Many multinational companies, not traditionally associated with the water industry, are now moving into the market, attracted by prospects of long-term growth. We take a look at the companies developing new business in water technology.

In an interview with Waterbriefing in May, Paul O’Callaghan, CEO of O2 Environmental and BlueTech Research, said there were two types of firms entering the water sector: companies sitting on large cash reserves and taking a long-term strategic view; and those with core expertise in fields such as advanced material science, biotechnology or filtration – expertise that can competently be applied to the water market. The new entrants define their ‘right to play’ by focusing on their strengths and entering market areas where they fit.

A speaker at the recent BlueTech forum held in Amsterdam succinctly explained why many multinationals are moving into the water technology space. The industries they are involved in are very water intensive, and if they develop or obtain new technologies in order to reduce their own costs, they can then sell the successful technology to others.

An interesting range of factors lie behind the strategic aims of the multinationals moving into the water sector.

Bilfinger

International engineering and services group Bilfinger struggled in the first three months of 2013, particularly in its construction business due to the particularly harsh winter in Europe and a continued lack of economic impetus in Europe, where it generates 80 per cent of its output volume.

Despite a challenging economic environment, Bilfinger said it has made “important progress” in its acquisition strategy. In February, the German company took over US water technology specialist Johnson Screens, adding another component in the “internationalisation” of its business. With the acquisition, Bilfinger has doubled its output volume in the water and wastewater business to more than €300 million, and has become a globally leading supplier of components and services for nearly all aspects of water and wastewater technology.

Bilfinger will supply Johnson Screens products for use in the purification of drinking water, in the oil & gas industry and in other industrial sectors for the treatment of wastewater. The acquisition of Johnson Screens will allow Bilfinger to continue its growth strategy in the field of water and wastewater technology. In the autumn of 2011, the Group acquired Diemme, a specialist manufacturer of chamber filter presses based in Lugo, Italy.

Outotec

Metal processing technology Outotec has also recognised the positive mid-to-long term market outlook for industrial water treatment. The Finnish firm has identified the need for sustainable technology, due to tightening environmental regulations, increasing energy efficiency requirements and the scarcity of fresh water.

It sees that “many developing economies are investing in domestic production capacity in order to capture more value from their natural resources. All in all, industrial companies are increasingly focusing on the social and environmental impacts of their operations and this increases the demand for sustainable processing technologies.”

In April it announced a collaboration with fellow Finnish firm Kemira, among others, to address issues related to industrial water consumption in Russia.

Kemira

Chemicals giant Kemira has recently said it will invest in innovation, technical expertise and competencies as it looks to move into the expanding market for the chemicals related to water quality and quantity management.

Research and Development is a critical organic growth enabler for Kemira and it provides differentiation capabilities in the water quality and quantity management markets.

Kemira has recently acquired Italian firm 3F Chimica, which produces polymers and flocculants used in wastewater treatment and sludge dewatering and thickening, to increase its capabilities in the wastewater treatment, oil & gas and mining sectors.

Lockheed Martin

Sometimes the gap between a company’s recognised expertise and its new presence in the water market seems quite large. In March this year, defence contractor Lockheed Martin was awarded a patent for Perforene material, a molecular filtration solution designed to meet the growing global demand for potable water.

“Access to clean drinking water is going to become more critical as the global population continues to grow, and we believe that this simple and affordable solution will be a game-changer for the industry,” said Dr. Ray O Johnson, Lockheed Martin senior vice president and chief technology officer.

The Perforene material works by removing sodium, chlorine and other ions from sea water and other sources. Lockheed claims it makes sea water desalination more effective at a fraction of the cost of industry-standard reverse osmosis systems.

Other applications for the Perforene material are being explored, such as separating proteins for biopharmaceutical use and removing chemical substances and compounds from water used in oil and gas wells.

The company is currently seeking commercialisation partners.

Mahle

In January 2012 Mahle acquired fellow Germany company InnoWa Membrane GmbH, which specialises in the development, application and manufacture of high-performance filter systems based on membrane technology.

InnoWa’s hollow fibre membranes for ultrafiltration are used as a process step in the treatment of drinking water from rivers, surface waters, or springs, and as a preliminary step in sea water desalination. According to Mahle, the technology allows even minuscule particles such as germs, viruses, and bacteria to be filtered, opening up additional areas of application – for example, in home and building services engineering.

Mahle was already an established manufacturer of filtration solutions for a broad spectrum of industrial applications, though mainly in the automotive industry. “By acquiring InnoWa Membrane, we are opening up new areas of application for our company in the field of filtration, such as the increasingly important segment of water treatment,” said Dr. Michael Matros, Corporate Executive Vice President and General Manager of MAHLE Industry.

