[00:00:00] Speaker A: This is Reece Tisdall, CEO of Bluefield Research. You're listening to the Water Values Podcast.
[00:00:04] Speaker B: The Water Values Podcast is sponsored by the following market leading companies and organizations by Advanced Drainage Systems Our Reason is water by 1898 Co. Possibilities Powered by Experience by Woodard and Curran, High Quality Consulting, Engineering Science and Operations Services Buy Interra Innovation and Stewardship for a Sustainable Tomorrow by let's Solve Water by the American Waterworks association, dedicated to the world's most important resource and by Black and Veatch, Building a World of Difference. This is session 287.
Welcome to the Water Values Podcast.
[00:00:53] Speaker C: This is the podcast dedicated to water
[00:00:55] Speaker B: utilities resources, treatment, reuse and all things water. Now here's your host, Dave McGimpsey.
Hello and welcome to another session of the Water Values Podcast. As my daughter Sarah said, my name is Dave McGimpsey and thank you so much for joining me and thank you for your support over the last 12 plus years.
Man, do we have a great show for you today. Rob Powelson, former FERC and Pennsylvania Public Utility Commission Commissioner and now the President and CEO of the national association of Water Companies, joins us to address an incredibly important topic that we haven't hit on in a couple of years, workforce development for water utilities. Rob does a phenomenal job addressing workforce issues and even ranges into AI and the impact of system consolidation on workforce and the broader industry in general.
Also, Reece Tisdale is back for another Bluefield On Tap segment, this time discussing the federal funding cliff.
Before we get to today's conversations, however, we always say thank you to our awesome sponsors at the top of every show.
Advanced Drainage Systems 1898 Co, Woodard Curran, Entera Xylem, the American Waterworks association and Black and Veatch. And that is a terrific collection of impactful companies that have affirmatively decided to support water industry thought leadership and education. And I thank you all and I'd like for you, the listener, to do me a favor. If you work for or with any of those sponsors, please thank your boss or thank your contact at the sponsor firm and tell them that you appreciate their leadership in the industry through the sponsorship.
You would be surprised how far that simple little note of thanks will go.
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Well, before we head on to the interview with Rob Powelson, we've got a Bluefield on Tap segment with Bluefield Research's Reese Tisdale. So take it away, guys.
Well, Reese, welcome to another Bluefield on Tap. How are we doing this month?
[00:03:12] Speaker A: Things are good. We're back from spring break, which is, I guess I'm supposed to be relaxed, but as everybody knows, you just face a mountain of work when you get home and, but well worth it. And the Boston Red Sox are terrible and the Boston Celtics are about to collapse, so everything's great.
[00:03:34] Speaker B: Well, you know, you can commiserate with this month's guest, Rob Powelson, who, like the Red Sox, he's a Phillies fan and his saw his manager get out of work, so.
[00:03:45] Speaker A: Yeah, that's right. So that's good.
[00:03:47] Speaker C: All right.
[00:03:47] Speaker A: Well, you know, Rob's a good guy, so it's going to be a good one.
[00:03:52] Speaker B: So here we go.
What is Bluefield seeing out there in the water markets? What's kind of the big questions that are being asked?
[00:04:01] Speaker A: So we've been going through a number of questions that clients have been asking, and one of the bigger ones, and it even came up at the UMC Utility Management Conference in Charlotte a month or so ago, and it is, are we heading towards a federal funding cliff? And I think this ties together a number of different things that you and I have talked about even over the years. And that is, is, what's going to happen with iij? Where are we?
What's happening with arpa? What's going to happen? What's happening with just state revolving funds as a whole?
And I think companies, I don't want to just put it on publicly traded companies, but they're feeling a little bit of pressure from the market to say, wait a second, are you going to be facing revenue pressures?
Because this federal funding is going to disappear. And that's kind of one of the big questions we're going to.
[00:04:54] Speaker C: Yeah.
[00:04:55] Speaker B: And are the, the companies that are. That are worried about their revenues, are they, what, what categories do they fall into? I assume it's not just utilities.
[00:05:06] Speaker A: Well, that. Well, actually, that's a really good question. I didn't even anticipate that. And that is.
So it's hardware and equipment companies primarily, and partly because I would say they're sort of further downstream when it comes to the federal funding they've been waiting for. The dollars we've talked about, how much has been all iij, for instance.
Now I say this with a caveat now, because government data has gone a bit squarely on us since the fall, whether it be because of DOGE or whether it be because of BLS data and all these other things.
