October 12, 2004

Suppliers of water and wastewater treatment products and services and suppliers of filtration products and services will achieve worldwide sales of $183 billion dollars in 2010 up from $122 billion in 2004, according to the forecast in McIlvaine, Water, Wastewater, and Filtration: World Markets.

The biggest growth will be in outsourcing the operation of municipal and industrial treatment systems. Presently, the cost of operating systems is $172 billion. This will climb to $242 billion in 2010. Suppliers are selling repair parts worth $30 billion, and outsourcing and other services valued at $6.9 billion. But the outsourcing segment will grow at more than 10 percent per year over the next six years. By 2010 the supplier share of operating revenues will climb to 26 percent ($63 billion) up from only 21 percent now.

Sales of chemicals will grow from $15 billion now to over $21 billion in 2010. System and product sale will climb from $70 billion now to $99 billion in 2010.

Process treatment is the largest application segment. The present cost of owning and operating systems which filter or treat blood, fruit juice, wine, chemicals, paint, boiler feed water or chip rinsing fluids is $75 billion.

Municipal wastewater and municipal drinking water account for nearly $50 billion each. Industrial water accounts for expenditures of $47 billion while industrial wastewater costs are less than $30 billion.

There are growing numbers of companies who are pursuing most aspects of the entire market. GE and Siemens are two recent entries into the field. Both are positioned to supply services and outsourcing, particularly in the industrial sectors. Siemens purchased USFilter from Veolia (formerly Vivendi). This French company was the world’s largest operator of municipal water and wastewater plants as well as the largest supplier of filtration equipment.

Suez is another French company who has retrenched in the field. They sold Nalco to private investors who, in turn, are presently making a public offering for this large water and wastewater treatment chemicals company.

Therefore the trend is toward industrial outsourcers combining with equipment and product companies while municipal outsourcers are divesting themselves of these supplier companies.

Another trend is toward the acquisition of companies in this field by companies in flow control. The world market for valves and pumps is more than $60 billion. Nevertheless, this is small compared to the treatment market. ITT, the largest supplier of pumps, has acquired filtration companies and, therefore, is now participating in a present market (flow control plus treatment) of $180 billion per year.

This market will continue to grow at a rate greater than the GNP. Certain segments such as membrane treatment and instrumentation will grow at double-digit rates. There is tremendous potential for remote control and more efficient operation of both industrial and municipal plants. The development of smart sensors, advanced process control engines, and other software will drive the outsourcing growth.

© 2004 Scranton Gillette Communications, Inc. All rights reserved.