Episode Transcript
[00:00:00] Speaker A: Here's a fun water fact. If all the water on earth were packed into a one gallon jug, only about one third of a cup would be fresh water.
And the part we can actually use is just 2 to 3 tablespoons. The rest is either frozen, buried deep in the ground, or just too salty to drink.
I am Reece Tisdall and this is the future of water which we talk about. All the ways which companies, utilities and people are addressing the challenges and opportunities in water. This is episode 125. That's a 1, 2, 5. And I have a good feeling it's going to be a great one. That's because today I'm joined by two colleagues. You get a twofer. Bluefield senior analyst Amber Walsh, who you've heard a lot from recently, and Europe analyst Zineb Mauman out of Barcelona. These two are at the forefront of Bluefield Research's industrial water analysis. From Boston to Barcelona, Bluefield has released its industrial water forecast and market trend analysis, both for the US And Europe. So I thought I'd bring these two on to talk a little bit about not only how these two markets are the same, but also how they differ. What are the hotspots, what are the industrial verticals that are driving the forecast, but also what are the policy landscapes look like for each of these. So I thought this would be a great opportunity to bring them in.
But before we get to Zineb and Amber, you're going to have to bear with me just a little bit longer because something caught my eye this past week.
According to the Financial Times, that is those pink pages out of the uk, Europe's electricity system has apparently been facing a new stress test, that is extreme heat.
Repeated heat waves this summer have driven record demand for cooling while simultaneously constraining generation capacity at nuclear and hydropower plants. The result? Soaring electricity prices, blackouts or brownouts in some cities, and warnings that Europe's energy system, which has traditionally been built for winter peaks, must adapt to a climate in which summer extremes dominate. Water's role in cooling, power reliability and grid resilience is at the center of this challenge.
So really it makes me think of the water energy nexus. So a couple of takeaways that I've been thinking about is water is a bottleneck for the power and energy system. Inland nuclear and power coal plants have cut output due to hot river temperatures and low flows.
Also, the UK power output for hydropower has plunged 40%, which highlights critical water energy dependencies. But at the same time, while the US energy sector is really excited about the EU pledge to purchase $250 billion worth of natural gas over what I believe is the next three years.
Well, did you know that hydraulic fracturing in the Permian basin in particular can require as much as 12 million gallons of water per well to produce oil or gas. In this case, natural gas is what we're talking about. So this is a water play as well. It's not just exploration of oil and gas. There's a huge water component. So extreme heat in Europe exposes a hard truth. Like American runs on Dunkin, that small donut chain out of Boston. Energy runs on water. So what I'm hoping is that you'll stay tuned for more analysis from Bluefield's team of water experts as we uncover not only the water energy nexus, but also what's happening in the oil patch also with natural gas and the Marcellus and the Appalachian. We're doing a lot of analysis in that area. We're now looking at the actually the nexus between data and power and what that means for water demand and water solutions. So this is really exciting stuff that's happening here at Bluefield and hope you'll stay with us for the journey.
And so with that being said, let's jump to Zinev and Amber to see how things are going in industrial water in the US And Europe.
All right, Zineb, Amber, how are things?
[00:04:13] Speaker B: Good, how are you?
[00:04:14] Speaker A: Pretty good. So at the request of Mike Gaylor, the person who actually kind of makes this happen, he cleans up the mess that we make audio wise, he's suggested that we lean into the weather a little bit. So just to maybe this is also a good way to tell everybody where you are. So, Zineb, we'll start with you. So where are you and how's the weather?
[00:04:35] Speaker C: Hi, Luis. Thanks for having me. I'm basically now in Barcelona and as most of the days weather in Barcelona is always sunny and beautiful.
[00:04:43] Speaker A: How about over there, Amber, what do you say?
[00:04:47] Speaker B: Really nice. Rhys and I were just talking about this before the call. It's been quite nice weather recently.
Not as much rain probably as we need, but been sunny and nice.
