Business in 2008 and 2009

Years from now when I think back on 2008, I will remember a year of extremes. This has been an exceptional year for ITT's Fluid Technology business with strong growth across our global business, even a new sales record during the second quarter. Now, we are challenged by one of the most significant business downturns in 80 years. I have spoken with many of our key customers in recent weeks, and have found that conditions vary widely by market and geography. Whether business is up or down, I believe it is more important than ever for us to stay close to our customers, anticipate their needs in this uncertain environment and stay ahead of market trends.  

The year included significant global expansion for ITT. We grew our footprint in China, winning our largest single order to date there, and opened a production facility in India. We added resources in our Industrial Process business in the mining and oil & gas markets, and are seeing great results there. In Latin America, our team won the largest order ever booked in the region for high pressure multistage pumps that will move large volumes of filtered seawater up more than a mile above sea level to a copper mine. Our Water and Wastewater business is making inroads in the Middle East, winning a key contract for pumps and systems for Oman's largest wastewater treatment plant. 

Positioning ourselves in these global markets will ensure we maintain our growth trajectory in 2009. Contact with our customers in our established markets is going to be the key to emerging even stronger when the economy improves. That means more frequent calls, demonstrating our global strength and reliability in ways that matter to the customer.

Critical Issues

With economic uncertainty, staying up to the minute on changing market conditions becomes critical. The credit crunch is an equal opportunity challenge, impacting our municipal and industrial customers looking to finance both small and large projects. That does not change the underlying needs for these projects. For that reason, we are working with various industry alliances to convince state and federal lawmakers that water and wastewater infrastructure investment is just as important as the more visible roads and bridges. In many cases, more customers will be forced to look at maintaining and upgrading existing systems rather than building new ones. This translates into new opportunities for us with our widespread local presence.

The solution to these challenges, again, is to stay close to our customers, monitor changing conditions and maintain the flexibility to propose solutions that meet their needs.

Business and Technology Trends

The efficient use of resources-whether they are energy resources or manpower-is a market trend that I believe will be with us from now on, regardless of the economy or the price of oil. This is something we have been watching for some time. Our newest generation of vertical turbine pumps for residential and commercial water markets offers a boost in base energy efficiency, which translates into a significant 10 percent reduction in life cycle costs for the customer. Our N-pump for wastewater applications reflects similar synergies, using 20 to 30 percent less energy and lowering life-long maintenance costs. The comprehensive life cycle assessment associated with the project minimizes every aspect of a system's environmental impact. 

Another trend that is here to stay is water conservation, driven by water shortages in many regions and the need to preserve this precious resource. This trend will drive the demand for more efficient desalination and systems that allow us to clean and re-use wastewater more effectively than we have up to this point.

Additional Thoughts

I am very mindful of the fact that with challenges come opportunities. Assuming that is true, we have a lot of opportunity to cement our position as a global leader in 2009 and beyond. ITT is a strong company. We have a broad product offering with strong brands and a global footprint to meet local market needs. With a laser focus on the customer and an eye on the opportunities that present themselves, we will emerge stronger than ever.