A robust water infrastructure, including drinking water systems, wastewater treatment, stormwater management, and desalination plants is critical to our physical and economic well-being, yet the US relies on an antiquated water system plagued by leaks, contamination, and other deficiencies.
Infrastructure Decline
Approximately 6 billion gallons of treated water are lost daily due to leaky pipes, and many facilities have difficulty meeting modern water quality standards. Changes in weather patterns, including more rain and hurricanes in some geographies, have also contributed to a degrading infrastructure.
Funding Woes
The American Society of Civil Engineers (ASCE) estimates that there will be a $105 billion funding gap for US water infrastructure over the next decade. Federal funding for water systems has declined over the past 50 years, contributing to inconsistent maintenance and repairs, an inability to scale systems to meet growing demand, and a lack of resources for innovation and modernization.
Aging Workforce
To add to these challenges, the skilled workers who keep a compromised infrastructure running are approaching retirement age, with few qualified workers behind them to take over their responsibilities. According to the American Water Works Association, nearly one-third of water sector employees are eligible to retire within the next decade.
Private Equity Solution
These deficiencies have created an opportunity for private equity firms to invest in solutions that address these issues while generating returns. According to Tom Rooney, Operating Partner at SciensWater, a research-driven private equity fund focused on the water industry, “the water industry in the US is profoundly fragmented with tens of thousands of regulated operators, many of which are far too small, including all the way down to ‘mom- and-pop’ size operators. By acquiring these smaller players and scaling-up their capabilities, the firm brings quality and efficiency to the water system, delivering cleaner water at a cheaper price while meeting all compliance requirements.”
Talent Renaissance
It has been challenging to recruit traditional infrastructure talent because today’s engineering degree graduates are more interested in a path that relies heavily on technology. Much of the water industry innovation funded by private equity is focused on digital, AI, and ML solutions, including IoT smart meters/sensors, AI-powered analytics, automated leak detection systems, smart irrigation systems, and digital twin technology. This industry pivot will change the talent trajectory needed, and Rooney believes “we can recruit the best engineers by bringing in data plays to improve systems.” Rooney has built relationships with Columbia University, Johns Hopkins, and Arizona State University to fuel this talent pipeline.
In addition to engineers, private equity portfolio companies need executive talent to oversee finance, operations/integrations, sales, marketing, R&D, technology, compliance, human resources, public relations, legal, and government affairs. Rooney notes that “sourcing this talent may require expanding the search outside the water industry, and a retained search firm is an essential strategic partner in this process.”
Emerging opportunities in the water industry can open entirely new career paths for seasoned executives exiting an industry experiencing contraction or those seeking an alternative environment to a publicly owned company.
About Human Capital Solutions
Human Capital Solutions (HCS) is a high-touch, boutique consulting firm specializing in Retained Executive Search, Professional Recruiting, and Professional Coaching. Our team of subject matter experts partners with organizations across the U.S. to engage and deploy human capital to achieve desired business outcomes. HCS specializes in Private Equity, Technology, Hospitality, Industrials, Life Sciences, and Healthcare executive search.