The Future of Water

As we move forward into 2004, many organizations are looking
to close the books on some issues while focusing attention on the long-term
future of the industry--an industry that requires the time, attention and
fullest efforts from all of its members. The marketplace has been steadily
changing, and the near and distant future only looks to continue that trend.

As presented each January, the following pages contain
outlooks for the water treatment industry. Water Quality Products asked various
industry professionals to present a view of the marketplace from their seats,
so that we all may look at our individual business futures as well as the
future of the industry and make our plans accordingly. Some issues that once
seemed futuristic may become reality sooner than we think.

The Future of U.S. Manufacturing in Residential Water Treatment

By Mark G. Bertler, Sta-Rite
Industries

In A Tale of Two Cities,
Charles Dickens wrote, "It was the best of times, it was the worst of
times." This quote is so appropriate today as manufacturers in the
residential water treatment industry enter 2004. The market drivers that make
the water treatment industry such an attractive market are still present, among
them the increasing uncertainty over water quality and the escalating global
demand for clean water. However, new competitors, significant price point
pressure and the need for product innovation create potentially difficult times
in 2004 for water treatment manufacturers.

Even so, market opportunities abound. For example, the U.S.
residential water treatment market is expected to grow at a rate of two to
three times GDP, with total manufacturer's dollars estimated in the high
several hundred million range. The demand for pure water has never been
greater.

That potential is not free of challenges, however. It is
rare to raise prices to customers in this business environment and the
expectation is that manufacturers need to continually reduce their selling
price. Aggressive cost reductions achieved through product redesign, material
substitution and better manufacturing efficiencies are mandatory to remain
competitive today. An increasing trend will be to accelerate both global
sourcing and manufacturing of components and finished goods.

It is predicted that there will be a continued downward
slide in U.S. manufactured products, especially components. The expected growth
in the manufacturing of residential water treatment products will come mainly
from Asia with China being well represented. It will be uncommon to have
manufactured and/or assembled product with little or no foreign content. It
should be noted that products that are bulky such as brine cabinets and
pressure tanks, to name a few, still will have an advantage in being
manufactured locally due to the economics of transportation but still will not
remain free of foreign content. The manufacturers of non-differentiated
products will continue to rely on countries that have lower operating costs.

Assembly of finished goods in the United States will remain
strong, but as product quality and testing improve in Asia, the shift to
finished goods manufactured there will become more prevalent throughout 2004
and beyond. Asian manufacturers have improved their quality significantly with
the use of manufacturing advances such as lean manufacturing and six-sigma
quality programs. These types of initiatives were unheard of a few years ago in
Asia, but today they are becoming more commonplace. With expected greater
reliance on foreign suppliers comes the need for better component forecasting
and larger inventories. The improved cost position from manufacturing in a
foreign country does have its downside; typically higher carrying costs, higher
transportation costs and the extended delivery times. These additional cost
burdens need to be considered in determining the full extent that companies
rely on offshore sourcing and manufacturing.

Not all is doom and gloom for U.S. manufacturers. The
challenge will be to commit the necessary resources to product development and
innovation in a business environment that is pressing hard to reduce costs.
Where commodity products are concerned, manufacturers must embrace offshore
production and/or the formation of alliances with foreign suppliers who can aid
in improving cost positions. It is only through product innovation combined
with a lower cost base that manufacturers/suppliers will be able to achieve and
to sustain acceptable growth and profitability. Those who act aggressively in
these areas can expect 2004 to be a very good year. 1'>

About the Author

Mark G. Bertler is the vice president of Sta-Rite Industries
Water Treatment Group, Delavan, Wis. Previously, Bertler held the position of
general manager at U.S. Filter Corp. based in the Midwest. Before joining U.S.
Filter in 1995, Bertler was with BFGoodrich/Arrowhead Industrial Water since
1987, serving in a number of managerial positions ranging from new business
development, product development and mergers /acquisitions.

Research, Awareness and Standards Will Drive the Future

By Shannon P. Murphy, Watts
Premier

2003 has proven to be a very unique year, both personally
and for the water treatment industry. When I was asked to author a 2004
predictions article for Water Quality Products, I was reminded of the article I
authored last year on predictions for 2003. For me, that article would prove to
be rather predictive of my personal future in this water treatment industry.