[00:04:57] Speaker A: Yeah, ten days straight. No precipitation. It's kind of been incredible. And although a little bit overcast because of the Canadian wildfires, I think this is second or third year in a row the Canadians have, you know, covered us in smoke at least in the Northeast. And so the sunsets I think are a little bit nicer this time of year. And although if you, I think if you have asthma or other respiratory issues, Might be a bit of a problem. It's not bad today though. But in any case, there you have it. That's from Mike Gaylor, that's his gift weather wise.
So the reason I brought you guys on, as I stated in the intro, is that we've now most recently just released our Europe industrial forecast looking at what I think are 12 industrial verticals. Zineb, you can correct me in a second.
[00:05:45] Speaker C: Wow, it's 15 actually.
[00:05:46] Speaker A: 15. All right, 15 this is. There you go. Quickly, quickly corrected. Amber in the US who did 15.
[00:05:53] Speaker B: 16, 15 and then the other categories. So 16 total.
[00:05:56] Speaker A: Okay, so all right, so we're pretty close. So across the US and Europe we've forecasted within these regions water management, that's opex, capex, how much water is being used, demand talked about the drivers, inhibitors of each. So what I'm hoping is to bring you guys together now that we're all here for the listeners is to talk a little bit about how do Europe and the US compare? Right. We have clients who as I say, work on both sides of the pond and if not globally. So let's give it a shot. So maybe we'll start with use, but so how do the two markets compare in size and growth? Maybe we'll start with Europe.
[00:06:40] Speaker C: Well it starts by Europe. I mean the market is projected to surpass 101 billion by 2030 at its growing at a rate of 5.15 and that's both across capex and opex. And we can actually like break it down to three tiers. At the top we are having the heavyweight high maturity sectors like food and bed, chemical pharma and of course power generation. Then there is a second tier, it's so smaller today. Yes, but with a huge growth potential. And obviously here I'm talking about data centers and semiconductors and finally we got a third tier with a slower growth rate like pulp and paper resource extraction, more niche, less dynamic I would say. So by far. Like if I want to give a global overview, manufacturing in Europe is a dominant player and here we are talking about around 83 billion across key segments. Food, Bev, chemical pharma, electronics. How about US and Canada? Amber?
[00:07:46] Speaker B: Yeah, great, I'll jump in here for US and Canada.
If we're talking total spend 2025 to 2030, it's about 340 billion. So that's higher than the 100 billion euros that Zinev had mentioned. But a large chunk of the spend is oil and gas extraction.
So when we take that out it's about 177 billion.
If we convert that to euros, it's about 150 billion euros. So a little more comparable.
And so we're talking similar trends. There's a mature food and bev market, chemicals.
We also see data centers, semiconductors. So similar trends.
[00:08:30] Speaker A: Yeah, I mean it sounds like it's kind of similar. I think Zanab put it correctly. Right. You've got these mature sort of long standing sectors like food and beverage is pretty obvious. Right. That's been around for a while, but highly fragmented. I suspect in both cases incredibly fragmented. For food and beverage manufacturing you get the very small facilities in the large. I think the other two things, just for my quick take and I don't want to get ahead of ourselves, but is oil and gas in the U.S. i mean that's kind of a. It's a little bit of a different market. We're actually going through a deep dive analysis of midstream water management. Right now it looks like the total management spend for that.
Well, I don't want to get into that now because it'll create more confusion, but it's pretty significant in the US whereas in Europe it's not. Then lastly, I think the commonality, like the hot topic or topic du jour is. Or data centers or high tech. Right. That's really where we're seeing and that makes sense. I don't think that should be a surprise to anybody. So let's talk a little bit about which sectors are creating some of the bigger opportunities. And so maybe we'll start with you, Amber. What are the, what are the key US drivers to industrial water management?
