U.S. Water adapts to the changing water market with acquisition of Tonka Water
Last fall, U.S. Water expanded its business with the acquisition of Tonka Water, a supplier of municipal and industrial water and wastewater treatment systems. U.S. Water Chief Executive Officer LaMarr Barnes spoke with WWD Managing Editor Bob Crossen about the acquisition and what is on the horizon in the municipal and industrial markets.
Bob Crossen: Tell me about this acquisition and what it means for your company.
LaMarr Barnes: The acquisition of Tonka Water and making them a part of U.S. Water provided several advantages that made it attractive to us. First off was the additional offerings that it adds to our engineering and equipment capabilities. The additions include designing and building larger clarifiers and filter systems. U.S. Water’s equipment manufacturing capabilities are more concentrated in membranes and filters, ion exchange, etc., so broadening our internal capabilities was an important opportunity for us. The municipal drinking water market was a market that we were not focused on at U.S. Water, and Tonka Water provides an additional channels into that market for us.
Crossen: What trends in the municipal market influenced the acquisition and your decision to make this move?
Barnes: It’s both the municipal market and the addition of the capabilities to the industrial market, so it’s both sides of that. The municipal market is a steady growing market. It’s fairly predictable for us, and Tonka Water provides a full solution set in that market, which matches up with what we do and what U.S. Water had been doing in the industrial market. There’s good synergies between the companies. We can make each other stronger with the municipal market. Part of the other equation was to better serve the larger water and water reuse projects that we were involved with in the industrial market, and we continue to see strong growth in that space.
Crossen: On the industrial side, are there aspects that you’re excited to move toward?
Barnes: What we generally see in the industrial space is continued growth and demand for complete solutions for water treatment, and especially water reuse projects with broadening industries participating in water reuse and new challenges developing all the time. There also are new contaminants of concern or new types of industries that are experiencing water stresses that have brought them to the point of looking at new solutions, so we anticipate growth in water reuse
Crossen: How is U.S. Water adapting to new trends?
Barnes: We’re looking to add capabilities that have brought U.S. Water and Tonka Water together. Right now, while we do some aerobic waste treatment-type systems, that’s not really been a sweet spot for us, but we see an increasing demand for that in the industrial market as part of our water reuse projects, so we’re adding capabilities. It’s a little bit of staying even with or a little bit ahead of the market in capabilities when we look at the engineering or equipment side of our business. Two-thirds of our company is traditional water and process chemistries used in conjunction with our equipment projects, so on the chemical side, it’s finding new chemistries to address things like eliminating phosphorus from cooling water treatments or finding a better method to reduce deposits in oil and gas pipelines.
Crossen: What goals does U.S. Water have for 2018, and what strategies are you looking to implement to achieve them?
Barnes: Our main focus for 2018 is to continue to grow the company. Our business model is integrated solutions, which means providing complete water solutions for our customers—not just one part of it, not just one unit operation, not just chemistry, but really looking to solve their overall problem with the best possible solutions that we have. To be a solutions provider, we really have to continually innovate ourselves and look for new market entries that we can include in our portfolio even if it’s not something we develop ourselves.
Reuse by Way of Regulations
The popularity of water reuse varies from region to region, as geography plays a large part in water scarcity. California, for instance, has several water reuse applications as it plods through a lengthy drought. LaMarr Barnes said other areas of the U.S. Southwest, like Texas and Arizona, have also experienced droughts and tighter regulations on water use.
“The regulatory environment continues to favor water reuse, and in some states, like Arizona, they are moving people towards using impaired water sources instead of freshwater sources for industrial use,” Barnes said.
While that regulatory framework is the greatest motivator for water reuse applications, Barnes said societal expectations on large companies also play a part. Consumers and the public like to see companies becoming more sustainable and environmentally conscious.
When it comes to industrial companies discharging water, conscious efforts to make sure that discharge does not impair local drinking sources is an area of business growth for companies like U.S. Water.