By Dawn Kristof
Senior executives from the water and wastewater equipment manufacturing community converged in the nation's Capital on April 25 and 26 to gain valuable insight on the forces that are shaping their markets and dictating demand for their products and services, both domestically and overseas.
The event was WWEMA's 29th annual Washington Forum. Speakers on this year's program included key policymakers from the Department of Commerce, the U.S. Environmental Protection Agency, the Department of Agriculture and U.S. Trade and Development Agency. They were joined by congressional staff members, embassy personnel, utility managers, international trade specialists, financial analysts and market consultants who shared their unique perspectives on a variety of timely topics of utmost importance to producers of water and wastewater technologies.
Highlights from this year's Forum portray the complexity of issues and challenges facing the water and wastewater industry as it enters the 21st century.
Trade Promotion: Kevin Murphy, Deputy Assistant Secretary for Energy, Environment and Materials at the U.S. Department of Commerce, credited WWEMA members for contributing to an 87 percent increase in exports for the water and wastewater sector, jumping from $3.9 billion in 1998 to an impressive $7.3 billion level in 2000. He predicted that with passage of trade promotion (fast track) authority legislation during this session of Congress, and with on-going negotiations to eliminate trade barriers for environmental technologies through the World Trade Organization (WTO), exports of water and wastewater equipment will experience unprecedented growth in the decade ahead.
China: Chuanshui Zhon, First Secretary of the Commercial Office of the Chinese Embassy, described how doing business in China will continue to improve as a result of major concessions made for China's accession to the WTO. These concessions include reducing tariffs and protecting intellectual copyrights, to providing access to judicial review and making trade rules more transparent. He acknowledged that competition will be fierce and cautioned that U.S. companies which simply attempt to export from America will be out of business in five years. To succeed, he urged WWEMA members to invest in China by helping local agents learn how to sell and distribute their products, and by bringing foreign aid to the table. China will spend $84 billion in the environmental sector between 2000-2005, with 38.5 percent in water-related activities.
Animal Waste: Geoff Grubbs, Director of EPA's Office of Science and Technology, challenged WWEMA members that unless they develop other affordable technologies to treat animal waste, EPA will have no option but to designate lagoons as the only best available technology (BAT) for inclusion in the upcoming regulations governing Concentrated Animal Feeding Operations (CAFOs), due to be released in December. Tom Christensen, Director of USDA's Animal Husbandry and Clean Water Programs Division, reported that there has been a 50 percent reduction in swine operations over the last five years due to consolidations. This has resulted in 165 counties with excess nitrogen problems and 374 counties with excess phosphorus. He noted that 270,000 animal feeding operations are in need of assistance to develop comprehensive nutrient management plans, encompassing manure and wastewater storage and handling.
Water Security: David Binning, Director of Planning and Engineering at the Fairfax County (Virginia) Water Authority (FCWA), and Mike Marcotte, Chief Engineer and Deputy General Manager for the D.C. Water & Sewer Authority (WASA), offered fascinating perspectives on the challenges they face in protecting their systems from terrorist attacks. FCWA's greatest needs include multi-parameter monitoring at 3,000 locations, locking caps and special keys for 22,500 fire hydrants, a standardized SCADA encryption system, integrated software, and point-of-use treatment to provide water in the event of an attack. WASA faces similar challenges with 12,000 miles of pipeline, nine pumping stations and storage facilities, 1,800 miles of sewage lines and a 370 MGD advanced wastewater treatment plant to protect.
Water Infrastructure: Susan Bodine from the House Transportation and Infrastructure (T&I) Subcommittee on Water Resources, and Ken Flanz from Senator Mike Crapo's office, apprised the audience on the status of legislation to reauthorize the Clean Water and Drinking Water State Revolving Fund (SRF) programs and significantly increase their funding levels to $35 billion over a five-year period. Bodine noted that her subcommittee was aware of the inefficiencies and cost overruns associated with the EPA Construction Grants Program and did not desire to abandon the successful model of the SRF programs. She stated that the legislation ultimately passed by the House T&I Committee placed certain conditions on loan recipients to ensure that they don't return 20 years from now for more money, including establishment of adequate rate structures and capital replacement plans. Each speaker predicted that legislation would be enacted during this session of Congress, but reserved judgment on whether the Appropriations Committees would actually fund the programs at the levels being recommended. Rich Kuhlman, Director of EPA's Municipal Support Division, confirmed the Administration's opposition to the funding levels contained in the House and Senate water infrastructure bills. He announced that EPA plans to conduct a stakeholders meeting this year to explore ways to bring new technologies to the market as a means of reducing the overall price tag for rehabilitating the nation's water infrastructure.
Market Outlook: Two market specialists offered their insights on the outlook for the water and wastewater industry. Joan Berkowitz, Director of Farkas Berkowitz & Company, stated that the industry gave a strong performance in 2001 despite challenging conditions, with revenues increasing 3.7 percent and operating income growing 3.2 percent. USFilter was a favored topic, described by Berkowitz as a company which has returned to its roots from consolidator to acquired to deconsolidator, having sold off some of its businesses unrelated to waterellipsewith more to come! Brian Oakley, Director of Scully Capital Services, took a comprehensive look at the design-build and contract operations markets and the opportunities they provide to water and wastewater equipment manufacturers for delivering value instead of low bid. He offered some interesting advice on how the Job Creation & Worker's Assistance Act, signed by President Bush on March 9, could stimulate demand for industrial water and wastewater equipment purchases over the next three years due to new depreciation allowances.
Attendees at this year's Washington Forum left the conference equipped with valuable knowledge on the forces shaping their markets and new opportunities for growth in this ever-changing industry.
About the Author:
Dawn Kristof is President of the Water and Wastewater Equipment Manufacturers Association, a Washington, D.C.-based, non-profit trade organization serving the industry since 1908.
