Of Political Winds and Steely Resolve

Nov. 1, 2006
While trends for fuel prices were down in early November, those for steel prices - particularly stainless steel - were up again despite record output, according to leading consultant MEPS Ltd.

While trends for fuel prices were down in early November, those for steel prices - particularly stainless steel - were up again despite record output, according to leading consultant MEPS Ltd. Not that there’s a correlation but so were the fortunes of Democrats, who swept into control of both houses of Congress, six additional governorships and 15 more state legislatures in fall elections.

Both were hot topics at the annual meeting of the Water & Wastewater Equipment Manufacturers Association in San Diego, Nov. 9-11. Much of the talk was about how changing political winds might affect the industry. And, while Democrats are generally considered more environmentally friendly, a couple factors reined in enthusiasm, largely readoption of a “pay-as-you-go” fiscal policy that means any proposed spending increases have to be offset by cuts elsewhere.

WWEMA President Dawn Kristof-Champney also pointed out only two of 11 spending bills were approved by the outgoing 109th Congress so it was likely an omnibus bill would be adopted before committee chairs switched to the new majority party. That meant no gains for the Drinking Water State Revolving Fund and Clean Water State Revolving Fund, the latter focusing on wastewater projects and halved to $675 million over three years. On the upside, the CWSRF is expected to reach $100 billion by 2015 and loaned out nearly $5 billion in 2005.

Another election drawback was the loss of Rep. Clay Shaw, R-FL, the primary champion of the effort to lift state caps on Private Activity Bonds to allow private investors to help fund shortfalls in meeting infrastructure priorities - whose needs were underscored by the 2005 ASCE Infrastructure Report Card rating of D- for drinking water and wastewater. But WWEMA members were encouraged by incoming chairpersons in related committees, such as the Senate Committee on Energy and Natural Resources (with the gavel simply passed from Pete Domenici, R-NM, to Jeff Bingaman, D-NM).

With respect to steel, WWEMA members debated how to make ends meet or recover escalated costs with such volatility in the critical construction material’s pricing. Oddly, a shortfall of nickel - a key component - is the reason for the recent impact, in addition to pressure from ongoing resource competition from strong economies in China and India. Another competitive point was the booming oil & gas industry, which also was drawing away contractors. There were seven price increases in 2006 for stainless steel and nickel has gone from $2.70 /lb in 2001 to $14.70 /lb. Some members have tried to adopt a form of “stainless steel price escalator” in contracts to encourage same-year delivery. Others simply shrugged due to elongated periods (up to three or more years) between contract bid awards and delivery to public agencies. Where industrial contracts were concerned, there was more leeway to pass along hikes.

In the end, promoting funding and enforcement were the two top focuses WWEMA settled on for 2007, with emerging contaminant spotlights on perchlorate and nanomaterials. On the plus side, Kristof-Champney noted, with continued high fuel costs, energy efficiency is increasingly the name of the game in big water and wastewater applications, which highlights life cycle costs and value-based procurement.

In other news, we learned at WEFTEC.06 the Water Environment Federation has revived its “Industrial Wastewater Conference” as “Industrial Water Quality 2007,” set for July 29-Aug. 1 in Providence, RI, along with the New England Water Environment Association and Water Environment Research Foundation. WEF held the original for 10 years before rolling it into WEFTEC in 2005. We’re glad it’s back.

Carlos David Mogollón, Managing Editor

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