Dupont goes on Membrane Technology Buying Spree!

I was just about to write a post speculating on how DuPont will integrate the recently acquired

BASF/Inge and Memcor Microfiltration/Ultrafiltration membrane products into its portfolio when it came to my attention that it was announced today they have just come to an agreement to also acquire Desalitech! Thoughts of Black Friday deals come to mind at this time of the year, but I won’t go there…

The first acquisition announced in late September was that of the Inge UF membrane product line from BASF which makes sense to me as it will complement Dupont’s range of membrane products where this membrane is a very durable inside-out PES membrane with some benefits over DuPont’s existing IntegraFlux outside-in PVDF membrane in challenging applications, plus established customers in Europe. It also does not change the relationships with existing OEM customers who would potentially buy from both membrane module suppliers.

The shortly after announced acquisition of Memcor from Evoqua is a little more complicated to work out. In my opinion, I don’t see how the Memcor MF module complements DuPont’s existing membrane portfolio since it is outside-in PVDF and from what I can see is losing a lot of market share to new higher surface area UF modules, including DuPont’s - unless DuPont wanted to acquire Memcor’s existing global customer base and add a submerged module to the portfolio, although for non-MBR applications, I rarely see submerged MF/UF systems being installed these days. DuPont wanting to add a MBR product to the portfolio makes the most sense and that seems to be the consensus amongst others speculating from the outside. I don’t know what percentage of Memcor’s sales are from MBRs, but it seems like DuPont is acquiring a lot of other Memcor products just to get an MBR membrane.

I was asking some of my DuPont contacts at recent conferences about the acquisitions but understandably they can’t disclose any details until the deals are finalized at the end of the year, plus it is my understanding all the details of how the businesses will combine are still being worked out. I did also talk to some Memcor/Evoqua employees and they said the whole engineering group will be coming over to DuPont. That raises a big question to me. Is DuPont thinking of not just being a membrane module supplier, but also expanding into the membrane system market and becoming an OEM? Now that would open up a whole can of worms!

As an OEM you would now have DuPont competing against their membrane module customers in many instances. That is going to be very sticky to manage and will make other OEMs very wary about disclosing project information when asking for quotes or just going to other membrane module suppliers. If DuPont is just looking at building MBR systems, there would be less conflict with its customers, since DuPont is currently not in the MBR market, although some of its customers for UF modules do also build MBRs so there would be some competition with these OEMs.

Does acquisition of Desalitech confirm DuPont is becoming an OEM?

Now how do we interpret the recent announcement of the pending acquisition of Desalitech? Desalitech has a proprietary high recovery Reverse Osmosis process and I believe a lot of the time uses Dupont’s FilmTec membranes in this process, although it has not been exclusive. Desalitech uses a number of fab-shops around the US to build its systems, has its own salesforce and is essentially an OEM. So, what the heck is behind this move! I have spoken to folks at Desalitech and some of their reps in the past and they have said they are not competing against conventional RO OEMs and are only looking at applications that need a recovery higher than what conventional RO can achieve and want to work with conventional RO OEMs to build their systems – but that is a whole lot of baloney. I hope DuPont hasn’t bought into that and think they can become an OEM with the Desalitech system and not run into conflict with their traditional RO membrane customers, who incidentally would make up the largest percent of sales for all of their membrane products. That would be suicide for them. If DuPont licenses the technology to OEMs and stops manufacturing themselves that would make a lot more sense.

I just heard the news about the Desalitech acquisition and may be jumping to conclusions, but it is fun to speculate. Unfortunately, there are no conferences left this year to hear what the industry may be saying about this. But the Memcor and Desalitech acquisitions do suggest DuPont may be looking at some sort of involvement in the membrane process equipment supply market and that will result in some interesting discussions with their existing OEM customers. I am sure all will be revealed regarding DuPont’s strategy in the membrane market in early 2020. Should make for a very interesting AMTA/AWWA Membrane Technology Conference in Phoenix in March!

The comments and opinions in this post are my own and not those of my employer.

Convergence of the Microfiltration/Ultrafiltration Module Market is Here!

While the manufacturers of microfiltration (MF) and ultrafiltration (UF) modules have been resisting the commoditization of this market, as has happened with reverse osmosis (RO) elements, they have unwittingly brought this upon themselves in the past year.

