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Gretchen McLain, president and CEO of Xylem, sat down with Water Online Radio for this live interview from the show floor at WEFTEC 2011 in Los Angeles. McLain explained the purpose of the spinoff, the vision of the new company, and its place within a changing water/wastewater landscape. Listen or read on to learn more.

Water Online Radio: From ITT Comes Xylem

Todd Schnick: We are back, broadcasting live from WEFTEC 2011 on the tradeshow floor of the Los Angeles Convention Center. I am Todd Schnick, joined by my co-host, Todd Youngblood. Todd, I think we’re in for a handful with this next guest.

Todd Youngblood: Well, actually, I’ve been looking forward to this interview since we got the original list. What was that, a month or so ago?

Todd Schnick: Yeah.

Todd Youngblood: Just what’s going on from a business standpoint with our next guest is fascinating.

Todd Schnick: Yeah. It’s going to be a lot of fun, wrapping up hour four of Water Online Radio. We are joined by the president of ITT Fluid and Motion Control and the future president and CEO of Xylem, Inc., the new name in water. Welcome Gretchen McClain to Water Online Radio.

Gretchen: Well, thank you, Todd. This is exciting for us. We may be a new name, but we’re a well-established company with lots of well-known brands. We’ve been in the water industry for over 100 years, so we’re very excited about our activities right in front of us.

Todd Schnick: Oh, I bet you are. Well, I look forward to getting into that conversation. Before we do that though, take a few seconds and just tell us, Gretchen, a little bit about you and your background, and the work that you’ll be doing with Xylem.

Gretchen: Okay, sure. Gretchen McClain – myself, a mechanical engineer, but I get the opportunity to represent ITT, our fluid and motion and flow businesses, but, specifically, fluid technologies.

When you think about where ITT plays in the water industry, we really play in the transport of water and wastewater, treatment, and testing. We have the opportunity now to come out with a brand new company where 90% of our revenue is focused around water and wastewater.

Todd Schnick: Why the change from the business perspective? I’m really curious about that.

Gretchen: Sure. ITT was a multi-industry company, $12 billion wide, that basically had three legs to the company: a defense arm, a fluid technology arm, and a motion and flow arm.

What made sense in terms of the company bringing our value to our shareholders, is to split the companies up into three separate, independent companies, really focused on the customer and the industries in which we serve.

Todd Schnick: So what’s the vision of Xylem going forward?

Gretchen: The vision for Xylem going forward is to be the premier application solution, solving our customers’ issues around water and wastewater.

When you look at our portfolio of where we play, there is no other company in the water industry that has treatment, transport, and test, and the ability to have the in-depth knowledge and the assets that we’ve got to really serve our customers’ needs.

Todd Schnick: Now, will you be serving the same customer base or will these three – the split into three that you talk about – is that three different customer segments, or are you still going to be serving all of them?

Gretchen: We will be three completely independent companies. Our company Xylem will be dedicated to the water industry. Ninety-percent of our revenue, like I said, is tied to water and wastewater. So we will serve – when you think about the public utilities – we’ll be the industrial market, residential and commercial, and agriculture.

Really moving the water from the source, treating it, getting it ready to use, moving it into all kinds of applications where we use water, and then making sure that we bring it safely back into the environment and driving reuse, which is essential since water is a finite resource.

Todd Schnick: Gretchen, we certainly live in interesting, changing times. What kind of trends are you most focused on?

Gretchen: Trends are really critical. When you look at the complex problem-solving, the water issues, both globally, but as we all know with a local face. Energy efficiency with all of our customers is critically important. The ability to be able to reuse water.

As we all know, water demand is rising and we’ve got to be able to protect that finite resource that we’ve got. So reuse, conservation – bring solutions that ultimately reduce the overall cost to our customer base.

Todd Schnick: And what do you guys have planned to address these trends?

Gretchen: We’ve got some great things. Just this morning we launched our Flygt Experior, which was an exciting opportunity. We’ve always led the way in the wastewater pumping arena.

We brought out our new hydraulics, married it with the right motor and with advanced controls, and we were able to bring a solution that’s 50% more efficient than our competition.

Todd Schnick: You might have just answered the question that popped in my head. In these economic times, it’s a little bit scary, I would think, to invest a lot in new product development. But I heard that 50% improvement. Is that the answer to my question, or is there more to it than that?

Gretchen: Well, we live in a market that needs new issues, needs new solutions. The thing that I think about the water industry, there’s a lot of great technology out there, but marrying that technology together.

To be able to bring an application solution, as compared to just a product that addresses one issue, and marrying them together. That’s what I think brings us uniquely capable of doing. Energy efficiency is critical. New product development is essential to our market.

Todd Schnick: A related question, but different. I think about my own kids, getting out of college and looking for a career. How do you attract young people? I mean, it’s not the most glamorous industry in the world. But that new creativity and the knowledge of the technology and IT and that kind of thing is important. How do you attract folks into your business?