[00:05:39] Speaker C: But
[00:05:43] Speaker A: the hardware and equipment companies, they're sort of waiting for the dollars, but I think overall they've been doing fairly well. So their argument is, wait, we've been doing well and we haven't even received, you know, a lot of these dollars. So actually it may be a benefit. Like I said, if, if an estimated 70% hasn't hit the street of IJ funding, there's, it's only upside. The utilities are a different story. I think you mentioned IOUs, and that is for like state revolving funds. They don't even get clean water funds. And that's a real sticking point that I think the investor in utilities argue that they're a public service, they're a utility. Why do they not get access to those funds and the IOUs? In fact, I think their revenues are actually picking up. So that's sort of the, a big part of the federal funding story.
[00:06:37] Speaker B: You hit on kind of where I was going to go next. And that is, you know, municipals and special districts, quasi governmental type utilities are the ones that have access to those low interest rate loans through the state revolving funds.
But on the same hand, a lot of those municipal systems are not the ones that are getting. The funds are typically smaller and they're not the ones that are going to be, you know, making, putting in smart meters and things like that. By and large, it's usually the larger systems that get, get the, those types of SRF loans.
[00:07:12] Speaker A: Yeah, and that's one of the things we've been looking at. And it's, I wouldn't say it's a complaint, that's probably a stretch, but you definitely hear murmurs. You know, when the SRF program was initiated in the late 80s, it was a fairly simple program. Federal government provides state dollars to the states and they have these programs and they build and they kind of grow in perpetuity. I mean, that was the plan. But over the years, what you're seeing happening is there are more barriers or more requirements being placed on systems and utilities to receive the funds. IJ is a good example. There are a number of things that were added on top of that for good or bad. I'm not going to argue. One thing was disadvantaged communities. And then the question was, well, every state defines disadvantaged communities maybe a little bit differently. And so what does that mean? And is that even slowing the process of the dollars getting out there. So I think that longer term, and I think we've talked about this, the growing concern now is or are earmarks, right?
These state revolving fund dollars, they're becoming a bit of a pool of cash for politicos, so to speak, that they can draw on. And if it cuts into the principle of the program, meaning that if they're mainly grants and they're not paying back into the program, what are the long term implications? And I think there's some concerns about that.
[00:08:44] Speaker C: Yeah.
[00:08:45] Speaker B: Let me ask, let me ask this and I'll try to tie it to something we've spoken about in the past. And I think one of the themes we, we heard from Bluefield, oh, it might have been maybe even a year ago, was that the engineering firms are the ones that are kind of, I don't want to say gatekeepers, but they're the ones that a lot of projects are going to pass through. And some of those engineering firms are publicly traded. So what's the impact on the soft costs that utilities are incurring?
[00:09:19] Speaker A: So, yeah, I think, man, you should be. It's like you're reading my notes.
The engineering firms to date have been kind of big winners. They're at the front end of these funds, right? They're the ones, whether it be in program management, whether it be in designing systems before even the, you know, the boots hit the ground, you know, in the field to dig the ditches or dig the trenches.
So they've actually been doing fairly well. Now when you look at our most recent, what we do is that every quarter, our top companies in water, publicly traded companies and engineering firms, their revenues are starting to decline, the market is softening. Now, I wouldn't necessarily say that's because of federal funds. I think there are other issues at hand, right. Whether it be tariffs, is that slowing things down.
We haven't even seen the impact of the Iran, Iraq, or I'm dating myself, Iran, Iraq, Iran conflict and what that means. We're starting to see some news as, as the Q2 quarterly reports come out from these companies. But yeah, the engineering firms now, they've been the big winners. I would say, generally speaking, they've been extremely busy. I think don't think they've had even their own workforce challenges having enough workers.
So it'll be interesting to see what happens with them. I would say, you know, while everybody's concerned, the, the cliff is expected. It was prescribed in these programs. These programs were not expected to go on forever. You know, ARPA was 2021, and it was quick. And the water sector gets $10 to $20 billion out of that, out of, I think $350 billion. IIJ, they get 51 billion. But half of that is just for PFAS and lead, including inventorying the problems. And if you look at lead, a lot of that work is just local contractor work. It's not, you know, that's. So I think there are two things that have happened.
People or expectations are high because of this federal funding. But how much federal funding is really the addressable market for a lot of these publicly traded companies?
I wouldn't say. So it may be over inflating expectations and they're probably being hurt less from any cliff or perceived cliff than there is. That's my take.
