Bruno Steis is the Chief Executive Officer (CEO) of inge watertechnologies. Prior to his current role, Steis worked at Siemens Venture Capital (SVC), where he was an investment partner specialising in environmental and water treatment technologies. He spoke to Anoop K Menon on the factors that make his company a top player in the global ultrafiltration (UF) marketplace.
Could you provide a brief overview of inge watertechnologies?
At inge, we see ourselves as a cleantech company focussed on water treatment. We develop, manufacture and sell ultrafiltration (UF) membranes and sub-systems. All our products are based on patented membrane technology developed in-house. Our Multibore membrane combines seven individual capillaries with an inside diameter of 0.9mm into a highly resistant support structure, modelled on the honeycomb structure found in beehives. This makes for a very stable and reliable membrane; therefore, it constitutes the core of all our products.
Our products are manufactured at our headquarters in Greifenberg, Germany and shipped to locations all over the world. We believe that we are the global technology leaders in UF membranes.
From a geographical perspective, the four regions where the market sizes and growth rates for UF membranes are high are Europe (including CIS), Asia (dominated by China), North America and the Middle East. At the same time, the main UF applications differ in these regions. In the Middle East, it is mainly seawater desalination, whereas in China, it is desalination, wastewater re-use and industrial water treatment. In Central Europe, it is mainly municipal water treatment, but in North America, it is municipal and industrial water treatment.
We are component sellers. Hence, the location of our customers is not necessarily where the project is built. For example, our large reference plant in Abu Dhabi, at Emirates Steel Industries, was installed by an Italian customer.
We established an office in China in 2004 because it is the largest single market and the fastest growing market in the world for UF technology. We have recently opened an office in Turkey and will be doing the same for the Middle East region too.
Great technologies typically transit through premium stage to being cost-competitive and then become ubiquitous. In this regard, in your opinion, where does UF technology stand today?
I think UF will develop along the same lines as Reverse Osmosis (RO), and sooner or later, become a ‘commodity’ technology. Currently, from our perspective, UF technology is still in its early stages. Worldwide, there are at least 10 suppliers fighting for market dominance, but no supplier commands a 50% market share. Therefore, as we go along, I expect to see market consolidation taking place, at least on the supplier side. There is a lot of untapped potential. For example, the replacement of all sand filters is a big market for UF technology. The basic advantage of UF is that the filtrate is independent of the quality of feed water, which cannot be guaranteed where sand filtration is concerned. In many areas, end-customers have also started seeing UF as an alternative to sand filters. The increasingly stringent requirements that dictate drinking water standards cannot be achieved using sand filters. I feel that sooner or later, sand filters will be replaced by UF.
What have been the keys to inge’s success in the UF market-place?
I would credit our success to four factors. Technology comes first. Our Multibore membrane is a very stable membrane, which ensures high operational reliability. Even in low cost markets like China, for critical applications like power plants, or industrial water or process water treatment, foreign technologies are preferred over local ones. The second success factor is quality. We provide a German-made, high-quality product backed by an extensive quality management system. In fact, out of the over 500 plants around the world equipped with our technology, none has reported a single case of fibre breakage.
The third success factor is technological support we provide to our customers, who are essentially system integrators. Most of the suppliers of UF technology also provide systems to a certain level; hence, it may not be in their interest to share their knowhow with customers. Being a component supplier, we don’t build systems. Therefore, we can be much more open to our customers than most of our competitors. The support that we offer, whether in the design phase or installation phase or even in the operational phase, is well-perceived by our customers.
The fourth factor is that as an independent component supplier, we never compete with our customers.
Is inge’s UF proposition an improvement over UF in the conventional sense?
There is no clear definition of UF in the marketplace. Internally, we define UF as virus retention of log 4. There are several products in the market that claim the UF label, but as per our understanding, they are mainly micro-filtration (MF) products as their pore sizes are bigger and virus retention is much lower. Comparing UF and MF is like comparing apples with oranges.
Other parameters like flux and recovery rate in different operating environments depend on the feed water. At inge, we sincerely believe that we make the best and most stable UF membranes in the market. Even if you have fouling on the membrane surface, you can aggressively clean the membranes; you can use chemicals in the pH range of 1 to 13. You can also backwash with high pressure because of the membrane’s mechanical strength.
