An Interview with ITT Corp.'s Bjorn von Euler

By Carlos David Mogollon, WWi Managing Editor

The long-time corporate spokesman for its Fluid Technologies and Motion & Flow Control groups was named to the new post last fall and wanted to discuss a white paper being presented in Istanbul by the World Business Council for Sustainable Development, of which ITT CEO Steve Loranger currently is the co-chairman. It's focus is on the nexus of water, energy and climate change -- which are critical topics in a world where the population passed 6 billion in 1999 and is just shy of 7 billion today. Likewise, he discusses infrastructure needs in developed and developing nations around the globe, as well as the impact of various governments' economic stimulus plans.

This interview coincides with an "Executive Watch" column that appears in the April/May 2009 issue of WWi, "Ahead of His Time." The full interview follows in Q&A format. Read on to learn more:

WWi: I'm with Bjorn Von Euler with ITT and I was hoping you could catch me up first with your official title today?

von Euler: Yes, my official title today is director of corporate philanthropy for ITT.

WWi: And we're going to be chatting about the White Paper that's being released on "Water, Energy & Climate Change" as part of the World Water Forum in Istanbul next week. First off, give me a little bit of background on yourself, if you could?

von Euler: I've been in the field of communications since I was age 9. And, for the last 22 years, I've been with ITT -- 10 years in Sweden with Flygt and the last 12 years in the United States on the corporate level and doing communications. I am also director of the Water Environment Federation, a trustee. I am a director and supporter of Water For People as well. And I am sitting on the Strategic Council for the International Water Association, the IWA. And that's probably it for now. I was also instrumental in the establishment of the World Water Week in Stockholm, the Stockholm Water Prize and the Stockholm Junior Water Prize.

WWi: When did that start, by the way?

von Euler: The Junior Water Prize is now 15 years old and the Water Prize itself is now, I think, 18 years old.

WWi: ITT also participates in the World Water Council as well, which is the organizer and host of next week's activities at the World Water Forum, too?

von Euler: Yes, yes, yes. That's what we are talking about. We've been a member of the WWC for a long time and, for the last two years, I think, Steve Loranger and ITT have been the co-chair of the Water Initiative or the Water Group in the World Business Council (for Sustainable Development). That makes me active in that group as well. That's the reason, when you look at the World Water Forum that we have in front of us, and the only way for industry to actually be invited or be accepted in these circumstances are through the organizations that we work with. A long time ago, when we had the second World Water Forum, which was in Holland, we got together 10 companies, among them Unilever, ITT, Nestlé, Heineken and a few of the water companies to try to put together an industrial or industry's point of view to be presented to the ministerial conference that is active with the World Water Forum. And we did, but that was a lot of work. Then we had Kyoto in Japan, which was a disaster. And we had Mexico, which was a disaster. And the issue was never welcome. We were never invited. You had to fight your way in and that made it difficult to be heard and it made it difficult for leaders in our field to pay attention. If you're not invited, you won't get the CEOs to go there.

WWi: Exactly.

von Euler: It's not an impossibility now.

WWi: It's more of a mixed thing as far as being heard.

von Euler: That's why we said, "Let's now work together and let's work through the organizations that we are working in. The World Business Council is one, the IWA is another and the Water Environment Federation is a third one. They're all there... being active and, through them, we are also active.

WWi: I was about to say that it seems today that people are more willing to recognize the solutions that the water and wastewater treatment industry can provide, although there's still some wariness in some corners about, oh um, the public right to water and the ideas of privatization of water. I know that here in Tucson, Arizona, they just had a screening at a local theater that's sort of an arthouse theater here on the documentary "Flow." I went to go see it and I think I was about five people behind when they hit their limit on the theater's capacity...

von Euler: Really?

WWi: Yes.

von Euler: Wow!

WWi: Luckily, my wife had ordered it on NetFlix, the home delivery video mail service, so I can still see it. But what was interesting to me was that level of interest that you're talking about that's changed.

von Euler: Yes.

