USA vs European Engineering Thinking and Marketing Repercussions for Water and Wastewater Manufacturers and Designers

Don Voigt, P.E. Engineered Equipment Integration Port Washington, Wisconsin, USA don@equipintegration.com (414) 940-9281 (cell)

Dons History

6 years in engineering university 2 years of research & development 5 years as industrial design engineer 35 years of being the go between for engineers in manufacturing and engineers in consulting in the construction of water treatment systems

In a Career 35 years

Consulting engineers were permanentnow 2 year tenure and bidding of engineering work Owners went from no voice..or over-shadowed by low bid contractors to aware and dominant in a team environment Europe came from foreign to us Information went from 1 week to deliver a letter recommendation to 1 minute for an email summary/recommendation Costs of equipment went from hidden to public knowledge Total Cost of Ownership has become dominant over low bid cost selection for equipment

In 35 years, how have world markets changed?

From rare flights to USA/Europe to multiple trips per year From licensed technology to who knows who is making what manufacturers location unknown From local engineers and contractors to World Design-Build Conglomerates

Municipal vs Industry

In Municipalities, equipment is a primary target for project cost reduction of course, this is short term thinking. Distrust is a common thought process In Industry, equipment is bought based on life cycle cost. Thus, equipment quality and performance is important to the selection. Trust is part of the expected equipment cost and performance

How does a USA person think?

Short term expect change Nothing lasts forever (divorce, cars, equipment) Quicker better cheaper I want it now and, for less $ Trust? Based on lawyers and law-suits if you dont do it, Ill sue you

Trust by: Francis Fukuyama

Trust lowers costs by eliminating cross checking. In USA trust is based on lawyers this may be a weak future concept

Recently, the Harvard Business Review Bulletin asked Dr. Steven Covey what he thought the biggest shortcoming of American business was.

Steven Covey said

Its low-trust culture, characterized by defensive and protective communication, hidden agendas, internal politics, and underutilized human talent, he said.

In all people interconnect networks, the world is becoming flat

In order to be as efficient as Industry/Privatizers, trust each otherteaming is the optimum

Constructor

TEAM

TEAM

Consulting Engineer

Corp. Board &/or Commission

TEAM

TEAM

Manufacturing Engineer

TEAM
Owner/Operator

Like the book Blur, look at who is adding value and who is not. Reduce duplicate markup costs. Be open on costsand value.
25% Switchgear Manufacturer Distributor 10% Electrical Contractor 10% GC 8%

Owner

Courtesy of

Get direct! Reduce markup costs!

Mark State up Tax 25% 5%
Switch gear Manufacturer $100 initial cost

Mark State up Tax 10% 5%

Mark State Mark State up Tax Up Tax 10% 5% 10% 5%

GC $198.00

Distributor

Electrical Contractor

Owner

10% 5%
D/B/Team

6% 5%

$151.00

A potential Savings of nearly 1/3rd of equip. cost

The Blur
by Stan Davis & Christopher Meyer

The World is Flat in determining who does what Who Does What Determined by your Value Added Customers, Designers, Manufacturers, Service Providers - All Transferring Money and Value Added on a 6 Lane Highway

Value is changing
Values of different portions of systems change over time, requiring different business models and approaches to $ savings
Automation Business

1985

1990 TIME

1995

2000

Openness and information flow

Ease of Access to Knowledge Competitive Nature of Business Openness to World Markets
1950 1980

Internet

2010

Everything is speeding up. Get there quicker!

Speed of all things related to human endeavors

Internet

1950

1980

2010

Speed and access to information result in timely and efficient solutions

Water/Waste Project Completion Times

1950

1980

2010

Cost of cars (and pumps, water plants) is available to everyonesoon

Knowledge of Total Cost of Ownership of Cars, planes .and.... Pumps
1950

Internet

1980

2010

This year.. China will graduate 250,000 engineers

the US will graduate 50,000...

and India 125,000. they all speak English!

R&D centers ..MIT Boston or Shanghai??

The World is Flat

In 1905 Three weeks by ship

In 1955 Three days by air

In 2005 One day by Federal Express

The World is Flat!

In world markets, go direct is everywhere Energy is king watch the watt meter Every person is (or could be if they want) connected (internet/email) and - or

Keynote Address: Small Business Innovation Research Conference March 8, 2005

James B. Miliken

Success in this new economy will depend on our ability to lead in innovation. The Council on Competitiveness, in its recent report Innovate America, says innovation is the single most important factor in determining Americas success through the 21st century. The Council noted, For the past 25 years we have optimized or organizations for efficiency and quality. Over the next quarter century we must optimize our entire society for innovation.

Excerpts taken from Fortune Magazine, Aug. 2005 article titled

Can Americans Compete?

