Los Angeles, CA (PRWEB) October 11, 2013
The Sewage Treatment Facilities industry has fared well in the five years to 2013. Waste volumes have increased since 2008, as consumers and businesses have generated more wastewater during the economic recovery, despite the slow economic growth. In turn, operators sought rate increases from public utility commissions (PUCs), which were approved and then passed on to the industry's customers, thus boosting profit margins. According to IBISWorld Industry Analyst Deonta Smith, “Rate increases are based on a variety of factors, including a company's ability to efficiently cover costs and earn an appropriate return on investment.” In light of these positive conditions, industry revenue is expected to climb at an average annual rate of 0.9% to $43.1 billion in the five years to 2013.
While local governments and small municipalities dominate the industry, significant consolidation has occurred. A lack of government funding for the industry is providing opportunities for private-sector operators. Private entry into the industry has spurred acquisition activity, as struggling local governments that are still reeling from the recession, outsource facilities and operations to meet public demand. These companies are buying up facilities to stake their claim in this industry and turn aging assets into efficient wastewater operations. This restorative trend will flow into revenue as these third-party companies expand and set up operations quickly; in effect, revenue is anticipated to grow a slight 0.1% in 2013.
The five years to 2018 will benefit the industry a bit more substantially. Growth in the US economy will firm, and in turn, consumption will rise across many sectors of the economy. Wastewater volumes will increase as consumption expands among households and businesses. “Despite slightly declining per capita water use due to increased water-conservation efforts, rate increases will still lead the way as industry operators experience revenue growth for handling higher volumes of wastewater,” says Smith. Private companies will continue to enter the industry, acquiring aging assets to expand their presence. As a result of these favorable trends, revenue is forecast to increase in the five years to 2018.
Concentration in the Sewage Treatment Facilities industry is low. The major company in this industry is American Water Works Company Inc. Most sewage treatment facilities are locally operated by governments and municipalities and tend not to extend outside of the areas they serve. The top four companies account for less than 10.0% of industry revenue.Significant consolidation has occurred as private firms have entered the industry at accelerating rates. While it is not likely that this activity will dramatically increase the industry's market share concentration anytime soon because of the high level of industry fragmentation, the market share has increased slightly in the five years to 2013 and will continue doing so during the five years to 2018. As governments and municipalities continue to encounter financing difficulties because of the recession's aftereffects, they will look to private firms to take over and provide those services. These private firms will acquire operations at a relatively fast rate and look to expand while their share of the industry.
For more information, visit IBISWorld’s Sewage Treatment Facilities in the US industry report page.
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IBISWorld industry Report Key Topics
This industry operates sewage systems or sewage treatment facilities that collect, treat and dispose waste. The industry includes both public and private sector operators.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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