WWi: And it raises issues on both sides of the equation. That documentary looks at particularly the issue of privatization of water resources and the issue of the public right to water as a basic need. Now, what we've got coming up here is the point of the interview, which is the fact that there's a White Paper (from the World Business Council on Sustainable Development and ITT) that's going to be presented on water and climate change issues and how they're interrelated.

von Euler: Yes.

WWi: You wanted to discuss some of the things that are in that white paper that's going to be presented at the World Water Forum and why they're important, yes?

von Euler: Yes, I think that one of the things that has been debated and discussed, as you just mentioned, is there is an understanding about water and an awareness about water that comes out of scarcity and people are scared: "Will this happen to me?" But the discussion also includes that companies have been talking about water footprint and how much you draw from the well, how much you export from the region or the watershed, how much you put back, and the quality of what you're putting back.

WWi: Yes.

von Euler: But if that is the only way you look at it, that is a one-eyed way of looking at it -- that is the focus on water. What we're saying is, "That's not always the right way of looking at it." You probably need to look at also how you get the water and what it means in order to treat the water to a certain level or what's required to do that. And there's always a link between water and energy. On the other point, you have a discussion on CO₂ emissions and that you want to reduce those.

WWi: You're referring to the idea that water and wastewater treatment, distribution and collection -- in particular, say, the pumps that are used -- is a core user of energy in any particular community.

von Euler: Yes.

WWi: And, therefore, one of the issues that's come out of that is water efficiency to make sure that we're also reducing water losses simply because there's no point expending so much energy to treat water that's never actually delivered to the tap -- that's a double loss. Creating those efficiency improvements there mean you're treating less water and you're pumping less water, so you have a double savings in terms of both water and energy.

von Euler: Exactly. And that is exactly what we wanted to achieve with the white paper, to make sure that people make that connection. We're not talking about either/or, but that we're talking about a holistic relationship between the two and also to understand what that means in the focus of climate change.

WWi: It's a pretty good time to discuss that because of all of the different plans that have emerged since last fall, regarding economic stimulus spending as a way to brunt the effects of the global recession. I think China mentioned about $586 billion, the USA just passed a $787 billion package and Norm Anderson, from CG/LA Infrastructure, noted recently that globally there will be 2.9% of world GDP spent on infrastructure this year vs. 2.2% in 2008. And, again, prior to the interview, you and I were discussing the issue of how do we ensure that water and wastewater is included in that definition of infrastructure. Would you like to expand upon that?

von Euler: Yes. This is the most critical part of that, because when people think about infrastructure, they're thinking bridges, they're thinking roads -- not what's underneath the ground. And then we have the result in the United States that only about 1% of the stimulus package is actually going to water and wastewater handling and transportation. And that is the point. That is about $8 billion dollars -- $8-to-12 billion. The number varies depending upon who you speak with and how you look at it. But we know from the EPA that we have a deficit of $400 billion already today just to make sure that we are in line with the rules and regulations that we have. And it's the same situation in Europe. So on both sides of the big pond, if you combine that, we need $800 billion just to get in line with regulations we currently are struggling with.

WWi: And deal with aging infrastructure on both sides of the Atlantic...

von Euler: Yes, and when you look ahead, when you look 20 years down the line, we know that we need to add $1.2 trillion dollars, I think it is.

WWi: From that sense and that point of view, $8 billion is a bit disappointing...

von Euler: It's extremely disappointing. It's like it doesn't matter. And to me, that is a catastrophe. It's a failure of the whole water and wastewater business that we have not been able to communicate the necessity and the real situation that is under our feet. We are so close to having real catastrophes, yet we don't think in the Western world that we could even be close. Those are the things that we talk about when we talk about Third World countries. But we're closer than we think. New York was so close last year. We had so many breaks, everything from big wastewater main breaks to...

