June 2005

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WATER &WASTEWATER

AGEING USWATER SYSTEM

REQUIRES“RESTORATION”

A study conducted by Frost& Sullivan reveals that theUS water infrastructurerequires restoration andupgrading.

With water becoming ascarce commodity, the ageingUS water infrastructure is acause for much concern, saysthe market research company.Although government spend-ing in this sector is substantial,the infrastructure requiresurgent restoration for comp-liance with updated water safe-ty standards. What remains is a gap between budgeted and required investments.Remedial action on this frontwill give water equipmentcompanies the necessary impe-tus to grow at a faster rate.

The study, entitled ‘USMunicipal Water EquipmentMarket: Investment Analysisand Growth Opportunities’,reveals that revenue in thismarket (excluding the pipesand fittings sector) totalledUS$4.09 billion in 2004, andprojects that it will reachUS$5.22 billion by 2011.

The municipal water sectoraccounts for 40% of the totalwater usage in the USA, saysFrost & Sullivan. While watersafety and quality concerns arethe primary drivers for manyinvestments made at themunicipal level, the need todisseminate drinking waterefficiently through structuredwater mains is drawing consid-erable industry focus.

Water, a basic necessity, isturning out to be an investmentnecessity, says Frost &Sullivan. According to thecompany, the EnvironmentalProtection Agency estimatesthat heavy investments will berequired in the USA to upgrade

or replace the water infrastruc-ture to ensure compliance withthe safety standards prescribedby the Safe Drinking WaterAct.

It says that in order forwater equipment manufactur-ers to take advantage of theincreasing opportunities in themunicipal water treatment anddistribution sector, they mustdevelop new technologies totreat emerging contaminants.While developments in ozoneand ultraviolet technologiesare expanding the applicationareas of these technologies,membrane technology mayeventually replace conven-tional filtration equipment,because of its increased relia-bility and it is financially feasi-ble technology. By upgradingageing infrastructures withmembrane treatment systems,municipalities can achieve costsavings in the long run, saysthe report.

REVERSEOSMOSIS TO BEAT

US$3BN BY 2010Water treatment has becomean area of global concern asindividuals, communities,industries, nations, and theirnational institutions strive forways to keep this essentialresource available and suit-able for use.

The water treatment marketremains a highly competitiveindustrial sector. This is due, inpart, to the number of competingtechnologies, as well as themany components that may beneeded to make up any one sys-tem. Reverse osmosis (RO) sys-tems have, over the past 25years, emerged as an effectivesolution to transform saline,brackish, and contaminatedwater into a useable and/orpotable product. The RO tech-nology sector still has areas ofpromising activity and a marketfor replacement and upgradedequipment.

According to a soon-to-be-released updated report RGB-

255R Major Reverse OsmosisSystem Components for WaterTreatment: The Global Marketfrom Business CommunicationsCo Inc (www.bccresearch.com),the global market for RO mem-branes and system componentsis currently estimated at US$1.9billion and is expected to rise atan average annual growth rate(AAGR) of 10.3% to more thanUS$3 billion in 2010. Through2010, current and future usersare projected to add more than2.5 billion gallons per day of ROcapacity.

The US leads the world inexpenditures for RO equip-ment, US$848 million in 2005;and will continue to be thelargest purchaser during theforecast period, investing anestimated US$1.4 billion by2010. Outside of the US, thevalue of RO varies from regionto region, although the indus-trial sector generally benefitsmost from installing capacity.With an estimated market sizeof US$433 million, the AsiaPacific region currently rankssecond in the RO market.Japan has consistently fol-lowed the US in global pur-chases of RO equipment.China and India with theirrapid industrialization and vig-orous GDP growth will see thehighest market share increasesas they outstrip other nations inadopting the technology.

In Europe, the region’slargest user, Spain, will continueto purchase RO equipment as itexpands existing water treat-ment capacity and builds newdesalination plants along thecoast. Eastern European nationsalso are expected to make majorRO purchases as they work tocomply with EU water stan-dards. Germany and the UK,large existing markets, will con-tinue to make purchases forindustrial and some municipaluses. London is looking into thepossibility of building the UK’sfirst desalination plant.