[00:11:55] Speaker B: Very interesting. Well, it'll be, it'll, it'll be interesting to see how that plays out as the, as the, quote, federal funding cliff comes upon us here. So, yes, Reece, thanks again for coming on. Always great to speak with you and really appreciate you sharing your insights into the water sector.
[00:12:15] Speaker A: All right, man, take it easy. Look forward to talking again soon.
[00:12:17] Speaker B: Yep. All right, see you, Reese.
As always, great information for Bluefield Research and Reese Tisdale. Now it's time for the main event, our interview with the NAWC's Rob Powelson. So let's get that water flowing.
Welcome to the Water Values podcast. I've wanted you on for a long time and I'm so glad we finally have the opportunity to have you on.
[00:12:38] Speaker C: How are you doing today, Dave? I'm doing great for a Friday in the thriving metropolis of Philadelphia, although where our Phillies are not doing well, but our Sixers are playing in the NBA playoffs against the Celtics. And our ice hockey team, the Flyers, will play the Pittsburgh Penguins in a Keystone State rivalry. So things are good.
And more importantly, how are you doing?
[00:13:05] Speaker B: I'm doing well. I'm in the same boat as you from a baseball standpoint. My Seattle Mariners have not fared started off the season as well as I thought they would. But if you haven't been able to discern, we're speaking with Rob Powelson, the president and CEO of the national association of Water Companies. And again, very happy to have you on.
Could you give us a little background, Rob, about how you came to the water sector?
[00:13:35] Speaker C: Yes. So my journey started in 2008 when I was appointed by then Governor Ed Rendell and confirmed by the Pennsylvania State Senate to serve in the role as a public utility Commissioner in Pennsylvania. Prior to that, I was really in a different World. I was president and CEO of the Chester County Chamber of Business and Industry. So I did 14 years in the area of economic development and got a little tap on the shoulder, said, hey, would you consider an opportunity in state government? And at the time, I jokingly said I didn't even know what the Public Utility Commission did or, you know, what, what its mission was. And you know, I kind of look back over that and that experience from 2008 to 2017 before I went on to serve at the Federal Energy Regulatory Commission. That was an incredible opportunity and it really opened my eyes to the impact that government, both state and federal, can have on energy infrastructure, water infrastructure, public safety, and how you really drive home the message of to consumers that they should have peace of mind, that there's a regulatory structure in place that is able to protect the public interest standard. And that's something that was ingrained in me during my experience in Pennsylvania. I think my colleagues and I look back and can look back and say, hey, we did our jobs. As I like to say, we did the boring good, right? We made some very unpopular decisions. We had to raise rates at times, we had to find companies at times, we had to revoke licenses at times for bad behavior. But for, without us, the Public Utility Commission, the market, you know, you'd have bad actors in the market. And I think to the credit of, you know, served under three governors, you know, the part, there was no partisan politics in your decision making, which is a really good thing. And public utility commissions by statute have, you know, they can't take five years to make a decision or as I like to say, two hours to watch 60 Minutes. We have statutory deadlines we have to meet. And that's another unique aspect of, you know, public utility commissions across the country are really at the cutting edge of, of not only you know, the addressing, you know, utility reliability, utility affordability, but safety as well. So it is today with the evolution of data center development, you know, new technologies like energy storage, more clean tech investment coming on the grid.
And then obviously in the water world, you know, where you have emerging contaminants, physical and cybersecurity issues, lead service line replacement, maybe someday microplastics resiliency planning around flooding and weather related events. It's really a challenging period for the water industry and obviously the investment that needs to take place over the next 10 to 25 years for this industry.
[00:16:56] Speaker B: I couldn't agree with you more about the importance of state regulatory commissions. They are, I've got a lot of respect for the work they do. One of the challenges that water utilities are facing is a subject of a report that the national association of Water Companies and Bluefield Research recently produced that concerns workforce.
So could you give us a little thumbnail on why, why did you choose now to engage in this?
[00:17:25] Speaker C: Yeah, so there is a lot of lessons learned in the, you know, we'll call it free and post pandemic era about our workforce and some of the trend lines. So working with our board of directors, our professional staff, along with just talking to our employees within the companies who serve on our committees, we thought it would be very important to take some of the lessons learned through the pandemic and apply a research report that consisted of project interviews looking at some demographic shifts. And look at the end of the day, here's the macro theme. The US water industry, both public and private. But we're going to face some critical workforce shortages.
