Water Management: Where is The Industry Heading?
In the light of constantly growing awareness about environmental protection, being it GHG emissions reduction or prevention of sludge in the soil, or other, reuse of resources at every level of production becomes especially crucial. It is applicable for either increasing overall energy efficiency through the implication of innovative technologies with low energy consumption or pollution prevention by the repeated use of natural resources after they are purified.
Not so long ago we have met the owner of Karme Filtrs Ltd. Andrey Belogorsky, who is working in this industry for almost 25 years. On his own, his likes to say that often feels more of an engineer rather than an entrepreneur. Nonetheless, he certainly had strong entrepreneurial spirit, otherwise his company would not have millions of turnover and hundreds thousands of profit. Other than that, during its business operations, Karme Filtrs acquired one company in Latvia and three daughter companies in Russia, Uzbekistan and Lithuania. Thanks to such kind of business structure, Karme guarantee high quality implementation of their solutions, ensuring individual approach for each end every customer and project.
Such kind of industry, however, is too knowledge-intensive that makes an international exchange of knowledge and experience vital in low-carbon and energy-effective development. Moreover, it is impossible to create uniform solution which would fit each and every client. For example, waste from metallurgic production are way more harmful and dangerous than the ones from household processes, but the term “energy efficiency” takes completely different meaning when speaking about thousands of euro annually, rather than few hundreds. In the end, adoption of existing technologies depending on particular production processes becomes vital for a sustainable growth of innovations.
Talking about water, the first crucial for the industry point happened, according to A. Belogorsky, somewhere around the beginning of millennium. Membrane technologies, which allow purifying water without the use of chemicals and excessive energy, has seen the dawn on the market. These technologies offered the highest-level purification already by that time, and lately evolved in substituting traditional technologies in most of the industries and private sector.
Fortunately, the times production dumped contaminated by their processes water directly into the environment, thus making natural water reservoirs untenable, has passed in the most of developed countries. The latest technologies go further, allowing a production to use all of its water repeatedly, preventing liquid discharge completely. Moreover, these technologies are proven to increase the effectivenes of the power plants by providing them with more time to implement their solutions.
In his interview, Andrey Belogorsky has told about the newest project for his company Karme Filtrs, which is about to implement the aforementioned technology on the Tula territory. Please read more to find out more about that and his vision of cluster future.
How did you start your business?
Accidentally. I mean the industry which I am currently workning in for almost 25 years was appointed accidentally. I have an engineering degree. In the beginning of 90s one of my buddies, who studied in mid school in the Netherlands by that time, have just invited me to visit the Netherlands in order to introduce me to some businesmen, whom he got acquainted with after around half the year of studies. Considering the fact that I did not have any ideas, I decided to go and he started to conduct the meeting between dutch companies and me.
One of the meetings I had was carried out with a quite elderly gentleman who did not even run the business already, but acted as a so called business angel, which means he was a kind of free-of-charge consultant there. Anyways, he was quite well-known among his surroundings because he had invented and patented the general pallet loading system, a kind of special lading system, conveyor belts and whatever… onto the ships. As of now I remember, his name was mister Emarel.
So we had a conversation with a cup of coffee (it took place in Rotterdam, as far as I remember) and I asked him:
“If you were in the same situation…” I told him, as far as possible, everything that happens in Latvia as well as it features and specifics: “If you were me, which direction would you look at?”
He took a thought… “Based on the perspective you could ever have. It is reasonable to go where is nothing, but the perspective,” pondered again: “So there are water, air and… shit.” Took another, deeper thought: “No… Waste. So there are three themes you might want to think on. Furthermore…” He rummaged through his papers: “In Amsterdam there will be held an exhibition called AQUA TECH, which is held every two years. It is a large sectoral exhibition, maybe the largest in the world. You shall try going, there will be plenty European, American and Dutch companies… You are an engineer, so it might happen that your eye will catch something concerning water and waste water.”
Therefore, I accepted the invitation and returned in a month – the exhibition, traditionally, was held in the fall September. This way everything began. As it was necessary to understand in technology, hardware solutions, maybe, I had to dig deeper and deeper. Fortunately, Soviet engineer education implies that, having base knowledge, you can basically go in whichever direction. As a matter of fact, it was the way everything began and, evolved as an agency, distribution we gradually went over to start our own technological solutions design and prosuction of original equipment by enterprise orders.
Am I right that, talking about Latvia and Baltics, the dawn of the industry migh be defined, roughly speaking, by your company?
Not really, there were a few other companies… If we think of those who do exist up to nowadays, it is FILTER Ltd., though they have a slightly different focus now. Water is also present in their business, but they are mostly specialized on boiler and cogeneration station construction. Few other firms, unfortunately, do not exist at this moment already, though they were there in the beginning. FILTER Ltd. is, probably, the only company to be by ear.
In the course of the work and moving to the new levels, have you ever looked back at the experience of foreign companies?
Well, I would put it this way. If we asses our business model from both organizational and technological points of view, then is not copy & paste – it is adaptation. They, of course, gave us a lot. Among our partners, the ones we are working with from the very beginning: a few Dutch companies, Austrian, German, American… They gave us a lot, firstly, talking about what we are as specialists now. It is completely… well, I would say not completely, but more than a half of their merit simply because they existed while there was no such industry in Latvia.
Strictly speaking, there was no such industry in Soviet Union either, as there were only large municipal formations and everything that happens with water – happened at the municipality level. On the contrary, we started to occupy the so called decentralized industry, where you have a facility (private premises, hotel or whatever else) which owners has to settle the same problems on their own at their own risk and account, thus we offer them a technical solution. Our partners were ready to give us a lot and the only thing we had to do is to ask the right questions. They were opened as much as possible to give us their knowledge and experience.