Increased Growth Through Consumer Awareness

We have witnessed in this past year greater growth in the
home water treatment industry than we have in the past few years. This has been
accomplished through a number of factors that will continue to play a role in
this upcoming year. First, the general public continues to hear about drinking
water and water quality concerns through many different media outlets. Whether
it is due to a severe power outage that has caused millions of people to boil
their water or a smaller localized concern that has caused the need for the
local and state health agencies to get involved, the general public slowly is
becoming more aware that it is responsible for its own safe drinking water. You
know when the politicians are getting involved in discussing water quality
matters and costs that it is becoming a larger public concern. The general
media also is becoming more aware of the public need for information as we are
witnessing a greater number of informative websites and printed articles
nationwide that discuss local water concerns and the health and financial
impact it will have on their local communities. In addition, the economic
recovery also is playing a factor. As the economy continues to rebound, this
will increase investment in R&D for new and innovative products, as there
is greater economic confidence providing purchasing power for the consumers.
Additionally, with the possible continued consolidation through acquisition,
there is a potential for a merger of technology advances and new networking
capabilities, providing unique product offerings to new market segments.

Working With Municipalities

As I wrote about last year, I continue to see this industry
aligning itself closer with the water treatment municipalities. There are many
questions and hesitations regarding the use of POU/POE devices for Safe
Drinking Water Act compliance for the water municipalities. However, 2004 will
be a big year for projects to answer many of these questions. The EPA will
initiate Phase II of the Arsenic Treatment Technology Demonstration program,
where unlike Phase I, has the potential to contain POU applications. Some
states such as Arizona are being very proactive in evaluating POU products for
smaller water districts; others are waiting to see how many of these pilot
projects are turning out. In the end, 2004 will result in the completion of
many of these studies, which will answer many of the questions regarding POU
applications and its viability.

More Than Just Arsenic

As much talk as there has been in the municipalities
regarding arsenic, I believe this is only the first of many topics that are on
the way. As new studies are conducted on water contaminants, new levels may be
set for existing contaminants, as well as the research and discovery of new
water concerns that will require monitoring. Some of these new concerns may
include compounds such as pharmaceutically active compounds,
endocrine-disrupting compounds and personal care products. As these new
regulations are enacted, the POU application may prove to be a more economical
solution than initially considered.

The Infamous Purifier Standard

Continued efforts will be put forth regarding the NSF/ANSI
"purifier" standard that currently is under construction. As the EPA,
through its ETV testing program, continues to test and study products for the
removal of viruses, bacteria, cysts and chemical agents, it will provide
fruitful information for the regulators and the industry on how to test and
develop these purifier products.

This progress by the EPA also may influence the speed in
which a purifier standard is set forth through NSF, as a real need for standard
testing methodology becomes more of a concern within the industry. Development
and testing of low-cost water purification devices go hand in hand with the
ongoing consumer awareness, as individual homeowners then will be able to
economically provide personal insurance for themselves and their families in
the event of a localized water contamination or boil alert occurrences.

Consumer education, continued testing and research on POU
application for SDWA compliance, new water regulations, purification,
innovation and conservation combined with greater economic consumer confidence,
domestically and internationally, all point to a very interesting year ahead of
us for this water treatment industry.

About the Author

Shannon P. Murphy is the vice president of municipal
programs at Watts Premier, Phoenix. Previously, he worked at NSF International.
Watts Premier has independent piolet studies underway, which are set to be
completed in mid- to late 2004. Periodic updates and findings regarding these
projects can be found at www.wattspremier.com.

Reaping the Benefits of Change

By Mark Rowzee and Chubb
Michaud, Water Quality Association

The one constant in the POU/POE market is change. Never has
this fact been more evident. Just watch the California regulations and the
evolution and study of decentralized treatment in small water systems and the
big box sales of water treatment. Change can present both problems and
opportunities. While these many ongoing changes in our market may seem like a
threat to the future of your water business, in fact this change can represent
opportunities.

The key to dealing with all of these changes is becoming
more diverse in your understanding of "the water market," as well as
diversifying your company's avenues. In other words, there is an opportunity to
grow, together, into other markets. This is partly why a segment of Water
Quality Association (WQA) membership has asked for an increase in the
association's commercial and industrial activities.

If you are up to date or have been involved with any of the
Commercial & Industrial (C&I) activities within the WQA over the last
year, you already will know that the market for knowledgeable water treatment
specialists is vast. You also will know that the WQA has certain goals for
linking C&I members with C&I users as well as addressing other needs of
non-residential members.

