WELCOME
Weekly selected highlights in flow control, treatment and combustion from the
many McIlvaine publications.
• Briefs
• Municipal Wastewater Plants to Spend $64 billion for Flow and Treat Equipment
This Year
• Impact of Free Trade on the $400 billion Combust, Flow and Treat Industry
Briefs
Webinars: We are conducting a webinar later this month on municipal wastewater.
Next month the subject will be coal fired boilers and the subject in May will be
gas turbine combined cycle plants. We will be providing market forecasts for
combust, flow and treat but also providing details on project databases and
decision guides for each industry. You can register at Free Market Webinars
5 step program; the market forecasts, project tracking and decision guides are
all part of a 5 step program discussed at www.mcilvainecompany.com
Municipal Wastewater Plants to Spend $64 billion for Flow and Treat Equipment
This Year
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.
2018 Municipal Wastewater Purchases
$ millions
World
U.S. Suez
Jacobs
CH2M
BEWG Los Angeles Chicago MSD
Guide 5280 1100 106 63 33 11 22
Control 8640 1800 173 104 54 18 36
Measure 4320 900 86 52 27 9 18
Valves 4800 1000 96 58 30 10 20
Macrofiltration (belt presses, sand filters) 2400 500 48 29 15 5 10
Pumps 9600 2000 192 115 60 20 40
Treatment Chemicals 6720 1400 134 81 42 14 28
Sedimentation and Centrifugation 4320 900 86 52 27 9 18
Variable Speed Drives and Motors 4800 1000 96 58 30 10 20
Turbines, Fans, and Compressors 10560 2200 211 127 66 22 44
RO/UF/MF Cross Flow Membrane Systems 1200 250 24 14 7 3 6
Air Pollution Control 960 200 19 12 6 2 4
Total 63,600 13,250 1271 765 397 133 266
McIlvaine is forecasting flow and treat product and service expenditures for all
industries and for 550 operating companies and 400 OEMS, EPCs and process sub
system companies worldwide. Municipal wastewater is one of 14 industries which
are covered. The wastewater purchases in many countries are concentrated among
just a few operators. Suez operates more than half the plants in Chile. In the
U.S. the engineering/consulting firms play a big role.
There is a metamorphosis in the way purchases will be made in the near future.
Process management system suppliers are providing monitoring and control of
every valve, pump and filter from remote monitoring centers. Suez is monitoring
hundreds of plants from its European base. The equivalent of millions of total
lowest cost of ownership analyses are continually generated. This development
will profoundly change the route to market as explained in N031 Industrial IOT
and Remote O&M.
Profiles of the 100 largest operators and EPCs worldwide are included in 62EI
North American Municipal Wastewater Treatment Facilities and People Database
which is being expanded to include the major worldwide purchasers.
A decision system for municipal wastewater flow and treat purchases includes a
number of decision guides. One is on aeration blowers. Another system provides
the odor control options. There is a guide just on mercury control options for
sewage sludge incinerators Details are found at Municipal Wastewater Decisions.
Detailed forecasts for each of the 550 major purchasers are shown in the
relevant market reports listed at:
http://home.mcilvainecompany.com/index.php/markets
A free webinar to discuss the municipal wastewater flow and treat market and the
sea change in the way purchasing decisions will be made will be held at 10:AM
Central time on the March 28. To register click on Free Market Webinars
Impact of Free Trade on the $400 billion Combust, Flow and Treat Industry
After World War II the U.S. led the way to world prosperity with the attitude
that a rising tide lifts all boats. The better each country does, the bigger the
potential market. Now the world is facing trade restrictions which are based on
the opposite philosophy.
Last week China eliminated the two-term presidential limit and the U.S.
announced plans for tariffs on steel and aluminum. Neither initiative bodes well
for the $400 billion Combust, Flow and Treat (CFT) industry. (1) In fact, any
individual efforts toward trade restrictions will have a negative impact on the
industry. Here are some of the reasons why this is so.
• CFT purchasers are rapidly becoming more global
• The CFT supplier industry is rapidly becoming more global
• The U.S. market share shrunk from 60% after WWII to 15% today
• The ratio of profits based on knowledge/manufacturing is increasing
• Knowledge has no geographical limits
CFT purchasers are rapidly becoming more global: Alcoa just received a big
contract to ship bauxite from its Australian operations to companies in China.
The U.S. produces less than 1% of the world's aluminum because of the locations
of bauxite and cheap electricity. In the last year Alcoa received contracts
totaling $665 million to supply bauxite from mines around the world to China,
Brazil, the U.S. and Europe. The Alcoa "Smelting Center of Excellence" is in
Canada. So, Alcoa cast products made in the U.S. from ingots made in Canada will
be more costly.
With annual achievable production capacity of approximately 113 million tons of
crude steel and some 199,000 employees across 60 countries, ArcelorMittal is the
world's leading steel and mining company. It is the largest producer of steel in
North and South America and Africa, a significant steel producer in the CIS
region and has a growing presence in Asia, including investments in China and
India. It is also the largest steel producer in the EU, with significant
operations in France, Germany, Belgium, Spain, Luxembourg, Poland, the Czech
Republic and Romania.
