The North American industrial water services and outsourcing market is largely driven by government regulations, environmental awareness and risk management. The primary buyers of outsourcing services for water and wastewater treatment are large manufacturing or industrial companies. This includes water treatment for use in manufacturing activities in several industrial sectors. Outsourcing also includes the disposal of industrial wastewater.
New analysis from Frost & Sullivan North American Industrial Water Services & Outsourcing Market: Investment Analysis and Growth Opportunities, reveals that the market earned revenues of $6.5 billion in 2006.
"The Clean Water Act (CWA), Safe Drinking Water Act (SDWA), and wastewater discharge regulations force companies to examine their manufacturing processes,” said Frost & Sullivan Research Analyst Clare Walker. "Often they look for other companies to treat their wastewater because they cannot afford to be noncompliant and want to be perceived as good environmental corporate citizens. As part of the CWA, the National Pollutant Discharge Elimination System (NPDES) permit program controls water pollution by regulating point sources, which discharge pollutants into the waters of the United States. Industrial, municipal and other facilities must obtain permits if their discharges go directly to surface waters."
The current dilapidated state of infrastructure in the United States, the need for a fully developed infrastructure and emerging markets drive the infrastructure, equipment and technology providers segment. In addition, companies that provide water and outsourcing services provide a level of expertise that personnel within the customer's organization cannot provide, and they guarantee the quality of the water and wastewater services. Moreover, customers are able to shift the operation and maintenance risks to the outsourcing company because the third party provides the operating expertise and bears risk as part of the contractual agreement.
While manufacturers are aware of outsourcing, some may not view it as a simple process, or realize the benefits it provides. Basic services are outsourced such as gas, electricity and waste. However, it can be challenging to get the customer to view water services and outsourcing as another utility package and a way to reduce costs. Because of the diverse needs of industrial end users, these solutions need to be customized; generally there is no singular approach, which can meet all needs.
"Also, endorsement of the technology is a must; the technical staff will be the ones working with the technology and they need to market it. Otherwise, it is likely to remain a limited niche application," explains Walker. "The industry is also dominated by large multi-utility and diversified utility companies which offer a wide variety of services to the customer in the form of design, build, operation and maintenance contracts and as a result, prices can end up being squeezed, along with suppliers' margins."
The North American industrial water services and outsourcing market is poised to exhibit a healthy growth rate of 10.5 percent through 2011 because the basic infrastructure continues to age and industries need to keep pace with regulations. A significant benefit of outsourcing any product or service is the guaranteed provision of the service at a known and fixed cost. Customers also need not train their own personnel on water and wastewater issues or operate the systems.
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