good quality faucets manufactured in Germany.
Not any longer.
Today it is a German company owned by a German holding company owned by a Luxembourg holding company owned by a Japanese conglomerate that manufactures virtually all of the faucets destined for North America in Mexico and China using parts and components made in Asia.
Despite the company's claim of "German Quality", a Grohe faucet is no longer a German faucet. It is a German-designed faucet that has never been to Germany or been touched by an actual German.
Pronounced "grow-HEE" in North America, and "grow-HEH" nearly everywhere else, Grohe is the largest European-based manufacturer of sanitary fixtures with a global share of the sanitary fixtures and accessories market estimated by the Wall Street Journal to be about 8%.
Founded in 1911 as Berkenhoff & Paschedag, the company was purchased by Friedrich Grohe in 1936. It became Fredrich Grohe Armaturenfabrik in 1948 then Fredrich Grohe AG in 1991 and Fredrich Grohe AG & Co. KG after being acquired by BC Partners and privatized in 1998.
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In 1962 Grohe astutely pulled off a coup of sorts by obtaining exclusive rights to produce the Moen single handle cartridge faucet for the European market, making Grohe the only company that could offer the modern single-hangle mixing faucet to the growing European market. The move greatly increased its market share, and helped make it the single largest faucet maker in Europe.
The company, Fredrich Grohe AG, is headquartered in Hemer, Germany, but is owned by Grohe GmbH which has its corporate offices in the nearby city of Dusseldorf.
Grohe GmbH was created by London-based BC Partners which bought out most of the shares owned by the Grohe family and took the company private in 1998.
Grohe GmbH is in turned owned by Grohe Group S. à r.l. based in Luxemberg, primarily for tax purposes.
Grohe Group S. à r.l. is majority-owned by the giant Japanese holding company, LIXIL Group Corporation, headquartered in Tokyo with 80 thousand worldwide employees. LIXIL bought Grohe from BC Partners for a reported $4.13 billion in 2014.
LIXIL is itself a very new enterprise, formed in 2010 by merging the Japanese toilet and sanitary ware maker INAX Corporation, with building materials manufacturers: Tostem Corporation, Shin Nikkei Co., and Toyo Exterior. LIXIL is expanding rapidly into European and American markets through acquisitions as its home market in Japan shrinks. Japan's aging population and very low birth rate have resulted in a rapidly declining interest in new home-building.
It purchased in 2012, and with its purchase of Grohe (organized with American Standard into the LIXIL Water Technology Group), it is now one of the largest sanitary wares companies in the world, possibly the largest. Its challenger for world's biggest is the American company, Masco, which makes
Grohe owns two large Asian subsidiaries as well as production facilities in Portugal and Mexico:
In accordance with § 15 of the German Securities Trading Act (Wertpapierhandelsgesetz), Joyou AG announced that it has filed an application of insolvency in the district court (Amtsgericht) of Hamburg. The filing resulted from losses estimated at over $650 million due to accounting fraud and off-the-books loans by Jianshe Cai and Jilin Cai, chairman and deputy chairman respectively of its subsidiary, Zhongyu Sanitary Technology, Ltd. of Hong Kong.
The alarm was raised in April when the company warned shareholders of potential problems. Since then the once $400 million company has lost nearly all its market value. Through insolvency proceedings, the company expects to write off about $300 million in loans that Joyou had secured from a consortium of Japanese banks in 2014.
The insolvency petition was filed barely seven weeks after LIXIL Corporation completed its acquisition of the final 12.5% of the shares of Grohe Group, S. à r.l., the owner of Joyou AG.
Jianshe Cai and Jilin Cai have, according to the announcement, "engaged in inaccurate accounting and unlawful reporting for many years," falsely stating and grossly inflating sales and assets. There are also early indications that Texas Pacific Group and Credit Suisse Private Equity, Grohe's former owners, may have manipulated Joyou to enhance the value of Grohe and inflate the sales price to LIXIL.