Gretchen: Well, I’ll tell you this: I think what’s important today is we work in a place that’s environmentally critical. We need sustainable type solutions. You look at a lot of the young folks coming out of school.

Of course, they want to be able to work for a business, and be able to bring new innovation. But they also want to bring a greater purpose, which is bringing something back to the environment. I’m seeing more and more young folks wanting to be engaged with a company that does both.

The thing that Xylem is going to be able to do is marry both the social and economic aspect together. When you work in the environmental area, bringing a smart infrastructure in place is critical to solve the issues that are out there.

Todd Schnick: You’re exhibiting here at WEFTEC, is that correct?

Gretchen: Yes we are.

Todd Schnick: I think you mentioned a few minutes ago that you have used the WEFTEC event to announce some of the new solutions. What are some other goals that you have here at WEFTEC?

Obviously, lead generation, I suspect. Launching and announcing these new solutions, market education, identifying new partners. What are your goals here?

Gretchen: Absolutely. So, of course, two things: with a brand new name, we want people to know where ITT is going and the new name of Xylem going forward. We obviously want to be able to launch our new products and get the leads associated there.

But it’s more than that. This is a water industry that really needs to bring all players together, and that means all of us in terms of suppliers. It means bringing governments together, it means education. If we don’t work all together, we’ll never be able to get the funding that’s essential to be able to solve the issues.

The value of water is critical. We all take it for granted. We turn on the tap, that water’s there, typically – in these established regions – on a regular basis. But we’re facing some critical issues, such that if we don’t put the right technologies to bear, we won’t have answers in the future.

Todd Schnick: Gretchen, from an executive kind of perspective, once you’ve climbed to the top of the pyramid, in any kind of an organization, that’s a career goal that a lot of people work toward for a long time.

You’ve gotten there. And now I hear you talking about the need to collaborate with all of the suppliers and all of the people that are here at WEFTEC. How do you square that circle? It seems like they’re a little bit opposed.

Gretchen: No. Obviously, any industry that does extremely well, the more you have competition in your industry, the better you all are. Of course, those who are bringing out new technologies, creating, thinking about what their ultimate customer’s needs are, are going to be the ones that are out in front.

We all can’t be experts in everything. When you look at the complex problems associated – whether it’s the groundwater, whether it’s the wastewater and removing it, whether it’s the contaminants that are coming into the environment – all of them require us working together. We’ve got to address that.

Just a comment there … you know, I had worked before coming into the water industry, in the aerospace industry. It wasn’t uncommon that your competitor at times was your supplier.

Another day, on another project, they were your customer. Another day they were your partner, and another day you were just really tough competitors. I think that’s not such a bad thing. The more we can work together, the better off we all are.

Todd Schnick: Yeah, I would think. Just sharing the knowledge. There’s just so much knowledge already out there and more pouring out at such a ridiculously high rate. Without that kind of collaboration, I guess we really get nowhere.

Gretchen: It’s exactly right. I’ll give you an example in another area. We are collaborating with GE. GE’s got some world-class technologies. When you marry that up with ITT or Xylem’s channels, we have world-class channels.

Us being able to be their distributor on some of their key products helps us, helps them, and ultimately helps the customer that’s worldwide.

Todd Schnick: Gretchen, a common theme today with all of our guests on Water Online Radio has been a communications breakdown between the industry and the consumers and the end users.

What can the industry do to better communicate what we need to be doing as a community to improve our water and wastewater issues?

Gretchen: That’s a great question. We’re talking about it. Many of my peers, we’ve been trying to get together and say, “How do we collaborate in getting some business leadership together and talking through these things?”

Working with, obviously, the associations that are already critical, instead of us each trying to create our own little unique initiative. If we come together as a community, we’re going to have that much more impact.

I think that’s what these types of shows are all about, in addition to, of course, selling your products and being able to push forward.

Todd Schnick: Just a comment. You used the term “customer focused,” or something like that, a couple of times. I think you’ve taken it a step further as I hear you talk. It’s customer focused, it’s partner focused, it’s industry focused. It’s just a much broader, holistic approach to this whole issue.

Gretchen: Yeah. I think we’ve moved away from being … we were a component and a product provider. We’ve moved away from just being the customer getting a passive part of our product, to really engaging them in the value creation and understanding what their real needs are, and making sure that we’re helping them in the long term. If we don’t play and really understand their needs, we’re not going to have the right solution.

Todd Schnick: Gretchen, I hate it, but we’re out of time. Before we let you go, share with the audience how they can contact you and Xylem and learn more about the work that you’re doing.

Gretchen: Sure. We’re really excited about Xylem. You can reach us at www.xyleminc.com. We’re also located here at WEFTEC. Trust me, you won’t be able to miss us. We’re large, we’re big, and we’re excited.

Todd Schnick: Outstanding, Gretchen. It was a real pleasure having you. Thanks for joining us today.

Gretchen: Thank you … enjoyed it.

Todd Youngblood: Thank you, Gretchen.