An overview of trends & insights in 2020 that will inform 2021.
Editors Note: An extended report with exclusive insights will be released in January 2021. Subscribe to WWD’s weekly newsletter at wwdmag.com/manage-subscription to get exclusive access when it releases.
A year unlike any other. Unprecedented. Historic.
2020 has more platitudes going for it than any other year in the lifetime of the editors overseeing Water & Wastes Digest, and the same can likely be said for practically all the Water & Wastes Digest audience members.
In 2020, the water industry started strong and remained determined, diligent and unrelenting in the face of the challenges presented to it. From the still ongoing and currently nine-month long global pandemic of the coronavirus to a tumultuous election—the results of which could present considerable change for the industry—the larger conversations of society have begun to permeate the water and wastewater industry as a whole.
Digital and smart solutions gained steam, creating a surge in adoption for smart water technologies. Likewise, national conversations on race have pushed the issues of diversity and inclusion, water equity, water affordability and water access to the forefront of industry leaders’ minds.
It has become more important than ever that Water & Wastes Digest survey its audience to better understand the current state of the industry.
Survey Respondent Demographics
A total of 135 audience members responded to the Water & Wastes Digest State of the Industry Survey in 2020. Of those who responded, Operations (31.95%), Government Administrators/Corporate Management (28.95%), Engineering (24.06%) account for the bulk of respondents’ primary job functions. OEM (9.4%) and Technical (5.64%) rounded out the list.
Respondents skewed to 50 years old or older with 17.29% of respondents indicating they were 70 years old or older, which nearly doubled from 2019’s results. 37.97% said they were between the ages of 60 and 69 (up nearly 14 points from 2019), and 25.19% said they were between the ages of 50 and 59 (a decrease of 2 points from 2019). With such a large portion of respondents over the age of 70, this lead WWD editors to consider two things:
1) Those in positions of purchasing authority are more likely to be over the age of 50; and
2) People are working later into their life, which reduces the opportunities for those under the age of 50 to take purchasing authority positions because they are still filled by those with greater experience.
While nearly half of respondents to the survey said 2020 was a good year (49%) and 16.34% said it was very good, nearly a quarter of the responses said it was mediocre (24.84%). This is the largest portion to indicate mediocre since 2018 when 21% indicated it to be as such. Respondents are not deterred by this, however, as more than half said next year will be good (54.9%) and more than a quarter said it would be very good (25.49%). This follows a similar trend to 2018 when 70% of respondents that year thought 2019 would be good, very good or excellent.
The industry was considered essential during the pandemic, so most work still continued, although the earliest stages resulted in an initial stall.
“We had a healthy amount of activity occurring before the pandemic,” said Chad Mize, senior vice president of sales and marketing for Mueller Water Products. “There was this little lull. And then as we’ve seen, as people have been able to get back to work and figured out how they’ve worked from home, and city councils get back together and they get to approve projects, that things certainly continue to roll.”
According to the 2020 WWD State of the Industry survey results, 50.23% of respondents said they are not planning new construction. This is a small drop from last year’s 53% and on par with 2018’s 51%. In the past three years, WWD has noted that this does not mean a lack of work, so much as it means projects primarily are focused on rehabilitation, repair, upkeep, maintenance and other upgrades. That trend has not changed in 2020, as 37.67% and 11.63% indicated upgrading in 24 months and 36 months, respectively. New construction is not off the table, however. The 2020 results also show 26.98% of respondents indicated new construction in 24 months, and 9.30% are looking at a 36-month timeline.
Lastly, revenue expectations for 2021 appear promising. While respondents largely indicated their revenue remained the same from 2019 to 2020 (43.23%) and expect their revenue to remain the same in 2021 (47.4%), the percent of respondents who expected 2021 revenue to increase (42.21%) leaves only 10.39% expecting a decrease in revenue for 2021.
Resilience & Low Flow
Water is the lifeblood of society, and if it were to stop flowing, especially during a pandemic, many societal functions would cease to operate effectively, particularly healthcare. Barry Liner, chief technical officer for Water Environment Federation (WEF), noted that in WEF’s research during the pandemic, utility responses shifted every six weeks. What was initially seen as a harsh new reality became less harsh as utilities adapted over time. Of particular interest, Liner said, was the effect of the pandemic on flows and loading for water and wastewater utilities.
“As everybody shut down, we saw a massive drop in flows, in some cases,” Liner said. “San Francisco and Portland got hit hard, and Aspen, Colorado went down by something like 70%. But when you look at overall, you know about half the people didn’t have any real change. What happened was more of a shift between diurnal kind of flow and commercial peaks during the day because everyone is spread out to home.”
Liner said this shift then impacts revenues for utilities because the money is coming from residential customers rather than commercial ones. And in the case of most utilities, shutoffs or terminating service due to delinquent bills was not an option, so it created a compound effect on revenue and rates.