Jianshe Cai and Jilin Cai have both been dismissed and are looking at possible criminal charges. David J. Haines, the CEO of Grohe Group S. à r.l. since 2004 and a member of Joyou's board of directors has been let go as "redundant". Grohe denies that the separation has anything to do with the Joyou debacle. Yoshiaki Fujimori, the LIXIL CEO that led the company's debt fueled buying spree starting in 2013 also resigned.
There is some evidence that Grohe management suspected accounting irregularties at Joyou, but failed to investigate and failed to disclose their suspicions during the run up to the sale to LIXIL. Grohe, which lost $420 million dollars from 2008 to 2012 nonetheless continued to look profitable due to the inflated gains reported by Joyou — gains that turned out to be entirely fictitious.
To boost its cash flow, LIXIL has been forced to sell some of its recent acquisitions, including the 2017 sale of the Italian construction group Permasteelisa for a $127 million loss. It also sold Hivic Co., Ltd., its lumber material subsidiary to a Polaris Capital, a Japanese private equity firm, for an undisclosed sum in August 2016.
Until recently, Canada was the primary source of Grohe faucets sold in North America. Grohe manufactured "American style" and stainless steel faucets in Mississauga, Ontario.
In 2015, however, Grohe dismantled the entire Canadian factory and trucked all of its machinery to Ciénega de Flores, just outside Monterrey, Mexico where it has set up shop in an assembly plant abandoned by its sister company, It appears that virtually all faucet assembly for the North American market now takes place in Mexico.
According to Dr. Ulrike Heuser-Greipl, senior vice-president, public and investor relations for Grohe AG, the Canadian plant was closed
"because of its limited productivity compared with our other production facilities …"Grohe left behind its 300 veteran Canadian workers, and it will take a while to train a rookie Mexican workforce, so not only will production be down, but the quality of Grohe's Mexican faucets will be suspect for quite a while. Eventually, however, this plant is expected to become Grohe's main source for faucets sold in the U.S. and Canada.
The company may still manufacture a few faucets in its sole remaining faucet factory in Germany at Lahr — mostly low volume high-end designer faucets and faucets with special finishes. In a cost-cutting measure initiated by former CEO David J. Haines, the Lahr workforce was reduced from 1,400 to 600 in 2013, and faucet-making virtually ceased. The Lahr plant now makes mostly shower components.
German Firm Plans New Faucet Factory
by: Soonya Vanichkorn
The local unit of Germany's Grohe AG, a leading provider of premium bath faucets and showers, will build a third, 600-million-baht [$18 million] factory in Thailand to serve a larger market under the Asean Economic Community (AEC).
Grohe Siam Co., Ltd. is a joint venture between the Dusseldorf-based Grohe [GmbH] and Haco Group Co. Ltd., its Thai distributor.
"Our foreign counterpart has always been interested in the tax incentives under the AEC and wants to make Thailand its main production base," said Dhitipong Dowpiset, Haco's chief marketing officer.
Grohe Siam's two present factories are in Rayong's Klaeng district. Running at 80-90% capacity, they produce a combined 100,000 items a week. Mr. Dhitipong said the third plant will increase output by 30%, making the faucet manufacturing site the largest of its kind in the world.
Only 5% of the products are sold in Thailand, with the vast majority exported mainly to .... India, China, Europe and the U.S.
Grohe's main European faucet plant is now in Albergaria, Portugal. We can find no evidence that much, if any, of the faucet output from either of these European facilities reaches North America. Most appears to be sold within the European Community.
In addition to manufacturing faucets in its own facilities, Grohe buys finished faucets, in the box and ready to sell from factories in Asia and Mexico, including:
The association with AS Maquila Mexico may be temporary, ending when the new Grohe Mexican factory gets up to full production. But, a lot depends on the market and circumstance within the company. With Grohe's troubles with Joyou, the additional production capacity may be necessary for a while yet.