[00:09:44] Speaker B: Definitely. So if you've been listening to the POD the past couple weeks, we've talked about data centers and semiconductors here in the U.S. so semiconductors, the chips act, that's really been pushing manufacturing. So reshoring the production of chips. We see tsmc, Intel, Samsung, they're all building these large fabs, spending billions and billions of dollars on these chip production expansions. So that's been interesting to see. And if we're going to compare it to Europe a bit, they have the European chips Act as well. From my take, it hasn't had as much traction as the US Chips act has. We see intel, they've recently just canceled their fabs, their plan fabs in Europe. I think there was one in Germany and one in Poland. Correct me if I'm wrong, but. So Intel's been facing a host of issues internally, but we're also seeing the US be a hotspot for Greenfield semiconductor production and with that comes significant water spend. There's the ultra pure play.
There's also it creates challenging effluent that requires advanced treatment before discharge. So then also data centers as Rhys mentioned us is a leading market for data centers. We've done a lot of work looking at the US data center market and its high growth. We say it's about 8% compound annual growth rate for spend through the end of the decade. Growth in AI workloads.
Virginia alone is expecting billions and billions of dollars in new spend.
And then also something Reece, you touched on midstream water management. So fracking is huge in the US large producer of oil and gas and with that comes a ton of water spend. So there's opportunity there.
[00:11:34] Speaker A: Yeah, I think that makes sense. I think there's a lot happening. I think your point. I think we talked about this on I think we were calling like a high high tech discussion semiconductors and data centers for a podcast a couple episodes ago with you Amber and that was.
I can't remember if we talked a little bit about intel but yeah, Intel. I think it was actually with Greg Goodwin last episode. I think I had raised the fact that intel was sort of exiting Europe fabrication or its plans there. I didn't know how much of that had to do. Also with the new.
Is it a incentive structure?
How much of it was at an incentive? So it's gone from a 20 incentive, a 25% incentive for semiconductor fabrication in the US to 35% through 2028 maybe 20. I can't remember the exact year.
[00:12:26] Speaker B: Yeah, that's definitely an incentive. And we do see intel has noted that it is going to slow the rollout of their Ohio fab but they haven't canceled it like they have their German and Poland one.
[00:12:39] Speaker A: Yeah and probably not all because of the incentive. Intel's been having its own problems which has I think been noted in the media. So. All right, well Zineb, let's talk about Europe drivers, what's. What's happening, what's driving that market and see if we can find any differences or interesting.
[00:12:59] Speaker C: Well I've already highlighted the key differences and similarities which we we obviously gonna if, if I would say a similar market is these ascendos but in your side no surprise food, chemical and pharma continue to dominate the Capex and opex.
Actually these are big mature markets but they are really far from being static because they are kind of the center of evolving regulations especially around PFAS restriction and the yogurt with water treatment directive Upgrade. And just to give you an idea about the market, like food industry alone tops the European industrial spend chart with around 27 billion.
So yes it is, it's a legacy sector but one that's still very much evolving, especially with the push toward cleaner and circular water system.
And now shifting to the most exciting one. As Amber mentioned, DESA centers with a growth rate of 8.6% adding up around 1 billion to the cumulative spend in both capex and opex. And this AI boom, it doesn't stop here but it triggers a ripple effect across semiconductor and power and electricity generation.
So we just look at the EU cheap packs of around 43 billion in funding to capture 20% of the global ship markets by 2030.
But for the energy here, where things is getting interesting with. You brought up the recent news about the shutdown of nuclear plants in Europe due to the heat waves.
[00:14:34] Speaker B: Right.
[00:14:35] Speaker C: So that's not just one off event, it's a signal. It's not that it's true that energy is a volatile market, but it's highly dependent on water for cooling and when heat spikes or floods, heat systems got overwhelmed. And in our forecast we already looked at the old patterns, climate extremes, aging infrastructure, shift toward AI smart grades. And we predicted accumulative spend of 16 billion for this segment alone with a growth rate of around 6.3 which places power generation among the first industries still in Europe.
