The biggest growth will be in outsourcing the operation of municipal and industrial treatment systems. Presently, the cost of operating systems is $172 billion. This will climb to $242 billion in 2010. Suppliers are selling repair parts worth $30 billion, and outsourcing and other services valued at $6.9 billion. But the outsourcing segment will grow at more than 10 percent per year over the next six years. By 2010, the supplier share of operating revenues will climb to 26 percent ($63 billion) - up from only 21 percent now.
Sales of chemicals will grow from $15 billion now to more than $21 billion in 2010. System and product sales will climb from $70 billion now to $99 billion in 2010.
Process treatment is the largest application segment. The present cost of owning and operating systems that filter or treat blood, fruit juice, wine, chemicals, paint, boiler feed water or chip-rinsing fluids is $75 billion.
Municipal wastewater and municipal drinking water account for nearly $50 billion each. Industrial water accounts for expenditures of $47 billion, while industrial wastewater costs are less than $30 billion.
There are growing numbers of companies that are pursuing most aspects of the entire market. GE and Siemens are two recent entries into the field. Both are positioned to supply services and outsourcing, particularly in the industrial sectors. Siemens purchased USFilter from Veolia (formerly Vivendi). This French company was the world's largest operator of municipal water and wastewater plants as well as the largest supplier of filtration equipment. Suez is another French company that has retrenched in the field. It sold Nalco to private investors who, in turn, presently are making a public offering for this large water and wastewater treatment chemicals company. Therefore, the trend is toward industrial outsourcers combining with equipment and product companies, while municipal outsourcers are divesting themselves of these supplier companies.
Another trend is toward the acquisition of companies in this field by companies in flow control. The world market for valves and pumps is more than $60 billion. Nevertheless, this is small compared to the treatment market. ITT, the largest supplier of pumps, has acquired filtration companies and, therefore, now is participating in a present market (flow control plus treatment) of $180 billion per year.
This market will continue to grow at a rate greater than the GNP. Certain segments - such as membrane treatment and instrumentation - will grow at double-digit rates. There is tremendous potential for remote control and more efficient operation of both industrial and municipal plants. The development of smart sensors, advanced process control engines and other software will drive the outsourcing growth.
For more information on “Water, Wastewater and Filtration,” click on www.mcilvainecompany .com/water.html.