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Water Purveyance Water Purveyance Bruce Lumis Bruce Lumis Amy Ott Amy Ott Brennan Ott Brennan Ott Noah Whitaker Noah Whitaker

Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

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Page 1: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

Water Water PurveyancePurveyance

Bruce LumisBruce LumisAmy OttAmy Ott

Brennan OttBrennan OttNoah WhitakerNoah Whitaker

Page 2: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

OutlineOutline Water-Ways Irrigation EngineersWater-Ways Irrigation Engineers CustomersCustomers Cost DriversCost Drivers Changing TechnologyChanging Technology Opportunities and ThreatsOpportunities and Threats Political IssuesPolitical Issues Global IssuesGlobal Issues Intersection of Water Channel & Value Intersection of Water Channel & Value

ChainChain ConclusionConclusion

Page 3: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

Water-Ways Irrigation Water-Ways Irrigation EngineersEngineers

WWIE purchase equipment to sell and rent WWIE purchase equipment to sell and rent ProductsProducts

PipePipe Drip irrigation systemsDrip irrigation systems Valves and fittingsValves and fittings

WWIE services equipmentWWIE services equipment Pipe rental accounts for about $100 million Pipe rental accounts for about $100 million

in revenue per year (35% of revenue)in revenue per year (35% of revenue) Sale of equipment is about $300k per yearSale of equipment is about $300k per year

Page 4: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

CustomersCustomers

FarmersFarmers San Joaquin ValleySan Joaquin Valley Monterey BayMonterey Bay Oxnard areaOxnard area WashingtonWashington OregonOregon CanadaCanada

Oil Industry?Oil Industry?

Page 5: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

Cost DriversCost Drivers

Increasing price of water Increasing price of water Update equipment to use less water Update equipment to use less water

while producing more cropswhile producing more crops

Increasing price of diesel fuelIncreasing price of diesel fuel Pumps need fuel to deliver the waterPumps need fuel to deliver the water

Page 6: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

Changing TechnologyChanging Technology Out with the old…Out with the old…

Water pipes used to be made with concrete, Water pipes used to be made with concrete, transite, and/or asbestos!transite, and/or asbestos!

Problems included easy cracking, substantial water Problems included easy cracking, substantial water leakage, oh… and cancer.leakage, oh… and cancer.

...In with the new...In with the new 50+ years of increasing knowledge in 50+ years of increasing knowledge in

hydrodynamics.hydrodynamics. Increasing use of drip systems vs. old school crop Increasing use of drip systems vs. old school crop

spraying and flooding.spraying and flooding. PVC, polyethylene, and aluminum. PVC, polyethylene, and aluminum. These pipes minimize inner-pipe friction leading to These pipes minimize inner-pipe friction leading to

lower pumping energy demands and better flow-lower pumping energy demands and better flow-thru rates. Water loss and contamination is thru rates. Water loss and contamination is minimal.minimal.

Page 7: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

Opportunities & ThreatsOpportunities & Threats

OpportunitiesOpportunities The high price of oil ($126/barrel) leads to The high price of oil ($126/barrel) leads to

lucrative markets for pipes, pumps, and drill lucrative markets for pipes, pumps, and drill cooling.cooling.

Going “Green” – High cost of water forces farmers Going “Green” – High cost of water forces farmers to seek new equipment that is more effective and to seek new equipment that is more effective and efficient.efficient.

ThreatsThreats Capitulation of the dollar with growth of aluminum Capitulation of the dollar with growth of aluminum

demand and increasing fuel costs.demand and increasing fuel costs. Increasing competition from Rain for Rent, Agri-Increasing competition from Rain for Rent, Agri-

Valley Irrigation, US Irrigation, Baker TanksValley Irrigation, US Irrigation, Baker Tanks

Page 8: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

Political IssuesPolitical Issues

Government regulation. Government regulation. US Ag firms cannot compete in the US Ag firms cannot compete in the

global market due to stringent and global market due to stringent and unfair regulations and business laws. unfair regulations and business laws. Workers compensation, payroll taxes, Workers compensation, payroll taxes,

inventory tax, property tax, and numerous inventory tax, property tax, and numerous other taxes…….. other taxes……..

In China they can grow a bushel of In China they can grow a bushel of cotton for pennies, in the US it takes cotton for pennies, in the US it takes dollars. dollars.

Page 9: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

Global IssuesGlobal Issues Explosive growth in China has lead to Explosive growth in China has lead to

increased production of products like increased production of products like window seals, which are made using the window seals, which are made using the same aluminum alloy as many of the same aluminum alloy as many of the products WWIE purchases. products WWIE purchases.

““Chinese [aluminum] demand this year Chinese [aluminum] demand this year will be about 14.9 million tons, a 24 will be about 14.9 million tons, a 24 percent rise from 2007. The country will percent rise from 2007. The country will account for 35% of total demand by 2020 account for 35% of total demand by 2020 from 13% in 2000.” from 13% in 2000.” ((

http://www.researchandmarkets.com/reportinfo.asp?report_id=597714&t=d&cat_idhttp://www.researchandmarkets.com/reportinfo.asp?report_id=597714&t=d&cat_id=)=)

Page 10: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

Intersection of Water Intersection of Water Channel & Value ChainChannel & Value Chain

Channel SelectionChannel Selection Single channel, based on direct sellingSingle channel, based on direct selling

High concentration of buyersHigh concentration of buyers High need for technical/product serviceHigh need for technical/product service

Strategic Channel OptionsStrategic Channel Options Distribution intensityDistribution intensity

Focus where large number of farmers areFocus where large number of farmers are Oil industry in Central Valley and OxnardOil industry in Central Valley and Oxnard

Page 11: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

“Economy”(Father Money)

“Ecology”(Mother Earth) “Value”

(Offspring)

End Consumer

THE WATER CHANNEL

AS A COMBINED SUPPLY & DEMAND CHAIN

Water affects the Going to Market of WWIE by steering the marketing & sales, service, and ultimately the margin. Water is not used internally to any measurable extent.

Page 12: Water Purveyance Bruce Lumis Amy Ott Brennan Ott Noah Whitaker

ConclusionConclusion

Lots of money to be made in Lots of money to be made in transporting watertransporting water

Increase in oil prices has direct Increase in oil prices has direct impact on waterimpact on water

Growth in China will have HUGE Growth in China will have HUGE impact at home in ways we never impact at home in ways we never thought possiblethought possible

Must select channel and strategy to Must select channel and strategy to optimize channel carefullyoptimize channel carefully