Part of it's going to be driven by high retirement rates.
You know, in total like roughly 1.7 million workers are going to be needed to support the build out of new infrastructure.
You have challenges recruiting people like look, you know, I get it, you know, one of the things that I've learned and this is a very mission driven industry but you know, you're recruiting people for specialized roles.
We've got competition for talent. You know, I mentioned data centers but you know, Google, Amazon and companies like that, those tech savvy companies are, you know, they're on every university campus recruiting.
And then you know, obviously the other piece of this is replacing skilled operators with unbelievable institutional knowledge that needs to be passed on. And so you know, you've got an aging workforce, you've got these recruitment challenges, you've got skill gap challenges and then how do we message and really improve the message around making this a valued career path?
You know, I've said this all from my days back at the commission and working at NARUC as chairman of the NARUC Water Committee.
You know, water jobs, utility jobs are, you know, in general, water in particular are very stable. They're long term careers, competitive wages, you know, educational opportunity, leadership opportunities.
And that's exciting, but we've got to, we've got to tell our story. So part of this engagement with Bluefield that started in earnest in 2025 was to get, to get a handle on not only the demographics, but take within the NAWC membership some of those business education partnerships that already exist, whether they're local trade schools, community colleges, what are we doing in high schools to provide externships what are we doing in colleges and universities to bring accounting engineering into, into our enterprises?
So I thought, you know, for us as an industry, it was a good time, as we hear this word sober tsunami, which it's real, is to benchmark and pull some demographic trends together and start talking about them, socializing them with our key industry stakeholders. And I, I want to say it's been, for me personally, it's been a really good journey for us, you know, looking at some of the things we do well and then obviously some of the things we need to improve on as an industry.
[00:20:57] Speaker B: Interesting. You, you mentioned the.
There's a ton of institutional knowledge that's about ready to walk out the door through retirements.
Is there a specific category of institutional knowledge? Is this just kind of like just these guys know where the bodies are or is there.
Could you expand?
[00:21:16] Speaker C: Sure. I think it really runs the gamut across our member companies. And again, not only our member companies, but, you know, obviously public water systems as well.
It could be in the, you know, more on the management side of the ledger. But, you know, the, in the field retirement numbers are just so, so I would say, you know, not to put a ratio, but you know, probably a 50, 50 split between professional and, and, and in the field workforce that's being impacted. In fact, one of our member companies, you know, through their conversation with their board of directors, you know, the CEO mentioned, you know, if I, if I were to take the numbers in front of me today and I had, you know, we exercise the ability for our workers that are eligible for retirement, that would be 22% of our workforce would be eligible to walk out the door tomorrow. Now the reality of that happening, it's more of a staggered approach. But 22% of anything in an enterprise, when you're dealing with human capital is a big issue.
You're losing skill sets that, that don't get replaced overnight. So for us, you know, many of our utilities are reporting they're struggling to attack, attract and retain employees.
You know, aside from the fact that we've got good benefit packages, the new workforce is, is driving a little bit of that change, you know, prioritizing things like alternative work schedules.
You know, some companies have gone even further and looking at, you know, some quantitative analysis around the value of benefits received. And how do you, how do you tie that into an actual competitive compensation package to an employee?
So these are all the challenges that we're seeing in our, you know, in ways to strengthen our pipeline of new workers and obviously, excuse me, that we're going to have, you know, the reality check is we are certainly going to be facing, you know, retirement, a big retirement scenario over the next, you know, five to 20 years.
[00:23:38] Speaker B: And you mentioned earlier that, you know, the big tech companies are on every college campus hiring folks.
How will utilities be able to compete with all the different job offers? I mean, there's not just remote work, there's a sexier field, so to speak, of the tech.
Did the report come up with anything speaking to that?
[00:24:04] Speaker C: So, yes, a number of our companies, so I call it the Business education Partnerships.
In California in particular, you know, Cal Water Services has a program with Bay Area Networks and that's a program that brings in students that want to, not only through internship programs but career development opportunities to come into, to work at Cal Water. By the way, I think Cal Water was just listed as one of the top workplaces in America.
And other companies are working with technical training schools to bring in employees like essential Utilities. Here in my home state, they have a very robust program with the Williamson Trade School. They've launched their first ever career guide and they're also working with area high schools as well.