In chasing the Pall/Asahi MF module retrofit market first Scinor, then Dupont (previously Dow) and

Pall Rack with Asahi UNA-620A Modules

now Toray have all developed a direct replacement module for the Asahi UNA-620A module. This makes the design of an Universal/Open Platform MF/UF Module Rack that can fit 4 different modules easy – one design for all just like a RO skid! The design of the ancillary equipment for backwashing and CIPs still varies between each module to some degree but the hardest part of designing a universal MF/UF system has just been solved. I mentioned this to one of the manufacturers of the retrofit modules at a recent conference and he hadn’t realized how his company was helping to commoditize the MF/UF module market. His company is also helping Pall where in recent years they had been shut out of the market for Universal/Open Platform systems, which are increasingly becoming the norm for new MF/UF installations, but now Pall can say their standard rack is Universal because it can accommodate four different modules…

So, in the process of chasing some quick bucks for retrofitting Pall/Asahi installations, these companies have driven the MF/UF module market faster towards commoditization and ultimately a much more competitive and less profitable marketplace.

I don’t want to oversimplify the ability to interchange these membranes on a MF/UF system, where different cleaning and backwashing requirements have to be understood and designed for and accommodated for in the system programming, plus some of these modules have different integrity testing procedures and membrane surface areas. But Pall has now been given a free pass into the Universal MF/UF system market, a market that over the past 4 years has allowed smaller OEMs using Toray, Dupont and other non-exclusive modules to win a good-sized installations while Pall was excluded.

I haven’t seen a spec yet with all the Asahi membrane clones listed but when doing a presentation at a major engineering firm recently who has championed the Open Platform system, it was not lost upon their membrane experts that this was now possible. I am sure very soon we will see such a spec.

Dupont Acquires Inge and Memcor Membranes to Expand Membrane Portfolio

I can’t not mention the recent big news in the MF/UF market where Dupont acquired Inge membranes from BASF and Memcor membranes from Evoqua over a space of two weeks late September/early October. This gives Dupont three different types of membranes, all that can be used for the same applications. I am interested to see how they promote the different membranes without causing internal conflicts. The word is Memcor was valued for their MBR membrane which Dupont did not have. I am sure the marketing strategy will be revealed at upcoming conferences (I’ll be at their booth at IWC next month)!

AWWA Aces it at ACE19 in Denver!

Every time I start to wonder if AWWA’s Annual Conference and Exposition (ACE) is starting to lose steam they have one in Denver that brings back the mojo and feeling that this is a really important event for the water industry. I think this year’s ACE in Denver was the best since…the last ACE in Denver in 2013. I don’t know if it is because AWWA is based there so a lot more effort is put into making it a great event or if people just love to come to Denver. Since I live here it is hard for me to compare Denver as a place to visit compared to other cities but I certainly think the convention center location downtown near hotels and restaurants etc, and less distractions such as casinos and theme parks makes it one of the better locations.

What was so good about it? I don’t know the official attendance numbers, but it felt like there were a lot more people at the show this year. As an exhibitor, the exhibit hall seemed to have a busier atmosphere right through the end of the show on the Wednesday. I usually plan on doing a walk around the hall on the last morning when it is typically quiet, but I was too busy with visitors at our booth which is great. I went to some of the morning technical sessions and these were very well attended and there seemed to be a buzz downstairs at the presentations with people rushing between sessions. Maybe the fact that there are less distractions away from the convention at Denver meant more people stayed at the show.

No junket no reps?

ACE is certainly less of a party than WEFTEC and I think it draws delegates more for technical content than going to party. I have been going to ACE and exhibiting for 20 years now and I recall there used to be a lot more people going for a junket. Perhaps that is why there are so many fewer manufacturers’ sales reps attending ACE now. Years ago all rep firms sent at least a few of their sales guys to ACE. Now, many rep firms may send one person or nobody at all. That is probably over 1000 people out of the exhibit hall right there (they don’t go to presentations). The quality of attendees in terms of key consultants and water system personnel is still very high and those going on a junket normally aren’t a target for the exhibitors, but with less wining and dining of water industry fat cats who probably now just go to WEFTEC, there is less incentive for the sales reps to attend. Many manufacturers see shows such as WEFTEC and ACE as opportunities to network and train with their reps. With less reps at ACE some manufacturers are questioning the value of exhibiting (and I have had some reps who say we should just go to WEFTEC which would then give them an excuse not to go to ACE). These exhibitors really miss the point where their main target should be showing their wares to the quality attendees at the show. To do that you have to put some thought into how to get the best from the show and not just turn up hoping a few leads will accidentally find your booth.