Outreach and Growth Activity

At the March 2003 C&I section meeting in Las Vegas,
representatives of more than 30 companies interested in C&I growth
identified a list of target markets in which the WQA C&I section would
focus growth efforts.

An original list of more than 40 C&I markets was pared
down to 10 markets which were subsequently prioritized by simple majority
ballot vote. These include markets as diverse as boiler water treatment, metal
finishing, municipal, car washing, hotels, hospitals, etc.

The next step in the growth effort is to conduct brief
research of the potential of the selected markets, which will determine the
WQA's outreach activities for the benefit of its member companies. The informal
market research conducted will attempt to determine factors such as the size of
the market and vehicles available for reaching into the market (associations,
shows, publications, etc.). WQA's C&I outreach efforts could include one or
more of the following.

* Education
at other associations' shows.

* Producing
water treatment articles specific to a market's publication(s).

* Targeted
advertising, sponsoring WQA exhibiting pavilion at other shows.

* Trying
to draw participation and attendance to WQA's shows and other activities.

In fact, some of these activities took place before the end
of 2003.

Another branch of C&I activities is the development of
C&I water treatment equipment standards. At the time this article was
written, a small group of interested individuals is working on draft documents
for standardizing terminology and specification guidelines for ion exchange and
reverse osmosis equipment applied to commercial and industrial operations.
These types of documents tend to draw attention to and participation in WQA's
activities from a variety of angles (end users, suppliers and dealers).

Other Strengths

Beyond WQA's growth efforts, one common thread for C&I
businesses already has emerged and that is the issues of discharge regulations.
WQA is poised to leverage its governmental affairs activities on behalf of
C&I interests as they pertain to C&I applications for water treatment
equipment.

Education also has proven to be a common need. As part of
the growth effort, WQA intends to bring people from outside our industry to
seminars that will give water treatment professionals a clearer picture of the
water needs for a variety of markets.

Some of these opportunities were presented at the Mid-Year
and Convention in Chicago.

WQA Commitment

The process of market outreach will take time. But those
actively involved in the process from the early stages will undoubtedly benefit
most from the strengths that the C&I Section has to offer. There is
undoubtedly no better time to involve yourself in this process. Doing so is as
simple as contacting WQA, asking for more information and participating in the
section meetings at the annual and mid-year WQA conferences. style='mso-tab-count:1'>

About the Authors

Mark Rowzee is the Water Quality Association's (WQA) staff
advisor for the C&I Section. Chubb Michaud, CWS-VI, is the WQA's C&I
Section chairman.

2004: A Year for Closure?

By Tom Bruursema, NSF
International

As we look forward to another new year, we find ourselves
wading among many important projects that today are riding the wave of
progress, but have not yet come to closure. These range from new NSF/ANSI
Standards for shower filters and microbiological treatment claims to homeland
security protocols and testing to demonstration projects using POU devices for
small systems compliance and more. All of these represent important
opportunities for the industry, leading then to the million dollar question of
... when?

While NSF is assisting in all of these projects and leading
several, there are many aspects of progress that no one organization can control.
Yes, that includes NSF. It is the nature of the process. From our crystal ball
observations, however, we see several of these coming to closure in the new
year.

New NSF/ANSI Standards

Now in its ninth draft, it is our sincere hope that we will soon
have an NSF/ANSI Standard for Shower Filters. There have been a variety of
issues that have caused this standard to take longer than most. First and most
obvious, is that it's not a drinking water treatment unit standard, but rather
a shower water treatment unit standard. While the template didn't change much
(i.e. addressing structural integrity, performance claims and literature
requirements) there is one noticeable difference from the Drinking Water
Treatment Unit Standards (DWTU) (i.e. no material extraction testing). Earlier
drafts included materials testing but were based largely on DWTU and,
therefore, were very conservative towards ingestion exposure. It also did not
take into account other aspects of shower filters such as dermal and inhalation
exposure and high temperature water conditions. In the end, it was decided that
materials were an unlikely source of concern when considering the high flow
rate through the product during periods of use and limited ingestion of shower
water. It was agreed, however, that materials containing lead would be
prohibited, as would solvent bonded materials, and those formulations not CFR
Title 21 compliant would undergo review.

Other issues relating to shower filters included performance
testing under high temperature conditions. Performance is limited at this time
to free available chlorine reduction. Due to the volatility of chlorine at high
temperatures, the method of influent challenge and influent/effluent sample
collection is more closely controlled to ensure accuracy in the performance
results. The challenge is 2.0 mg/L with a minimum 50 percent reduction, the
same as NSF/ANSI Standard 42.

