Global stocks snapped back yesterday after central banks pledged to intervene sharply.
So the economic situation may well work itself out.
But there will be winners and losers, and the Chinese economy is probably the biggest loser.
Scrambling to replace Chinese suppliers
I was speaking with a friend who sells a successful protein powder. He saw all his prepaid orders for packaging materials held up in China.
He had to scramble to find replacement products in Malaysia, Vietnam, Thailand. He got his products, fortunately, but had to pay again for the privilege!
Our current administration has been pushing for manufacturers to come back to the USA. Tariffs on China have also been favoring other Asian countries. Coronavirus will cause this trend to accelerate.
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Coronavirus will accelerate existing trends
You can think of all the trends that will accelerate: eating at home instead of in restaurants; watching shows on Netflix instead of going to the theaters; choosing vacation spots here at home instead of abroad; meeting online instead of in person…
I say continue to accelerate, because they were already well underway when this dislocation occurred.
Now, investors are looking for trends people haven't thought of, yet. And water is one.
Well actually, there are two.
Both these trends have been going on for decades, but now they are accelerating.
Big Trend One: Decentralization.
Industries doing their own water treatment, mostly because central systems
are increasingly failing.
Our own Dan Early started seeing these on-site projects two decades ago.
Now, like the brewery that had to build its own water treatment plant, they
Source: "Closing the Loop─The Future of Decentralized Water Webinar" Lux Research
Big Trend Two: Maintenance.
When you don’t invest in new systems, you have to spend more to maintain the old.
This isn’t a new trend – we have seen Operation and Maintenance (O&M) costs rise by more than seven times since 1960.
We will see much more spending on refurbishment and maintenance, to keep those old systems running longer.
But all this must be done at a lower price with higher quality.
That's the other big trend: lower cost, higher quality.
Standard design = lower cost, shorter install time
At OriginClear, we were recently able to slash the price of our pump and lifting stations.
We did this by standardizing their design, eliminating both the extra cost and the delay of customized systems.
And we have the quality advantage of our modular design, and our Structurally Reinforced Thermoplastic (SRTP) material boasting a lifecycle of up to 100 years. (Protected by five patents.)
This is so important that a city in the U.S. mid-Atlantic region recently mandated that their engineers use heavy-duty plastic pump stations instead of concrete; and pointed to OriginClear.
Using filter membranes again. And again.
In maintenance, we are seeing that users who previously would only replace their filter membranes with new ones, are now willing to have them cleaned.
But they must be similar quality.
A kidney dialysis clinic still needs the same quality of water treatment. They will accept membrane cleaning only if it delivers quality within the same high range as new.
We are currently working with a company that delivers exactly that: extremely high quality membrane cleaning, at highly competitive prices.
Our discussions with this company are very interesting, but I can’t comment further. I am meeting again with them today, and will report on the outcome in this Thursday’s Interactive Briefing.
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Riggs and Team
President & CEO
OriginClear, Inc. (OCLN)