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2026.10.01 | TB | Chemicals | US Water Treatment Chemicals & Hawkins

原标题：US Water Treatment Chemicals Market & Hawkins – Senior Executive, Supply Chain at Veolia Water Technologies (Veolia Environnement SA)

#chemicals

Third Bridge · 2026-10-01

Client-led • 23 Sep 2026

Companies: VIE FR, HWKN US

Expert Senior Executive, Supply Chain at Veolia Water Technologies (Veolia Environnement SA)

Agenda

Introduction

Client [00:12:47]: We're trying to learn more about Hawkins. It's a bit of a niche space. It would be helpful to kick off with your role.

Expert [00:13:53]: Sure. I work in supply chain, have responsibility for North America. One is equipment, one is product, one is analytical instruments, and then chemicals. That's probably the one that you're most interested is in chemicals business. Basically, we have a service model within that that we run. We run basically that monitoring and services is where we make most of our money, but then we also supply chemicals. If you're particularly with Hawkins, then obviously, in the distribution space, they're a competitor because municipalities, industrials, our customers can either get it from the Olins or OxyChems or from us or from a Hawkins or Brenntag and the other distributors. It's a commodity business. It's definitely a logistics business. Where is the total cost? Our niche is, "Hey, we want to do services, we want to provide everything from the monitoring and then we'll provide you the chemicals as well." Again, this is industrial and municipalities as maybe a little bit more municipalities when it comes to, I think, the products that were on the screeners, again, the acids and the bases, but again, that's our business or our responsibility really for that supply chain piece of it.

Questions

00:15:10] On the chemical side, the water treatment chemical industry is split between big players, such as the Olins, Brenntags, Veolias, Chemtrades, Univars, etc. The big players target the big customers, the bigger cities. The smaller ones, such as Hawkins, target smaller towns or counties. Does that sound right? Would you say that's too stark a divide and there's more overlap?

Expert [00:16:28]: No, I think you're right. I don't know, call it a 2x2 matrix. It's one is just on the scale. Again, is the Olin, Westlake, OxyChem they want to break it up into small lots and businesses, probably not. Almost their minimum quantities will push you to the LAs or the big municipalities or if it's a big industrial complex that has a lot of order, they'll go right to the producer basically. Your smaller ones, then they go through a distributor and then they'll get everything from that distributor for water chemicals and then that distributor holds some inventory, so they don't have to do too much.

I think the second line that I'd cut a little bit is almost the services or the expertise or the technical side. Your smaller ones or municipalities usually don't have too much of an engineering or technical or quality lab background. It will be the Olins and the producers, but again, if somebody has that technical expertise, then they can go right to the producers or the distributors. It's a little bit the size, what you laid out, I think, is accurate, but then I think there's another split of do they have the technical ability to order and know exactly what dosage, it's not that difficult, but it still requires some design work and then the quality manufacturing piece.

Client [00:17:55]: If you are a big manufacturer, such as a Solenis or Olin, you are either selling directly to the LAs, New York Cities, Miamis of the world, the biggest industrial plants or selling to a distributor who will then sell it to smaller players. Is that right?

Expert [00:18:37]: Yes, that's spot on.

Client [00:18:45]: There are the big distributors, too, such as the Brenntags, Univars of the world. Are they, given their size, mostly servicing bigger customers or will they service small ones, too?

Expert [00:19:28]: They will. They'll have some minimums as well. Again, it depends a little bit on what they want and the frequency. They'll service. They might upcharge a little bit to make sure they're getting their margin back if it's a super small or sometimes, again, they might play in the drums, they're not going to go into pails, for example, they might go IBCs and drums are packaging. If you need a 5-gallon drum, that's not us kind of thing.

00:20:12] Let's say I'm a big town with 100,000 people. Who do I have the opportunity to buy from? What is the process? Am I putting it out to bid? Am I doing my research and picking up a new client or supplier? If I'm the water treatment for New Rochelle, which has around 85,000 people, how does that process work, who is going to be competing for that mid-size player?

Expert [00:20:59]: Yes. You put your whole chemical buy together and say, "Here's what we typically use now or here's how the plant was designed. Probably our annual buy." Then you also have to determine what inventory can I hold safely, whether it can be stored in the yard or if there's secondary containment needs. Then that goes back to what's the minimum frequency I need? Is it a weekly delivery? Is it a monthly delivery? You determine those two. Then you put it out to bid. Again, a town of that size, you're probably not going to have the Olins or the OxyChems that are interested, they'll probably push you to the distributors, but then I think all distributors are probably fair game for you. Again, it's a little bit by coverage. You might get lucky if you're, say, close to something else that they already service from a distributor or even from the producer.