Another standard long in the works, or more appropriately
stated a suite of standards, are those for microbiological treatment claims.
There has long been a standard for ultraviolet disinfection and microbiological
claims for distillation devices. Similarly, there have been cyst reduction
claims for mechanical reduction technologies and bacteriostatic claims for
carbon media. However, what has been missing is a complete microbiological
treatment claim (i.e. bacteria, virus and cyst) for several treatment
technologies. The two new standards that are the furthest along include those
for mechanical and halogen treatment technologies. It is our hope that these
two standards will reach conclusion in 2004.

The draft standards for these microbiological treatment
claims are intended for safe water supplies, providing supplemental treatment.
The challenge organisms vary by the technology under test but are designed to
be very conservative surrogates for the given technology. In the case of
mechanical, the surrogate selection is based on size restriction, and for
halogens, chemical resistance.

A further measure of conservatism can be found in the
requirements for treatment performance. Reduction of bacteria is set at 6 logs
(99.9999 percent), virus at 4 logs (99.99 percent) and cyst at the current
criteria of 3.3 logs (99.95 percent). Products will be able to make a cyst only
claim, as is true today, and/or a bacteria/virus claim. Bacteria and virus
claims, however, cannot be separated.

One final area of closure we are seeking in 2004 is for
arsenic reduction claims. In particular, we are expecting the addition of an
Arsenic III claim to Standard 53 that would in turn offer a total arsenic claim
when combining the Arsenic III with the existing Arsenic V claim. Validation
work has been completed in 2003 and balloting will commence shortly.

Homeland Security

Throughout 2003, NSF has been working with a number of
federal agencies to establish test procedures that demonstrate POU reduction of
contaminants deliberately applied to a public water system. Through funding by
the U.S. Environmental Protection Agency (EPA) Office of Ground Water and
Drinking Water, NSF has been working with a core group of experts to establish
a first test protocol for RO systems, looking initially at microbiological
treatment claims. This protocol is not intended at this time to become an
American National Standard, but may in the future. For now, it is being used to
evaluate commercially available technologies. Testing was begun in 2003 and the
first report is expected in the spring of 2004. This will be a significant step
forward in addressing the applicability of POU technologies as protection
against acts of terrorism on public water supplies. Further protocols are
planned in 2004 for additional technologies and for claims relating to chemical
agents.

POU/POE for Public Water Systems Compliance

This tremendous area of opportunity first exploded in 2002
with the lowering of the arsenic MCL. It was still riding high in 2003,
highlighted by NSF's symposium in February. The goal of this event was to get
all three parties--POU/POE manufacturers, state and federal regulators and
utilities--to the table to answer the question, "Can this really
work?" The answer was "yes," but there was work to be done
before it progressed to any significant level. One critical area identified as
needing development was with the state agencies and, in particular, adoption of
regulations that allow it all to happen. The SDWA allows for the concept to
work, but the states themselves must still adopt the proper regulations that
govern their jurisdiction. The EPA has recognized this hurdle and is expected
to release new guidance on this matter in early 2004.

Another important milestone in realizing this opportunity
will come with the conclusion and findings of the pilot studies. The project
lead by NSF in Grimes, Calif., will conclude in 2003, with a report expected in
early 2004. This particular pilot, also funded by the EPA Office of Ground
Water and Drinking Water, focused on the logistical challenges of using a POU
technology for a small system treatment environment. Simple questions needed to
be answered such as: Are people willing to allow such products into their
homes? Is the community equipped to monitor and maintain them? Will people use
the system as their only source of drinking water? The reported findings of
this pilot will help to set the direction for putting this tremendous
opportunity in practical terms, highlighting the obstacles that need to be
considered and addressed for this to be a success.

Further Incubation Required

While NSF is planning for some significant closure in 2004,
there are always plenty more opportunities still incubating. Examples include
perchlorate reduction and cyanobacterial toxin reduction claims under NSF/ANSI
Standard 53, harmonization of materials testing between the DWTU Standards and
NSF/ANSI Standard 61, ozone treatment and others. These projects are not
expected to conclude in 2004, though we always remain optimistic that progress
will move more quickly than expected. And then there are those not yet underway
such as standards for nano- and ultrafiltration, microbiological claims for
non-potable water and health claims for shower filters to name a few. And what
of international standards?