[00:15:15] Speaker A: Yeah, I think the energy play is really, I mean, I don't, I, you know, to the extent people understand this, there's so many factors shaping energy or power production or generation. Right. You've got obviously Russia, Ukraine, which has created gas shortage.
There's been a shift towards away from nuclear and coal in places like Germany, high manufacturing countries.
And then you've got the climate related issues. Europe is.
While the US may be stepping back from any climate related commitments and renewables, Europe is moving forward full steam ahead then that you started talking about things like hydrogen and electric vehicles. You know there's. I think that's what's really interesting from a policy framework. So. And then it's at the same time, you know, I think I mentioned this in the intro and that is whether it's a framework agreement, I don't think anything's been signed between the US and Europe. But that is, you know, Europe at least is pledged to purchase at least $250 billion worth of natural gas over the next three years, I believe. So what does that mean for power demand? Is there just going to be more natural gas? Will there be more Nuclear, I mean.
[00:16:32] Speaker C: It'S, it's kind of a very layered market risk because okay, we got the, as well the nuclear revival which like some countries are trying to switch from renewable energy because it's not sustained around the year. You got solar, you got wind, but this is like got interruptions. If the weather is not convenient for the right energy generation, we got this ascendance. These ascenders is driving energy up because it has a double effect. It requires more water for cooling and energy and the energy needs water as well. So it's a kind of a double effects and all this kind of driving up the demand how this is translating into the markets. Of course everything is leaning or converging toward reducing the operational expenses toward energy efficiency. But we need high capex to achieve this target.
[00:17:26] Speaker A: Yeah, no, it's, it's super complex and super interesting. And I think what it means for the water sector, I think in both cases US and Europe, there are these sort of undercurrents in the industrial markets within either verticals or segments that are changing how water demand or what water demand will be and how it's being managed. So let's talk a little bit about regulation. So maybe we'll start with you Zineb.
[00:17:51] Speaker C: There is a lot, a lot going on in Europe.
[00:17:54] Speaker A: All right, so make it happen. Let's talk Europe regulations. What's happening?
[00:17:59] Speaker C: What a lot of things like we got the European Wastewater Treatment Directive update, the push toward PFAS ban, water resilience strategy, European Green deal. All of these are shaping and driving highly the markets. But the thing is it's not just policy on paper because enforcement is ramping up too. For example, countries like France and Germany and Netherlands are increasing inspections and penalties for non compliance.
And we already saw this in Italian case.
So industry that haven't yet adapted, they are under real pressure. At the same time, regulation also creates opportunities through ECG frameworks. Water use and circularity are becoming key metrics, especially for investors.
But Europe market, as you mentioned, risk is still very fragmented. Different countries have different tools, level of industrial maturity, market exposure and plus for high growth sector like data centers, land scarcity is now an issue.
And we saw this in already in Germany with the limitation of permit accreditation to build up and operate data centers. So I would say overall regulation is both catalyst and a filter, accelerating innovation and sustainability. Yes, but also exposing in Europe a market complexity that only the most adaptive players can navigate.
[00:19:34] Speaker A: Yeah, no, I think that makes sense because you've got a centralized authority through the EU and then you've got the state and local government sort of authorities. So they're once again multi layered. What about and what about in the U.S. amber, what, what stands out in your mind as far as our forecast and outlook?
[00:19:51] Speaker B: Yeah, definitely. So I think it's a little more incentive driven Here in the US we don't have as much of the regulatory force that we see in Europe, especially with that Urban Wastewater directive specifically targeting pharma in the beauty industry. So with the CHIPS act we had mentioned to boost semiconductor spend, the Inflation Reduction act, although facing some rollout, final rollout hurdles under this new administration, it still boosts certain segments of our forecast. When we look at regulation though, we look more at the local level.
