Pipe and hardware companies should benefit from heightening concerns about U.S. municipal water infrastructure and $300 billion of forecasted capital expenditures over the next decade, according to a new report from Bluefield Research, U.S. Municipal Pipe Markets: Trends, Opportunities and a Changing Competitive Landscape in Water.
Bluefield forecasts that new and replaced pipe and hardware infrastructure will make up more than 57 percent of municipal utilities’ total capital spend through 2026.
“The public does not want to think, or even know, about the 1.6 million miles of pipes underground, but hundreds of thousands of water main breaks and lead-tainted water have begun to put a spotlight on this historically overlooked sector,” said Reese Tisdale, president of Bluefield Research. “In fact, the average age of water pipes continues to climb – from 25 years in 1970 to 45 years in 2020 – largely because of underinvestment.”
While municipal demand for pipe solutions is expected to scale going forward, the pipe sector’s material profile, for water and wastewater, is also being reshaped. New spending on pipes is showing a preference by utilities and engineering firms for plastic pipes (PVC and HDPE), which account for $97 billion of the 10-year total. This trend highlights the continued growth of these materials, largely because of cost.
As pipe materials change, so does the highly fragmented supply chain. Companies are expanding their portfolios of pipe technologies and innovative solutions, and in some cases, entering new geographies to capitalize on growth. At the same time, positive signals for increasing demand have sparked merger and acquisition activity. Bluefield has tracked 28 acquisitions of pipe companies, totaling $6.3 billion, since the start of 2016.
The scale of investment going into upgrading pipe networks is already driving more innovative, smarter solutions to stay ahead of rising costs. More than $2.7 billion will be directed towards asset condition assessment and pipeline monitoring through 2026, while operating expenditures on leakage management, alone, will total $1 billion through the forecast period.
“Replacing water pipes is extremely labor intensive and costly, so utilities will increasingly be forced to look for ways to squeeze costs with more cost-effective materials, installation techniques … and network analysis,” said Tisdale. “Certainly adoption will take time, but innovative solutions are in front of them.”