Well, enough for now. After three decades of service to this
industry, suffice it to say that NSF's prognosis for the future remains as
bright as ever. The value and benefits of the POU/POE industry remain clear,
and the need for national standards, third-party testing and certification
remains strong. Together, we have much to look forward to. style='mso-tab-count:1'>

About the Author

Tom Bruursema is the general manager, Drinking Water and
Wastewater Treatment Unit Programs. Tom has been employed by NSF for 18 years,
serving in a number of technical and administrative positions. Tom holds a B.S.
in Medical Technology and M.S. in General Biology from Eastern University
Michigan. Tom is an honorary member of the Water Quality Association, and
serves currently on the WQA International Standards and Regulations Task Force.
He has primary responsibility for all of NSF's POU and POE testing and
certification services.

Industry Perspective: Just a Drop in the Bucket

By Jeff Roseman, CWS-II, Aqua
Ion Plus+ Technologies

Water treatment is something that has been used for
centuries. Over time technology and water sources have changed; therefore, so
have the demand and expectations. Treatment methods have been traced back to
early civilization. Mankind always has sought ways to remove contaminants or
bacteria from water sources. Water treatment has been employed to solve issues
of aesthetic nature such as staining; maintenance issues such as clogged pipes
and scaling; or health-related issues, where water transports pathogens.

As more sophisticated manufacturing evolved, a need for
better water treatment emerged. Electronic and pharmaceutical industries needed
ultrapure water and nanofiltration. Hospitals and medical facilities needed
deionized water for various needs and labs required pure water for testing
purposes. Over time, filtration methods such as reverse osmosis and UV light were
developed, not only to become a more effective means of water treatment but
also to be affordable.

The paradigm for change must be addressed in the water
treatment industry. Water sources have changed drastically, whether it is
surface water or ground water. The needs of the consumer have changed and are
more demanding. Municipalities are using newer disinfection methods such as
chloramines that are creating a slew of byproducts, which are harder to deal
with but less health concerning. A worldwide water crisis is being touted as a
future problem, just like the oil shortage was viewed as the end of mankind 30
years ago. New technology and methods of producing oil, in addition to more
efficient fuel use and alternative fuels have eliminated that fear. Ground
water is being contaminated from herbicides, pesticides and manufacturing.
Pollutants from farming and manufacturing operations are leaching into our
aquifers from runoff, septic and improper disposal methods. The Water Quality
Act is helping, but it could be too little too late. Is there really going to
be water crisis, or will there only be a shortage of affordable water?

Water reclamation, new technologies and affordable methods
of obtaining water all will be the keys to a worldwide water surplus. Water
treatment professionals need to be organized and share information in order to
make water treatment a household necessity. POU/POE water treatment systems
need to be a key focus of the consumer, whether the consumer is residential,
commercial, industrial or agricultural. Applications need to be addressed and
water treatment systems need to be designed to solve problems and not just be
an avenue for revenue and profit. Treatment professionals need to help create
affordable treatment methods and share ideas in order to provide end users with
great water quality.

Banded together, self policed and organized water treatment
professionals can prevent government intervention that would likely result in licensing
and/or certification. Many industries have seen regulation.

The communications, medical and commerce industries, just to
name a few, have been regulated for decades. It is up to each and every water
dealer, manufacturer, sales representative, installer, retailer, etc., to do
their part to make sure regulations that don't make sense do not get passed.
Educational programs and organizations need to train and recruit members to
adhere to the highest standards of ethics and business practices. End users and
consumers need to know that each and everyone in these organizations are
trained properly and can be trusted to provide the best water treatment or
water treatment products.

In conclusion, if you are a member of an organization, get
involved and stay involved. Attend the conventions, learning seminars and
educational venues to expand your knowledge.

If you are not a member become a member in your respective
industry, even if only at the state level at first and the national or
international level later. We must all do our part to weed out unscrupulous,
misinformed and uneducated personnel in the water treatment industry to protect
our industry from regulation and government intervention. style='mso-tab-count:1'>

About the Author

Jeff Roseman, CWS-II, is the owner of Aqua Ion Plus+
Technologies, in La Porte, Ind., and a member of the Water Quality Products'
Editorial Board. He has been instrumental in developing copper ionization
controllers for the greenhouse and agriculture industries for disease control
and scaling issues. He can be reached for comment at 219-362-7279;
jeff@aquaionplus.com; www.aquaionplus.com.