Diversity is firm's strength
Eimco Water Technologies recognised the growth in the water market and hit the trail to acquire new companies as part of worldwide expansion and diversification. The result is the company can now provide truly integrated solutions for projects.EIMCO WATER Technologies (EWT) is a relatively new name on the European water scene, despite the fact it has been around for more than four years. The name was born of the amalgamation of Eimco, Dorr-Oliver, Brackett Green, Jones & Attwood, Copa, Enviroquip, Wemco and Caird & Rayner Clark.
Eimco, originally a mining business, is part of pulp and paper group GLV. It was the pulp and paper activities that led GLV to diversify into the water sector, and the creation of Eimco Water Technologies. In 2008, GLV finalised a carve-out transaction of its net assets in the mining and processor sector. Recognition of the growth in the water market led to the company, which specialises in equipment used for treating municipal and industrial water and wastewater, and large-scale water intake and industrial effluent, hitting the acquisition trail.
Jerry Thorne, regional marketing manager, Eimco Water Technologies, explains: "That's when we picked up Jones & Attwood, Brackett Green and Copa among others."
Eimco Water Technologies bought screening companies Jones & Attwood and Brackett Green four years ago. Two years later, Copa was added to the Eimco portfolio. Thorne says these three companies have now bedded down into the water treatment group, but EWT is still on the acquisition trail, and for companies in different sectors to municipal water. The company names are now brands within EWT's product offerings.
"There's a strategy to grow the business significantly," explains Thorne. "One way of growing the business is through acquisitions, and some of these are going to be in different markets to our core municipal sector."
As a result, EWT is targeting the industrial sector - water treatment in the food and beverages sector, for instance, is a growing market, says Thorne.
The company has also been looking abroad. Last summer, it bought an Australian company specialising in water treatment for the food and beverage sector. "We're bringing that technology into Europe."
Thorne says that EWT has two main focuses now - the industrial sector, and the overseas business in Europe, the Middle East and Africa.
"There's a recognition that the AMP cycle's coming to an end pre AMP5. There's also a recognition that the municipal market has seen a downturn in business earlier than it would normally have done," says Thorne. "Our diversification has overcome the traditional peaks and troughs of the AMP cycle, and our strategy to develop the overseas market is exceeding our expectations."
Thorne says the aim is to grow the business in Europe, the Middle East and Africa.
Eastern Europe has been another region targeted.
With the introduction of the new AMP5 cycle just more than a year away, the water companies have been reviewing their outstanding AMP4 work - what projects to work on and which to defer to AMP5. While this stance is not unusual when AMP cycles are changing, the industry's supply chain agrees the process has arisen earlier than expected.
Thorne does not disagree: "It's a year earlier than we had expected. It's come early.
Typically you go through these AMP cycles, and the last three years would be the busiest and perhaps leading into year one [of the new AMP cycle] which is the carryover of contracts that haven't been completed.
"That would be the boom time for us. The slack time is when the consultants are in building up for the next round of projects you don't see until the second year onwards."
Thorne continues: "What we're seeing right now is that the water companies are just not spending the money. They're deferring contracts to the next AMP period. We've had contracts cancelled until the next AMP period or postponed until further notice.
Despite this, Thorne says the company's after-market activity is growing. "We've recognised that there's a market place for aftersales, plant operation and maintenance as part of our industrial growth. This is a service we are providing and the spin from that is that we're rolling that out to the municipal market."
But Thorne says the municipal sector is different to the industrial sector because the utilities already have their operational teams in place. "The service is there, but we're not expecting any major returns - it's the industrial side where we'll see that."
The core businesses of Copa and Jones & Attwood were in the municipal sector while Brackett Green's was in municipal and power - cooling water intakes for instance. But Thorne says they were not heavily reliant on the UK markets. "We're in a stronger position to grow the overseas business, and that's exactly what we're doing successfully."
It is also why the company is keen to expand the industrial water business and "if we haven't got the in-house skills or products we'll buy it".
EWT is likely to acquire companies, rather than pursue organic growth, because "it's a quicker way to get a return".
The industrial sector is very different to the municipal side, says Thorne. He says that there are a lot of companies specialising in one application.
"For us to go into that market place as the new company is quite difficult and will probably take two or three years. Using the acquisition route or taking on board those people with the specialist skills opens doors quicker."
Thorne says that a lot of industrial companies are concentrating on water re-use, and EWT has supplied a lot of membrane technology for that. A couple of projects the company has been involved with have been within the abattoir and dairy industries. "They have been looking at water re-use and we've got a couple of good projects where the companies are re-using large amounts of their wastewater," he says.
"That's what's driving it for us on the membrane side."
Water reuse is also where EWT's Australian business, AJM, comes in on the screenings, polymer blending and process systems side.
"This is what we've got to push out to the market - DAF systems, for example."
So what does the future hold for Eimco Water Technologies? Thorne says: "We are already seeing a lot more business coming in from the European operations, the Middle East and Africa operations. At the moment, probably 75% of that business comes from the UK. There should be a swing to 70/30 in favour of the overseas business."
Thorne says that being part of a bigger company helps in outsourcing.
He explains: "We've got operations spread around the world in 30-plus countries so manufacturing in India and China is not a problem for us. We can call on that resource, and it gives us a bit more flexibility, and gives us the ability to be more competitive."
The majority of EWT's manufacturing is overseas, with the UK concentrating more on assembly work, says Thorne.
On the wastewater treatment side, Thorne says the company covers the "whole process train of wastewater treatment - from managing the flows in the sewerage network under the SUDS umbrella right through to the inlet works of the sewage treatment plant to treating it so that it's virtually reusable water".
Within EWT's product portfolio it has conventional treatment equipment range and state-of-the-art membrane technology. "Then there's sludge treatment. That's an interesting one. We're doing a lot of work in anaerobic digestion and energy recovery from sludge. That leaves sludge drying, which we don't do a lot of at the moment."
EWT has about 65 different technologies within the business and no longer considers itself to be just a product company. Copa, Brackett Green as well as Jones & Attwood were product specialists.
Now, says Thorne, EWT specialises in providing integrated solutions for projects from start to finish. "That might mean we look at a project and select technology from our portfolio or we will select it from another company. So we integrate the whole project from feasibility design to build and operate."
This is definitely the way the company is progressing and two recent contract awards totalling more than £11M are evidence of this, says Thorne.