So PFOS testing, adding to NPT's permits. Also something interesting that we're seeing, it's not exactly regulatory tide, but it's the pushback of municipalities on some of these industrial players. So if their effluent is of a certain quality too high in organics or whatnot in the municipality, can't treat it with within, like with staying within their own permits, they're pushing back. So we're seeing surcharges or even just a rejection of the effluent. And that's pushing for more on site treatment at some of these food and Bev plays. And then also something to mention is state level variability. So if you look at different regulations and incentives, state to state, it varies. Texas versus California versus Virginia, it's all going to have different permitting and tax incentives.
[00:21:22] Speaker A: Yeah. And I think one thing that jumps out at me is sort of let's talk PFAS for both, right. You've got these chemical or industrial producers of chemicals and other products. But PFAS is one thing that has historically been discharged in the surface waters and so on and so forth. I think I don't know if my mind is changing or it should be changing. And that is always looked at Europe over the past couple years at least when it comes to PFAS management as going to the source and addressing the chemical manufacturers. Right. In the US I felt less that that was the case. I mean there's been some question about well who does it really fall on? Does it fall on the wastewater treatment utilities, the sewer companies who are having to deal with it, which is really just a pass through. But just this past week Chemours and Dupont and Cortiva, they just agreed to $875 million settlement of claims in New Jersey alone. So that's just in the state of New Jersey. That's in addition to the other agreement that came out of South Carolina, I think it was for 3M if I recall, for like $12 billion, $12 billion settlement.
But that wasn't just, it was just filed in South Carolina, it was multiple states.
So I don't know if that's changing in the U.S. if that, if the winds are shifting towards the supply side of the equation of PFAS chemicals. It seems to be the case, at least in the courts. So I think that's pretty interesting because you both have brought that up.
But when we think about where things are geographically, right, we're obviously dealing with some significantly large land masses. 1 Europe is no small potato, as I would say. And the same goes for the U.S. right.
So Amber, let's stick with you. So is there any regional or geographic differences in the forecast? Like what are the hotspots?
[00:23:20] Speaker B: Yeah, so one driver that we took into account or impact is water scarcity. So you look at places like Arizona and Texas and they're facing water security concerns. You also have huge semiconductor fabs going up. You have data centers going up. If you look in Texas, you have your midstream water management, different food processors.
So the high growth in areas of water stress is pushing towards more advanced water management, boosting the spend in our forecast. It's also just boosting some interesting water management strategies that we're seeing. So Microsoft, they're doing that direct to chip cooling. In Phoenix, they're going back to, so they're doing at the chip level, the direct chip cooling, but then using mechanical coolers. So that then boosts their power demand. And then we start talking about that power water issue. So that's been interesting. TSMC in Arizona, they're doing a reuse facility aiming for, I believe it's 90% reuse at full build out. So these are pretty significant strategies. And these costs are highlighted in the forecast. And then we also see Midwest is just a manufacturing hub. So you have Michigan, Ohio, Indiana. Talk about automotive EV supply chains, plus just your legacy manufacturing.
So lots going on in different parts of the country. But definitely interesting.
[00:24:52] Speaker A: Yeah. And I one thing I would throw in there, I don't have to admit, like Texas, New Mexico for oil and gas, obviously that's probably pretty obvious. But then there's also the Marcellus, so Pennsylvania, West Virginia, Ohio, Utica, so Appalachian Basin, broadly speaking, that's for gas extraction. So there's significant water management there as well. All right, Zineb, what about geographically for you? And I'm going to bring it up because we've done research on this. I think it was related to data centers in the past. But you and, and our colleague Keith Hayes and I think Antonio Del Omo as well have talked about Flap D. Right. And it's something that I could never remember but I'm going to ask you a little bit about that. Is that a region or a hotspot? And then what other hotspots are there?
[00:25:42] Speaker C: Sure. First and before digging into the flab D, I would like to deep dive into the PFAs but maybe in a separated episode because there are a lot of things going on and we are currently working on a PFAS report. So on the other side of the ocean, looking across the map, we have a very layered story here at the high level digital expansion in the north and west, climate pressure in the south, strong industrial muscle in Western Europe and share drive toward resilience, reuse and new evolutionary systems. And yes, this starts with our famous Flap D countries and here talking about Frankfurt, Germany, London, Amsterdam, Paris and Dublin. These are the core digital and data centers hub and they are driven by the explosion of AI, cloud computing and hyperscale infrastructure. And now we saw a trend of gigafactories and a lot of funding going on there.
