Grundfos Centralizes North American Municipal Wastewater Business Near Chicago
Pump producer enhances its national manufacturing presence in Illinois, launching new “competency center”
Grundfos celebrated the official launch of a new business development “competency center,” serving all of North America and devoted exclusively to the municipal wastewater market. Located approximately 40 miles west of Chicago, the center is housed in the 105,000-sq-ft, pump manufacturing facility of the former Yeomans Chicago Corp., which Grundfos acquired in December 2008.
Since that acquisition, the global pump manufacturer has invested several million dollars in new equipment and systems to upgrade the Aurora facility and ready the operation to begin production of Grundfos-brand wastewater pump systems, previously made by the company in Europe and Asia. The first such product, the Grundfos S-Line of energy efficient waste water pumps, commenced production in Aurora in February of this year.
One of numerous such “competency centers” operated by Grundfos worldwide, the North American Water Utility Center brings together a fully integrated team of professional experts in the municipal wastewater industry. Their specialized skills include engineering, manufacturing, product sales and service, distribution, regulatory issues, and equipment testing. The Aurora facility currently employs 93 full-time personnel, including 31 machinists working two shifts five days per week.
Nearly 100 guests joined Grundfos personnel for a ribbon-cutting ceremony inaugurating the new Water Utility Center, led by Denmark Minister for Trade and Investment Pia Olsen Dyhr and Dan Seals, assistant director of the Illinois Department of Commerce and Economic Opportunity.
Speaking at today’s ceremony, Grundfos North America CEO and President Jes Munk Hansen said, “This center is pivotal to Grundfos becoming a leader in the North American municipal wastewater business. We have big ambitions for the next five years, as we strive to double—if not triple—our sales in that key segment, with commensurate growth in our product offering.”
Grundfos has invested more than $50 million in municipal water-related activities in the United States during the past few years, including acquisitions, increased production and infrastructure, information systems, product launches and the hiring of key people. Over the next half-decade, the company expects to invest an equal amount in its North American operations. “These investments are part of a global strategy that aim to capture 10% of the worldwide municipal market and generate roughly $1.3 billion in export sales,” said Hansen.
Minister Dyhr praised Grundfos as an example of a Danish company successfully meeting the global mandate to counter climate change by reducing water and energy consumption.
“One of the most pressing challenges facing the world today and over the next decades will be identifying and implementing technologies that mitigate climate change through the conservation of water and energy,” said Dyhr, noting that Grundfos has gained a global competitive advantage by embracing Denmark’s energy efficient and resource conservation public policies. “Just as clean technology is now the fastest growing part of Danish exports, we are positioning ourselves to also lead in water and climate solutions.”
Energy Efficient Focus
The 2008 acquisition of YCC—along with its collection of venerable brands: Morris Pump (founded in 1864), Yeomans Pumps (1898) and Chicago Pump Co. (1909)—was designed to strengthen Grundfos’ position in the municipal waste water industry. The global market leader hopes to differentiate itself in the $2 billion North American municipal water arena by building on the strength of its growing portfolio of highly engineered, energy efficient pump systems.
“Electrical consumption represents a large operational cost for municipalities and public utilities,” said Hansen, who noted that America is about 10 or 15 years behind its European and Asian counterparts with regard to integrating this type of energy efficiency into its wastewater operations. “Because energy represents upwards of 85% of a pump’s life cycle cost, switching to high-efficiency motor technology can cut operational costs in half, with a corresponding reduction in power plant emissions.”
The new water utility center will bring its customers consistent lead times, a shorter supply chain and accelerated new-product development—all made possible through a permanent North American presence, according to Andrew Warrington, president of the Grundfos Water Utility business unit. “As a North American supplier, we engineer, manufacture, sell and service products that are unique to this market, including those that happen to be produced overseas at the present time. It is vital to have a local, interdisciplinary team like the one we have in Aurora so we can offer the industry a holistic solution.”
Warrington noted that the Chicago location was important to Grundfos both for its ample engineering labor force and centralized geographic location.
“Our new Midwest presence is an ideal marriage of expert product knowledge and advanced technology, located near a major international transportation hub that allows us to work with North American consulting engineers as they pursue projects worldwide,” said Warrington, who also noted that Aurora has furnished wastewater projects as far away as Egypt and Russia.
“The Midwest is also a good place to live,” said Hansen, noting that its culture and the prevalence of “highly loyal, reliable employees” reminds him very much of Scandinavia. “As a result, we expect to be able to attract additional engineering talent to Aurora—professionals who readily understand our mission of energy and water efficiency.”
Grundfos expects to use the Aurora Water Utility Center as a platform for launching increasingly sophisticated, energy saving pump technologies in the coming years, all targeting the wastewater market. While the segment has been slow to adopt these more advanced—and therefore more costly—technologies because of a slumping economy and local government budget shortfalls, Hansen is confident that the current brake on infrastructure spending will not last much longer.
“In the short run, water is a tough market because the mayors and the city councils simply lack the funds to invest in new plant and equipment,” he said. “Plus, the impact of that delay in spending is not evident until there is a local water crisis. But that growing funding gap will soon become an enormous and highly visible issue in this country, especially with the advanced age of the equipment in many parts of the nation, particularly the Northeast.”
As Hansen also notes, not only is much of this older equipment at risk to breaking down soon, but in the meantime, it is increasingly expensive to operate because of the relentlessly rising cost of energy. In time, the economic argument for replacing aging, inefficient infrastructure will only grow stronger.
“That is why our focus at Grundfos is on developing more energy efficient pumping products, and why we look at the market in terms of the next two decades, instead of the next two quarters,” Hansen said. “As a privately held organization, we can afford to have a long-term perspective with regard to our investments and business strategy. Our dedication to the municipal water market in North America is a long-term strategy."