Xylem After the Spinoff

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About 18 months after ITT became three separate companies (finalized on Oct. 31, 2011), Xylem continues ITT’s focus in the water industry. I was happy to talk with Ronald Port—VP and director, Treatment Business Unit—and Andrew Fraher—director of marketing and business development, U.S., Water Solutions—in Dallas at AWWA-ACE 2012. The consensus between Port and Fraher is that Xylem is going strong since the split.

“In general when you look at the spin and Xylem becoming its own company, which has a pure water focus, has been good from the standpoint that all our investments, all our energy, all our resources are around water,” Port says. “Solving problems for our customers in municipalities—that part has been exciting. The press and everything around Xylem and what it does is gaining momentum. The employee base is more focused and directed. Most of the people in our company have been doing water for anywhere from 10 to 20 years.”

Fraher agrees that the transition has been a smooth one. “Leadership and everything is much more focused. It’s easier for our employees to understand what we do, and they rally behind it.”

Xylem has three divisions:

  • Water Solutions—municipal water and wastewater transport and treatment
  • Residential & Commercial Water (RCW)—pumping solutions for commercial and residential applications—including residential, agricultural, landscaping, commercial and light industry
  • Analytics—instrumentation division, which has both field and laboratory instrumentation


In many cases of mergers, acquisitions and splits, organizations experience internal struggles when managing the changes, but not Xylem.

“The program managers who went through and did the spin did a wonderful job,” says Port. “The tough part was always going to be the shared facilities and the shared services and how you deal with that. However, they put in service agreements that clearly defined the responsibilities and the timeline to allow for a smoother separation of certain shared service but not cause a problem immediately with a cutoff. The big thing was of course separating the email servers. All that went flawlessly for the most part. There really haven’t been any internal struggles organizationally.”

Xylem was originally ITT’s fluid technology division, so organizational changes were minimal.

“ITT always wanted to try to drive a lot of cross value center work, and that’s kind of happening more so. Because now, from our standpoint with water solutions and working with Analytics and the ability to integrate Analytics’ control systems and instrumentation with our process equipment is just a natural fit. Now, we’re starting to develop solutions that allow us to put those two things together and have a better value proposition for our customer. Those kinds of things have improved greatly,” Port says.

Fraher agrees. “One of the things that happens with something like this is that people become very concerned about their jobs and the situation in general. This is the second time I’ve been through one of these, and I had not a single person walk up to me and say, ‘I’m really concerned. What do you think about the split?’ It was just full speed ahead. What that does for productivity is phenomenal. I [can’t say enough] about what the program managers did to maintain that piece of it. Not only for our customers to make sure it wasn’t disruptive for them from an equipment perspective, from process and order entry, but also making sure that our people were boring ahead, because our customers sense that. Hats off to the people that did that. They really just did a fantastic job.”

Internally, the process went forward smoothly. What about externally, with investors and customers? Since Xylem maintained the same, recognizable product brands, no problems arose.

“We recognize the strength in our product brands, and because we’ve always maintained that integrity, that’s what our customers associate us with, first and foremost. Being able to leverage the synergy between the product brand and the Xylem brand and building that cohesive brand strength between the two has [allowed] Xylem to be accepted much faster than you might have even thought it would be,” says Port.

Also, when part of ITT, the defense component of the company caused some investment issues. Many organizations have bylaws that do not allow them to invest in defense companies. “Now that we’ve split off and are a pure water company, we can attract a lot more investment that we previously didn’t have access to,” Fraher says.

After the first year, Xylem’s goal is to focus on helping its customers solve problems, which includes planning for whole system efficiency and providing aftermarket services—a focus that will continue into 2013.

“When you look at the challenges in front of people now—money is tight,” Fraher says. “They’re trying to figure out where they’re going to get the money; the infrastructure is aging. The question is: how does Xylem play into helping them solve those problems? There’s clearly a shift from the capital part of the market to the operations side.  People just aren’t spending money on new installations. You have to figure out a way to make it work. How you do that is updating existing technology. We have a Total Care Program that is focused on making sure that we’re working with end users—either directly, through our distribution channel or potentially through third-party providers.”

Energy efficient pumping is key for Xylem. This focus is understandable considering that about 80 percent of the cost of pump operation through its lifetime is its electricity—not the upfront capital costs.

“The whole concept of intelligent pumping is not just looking at the pump in and of itself, but its integration with controls and a complete pumping solution, which is where we’re moving,” says Port. “That is where our energy and resources are going–providing that complete efficient system, which is going to save them money.”

Both see growth as Xylem continues to focus on its Total Care program and help its customers solve their water problems.


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