The previous article suggested that the signs may not be propitious for a great deal of switching in the C&I market in England when it opens for competition in 2017. But should WaSC's therefore be complacent?
The market may behave differently in different parts of the country, partly because of the structure of the W&WW industry. For example, in the South East, the presence of water only companies makes for existing, experienced players on each other's doorsteps: Thames, Anglian and Southern Water may have to be a bit more nimble than say, the monoliths of UU, Yorkshire or Severn Trent.
That said, it will be a bold WaSC that decides to build a full sales operation and attack this market. As previously discussed, margins are thin in basic W&WW services. Customers with more complex water and effluent issues, where bills will be higher and value can be added -
- are probably over the 5ML threshold and have already made a choice of supplier;
- have specialist needs that will make it hard for a WaSC to compete with a Veolia, a Suez or a GE to meet them;
- will favour multinational partnership deals (such as the one Veolia struck with Novartis this year) that will take WaSCs out of their comfort zones.
So what's a poor WaSc to do? Quite a lot, and yet in reality not much..
As the previous article indicated, Business Steam has held over 90% of the Scottish market by doing the basics. A sensible WaSC C&I strategy for the next two and a half years would be to get round all their major C&I customers pronto and grab the low hanging fruit first - the leaking pipes on site, the water intensity of processes, re-use opportunities. It's pretty much the day job for them anyway, so no need to build up huge sales teams, and as a defensive strategy it will take off the table much of the value new entrants will be banking on. Revenues will be hit slightly, but they would be anyway. It may even be enough to keep the big players on board.
For the third article on this topic, click here