ArcelorMittal recently purchased dust collector systems for multiple plants on
two continents from Hamon. The order was placed in Europe. Hamon has a European
base but the dust collector technology comes from its purchase of Research
Cottrell which was a U.S. company.
The U.S. steel production in 2017 was 82 million tons. So, Arcelor Mittal is a
more important customer than all the plants in the U.S. World crude steel
production reached 1,691.2 million tons (Mt) for the year 2017, up by 5.3%
compared to 2016. Crude steel production increased in all regions in 2017 except
in the CIS, which has remained stable. Since U.S. steel production is only 5% of
the world production a tariff which increased U.S. production by 20% would only
have a world total redistribution of just 1% of the market. It would also mean a
lower output in the rest of the world.
Fewer than 2000 major international corporations will purchase the majority of
the CFT products and services this year. Purchasing is becoming centralized.
Arcelor Mittal has made huge savings by centralizing decision making and
purchasing based on total cost of ownership for all plants. BASF has made
decisions from Germany on valve and instrument vendors for condition monitoring
systems at all their plants.
Conclusion: The 2000 international customers are much more important than
individual countries to the CFT industry. A tariff which helps one country hurts
the international players and therefore the CFT industry.
The CFT supplier industry is rapidly becoming more global. CFT companies are
increasing their market share in the areas of the world with the large and
growing markets. Emerson purchased Pentair Valves which had purchased Tyco
valves which had purchased many dozens of local valve companies. Xylem purchased
a European pump company to become a major international pump supplier. Most
major CFT companies now have a significant presence in China and vice versa.
Neway Valves headquartered in China is a major supplier of valves on a worldwide
basis. Andritz has made major purchases in the U.S. and other countries to
expand beyond its European roots.
The Chinese air pollution system and product companies are now focusing on the
international market. Since the market for FGD and SCR has peaked in China the
local suppliers are aggressively pursuing markets in Asia, the Middle East and
Africa. International catalyst suppliers with joint ownership of Chinese plants
are expanding their global presence through this path.
Conclusion: Most of the CFT products and services are sold by international
companies who are negatively impacted by trade restrictions.
The U.S. market share shrunk from 60% after WWII to 15% today. The U.S market is
small compared to the world market. Japan, Europe and the U.S. once represented
more than 90% of the world CFT market. The Asian countries absent Japan now
represent larger markets than the three onetime leaders for most CFT products.
The coal fired boiler market represents one of the most significant shifts.
Twenty years ago, 90% of the FGD and SCR markets were in the former big three.
Over the last decade China purchased more of these products than that three
combined. Now ASEAN and India are the big markets with purchases greater than
the former big three. Most of the new coal fired boilers are being built in
countries in Asia other than Japan and China. Africa will buy more coal fired
boilers than the U.S. and Western Europe combined. Most of the new wastewater
treatment plants are being built in Asia.
Conclusion: No one country and specifically the U.S. is the dominant success
determinator for CFT. In fact, when a big market opens up in one country the
wise CFT company needs to ask, "How do I take advantage of this opportunity in
the short term while focusing on the longer-term world opportunity?"
The ratio of profits based on knowledge/manufacturing is increasing: In the
future the Industrial Internet of Things (IIoT) will be empowered by the
Industrial Internet of Wisdom (IIoW). (2) CFT companies will be selling packages
justifying higher margins and selling prices because they will offer lower total
cost of ownership (TCO). This lowest TCO is achieved with process wisdom which
results in better specific products for the application. The added revenue from
remote monitoring and operational support will be very significant.
The manufacturing and transport costs for high performance products will be less
important than product design and process knowledge. Many valve companies have
retired foundries and are buying castings. (3) Most suppliers of pollution
control systems purchase all the products and or parts and have only a few
assembly or special part manufacturing facilities. (4) High performance products
generate more revenue than general performance price-based products.
Conclusion: Knowledge is more important than low cost manufacturing. With IIoT
empowered by IIoW the importance of knowledge will increase.
Knowledge has no geographical limits: MHPS is monitoring coal fired power plants
in Asia from a remote-control center in the Philippines and gas turbine power
plants from a center in Florida. Donaldson can remotely monitor filter
performance of off road vehicles. With cloud-based systems subject matter
experts anywhere on earth can be made available for instant advice based on data
analytics of performance at any plant. An avalanche of data analytical
information will allow subject matter experts to become subject matter
ultra-experts (SMUE's) who will make a major impact on TCO.
Knowledge knows no geographical boundaries. Greater knowledge will lead to
international success. Those companies who allow SME employees to become SMUE's
will obtain a large market slice. Trade restrictions are a negative factor in
the success equation for CFT companies.
The ethical behavior of international corporations may be no better or worse
than that of the politicians who run the countries of the world. However,
corporate self-interest dictates the same type of ethical policy that led the
U.S. to create the international free trade structure after World War II.
Therefore, the greater impact international corporations can have limiting trade
restrictions the better.
(1) Market 'Forecasts http://home.mcilvainecompany.com/index.php/markets
(2) N031 Industrial IOT and Remote O&M
(3) N028 Industrial Valves: World Market
(4) 5AB Air Pollution Management