By Dawn Kristof
For the third consecutive year, WWEMA has hosted a two-day meeting of financial officers, credit managers and contract administrators from its member firms to discuss issues of mutual interest and challenges facing these individuals with similar job responsibilities. The common theme that permeated throughout this year's formal presentations and roundtable discussions was RISK - how to identify it, how to manage it, and - preferably - how to avoid it.
In the export of goods, manufacturers of water and wastewater equipment face the risk of non-payment, shipping delays, damaged merchandize, custom restrictions, unforeseen dutiesellipsenot to mention the risk of equipment failure due to improper installation, startup and operation on the part of the owner if and when the product reaches its final destination. Some degree of risk is unavoidable. The challenge is to manage that which can be controlled.
To aid in this process, WWEMA members were expertly briefed on proper use of International Commercial Terms (INCO 2000) and the obligations of both buyer and seller in such transactions, as well as ways to ensure payment through effective use of surety bonds and letters of credit.
Another risk that buyers and sellers face on a daily basis, irrespective of national borders or industries served, is that associated with the infamous Purchase Order. Endless manhours are spent by both parties in attempting to limit their risk by taking responsibility for only those areas of a contract that they have complete control over. Oftentimes, this is a gray area subject to biased interpretation, which explains why the list of terms and conditions continues to grow in length and shrink in font size.
To help shed light on this controversial subject, WWEMA conducted a live negotiation between a contractor (Bob Bowen of Bowen Engineering) and a supplier (Frank Rebori of Smith & Loveless) for purchase of venturi tubes and flow transmitters. From delivery terms to retention to liquidated damages, each major provision of the purchase order was debated, each perspective was rendered, and compromise was eventually reached. In the end, both parties called upon WWEMA to work in cooperation with the Associated General Contractors (AGC) to develop a standard purchase order for use in the water and wastewater industry. The concept has merit, but the realityellipseWho are we kidding!
Speaking of reality, WWEMA members received a wake-up call from Peter Beering, a counter-terrorism specialist from the Indianapolis Water Company, who spoke passionately about the risks associated with terrorism, from the air we breath to the water we drink. He described the tactics of attack, from chemical and biological agents, to nuclear and fissile materials, to cyber technology.
"Conventional explosives in the hands of suicide bombers will be the most prevalent terrorist method for the time being," he opined. When asked what chemical will most likely succeed in contaminating water supplies, he replied with confidence, "Petroleum!"
Beering noted that terrorism is not a new phenomenon in the U.S. water industry. In 1972, the Chicago police recovered maps from the eco-terror group R.I.S.E., which was planning to release a variety of biological contaminants into Chicago's reservoirs. In 1985, the water systems in Chicago, New York and Washington were potential candidates for potassium cyanide contamination by the survivalist group Covenant Sword and Arm of the Lord. In 2001, the FBI discovered a two-page letter in a New York apartment threatening to poison the water systems of 28 major U.S. cities, written by someone with ties to Al-Qaeda.
He observed that the biggest problem was not pipe and machinery, but people. "Disgruntled employees are sources of legitimate concern, as are loners, outcasts, militias, patriots, survivalists, and white supremacists," Beering said and suggested the following:
• carefully screen employees and have them check on each other;
• obtain fingerprints, photos and emergency medical information for each employee;
• train employees to detect and respond to suspicious behavior;
• limit public access to prevent improper intelligence gathering and 'casing';
• control deliveries;
• plan now for possible contingencies;
• take threats seriously;
• quit talking about vulnerabilities; and
• use common sense!
Common sense…our greatest tool in the fight against terrorism and in our struggle to manage risk in our daily activities. That, and relationship building. For without each, we are destined to fail in response to future threats which are inevitable in these extraordinary times.
Dawn Kristof is president of the Water and Wastewater Equipment Manufacturers Association. WWEMA member companies are among the world's leading producers of technology to the water and wastewater industry, employing 43,000 workers with collective sales nearing $6 billion (USD) worldwide.
