Water line manufacturing might be a crazy
market but in times like these, when everything goes
topsy-turvy, sometimes you need to be, well, a little
While there are a fair number of steel
tubular manufacturers, very few are in the business of making
water lines. That business decision has allowed plastics to
dominate the market. And while the wisdom of this choice can be
argued on both sides of the equation, the bottom line is still
the bottom line and the decision to exit any market can add up
to a lot of lost revenue.
"Generally, water work is not terrible and
it's not fantastic," said Paul Vivian, principal at Preston
Publishing Co., a tubulars research firm in Ballwin, Mo.,
noting that the margins for water line manufacturing are much
thinner than those for energy tubulars.
Because transportation of large and long
steel and iron pipes is so expensive and these types of
projects are dependant on cutting through a lot of red
tape-rights-of-way across land, public hearings and often court
rulings-"anyone who wants to be in that business is crazy,"
And the business is getting crazier, with
competition from plastic and a lack of funding to underwrite
such infrastructure projects.
Michael Deane, executive director of the
National Association of Water Companies in Washington, said the
federal Environmental Protection Agency (EPA) has multiple
lists of projects that depict what the nation needs in terms of
water and wastewater infrastructure for the next 20 years.
"It's worth several hundred million dollars over several
years," he said.
But actually getting those projects done is a
tricky proposition, despite the pressing need. "We've always
been concerned in the water industry that we're not investing
enough, particularly in the hidden underground infrastructure,"
Deane said. "It's easier to build treatment plants that are
necessary for permit compliance and a more difficult
proposition to shut down streets for months to lay lines."
While Deane doesn't believe that economic
stimulus funding from the American Recovery and Reinvestment
Act will necessarily add to the amount of water projects
getting done nationwide, "I think it will help projects that
would fall in this economy. I think it will keep up a level of
activity and save jobs rather than add more jobs. It's keeping
activity going at this point in time."
Vivian agreed. "The EPA has made several
comments about the stimulus package and how dismayed (they are)
at their ability to get projects started," he said.
The water line market is down because of the
economy, according to Jey K. Jeyapalan, an engineer in the
pipeline field and owner of Dr. Jeyapalan & Associates LLC,
a consulting service in New Milford, Conn. The federal stimulus
money isn't helping much, he said. "It is not up; despite all
the talk, there is little change in the available money for
Jeyapalan said that last year the
$3.3-billion water pipe market spent more on plastic material
than metal, with ductile iron pipe accounting for 35 percent of
the market; welded steel pipe, 10 percent; polyvinyl chloride,
38 percent; fiber-reinforced plastic, 5 percent; high-density
polyethylene, 10 percent; and prestressed concrete, 2
Plastics have been growing significantly for
the past 20 years, replacing steel as the material of choice,
he said. "Unless the steel pipe people change the way they do
business, their market will continue to lose," Jeyapalan
Plastic lines offer many advantages they are
cheaper, easier to handle and install and create no corrosion
problems, he said. "The plastics industry has much deeper
pockets and is staffed by forward-thinking people. The steel
industry, on the other hand, does not want to change. There are
no new ideas that they would consider implementing. It's low
margin, and the leadership does not have much in the form of a
vision compared to plastics, etc."