In 2005, the MiddleEast/Africa region will spend anestimated US$170 million on

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Pump Industry Analyst

Pump CompanyIndex

Alfa Laval 11,13,15Allweiler 10,11Ampco-Pittsburgh 15Andrews Sykes 10Andritz 7,13,15Aro 11Baker Hughes 15BHEL 15Bjørge 13,15Cardo 10,13,15Cardo Pump 10Colfax Corp 10Colfax Pump Group 10Crane 10,15Davey Products 12DESMI 16DMW 15Dover 15Ebara 1,7,10,12,14,15Ebara Boshan Pump 1Flowserve 10,13,15,16Fybroc 11Gardner Denver 5,6,15GEA 12GE 13,15Gévelot 15GL&V 12,15Godwin Pumps 10Gorman-Rupp 8,15Graco 15Grundfos 1,12GUD Holdings 13,15Hale Products 14Hamworthy 8,12,15Hyundai Heavy Industries 15Idex 15IHI 10IMO 10Ingersoll-Rand 11ITT Flygt 13,14ITT Industries 10,12,15Jarlway 12Johnson Pump 13,15Kickstart 16Kirloskar Brothers 11,15KSB 10,11,13,15,16Kubota 15Layne Christensen 10,15Met-Pro 11,12,15Metso 13,15MG Technologies 12Nash-Elmo 5National-Oilwell Varco 15Nikkiso 15Oberdorfer 6PCM Pumps 11Pentair 9,10,15Pfeiffer Vacuum 12,13,15Precision Castparts 15Pursuit Dynamics 11,15Robbins & Myers 15Roper Industries 15Schlumberger 15Shandon Boshan Pump Science and Technology 1Siemens 13SKF 15Smith-Koch 13Spirax-Sarco 13,15SPX 9,15Sulzer 13,14,15Tecumseh 15Teikoku Electric 15Textron 15Thomas Industries 5,6,15Torishima 15Total Equipment 13Tsurumi 15United Technologies 12,15Weir 13,15Weir Pumps 11WorldWater 12,15Zenith 10

June 2005

RO equipment. In the MiddleEast, desalinating water is essen-tial to meet the needs of its afflu-ent population and water inten-sive industries, especially oil andpower. Relative to thermaldesalination methods used wide-ly in the Middle East, the energycosts of RO have dropped,increasing RO market share inregions not formerly served bythe membrane process.

The US$132 million LatinAmerican/Caribbean RO mar-ket currently is based on the tourist trade for both coun-tries. In the next five years,the Antilles, Antigua, theBahamas, Caymans andBermuda will add to theirexisting RO capacity for resortand other tourist needs.Mexico and Chile have plansto add 5.2mgd (mega gallonsper day) and 13.7mgd, respec-tively, during the five yearforecast period. Chile willdesalinate seawater for its cop-per mining industry, whileMexico will use RO for indus-trial and municipal waterdesalination.

The reduced cost of ROhas made the process morecompetitive with other watersupply options. Factors con-tributing to price decreasesinclude greater competitionamong equipment suppliers,improved productivity and thefalling costs of membranemodules, improved energyrecovery devices that cut plantenergy requirements, and theglobal trend toward privatizingwater projects.

WATER BUSINESSSPINS OUT OF UK

UNIVERSITYA new water business hasjust completed its successfulspin out from the School ofWater Sciences at CranfieldUniversity in the UK.

According to technicaldirector, Professor TomStephenson, the company,called Water Innovate Ltd, willbreak new ground by providing,

for the first time, an effectiveconduit for the transfer of newtechnologies out of the labora-tory and into the water industry.He says that it will bridge theinnovation gap that has existedin the water sector for far toolong.

John Catling, former man-aging director of ThamesWater’s Products Division,joined the company as execu-tive chairman after leading aconsortium of investors to fundtechnical developments andbring them to the market ascommercial products.

