In the post “Water Works” on March 22nd we looked at data from the American Society of Civil Engineers (ASCE) and the U.S. Environmental Protection Agency that reveal the high cost of replacing and improving the drinking water infrastructure. Even at the current sluggish pace of water system repair of about 5,000 miles per year, the repair portion of the U.S. water infrastructure market value is near $5 billion. The Freedonia Group reports that world demand for water infrastructure equipment for both repair and expansion is expected to increase 6.5% to $101.7 billion in 2016. The growth is boosted in part by expansion of water supply lines in developing countries. Demand in developed countries is primarily for repair and upgrade of existing pipes and connections.
No matter how it is measured water infrastructure is a large market with numerous competitors offering, in many product categories, highly commoditized components. Strong brand recognition and a well entrenched sales network have helped Mueller win and retain market share. The company goes head to head with the likes of Tyco International (TYC: NSYE) with its well-developed fire and water division. While both McWane, Inc. and American Cast Iron Pipe Company are private companies and provide limited financial information to the public, it is clear that both are significant players in the business of pipes and values. McWane revealed sales of $1.7 billion in 2014, and American is through to be near $500 million in annual sales.