Clearly, there are operating benefits based on membrane characteristics that you can see on the cleaning side as well on the membrane life-span side. We are extremely confident about the stability of our membranes. That’s why we offer five-year guarantee on fibre breakage.
Could you highlight your main product lines or configurations?
I would like to re-emphasise that we are a pure-play component supplier which sells to system integrators. Our key products are modules. Our latest module with surface area of between 0.5 m2 and 6 m2 is available in standard configuration or in a T-Rack, where the piping and the headers are combined. In fact, the T-Rack is well received in the market because of the reduced footprint and easy assembly. We also sell modules for point of use and point of entry applications.
Unlike many of your competitors, inge has chosen to remain a component seller. Is there a strategic reason underlying this choice?
There are many independent system integrators in the market who don’t have their own UF technology. They are reluctant to buy UF technology from companies who are their competitors in the system integration field too. That’s a key reason why we chose to focus on the component business. Some UF technology companies are now moving to providing kits. We may do something similar, adding more components to our portfolio and making the job easier for our customers. But we will definitely not enter the system integration business as such a move would take us away from our OEM customers.
How does inge approach product innovation and improvement?
To maintain our technology leadership in UF, investment in R&D is a must. We focus on membrane characteristics and features. I believe there is room for improvement on the product side, how the membranes are installed in a module, how the module is installed in a rack and last but not the least, there is room for improvement on the application side. Currently, we use one membrane for all applications. I believe that in the future, we might see different types of membranes for different applications.
We have established a formal innovation process where we seek out and understand market requirements and try to incorporate them into our products. We have appointed people on the R&D side to address these requirements. We also work with partners like universities, system integrators and institutes in R&D projects to try to leverage the combined knowhow. We spend roughly 10-12% of our revenues in R&D.
How do you engage with end-customers?
If you look at the market, there are three parties involved in the decision chain. First is our direct customer, which is the system integrator; the second party is the end-customer and the third party is the engineering company. We try to address all three through conferences, exhibitions, seminars, and road shows. Additionally, we provide technical support and service to end-customers to help them optimise operations, which also serves as a point of contact with them.
Are there any specific projects that you are excited about?
Apart from the Abu Dhabi project I mentioned earlier, one of our recent successes is China’s largest seawater RO desalination plant, being built in Tangshan on the Yellow Sea. The 110,000 m³/day plant will use our modules for pre-treatment. We won this project last year against stiff international competition; it is also the biggest we have worked on so far. Another interesting project, where our modules have been in operation for the past five to six years, is Europe’s largest backwash membrane plant at Roetgen, Germany. Our modules treat the backwash water from the primary membrane plant. With this treatment, the overall recovery for the whole plant can be increased above 99%. This project was a technical challenge that we successfully addressed.
How do you see market opportunities taking shape, whether it is potable versus wastewater, municipal versus industrial?
From our perspective, we see the industrial business growing faster than the municipal side. Most of our projects outside Europe are non-municipal ones. In China, where we started in 2004, we have done municipal pilots, but the projects realised on the ground have been on the industrial side. By industrial, I mean process water treatment for power plants, water re-use and wastewater treatment projects. I think this will be the trend in other areas with water scarcity with wastewater increasingly being regarded as a valuable resource.
Do you have a foot in the consumer market as well?
Yes, we do. In fact, recently we introduced a new product range for consumer applications. However, the consumer market is only a fraction of the overall market. In terms of components, it is perhaps 10% of the overall market. So our focus will continue to be on large projects. On the consumer side, we will be focussing on customers who will use our modules in their OEM systems and have global distribution.
What is inge’s go-to-market strategy for the Middle East?
From a sales perspective, we have two approaches – one is direct sales, with local people on the ground on inge payroll, and the other is working with partners. In the Middle East, we will be increasing our partner portfolio. Currently, we are working with two partners for the Middle East. I subscribe to the credo ‘think globally, but act locally.’ So sooner or later, we will have our own people in the ground here.
Lastly, what are your plans for 2011?
We are aiming to grow at double the market growth rate. I believe sooner or later there will be shakeout in the market, and we need to among the top three or four companies. We have to increase our foothold in markets around the world, which will be mainly a sales and marketing story. We will be increasing our sales force, the number of partners and sharpen our marketing efforts in the direction of having very specific arguments for certain applications.