There's also what Veolia has done. The Veolia Academy is what I call outside the box. Thinking where they're going up on social media through LinkedIn and other means to bring a portfolio of training modulars that anybody can take, by the way, that you can take online and be able to go through a certification process that they're basically funding through their own network, which is pretty, pretty unique. They're also in the state of Connecticut. They've developed a state approved off the shelf high school curricula for classes in the water and wastewater treatment space. So students, for example, in their senior year will do a half a day work program at one of their operation centers and they get, they can get their operator certification. Certification. Excuse me. So these are all, you know, really unique business education partnerships. You know, back in my home state again, our oldest water company, the York Water Company Company, very active in their local community, but they're working with York College and they're hiring graduates from one of the best training schools, technical training schools in the Commonwealth of Pennsylvania. And that's the Thaddeus Stevens School of Technology.
And they're basically working through Thaddeus Steven to bring in, you know, field workers as part of their, as part of their organization. So all, you know, unique, you know, what works in California, as I've learned, may not work in the Commonwealth of Pennsylvania. But the reality is, you know, getting into Schools, developing these business education partnerships, these are all, you know, areas that, to recruit and attract new talent into, into these water companies.
[00:27:03] Speaker B: Can you please dive in a little to the differences between small rural utilities versus the larger utilities? I know that the report surveyed utilities in both categories and from 15 to 1,000 employees. So I'm curious what you found when doing this research.
[00:27:26] Speaker C: Yeah, so I mean the common threads through all of this and you have extensive interviews that were conducted and you look, there are circumstances that may vary, but one thing that was a common denominator is the similar challenges that private water companies and municipal systems face. Right.
And as I alluded to earlier, ready.
We know we all accept the fact we have the aging workforce challenge. Right. And we know about the demographic tipping point.
Then we also small, rural, large systems, suburban systems, large investor owned utilities, small investor owned utilities, all share in the difficulty of attracting staff. Right.
And we struggle to not only recruit that staff, but the diversification of that talent pool as well.
Skill gaps in technology.
You know, I'd say many of our companies are well ahead of the curve in terms of how they've invested in, you know, their, their water system investments and their, their water system technologies. But you know, you've got to develop a, a new worker who has to understand data analysis, analysis. They have to understand how to use these smart technologies. So these training modulars that we were using 10 to 15 years ago are not relevant to some of the new technologies that are in front of us today. So that skill gap and how do you, how do you address that?
As I also mentioned, you know, the shift in, you know, you honed in on it, the Amazon, the tech economy versus this valued career path of working for a water utility.
How do we change that narrative? Again, I think this next generation are going to be the problem solvers, the engineers, the entrepreneurs that are going to use AI tools to build efficiencies in utilities, electric, gas and water. They're going to do probably see, we're going to see tremendous gains in air quality, water quality because of this next generation. And I think that's what's driving the next era of workers to want to maybe look at old utility as a place where innovation, incubation of ideas is a place where you want to be and it's stable. Right. I think this generation has seen a lot of instability in their lives. So going down a utility career path is not a bad, is not a bad pathway to follow.
We talked also about, you know, the workforce of five days a week is really changing.
So we Talked about competing, you know, how do we balance the work life balance remote work, how does that all play into this?
And I think again, this mission driven focus of the water utility is, is an attraction for people to want to consider careers in, in, in, in water.
[00:30:53] Speaker B: Yep. You, you hit on something I wanted to touch on is, is that AI and its impact on the workforce because a lot of people are saying that, you know, white collar jobs are going to vanish.
AI is going to replace all that.
Do you have a, do you have a perspective on that?
[00:31:12] Speaker C: But I'll start with this. You know, look, you know, as a recovering regulator and now leading the largest association representing the regulated investor owned private water industry, is that the way we source, transmit and distribute water is changing radically? It's changed radically not only in the last decade, but within the last five years. Right. There's just so many new technologies. I, I teach a class at the Wharton Business School and we, I'll never forget, you know, sharing with this group of graduate students, you know, the passage of the Safe Drinking Water act, right to where we are today in water quality. And think about it, back in the 70s we were probably treating water molecules at parts per thousand.
In the 80s and early 90s we got the parts per million.
And then we got into the 2000s and the late 90s, 2000s at parts per billion. And think about this. Today we are treating water molecules at parts per trillion.
And why, why I use that is just as the backdrop for, to answer the question of how AI is going to change not only water quality, but it's going to augment the way we interface with customers, the way we address things like sustainable water infrastructure, investment.
You know, I've given a number of talks about climate risk and how, you know, what we've seen in the last five years and the demographics we're seeing on drought management and the fact that something close to 30 US states over the next decade are going to face some type of water scarcity issue.
