Filtration Market Rankings Change with Two Acquisitions

Two significant mergers in the filtration industry have taken place in the last month.  Lydall has acquired Gutsche and Parker Hannifin has acquired Clarcor. Lydall’s acquisition is relatively small but their increase in market share is large.  Parker Hannifin’s acquisition is large but their increase in market share is relatively small.  One reason for this is that Lydall is nearer the beginning of the supply chain where total revenues are less.  The second reason is that Lydall has focused on a niche market, whereas the Parker acquisition is much broader based.

Lydall, Inc. has entered an agreement to acquire MGF Gutsche GmbH & Co. KG (“Gutsche”) for approximately $58 million in cash.    The business consists of operations in Germany and China. Gutsche’s fiscal year ends on December 31, 2016 and revenue and EBITDA for these operations are forecasted by Gutsche to be approximately $50 million and $6 million, respectively.

Lydall has recently acquired Texcel and they purchased Andrew several years ago. These previous acquisitions plus Gutsche are providing Lydall with a market share approaching 20 percent in high performance non-woven media for fabric filters.

Other competitors in the high performance non-woven area for fabric filters are BWF, Xiamen Savings and Testori. An increasing number of Asian suppliers have also entered the market.

Parker Hannifin will acquire Clarcor for $4.3 billion. Clarcor is a diversified manufacturer of mobile, industrial and environmental filtration products with annual sales of approximately $1.4 billion and 6000 employees worldwide. Clarcor brands include Clarcor, Baldwin, Fuel Manager, PECOFacet, Airguard, Altair, BHA, Clearcurrent, Clark Filter, Hastings, United Air Specialists, Keddeg and Purolator. The acquisition of Clarcor adds a broad range of industrial air and liquid filtration products and technologies to Parker Hannifin’s filtration portfolio. With approximately 80 percent of Clarcor’s revenue generated through aftermarket sales, the acquisition is expected to significantly increase recurring revenue in Parker Hannifin’s Filtration Group.

The combined company has full portfolios in some segments of filtration and partial in others and is not a player in many segments.

The new Parker will be a leader in dust collector bags.  They buy the roll goods from companies such as Lydall.  Clarcor has moved vertically to manufacture media for HVAC but is a small player in roll goods manufacturing.

Parker has expanded and is a major player in filter elements. It is not competing in system work except in some narrow areas such as gas turbine inlet filtration.  However, because of the fractured nature of the filtration industry, it is a market leader in an expanded number of segments thanks to this acquisition.

The market shares of suppliers are continually tracked in:

1ABC Fabric Filter

2ABC Scrubber/Adsorber/Biofilter Knowledge Systems

3ABC FGD and DeNOx Knowledge Systems

4ABC Electrostatic Precipitator Knowledge Systems

N007 Thermal Catalytic World Air Pollution Markets      

N024 Cartridge Filters: World Market  

N020 RO, UF, MF World Market  

N006 Liquid Filtration and Media World Markets

N005 Sedimentation and Centrifugation World Markets 

N022 Air Filtration and Purification World Market  

N035 NOx Control World Market 

N064 Air/Gas/Water/Fluid Treatment and Control: World Market  

Coalescer Supplier Program  http://home.mcilvainecompany.com/index.php/markets/28-energy/1124-n065.

Who Should Purchase GE Water?

Hundreds of companies in the water business as well as private investors will be considering the purchase of GE Water. The first conclusion in a cursory review will be that this is a group of individual companies which operate independently and are not necessarily in the same markets.  There are companies selling systems and major components, small components, instruments and consumables such as treatment chemicals.

The management of these businesses is challenging because of their diversity.  The way you manage an effort to supply $50 cartridges is totally different than the way you manage an effort to sell knowledge which is bundled into the price of formulated chemicals. The management of a company which sells complete zero liquid discharge (ZLD) systems requires skills not required in some of the other businesses.

Danaher has been mentioned in the media as a potential purchaser.  Their recent Pall acquisition has made Danaher a major player in pharmaceutical and chemical industry filtration.  GE Water is focused more on power, oil and gas, refining and to a lesser degree on various water-related purification.  So, the industry alignment is complimentary.

Xylem has grown the test segment of its transport, treat and test efforts. Its instrumentation or test business is mostly in municipal water and wastewater and compliments the GE instrumentation applications.

Other water chemical formulators such as Ecolab and Solenis and basic water chemical suppliers such BASF and Kemira are also potential purchasers.

Any of the large companies in the air, water, liquid, gas flow and treat businesses with an industry total revenue of $323 billion are potential purchasers.

* includes vacuum bags and face masks as well as HVAC

The GE water treatment chemicals business is of greater value as the percentage reduction of end user knowledge to total knowledge continues to shrink.  The formulated chemicals business is more problem solving with the right combination rather than sale of a product.  Knowledge of the applications is critical.  With the development of the smart sensors, the formulators can become remote operators or continuous advisors rather than just offering periodic advice as part of the chemical sale. Will potential investors fully recognize this opportunity?   If they do, the potential buyer will be one who can best leverage this very large potential.  The expertise in the use of chemicals along with filtration, valves, pumps, etc. will all create a very large remote advice, operations and preventive maintenance revenue opportunity.

