Amane’s Bill Malarkey gave an interview to The Water Center at the University of Pennsylvania on global water industry trends. Under the leadership of Howard Neukrug, PE, the former Commissioner and CEO of Philadelphia Water, The Water Center at Penn has the vision of becoming the preeminent center for the advancement of innovative urban water strategies that create integrative real-world solutions for our shared water problems. Having just opened our North American office in the Philadelphia area, Amane Advisors is extremely supportive of this important mission for the region.
A: It’s encouraging to see digital starting to make inroads in the way people do business. Although digital in some ways is still a buzzword with people having their own ideas of what digital means, there were some concrete examples there of how digital is working in real life. One example is remote monitoring and maintenance where a technician with a virtual reality headset is guided by colleagues who can see what he sees and guide him in how to fix a problem. Also, it was great to see that attendance was much larger than at previous conferences.
A: Clients are searching for how to change their current business model. They realize they need to create an ongoing link to customers and provide value added services. It’s no longer enough just to sell products. There is increasing understanding that providers have to listen more, figure out what their clients need in different segments and different regions and then find more customized solutions. We see this trend with equipment and technology providers that are now becoming service providers.
A: There is a lot more interest in mobile or semi-mobile treatment applications, especially for industrial water and wastewater treatment. On the municipal side, utilities are now seeing that they also need resiliency. They can’t rely on a single source of water anymore. Of course bringing in new sources can be expensive which comes back to the question, “Who is going to pay for it?”.
A: Trying to make sure people understand the value of water is difficult, but it can be done. San Francisco and Washington, DC are examples of municipal utilities that have been successful in explaining to customers what they are paying for when it comes to water and sewer service. When a system is first put in, people have to pay for it. That’s OK because the system is new and people expect to pay for it. It’s much more difficult to update a system because people don’t see the system and it’s no longer new. But ultimately the price of water must go up. This past year was the first year in the last 10-15 years that water-price increases in the US didn’t match inflation. It’s a strange dynamic that people have no problem paying for other things they need like electronics but don’t think about water in the same way.
A: Yes the trend will continue. There are advantages with scale and companies are seeing that they can add to their offerings more quickly through acquisition versus developing new technology themselves. This aligns with the trend of trying to figure out a new business model. Right now the market is barbell shaped with big companies at one end and lots of small tech companies and small utilities at the other. Also, there is a lot of private equity interest. Private equity firms are realizing the value of the water industry and that the demand for solutions to water problems is going to go up due to issues like increasing water scarcity and the increasing number of pollutants being regulated. But you have to have patience. The water sector is a good long-term value and a great place for patient money, not for people only looking for a big short-term gain.