Chemicals industry expected to increase spending on water treatment equipment by nearly 30% in seven years

The chemicals industry, the water and wastewater treatment equipment sector’s largest industrial client base, accounting for 24% of customers, is expected to increase its spending within the sector in Europe from US$319 million (£221 million) in 2000 to nearly US$410 million (£284 million) in 2007.

According to a new report by international marketing consultants, Frost and Sullivan, the chemicals industry requires a high level of water quality in incoming water, used for manufacturing, washing, cooling or heating, in order to measure resistivity and pH levels and to minimise the level of pollutants such as suspended solids. Mounting legislative pressure also requires that polluted effluent should receive sufficient on-site treatment. Companies are also often keen to reinforce their environmental image, and benefit from the cost advantages of efficiency improvements, both of which will add to growth in the market, and are prompting customers to take on large one-off investments in complete upgrades, says Frost and Sullivan.

“Due to the diversity of on-site demand, annual investment levels in maintenance and replacement purchases span a wide budget range,” said Frost and Sullivan Research Analyst Saana Karki. “Expenditure ranges from a minimum of around US$300 (£208) to US$2 million (£1.4 million) for the largest plants in Europe. This clearly highlights the breadth of tantalising opportunities the chemical sector boasts for suppliers of water and wastewater treatment equipment.”

“The approaching maturity of the [chemicals] market has expanded manufacturers’ interest in cost-efficient solutions for recycling wastewater at all stages of the production chain,” added Karki. Waste minimisation is also important, she says. “Customers are also exploring methods of recovering wastewater pollutants and, through the application of chemical stripping procedures, reclaiming relevant substances back in the production process or up-selling specific types of chemicals.”

Firmly established relationships between suppliers and customers are important as there is a high level of loyalty to existing suppliers, according to the survey. A prominent regional presence is also important for suppliers, with companies such as the French firm Degrémont having a high level of brand recognition in Europe. Nevertheless, the lack of willingness of customers to consider changing suppliers has led to a crippling of future supply-side evolution, restraining market penetration, says Frost and Sullivan. “This trend is a challenge for suppliers, mainly being offset by improved servicing and more proactive up-selling of beneficial and cost-efficient upgrades,” said Karki.

On the downside, criticisms from customers include lack of specialised supply, price concerns, delivery failures and insufficient services, as well as both passive and active sales. “Passive supply nurtures a lack of customer involvement, destroying long-term supply confidence and market awareness,” explained Karki. “This has become one of the key threats facing the industry. As a growing number of suppliers are beginning to provide added customer support, those market participants that fail to deliver such benefits are likely to be outperformed. Still, many customers continue to experience a nearly nonexistent supply relationship.”

It should also be noted that many customers are skilled engineers, which means that over 23% of water and wastewater treatment customers merely buy a product and take care of the installation and maintenance themselves.

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