By Carlos David Mogollón, WC&P Executive Editor
Following is the second installment of our series allowing Water Quality Association (WQA) members to express themselves on what they would view as an ideal association. The series began in the January issue with the views of Pentair’s Jorge Fernandez, Innowave’s Jenny Christensen, Gerry’s Water Conditioning’s Gerry Dierolf and Troy Ethen, formerly of Spectrum Labs. The series will conclude next month, which is when the WQA Strategic Planning with the assistance of consultant Lynn Kahn will present its final report—a blueprint for the future of the point-of-use/point-of-entry water treatment industry association.
President and chief operating officer, Osmonics Inc., and a past WQA president—In 1987, I joined the water treatment industry and quickly developed an appreciation of the Water Quality Association and its efforts on behalf of the household water business. At that time, the association had its hands full in a continuing struggle with legislation and regulations aimed at restricting the role of the point-of-use/point-of-entry (POU/POE) industry. The industry was under attack on state and federal levels and by other facets, all with far greater resources than the WQA. I immediately became active, serving on various committees, the board of directors and the board of governors and, in 1994, I was elected president of the association.
In looking at the history of our industry, I became familiar with its evolution. In the 1940s, the Water Conditioning Foundation (WCF) was established to advise the fledgling industry in matters pertaining to manufacturers and suppliers. During the same time frame, the Water Conditioning Association International (WCAI) was formed to represent dealers and retailers. The ’70s saw rapid growth in the household water treatment industry along with increasing challenges. To address these challenges and opportunities, it made sense to merge the WCAI and WCF into a single entity to give the industry a single, stronger voice—namely, the Water Quality Association.
Now, as in the ’70s, our industry is changing and even more dramatically and rapidly than ever before. Larger scale changes, both in the marketing and distribution, are occurring every day. The “face” of the industry looks very different than it did when I first entered it… and we, our association, must be in a position to embrace and capitalize on these changes for the future.
During the past several years, our industry has seen a rapid consolidation through mergers and acquisitions, for example, as USFilter purchased and consolidated many of the larger water companies such as Culligan, Davis Water and Memtec. Conglomerates GE and Ondeo bought chemical firms such as Betz-Dearborn and Nalco, respectively. Osmonics bought valve manufacturer Autotrol and Pentair purchased valve manufacturer Fleck Controls. And Sta-Rite acquired tank manufacturer, Park International. Consumer companies entered the industry with Procter & Gamble buying Recovery Engineering (PUR) and Clorox acquiring Brita’s North American operations, driving more household products through mass retail. Even dealerships weren’t immune as manufacturers bought them and turned them into company stores.
Is the consolidation of the water treatment industry over? Not in my estimation. It’s very likely we’ll see many more acquisitions and mergers because many see the water business as having great potential for economic opportunities and growth. As in 1974, when it made sense to merge the WCAI and WCF into the WQA, we must again ask: “How can the WQA structure itself to best serve the rapidly changing ‘face’ of our industry?” At this juncture, it is not a question of “if we should change” but “how fast can we develop a viable plan and structure that will meet the realities of the new marketplace? ” A study team has been established by the WQA Board of Directors to recommend what must be done to meet these new challenges. I feel personally honored to be a member of this study team as we prepare our recommendations to be presented in March 2003.
As a great orator once stated: “We have nothing to fear but fear itself.” We should not fear changes impacting our industry but look at them more as a great opportunity for the WQA to step forward and provide industry leadership.
President of Aqua Focus Ltd., of the United Kingdom, and past chairman of Aqua Europa, the European federation of national water treatment associations—Why belong to a trade association anyway?
Invariably, a company joins a trade association expecting benefits in the form of a more secure or broader-based business prospect—not unreasonably, there needs to be a return on the subscription investment. This expectation may be in terms of improved company image, or credibility, by use of the association logo—or communication in the form of market knowledge, technology and intelligence. But perhaps the more stable membership of a trade association is among those with the longer-term perspective that seek to protect their member businesses against restrictive regulation or trade barriers, and seek to promote the reputation and integrity of the industry.