The various relevant market reports for an evaluation of this opportunity are shown at: Markets

Utility E-Alert Tracks Billions of Dollars of New Coal-fired Power Plants on a Weekly Basis

Here are some Headlines from the Utility E-Alert

UTILITY E-ALERT

#1304 – January 6, 2017

Table of Contents

COAL – US

·        Ash Pond leaks this Week at Duke Energy Rogers Coal-fired Power Plant

·        Coal-fired Power Plants will continue to close despite change at EPA

·        Coal-fired Power Plant's Owners weigh Options that include closure

·        Washington State has blocked Plans for the Nation’s biggest Coal Export Terminal

·        Ameren will install New Ambient SO₂ Monitors

·        EPA analysis shows Wet FGD is most Cost-effective Route to meet Federal Implementation Plan

 
COAL – WORLD

• China fines 605 Power Plants 328 Million Yuan for Environmental breaches
• BHEL commissions Second 600 MW Thermal Unit in Telangana
• Delay in approval of Meralco Projects to hike construction and Operational Costs
• GE Power India Ltd awarded Contract worth Rs. 271.1 Crores
• Aboitiz Power cleared to acquire Stakes in in GNPower Thermal Power Plants
• French Bank backs out of financing Indonesian Coal-fired Power Plant
• Swahili Settlement in Lamu, East Africa protesting against Kenyan Government’s plans for a Coal-fired Power Plant

The 41F Utility E-Alert is issued weekly and covers the coal-fired projects, regulations and other information important to the suppliers. It is $950/yr. but is included in the $3020 42EI Utility Tracking System which has data on every plant and project plus networking directories and many other features.

Connecting Things, People, Intelligence, Niche Experts and Wise Crowds for Power Industry Decisions

GE, Emerson, Siemens and many other companies are creating software to connect things.  There is a large potential for this in power generation.  This potential was reflected in a number of papers and displays at the recent PowerGen Asia exhibition.

“We believe the success of our power generation customers will be more and more supported by the intelligent use of data generated by ever increasing connectivity of devices. The integration of those data with people expertise and knowledge will create additional services in a cycle delivering unprecedented knowledge of the behavior and potential of their assets,” said Marco Sanguineti, Head of Technology for ABB’s Power Generation business unit.

McIlvaine recently conducted nine hours of webinars focused on a problem for one utility.  Presentations by Siemens, GE and Emerson addressed the optimization route to a lowest total cost of ownership (TCO) solution but the participants (wise crowd) concluded that incorporating innovative new technologies and components would be equally important in a system which would provide the lowest TCO.

Companies such as ABB are integrating the data from many thousands of sensors which are monitoring thousands of pumps, valves, mixers, fans, compressors, burners, conveyors, filters, etc.  In a large utility with multiple plants, there are hundreds of individuals with specialized knowledge that may be valuable in a specific lowest TCO determination. As a result, there are likely to be many thousands of people who can contribute to the decision-making process. How do you take advantage of all this niche expertise?

Jeff Immelt of GE observed that the power industry needs to adopt the “hurry up” attitude of Silicon Valley in developing new technology.  McIlvaine believes that this “hurry up” mode can best be achieved by decision systems which interconnect machines with people, intelligent databases and systems, niche experts and wise crowds.  Systems have been created which provide the four knowledge needs:  Alerts, Answers, Analysis and Advancement. The newest addition has been to supplement periodic webinars with very focused LinkedIn discussion groups.  These groups facilitate “wise crowd” decisions by addressing all the criteria needed for a “wise crowd” to function properly.

Wise Crowd Criteria and LinkedIn Role

The LinkedIn discussion groups are an important part of the entire interconnection system between:

·       Separate individuals and divisions within a supplier conglomerate

·       Separate individuals and divisions within a utility conglomerate

·       Separate individuals and divisions within a consulting company

·       The final interconnection between all the many individuals in each of the above

Supplier knowledge can be transmitted through individuals who are encouraged by management to focus on becoming more expert.  These individuals will be “rainmakers.”  If they demonstrate that their company has the knowledge and the products to provide the lowest TCO, they can be very effective in boosting sales.

The same is true of consulting companies. However, the challenge will be to offer just enough expertise to achieve the rainmaking without reducing the potential actual consulting revenues.

The LinkedIn discussion groups are incorporated in three Decision Guides:

4S01 Berkshire Hathaway Energy Supplier and Utility Connect

44I   Coal fired Power Plant Decisions (formerly PPAQD)

59D Gas Turbine and Reciprocating Engine Decisions

44I: Coal Fired Power Plant Decisions     $1600.00/year (Additional Users $120.00/year)     Click Here to Order

This service provides a connection for suppliers and coal-fired power plant operators around the world.  It is free of charge to any coal-fired utility employee.  It is designed to help owners make lowest cost of ownership decisions. The service covers combustion systems and components, flow control and treatment and air, water and solid waste pollution control.  It addresses the four knowledge needs:  Alerts, Answers, Analysis, Advancement.

Alerts:  Six alerts and newsletters are included.  The latest entries in the intelligence system are easily accessed.  Daily entries in LinkedIn discussion groups are also available.

Answers:  The intelligence system includes case histories, product information, regulatory analyses and all the past newsletters dating back to 1999 (over 1000 newsletters).  Hundreds of hours of recorded webinars provide graphic as well as text answers.

Analysis:  Upcoming webinars, the newsletters, white papers in the intelligence systems and detailed discussions in the LinkedIn groups provide analytical data.  Focus on seeking the lowest total cost of ownership is one of the most valuable aspects of the service.

Advancement:  The extensive webinar library and intelligence system provide the material for tailored training programs.  If fills the needs of the trainee but also senior people who just want to keep up with the latest developments.

Click Here for more information

Bob McIlvaine
President
847-784-0012 ext. 112
rmcilvaine@mcilvainecompany.com
www.mcilvainecompany.com