That's if you want to do it all yourself, "Hey, we're going to monitor our own inventory of all the chemicals. We're going to do all our dosage. We're going to do everything. We're pretty much going to have all in-house to do that." Distributors might help you a little bit, but they might manage your inventory a little bit, but not much from the technical service side, where you could also go with an Ecolab, Nalcos or any of those, and now you could do a full service. Hey, I just want my water chemicals treated. You guys tell me what I need and you guys set it up and monitor it for us. There's a little bit more IT and monitoring within that for real-time data, but then Ecolab will basically just control all the chemicals for you, their inventory, the delivery, and it's like a full-service route.

00:22:49] Is it normally something that big, are you saying you'll put that out to bid and have 3-5 distributors that will bid on it? Are you going to choose based on some combination of cost and service?

Expert [00:23:24]: Cost and then they might come back and say, "You can get it cheaper if you do this," then it just goes back to make sure it's apples-to-apples across the distributors, but typically, you'll know your frequency, you'll know total amount and then what you can do inventory and then that will be the bid and there might be some negotiations, well, if you could take a delivery every two weeks vs every week or two weeks, here's a little bit different scale.

00:23:48] Is it a contract you sign or are there contractual terms? If so, are there minimum volumes on that contract? Are you going to have a main provider and backup provider or just one? Is pricing determined through that contract with escalators or pass-throughs?

Expert [00:24:24]: Yes. It's typically a one-year contract. It's sometimes written almost like a two-year contract with a rolling price adjustment every year. Again, that's basically based on what you said, a minimum volume.

Client [00:24:36]: Did you say typically a two-year contract?

Expert [00:24:40]: I've seen it both, where it's truly on a price. Letter of the law, it's a one-year contract. Typically, volumes are get it in for one year, prices are locked for one year, but a lot of times, we'll let this jump to the next year, but there's usually some type of price adjustment from year to year. A lot of times, they'll go into a two-year contract from a commitment, but then there's some agreed upon inflationary number that goes to a price adjustment.

Client [00:25:08]: Is it usually maxed out at two years and they put it out to bid, or does that keep rolling?

Expert [00:25:19]: It's usually a two-year, and that's usually the cadence from a corporate sourcing is every two years, you put out to bid and some of that private is do whatever you want, but sometimes when it's government, if it's state city, typically, they do have to put out to bid every two years. Sometimes they'll do it every year, but a lot of times, they'll do it every two because to flip back and forth for a little savings or a lot of savings as it can be a hassle just on inventory control.

00:25:47] Looking at examples, what is the smallest town that will doing its own water treatment and not benefiting from a nearby or a county one? Is 80,000 as small as it gets? What's the smallest customer out there?

Expert [00:26:43]: Yes, you might get towns of 50,000, but then there's a little bit of a spread, so then it almost jumps up to 100,000 when you take anything and everything around there, but a lot of times, your municipalities, again, they're trying to tie together for buys, but at that point, then it goes back to the technical, they would just want to have the technical acumen to do anything and then you're talking a 24/7 operation, then you're better off partnering with an Ecolab or a Veolia, but then sometimes we got to make that our margin. When it gets to be in the middle of nowhere and you can't tie to anything, then it's tough a little bit to get service there all the time and deliveries there. The rural ones really get tough when it's really low from a distributor, which, again, you can always get, but you'll just pay for because, again, it's a logistical challenge or the service, then it's just a service challenge to get the right people out there.

Client [00:27:47]: Is the town of 50,000 about as small as it gets?

Expert [00:28:03]: For the most part, yes. Well in a treatment centre, that's what you're going to have. Otherwise, typically, a lot of those are just on their own wells until they convert into and run basically the municipality, the public works.

00:28:17] What is the smallest city, population-wise, that one of the big producers will go after?

Expert [00:28:47]: If it's within their route from logistics, they might go after even small if it's on their route and as long as they take IBCs. A lot of times, it's the packaging that might even dictate, "Hey, can you take an IBC or are you going to need drums?" Because if you can take IBC quantities, then as long as they're not doing a route specifically just for a different area, they'll add that to their route pretty easily, but again, if it's a small and it's not on their current routes or logistical chain, then that's where they might just say, "No, just go through a distributor."