WWi: I recall a big line break that shot steam and asbestos from the pipe lining up into the air in downtown Manhattan...

von Euler: Right. And I was just hoping that would wake someone up. It's almost like you have to wonder whether just one more will make people start asking, "Who the heck is responsible?"

WWi: It's unfortunate that we're often reactive rather than proactive to things like this. Rather than be proactive to disasters, it's usually a crisis that prompt the reaction to finally fix things, whether it's an explosion or a flood or hurricane, for that matter.

von Euler: Yes, you're right. You saw immediately when that bridge went down in Minnesota last year, then suddenly we needed to look at all the bridges. And bridges was a hot topic...

WWi: For a while...

von Euler: For a while, yes, but bridges are much higher on the priority list when it comes to the stimulus package than water and wastewater. Now, this is not a U.S. problem. This is a global problem.

WWi: I noted in our community networking site -- that we launched last fall for the water and wastewater industry -- that I had added a comment in the blog section in early February that there was another $7 billion they wanted to add to the stimulus for water and wastewater out of $25 billion overall that was to be added for infrastructure. And Republicans portrayed it as sort of a giveaway, suddenly arguing for fiscal discipline that was lacking during most of the Bush years. I was kind of amazed. That would have effectively doubled what was going on for the water industry. And we have to keep in mind that we're talking about this lack of commitment in one of the world's wealthiest economies. There are other parts of the world that aren't as well off that are struggling to meet these infrastructure needs as well but lack the resources.

von Euler: What dawns on me is that we have the ability to do the right thing, we have the money, we have the technology...

WWi: How do we create the political will... without a natural disaster, by the way?

von Euler: Exactly. It really comes down to that. It really comes down to communication, put it in the will, make it important for the politicians to make the right decisions.

WWi: The whole reason for all of these stimulus plans is about the economy.

von Euler: Yes.

WWi: And how does that from your perspective and how you've looked at this over the years and seen different things happen -- how do we expect the continuing economic problems to affect these efforts or these projects, particularly in areas of the world that may not be as affluent as the United States or much of Europe?

von Euler: I think that is the million dollar question.

WWi: Billion dollar.

von Euler: The billion dollar question, absolutely. In many ways, if you look at what part of the solution might entail, it should involve small scale solutions rather than the large ones. So, you take small steps rather than big steps.

WWi: Why do you say this?

von Euler: I'm saying this because if you look at large scale projects that take much more time to establish and to make them happen. If we can take small steps, we are much more likely to make them and find the financing for those. They will not be as difficult to finance. They will be easier to deal with. If you look at peri-urban areas in developing countries, you don't have the infrastructure to rehabilitate, so you need to build the infrastructure of some sort from scratch. The only thing we're pretty much seeing is we will not be able to hook the whole world up on pipes. That will not happen. It's not feasible. And so we will have to find other ways of fulfilling the need. Therefore, looking at smaller solutions and reuse and other sustainable approaches...

WWi: Do you mean more local and less centralized?

von Euler: Yes. They should be totally decentralized and you can take, you know, it step by step and prioritize. You can say, "Now we do this... "

WWi: Are there any examples that ITT has been involved with that kind of highlight this for you?

von Euler: We have over many, many years have been involved with projects that have done similar things. In Easter Europe, in Poland, we started many years ago and kind of standardized on the 5-3,000 PE treatment plants, which was very rudimentary but easy to install.

WWi: By PE, you mean?

von Euler: Person equivalents, like for a small community, not a big industry but a small one. It's probably a community of between 500 and a thousand people. That's what it is.

WWi: I would imagine that you also learned a lot from your experience in the humanitarian effort following the tsunami in Southeast Asia in December 2004. I know I wrote a little bit about what you were doing there along with many other companies' efforts to help.

von Euler: Thank you. That drew us back into a lot of understandings we have now and into putting a lot of thinking into how we can do this. We did do some of that -- and some of the thought that you see in Singapore went into it as well, that whole very big reuse system.

