Consolidation, government mandates and environmentalism define Europe's sludge treatment equipment market

Though currently in a growth stage, the European sludge treatment equipment market is rapidly maturing, leading to consolidation. Even so, the market offers substantial opportunities, chiefly due to legislation and increasing public concern regarding safe disposal of waste and other toxic elements. Recent analysis by Frost & Sullivan reveals the market is projected to grow from $1.95 billion in 2004 to $2.77 billion in 2010 at a compound annual growth rate of 6.2%...

Dec 5th, 2004

LONDON, Nov. 22, 2004 -- Though currently in the growth stage of its life cycle, the European sludge treatment equipment market is rapidly maturing, leading to consolidation of revenues and market shares. Even so, the market offers substantial opportunities, chiefly due to a combination of legislation and increasing public concern regarding safe disposal of waste and other toxic elements.

Recent analysis by Frost & Sullivan reveals that the market is projected to grow from $1.95 billion in 2004 to $2.77 billion in 2010 at a compound annual growth rate of 6.2%.

Sludge treatment and disposal techniques have been subject to particularly rigorous inspection, leading to strict policies governing the treatment processes suitable for final disposal routes. These dominant forces present a major market opportunity for equipment manufacturers.

"The Urban Wastewater Treatment Directive, with its next deadlines due to be put in practice by 2005, in particular drives the market to meet legislative requirements -- thus boosting the demand for treatment equipment," states Frost & Sullivan research analyst Suchitra Padmanabhan, who worked on the company's latest report on the topic, "European Sludge Treatment Equipment Market.".

There is a need for high technological capability and industry knowledge. Environmental credentials and responsiveness to regulatory changes are also critical success factors for those operating in this industry. Innovative and flexible services are also likely to ensure future growth in this regulated market where environmental consciousness is rising.

Significant opportunities remain in upstream treatment efficiencies where innovation and adaptability is a key for success. The most progressive technologies, such as dewatering and drying, continue to be advantageous to companies compelled to find methods for reducing the amount of water content in sludge to minimize transport and disposal costs. Sludge drying is expected to garner greater demand and revenues with increasing safety regulations and restrictions being placed on disposal options such as landfills.

An increasing emphasis on thermal disposal is further likely to push up demand for dewatering and drying since the sludge that requires incineration necessitates such forms of pre-treatment.

The market is highly fragmented with a surfeit of participants. Though this is not a particularly threatening trend currently, it is envisaged that in the long term aggressive policies by market leaders could make it difficult for smaller and medium-sized competitors to exist and compete successfully in the market.

Another factor to consider is the significant regional disparities within Europe with respect to the level of market development with variations in technological progress, scope of treatment capacity and associated demand for treatment equipment.

While the established treatment markets, such as Germany and Scandinavia are primarily driven by revenues from replacements and upgrades, the major prospects depend on growing demands in the United Kingdom and France as well as emerging markets such as Belgium, Spain, Portugal, and -- to some extent -- Italy.

With the increasing consolidation and strengthening of market majors, smaller companies have to find opportunities by developing unique technical expertise or targeting niche specialist markets.

"Future success is largely dependant on the ability of participants to collaborate with equal partners and integrate additional services," states Ms. Padmanabhan.

As treatment capacities become increasingly met, the future pattern for investment is largely seen in smaller to medium-sized treatment plants. The impending saturation in demand and slow down in revenue growth rates are a prominent challenge faced by most market participants. Equipment suppliers have responded by expanding toward international markets or by specializing in niche markets which still experience continued, even if sporadic, potential.

For example, market leaders Degremont and Veolia maintain an active profile in all domestic as well as international markets, and others use specialization to succeed in a particular segment, such as Andritz in drying technology.

The European Union and national legislative measures that continually seek to develop a more environmentally conscious approach toward sludge management remain the main driver in the sludge treatment equipment market. In such a compelling market climate, the most proactive and solution-driven suppliers are likely to excel.

About Frost & Sullivan
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For more information, see: www.environment.frost.com.

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