And that is really putting really good thought leadership into how we plan out our grid, how we use water more efficiently, how do we address some of the chronic problems of main brakes, the 240,000 main brakes a year.
I wouldn't be shocked because of the tools that artificial intelligence can provide us that we can put a dent in the main brake problem that exists in this country. And then the thing that kept me up and bothered me that what we call the leaky pipe syndrome or unaccounted for water, and how can we as a country do a better job to track and fix leaky infrastructure and use our water resources more effectively, more efficiently. By the way, water is finite, right?
And the way we use it is going to be critically important going forward. As I talked earlier about that scarcity piece, which is real and it's a trend line that we've got to be cognizant of.
So I think AI is going to transform operations.
But back to our conversation of workforce, I think it's going to drive greater productivity. And I really think, and I use an example, you know, let's just go out in the field and pretend we're doing a main replacement. And in preparation for that main replacement project, we used an artificial artificial intelligence technology to optimize our asset planning and our deployment of capital to fix our, you know, areas of our service territory. We have a problem, but what you don't replace is the person who has to trench that putt to trench that hole, the person that has to lay that asphalt, the person has to weld that pipe. That is still a human touch. That's never going to go away.
And that's a good thing for our industry. You know, someone said, well, what about robotics?
I'm not so sure robotics is going to be able to, you know, you know, displace, you know, the critical role of a utility worker, whether it's a lineman or someone working on a pipeline project, a water pipeline project. You still have that human element, right?
Now, one thing I will say which is unique is that human element, because of artificial intelligence, it could drive greater safety outcomes out in the field. Where we reduce, we see sizable reductions in workplace safety incidents. That's a good thing, right? So these tools are. I don't see them as disruption. I see them as driving efficiency and automation, the likes of which we haven't seen in over 50 years in this industry.
[00:36:11] Speaker B: Yeah, great answer.
Another thing I want to explore with you is your position on how the workforce may be impacted by market fragmentation. And with your experience on the Pennsylvania puc, everyone knows Pennsylvania's at the tip of the spear on fair value acquisitions and consolidating the fragmented market. So I'm curious what your position is on. On how the workforce can be impacted by the market fragmentation issue.
[00:36:51] Speaker C: Well, that is a, that is an issue that it keeps us all up at night. Right? You know, we have 51,000 drinking water systems in this country.
That's way too many, by the way.
I wish I could show the chart of the water industry versus the electric industry versus the gas industry, but thank God I know the numbers Pretty well, right? You have approximately 51,000 drinking water systems. You have approximately 3,200 electric distribution companies in this country and about 1,000 gas local distribution systems.
So in the world of fragmentation, water is the outlier. And that fragmentation leads to inefficiencies, it leads to compliance failures.
And whether you want to put the academics, I call it the academic North Star. What does that number look like? Or my good friend Seth Siegel, who wrote a great book entitled Troubled Waters.
Look, we probably need to get our water grid down below 10,000 in this country to drive incredible economies of scale.
That will be great for consumers, it'll be great for communities.
But the reality is the water utility grid in this country is just.
It's so fragmented, some people would argue it's going to take a generation to get it down or some cataclysmic event that might drive it. So in the interim, how do you get there? How do you drive consolidation in a thoughtful way through policy? And I think there's a, I'm just going to touch briefly on it. One you mentioned fair market value, where a willing buyer and a willing seller come together in a transaction to want to sell the, the asset to a, to a private regulated utility. That's one outcome. You also have outcomes in water consolidation that are, you know, believe it or not, municipal on municipal. You also have another scenario, you know, where cities don't want to necessarily sell the assets or a community doesn't want to sell the assets, so they move into a contract operations agreement. And that is another driver in and in consolidation.
So it's really critical for policymakers, and I consider, you know, members of Congress, the EPA, state environmental regulators, and PUCs to understand that fragmentation is a big, big hindrance to driving water quality compliance.
And also, you know, we want to talk about things like cybersecurity compliance.
And it's got to change because we can't afford. And I did a case study on Jackson, Mississippi.
The Jackson crisis was not a crisis that happened in one event. The Jackson timeline was 15 to 20 years of chronic uninvestment, inability to run an effective utility enterprise, inability to attract good talent to run the, to run the enterprise, and then over time, patchworking a system that completely failed because of a flooding event.
And now, you know, $300 million had to be sent in by the EPA and congressional appropriations. We don't have $300 million to do another Jackson bailout. Right?
