I had the pleasure of attending the recent WWEMA Washington Forum, an annual event held in D.C. each May to keep equipment manufacturers up to date on the latest trends in the water and wastewater industry.
One of the key speakers was Joan Berkowitz of Farkas Berkowitz & Company. Joan is a regular speaker at the Forum and always provides interesting insights into the state of the industry. According to her figures, the domestic U.S. water and wastewater industry represents an $82 billion annual market.
Of that amount, 35 percent is spent on public wastewater, 33 percent on public water supply and 12 percent on construction. Equipment and chemicals represent 6 percent and 4 percent respectively. The point-of-use and bottled water markets represent only 4 percent each. Contract operations represents about 2 percent of the market, but it is growing rapidly.
The private sector controls about 38 percent of the market, primarily through regulated utilities (6 percent) and private sector firms (32 percent). Municipalities still control 62 percent of the market.
Overall annual domestic growth of the U.S. water/wastewater industry is below 5 percent, with industrialization and population growth serving as the key drivers. Neither is expanding rapidly in the U.S. The United States represents approximately 27 percent of the global market, which Berkowitz pegged at $300 billion annually.
Key trends in the U.S. market are the blurring boundaries between water and wastewater, the growth in design-build and privatization, new delivery modes and the consolidation of the equipment industry.
Economic pressures are behind the drive for public/private partnerships. According to various studies, cities will need to spend more than $250 billion over the next 20 years to keep up with capital improvement requirements. At the same time, federal funding is on the decline.
By far the most favored mode of public/private partnerships is Contract O&M. Companies involved in the market reported revenues of about $1.2 billion in 1997. Berkowitz projected Contract O&M will see an annual growth of 20 percent to 30 percent over the next few years and competition is expected to be intense.
The major players in the industry are Professional Services Group (PSG), with 34 percent market share; United Water with 15 percent, U.S. Filter with 11 percent; OMI, 11 percent; Severn Trent, 7 percent; and American Anglian, 6 percent. Its interesting that of these top six firms in the contract market, only U.S. Filter and OMI are completely U.S. owned. PSG and United water have affiliations with the French, while Severn and American Anglian have ties to the British.
With the changes in the marketplace, Berkowitz warned that the central role of the consulting engineers is threatened, and that contractors of the future will need combined skills that include the ability to design, construct, operate and even finance facilities. Equipment vendors and buyers will face a different universe in the years ahead, with changes in both the way equipment is sold and the way it is purchased.
For those of you who dont know, WWEMA is the Water & Wastewater Equipment Manufacturers Association. The groups Washington Forum always has a strong focus on legislation and regulation. The general feeling was that we can expect little or nothing out of Congress in the next year. Environmental legislation, including the Clean Water Act, are way down on the scale of importance for our Nations leaders. Re-election is nearest and dearest to members of the House.
Changes mandated by amendments to the Safe Drinking Water Act will continue apace. Although compliance schedules tend to be fluid, one possible scenario calls for the final stage of the D/DBPR and IESWTR by November 1998, followed in January ’99 by the Proposed Ground Water Disinfection Rule. In November 2000, we may see a final long-term ESWTR affecting systems serving under 10,000, regulations on recycling of filter backwash regulations and a final GWDR.
Other regulations on the horizon include new rules governing the incineration of sewage sludge, with a final rule expected in November 2000. The Clean Water Action Plan is moving ahead, although funding for its programs may be problematic, according to Mike Cook of EPAs office of Wastewater Management. Part of the problem is the program is designed to split the money between a number of agencies, which tends to split support for funding.