WWi: Which thing in Singapore are you referring to?

von Euler: All of Singapore is one giant reuse system. It's designed to recapture the water for reuse.

WWi: A big catchment area.

von Euler: Yes, well you know, a lot of the water is reused and then reused again. It's really almost from the toilet to the tap.

WWi: But we don't like to say that, do we?.

von Euler: No we don't. But that is a generation divider.

WWi: Younger people may not be as offended by that statement?

von Euler: No. I'm judging something called the "Future Cities" contest, which is a national competition with high school kids here in the United States. They're thinking 20-50 years ahead and everyone has reuse and "toilet to tap" is the phrase they use. I ask them do they believe in this, and they look at me like, "From which planet are you? Of course." There's nothing that is disgusting about that to them. It's kind of interesting.

WWi: I know that in Singapore they shy away from the phrase in favor of "used water."

von Euler: In New Mexico, there's a small town called Cloudcroft. Together with them, we produced a whole integrated system where they reuse the water. Before our solution, they had to truck water up to this small town. And now they no longer need to do that. They can reuse the water. It's a whole system, but you're not going from toilet to tap. You're actually discharging highly treated water into a small lake and then you pump the water into the system from the lake again and you treat that...

WWi: So it's indirect delivery.

von Euler: Yes, basically.

WWi: It's similar to what's going on in Orange County where they have the Groundwater Replenishment Project. They inject the water into the ground and then pull it up again.

von Euler: Yes, exactly. And we will see that. We need to do exactly that all over the world. And that's why I'm saying small steps will get us there. I think we'll see new technologies come from that. And most of the technologies will be adopted in developing countries faster than in developed countries.

WWi: How does this fit in within the various divisions of ITT, particularly within Fluid Technologies, which is the one I work most closely with? How do you see some of these priorities having evolved into the business priorities?

von Euler: I think that's part of where we've come in is connecting back to really where we started with this conversation, which is on energy and going back to lifecycle costs and looking at energy conservation and reducing the amount of energy that's required...

WWi: As well as water efficiency in general...

von Euler: Exactly. Now you're getting into conserving water and energy. And for us, that has been a very old priority. I can show documents from the '80s where we wrote about this. Fortunately, we've always thought like this.

WWi: The world is catching up with you...

von Euler: It's been integral through the entire wait as we advanced and developed our products. Given that, then if you look what we have done the last 10 years when we've been out buying new companies and adding to our product portfolio -- that has been focused on adding adjacent and increasing our service into the treatment side and looking at how we can build this into what I've just been talking about -- to service the smaller solutions but also to approach the bigger ones as well, the bigger needs of municipalities, too.

WWi: Well, correct me if I'm wrong, but the last few years, the focus has been less on buying additional companies and more on integrating what you have so that the benefits of one are more easily translated to the others that you have, etc.

von Euler: Absolutely. I mean I've been there through several acquisitions, but I think that we'll see what happens now. If you go back three or four years, the costs for companies were sky high. And that's mostly because there were not so many more to buy. And several integrators were out there, Siemens, GE and us, all seeking the same thing. That's a great opportunity for anyone that wants to sell their company. But also it's a very important step to integrate what you've acquired and begin to organically develop the opportunities that we have bought and looking to develop further.

WWi: I did a column recently for one of the publications I do and a monthly e-newsletter for our international publication, WWi, where there was a section talking about what's happened to a number of companies in our industry and how they've been affected by the financial crisis. I looked at 15 in terms of where their peak stock value was in 2008 vs. where it was in February 2009. I had share values that had dropped anywhere from 75% down to the 30s.

von Euler: Yes.