Client [00:29:24]: Are you talking about the big one? Will Olin sell to a smaller town if it's on the route?

Expert [00:29:34]: If it's on the route, they can handle IBCs and no special packaging because as soon as you get a special packaging, then you're pushed right into the distributor.

Client [00:29:45]: Is it common to need special packaging?

Expert [00:29:49]: It's more of the quantity. Again, it goes back to you always do a lab analysis on the water, "Hey, what are we going to need to do from a treatment standpoint, unit operations? Then as we talk about the acids or bases, how much are you going to dose?" You don't want to have a one year supply stored, you want a one month supply a little bit. If it doesn't need much, now you're in drum quantities for these smaller plants, but as long as you take an IBC, it might be worth it to go to an IBC type of quantity and then make up in use from there. Again, that's typically your breaking point of can you go through an IBC enough vs then having to go to a drum. Sometimes even the IBC set-up might be a little bit higher capital investment that these smaller companies won't even have. They might just be forced into a drum type of solution from the get-go and then that pushes them right into the distributor.

00:30:59] You seem unique. Do you serve the small towns? Where are you mostly focused?

Expert [00:31:12]: We are a little bit probably more focused on the larger ones from the whole service because then it's a little bit of a capital outlay for all the services. We want to make sure we recoup all that. If they have it, great, if they don't, then we add all those sensors and monitoring, so we can do more remote monitoring and real-time monitoring, but we will do smaller ones. It just might be an upfront cost just to make sure, again, we have to recoup our costs in that first contract with them. Then we can do IBCs, bulk if it really goes that far or the speciality packaging and the drums. Again, if it's part of the service, we will do 5-gallon pails. We don't do it much, but we do have a capability to repack and pass that through.

00:31:58] What is the relationship with the industrial customers? Are they putting it out to bid as well? Are those done on contracts usually? How to think about that part of the business?

Expert [00:32:26]: Yes. They'll have their own sourcing group, but they'll usually send it out to bid. They'll typically know exactly what they need from either design or what they're currently working on. Then same thing is their volume big enough for the OxyChem, Olins to want to do. Sometimes on the industrial, they don't want to get into the water piece of it. Then they'll hire a Veolia or an Ecolab or somebody to, "Hey, you guys just deal with this. We just wanted to make sure it's operationally 24/7, you guys deal with it," and then they just pay us to deal with it. Otherwise, if they do have the capability to want to do with it, they'll do the same thing on the request for proposals.

Client [00:33:07]: Are they usually multi-year contracts?

Expert [00:33:13]: Yes, they'll be similar. It's probably similar, I think, to the municipalities where it's definitely a one year. I've seen a lot of one year, but then a lot of times, it will be almost auto renewal thing or a two-year, but then there's always a price adjustment since we're talking some commodities.

00:33:30] Hawkins has seen very strong growth, some through acquisition, but a lot organically as well over the last few years. It has also seen some pretty good margin expansion up until 2024. You said late '24, early '25, it started seeing margin pressure, and it's continued. Its water treatment business was on an attractive upward trajectory of margin expansion for a long time, and it's started reversing now. Is that idiosyncratic or does that make sense? Why would it be seeing margin pressure? What would a reasonable gross or EBIT margin for this business be?

Expert [00:35:42]: I think they grew because they focused on the water treatment space. I think I have heard more stuff that they're acquiring and getting a stronger footprint at least in the US. I think that probably helped them grow because then they could service more and more and more efficiently because, really, the chemical space in the water treatment is really a logistics business. You need to be close to your customers on where you produce or hold a lot of your chemicals because you're shipping water in a lot of cases. You need to be efficient, again, with the IBCs and then how do you restock your trailers. That's why bulk isn't as efficient anymore because then you're shipping air basically when you're not doing anything value-added from a route standpoint. I could see them growing because of that focus. Again, I haven't heard them do too much more acquisitions, but the chemicals business is a tough business, and it's a lower-margin business. The margin is had through logistics and gas prices and everything else and labour rates for drivers is a lot more than what it was.

