Stricter governmental regulations have spurred new areas of growth for the U.S. water treatment equipment (WTE) markets. Legislation - such as the Safe Drinking Water Act and the Interim Enhanced Surface Water Treatment Rule - has been urging municipal water treatment facilities to upgrade aging equipment.
According to recent research by Frost & Sullivan, the WTE market brought in more than $900 million in revenue in 1999, and is expected to increase its annual revenue growth rates through the next five years.
Treatment plants are seeing the majority of growth, and are turning to private businesses for needed upgrades. Several plants are using a Design-Build-Operate (DBO) contract, in which a private water treatment company pays the initial financial costs related to retrofit or new construction work. The company then sells the treated water at a pre-set price to the municipality for several years.
Growing preference for DBO contracts presents profitable opportunities for WTE companies that use cost-effective technologies, says Frost & Sullivan analyst Matthias Kubr.
With DBO contracts, there is a high initial cost that is outweighed by long-term savings. Without having to use multiple companies, water treatment facilities are more likely to install advanced equipment.
This "one-stop shopping" may be a barrier for smaller companies unable to provide complete product lines. But they could find opportunities in niche markets.