Kodak swaps supplier in first deal for region

3 May 2000
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04 May 2000 | David Arminas

Photography giant Kodak has changed water suppliers for its 35-acre Harrow site, making an "inset appointment" with water firm Hartlepool - the first for a large user in the south-east and only the seventh nationwide.

Hartlepool, a subsidiary of Anglian Water, will supply Kodak's main paper and film-products manufacturing site at Harrow, near London. Three Valleys Water, part of the Vivendi Group, was the previous supplier.

"We were looking for innovative ways to drive down costs," said Brian Goodwin, Kodak's utilities manager. "Hartlepool offered us ways to save water. They were prepared to drill wells on our site at its expense and sell the water at a cost that was lower than through the mains."

Kodak hopes to save 10 per cent on its annual water costs throughout the five-year, renewable "partnership" with Hartlepool, added Goodwin. There is provision in the contract for profit sharing between Kodak and Hartlepool on savings for demineralised and softened waters.

Kodak has an option to buy the on-site borehole, but Goodwin believed that the company would be unlikely to buy as water is not one of its core activities. He said it showed that the water company felt that Kodak would be satisfied with its service in the long term.

The prospect of more successful inset agreements mean there will be commercial losers in the new competitive market. Goodwin believed the big question surrounding the Kodak switch was how Three Valleys could let it happen.

A Three Valleys spokesperson said the issue was sensitive. In a written statement, the company said: "Competition is a two-way street and everyone will learn a lot from the process."

The inset took two years to complete - something that Goodwin believed could deter other firms from beginning the process. The problem, he said, was that the regulator Ofwat, which presides over inset appointments, had a short history of performing them.

It had been difficult to know how to speed up the process at Ofwat, he added. "Two years is a long time in any strategy for a tactical move like this."

A spokesman for Ofwat said he was confident that the time it takes to set up an inset had been reduced. A recent effort to streamline the process had brought it down to around 16 weeks on average, he said.

Other UK organisations with inset appointments include Buxted Chicken in Suffolk, RAF Finningley near Doncaster and MoD Tidworth in Hampshire. Anglian Water has four of the six other insets in the UK.

The appointments are allowed for only large users (those that use at least 250 megalitres of water a year), but Ian Byatt, Ofwat's director-general, has been pressing the government to lower the threshold to 100 megalitres. This would boost the number of companies eligible for insets from around 500 to nearly 2,000.


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