ABU DHABI, UAE (19 January 2015) — Sustainability, water stewardship, efficiency, desalination advancements and the water-energy nexus were key themes at the third annual International Water Summit. In an exclusive interview, Xylem CEO and President Patrick Decker discussed these topics in detail with Pumps & Systems MENA. Read about trends in the pump industry, Xylem's focus on emerging markets and some of the company's key initiatives to grow its business in the MENA region.
Michelle Segrest: What are the key trends in the pump industry as we enter 2015?
Patrick Decker:
The single biggest trend going on in the pump industry right now is a focus on energy efficiency. It's being driven by regulations in the industry as well as the needs and demands of our clients. There is much conversation about the water-energy nexus. The most important aspect of that for us is developing technology that leads to energy efficiency. Most people don't realize that about 7 percent of the total cost of the energy space is tied to water management, which is an exciting opportunity for us.
Another trend in the industry right now that we are continuing to see is an expansion in the emerging markets as infrastructure continues to be built. While we are so proud of the installed footprint that we have around the world, a new installed base is being built in rapidly growing regions like the Middle East and China.
MS: Can you tell us about the different geographical regions Xylem serves and how they relate to the complete global package?
PD: This is my second visit to the MENA region since I joined Xylem last March. We are a very global company and do business in close to 100 countries around the world. Obviously, not everyone is created equal. We are very proud of our installed base in North America and Europe. The pump industry has faced some tough challenges in the past several years. We are heavily tied to municipal business across the world, but also have an expanding industrial base.
We see a return to growth in North America as we see some of the stalled municipal spending beginning to vault. There is a lot of pent-up infrastructure rebuild in the U.S. that needs to be dealt with, and we are beginning to see significant growth in our backlog in that part of the world. Europe continues to be a challenge both in terms of political and macro-economic issues, but we see continuing growth in our pump business there, as well. We no longer look at regions such as the Middle East and China, South America and India as low-cost manufacturing bases anymore. It's really a matter of how we support growth in these markets by being global.
There is a tremendous appetite for technical knowledge and expertise in this region. I am so excited about what we are doing here because it's not just localization of manufacturing capabilities, it's also localization of R&D and engineering resources. Most of the water solutions around the world today are being developed in regions that are facing scarcity and other issues.
MS: What are some of Xylem's key initiatives moving into 2015?
PD: It's not all about growth, but we are continuing to do more things as a company to become more lean in our processes and be more efficient as a company. There are opportunities to be faster, smarter, more agile and, therefore, more cost efficient. This will continue to be a cornerstone of our story as a company. But at the end of the day, we are here to grow this company.
Source: "The Water-Energy Nexus in the Middle East and North Africa," Afreen Siddigi and Laura D. Aradon, 2011One of the things that drew me to Xylem is the ability to marry social value creation with economic value creation. People hear me talk about this a lot. I do believe companies need to be here for a higher purpose than just making money. There's no greater place to do that than in the water space.
Growth is a big deal for us. We have struggled with growth, in general, as an industry, in the past three to four years. Now we are beginning to see opportunities to accelerate that. First and foremost, we want to accelerate profitable growth. There are several areas of focus for Xylem. One is growth in emerging markets and the investments there. Second, we want to expand our presence in the industrial use of water. We are building what we are calling an industry-vertical market. We are mapping the needs of our customers to understand where are the gaps in what we offer today and how that affects R&D priorities and acquisitions.
We are also focusing on increasing our innovation, and we have increased our investment in that area. Those are the priorities. Many of your readers know we have some of the best pump brands in the world. We are proud of them and will continue to invest in them. We are equally excited about expanding our testing and treatment capabilities. We have a broad offering in the water industry, and we are not done yet. We are finding that our customers around the world, especially in these emerging markets, gravitate toward an integrated offering. We combine the power of data and information along with the pumps.
MS: When you think about how many people in this world do not have clean water, the stats are absolutely staggering. Water is something we take for granted. It's so good to see companies like Xylem taking pumps and other technological solutions into remote parts of the world to provide clean water and sanitation for people who don't have it.
PD: What excites me about that is a lot of companies, in a very good way, give money to the cause. This is important. Money matters. But what matters even more is time, energy, solutions and technology. We are excited because our people get involved. We also can identify sustainable business opportunities, not so much from the commercial lens, but it is a great source of innovation when we help to address that bottom tier of the pyramid to which we otherwise do not have access. We view projects like this more than just a philanthropic program, but as one more piece of leverage to create a real impact.
MS: Xylem ME Managing Director Vincent Chirouze told us that Xylem is working on a water treatment project in Qatar, pretreatment technologies in Saudi Arabia and is active all across the GCC. Can you speak specifically about how Xylem pumps and technology are making a difference in the MENA region?
PD: What we get excited about while working in this region is the desire for knowledge transfer and there is also a willingness to leapfrog. We have opportunities to jump past some of the lessons learned from working in the more mature markets. Our partners here are sponges for knowledge and technology, and we are going to learn as much from them as they will learn from us.
When we talk with partners and customers here, we get excited to share what we've done in other parts of the world, for example our work with the Public Utility Board in Singapore, or other parts of the world where they've become very advanced in their thinking about water reuse, which of course is a very big deal in the MENA region. There are great things happening in North America and Europe, as well. We are bringing new technologies, SMART grids and SMART networks to the table. But there is such a clean sheet of paper.
MS: Is Xylem doing anything to help end users in the MENA region be more knowledgeable about maintenance and repair at the job sites so they can keep the systems running?
PD: When I talk about some of the investments we are making in this region, it's multi-faceted. Service is critical. We can certainly fly people in from other parts of the world, but you have got to have service reps that are available at a moment's notice.
We are also providing technical training upfront during installation and in the specification process, and we continue to build resource capabilities in these areas here, as well. We conduct technical seminars, which increase the understanding and importance of the need for this in this region.
We will be investing in mobilization of assembly and testing of products, building our local service capability, both before and after market, and of course investing even more in R&D. We will also be partnering with different technical institutes, universities and agencies here in the MENA region to continue our knowledge-sharing efforts.