I don’t know if AWWA should try to attract more reps to help retain more exhibitors or concede these to WEFTEC and concentrate on keeping the show’s quality technical program and other activities. Without doubt, AWWA should try put this year’s ACE19 in a bottle and replicate it as much as possible every year rather than just in Denver.

The opinions expressed in this post are my own and not those of my employer.

2019 AMTA/AWWA Membrane Technology Conference Wrap

The AWWA/AMTA Membrane Technology Conference was held in New Orleans, February 25-28 and attendance was a little down this year. I put the lower attendance down to two main factors - scheduling the week before Mardi-Gras made accommodation and travel expensive (although it was fun seeing some of the festivities) and; because the region isn’t a hub for membrane installations, at least municipally which is where most attendees come from, there were very few local attendees. Further to the last point, there were no technical tours this year because suitable nearby membrane installations could not be found and that may have made the conference less attractive to some potential attendees.

Despite a few hundred less attendees, the technical program was still strong and most of the key engineers working in the municipal membrane field were in attendance. In terms of new developments, there were two ceramic membrane sessions, one of which I attended, but I didn’t see a lot of new information presented as I had already seen versions of these projects presented in the past year. Nanostone has completed a few more retrofits of their membrane at polymeric installations but overall, I don’t see large scale adoption of ceramic membranes at new facilities in the near future where costs are still prohibitive – there is a lot of interest in ceramic membranes though. In the exhibit hall there were a few more companies promoting ceramic membranes and I would like to see some case study posters or presentations from these firms in the future.

Niche Technologies Poorly Represented

Most of the sessions were more around interesting applications of existing membrane technology or optimization of performance and waste minimization, which is all very important, but I didn't see much on the full-scale application of new technologies (although there were some good research presentations on new membrane developments). Walking around the exhibition, there are some interesting technologies available such as Berghof’s tubular UF membranes which are used in challenging filtration applications and it would be nice to have a session to showcase these niche technologies. Perhaps these companies don’t submit abstracts because they are intimidated by the selection process, so maybe there should be a dedicated session for the more niche membrane products.

One beef I had about the exhibition was how far it was located from the presentations which was a disincentive for those attending the presentations to make it back down to the exhibit hall during breaks or for those in the hall to go to the presentations. For this reason, I didn’t get to see as many presentations as I normally do as I had to be at a booth. The hall was slower than I have seen it in the past 8 years and many exhibitors were not happy. The New Orleans Convention Center is fine for a huge event like WEFTEC but was too large and spread out for a smaller specialty conference like MTC. I think the logistical issues were realized by the organizers and will be taken into account at future shows.

So, it was still a worthwhile conference to attend and it is good to try new locations, and some will be better than others. With MTC in Phoenix next year in a strong membrane using region, I am sure attendance numbers will be back up.

Why do so many new water technology companies struggle?

I was at an American Membrane Technology Association (AMTA) workshop last December focused on the use of membranes in the oil & gas and mining industries and in a discussion with a professor who had done a lot of research on forward osmosis (FO) applications I learned of the demise of Oasys Water in the past 12 months. Oasys was one of the water tech shooting stars a few years ago, promising great new applications for forward osmosis for seawater desalination and oil and gas produced water treatment. The professor I was speaking to was a big proponent of forward osmosis ten or so years ago and his group at the Colorado School of Mines had done a lot of work looking at the use of FO for produced water treatment applications.

Over that time he said the producers of the FO membranes have failed to deliver a robust product with issues such as contaminant leakage, fouling and membrane integrity not being solved. I believe another FO company called Hydration Technologies (HTI) has been restructured and refocussed. I don’t want to get into the technical issues of FO but rather why did these start-ups with a lot of investor backing and seemingly great technology fail?

Here are a few of my thoughts as to why I think many water tech start-ups struggle:

Technology is brought to market too soon

In the excitement over the great potential for a technology, it is brought to market too soon without enough testing in real world applications to iron out technical flaws and while product development is still underway. I suspect executives are too impatient to sort out these details and want to get the product to market ASAP and assume the technical flaws can be worked out on field trials for commercial opportunities. I agree that you don’t want to delay launching a product until every minor technical detail is finalized but word travels fast in the water industry and a failed pilot study can be a critical set back to a new technology. There is a delicate balance between getting a product to market ASAP to capture an opportunity and start bringing in some revenue and continuing costly product development until the technology is perfect. I assume that in some cases start-ups are pressured by investors to commercialize a product too soon, so they can start getting a return on their investment.