The motive is therefore essentially self-centered—but a fundamental principle of trade association activity requires that the objectives of the association must be those of the collective membership. Manipulation of the activities by one company or organization to the benefit of its own ends will, sooner or later, be recognized and countered.
On the other hand, one of the main pitfalls of trade association management is trying to be all things to all people—satisfying nobody. The cause is often too wide an agenda and the only consequence can be to scale down or focus on the targets. Where there is apparent conflict between aspirations of sections of the association, consideration will inevitably be given to de-merging the sections that conflict with the perceived core. Experience suggests that this will probably be disadvantageous to one if not both sections.
Within British Water (the trade association for both national and international activities of the UK water treatment industry covering municipal, commercial and industrial water and effluent treatment), the Quality Water Group was the sub-committee covering water treatment equipment for the home. Although membership had fluctuated, this had been a well-represented and enthusiastic group for many years. The aspirations of the group developed toward greater support for, and membership of, the dealer sector of the industry—with increased demand for media publicity. The British Water Board was uncomfortable with this change in direction and the conflict culminated in the disbanding of Quality Water Group. As yet there has been no effective effort to replace it and its absence is a sad omission in the UK market. This increasing fragmentation of the industry’s association activities is further evidenced by formation of new associations, i.e., UKPWCA (UK Physical Water Conditioner Association) and the EPDWA (European Point-of-Use Drinking Water Association). The latter was formed by a group of companies supplying plumbed-in, water-cooler systems. In both cases, they were formed because the sector felt that its agenda was not adequately represented elsewhere.
This fragmentation diminishes the collective resources available for pursuit of the common objectives and it reduces its credibility in the eyes of the government bodies that the industry seeks to influence, not to mention past and prospective members.
The “Catch 22” is that a trade association needs strength of numbers to be able to afford the resources to be effective, and it needs to be seen to be effective in order to attract—and maintain—the membership. Other than in perhaps the United States, the market penetration for water treatment equipment in the home is still low. In an industry that’s still struggling for recognition internationally, the need is to consolidate—not partition. With the events that beset the European market, there’s an urgent need for a strong and well-represented international association that reflects the interests of the industry as a whole. But such an association would have to be overtly internationally managed to demonstrate true independence—and with a clearly defined mission.
Evan Koslow, Ph.D.
President and chief operating officer of KX Industries and a member of the WC&P Technical Review Committee—Two trends are taking place that contributed to a weakened state for the water industry in general and the WQA in particular. The first trend is the impact of mass retailers that increasingly control a significant segment of the consumer water treatment business. The second is the steady consolidation of the industry at the dealer level and manufacturing level. The result is both a reduction in the number of industry participants committed to the water industry and a dilution by players with only modest commitment to the industry.
Water treatment products are increasingly sold through routine retail channels, not only the mass marketed small carafe and end-of-tap filter products, but also the larger counter-top, undersink, and POE water softeners and reverse osmosis (RO) units. These are sold at do-it-yourself (DIY) outlets such as Lowes, Sears and Home Depot as well as numerous retail chains. These “big box” retailers have neither the resources nor the inclination to directly support the thousands of industries that sell their products through these channels. As they absorb greater volumes of the water industry retail dollar, we should not expect these companies to support the industry.
At the next level are those firms that make water treatment systems and components; however, the number of these firms has been greatly diminished by a series of mergers and acquisitions that have consolidated dozens of former WQA component suppliers and systems assemblers (all strong WQA supporters) into a small number of large conglomerates. While the industry’s structure was dominated by small privately held, often family-owned, businesses in the 1980s, this has been replaced by industrial “clusters” such as USFilter, Sta-Rite Industries and the Marmon Group. These firms all strongly support the WQA, but now there are only a few players, where once dozens of independent family-owned firms existed.
