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Ecolab built its business on an impending catastrophe
While startups create apps to save the world, the parent company of an 85-year-old Naperville business grows by innovating treatments to ensure clean water and safe food in ways that save energy.
Ecolab, based in St. Paul, Minn., had $11.8 billion in sales in 2012 and forecasts topping $13 billion this year by selling hygiene, food-safety, water treatment and energy-saving products and services to Coca-Cola, Hyatt Hotels, Kraft Foods Group, McDonald’s and Nestle, among other global conglomerates. Its clients in 171 countries also include restaurants, cruise lines, dairy plants, manufacturing plants, mining and mineral processors, and pulp and paper companies.
As a result, Ecolab Chairman and CEO Doug Baker finds himself spreading the gospel of water conservation and sanitation amid an impending water crisis.
Baker talks with Grid ahead of his keynote speech Thursday at the Executives’ Club of Chicago’s awards luncheon at the Hilton Chicago.
The Naperville business, Nalco, is playing a big part in Baker’s ambitions.
Ecolab acquired water treatment company Nalco in December 2011 for $8.3 billion to expand its reach in selling technologies to ensure clean water worldwide.
“Naperville will continue to be a major employment hub because our global water business is headquartered there,” Baker says.
Nalco, founded in Chicago in 1928, employs about 1,000 in Naperville, including 215 workers in a research and development lab. Ecolab, which employs 44,000 worldwide, also has 954 workers in manufacturing plants in Joliet, Clearing-Bedford Park, Elk Grove Village and South Beloit.
The Nalco business is aimed at what Baker describes as “a water-starved world” verging on “human calamity” in certain areas such as the Middle East and Northern Africa.
Companies must navigate the situation to stay competitive and to grow, he says.
“It will drive big changes,” Baker says, perhaps even forcing heavy water-using companies to relocate closer to rivers and lakes like in the old days of steel manufacturing.
Here’s the situation: Freshwater accounts for 2.5 percent of the world’s water supply, with the rest saltwater. Less than 1 percent of the world’s water is easily accessible to the world’s 6.8 billion people because much of it is trapped in glaciers and polar ice caps.
The crisis is worsening because of converging trends: More people in the developing world are eating protein-rich diets and water-gulping manufacturing plants are expanding to keep up with burgeoning middle classes in countries such as China and India. At the same time, water sanitation and energy savings are needed in North America, where natural gas hydraulic fracturing and oil sands mining are expanding as oil and gas companies find new ways to exploit energy resources.
“The heart of the challenge is agricultural and industrial production,” Baker says.
Analysts credit Ecolab for its goal of generating 35 percent of its sales from products and technologies it has developed within the past five years. The newer innovations drive profits.
The innovations mean that laundry services in Chicago-based Hyatt and other hotels use 40 to 50 percent less water and energy to wash towels using Ecolab chemistry that reduces the number of wash cycles required.
Another innovation, a dry lubricant, is now sprayed on Coca-Cola bottling plant production lines to keep them running rapidly, doing away with the old method of running water 24/7.
Wastewater plants and companies with industrial boilers can now keep real-time tabs on corrosion by using Ecolab’s real-time detection system and software programs with automated chemical feeds. The system collects and analyzes data and sends alarms to workers’ mobile devices.
Despite the looming water crisis and seemingly invisible high-tech efforts to control it, Baker remains optimistic.
“My optimism is predicated on our willingness to adjust and adapt,” he says. “The accessible freshwater is pretty darned small. It’s hard to argue that increasing populations won’t pressure the situation because water is the primary means of growing food.
“We need to make sure the conversations are fully formed, and that everyone understands the tradeoffs,” he says. “And then we need to do much more beyond conversations.”
Photo courtesy of Ecolab