Dec 28, 2000

Stricter Government Regulations Spur Growth in U.S. Water Treatment Equipment Markets

SAN ANTONIO-- More stringent governmental regulations are opening new areas
of growth in the U.S. water treatment equipment (WTE) markets.
Growth in this industry usually comes from increased water demand, but
governmental regulations such as the Safe Drinking Water Act and the Interim
Enhanced Surface Water Treatment Rule are placing pressure on municipal water
treatment facilities to upgrade or install new equipment. As the demand
for new equipment increases, new growth is expected for equipment manufacturers
and suppliers.
According to the new strategic research from Frost & Sullivan, U.S. Water
Treatment Equipment Market, this market, which brought in more than $900 million
in revenue in 1999, is expected to experience increasing annual revenue growth
rates through 2006.
Municipal treatment plants, which will see the majority of the new industry
growth, are turning to private businesses for the needed upgrades. An increasing
number of plants are using a Design-Built-Operate (DBO) contract, where a
private water treatment company takes up the initial financial costs related to
retrofit or new construction work. This company in turn sells the treated water
at a pre-set price to the municipality for several years.
"Growing preference for DBO contracts among industrial end users and
municipalities presents lucrative revenue opportunities to WTE companies that
deploy cost-effective technologies," Frost & Sullivan analyst Matthias
Kubr said.
The DBO contract has several advantages. The water treatment facilities
will be more likely to install advanced equipment, which will have a high
initial cost that will be outweighed by long term savings. End users will
deal exclusively with the contracted company and avoid the hassles of using
multiple companies.
However, this trend may force manufacturers to offer a complete product line
and "one-stop shopping" for their customers. Smaller companies that
are unable to provide this service could see their sales decline unless they can
find opportunities in niche markets.
SOURCE: U.S. Water Treatment Equipment Market