|Environmental Technologies Industries
|Water and Wastewater Treatment Export Market Plan|
|Chapter 3. Increasing Competitiveness of the U.S. Water Industry|
|Case Study 3.1 Developing Water Projects in Emerging Markets: What Does It Take to Succeed?|
Thierry Baudon, Managing Director of ONDEO’s International Finance Division, identified five success factors in emerging water and wastewater markets:
|Case Study 3.2 Pipe Repair Manufacturer Export Activities Limited by a Lack of Strategy|
An American-owned and Texas-based company manufactures fittings and fabrications for the repair, connection, and branching/tapping of all types and sizes of pipes. Their products are used for water, wastewater, industrial, and manufacturing piping, as well as for irrigation and natural gas pipelines. Currently, the company has 160 employees and 2 to 3 percent of its business is international. The company’s limited successes exporting repair products have been in the border regions of Mexico, Panama, and the Caribbean.
The company began exporting approximately five years ago when Mexican clients heard about it from colleagues in the Caribbean. Since then, however, it has not developed an export strategy to solidify and expand its international presence.
The company relies on contacts made at national and international expositions to find leads and often waits for those who have expressed interest to call. In addition, it does not have a formalized process for finding local affiliates. The company has tried using a sales representative, but the mixed results have made it disinclined to rely as heavily on this approach. All of this suggests a poorly formed export strategy.
The company wants to use its existing base to strengthen its presence in Central America, but is likely to continue to face substantial obstacles until it develops a strong marketing strategy.
Source: Primary interview with company staff.
|Case Study 3.3 Komline-Sanderson: Small Company Effectively Develops New Export Opportunities|
Komline-Sanderson of Peapack, New Jersey, is a medium- sized business that makes water quality instruments, primarily for liquid/solid separation. It has been working to develop overseas opportunities for its products. Currently, 10 to 15 percent of the company’s business is with foreign industrial and municipal clients.
Komline-Sanderson has found its small size to be both a detriment and a benefit when exporting overseas. As Jabez Van Cleef, director of communications, stated in the Environmental Business Journal, “our size constrains us from building an extensive service and information infrastructure overseas, but it permits us to respond quickly if a market opportunity presents itself.”
Komline’s flexibility has made it possible for it to get a foothold in new markets. The company has been content to sell different products to different markets and to use these footholds as a “springboard” into neighboring and other product markets. For example, it is currently selling industrial process and filter technology in Mexico, machinery for sludge concentration in municipal wastewater treatment in the United Kingdom, and filters for corn-syrup processing in China. Now the company’s associates in China and Mexico are actively working to develop the municipal wastewater side of the business.
Driven by the idea that building a relationship of trust is key to successful exporting, the company’s marketing strategy has benefited from the company’s small size. Also, unlike the competition, Komline is unwilling to “oversell” its products and prefers instead to be forthright about such things as product lifetime. This honesty and the relationship of trust KS develops with its clients will further assist the company’s export efforts.
For further information, visit the Komline-Sanderson Web site at www.komline.com.
|Case Study 3.4 Building a Network of Top-Notch Local Distributors: The Hach Company|
“The advantages of entering into distributor and dealer relationships far outweigh the costs,” says Paul Goltz, director of international sales and marketing, The Hach Company.
The Hach Company of Loveland, Colorado, is an internationally recognized manufacturer and distributor of analytical instruments and reagents used to test the quality of water and other aqueous solutions. The company employs almost 1,000 people in the United States and has been selling its products overseas since the 1950s. Hach has built a professional distributor network in over 100 countries; most dealers and sales representatives have well over 10 years of service working with the Hach Company and building markets for its products.
The Hach Company believes that strong local relationships are key to export success. Local affiliates fulfill such critical functions as negotiating new and sometimes frustrating business climates, arranging payment, and addressing tariffs and other barriers.
The Hach Company has established a formal process for selecting and training local distributors, but it also believes that the enthusiasm and capability of the selected local affiliate is critical. Hach representatives look for key characteristics such as honesty, motivation, and a strong commitment to growth.
Hach identifies dealer prospects through the Agency/Distributor Service and the “Gold Key Service” of the Rocky Mountain U.S. Export Assistance Center and by making solid contacts at the U.S. Department of Commerce’s trade and catalogue shows. Other prospective dealers have been located through responses generated from their ongoing, multilingual promotional efforts and through overseas Technical Sales Seminars.
Overseas dealers are required to become experts on all facets of the Hach product line. As a result, the company has established an exhaustive process for training its distributors. Distributors are encouraged to visit the headquarters and the Hach Technical Training Center for hands-on training. In addition, they are required to attend factory-sponsored instrument repair courses presented in the United States and abroad. Since 1996, Hach has held technical sessions for its distributors in Australia, South Asia, Southern Africa, the Pacific Rim countries, the Caribbean, and Latin America.
Recently, the Hach Company expanded its Central Asian presence into Kazakhstan. The business climate and language in this former Soviet economy pose a challenge to American companies. Finding a good local distributor is critical to its success in this market. Hach’s approach was to send staff to the country to identify and build a relationship with a new distributor or sales representative. After a number of years of work, Hach identified a promising distributor candidate. Hach staff sent used equipment
to Kazakhstan so that the distributor and its customers could see and feel the products. Now, Hach has applied for U.S. Commerce Department funds to bring its Central Asian distributors to the United States for training. Growth has been slow in the new market, but the company is already beating internal projections. This is in large part due to the fact that its distributor demonstrates the real enthusiasm and excitement that Hach requires of its affiliates.