WWi: What kind of a pinch does that put on companies' ability to continue some of these efforts?

von Euler: Of course, that's a challenge, but of course there are still opportunities. ITT is doing very well and has been doing very well. And 2008 was a good year for us. A lot of companies can say that as well, because we really didn't start seeing the impact on the economy until we got to WEFTEC in October, right? That's really when it started to slow down. At that point, there's no trend. We don't know yet what's really going to happen. The cost of money was sky high at that time, in the last couple months of 2008 -- mostly because nobody knew what the cost should be and what was available. Right now, I think, what we're seeing is there are a lot of savings all over the place, and on the municipal side as well. Still, there are a lot of utilities out and not really affected by the municipal decisions to save and so forth. But you look at the market right now and, of course, it's interesting. There are companies. There's an opportunity to increase your portfolio. But these are times when you don't know what the price should be either.

WWi: Yes. And it will be interesting to see how it plays out. Everyone's watching, that's for sure. It's a question of who's going to make the first move. We've all been watching it and looking for when the rebound will likely occur. The projection we got last fall was a 10-month turnaround. Now, the talk is about an 18-month turnaround.

von Euler: I think so. I think it's because now we've been hit so hard, it will take time also to realize what has really changed. A lot of people are thinking that. Whatever it was will not happen again. We will come back to something that's different. It will be organized differently. We will have a market that looks a little bit different. And it will take time for companies like ours and others to adjust and figure it out. What is the price? I think we're better positioned than most. First of all, we have a global footprint that allows us to work in multiple markets. And we can find early responders earlier than perhaps a lot of others.

WWi: In other words, you can put more emphasis on a rebounding market in one particular niche or region and adjust to take advantage of those more quickly than others?

von Euler: Absolutely. I think we're very lucky to have what we have with experience in China and also down in India and opening up our R&D activities in those two very important markets, established production and so forth. So, we have a good global response team if you want.

WWi: Okay, bringing it back around again, is there anything you wanted to emphasize on what you're anticipating next week at the World Water Forum?

von Euler: Well, yes. I'm excited to go there. For me, it will be the second time. I was there when it was in the Hague at the second World Water Forum. This time around, I'm excited because I think the questions are more specific. That comes back to the White Paper: "Water, Energy & Climate Change" that we are presenting.

WWi: You have a more receptive U.S. partner as well...

von Euler: Yes, and I think those things are all important. When we have asked, we have put it forward to the forum and it was very well met. There was no discussion. It was just, "Where will it fit in." There will be a lot of warm discussion around this. So, I think the timing is perfect. This is a hot topic not only for industry, but also for municipal players and decision makers role in this. What I'm looking forward to is to promote the holistic view that we need to do that. Of course, we need to do that with the backdrop of packages that are needed all over the place and to increase the awareness that they have the responsibility to their constituencies to take care of them and make sure that they survive. They're the voters. The other thing that we are going to promote much more is an idea that, I think, we developed very much here at ITT but also at the World Business Council -- and that is a tool that includes the water footprint and the CO₂ footprint. You would have one number to meet both. Say you're a No. 3 company and, in order to define your position as a green or not-green company, you would have to do such and such. It would allow us to make the discussions more precise and more inclusive. I think that would be important for governments to decide on spending money on that and also supporting something like that. But also there's research to find a way to come up with something like that -- to come up with a measurement for that. It would help.

WWi: It would because I think that's where things are going. It may be a bit ahead of the curve again, but we know at some point in the future it's going to be just as important as carbon footprints within the whole climate change debate.

von Euler: Yes, and that would summarize the whole discussion about water and energy, because now you find a number for both. And also it would help us to define the impact and perhaps there's a tax or other way it can be calculated to encourage it.

WWi: As well as to develop and integrate solutions more broadly.

von Euler: Yes.

WWi: Well, I tell you what, I want to thank you so much for your time.

von Euler: Thank you. It was nice.

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CONTACT:
Bjorn Von Euler,
Corporate Communications & Philanthropy Director
ITT Corp.
10 Mountain View Road
Upper Saddle River, NJ 07458
Tel: 201-760-5795
Cell: 201-456-2633
Email: [email protected]
Web: www.itt.com, www.ittfluidbusiness.com and www.ittmotionandflowcontrol.com

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