As 2023 approaches, it seems the perfect time to review how the water treatment technology industry has been performing and look ahead. The results from the 2022 WWEMA Market Indicators Survey can shed some light on this. The WWEMA state-of-the-industry survey measures performance and projections for eight water market categories including domestic sales, international sales, bookings/orders, quotes, design work, company employment, material costs, and industry market growth.
More specifically, it includes actual performance data for the September 2021 to August 2022 period along with projections for the September 2022 to August 2023 period. Respondents to the survey include WWEMA-member companies representing a broad range of water treatment technologies and size of companies. Additionally, WWEMA manufacturer representatives also participated in the survey sharing their unique regional market perspective.
The performance of the water treatment technology market was strong in the September 2021 to August 2022 period with only one of the above mentioned eight water market categories not showing approximately 80% or greater growth. The lowest-performing survey indicator was international sales which had only 28% of companies reporting growth. In contrast, domestic sales performance was robust with 88% of companies reporting positive growth and half reporting growth in the 7.5 to 10% range. This achievement is on the heels of the prior year’s strong performance, making continued year-over-year growth even more impressive.
Further, the level of positive growth in this year’s survey outpaced the performance reported in the 2021 WWEMA Market Indicators Survey when only 26% of companies reported growth in the 7.5% to 10% range. The outlook for domestic sales remains very positive with an equivalent 88% of respondents expecting continued positive growth in the September 2022 to August 2023 period.
An indicator that the survey data confirmed expectations was the cost of materials. All of us, as general consumers and more specifically suppliers or purchasers of water technology equipment and services, are experiencing rising costs. The reasons for this are multi-faceted including supply chain disruptions, workforce shortages, rising energy and transportation costs, and even geopolitical conflicts. Therefore, it was not surprising to see all survey respondents report material costs increases with nearly one quarter indicating material costs have risen by 7.5%. Most respondents anticipate material cost to continue to rise in the September 2022 to August 2023 period with some tempering in the rate of increase.
This year’s survey included a new question asking whether respondents modified their Business Plan to account for the new Buy America requirements. Approximately half of respondents did and a few others said it was too soon to know if changes were needed.
Respondents also explained what components of their plan changed. Some highlights of those include entering additional markets, using alternative and more costly supply sources to support regulatory compliance, modifying staffing levels and locations, and even considering or making strategic acquisition of firms based in the U.S. In addition to Buy America compliance challenges, other headwinds for the industry include continued supply chain and labor challenges, persistent inflation and rising interest rates, hesitation about the overall state of the economy, and uncertainty regarding the level and severity of ongoing COVID-19 infections.
Additionally, recent data show some sluggishness for the manufacturing sector including a reading below 50 for November 2022 of the Purchasing Managers Index — an index that summarizes economic activity in the manufacturing sector. Nonetheless, our industry, which is known for innovative solutions, will likely find ways to meet these challenges and exceed the positive expectations reported in the 2022 WWEMA Market Indicators Survey. Industry growth is also likely to be bolstered by the influx of funding from the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act.