By Danny Swalley
Milton Friedman once said, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” While cynical, many folks believe in the underlying sentiment of these words. Regardless of where you fall on the political spectrum, nobody doubts the tremendous influence the federal government will exert over our industry in the coming years. Not since the Great Depression has such a focused, targeted investment in infrastructure been attempted or funded. Therefore, what can we do to ensure this period of intense investment achieves maximum impact? How can even the most cynical among us help the federal government avoid Mr. Friedman’s prediction? As a manufacturer, I believe there are three things we can do to help.
First, we must engage leaders in Washington. If you are not already part of a trade organization who actively engages with Washington, strongly consider joining one. This is especially true for smaller companies. I know from firsthand experience that leaders in Washington want to hear from small businesses because they know small business is the source of talent, ideas, and innovation and they play a critical role in the economy. Not all small businesses remain small, and they are a significant source of job creation. We bring family and friends into our industry because we love the role we play. We launch new products while providing the passion desperately needed to achieve Washington’s many broad business and labor objectives. Washington wants to hear from us! When we connect with those leaders, our voices are elevated because they know we are speaking from a place of true passion and commitment for this industry. Many small manufacturers are second- or third-generation families whose entire fortune is tied to with their company. Who better to speak for our industry? And the impact can be huge. Sure, Washington has a lot of competing agendas, but most agree their intentions are to promote the public good. So let’s help them focus their resources where they can be most impactful.
Second, manufacturers must stay economically grounded. The reality is our products require substantial capital to produce. How many times have we seen other industries go through boom-and-bust periods only to leave behind large voids that take years to fill? We need only look at the housing industry’s collapse in 2008, which created a decade of underinvesting. Today, 15+ years of sub-optimal home building has blocked an entire generation from accessing the American dream of home ownership. Manufacturers must remain disciplined to avoid over-building capacity in response to short-term stimulus. Instead, let’s work with project planners to help them anticipate longer-term needs and plan for the associated lead times. We’re all selling time on machines…. Let’s help our customers navigate this new paradigm. This doesn’t mean underinvesting or slowing down capital expenditures. Instead, let’s keep our eye on the longer-term objectives. Federal spending will come and go with various funding cycles, but our long-term duty is to ensure utilities have the products and services they need to effectively run their systems to provide a safe supply of drinking water and adequate treatment of wastewater. Sharp changes in supply, up or down, tend to have negative consequences in the long run. Better to plan capacity increases around long-term trends. To this end, the more communication with utilities, the better. I encourage utilities to share openly with manufacturers what is needed for both today and for tomorrow. Let us build the capacity to match the public need and not build only what is funded in various cycles of revenue that arises out of Washington.
Lastly, we cannot lose our culture. Spending of this magnitude will create temptation to cut corners, to under-invest in talent, or to water down standards. It takes years to develop and train the type of talent this industry needs, and there are no shortcuts for gaining experience. Early in my career, we were just beginning the previous housing boom. But as demand grew, our industry had two tailwinds: a pool of seasoned leaders and time. While we all focus on 2008, the last housing boom actually lasted almost 20 years. This gave our industry time to adjust. We also entered that period with a seasoned workforce who were able to mentor newcomers. Today, leaders are exiting the industry and newcomers are hard to find. Those of us participating in this next cycle of water technology provision would be well served to learn from our predecessors’ successes and failures. History is a great teacher and can be an even better coach. If we study their work, we are likely to find solid support for maintaining the standards and discipline that built one of the most reliable public works systems in the world. These standards were forged from decades of testing and verification. Let’s avoid the temptation to accept lesser products or sub-optimal solutions simply because the funds are available. We may end up with an even bigger problem in the future.
I believe strongly that our industry is on the precipice of 15+ years of strong demand. The drivers of demand will not subside anytime soon. And while federal spending is welcomed, our future will not be determined by federal spending but rather by the economic conditions that have always driven it. We serve the public, which gives us their trust and support and precious limited resources. We owe them a stable, competitive, and engaged industry. Therefore, as we prepare for the fruitful and busy decade ahead, let’s not forget what makes our industry so special. Let’s look back in five years and find Mr. Friedman’s desert is still filled with sand!
Danny Swalley is Managing Director at Electrosteel USA, LLC, a WWEMA-member company. Swalley currently serves as a member of the Water and Wastewater Equipment Manufacturers Association (WWEMA) Board of Directors. WWEMA is a non-profit trade association that has been working for water and wastewater technology and service providers since 1908. WWEMA’s members supply the most sophisticated leading-edge technologies and services, offering solutions to every water-related environmental problem and need facing today’s society. For more information about WWEMA and member benefits, visit https://wwema.org/membership/.