And we are also seeing Spain and Italy quickly gaining ground. So it's like I would say emerging markets with projects like Microsoft's cloud campus in Spain and in Southern Europe.
The question and the equation here is shifting because these countries are facing high water stress but also have a strong BEV and food sectors which makes them prime targets for water scarcity. Then if we are talking about scarcity we are talking about solutions as well which is reuse and desalination in this case Benelux and Nordics is another story. Think Belgium, Netherlands, Sweden, Norway, they experience slower water of stress. Yes. But they are home to heavy manufacturing and chemical industries. What stands out there is their high ECG focus and these regions are always ahead of the curve in adapting water saving technologies. So in general it's not one size fits all market. The most successful strategies are the one customized to local pressure, industrial needs and long term climate goals in the cradle of the European green deal vision.
[00:27:58] Speaker A: Yeah, I think, I mean your point about the solution. So like Southern Europe, Spain and Italy in particular and things like reuse and desal. One thing we're working on now which Amber knows about and that is we're working on a US Reuse report. So maybe it sort of put something in my mind to maybe get because Zineb, I think you worked on our last forecast for reuse across Europe, maybe you and. Or Maria as well, I don't know if she worked on it but also Megan and or Amber. We'll see and talk about compare, you know, markets. Once again looking at the US versus Europe because I think there are slight differences as well as far as off takers, how the water is being used.
Is there a move towards potable? I think it's a lot of. It's irrigation.
[00:28:41] Speaker C: There was, yeah, there was a lot of irrigation going on in southern Europe because it's, it's the main sector. But we saw like incredibly increasing trend between 2016 and 2024. Like the ratio of indirect potable water use was increasing. So what, what kind of projects especially going on in Spain, they just take water and they do injection in aquifers with a specific ratio like 2 to 3 and then they uptake it from the upstreams and they use it in that way it's mixing with the river water and it has like better quality. I would say that's, I would say it was not having a bigger share of the pie but it's an emerging trend we could capture in our years report.
[00:29:26] Speaker A: Interesting, no? I like it. All right, so I don't know what the difference is. You guys tell me are these, is this a CAPEX game or an OPEX game? So are we talking about capital expenditures or operating expenditures?
[00:29:42] Speaker C: That's a very very key. Good question and let's break it down. It's a game. I would say so. Okay. We're seeing heavy retrofit demand across industries in Europe. This is driven by compliance for many companies that's triggering obviously big CAPEX injections and especially in sectors like power generation data centers where energy intensity is high. A long term regulation complian is a non negotiable. But the logic here is very very simple. Rhys spend now to save later.
Simple. You invest in modular cooling systems, mobile cooling water and even AI powered predictive maintenance platforms. And over time you reduce the OPEX especially in terms of energy and water losses.
And we are already seeing this with Veolia's pilots projects that are deploying mobile cooling units to meet heat waves driving stress. A perfect example of CAPEX unlocking long term OPEX efficiency. But the problem is for these existing plants it's often a blended approach. I would say it's kind of a balance. You need solution upgrades to meet stricter discharge forms and that show up in both CapEx and OpEx. So you're buying new equipment and operating it differently means More chemical, more treatment, safe steps and more maintenance.
Let's take the chemical pharma industry for example. With the extended producer responsibility expanding, we are having Europe compliance now mean higher opex, especially for water treatment. So these companies are under pressure to constantly upgrade discharge quality which cannot be done only by hardware. So overall it's not a one sided game. I would say it's today's market. The smartest players are the one who can balance strategically, the CapEx and OpEx.