..you might wonder why were constantly reading about Chinese graduates in engineering and not in law, medicine, journalism, or philosophy? because economys successes are closely tied to technologydeveloped through research such as that which created the transistor and the laser. U.S. spending on R&D will have to increase if the country wants to remain technologically dominant. How we respond in our businesses, our government, and our culture will shape America in the deepest way.

2 million engineers in USA workforce

China on a steep rise

In the USA # of engineers is declining

How is equipment procured in USA past present.. and what are future trends?

Shell games waste everyones time and money. Get to the point quick!

Old conventional bids are shell gamesget to the point (price) fast and cut through the mystery of the actual cost of equipment!

Traditional Method of acquiring Water and wastewater systems in USA

Municipality

Consulting Design Engineer

Operators

Contractor Manufacturers Representative

Historically, project progress in USA is slow, expensive, and relies on attorneys as back up

European engineers offer an emerging project design/construction model

Decide/select system Team with industrial engineers early in the design get prices early on Show brands and obtain authorization for designs Proceed with design of the system as a team approach

What is the USA engineers model?

Gather information from a multitude of sources with no knowledge of credentials Attempt to design around patents and genericize products/processes Write specifications which are 5X deeper than the actual description Attempt to find multiple bidders the more the merrier! Battle through the projects and hope for the least amount of litigation/change orders

An understanding of the project scope and the owners definition of quality?

Owners Vision

Engineers Design

Contractor Delivery

The owner, not the construction contractor, needs to system control quality
Belt Press Bid Tab
Ashbrook: Andritz: Or Equal: $203,000 $198,000 $180,000 Low Bid

Selection?

Total life costs municipal projects

Public Interests

Community Risk
Operation &

Maintenance
Equipment Cost

Construction

Methods of purchasing leads equipment manufacturers investments

Frequency
100% Base USEPA Funding Bid 50% Direct purchase by owner

or equal clause
1980

1970

1990 Year

2000

2010

Equipment Decision Origin Is Changing

Decision Maker Influence

1980

1990
Year

2000

2010

Milwaukee, Wisconsin 24 Winklepresses

Over 50% of all equipment purchased in the past 12 months was owner selected

Exit

German engineering why so unique?

Watch the kids play Nintendo or Legos (Toy Tractors) Long term vision - 100s of years vs minutes Machinery is serious business (120 mph) See www.deutchesmuseum.de

Major water treatment process equipment items and their inventors

Product Process
Screw Pumps Fine Screens/Washers Storm Screens Vortex Grit Grit Washer Fine Bubble Aeration Submersible Mixers Progressive Cavity Pumps

Inventor (Nation or country)

Dutch

Germany
Sweden Sweden Germany England Sweden French

Major water treatment process equipment items and their inventors

Product Process
Sludge Thickeners Belt Drums Sludge Presses Sludge Dryers UV Disinfection Ozone Austrian Austria/France Germany French

Inventor (Nation or country)

Germany

Whats with the European/German engineer?

Why is she/he so innovative and highly regarded?

German Engineering an Ethical model?

German engineers have universal marks everyone knows if you are an engineer.or not. German engineers are widely recognized for their reverence for invention. German engineers have a very comprehensive code of ethics concerned for the greater good of our environment and the world as a whole.

Engineering Intra professional Ethics in Germany

How it differs from USA

Every Engineer in Germany is identified/known by a specific title Dipl.-ing Engineering social Ethical Codes are similar to USA with a focus on Environmental responsibility in all aspects of engineering work

Copyrights are highly respected and it is unlawful to copy designs of others without the specific citation of the original author

A sense of history & experience

Engineering Intra professional Ethics in Germany

How it differs from USA

Patents are proudly displayed on European literature/brochures of equipment but are specifically deleted for USA use Engineers in Europe are prepared to specify new systems based on knowledge of the competency of the engineers who suggest/offer it. In the USA, since manufacturers hide who is and is not an engineer, there is complete skepticism as to equipment or engineered products since competency is unknown and unrevealed (President of S/L refusal to allow P.E. on letters)

Top 5 Companies Receiving Patents U.S. Speaks Loudly

Year 1970
G.E. U.S. Navy AT&T Westinghouse

Year 2000
IBM NEC Sony Samsung

General Motors

Microsoft

25%

Oil Consumption versus Population

20%

15%

Oil consumption

10%

% of world population

5%

0% USA China Japan Germany Russia India

Energy perspectives in 2012

European electric Power costs are 5X USA Fuel costs are 4X USA USAs globe vs. the rest of the worlds globe Energy & Environmental concerns are high ethical issues elsewhere but still not in USA!

USAs world

vs

The rest of the worlds resources