The integration of InnoWa Membrane into the Industrial Filtration division created a new platform within MAHLE Industry with a focus on water treatment.

Fujifilm

Many Japanese corporates now have water technology portfolios but a relative newcomer is Fujifilm - specifically its Manufacturing Europe division in Tilburg where photographic materials are produced. Aside from the production of photographic material, Fujifilm Tilburg develops new products for existing and new markets. With the development of ion exchange membranes Fujifilm wants to provide cost effective solutions for water purification problems.

Based on its long standing knowledge in coating thin functional layers onto substrates, Fujifilm is developing separation membranes for various industries. The first achievements of Fujifilm membrane technology are in the field of water purification, where ion exchange membranes are increasingly competing on price and performance with conventional techniques. With these membranes Fujifilm said it aims to meet the stringent purification demands in water desalination, power generation and the chemical industry.

Johnson Matthey

In its annual report and accounts for 2013, chemicals company Johnson Matthey identifies the major global drivers - environmental regulation and climate change, natural resource constraints, population growth and increasing urbanisation – that support the demand for more industrial water purification products and effective technology solutions.

Matthey says it has identified “good prospects” within the “niche specialised processes area” of the water industry and has established a business team to conduct further research into opportunities.

It currently forecasts sales from water purification products of about £10 million per annum by 2017, followed by rapid growth as new products are brought to market. A sixth (£1 million) of its business development budget is currently being spent on water purification.

It is focusing its R&D efforts on technology to remove a range of low level toxic contaminants, including mercury. “With strong demand for more effective water purification technologies, we are applying our R&D expertise to develop a new generation of products to improve water quality.”

The company adds:

“Although the water industry represents a new area for Johnson Matthey, it offers opportunities for growth through the development of high technology products.”

Mann + Hummel

In April 2013, global filtration company Mann + Hummel increased its presence in the water filtration market with the creation of Mann+Hummel Water Solutions GmbH.

All purchases and sales of water filtration products in Europe will now take place through the newly created company, situated in Germany. The firm is a subsidiary of Mann+Hummel’s water solutions arm, based in Singapore, and the new company in Europe “will help increase our foothold in the water filtration market”, Mann+Hummel said.

Mann+Hummel originally entered the water filtration market in 2009 and acquired a Singapore membrane specialist Ultra-Flo Pte Ltd on 1st September 2010. It established its Water Division to “provide better services to worldwide clientele answering the needs for reliable and cost-effective clean water systems.”

BASF

Another chemicals firm expanding its expertise to water treatment is German giant BASF, which last year announced its main research emphasis is being placed on “growth and technology fields that address social challenges and offer BASF relevant business potential.”

“To seize growth opportunities we are systematically expanding our product and technology portfolio, establishing an even more global presence and increasing our efforts to develop solutions for a sustainable future,” said Dr. Andreas Kreimeyer, member of the Board of Executive Directors of BASF and Research Executive Director.

BASF said that by 2020, it wants to achieve sales of around €30 billion with products that have not been on the market for longer than ten years. To accomplish this, BASF is strengthening its collaboration with key industries and concentrating on growth fields relevant to society such as “heat management”, “water treatment” and “organic electronics”.

“These are new business areas for BASF with high growth potential,” the company explained.

In March this year, the company announced it would combine its water, oilfield and mining solutions businesses into one global business unit to “increase efficiency and support its growth strategies.”

Two months later, BASF sold its service-oriented industrial water management business, located in Lyon, France, to Degremont, a subsidiary of Suez Environnement. It said that its water solutions business will in future “fully concentrate on providing innovative chemical solutions to the water market.”

Sulzer

Swiss engineering and manufacturing firm Sulzer has recently said it wants to focus its activities in the three “attractive key markets” of oil & gas, power and water.

It is considering the potential divestiture of the Sulzer Metco division, active in the automotive and aviation industries, which would generate additional funds for targeted acquisitions and further investments toward organic growth in Sulzer’s key markets, it said.

Sembcorp Industries

And finally, despite Sembcorp already having a significant global presence in water and wastewater operations, it has opted to strengthen its technological capabilities and “cement” its “leading position” in the treatment of industrial wastewater. Just this month it invested NOK 30 million in Norwegian firm Biowater Technology, securing a 28.8% stake in the business.

In addition to the equity investment, Sembcorp will also enter into a Strategic Partnership Agreement with Biowater, which will give Sembcorp preferential and early access to its biofilm technologies. Sembcorp said it was “excited about the opportunities that this partnership will bring to Sembcorp given Biowater's innovation and R&D capabilities.”

For Sembcorp, Biowater's processes could be harnessed to improve the efficiency and performance of existing plants and give substantial competitive edge when bidding for new projects. The use of such advanced technologies also has the potential to help Sembcorp grow its industrial wastewater treatment business, particularly in Asia.