VWS plays second fiddle

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It may be the biggest in the world but it is only there to support operations.

Although Veolia Water Systems is the biggest design-build water and wastewater treatment plant specialist in the world, followers of Veolia’s quarterly results statements will know that recently top line sales have been slipping.

At the same time Suez’s design-build company, Degrémont, has been reporting strong growth.

Frérot rejects the suggestion that VWS has been losing ground to its competitors. “It is still much bigger than Degrémont: €1.2 billion not including operations vs €800 million including operations last year.

“In the past, VWS was developing in some fields where they did not have a really strong know-how, so we decided to contract VWS to focus on its core know-how, but even with that VWS is probably the biggest design-build company in the world.”

VWS has also sold or discontinued equipment manufacturing businesses which had originally come into the group as part of the acquisition of US Filter.

But despite his strong belief that VWS has the best technology in the design-build sector, and his satisfaction that it is the largest player in the sector, Frérot makes it clear that the division is a means to an end rather than an end itself.

“If we have this competence in VWS it is because we need to include this technological know-how for our operating contracts, and of course, having done that we will also propose to work on some short-term business, but the core competence of the group is to be able to manage on a long-term basis the operation of water and wastewater business.”

This approach to the design-build business is reflected in Frérot’s approach to the Middle East market. Despite the huge opportunities for VWS’s two desalination specialists – Sidem, which has an unparalleled reputation in Multi Effect Distillation, and RO experts OTV – Frérot’s main interest is in running entire water systems.

“One may consider that the Middle East market is a real paradox,” he says. “On the one hand, there is a huge need for water in many countries from the Mediterranean coast to the Gulf countries, and on the other, apart from EPC contracts, the market is moving, apparently very slowly, towards public-private partnership.

“The answer to the situation is twofold. The client must be fully convinced of the advantages of private management for its water utilities and this takes time and patience.

“Secondly, private companies such as Veolia Water can invest in the water sector, but only when needed. I mean only as a complement to its core business, which is operation and maintenance.

“The public authorities in the Middle East now understand how public-private partnerships are built, how to work with Veolia Water and how to take advantage of its knowledge.”

See: Patience wins the day at Veolia