Why did you decide to join the cluster?
The motive was one and the only. I saw that similar non-profit associations and formations also exist abroad. For instance, there is a prototype in the Netherlands – Dutch Water Partnership, where the companies band together to enter new markets even though they are usually competing with one another.
Latvia has entered a recession densely by that time and it was clear that we should look for business activities outside the scope. Even though we had a successful and self-sufficient business in Russia, which is also there for more than 20 years, we had to go further apparently. Then I decided that it would be a good instrument which would also include the usage of governmental instruments particularly, because this kind of activities without support of a government – experiments – have a little perks to my mind.
Why did you choose such distant target markets?
But, strictly speaking, what are the alternatives? Kazakhstan and Uzbekistan are two largest economies after Russia and Ukraine. “The glade is empty” there. Concerning Belarus, Ukraine and even Transcaucasia – everything is more or less “habituated” there.
Kazakhstan and Uzbekistan, on the contrary, was the question of scouting solely. We went there, looked around, and checked that there is demand, loads of specific problems at the place. I mean, including various organizational problems and some financing issues, and the customs rules, so basically, there are… not problems… but let us say, features everywhere. On the other hand, “the glade is empty” there and almost no one is around. There are no language problems as well that is crucial. Moreover, we have the comprehension and experience that would possibly be proposed to partners in these countries. Overall, it was completely conscious and logically justified decision – explicitly Central Asia.
How could you comment our cluster’s future?
I think it will evolve in the sense of evolving into deeper specialization, since in the beginning it took representational function of the companies, which in their turn were the body of the cluster. However, now we shall bear in mind that there is more intervention needed at every stage of promoting each partner to the market, therefore some kind of business constituent appears there. I do not think that the cluster will completely reshape into business structure, though there should be also some kind of business structures nearby… Which, having a slightly different basis, will also render assistance to the third parties, who are not a part of the cluster, but do keen on those sciences.
What were you favorite and most engaging projects?
Well… each of them… Let us look take the point of significance: it was the moment around 15 years ago, when we realized that membrane technologies, which were just commercializing, were outweighing the formerly existing technologies. We also realized that it was especially significant in terms of industries that demand special quality water – either completely desalted or demineralized water. Then we decided to push this technology further, individually designing engineer calculations, production and so on. Later we established an engineer group, which dealt with these issues, subsequently developing the pilot product line together with our German and Dutch partners. Hence, we started to manufacture and supply the equipment. We were competitive in terms of price that bothers market the most and in terms of quality.
Speaking about projects, we set up the first industrial membrane facility in Latvia for CIDO Group in 1997. It was a joint project with Germany and the first crucial project because no one had done something like this here. 20 years have passed since then.
What could you say about your newest projects in Tula, Russia?
Even though it is the largest project, which is 3.5 mln. EUR worth, in our portfolio so far, it is not the only point of our interest.
In our business exists a group of companies dealing with water, which flows out, and companies dealing with water, which flows in. Respectively, these are wastewater and source water for whichever purpose. Nowadays, however, there are many circumstances, including ecology, rational employment of resources, tariffs and a great many other factors that make companies think on using water, which is discharged either into municipal treatment facilities or, purifying inside the production facilities, is dumped into environment, repeatedly.
There is a technological solution that is generally regarded as zero liquid discharge, when the water is purified again after the treatment facilities and returned back into production process. That is exactly the innovative kind of project we have in Tula.
What is the production?
It is a new metallurgical enterprise. We had a prototype some 10 years ago, but it had a different scale and functioned slightly different in terms of technology: we took only a part of water there (sewage) and purified. Here the entire water mass, including storm sewage and water from circular cooling system, is dumped into one pool, averaged and passed for purifying. The project is interesting from this point of view especially, because we could count the projects like this on one’s fingers on the entire Russian and CIS countries’ territories.
However, it is, strictly speaking, absolutely new sphere. There are companies, which deal with water, and there are companies, which deal with sewage; but this is on the intersection of both. That is why we are trying to find the right balance. We do know water very well, while sewage slightly worse. We have to get experience… and we will have to cooperate with somebody. I think we will wind a reliable partner with whom we will implement this thing.
What is crucial in order to stay competitive?
The answer is easy, except it is very complicated, because something shall follow the claim. I think that in our case we went the path of even deeper specialization. Since it is impossible to grasp everything, you have to realize your best competitive advantages compared to other market participants. Considering also the fact that we are talking about engineering industry, you should better have unique, or at least much differentiated engineer product. Everything else follows.
Being a company and dealing with real production, you shall offer the whole range of services: if needed – consulting, if needed – audit, if needed – maintenance, design, production, installation, adjustment… If water is not a part of company’s production (as it would be for breweries or juice production), then it stands in the periphery of interests meaning that it is important, but not critical. In this case, management, as a rule of thumb, would like to hand it over to a single company. They say that they had so much problems that you are more than welcome to take it everything. Therefore, you have to be ready not only to say “yes”, but actually make it real… In the end, it becomes a complex task and requires consistent and methodical approach.
If you go there, you have to understand the challenges you will have in order to be capable in solving them. Otherwise, if you stopped at the only thing, equipment for instance, and do not offer other services… There are plenty of companies offering equipment. Would you offer, in this case, something unique or get lost among the competitors? Generally, it depends, but my answer is – specialization.