What? The U.S. federal budget deficit just approached 40 trillion.
So we've got to get serious about this. And I'M a big believer that private capital is going to be the pathway forward.
You know, we've seen since 1970 a 40 plus percent deterioration in federal support for water infrastructure. So the federal government has made that made it very clear since 1970.
Aside from what we did more recently with the bipartisan infrastructure bill, we still have that funding gap analysis. And that's also leading to issues around how do you sustain 51,000 drinking water systems in this country when federal support is going down and it's not being picked up by states? By the way, that is another stress point for our industry.
And then finally, I'd say it respectfully that the industry would operate much more efficiently if we were 10,000 or less.
And it's just the model, it just can't sustain itself.
So we're going to see more public health crisis.
I sound like the Greek goddess Cassandra here predicting the future and giving ominous signals that on this long term horizon things don't look good.
And I honestly believe that we need to get ahead of this. We need proactive approaches to solving these problems. And that's why I think fair market value is a good pathway forward to entice a selling of an asset that would be in better hands with a private operator.
[00:42:26] Speaker B: Very interesting.
The report also kind of goes into some state and federal policy considerations.
What was identified by the respondents to the questionnaire in terms of what's going to be the most helpful or restrictive for their workforce goals?
[00:42:46] Speaker C: Well, I think it starts with, I'm a former member of what we call. They're all over the country. Every county in America has a workforce investment board.
So, you know, allocation of dollars or developing partnership opportunities through workforce investment boards is a, is a good pathway for our industry to partake in dollars.
The other side of this is, you know, when you're working for a water utility, you usually have some type of tuition reimbursement program. Our companies are very focused on leadership training. It's one thing, as I said back to that, mission focused. We do a phenomenal job. 9 boxing talent within our businesses, small and large. Right. And medium.
And I think that's another key aspect. But when it comes to funding these programs, I think a lot of it is driven by our own balance sheet of our willingness to want to invest.
A trained workforce is a workforce that's going to be agile, nimble, safe and you know, they'll, they'll have institutional knowledge to solve problems in the communities where they serve. And let's be honest, water is very local, right.
So, you know, the the, the bottom line is, you know, we view. We view investing in workforce. And, and look, we. We want to. I don't. I don't say sound the alarm bells, but we're just looking at good demographics here, and we recognize that our member companies have developed proactive approaches to attracting and retaining their workforces. And that's a good thing. Right. But it's not without a lot of thought and collaboration in the communities where they serve. So they're tapping into those resources, as I mentioned earlier. They're working with their community college, working with high schools, working with their workforce. Investment boards, chambers of commerce, trade, the unions, the trade groups. These are all part of that equation.
[00:44:50] Speaker B: Interesting. So I just asked you about what the respondents identified for what would be most helpful or most restrictive. How about if you could choose just one recommendation from the report to implement, which one would it be?
What would have the most immediate impact on workforce?
[00:45:09] Speaker C: Oh, wow.
That's a $64,000 question here, I think, because it's just a. I'm a byproduct of it. I'm a big believer in mentorship and apprenticeship, and I think anybody that's listening to our podcast would say, you know, he's right.
Whether I'm, you know, I'm a cpa, I'm a lawyer, or I'm working in the trades, I'm a meter reader. Whatever it is I'm doing in that water company, I was brought up through an apprenticeship model, and it served me well.
And it has. It helped me advance my career.
So the promotion of apprenticeship and it doesn't. It, you know, it could be. Apprenticeship to me takes many forms. Right.
It could be someone that wants to further their education by getting a master's in business administration. It could be someone who's going to become a professional engineer.
It could be someone who's in the risk management side of the business getting their CPCU designation. But then it could be like people who were dear friends of mine that went to the Williamson trade School and did their training there and then went on to, like, a Widener University to get their engineering degrees. And this is where apprenticeship programs are so important to providing specialized training. And it helps build that. You know, that's like your farm system.
And that's where I think if I had to make one recommendation, I would double down on these apprenticeship programs, because that's where you're going to capture talent.
You know, our cultures of our companies are really good. I mean, cultures. You know, you look at some of the history of our member company. I mean, for example, I have to, I couldn't do this podcast without saying NAWC is 131-year-old trade association.
You know, York Water Company is the oldest water company in America. I mean some of our companies are celebrating 100 year histories.
So that culture is something that I think is an attraction to people that want to work in this business and obviously the people that want to stay in the business as well.