Finally, it seems clear the dealer networks have entered a period of stress, caused by a natural conflict with the large firms who cannot neglect their position at retail and who are anxious to consolidate their control in the form of company-owned stores. The slow reduction of dealers by competition and absorption into the parent firm has been under way for years. I don’t wish to neglect those dealer networks that have resisted this trend in the face of withering competition, but these firms will also face the eventual pressures of mass marketing and giant retailers.
The WQA is an industry jewel, but it’s placed within a corroding setting. The main trade show has fallen short in recent years as a result of attrition and absorption. It is less relevant as dealers become a smaller element in the market and retailers—who won’t attend the show—gain increasing control. Indeed, the industry will perhaps become too small to support such a high-quality organization.
We might wish to consider an alliance with other industry organizations similar to that between INDA and AFS—Association of the Nonwoven Fabrics Industry and American Filtration and Separation Society. Alternatively, WQA might be forced to greatly reduce its scope and activities—a disaster for those who continue to participate by traditional means within the industry (dealers and manufacturers). The financial support of WQA may need to be replaced by a revised financial formulation based upon the size of each participant.
Who would replace the WQA’s technical knowledge, their capable lobbying effort on behalf of our industry, their communications and coordination of industry policy, their advice regarding standards, their liaison with other industries (plumbing industry for example), their laboratory services—or even this fine independent magazine? To prevent such a loss, even the largest industry players, often those who feel themselves large enough to be isolated from the “goings on” with-in the industry, should take note that they survive within a world created and sustained by organizations such as the WQA.
Peter S. Cartwright, P.E., CWS-VI
President of Cartwright Consulting Co. of Minneapolis, and a founding member of the WC&P Technical Review Committee—In order to inject renewed vigor and financial stability into the Water Quality Association, I feel that reorganization is necessary. If we assume that the basic structure of the WQA is oriented around the manufacturers, then the manufacturers—whether U.S.-based or not—should be the linchpin of the WQA with subgroups or divisions consisting of the following: dealers, mass merchandisers, commercial/industrial users and interested parties. These subgroups are defined as follows:
- The dealers would be the existing dealer organizations, as we know them now, including overseas dealers as well.
- The mass merchandisers would be such organizations as Sears, GE, Whirlpool, Home Depot, Lowes and other major retail outlets.
- The commercial/industrial users would be those involved with water treatment as part of an operation whose main business is not directly associated with water. These would include boiler and cooling tower operators, pharmaceutical and semiconductor plant water and wastewater engineers and the like. In my opinion, many of these people now feel disenfranchised—”out of the loop”—and desire a forum to increase their technical knowledge and simply exchange viewpoints with their peers. I am not aware of any current organization that encompasses all aspects of water and wastewater treatment without restrictions as to the final water quality requirements
- Under “interested parties,” I would put regulators, consulting engineers, academics and others for whom water treatment may not be their prime source of income. This is basically the audience for the Water Quality Society.
With the movement of water quality issues toward a total system approach as opposed to individual technologies, the Water Quality Association is well positioned to emphasize this “water quality improvement” aspect of its written philosophy to all segments of society in an organized and comprehensive fashion.
What I’m suggesting will require that the WQA expand its scope to a greater portion of the water universe including wastewater treatment. But if its emphasis will be on technology-based approaches in creating total treatment systems to achieve a desired water quality, the distinction between water purification and wastewater treatment begins to blur.
We have the opportunity to create an organization that can offer much-needed education in all water and wastewater treatment technologies, without limitations to end-use requirements (such as drinking water or ultrapure water). This organization can provide a unified voice in regulatory issues and help direct research and development efforts to meet the constant and ever-changing demands of this dynamic industry.
All this will require that the WQA reach out in new directions, but I feel that the needs are there, and this organization has the infrastructure in place to “seize the moment. “