[00:31:48] Speaker A: All right, so you've hedged but you started with a heavy retrofit demand. I'm going to start with that. So Amber, shifting gears to you, Are you on the same page? What do you think?
[00:31:59] Speaker B: Yeah, it definitely varies segment to segment or vertical to vertical. As we've talked about semiconductors data centers, there's a large greenfield play here and there's massive upfront capex.
There's also OPEX play because semiconductor fab for example, we had talked on the previous podcast about Veolia working on that 16 year contract for operation services. So definitely a play there as well.
We see rising chemical costs, energy costs and that's really pushing towards a more service based model in optimization. So we're seeing how can these players kind of shift from putting all this upfront capital to more of an OPEX play. So we see Cambrian for example, they work a lot in food and bev and they have these water power purchase agreements and Cambrian fronts the capital and they, they pay an OPEX fee. We also saw that with CAI funding that semiconductor Fab water reuse facility. And then we're also seeing companies reduce OPEX for the corporate players through digital tools. So Ecolabs an example, they're using their solution to reduce opex. So it's both definitely depends on the segment. If we look midstream water management, there's a huge OPEX play. If you look semiconductors, you have Both the upfront CapEx but also we expect long term OpEx.
So yeah, not a clear cut answer for you.
[00:33:46] Speaker A: Yeah, I mean it seems like, I think Zanab touched upon it. I mean you spin now to save later and that's a big pill to swallow for companies, CFOs in particular. Right. You know how much capital they want to outlay up front.
But it seems like given the state of the world is sort of even in the intro we talked about curtailment in the power sector because of available water supplies. And the same goes for semiconductor fabs in Southern Arizona. There's real water risk. Right. And so operationally A lot of these companies and management teams are having to decide how do we reduce risk because otherwise they can't afford to not have to not have water. So all right, well maybe for the fun part and that is on the company or competitive landscape how should companies, I mean at least at a high level I know there are a lot of companies how should they position themselves or what should they be thinking about when they look at the two somewhat distinct market. So because they're different players, different approaches and there's different receptivity on what's needed. So Zineb, what do you think? What about Europe? You're a company looking at Europe, what do you think about.
[00:35:04] Speaker C: Yes, actually let's like start by high level and see where companies are moving strategically because we could track a shift in their strategies in the industrial ground. So we are seeing more companies expand spending across the value chain. Not offering only one solution but I would name it a kind of deployment offering integrated M and a solution that groups design, build, operate and maintaining contracts. That's creating a hybrid model where capex and Apex are increasingly linked hardware and equipment firms. Many are now moving beyond just supplying components but they are strategically or doing strategic acquisitions to build out frameworks full solution portfolio. And we saw this in ground force acquisition for adding like filtration, reverse osmosis, UV design fiction like parts. We also saw chemical giants like dupont entering the treatment space by acquiring Utah filtration and purification firms. Other deploying multiple treatment technologies into one package for industrial clients. I would say these are like major trends offering turnkey integrated water solution.
Meanwhile we have larger engineering firms are shifting their focus more heavily toward the industrial sector. So for example Kemira Chimera like shifting divested its oil and gas business to focus on renewable water treatments and digital services. And this is a clear signal where the future lies. So back to your question.
How companies should position position themselves today is simple. Be compliance first ECG aligned solution integration, embrace digital offer scalable retrofit solution build or acquire across the water value chain because after all the winners in this market are not only tech companies but the ones becoming full service industrial transformation partner is all about integration of more than one solution. And we already could track this trend.
[00:37:25] Speaker A: Nice. No, I like it. I think you know as you said you were talking about ESG alignment. I think one I don't know if that's the same in the US now. Seems like the world has changed beneath our feet. Amber, maybe jump over to you. What when you're a company or when you're thinking about the US what are companies thinking about as far as positioning?
[00:37:47] Speaker B: Yeah, so similar trends. We see the digital component is big here. Looking at how can we optimize operations.
