According to the latest ChangeWave survey on water industry trends, tough financial times are causing a dramatic slowdown in planned water project expenditures.
Just one-in-three water industry respondents (33%) say overall spending will increase during the next year — less than half the percentage we saw in our February 2008 survey.
Another 28% say spending will decrease — a 7-fold jump from previously.
The ChangeWave survey, conducted October 16-22, 2008, was composed of 116 respondents who work for companies in the water industry.
The one silver lining in the results is that even though…
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…even though the water spending growth rate is projected to plummet, these respondents still project positive growth — albeit by a very slight margin.
Water Project Slowdown By Region: A Continental Divide
The biggest projected slowdown in water projects is occurring in North America. Only 32% of respondents expect water spending to increase there — a 33-pt drop from previously.
The Middle East (62%) and Asia (59%), on the other hand, are seen as the top regions for increased water spending over the next 12 months.
U.S. Water Spending Trends
Just how far reaching is the projected slowdown for water projects in the U.S.?
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Industry respondents see all major U.S. funding sources slowing their investments going forward — including private, federal, state and local government investments.
Moreover, when asked specifically about the U.S. recession, respondents believe it will have the biggest negative impact on Local (Net Score = -41) and State (-37) government spending.
Winners and Losers in the Water Industry
Regardless of the slowdown, Water Infrastructure Repair and Replacement is seen as the biggest relative winner in terms of spending over the next two years — with 72% of respondents saying it will attract the Most Spending and just 10% saying it will attract the Least Spending (Net Difference Score = +62).
Wastewater Treatment (+28) and Water Filtration (+11) are also seen as beneficiaries of water spending.
On the downside, Desalination (-33) is seen as attracting the least spending.
We also asked respondents which companies in the water industry should be on our radar screen, and for the second consecutive survey…
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…General Electric (GE; 31%) ranks as the top company.
Here are the other best positioned companies in the opinion of our industry respondents — broken out by specific sectors:
Sector #1: Water Infrastructure
Best-Positioned Companies: General Electric (GE), Veolia Environment (VE), Fluor (FLR)
Sector #2: Water Filtration
Best-Positioned Companies: General Electric (GE), Calgon Carbon (CCC), Siemens (SI)
Sector #3: Consulting, Engineering & Construction Services
Best-Positioned Companies: General Electric (GE), Fluor (FLR)
Sector #4: Equipment
Best-Positioned Companies: Flowserve (FLS), Gorman-Rupp (GRC), Calgon Carbon (CCC)
Sector #5: Utilities
Best-Positioned Companies: American States Water (AWR), Veolia Environment (VE)
Bottom Line
Getting back to the dramatic slowdown in water spending — will the economic recession end up drastically hurting the water supply?
The verdict’s not in yet, but hard economic times are having a huge and growing impact on the water industry — and there’s no relief yet in sight.
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