Suppliers need specialist outlook for greater success in EU industrial outsourcing market

Sept. 12, 2005
The demand for these water & wastewater outsourcing services is expected to accelerate steadily over the long- term as established contracts and successful strategies enhance end-user confidence, according to a new report from Frost & Sullivan entitled "Outsourcing Opportunities in the European Industrial Water Sector"...

LONDON, Sept. 12, 2005 (PRNewswire) -- The outsourcing of industrial water and wastewater treatment facilities is gaining ground across Europe as an increasingly popular option for end users to effectively manage their on-site water needs and obtain operational cost savings while focusing on core activities.

The demand for these outsourcing services is expected to accelerate steadily over the long- term as established contracts and successful strategies enhance end-user confidence, according to a new report from Frost & Sullivan entitled "Outsourcing Opportunities in the European Industrial Water Sector."

"On their part, suppliers will need to establish a good track record and facilitate continuous interaction and involvement with industrial end users in order to effectively combat initial resistance and develop confidence regarding the outsourcing option," explains Frost & Sullivan industry analyst Suchitra Padmanabhan.

The market for industrial outsourcing in the European water sector was estimated at $620.0 million in 2004 and will continue to grow at a compound annual growth rate (CAGR) of 8.0 percent to reach close to $1 billion in 2011 with France and the United Kingdom offering the maximum revenue generation opportunities.

With the Benelux region fast becoming an industrial hub in Europe, successful contracts in the petrochemicals industry in this region are expected to boost revenues. Due to a strong industrial base, Germany is also exhibiting immense potential although progress has been slow due to strong in-house engineering capabilities.

While water treatment and water supply outsourcing has been stable, the revenue shares of these services have been diminishing due to the shift towards integrated water management contracts. As a result, wastewater treatment outsourcing constituted almost 62 per cent of revenues during 2004.

End users in petrochemicals, automotive and chemicals industries are showing a great interest in outsourcing wastewater treatment due to rising discharge costs strict effluent norms and increasingly complex effluents which support demand for specialist support.

In order to sustain demand for outsourcing services in the long-term, suppliers need to understand the highly cost-conscious nature of industrial end users across Europe and accordingly, offer solutions at a fixed competitive price within a contract, whereby operational risks are fully or partially transferred.

Critical factors for attracting industrial customers also include accelerated re-engineering benefits, long-term stability from integrated services, capability to manage multi-site contracts and assistance in complying with strict environmental standards and regulations.

Given the increasing end-user diversity and specific demands from each industry, suppliers who are able to cater to the specialist demands of the market stand to gain significant market share.

"The type of outsourcing contract, its scope and size, depend to a large extent on the type of end user sector," says Padmanabhan. "For instance, demand from petrochemical end users is based more on each individual site due to the large and independent nature of operations, while in the food and beverage industry, the demand for outsourcing is fragmented and spread across several regional sites."

To remain competitive, companies need to offer effective outsourcing strategies tailored to suit the size of the industrial site, the type of effluents produced, the local regulations and the nature of the production process.

There is also growing demand for higher-end and 'integrated water management' solutions that cater to the site's entire water needs ranging from water for boiler feed and process water and wastewater treatment to recycling and reusing wastewater.

"These all-encompassing contracts encourage further expansion of large service providers that can provide their clients with multiple technologies, comprehensive know-how and guaranteed efficiency and economy," says Padmanabhan.

The list of key industry participants in the study includes: Veolia, SUEZ, RWE / Thames Water, GE Water, United Utilites, FC Aqualia, Dragados, Fisia Italimpianti, AWG, BWT, Earth Tech, Black & Veatch, Cadagua, Nuon, KEPPELSeghers, Siemens, Severn Trent, Bamag, Kellogg Brown & Root, DHV Environment, Infraserv, WTE, VA Tech Wabag, E.ON, EnBW, Gelsenwasser, Andritz GmbH, Passavant Roediger, Termomeccanica Ecology, Pridesa.

Frost & Sullivan (, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.


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