Mcilvaine Insights

No. 54   March 15, 2018

WELCOME

Weekly selected highlights in flow control, treatment and combustion from the many McIlvaine publications.

• Briefs
• $1 Trillion Combust, Flow and Treat Market in 2018
• Advanced Forecasting of the $12 billion On/Off Ball Valve Market and the $ 1 Trillion Combust, Flow and Treat Market

Briefs

Our Municipal Wastewater webinar is slated for March 28.  You can register at

Free Market Webinars

The IIoT and Remote O&M report was just updated with tens of thousands of forecasts for Guide, Control and Measure for each industry in each country.  The Guide market which includes process management, data analytics and subject matter expertise will grow from $48 billion in 2018 to just under $64 billion in 2022.

                                        Guide Forecast $ millions World-wide

For more information on  IIoT and Remote O&M click on N031 Industrial IoT and Remote O&M

$1 Trillion Combust, Flow and Treat Market in 2018

Power, water and industrial plants will spend $1 trillion in 2018 for equipment and services for the combustion, treatment and measurement of gases, liquids and free flowing solids. This expenditure will equal 1% of World GDP and has been a major part of human progress ever since primitive man started utilizing fire.   McIlvaine Company multi-client reports cover nearly half the market while private consulting addresses the balance. The reports cover hardware such as air and water treatment equipment but also consumables such as treatment chemicals, cartridges and membranes.

The multi-client reports contain millions of forecasts.  They include forecasts for each product in each industry through 2022 in 80 separate countries and sub regions.  The multi-client valve report provides separate forecasts for each type of control and on off valve resulting in more than 50,000 forecasts.   These forecasts are continually updated.  This is necessary because regulations can cause sudden major changes in the forecast.

The IIoT market is the largest and fastest growing.  This includes controls and automation including a "Guide" category with process management and data analytics software along with third party advice from subject matter experts.  The consumables markets such as cartridges and treatment chemicals are less volatile than the equipment markets.  The most volatile markets are FGD and DeNOx for the power industry.  Each of these markets has fluctuated from $2 billion to $15 billion depending on the regulatory impact.  However, most countries of the world now have retrofitted this technology. So when India and Asean nations complete their programs the market will become mostly one of repair and replace.

One major process not included in the chart is heat exchange. It is a major investment for the power, chemical, food, refining and a number of other industries. Biological treatment is a substantial market in wastewater and was not included. Reaction processes in the chemical industry were not included in the chart but are part of the $ trillion market.

The rapidly developing Industrial Internet of Things empowered by the Industrial Internet of Wisdom is changing the industry. The connection of knowledge and people and products makes it more important to understand the interaction between blowers and scrubbers, or pumps and filters. Automation and control is expanding faster than the hardware.  A number of hardware suppliers are expanding their scope to provide the wisdom about their products with edge computer technology providing a gateway to central systems.

The explosion of knowledge also allows companies to afford advanced forecasting. For example it is now possible to forecast not only ball valve purchases for gas pipelines but to further segment by trunnion vs floating support, top vs side entry, and forecast each of the sizes from 2-36"

More information on the individual market reports is found at http://home.mcilvainecompany.com/index.php/markets

Information on the Advanced Forecasting is described in a 5 step program covered at www.mcilvainecompany.com

For more information contact Bob McIlvaine at rmcilvaine@mcilvainecompany.com  847 784 0012

Advanced Forecasting of the $12 billion On/Off Ball Valve Market and the $ 1 Trillion Combust, Flow and Treat Market

Advanced Forecasting can be defined as

1.     Bottoms up forecasting which provides accuracy supported by facts and statistics

2.     Detailed segmentation so that the forecasts match the individual sales responsibilities

3.     Process for continuing feedback, review and updates

4.     Provision for impact of innovative product developments

5.     Forecasts of purchasers by each major prospect

Advanced Forecasting can be layered.  In the top layer McIlvaine provides forecasts for 80 countries and regions for the next 5 years in more than 20 industries and for hundreds of products.  More than 1 million forecasts in the Combust, Flow and Treat industries are continuously updated.

In addition, McIlvaine provides forecasts for generic products for each large purchaser which adds another 20,000 forecasts.

This top layer is adequate for most regional decisions for product combinations.  A second layer provides the forecasts for each territory.  A third layer segments the markets in each territory for each special product.

The top layer of forecasts is contained in the McIlvaine market reports as shown at http://home.mcilvainecompany.com/index.php/markets

The second and third levels of segmentation are included in specific consulting contracts.

In the top layer the local salesman has a forecast total for all the products for which he is responsible along with forecasts for the large customers with home offices in his territory. Additional layers can segment by specific products.  In one case the market for pipeline ball valves was further segmented by trunnion vs floating, side entry vs top entry and by sizes from 2" to 30".  The market can also be segmented to include forecasts for purchases by any company purchasing some meaningful amount.  If 90% of the dollar volume is by customers with purchases of more than $100,000 per year and the average purchase is $300,000 then purchases for 3.3 million buyers would need to be determined in order to identify the purchasers for 90% of the $ 1 trillion total market. 

However, since most companies concentrate on certain products and industries and may not need to identify purchasers of less than $1 million per year, then forecasts for a few thousand companies would be adequate.

Let's take ball valves as an example of Advanced Forecasting. 2018 Valve purchases will be $62 billion. Purchases of ball valves will be $12 billion.  This is the largest of 8 categories of valves. The market is further segmented by control vs on/off.  Since a small percent of ball valves are used for control, the on-off valve market is over $11 billion.  Of this total the power market represents $1 billion.  This is further split by type of fuel with 50% coal, 25% oil and gas, 15% nuclear and 10% other.

The nuclear ball valve market is concentrated with just five purchasers accounting for 34% of the market.

The coal fired boiler ball valve market is less concentrated than nuclear but still 15 companies make 56% of the purchases.

* These two companies are now combined creating a company with 12% of the purchases

Many of the valve decisions are increasingly being made by OEMS, and EPCs. For new systems the end user will not often directly purchase these components.  Large power plant system suppliers will typically purchase or specify the specific brand and product.

As a result, a few thousand people in 31 corporations will make more than 70 percent of the purchase decisions for valves.

Municipal wastewater treatment plant operators world-wide are anticipated to spend $64 billion for selected flow and treat products and services this year. The majority of these purchases will be made by just 200 operators and 30 engineering/consulting firms.

Suez is supplying more than 30 million people with water and wastewater services. They are also designing plants and purchasing flow and treat products for new as well as existing plants. Beijing Enterprises Water Group (BEWG) operates more than 400 wastewater plants in China and other countries and is also involved in design build projects where they would specify flow and treat products. Chicago MSD operates seven wastewater reclamation plants.  It is also expanding its scope by encouraging nearby food processors to send waste to the plant for conversion to biogas. This will increase its sludge processing, compressor and air pollution control purchases.  Los Angeles Sanitation's operations are approximately half the size of those in Chicago.

The food market is much more fragmented than most of the other markets.  Cartridge expenditures this year by the industry will be $591 million. The largest purchasers will each buy 1% or less of the total.  The industry will spend $522 million for on off ball valves which is slightly less than for cartridges.

The top layer the market reports provide forecasts for 550 purchasers.  More extensive Advance Consulting is available on a contractual basis.  Advanced Forecasting is also the first step in a 5-step business program which is discussed at www.mcilvainecompany.com.