Frost & Sullivan report looks at future of water and wastewater treatment suppliers in the pulp and paper industry

Rising competition and capacity growth from developing countries -- due to lower fiber and labor costs -- in addition to high industry consolidation, poses a major challenge to the expansion of the North American pulp and paper industry. The water and wastewater treatment market is also under pressure as the number of customers from the pulp and paper industry declines. Excellence in the water and wastewater supplier services is vital to surmount competition in this maturing industry.

New analysis from Frost & Sullivan, "North American Water & Wastewater Treatment in Pulp & Paper Markets -- An End-User Study," reveals that revenue in this market estimates to reach between $125.0 million and $130.0 million in 2005.

"Water & wastewater treatment suppliers face substantial challenge in terms of customer loyalty -- pulp and paper companies tend to change their suppliers for better customer services," explained Frost & Sullivan Senior Industry Analysts Matthew Barker and Usha Srinivasan.

Participants with outstanding customer service, proactive after-sales support, competitive prices, and technological credibility expect to gain a competitive edge in this nearly saturated market.

Increasingly, aging infrastructure in the pulp and paper industry is set to drive the repair and replacements market. Furthermore, environmental legislations propel pulp and paper companies to invest in upgraded systems.

"Water & wastewater equipment suppliers that focus on cost-efficient product upgrades, process improvements and technologies -- that reduce chemical usage and sludge volume -- to counter regulatory pressures are likely to strengthen their market share," noted Barker.

Expansions of existing systems also hold huge potential for environmental engineering and consulting firms involved in the designing and planning of these systems.

Due to the large volumes of water used, the pulp and paper industry is susceptible to environmental controls and those associated costs. Suppliers who offer a complete solution to wastewater problems and the reuse of water with new technologies such as membranes can expect to be favored over their competitors.

"Reliability, output quality as well as safety of the system will remain critical success factors for the suppliers," said Srinivasan. "Sources of differentiation lie in rising importance of pricing and servicing."

Complete outsourcing of service related contracts is still undeveloped in pulp and paper industry, with many companies having in-house teams to handle these services. The water and wastewater treatment market is likely to benefit as more end users switch to outsourcing and become aware of the many advantages offered, such as long-term cost savings, use of external expertise, and reduced internal responsibilities.

This article originally appeared in the 05/01/2005 issue of Environmental Protection.

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