American Standard Brands and Grohe are essentially the same company now, so we expect an increase in consolidated manufacturing is in the cards for both companies, but we anticipate it to occur in China and other parts of Asia, not Mexico. Grohe's Thailand factory already manufactures a large percentage of the parts, components, and sub-assemblies that go into all Grohe faucets, wherever made. And, with the recent completion of its expansion, it has increased its capacity to manufacture single-handle faucets. We expect these to show up in the U.S. and Canada soon, if they are not already here,
Until 1998, Grohe and were owned by the same family, the descendants of Hans Grohe who founded Hansgrohe in 1901. His son, Friedrich, started with his father's firm, but left after buying his own company in 1936. His firm eventually became Fredrich Grohe AG.
Many Grohe family members inherited shares in both firms, but the two enterprises always operated as separate organizations, often in competition. They fought over the brand name "Grohe" for several years, finally reaching an understanding that gave Friedrich Grohe AG the Grohe brand name while Hansgrohe kept the Hansgrohe name.
The family feud settled down in 1998 when the Grohe AG family owners sold the majority of their shares to BC Partners. Hansgrohe remained under family ownership until 2002 when a majority stake in the company was sold to That sale ended the family competition once and for all.
Some Grohe family members still own shares in the two firms, but they are minority shareholders and are no longer involved in management of the companies.
In addition to buying finished faucets from external sources, Grohe also contracts with outside suppliers in China and Taiwan for parts and components, including:
With the expansion of Grohe's in-house zinc production in Thailand, we expect imports from Sunspring to drop off in the near future.
|EcoX & EcoY|
As late as 2004 Grohe sourced 80% of its faucet components from European suppliers. No longer. Almost all faucet components are now made in Asia. With the acquisition of Grohe by LIXIL Group, expect the number of Asian-made faucets and the amount of Asian content in Grohe's faucets to continue to increase.
Mexico and China are the major producers of the mid-level and economy Grohe Faucets that make up an ever-increasing proportion of the Grohe faucets offered for sale in North America. Customs and import records show a very substantial increase in faucet imports from Asian factories over the past five years.
Grohe employs a large in-house design team headed since 2005 by Paul Flowers, which is pushing the somewhat dated and dowdy line of faucets into more contemporary forms. Grohe designs have won an impressive number of international awards including the iF Design Award, over 15 Red Dot awards and a half-dozen or so coveted Good Design awards from the Chicago Athenaeum.
In the past, Grohe's designer faucets were initially made in its Lahr, Germany factory. We don't know that is still true. If not, then we don't know where they are made. In any case, after a few years manufacturing moves to Asian and Mexican factories. The popular LadyLux faucet, for example, has not been manufactured in Germany for years.
The company uses its own proprietary Eurodisc® ceramic disk mixer cartridges in its most of its single handle faucets. These are acknowledged in the industry as some of the best made. The cartridges include a Teflon® coating that Grohe calls SilkMove® technology. According to Grohe, the Teflon® makes the cartridge smoother and easier to operate with more precise control. What is not certain, however, is the durability of the Teflon coating compared to more recent innovations such as diamond like carbon applied using thin-film physical vapor deposition.
Grohe's testing laboratory in Lahr, Germany routinely puts sample Grohe cartridges through a daunting series of tests in some of the hardest, most mineral-rich water in the world, to simulate 15 years of household use. Eurodiscs also did well in independent tests conducted in 2007 by TÜV SÜD against nine other proprietary European cartridges. (Download TÜV SÜD test summary.) TÜV SÜD, founded in 1866 in Munich, is one of the oldest and most respected testing and certification laboratories in the world. If TÜV SÜD says it's so, then it is almost certainly so. We have not, however, seen comparisons to some of the better-known non-proprietary European cartridges such as those made by Flühs Drehtechnik, GmbH or Kerox Kft.