[00:47:33] Speaker B: Well, Rob, you've been absolutely fantastic today. I've learned so much and I feel like we could have gone off onto, we could have expanded this into a couple hour podcast talking about all the issues in the water sector. But I appreciate you coming on. Do you have a leave behind message that you would like to impart?
[00:47:51] Speaker C: I would just say this. Look, if we're going to as an industry seize the challenges around our infrastructure and the economic opportunities that lie ahead, I think it's through this report.
Aside from what it provides in benchmarking, I think it also lays out a set of actionable strategies for our industry going forward. That's what I'm most proud of, that we're not just sitting back on our heels saying, yeah, we know about those statistics, we know they're here. The question is what are we doing about it and how are we going to effectuate that change?
And that's why I think there's a lot of scalable lessons through this report. And that's another thing. When you work with someone like Bluefield Research, I think that you get a good product here.
So for us, again, I think we understand the wave of retirements that are on the future, but we also understand the importance of scalable lessons.
And again, the implementation of these opportunities to attract and retain skilled workforce, that's the holy grail of what we do. If we don't have a good workforce, we can't be out in the field providing safe and reliable service to customers. So very proud of what we've been able to do and look forward to continuing to benchmark where we're headed with our workforce initiatives.
[00:49:15] Speaker B: Yeah, you don't have to be the blind seer theresius to see what's going to happen if we don't do something about our workforce.
[00:49:21] Speaker C: That's so true. As they said, the great General Norman Schwarzkopf once said, problems that aren't dealt with lead to other problems. That is so true.
If we don't address the problem, we're going to have further problems down the road. And that's why I think workforce is a critical piece of how the water industry operates and it's all about people. It's a people business at the end of the day. And that's why, again, I think this report really highlights the importance of investing and attracting good workers.
[00:49:57] Speaker B: Absolutely. Rob, for those who want to find out more about you and your work at the NAWC and this report, where can they go to get that information?
[00:50:05] Speaker C: Sure. So please visit our
[email protected] and we have a very good website you can go to actually get updated on our upcoming programs. So that's where I would like everybody to go. And if anybody wants to reach out to me personally, my email is rfpawc.com so please don't hesitate to reach out. And if I can't answer your question, I have an incredible professional staff around me and they do great work for this association. They'll be able to assist as well. So really appreciate this opportunity.
[00:50:45] Speaker B: Absolutely. Thanks so much for your time, Rob. We'll talk to you soon.
[00:50:48] Speaker C: Likewise.
[00:50:51] Speaker B: Rob was such a great guest. I've wanted to have him on the show for a long time. I'm glad we finally got that done. He's such a great advocate for the water sector.
Keep up the great work, Rob. Really appreciate your efforts.
Well, I'd love to know what you thought about the interview. Please check out the Show Notes page for information and links on this episode. Just Google the Water Values Podcast and click the first link that comes up. That's our home on the web. Longtime listeners know that the Water Values LLC and Bluefield Research are not affiliates. We just have a joint marketing arrangement. And as part of that, Bluefield Research gives the Water Values a home on the web.
You can email me at david.mcgimpseydentins.com or you can sign up for the newsletter at that aforementioned landing page as well.
Thank you again for tuning in and I hope you make it a great day. Plus, I want to give a huge thank you again to our fantastic sponsors. Sponsors of the Water Values Podcast include Advanced Drainage Systems, 1898 Co, Woodard Curran, Entera Xylem, the American Waterworks association, and Black and Veatch. This show would not be possible without those great companies and industry leaders. And again, thank you for listening and for subscribing to the Water Values Podcast.
[00:51:59] Speaker C: Thanks for watching.
[00:52:00] Speaker B: Your support is truly appreciated.
In closing, please remember to keep the core message of the Water Values Podcast in mind as you go about your daily business. Water is our most valuable resource, so please join me by going out into the world and acting like it.
[00:52:46] Speaker C: You've been listening to the Water Values Podcast. Thank you for spending some of your
[00:52:50] Speaker B: day with my dad and me.
Well, thank you for tuning in to the disclaimer. I'm a lawyer licensed in Indiana and Colorado, and nothing in this podcast should be taken as providing legal advice or as establishing an attorney client relationship with you or with anyone else. Additionally, nothing in this podcast should be considered a solicitation for professional employment. I'm just a lawyer that finds water issues interesting and that believes greater public education is needed about water issues. And that includes enhancing my own education about water issues, because no one knows everything about water.
