January 2003: Volume 45, Number 1
Water Economics 101, GE SmartWater, California and Quebec
by Carlos David Mogollón, WC&P Executive Editor
January comes in with a more positive vibe economically for the coming year. Some folks might say, "Of course, there's no place to go but up…," which may be true considering November unemployment rose to 6 percent nationally (the highest in eight years), with 400,000 planned layoffs announced in the final quarter of 2002 and roughly 2 million job losses for the year (compared to 2.5 million for 2001). See the U.S. Bureau of Labor Statistics (www.bls.gov/schedule/archives/mmls_nr.htm) if you're keeping track.
But the new Bush Administration economic team at least looks better than the prior one, which seemed capable only of an endless succession of gaffes (although I liked that former Treasury Secretary Paul O'Neill toured with U2's Bono). And with interest rates at their lowest in decades, third quarter housing starts were up 7 percent over 2001, the fourth highest quarterly figure for this since 1987, and quarterly new single-family home sales were up 15 percent from 2001—the highest since tracking began in 1963. Existing home sales also were expected to break records in 2002. And refinancing averaged about 70 percent of all mortgage activity in 2002's second half (see www.mbaa.org/news/weekly_app.html and www.huduser.org/periodicals/ushmc.html). To bring it home—pardon the pun—my parents were able to lower their mortgage rate to 5-¾ percent. I dropped a point and a half off of mine.
What does that mean? Well, business. While most feedback WC&P has gotten from water treatment industry executives indicates commercial/industrial sales remain stagnant, residential sales seem to be booming. Both new homeowners and homeowners with more expendable cash from refinancing mean potential sales, acknowledges Russ Patterson, senior vice president of EcoWater Systems of St. Paul, Minn.
"I think there's plenty of upside in the water business," Patterson said, highlighting softeners and refrigerator filters.
One of the ways EcoWater has leveraged its business is by contracting to produce private label equipment for Sears and General Electric. Patterson said it's unclear what may happen to EcoWater's GE softener deal, i.e., the GE SmartWater brand, now that the latter has acquired Osmonics Inc. GE/Osmonics chief financial officer Keith Robinson wasn't sure if Osmonics would inherit the work.
"We'd like to think so but, at this point, we really just don't know. It's too early in the integration process to make any informed guesses about opportunities available to us. We've barely even complied with the regulatory filings," Robinson said.
In other news, one of our "Drinking Water Dollars" columnists, Neil Berlant, was just interviewed in November by The Wall Street Transcript (see www.twst.com) regarding the evolving water industry and prospects for dramatic growth in POU equipment that make him "dangerously ebullient." You'll find Steve Maxwell's installment for the column in this month's issue.
We also were instructed by California Department of Health Services to inform you we were premature in discussing a potential agreement to ease drinking water treatment unit (DWTU) testing requirements by allowing ANSI-accredited laboratory data for California certification in our November review of the WQA Mid-Year Leadership Conference. For details on this, though, read the WQANewsFax for Dec. 2.
Lastly, to follow-up on my November Viewpoint, the Quebeçois remain mostly recalcitrant to modifying deadlines for DWTU compliance with ANSI/NSF standards. In a Dec. 10 letter responding to notification to dealers that Standards 53, 58 and 61 would have to be met by Jan. 1, 2003, and Standards 44, 55 and 62 by April 1, 2003, the province's building inspectorate basically said: "Go away before we taunt you a second time…" Beyond the Monty Pythonesque reply, one has to wonder what they're thinking, considering they basically acknowledge even if there were enough labs ANSI-accredited for such testing they couldn't come close to meeting the deadlines. That's not to mention the fact Standard 61 doesn't currently apply to DWTUs. Still, it might engender a bit more cooperation if the WQA, Canadian WQA and Canadian Institute of Plumbing & Heating offered an earlier alternative deadline than Jan. 1, 2005—granted that's only two years difference.