Grohe's Brand Manipulation
Grohe, as a brand and as a company, has undergone and is still undergoing tidal changes. The reputation of the company and its faucets in North America is based on what the company was 10-15 years ago. It has not caught up to the reality of the new Grohe of today.
The staid, but reliable, engineer-driven bathwares company of the 20th century is gone. In its place is a new company that is very bottom-line oriented and marketing driven. Its new Japanese masters took on massive debt to finance the purchase of Grohe and are focused on increasing revenue above all other considerations.
Expect more major changes in how and where the company's products are manufactured, distributed and sold, but, even now, the Grohe brand in the U.S. is undergoing changes that are likely to redefine the brand's reputation over the next few years. The bankruptcy of one of its major manufacturing subsidiaries combined with its recent removal of its Canadian manufacturing to Mexico will certainly cause disruption in its supply chain for a while. How long a while is uncertain.
Few Americans realize that Grohe is actually the of Europe. It manufactures faucets at all price levels: economy, mid-price and premium.
Until recently North Americans never saw economy or mid-price Grohe faucets. Grohe America imported only the premium end of the faucet line, made in Germany, creating the illusion that Grohe faucets were all upscale, luxury items equivalent to
Grohe changed the rules starting in 2005.
Capitalizing on the company's reputation as a maker of luxury faucets, Grohe America began flooding the U.S. market with Grohe's lower-end products made mostly in Mexico and China. Grohe faucets began showing up in very un-exclusive and un-Grohe-like places, including mass retailers such as Home Depot, Amazon and even Wayfair and Walmart. What happens to the Grohe brand as it becomes associated with lesser quality faucets is well understood — it will, over time, cease to be viewed as a premium brand.
We think the caché of the Grohe trademark in the North American marketplace is on a downward slide. Expect the average price of Grohe-branded faucets to come down but also expect considerable overall quality and style erosion as the new company's new masters attach the Grohe name plate to its cheaper, mass market faucets, priced to sell at discount venues.
We saw the same brand erosion infect Black & Decker tools beginning in the 1970s. The tools engineered and manufactured by Duncan Black and Alonzo Decker were at one time the pro's preferred brand in the U.S. The company was the first to patent the pistol-grip power drill in 1917. Black & Decker products were so well-regarded for reliability by the 1960s that they were NASA's choice for use in space by astronauts on the Mercury, Gemini and Apollo missions.
But, in 1975, after Francis R. Lucier succeeded Alonzo Decker as chairman, the company started focusing on expansion and marketing instead of engineering and quality, and the brand began to drift. It bought GE's small appliances division in 1984 and began renting out the name to other manufacturers to increase revenue. By 1990 the iconic Black & Decker logo could be found on everything from waffle makers to curling irons. Meanwhile, the quality of its core products, power tools, crashed, especially after the company merged with Stanley Works to become Stanley Black & Decker in 2010.
Today, a professional who gets a week's worth of work out of a Black & Decker drill before one of its plastic components shreds is considered "buy a lottery ticket" lucky. The brand is regarded by many building professionals as little more than a toy.
We think Grohe has embarked on the same sort of brand cheapening process that has accelerated since the company's purchase by LIXIL. It is the sort of dementia that infects corporate CEOs facing repayment of massive debt resulting from leveraged buy outs such as LIXIL's purchase of Grohe from BC Partners in 2014 with borrowed billions. Grohe's situation is also aggravated by the unexpected insolvency of Joyou and potential added debt of $316 million. There is a need to drive up revenue in the short term to pay the enormous debt, irrespective of any likely sacrifice of long-term brand vitality.
Consumers can be fooled, but not forever. Initially the availability of low-priced Grohe faucets will spur sales in North America as customers snap up what they believe to be bargains on German-made luxury faucets. But, over time the buying public will come to realize, as it has with Black & Decker, that the Grohe marque no longer represents a high-quality product. Most Grohe faucets sold in North America are already no longer German. Many are not even made by Grohe. The vast majority are from Asia and Mexico, and an increasing number of those are manufactured by outside contract factories.