For more information, contact Paul Goltz, director of international sales and marketing at (800) 227-4224 or the Web site at www.hach.com.
Source: Primary interview with Paul Goltz.
|Case Study 3.5 Tied Aid Restricts the Export Activities of Aqua-Aerobic Systems, Inc.|
Aqua-Aerobic Systems, Inc., of Rockford, Illinois, is a leading manufacturer of wastewater treatment products and systems for industrial and municipal applications. The company has over 100 sales representatives globally, and approximately 130 employees in Rockford.
Aqua-Aerobic Systems has had notable successes in the developing world where municipal wastewater projects received USAID and multilateral development bank funds. Still, it estimates that its market opportunities in this area have been limited by as much as 50 percent due to the phenomenon of tied aid, according to Sharon DeDoncker, the company’s vice president of international sales.
Shortly before the Asian financial crisis erupted in 1997, the German government provided bilateral aid for a large municipal wastewater project in Indonesia. Aqua- Aerobic had the necessary vendor qualifications and worked hard to meet the source requirements of the German aid. Its efforts at developing vendor relationships in Germany were not successful, and it ended up losing the project to a German company.
Aqua-Aerobic is writing letters to members of Congress regarding its tied aid concerns. In addition, the company continues to work to develop foreign partnerships that will open up bilaterally-funded projects to it.
For further information, contact Peter Bugg, International Sales Department, at (815) 654-2501 or visit the company’s Internet site at www.aqua-aerobic.com.
Source: Primary interview with Sharon DeDoncker
|Case Study 3.6 Export-Import Bank Loan Guarantee Supports Aqua-Chem’s Sale of Desalination Equipment to the Caribbean|
Aqua-Chem, Inc.’s Water Technologies Division manufactures boilers and seawater desalination equipment. Headquartered in Milwaukee, Wisc., the division has developed a worldwide reputation as a supplier of industrial water equipment. It currently employs 1,300 people in the United States.
Aqua-Chem sold a complete desalination system to the Dutch colony of Aruba in 1998. This $8 million system provides 11.2 million gallons per day of desalted water to the Caribbean island. Used for both industrial applications and for potable water, the water generated by the desalination plant has helped the island keep up with the tourism-driven demand.
Aqua-Chem had provided desalination units to Aruba in the past and the Water and Electricity Board was pleased with its products. However, the utility had recently gone through a partial privatization and was particularly sensitive about capital costs. In order for the utility to purchase the more expensive but higher quality Aqua-Chem units, the company had to structure a particularly attractive financial package.
Aqua-Chem turned to the Export-Import Bank for assistance. The Ex-Im Bank facilitated the sale by providing a loan guarantee to the Water and Electricity Board for this project. Ron Thimm, treasurer, stated that “without the Ex-Im Bank money, Aqua-Chem would very likely have lost the job to a foreign competitor.”
Aqua-Chem used a banker to structure the financing and to complete the Ex-Im Bank application. Mr. Thimm highly recommends the use of a banker who understands both Ex-Im Bank’s financial assistance tools and other financing sources. He also stressed the importance of educating sales staff about the financing solutions and countries where Ex-Im funds are available.
For more information, contact Ron Thimm, treasurer, (414) 577-2845 or visit the company’s Web site at www.aqua-chem.com
|Case Study 3.7 Lemna: Finding Funds for International Clients|
Lemna International, Inc., of Minneapolis, Minn., is recognized worldwide as a supplier of innovative wastewater treatment systems. Lemna offers complete treatment plant designs and equipment for municipal and industrial applications globally, and has completed more than 100 facilities. About 60 of these are in the United States, with the remainder located in developing countries, including Turkey, Poland, and Slovakia. Lemna International’s sister company, Lemna Technologies, works with municipalities of fewer than 100,000 people. Lemna also provides its technologies to industries, including food processing plants, dairies, wineries, packaging production facilities, rendering plants, pig farms, and many others. In Poland, Lemna has worked with more than 30 municipalities, from small rural communities to medium-sized cities of 100,000 to 200,000 inhabitants.
When Lemna found that obtaining funds to build water and wastewater infrastructure was a major problem for many of its clients, the company designed an innovative strategy to help its clients secure needed project funds. The Lemna Infrastructure Financing Enterprise (LIFE) was set up to identify possible funding sources and help clients arrange appropriate financing terms. LIFE staff help Lemna International’s clients determine which financing structure will best meet their needs, and then assist them in securing all or part of the funds. LIFE works with debt, equity, and lease-back arrangements, and is experienced in working with private and institutional investors, private lenders, and export credit agencies, including the U.S. Export-Import Bank.
LIFE structured a $25 million loan package for the design and construction of a sewage system and wastewater treatment plant for a Turkish municipality of 400,000 people. The loan package included funds from Ex-Im and two international banks. The first phase of this project has been constructed, and LIFE is beginning work on financing for Phase II, also for $25 million. LIFE is nearing completion of a debt and equity package for a wastewater treatment plant in China, to be built through a joint venture that includes Lemna International. The total financing for this project will be about $120 million. Other current LIFE projects range in size from wastewater treatment projects in Poland valued at less than $6 million to a $36 million water supply project in Romania and a $50 million water supply expansion project in sub-Saharan Africa.
For more information, contact Poldi Gerard, vice president of marketing, at firstname.lastname@example.org or (612) 253- 2000, or visit Lemna’s Web site at www.lemna.com. Source: Primary interview with Poldi Gerald.