Canadian Manufacturing

Diversification helps H2O Innovation make a splash around the world

H2O Innovation recognized its global competitive advantage and capitalized on it to build a booming global business throughout the Great Recession

—Sponsored article by HSBC

In 2009, when much of North America was slogging through the Great Recession, one Canadian company in the industrial water treatment business responded by diversifying. Quebec City-based H2O Innovation had established itself as a leading designer, manufacturer and builder of water treatment systems in Canada and the United States, and had tried its hand at building systems in other countries around the world. As the economy tanked, there was no way to know whether those large, complicated projects would continue to keep the company busy.

By purchasing a small California company that manufactured and sold specialty products and chemicals used in water treatment systems, H2O Innovation was able to launch a product division in 2009. Suddenly, it had an easier way to move into other markets around the world.

The company’s willingness to be innovative by adding a new product line has translated into great success: In the six years since launching its product division, H2O Innovation has grown the division from zero revenue to now cover 90 percent of the company’s fixed costs. The product division, which earned US$200,000 in 2009 was responsible for US$18 million in 2014. The company finds its international buyers mostly through networking at trade shows and building relationships in its industry, says Marc Blanchet, vice president of corporate affairs at H2O Innovation.

H2O Innovation’s willingness to diversify and expand in international trade has transformed the company. Although the company has experienced ups and downs in doing global business, it continues to build highly respected water systems while also selling water treatment products in 40 countries around the world.

The H2O difference

Like most internationally successful companies, H2O Innovation understands the qualities that set it apart from the competition—its Global Competitive Advantages—and how to capitalize on them. One of the company’s most important differentiations is its skilled executives: Not only do its executive team members have prior international experience, but the company is known for the high quality of its water systems, which results in a deep understanding of how water systems work.

“The system we build is our flagship; it’s very high-end equipment”, says Marc Blanchet, vice president of corporate affairs at H2O Innovation. “The project business is not our most profitable division, but it is very synergetic with our service and products division. Our experience building those systems provides us the credibility to service the customers and keep the long term relationships.”

That expertise in building water system projects gives it knowledge that carries over into the product business. For instance, H2O Innovation customers could purchase couplings, devices for connecting parts of machinery, from a number of suppliers.It may seem like a very simple product, but desalination needs a certain type of stainless steel and not everyone understands those requirements,” Blanchet says. “That’s the added value we bring”.

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Issued by HSBC Bank Canada
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