Coronavirus Exposes Existing Trends
By: Originclear - Total Outsourced Water
Tags: Wastewater, Investment Research, Investment Opportunities, Investing, Investors

Riggs Eckelberry reports weekly on issues facing the water industry. In this report, he tells us how to read the impact that an economy impacted by Coronavirus will have on the trillion-dollar water industry. To watch him live, sign up at www.originclear.com/ceo.

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Coronavirus is the big news of the day. Many companies are reacting towards it by halting operations and restricting employee travel assignments. For example, Nestlé, the world’s biggest food company, has asked all of its 291,000 employees not to travel until at least mid-March. Not only they, but other large corporations are pulling back.

As air travel is being discouraged, other forms of communication are taking off. In fact, I use the Zoom platform to deliver my weekly live briefings. A month ago, their stock was about $75, and now it’s nearly double at over $115. So… the real world is being reflected in the stock market.

What’s happening? How can an investor find a way forward?

Well, I went to Sam’s Club the other day, because I needed something that same day. Normally, I would order this item online but I needed it that day, so I opted to physically go to the store. That’s when the broader scope of this situation hit me:

most people aren’t going to be coming to these big stores because of the Coronavirus epidemic.

Not just big stores but, theaters, conventions centers, restaurants, all are being affected. Even the World Cup of skiing, being held in Italy in mid-March, has now chosen to ban casual spectators.

The truth is, this event is just reinforcing existing trends: from marketing and shopping to communication and entertainment.

Sewage Systems and Fecal Matter

What does any of this have to do with water? I’m sure you saw the headlines about the multiple sewer line breaks in Ft Lauderdale, that caused one Pennsylvania man to cancel his plans to retire there.

In Alabama, where we’re saving a trailer park from its water treatment problems (and there are thousands of those), 34% of residents taking part in a 2017 study tested positive for hookworm─a parasite that people contract by walking barefoot through soil contaminated with fecal matter.

Johnny Depp has done an amazing film about toxic waste: “Places so toxic they threatened any life that enters them.” That is a failure of waste water management on a giant scale.

What’s going on? Simple: local governments can’t pay for the infrastructure to keep up with sewer demands. As I related in my weekly briefing of 20 February, it’s been going on now, at a national level, since 1960.

Here’s the graph from our friends at Lux Research:

Webinar: Closing the Loop: The Future of Decentralized Water (Lux Research. JUNE 26, 2016)

Even when the funds exist, big projects just aren’t happening. For example, San Diego’s landmark water recycling project is delayed. Why? Because there are major union problems.

Big projects in this day and age suffer from an already developed landscape and very high labor costs. And of course, you have NIMBY, “not in my backyard”. Go ahead and try and locate a sewage plant anywhere near where people live.

The general story is that things are falling apart in sewage and the big systems just aren’t being built. Won’t be, really.

As things begin to fall apart in the center, the people at the edge still need their water treated. And there lies the trend, the trend that is accelerating.

Well actually, there are two.

Both these trends have been going on for decades, but now they are accelerating.

Big Trend One: Decentralization.

Industries doing their own water treatment, mostly because central systems

are increasingly failing. Our own Dan Early started seeing these on-site projects two decades ago. Now, like the brewery that had to build its own water treatment plant, they

are commonplace.

Big Trend Two: Maintenance.

When you don’t invest in new systems, you have to spend more to maintain the old.

This isn’t a new trend — as you saw in the graph earlier, we have seen Operation and Maintenance (O&M) costs rise by more than seven times since 1960.

We will see much more spending on refurbishment and maintenance, to keep those old systems running longer.

But all this must be done at a lower price with higher quality.

That’s the other big trend: lower cost, higher quality.

Standard design = lower cost, shorter install time

At OriginClear, we were recently able to slash the price of our pump and lifting stations.

We did this by standardizing their design, eliminating both the extra cost and the delay of customized systems.

And we have the quality advantage of our modular design, and our Structurally Reinforced Thermoplastic (SRTP) material boasting a lifecycle of up to 100 years. (Protected by five patents.)

Cities Mandating Modular Pump Stations

I’ve got an email here from Dan Early, our guru. I am not going to name names, but he says here, “I just hung up on the phone after speaking with a certain water company and this water company was following up on a mandate from this particular city in the Mid-Atlantic region that has instructed their consultant to start working on budgeting and design for a packaged pump station using our structurally reinforced thermoplastic, or SRTP material.”

Modular Water Systems™ Structurally Reinforced Thermoplastic systems (SRTP) are built with non-corrosive reinforced plastics with a lifespan as great as 100 years. Pictured: a Dan Early design using SRTP.

“The city will no longer use any concrete structures for their pump stations, too expensive to maintain and replace every 20 years. The city was aware of what we do and instructed their consultant to start work in that direction. The consultant called the water company, which called us. The key message is that the city is going to adopt this SRTP standard moving forward. This is a huge deal because once the first locality does this, the rest of the Mid-Atlantic region, will follow suit.” Then, as Dan says, “It spreads from there to other regions.”

So─lower prices, much higher quality. That’s what is winning in the marketplace. And water is no exception.

Water Autonomy™ for businesses and industry is a megatrend that is accelerating like everything else in this winner-loser economy. OriginClear is moving quickly to take full advantage of it.