TLV Insider recently sat down with Gabi Yankovitz, the Arad Group’s General Manager, to discuss the company’s position in the growing global water metering market:

What is the current state of water delivery infrastructures in the world’s major cities and what are the trends towards change that are being enacted to make them more efficient?

There are several factors that are currently impacting policy makers everywhere in terms of the management and distribution of fresh water. Foremost, it’s imperative to understand that the global water crisis is very real. Demand is driven by a consistently growing world population, burgeoning urban centers and the emergence of a strong middle class in heavy populated geographies, such as China and India. On the supply side of the equation, our natural water sources are dwindling, due to climate change, drought, contamination and mismanagement. Water is becoming increasingly expensive to find, maintain and transport. Markets such as the US where a cubic meter of water used to cost just a few cents have seen prices skyrocket to nearly two dollars. So the public needs to be educated that water is far from free and that there are dire consequences to wastefulness.

Can you describe the role of water metering technologies in aiding the conservation efforts made by utility companies, municipalities and other agencies?

Nations that in the past never measured water consumption or at best charged a flat rate are now forced to rethink their policies and introduce more stringent municipal water metering and management systems.

On average, the loss in water supply pipelines all over the world is estimated to be 20%. There are a lot of contributing factors to this troubling statistic. Water loss can stem from underground leaks that are never found, gross exaggeration in sprinkler systems in public parks and roadways that go unmeasured or outright theft.  In the US alone, over two trillion gallons of water are lost annually due to breaks and leaks in the water distribution system accounting for potential billions in lost revenues.
 
To what extent is water metering a mission critical issue?

It’s unfathomable to think about the consequences of such mismanagement if continued unchecked both from an economic and environmental standpoint. It’s clear then, that the water pipeline in today’s cities can no longer function as a mere delivery infrastructure – it has to migrate into a smart network capable of gauging usage accurately and detecting costly faults in real time. Water metering is therefore indeed a vital difference maker and represents the transition point from the frivolous policies of the past and the need to ensure the future of the world’s precious water supply. 

How prevalent are water metering systems in today’s urban centers?

The penetration of water metering practices is not as widespread as you may think. The UK, for example, is only 32% metered. Russia is at 44%, the Nordic countries at 48%, Brazil is at 58%; and the US has a 63% rate of water metering penetration. Even in countries like China (78%) or France and Germany (100%) where water metering is very prevalent, most of it is still conducted in the old fashioned way – onsite reading of meters that requires the physical presence of workers to come to each and every house, factory or public building and record data for billing. These readings do nothing to verify whether consumption is really reasonable or influenced by other factors, such as faulty pipes or theft. And that causes a lot suspicion and mistrust among consumers who think they are being overcharged. Even more significant is the fact that standard meters can’t indicate if there is a critical leak or malfunction somewhere in the pipeline.

Describe how Arad’s automatic wireless metering network systems change the water metering field. To what extent is it a breakthrough in data collection and fault detection?

Arad’s automatic meter reading (AMR) systems transform water pipeline infrastructure into smart networks. Because we use wireless connectivity, data can be gathered all the time without costly and cumbersome onsite inspection. And it goes far beyond billing; our systems detect faults, leakages, and thefts in real time, so that if need be automatic shutdown can be initiated on the spot to prevent further water loss and their high cost. 

Where is Arad positioned in the market vis-à-vis the competition?

The whole world is moving to AMR. Out of the approximate eight million units per annum installed, close to 70% are AMR-ready. Countries like Canada that had a low rate of penetration (20%) but are currently looking to standardize metering all over the country are leapfrogging the old metering model and going straight to AMR – anything less simply wouldn’t be cost effective. We are clearly not alone – there are other players out there with significant market share. But Arad is the only vendor to offer true built-in wireless technology into every meter. It’s very robust, reliable and incorruptible. It also requires no additional knowledge from an installation standpoint, so it makes for a very cost-efficient process. And the rich interface we provide enables water contractors to follow multiple data sources and really control the network from every conceivable perspective.

What are your current target markets for the coming years? What will make municipalities more likely to choose you as a turnkey provider over others who are more strategically located?

We are strategically located. We have an exceptionally strong presence in the US, which accounts for 72% of our total business. It’s not just a matter of selling products – we provide professional services through our local subsidiaries, partnerships and M&A activity. Our pilot projects in the hottest emerging BRIC markets – Brazil, Russia, India and China – are real and working and on the verge of becoming viable projects for us. And in Canada we have a new subsidiary that is poised to take advantage of what promises to be a high growth market.

Finally, what makes Arad an attractive target for investors?

Water is clearly a timeless market. Demand will only continue to grow and innovative technologies for smart water management like AMR will always be sought out by investors. If I were a foreign investor, I would look seriously at Arad for several reasons: We are not a start-up. We’ve been in the water gauging business for 60 years and in the AMR space since its inception. Arad has more than doubled its sales in three years, rising from $50 million in 2005 – the year we went public on TASE – to $109 million in 2008. We have developed our core knowledge base in a country where scarcity of water continually breeds innovation. We have great R&D, proven installations all over the world and a significant established presence and record in the US. We also have proven pilots showing how our smart meters can interface with other utilities, such as gas and electric, which also face serious conservation and environmental challenges. Arad is also still priced at relatively affordable levels, which should make it even more attractive, considering its track record and potential.


For Market Data & More Details from the TASE Website, click here >>