Once brought to market, all product development stops

I have experience working for a company where once the new technology was commercialized, all efforts were put into field demonstration testing to get some sales while research and product development efforts were put on hold. Even when there was feedback from the field testing that some product improvements were needed to eliminate some issues, there were no resources available to work on these issues. I can see how in the urgency to demonstrate market acceptance and make investors happy after years of sinking money into product development there would be pressure to focus solely on making sales, but inevitably the field testing will find some product flaws and there must be resources allocated to further product development to keep the product competitive. Also, customer needs change and companies must adapt to keep meeting these needs. At the AMTA workshop one presenter explained how fracking chemistry has been improved to allow high salinity produced water to be reused in fracking whereas several years ago it was necessary to desalinate this water for reuse. That pretty much killed a key market Oasys Water, HTI and other forward osmosis companies were targeting!

Poor understanding of market

The municipal water treatment market is a conservative industry. If that is the target for a new technology the startup must be very patient and prepared for a very long sales cycle starting with small installations and very slowly building up to larger systems. Even if the technology is amazing and appears to have little competition, end users will be wary of buying an important piece of process equipment from a company that is new to the market without a track record and evidence that the company will still be around in several years to provide the customer with the technical support, parts/consumables necessary to keep the equipment operating in the future. Process equipment is typically a large capital investment and very few if any water utilities want to be the first to adopt it, even if it is widely used overseas. Industrial customers can be a bit more open to new technology and are often a good proving ground before entering the municipal market. But I still have seen companies with technologies proven overseas enter the US market expecting to hit the ground running and start selling to larger systems and end up very disappointed by the lukewarm reception from engineers and end users.

Other Start-ups to Watch

There are a few water tech startups I am watching with interest to see how they hold up in the next few years.

Nanostone Water, a ceramic membrane manufacturer, has been around for over 5 years now and in the last 1-2 years has been more aggressively pursuing commercial installations. In the early days its activities focused on pilot studies to prove the technology and also finish product development without racing to get sales, which I think was very prudent and showed great patience by the company’s investors. In recent years it seems like the development phase is mostly finished and the expectations are to start getting some sales, primarily in the drinking water market. I am not sure why the conservative drinking market has been initially targeted unless it is considered that the technology is ready for that market so that immediate sales can be pursued while development continues on more challenging applications. I would think for relatively non-challenging drinking water treatment in general it will be very difficult for a ceramic membrane to economically compete with a polymeric membrane. Especially considering that there are some very good polymeric membranes on the market that have minimal integrity issues on drinking water, where superior integrity is the main benefit offered by ceramic membranes. There could still be some legacy Memcor and Zenon systems out there that have to pin a lot of membranes, but polymeric membranes have come a long way since the late 90s/early 2000s and these systems should not be used as the standard for polymeric membranes.

There are some niche challenging potable applications such as backwash water recovery that Nanostone has done a good job in getting some early retrofits as mentioned in my previous post, but I don’t think they are ready for competing against polymeric membranes for mainstream filtration applications. Another big advantage of ceramic membranes is the significantly higher flux possible compared to polymeric membranes. I would therefore look at the wastewater reuse market where organics result in reduced fluxes for polymeric systems, more cleaning and therefore more chance of irreversible fouling and a shorter membrane life – all issues that ceramic membranes claim not to have. It seems too obvious be me, so there must be some issue with wastewater filtration using ceramic membranes that I am not aware of. I do know the Parker Water & Sanitation District's (Colorado) Metawater ceramic membrane system has had some fouling issues and the feedwater has a wastewater input so perhaps the characteristics of these organics are not favorable.

PolyCera has been a more recent entrant to the market after being spun off by Water Planet in 2017 to sell its membranes developed from a unique material. The main product is an organic polymeric UF membrane with similar properties to inorganic ceramic membranes which allow the membrane to have similar fouling resistance to ceramic membranes as well as being able to tolerate more aggressive cleaning regimes than conventional polymeric membranes. I saw a presentation from PolyCera a few years ago on a produced water treatment application in California where a full-scale system has been installed and this seemed like a very good market for PolyCera’s membrane. The thing is, I haven’t seen anything new presented since then other than a few pilot studies. It may be that PolyCera's membranes have applications in industries that I don't work in.

I do not know the strategies of any of the companies mentioned in this post and have just thrown a few theories out there based on my own experience on why some of these companies may be struggling. I am excited by the innovations out there in the water treatment market and really hope that they can be successfully brought to market when they can offer real benefits to end users.

The opinions expressed in my posts are mine and not those of my employer.