Considerable improvement in ceramic faucet cartridges technologies over the past decade has resulted in much more robust and durable cartridges, including the diamond-like carbon disc coating used in proprietary PVD+™ cartridges by TÜV's testing, now becoming a little dated, did not compare Grohe cartridges to these newer technologies.
The cartridges used in Grohe's two-handle faucets are more of a mystery. They are brass stem cartridges widely made in Europe, and may be sourced from a variety of manufacturers. We don't think they are made in house because appears to use the same cartridge in its two-handle faucets, and its unlikely these two European rivals are supplying each other with cartridges. We have never had a complaint about a malfunctioning Grohe stem cartridge, so we think they are probably well made. Certainly, the ones we examined were solid and impressive.
The Grohe faucet warranty is the standard "limited lifetime" warranty for the North American market. It guarantees against defects in mechanical parts and finishes for as long as the original purchaser owns the home in which the faucet was originally installed.
Grohe promises to keep parts on hand for discontinued faucets for just 10 years (15 years for internal parts). The company never does explain how it expects to honor its lifetime warranty after 10 (or 15) years without spare parts.
While the warranty itself meets the North American standard, the warranty service provided by Grohe USA is markedly below average. In fact, it is a blot on the brand. Grohe America clearly prefers that its customer service not to be contacted at all, but if customers insist, then preferably by e-mail or voice mail. Hold times of more than 20 minutes are common, and 40 minute waits to talk to a customer service agent are not at all rare.
Grohe promises to respond to e-mails and voice mails within 24 hours. But, our experience is that it frequently does not respond at all, and rarely within 24 hours. If your faucet needs a part and is out of service, this kind of delay is a real problem. Expect 5-20 days to get warranty claim resolution from Grohe, compared to 4-5 days for
If you do have the patience to wait for an agent, expect to be treated, at best, brusquely, and sometimes with outright rudeness. Agents act as if talking to you is a major imposition on their valuable time.
We rate Grohe service an abject failure. Only has ever gotten a lower score in our customer service tests, and then by just a whisker.
Our observations are confirmed by the company's Better Business Bureau's grade of "D+" on a scale of "A+" to "F". The basis for the poor showing, according to the BBB, is that "Grohe America does not respond to customer complaints."
This is a systemic problem that has been going on for more than a decade. It can be fixed. had the same sort of problems in the early 2000s and took a huge public relations beating, but it made serious efforts to turn its customer support around, and now has one of the smoothest, most responsive service operations in North America. So, it can be done. Grohe, however, has let the problem go on and on for years and years. It seems that it simply does not want to be bothered with post-sale service.
We rarely reduce a company's warranty score for lack of adequate warranty service, but Grohe's record is so dismal that it would be unfair to companies that at least make an effort to provide responsive service not to dock the company at least a full point for not even trying to provide adequate service.
On a brighter note, the company website for North America is an example of how a website selling faucets should be constructed. The navigation is intuitive and easy to follow. The information provided about Grohe faucets is very complete, including detailed specifications about each faucet, dimensioned drawings, exploded drawings showing replacement parts, 3D CAD models (universal .dxf format), and even a flow pressure diagram. These are often in the form of slow-loading .pdf files, but at least they are available. What's missing is information about where a faucet is made, something most buyers would like to know, and most faucet importers of faucets made in Asia and Latin America take pains to conceal.
We think a purchase of a Grohe faucet should be carefully weighed at the moment. There are a lot of changes going on at Grohe, most of them not good. We don't know how the company will shake out in the end, but the overall trend is not particularly hopeful.
We are continuing to research the company. If you have experience with Grohe faucets, good, bad or indifferent, we would like to hear about it, so please contact us or post a comment below.