The insights Liner provided from WEF’s analyses also align with those of the American Water Works Association (AWWA), which estimates the coronavirus pandemic has had a $13 billion impact on water utilities. Extrapolating that outward, the association estimates that to be an impact of $32 billion on the U.S. economy.
Smart Water & Digital Solutions
While utilities were well-equipped to handle the disruption of the pandemic due to resiliency plans primarily aimed at holding strong during extreme weather events, that did not stop them from looking for solutions to problems specific to the pandemic.
“We thought before the pandemic that there was adoption acceleration occurring in the market at high single digits,” Mize said. “I think post-pandemic, we feel like there’s going to be a double-digit growth in that type of technology space and solutions across the country.”
Colin Sabol, senior vice president and president of measurement and control solutions for Xylem, said the technology providers in the smart water space have identified in the past three to five years where opportunities lie for solving utility challenges. Smart water technologies for years had been in a “push” phase, that is to say providers were pushing these solutions in front of utilities that need them. But due to the challenges posed by the pandemic, that “push” has shifted to a “pull” phase with utilities clamoring for technology. More importantly, customers of these solutions are sharing new ways to use the systems.
“It’s fascinating to watch our customers come together and talk to one another and teach one another about ways to use a system that weren’t originally planned,” Sabol said. “Managing things like storm water flows and detecting where there is clogging at a lift station... They’re really starting to investigate other use cases for the technology.”
Mize, Sabol and Liner all suspected the next core step after data gathering is insight, which will then lead to artificial intelligence and machine learning technologies for further processing and analysis. Liner pointed out one gap that needed to be bridged before reaching that point.
“The water sector has a lot of people that understand the water domain, but we don’t have a lot of data scientists,” Liner said. “There’s a lot of data scientists who don’t necessarily understand the water domain, so the real focus is needing to get the coordination between those two to cross train.”
Race, Income, Diversity & Inclusion
Following the death of George Floyd and the ensuing protests across the country, WEF and AWWA were quick to issue statements of solidarity. WEF President Lynn Broaddus, who assumed the gavel in October 2020 at WEFTEC, noted how far WEF has come in this arena.
“You would have never seen WEF do that two years ago, three years ago,” Broaddus said. “It would be hard to imagine WEF doing that if we hadn’t been doing our homework on what this meant for us and what message we want to be sending to our members, especially those who are really affected most directly by what was going on.”
The issues of diversity and inclusion dovetail with three critical industry terms: water affordability, water access and water equity. The pandemic highlighted the magnitude of these issues as low income communities—which often also are communities of color—were disproportionately affected by the pandemic. Lay data of access to clean and affordable water over those low income areas, and it showcases a strong correlation between the increased spread of the disease, low income and access to water.
In September, the U.S. EPA released the updated Financial Capabilities Assessment, which aims to address financial problems for communities of low and moderate income, specifically as it relates to water and wastewater projects. This update was widely applauded by industry associations and advocates, including the National Association of Clean Water Agencies (NACWA). Kristina Surfus, NACWA managing director of government affairs, said the update has been a long time coming.
“I think the water affordability concerns really raised to the forefront this year in terms of a lot of policy makers concerns,” Surfus said. “There is no silver bullet, but all of these things are continuing to move forward and we’re taking important steps and gaining attention and some traction.”
One Water, One Purpose
Only a handful of days before the U.S. Presidential Election, President Donald J. Trump issued an executive order that established a Water Subcabinet. While this is largely seen as a political move rather than one with substance, it did generate interesting conversations on the policy of water at a national level.
Will Sarni is the founder and CEO of Water Foundry and he consults his clients on water strategies. He said one of the struggles for water in the U.S. is the culture and climate around it. In countries like Israel and Singapore, the culture around water is different.
“Both of them come to mind just because they’ve identified water as this strategic resource for economic development, business growth, ecosystem health and social well being, but also they’ve framed it as a business opportunity, for lack of a better term,” Sarni said.
Liner noted a strong first step toward addressing water from a national perspective would be data reports similar to those that are released by the U.S. Department of Energy on average energy consumed per household, total energy consumed nationally per month, and other useful data points.
“At the federal level, there’s a lot of challenge with respect to data,” Liner said. “We’re very data poor at the federal level. At the individual utility level, we’re very data rich and information poor.”
The two guiding principles if a national water policy were to take off, Sarni said, are direction and unity. One cannot exist without the other.
“Having a clear direction so everyone can row together and contribute their own special characteristics—entrepreneurs, investors, multinationals, the public sector, academic institutions, national labs, national resources like NASA, for example—really taps into all the moving parts in a unified way,” Sarni said.
And that is perhaps a goal to work toward in 2021.