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WWD: What is the outlook for the pump industry in 2006 and beyond?
Douglas Bingler: Over the last three years, we have seen multiple acquisitions in our space. The global pump industry is quite fragmented, and the trend toward consolidation continues.
In 2005, rising energy prices had a dampening effect on the market. Petrochemical, metals, and other energy-intensive industries have contributed to the deceleration. We believe that this trend will continue in 2006 for pump manufacturers in North America and Europe, but products produced and used in emerging markets will continue to grow, offsetting lower growth in established markets. Overall, we see the pump market growing at a compound annual growth rate of 3 to 5%.
The major trends and drivers in our market are signified by increasing demand for system solutions, and packaged technology and services. Manufacturers, distributors and contractors are increasing the competitive intensity by repositioning themselves to sell more of the value chain and influencing user expectations through innovation.
The demand for more complete systems solutions is driving innovation, but price pressure is also rising. It is a very exciting time to be in this industry.
WWD: How established is the pump rental marketplace in the water/wastewater industry?
Bingler: This is a healthy but highly fragmented market. We believe that non-core activities will be outsourced. As a result, we will see an increase in the demand for rental equipment, which is spurred by a preference to avoid the burden of self–owned fleets of pumps.
WWD: What other factors are influencing the pump marketplace?
Bingler: Global overcapacity has driven the industry to rationalization, resulting in financially stronger pump manufacturers. New technologies have created new playing fields, mainly by expanding the value of a product offer by adding monitoring and control far beyond the flanges of the pump.
With the dramatic increases in energy prices, improving the energy efficiencies of pumps and pumping systems is critical, as is the emphasis on understanding and more effectively controlling life-cycle costs (LCC). Low energy usage is particularly important in countries like China and other emerging markets, as they frequently encounter shortages of electricity.
WWD: What recent technological advances or product/design changes are expected to emerge within the water/wastewater industry?
Bingler: Within ITT, we have worked hard to release new products that will lower the overall LCC, and we have experienced a great response from our customers. N-pump, Hydrovar/Aquavar and Pumpsmart are just a few of our new product families.
In the treatment area, the introduction of UV and ozone disinfection, and membrane technologies are solutions that have met the appreciation of users as LCC becomes more common. Generally, product and system enhancements regarding efficiencies are the focus for the industry.
WWD: Is there a common request from the water/wastewater industry for pumps?
Bingler: The requests are all about high efficiency and low energy consumption. The industry is seeking pumps that are easy to maintain and integrated in a complete package. Therefore, today, we increasingly sell products that yield lower operational costs, and reduced manpower, maintenance and replacement costs.
WWD: How focused are water/wastewater plants on energy efficiency and life-cycle costs with regard to pumps and pump systems?
Bingler: ITT is in the forefront, and together with Hydraulic Institute and Europump, has been driving this issue since 1997. We have actively involved customers, media, consultants and major energy producers to educate and engage the industry in the use of LCC measurements.
Today, we see that our North American customers are asking to be quoted “the lowest LCC.” We have seen this for several years already in Europe.
LCC is also what drives the trend for systems rather than single products—you have a much larger influence and control of your LCC if you think of systems.