August 2016 - Cartridge Filter Insights 69

Total sales of cartridges for liquid filtration in 2017 will be $17 billion. High performance cartridge sales will be $4.6 billion, whereas sales of general purpose cartridges will be $12.4 billion. All of the $5 billion of cartridge sales for residential use will be general purpose. All of the $3.5 billion of commercial cartridges will be general purpose. By contrast, high performance cartridge sales in the pharmaceutical industry will exceed $1.6 billion. High performance cartridge sales for healthcare will exceed $1 billion. These are the latest forecasts in

Industry	High Performance Percentage
Chemical	50
Commercial – Point-of-Entry	0
Commercial – Point-of-Use	0
Electronics	75
Food	60
Healthcare	60
Metals	50
Oil & Gas	60
Other Industries	40
Pharmaceutical	70
Power	50
Residential – Point-of-Entry	0
Residential – Point-of-Use	0
Wastewater	30
Water	30

There is a big difference in price and sales approach between high performance and general purpose cartridges. McIlvaine is using its own definition of high performance to include:

Unique service is defined as a cartridge which is custom engineered for an application. The media, size and/or materials for the vessel are varied to meet a customer’s need. The extent to which a cartridge is unique can be measured by how much more a customer is willing to pay for the custom design rather than by content with an off the shelf alternative. A paint manufacturer may want a cartridge that is not too efficient on small particles but does remove the large ones. The reason is that the small particles are the ones providing the color. So, while with standard cartridges the higher the efficiency the better, this will not be acceptable in paint filtration.

Severe service is defined as an application where particle adhesion, particle size, corrosion, erosion, pressure, or temperature is a concern. Purchasers are willing to pay more for better severe service cartridges because the alternative is high replacement rates, high maintenance cost and potential disruption to processes. The refining, chemical and power industries have many severe service applications.

Critical service is defined by the importance of the cartridge performance. If safety, health, or quality of the goods manufactured are impacted by cartridge performance, then it would be critical service. An example would be cartridges in the semiconductor industry which must remove any particles which would otherwise cause damage to a computer chip. By contrast, the carbon cartridge in a refrigerator may deteriorate to where taste is impacted but failure would not be critical. The food, pharmaceutical and chemical industries utilize cartridges for food processing and, therefore, performance of the cartridge is critical.

Identification of the high performance cartridge segment is important to cartridge suppliers. High performance cartridges offer the opportunity for higher profit margins. They are also sold based on determining the lowest total cost of ownership. Therefore, the route to market is different than for general purpose cartridges.

Power plants extract and discharge more water than municipalities and industry combined. Water shortages and environmental regulations are opening a large market for many different technologies. The opportunities can be divided into three segments:

Water Delivery: The need to utilize alternative water sources presents a several billion dollar per year opportunity for:

· Desalination: A number of Chinese and Indian power plants have already incorporated desalinated water for cooling and boiler feedwater. Combined power and desalination plants already provide both municipal drinking water and power for many areas in the Middle East.

· Use of treated municipal wastewater: Most power plants are within 100 miles of municipal wastewater plants. With additional treatment this source is ideal for power plant needs.

Water discharge: Zero liquid discharge (ZLD) is mandated for new power plants in China and is being evaluated for all new plants in water stressed regions. In some areas, with plentiful water supply, ZLD has been chosen as a way to avoid delays in obtaining water discharge permits.

Regulations are tightening for plants which are discharging wastewater. U.S. power plants have to meet new Emission Limit Guidelines (ELG). The retrofit of scrubbers in the U.S., China and elsewhere has created new wastewater treatment challenges.

Water avoidance: The steam plumes emanating from the stacks and cooling towers of plants are not only testimony to water loss but to inefficiency. District heating is an alternative which can nearly double power plant efficiency. More modest efforts such as placement of the Blue Flint ethanol plant at one of the Great Rivers Energy power plants need to be explored.

Recirculated water for cooling towers results in a big reduction in water consumption versus once- through water. The problem is the net water loss through evaporation. Dry cooling eliminates the water loss but requires considerable energy. It is not practical in warm climates.

Initiatives to improve power plant efficiency have a direct effect on water consumption per unit of energy produced. McIlvaine is conducting webinars on greater heat recovery from flue gas with more efficient air preheaters and the use of high temperature particulate removal to allow for the use of more efficient heat exchangers.

These opportunities need to be addressed on a plant by plant basis. A number of Indian power plants have immediate needs. Adani Power has shut down five units of 660 MW capacity at the Tiroda plant in Maharashtra due to an acute water shortage. The 2100 MW coal-fired Farakka power station in West Bengal shut down its six turbines due to lack of water. The 1720 MW Raichur Thermal Power Station in Karnataka state has been hit by lack of water also. Since March 15, it has had to shut down several of its units indefinitely. The 1130 MW Parli power station in Maharashtra state has been shut down since July 2015 due to lack of water. NTPC's Solapur power plant is facing commissioning delays due in part to uncertainty over water supplies. In Karnataka's Krishna Basin, NTPC's Kudgi power plant and KPCL's Raichur power plant were affected by lack of water this summer.

Improving the Right-to-Win Ability for High Performance Flow Control and Treatment Products

The right-to-win for high performance flow control and treatment products can be enhanced by leveling the playing field and changing the scoring method. Right-to-win is the ability to engage in any competitive market with a better-than-even chance of success. Four strategies have been used to improve the right-to-win ability. They are position, execution, adaptation and concentration.

In flow control and treatment there are two types of products and services: high performance and general performance. The right-to-win strategies for them differ significantly.

The challenge of large U.S. and European based suppliers of high performance flow control and treatment products is to not only improve the right-to-win ability in the existing market, but to be pro-active in changing the rules of the game to level the playing field and even the scoring method in developing countries. Most of these large companies have not achieved the sales and profits in the fast growing developing market. McIlvaine, therefore, proposes that “creation” be considered a fifth right-to-win strategy. The importance of each strategy has been ranked from very important to irrelevant.

Right-to-Win Strategies for High Performance and General Performance Products (5 is very important and 1 is irrelevant)
Right-to-Win Strategy	High Performance	General Performance
Position	3	5
Execution	3	5
Adaptation	5	3
Concentration	3	4
Creation	5	2

The creation strategy changes the playing field by making it easier for purchasers to buy the best rather than the lowest cost product. This entails finding an easier way to determine the lowest total cost of ownership (LTCO). Arcelor Mittal is doing this by global sourcing and then providing LTCO analyses for its 200 plants around the world. McIlvaine is accomplishing this in certain industries with free Decision Guides for end users.

Changing the scoring method is another game changer. Most flow control and treatment products contribute to increased life quality today at some penalty to future generations (e.g. greenhouse gases or resource depletion). The perspective is quite different for a wealthy individual who wants to set up annuities for his grandchildren and the starving parent who cannot even ensure the survival of his children. McIlvaine has created a metric to help developing countries make the best choice for their citizens.

For more information on right-to-win strategies in flow control and treatment contact Bob McIlvaine 847-784-0012 ext. 112 rmcilvaine@mcilvainecompany.com.