I can see that erosion. We're seeing that from an erosion standpoint on margin. We make a lot of our money on our services piece. I think Hawkins tries to do some now that they're a little bit more better breadth and a little bit depth in the water treatment chemical space, but that can only go so far, too. They have a good portfolio now, so they don't have to sell onesies, twosies, they can sell a whole suite of products. It's a distributor that can provide everything to the industrial or the municipality. That helps them be a one-stop shop. It helps them on efficiency, I guess, as well as I think through it on just your distribution. Now you're shipping, say, I don't know, 3-5 chemicals to a site vs just one or two. That probably helps a little bit on that efficiency, but otherwise, there's good growth in water, but it's not high growth like other industries.

00:38:02] Competition-wise, has anything changed in the industry? Are any demand trends softer in some areas and therefore, people are being more aggressive on price to grow? Have you seen any competitive balances change at all?

Expert [00:38:29]: Not too much on the competitive balance. I think your Olin, Westlake, OxyChem, I think from what I know that, that hasn't changed too much. Then Univars and Brenntags, they're huge, but they service a ton of chemicals where I know Hawkins definitely was a little more regional. Now I think they're a little bit more national of a player, so aware of that. I guess the only other thing in the water industry, there are probably two things. One is on the municipality on everybody is basically testing for PFAS now and then has to put in whatever they're going to do, the ion exchange, the activated carbon or the ROs to get rid of PFAS. Basically, that would be '28, '29 if the EPA stays to that. People are gearing up for that. Now there's not a ton of chemicals with that, but if the ion exchange would require more HCl and soda just in the ion exchange. There's a little bit of tie to PFAS treatment within chemicals that we're anticipating being one of the options to alleviate PFAS.

Industrial, probably similar. They don't have the EPA as much, but they're discharged for wastewater or even the treatment, if you're food and beverage, you don't want to have suck up PFAS into your food stream and your water stream. That could be a little bit of a big thing, too. There could be some growth in that for all chemicals.

00:40:06] What should I know about the business that we haven't talked about, such as how it sits competitively or its reputation in the industry, etc?

Expert [00:40:50]: One thing. I would look at their footprint on where, again, their distribution centres are or if they do blending or if they do repackaging, where are they strong regionally because then you want to be strong where your competitors are because you should be, maybe not an advantage, but at least won't be a disadvantage, if you have all your distribution in Atlanta and you're trying to service the Northeast, yes, that's not going to work, but if you're already in that, call it, Northeast area, that obviously works. Then just maybe look at the supply chain, if you can on are they getting it from Olin, Westlake, OxyChem, I assume they are, and then they're just pushing it out. Understanding those contracts and a little bit of a pass-through. Then probably just what we talked about, who are their customers? Is it industrial? Is it municipality? Then that size, are they targeting anybody and everybody, which distributors typically do, but there is a sweet spot that they seem to find a hold on that smaller medium, and I assume that's who they want to go after. Now is that growing that much? Not a ton, you grow with population or advancement, but that could be a growth area as well.

00:42:05] One thing that I've heard about as a watch out is municipal funding in general. State and local budgets are getting tighter, ARPA funds are running dry and the IIJA [Infrastructure Investment and Jobs Act], there was a big step-up for a lot of years and then it's a plateau or there's some risk that the funding doesn't come through like it used to as Trump keeps trying to put through cuts. Would any of that impact demand for the chemicals piece, or is it pretty insulated and that's going to impact demand for more capital projects?

Expert [00:43:07]: Yes. I think you hit on it. I think everybody needs water and the US is really doing a little more sustainability, but still you can't not treat, again, some of the chemicals that are on the screen are you can't not use those. If you have water systems, you need these. Again, that's not the biggest budgetary item is these chemicals. It wouldn't be quality water basically. You'd put unsafe water into the system if you were using. I think it's insulated. I think what you mentioned, the capital because a lot of the funding, whether that's EPA and some of the BABA stuff for the capital and everything like that, that's a little bit discretionary because there's state funding, there's federal funding. Yes, there should be a lot of money there, but at the same time, Trump really cut a lot of the EPA. Either there's funding or the letter of the law says there is, nobody is there to approve or say, "Yes, you can go spend." There could be delay on capital. To be honest, when I talk about the PFAS, we're anticipating delays in that because people are going to say, "Well, it's funded, so I need it." Nobody is going to be there to approve it or say yay or nay. I think a lot of these capital ones going '28, '29 will get pushed just a little bit more than what was anticipated.