December 2014 - Water Market Insights 126

The New Approach to Market Forecasting For Flow Control and Treatment Products

Traditional forecasting of markets for air, gas, water and liquid flow control and treatment products has been the top down approach. The total market is determined and then segmented by industry, product and location. There are two problems with this approach:

· There is not the granularity needed to set quotas and promotional expenditures

The bottom-up approach is far better. The problem is that it is necessary to determine the quantities in as many as 50,000 niches. Prior to the digital age this was prohibitively expensive. Today it is a money saver. The granularity offers the potential to make a decision about selling an on/off ball valve to the pharmaceutical industry in Germany as follows.

Question	Answer
What is the valve growth projection for Germany?	Valve growth over the next five years will be $140 million from present $1.9 billion.
The biggest potential for the new valve is pharmaceutical. How big is this market?	Will grow by $4 million to $61 million/yr by 2019.
The product is a globe valve, so how big is this segment?	German pharmaceutical globe market will grow by $1 million/yr to $15 million in 2019.
It will primarily be used for on/off and not control, so how big is this segment?	On/Off market will grow to $13 million by 2019.
The new valve is used mostly in processing and not water, so how big is this segment?	Processing segment is 60 percent for a 2019 market of $7.8 million.
What will be the sales for new plants?	Only 30 percent or $2.3 million.
The new product should capture 15 percent share.	Target is $345.000/yr by 2019.
Should capture 5 percent of the replacement market which is 70 percent.	Target is 70 percent of 7.8 million x 5 percent=$273,000 for a total annual sales of $618,000.

These detailed forecasts provide the unique opportunity to validate the accuracy of the forecasts for the total market. Who better than the local salesman to evaluate the forecast for his products and its reliability.

Sales of hardware for cleanrooms will exceed $4.6 billion next year. Over 60 percent of this spending will be in East Asia. This is the latest forecast in World Cleanroom Markets published by the McIlvaine Company. (www.mcilvainecompany.com)

World Region	2015
Total	4,635
Africa	35
CIS	46
East Asia	2,780
Eastern Europe	33
Middle East	76
NAFTA	877
South & Central America	88
West Asia	95
Western Europe	605

The semiconductor and flat panel displays will account for just under 25 percent of the total. The semiconductor industry is booming. The Semiconductor Industry Association (SIA) announced that worldwide sales of semiconductors reached $87 billion during the third quarter of 2014, an increase of 5.7 percent over the previous quarter and a jump of 8 percent compared to the third quarter of 2013.

China is increasing spending due to smart phone sales and infrastructure buildup. Smart wearable devices, cloud computing and smart cars are likely to contribute to a record semiconductor expenditure on cleanroom hardware in 2015.

Five foundries are going to be able to offer high-volume leading-edge foundry production over the next five years (TSMC, GlobalFoundries, UMC, Samsung and Intel). Samsung recently announced plans to build a $14.7 billion wafer fab in Pyeongtaek, a city south of Seoul. The new fab is slated to begin production in the second half of 2017.

The market is being driven by the need to upgrade and replace older facilities with new ones which can make chips with smaller line sizes and more memory per chip. As the line size decreases, the damage done by a particle of a given size increases. There is, therefore, a continuing need for cleaner space.

On Thursday at 10:00 a.m. Central time, McIlvaine hosts a 90 minute web meeting on important energy and pollution control subjects. Power webinars are free for subscribers to either Power Plant Air Quality Decisions or Utility Tracking System. The cost is $300.00 for non-subscribers.

See below for information on upcoming Hot Topic Hours. We welcome your input relative to suggested additions.

December
18	Boiler Feedwater Treatment