Catling says that investorswere not only looking for lead-ing edge technology with clearmarket potential, but they alsowanted a proven managementteam that knew the sector andhad a successful track record.Dr Steve Callister, who has 15 years of business development experience withboth water and wastewaterprocess technology firms,joined the company as manag-ing director.

Among the technologieson which Water Innovate is ini-tially focusing are an odourmodelling software package,and a nitrification toxicitymonitoring technique. Thesoftware, called OdourSim,dynamically predicts the gen-eration and emission of odoursfrom sewage treatment worksallowing more accurate disper-sion contour plots to be gener-ated. N-Tox monitors the con-dition of a wastewater treat-ment plant and provides anearly warning of equipmentfailure. The company is alsooffering a chemical additivefor water and wastewater treatment, and three tertiaryprocess technologies forwastewater treatment.

Dr Steve Callister ex-plained Water Innovate’sstrategy: “Our initial focus ison commercializing the firstthree technologies and takingthem to market either directlyor through licensing deals.We will also be investing

significant resources in fur-ther development of the re-maining technologies, as wellas in evaluating opportunitiesto acquire additional portfo-lios of water-related technolo-gy to bring to market.”

Water Innovate’s fundinghas been provided by theNational Endowment forScience Technology and theArts, Oxford Technology 4Venture Capital Trust, Cran-field Enterprises Ltd, a groupof private investors, and thecompany’s management.

ULTRASTRIP,ALLBAUGH

EXPLORE WATERJVS

In the USA, water-engineer-ing company UltraStrip Sys-tems Inc of Stuart, Florida,has signed a business-devel-opment agreement with JoeAllbaugh, president andchief executive officer ofAllbaugh Co Llc of Washing-ton, that will explore jointventures worldwide.

The immediate objectiveof the partnership is to acceler-ate UltraStrip, and its newEcosphere Technologies Incsubsidiary, into its growthphase in the billion-dollarwater industry.

The rising global demandfor water is lifting water stocksto new levels with industrysales estimated in the hundredsof billions, according to arecent issue of Barron’s, aweekly publication forinvestors.

“The demand for pure,clean drinking water is risingalong with the world's popula-tion,” said Allbaugh inannouncing the agreement.“UltraStrip, through itsEcosphere Technologies sub-sidiary and the nation's firstHomeland Security emergencywater-filtration system, whichhas been verified by theEnvironmental ProtectionAgency, is in a strong positionto take advantage of this

worldwide demand for waterrestoration.”

“As director of the FederalEmergency ManagementAgency,” said Thomas VonEssen, former New York Cityfire commissioner on 9/11,Senior vice president of Giu-liani Partners and UltraStripAdvisory Board member, “JoeAllbaugh coordinated the fed-eral government’s US$8.8 bil-lion response to the September11 terrorist attacks and distin-guished himself in providingemergency needs assessmentsas well as response and recov-ery strategies.”

Allbaugh Co’s clientsinclude, among others, globalengineering firm KBR, BPShipping, DaewooEngineering and Constructionof South Korea, and NorthropGrumman Corp. The firm hasoffices in Oklahoma City,Oklahoma; Austin, Texas;Washington, DC; and in othercities worldwide.

ENERGY

RECORD DEMANDDROVE ENERGY

MARKETS IN 2004World energy markets sawrapid growth in demand forall forms of energy in 2004.While Chinese growth in par-ticular was exceptional, thestrength of demand growthwas a global phenomenon.

According to the BPStatistical Review of WorldEnergy 2005, the world’s over-all energy consumption grewby 4.3% in 2004. In volumeterms, this is the largest-everannual increase in global pri-mary energy consumption andis the highest percentagegrowth since 1984.

While China’s economygrew 9.5% in 2004, Chineseenergy demand increased by15.1%. Over the past threeyears Chinese energy demandhas risen by 65%, accountingfor over half the increase in

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Pump Industry Analyst