I think something that is interesting is the expansion geographically. So we see SAR for example like they acquired Aqua Chem and they're making moves to come to the States. Grundfos recent acquisition Nutera positions them well for that as well. So there's, there's been lots of through M and A expansions to Europe based companies looking to the US market So that's another way and vice versa to some US based companies looking for Europe. So I think there's a lot of similar trends in how they're expanding. Expanding across the value chain.
Yeah you see those, those chemical plays, they're expanding into digital solutions. Your more hardware, traditionally hardware companies, they're expanding towards treatment.
So I think there's, there's lots of plays there. But then also utilizing M and A for geographic expansion.
[00:38:51] Speaker A: Yeah, I think you know the services piece is really interesting. I think we've just put out some research with Ethan Edwards.
We were working on some analysis of the Inframark and Azuria deals really combining two service companies and they're mainly Muni focused but they've both been pushing into industrials as well. I think that's super interesting. I think you know, to Zineb's point also once again Ethan and I were working on for Alto or for Alto deal or investment into Emerald Technology Ventures.
And the reason that's interesting part of it is and I think it just has been posted on our website what's interesting is looking at M and A across these leading companies and what are these strategics? Yeah, they're not a lot of big platform deals right. Where like these multi billion dollar deals that are being acquired, they're few and far between but a lot of M and A and I'd say technology innovation has been by you know, acquiring small, you know, pieces at a time. Whether it be technology or small services companies either round out their portfolio or just round out their geographic reach.
So I think that happens probably in both cases. But it seems like you know, sustainability matters for both and it matters and I think whether that's, I say this because in the US is sustainability and think in parts of Washington or maybe half of Washington thinks that that is a dirty word.
I would rephrase it and say just mitigating operational risk really that's what it's about.
I don't think companies or corporations care what they call it. As long as they're able to operate. If you're a data center, you can't afford to not have a reliable source of water. And that's why companies like Ecolab or through services and long term contracts are targeting that sector.
So any closing remarks from either one of you, things to think about. So maybe we'll start with you. Zanep.
[00:40:57] Speaker C: So yes, I mean generally talking like very high level we can see some like similarities between the two markets in terms of data centers, semiconductor but key differences in terms of oil extraction and food and beverage dominance in Europe with the focus industrial heavy focus in US and then sustainability, European green deal regulation compliance in Europe and looking forward to do asset price dive for these assignments to mirror how the two markets are evolving.
[00:41:31] Speaker A: Nice. I like it. Amber, what about you?
[00:41:34] Speaker B: Yeah, I think something to highlight is just the difference in energy markets between the two regions. I think in North America we see more production and in Europe's definitely face their host of security issues and cost issues. So that, that plays a role in some of the inputs into our forecasts.
But definitely interesting to look at how the two markets compare.
[00:42:02] Speaker A: Yeah. And I'll get, you know, hats off to you guys because it's, this is tough. We're like we, as we started we're looking at 15, 16 different verticals across two different countries or continents.
So that's tough. Different regulatory landscapes. So this is a broad brush sort of race across, you know, a big chunk of the world.
And so, you know, I think you guys have done a great job pulling it all together not only on this podcast but also as far as in the reports themselves. So yeah, I agree. I think maybe next time we sort of take a deeper dive into something like data centers or reuse something even more focused and get into a little bit more detail about different, more specific segments. So that being said, I'll, I'll set you guys free. It is a Friday as we started the conversation. Beautiful day.
It's always beautiful in Barcelona according to Zineb. And it's at least been beautiful in Boston for 10 days.
So with that being said, you guys are good to go. Thanks a million for jumping on.
[00:43:08] Speaker B: Thanks for having us.
[00:43:10] Speaker C: Thanks, Rhys, and wishing you a great day from the other side.
[00:43:13] Speaker A: All right, take care. See ya.
All right, that's it for today's breakdown. If you want more intelligence like this, head over to bluefieldresearch.com so thanks for being part of the journey.
What's turning out to be an interesting 2025 still, although it's already August.
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