Paul Hubbard, chairman of valves and fittings manufacturer AVK UK, believes that by driving down prices today the UK water industry is piling up big problems for tomorrow.

Price must always be a consideration in any commercial relationship between customer and supplier.  But it has now become so dominant in the UK water industry that it could do irreparable harm to its long-term sustainability.

The rapid development of the global economy in the last decade has intensified competition, and that can do nothing but good if it serves to deliver greater value for the benefit of all.  As a world-class player, the AVK Group has had a full role in that process, investing in its supply chain as both a customer and a supplier and working to maintain its competitive position.

Similarly, the expectations that the utilities have of the suppliers who contribute to their treatment and distribution infrastructure are entirely reasonable.  They are, after all, under considerable pressure - on the one hand from their obligations to OFWAT, and on the other from customers who (equally reasonably) demand better performance and value for money – and both of these against a background where they must reduce whole-life costs to achieve their own financial targets.  They need to be confident that they are associating themselves with good engineering; products that their contractors can put into the ground ‘right first time’ and that they will have no reason to go back to for 25, 50 years or more.

So there is no disagreement about the ends, but it seems to me that today there is a reluctance to acknowledge – still less value – the means by which the ends are to be achieved.

In the course of my work I meet many senior operational figures in the UK water companies, yet in my recent experience only one has been prepared to recognise that suppliers put value into their process, and that it must be recognised financially. When utilities ask us to work with them on product innovations that address issues of concern to them, we’re happy about that.  In fact we take it as a compliment, because it shows that they recognise that we know our business well enough to help them with theirs. When the expected funding for a project doesn’t materialise and budgets have to be revised, we’re prepared to go away and do the value engineering necessary to keep the show on the road. And when customers ask us for carbon emissions data about one of our products to pass to their end user, we’re pleased that we’re in a position to provide it.

For us, none of these examples are hypothetical; they are current or very recent experiences.  But there are aspects of all of them that make us less than happy.

We are less than happy when our input into the development of a new product is disregarded when we try to negotiate a fair price for it; less than happy if contractors to our framework partners use our negotiated prices as a starting point for another round of cost-cutting; less than happy when competitors abstain from the bidding process, only to materialise at the last moment with a lower price; and less than happy when our foresight in devoting three years to developing a working carbon management strategy (the first in the industry so far as I am aware) is treated as a ‘free issue’ item.

And - above all - we are less than happy knowing that, as a consequence of the current obsession with ‘price, price, price’ to the exclusion of all else, there are water infrastructure products going into the ground that will fail prematurely because, contrary to the claims made for them by suppliers, they do not meet mandatory standards and specifications.

This worrying situation is the outcome of the progressive out-sourcing of responsibility for crucial product engineering issues, as every link in the supply chain fights to become leaner and meaner - initially from utility to consultant, and then in turn to main contractor, sub-contractor, supplier and now manufacturer.

If you come to the manufacturer you’re coming to the right place of course (certainly in the case of AVK, because we can show you exactly how we meet all your requirements), but please understand that the expertise we can offer you has been an investment to us.  So it must also be an investment to you.

That’s only reasonable - isn’t it?

DN100mm RSGV BS5163? - After less than one years service the product was replaced at a cost of £3,000, per valve, not to mention the disruption and loss in water quality and service.

A CRITICAL FEATURE OF THE RSGV IS THE WEDGE - Poor design, process and manufacturing control lead to premature failure, affecting water quality and service levels.

This article featured in the June editions of Wet News & Water Active