At this time of year it is customary to review the last year and think forward to 2011. A phrase we hear endlessly in the press after every event is “learn the lessons”. The water industry may be highly regulated but this last year was a salutary lesson that it is not immune to the wider economy. So what is the ‘New Normal’ for the water industry?
The term ‘New Normal’ was coined backing March 2009 by Bill Gross, founder of PIMCO, the California based investment solutions provider. PIMCO was one of the few organizations that warned of the risks associated with the sub-prime housing bubble that drove the American economic boom years.
In terms of the economic recovery, PIMCO discredited the idea of a sharp rebound from recession and a rapid return to the activity of the boom years. Instead they referred to a “New Normal’ which would bring lowered living standards, higher unemployment, stagnant company profits and disappointing equity returns.
So what is the ‘New Normal’ like in the water industry?
Customers are focusing on outcomes not services or products significantly changing spending behavior
Financial crises, fear of double dip recession and Government spending cut backs are driving a more risk adverse climate and a constant need to reduce costs
Customer expectations are steadily increasing
The net effect is a constant desire to do more for less. This is creating a major headache for suppliers in the water sector.
How to deal with this headache will be the theme of blog posts this week.
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