December 2015 - Water-Wastewater Treatment Chemicals Insights 59

The 2016 world market for food filtration and separation hardware and consumables will exceed $2.9 billion. This is the conclusion of the McIlvaine Company through iteration of data in a number of its related reports.

The expenditure for consumables will be nearly twice the hardware investment. One-third of the consumables expenditures will be for replacement cartridges followed by cross-flow filtration membranes. The third largest purchase will be for filter cloths, followed next by filter bags. Rounding out the consumables list are ion exchange resins and filter belts.

Ranking	Hardware Type
1	Centrifuges
2	Cross-flow filtration hardware
3	Filter presses
4	Cartridge hardware e.g. housings
5	Bag hardware e.g. housings
6	Leaf, gravity and drum filters

The largest application segment is dairy, fruits and vegetables, sugar beet, corn and grain. Dairy represents more than one-third of the total in this segment. Separation of milk and cream in centrifuges is one of the oldest applications. Membrane technology is replacing leaf filters with diatomaceous earth in many plants in this category.

The market is growing at rates slightly above that of GDP as filtration is used to create new products as well as improve the quality of existing products. Fat free and non-alcoholic beverages are two examples of new products created by filtration and separation.

A few centrifuge suppliers dominate this hardware segment. At the other end of the spectrum, there are thousands of companies sharing the consumable cartridge market in the food industry.

McIlvaine derives its food filtration and separation forecasts by extracting information and insights from the following reports:

Alternatively to purchasing the individual reports, one can choose to purchase application focused reports such as Food Filtration and Separation. This is one of many customized multi-client reports available from McIlvaine. For more information contact Bob McIlvaine at rmcilvaine@mcilvainecompany.com

Half of All Flow Control and Treatment (FCT) Purchasing Decisions Are Made Remotely

The choice among suppliers for an FCT product is more often made outside the local sales area. This means that coordination of local sales people is routinely necessary. Furthermore, market forecasts and sales quotas based on where the products will be used have to be adjusted to take into account the remote influence. A big portion of sales can be in large projects. Most of these involve remote influence.

Large companies are moving toward global sourcing. A few hundred large companies purchase 40 percent or more of FCT products. These large purchasers also are the ones with the large projects. Most large project purchasing decisions are made by groups and not individuals.

Local Influence vs. Purchasing Company Size for Flow Control and Treatment Equipment

100%
	Small companies with 60% of the market
↑
Local Decision Making Influence
50%
		Large companies with 40% of the market
↑


↑
	Project Size →

Smaller companies tend to make purchasing decisions in the country, province or state in which the product will be used. In larger companies, decisions are frequently made by corporate people in another locality. Another factor is project size. The larger the project, the more likely the decision will be made in part by people not at the point of use. McIlvaine has determined that anywhere from 50 to 200 large companies account for 40 percent or more of the purchases in any of the flow control and treatment product areas.

When the influence of EPC and system suppliers are included, the relative percentage of local decision making is further reduced.

Percentage of Purchasing Decisions Made at Another of the 95 Countries, Regions and Provinces Rather than at the User Plant

	Small Company (Purchases)		Large Company (Purchases)
	Local Decision	Remote Decision	Local Decision	Remote Decision
Large purchaser			20	40
Small purchaser	60	10
OEM, EPC	5	10	5	15
Consultant	5	10	5	15
Total for Category	70	30	30	70
Total for Market which is 60/40 Small	42	18	12	28
In the total market, 54% of the decisions are local and 46% are made remotely.

For a major system or component, 46 percent of the decisions are made remotely. This number is much higher when components such as pumps and valves for new plants are evaluated. Seventy percent of the decisions would be made remotely. Often a valve is assembled in a component in one location and then shipped to the end user. The component supplier will make the ultimate purchase but the end user man have substantial influence on the valve choice.

Most of the decisions will be made locally for repair parts and replacement valves, pumps, nozzles, etc. The exception would be large companies that are moving to global sourcing.

Sales management needs to take into account the remote influence and large project impacts.

The first step is to create detailed forecasting of markets by use in all the sales territories. McIlvaine has divided the world into 95 significant territories (9 regions in the U.S. and 6 regions in China). This spreadsheet then becomes the template for adjustments by remote influencers and large projects.

The sales effort at the global sourcing headquarters for Arcelor Mittal which has more than 100 steel plants and coal mines needs to be proportional to the remote influence. A large project such as the $3 billion potash mining project in Canada or $20 billion coal gas pipeline in China must also be taken into account.

OEM Networking Directory Has the Contacts at Consulting and Supplier Companies

If you sell systems, scrubbers nozzles, packing or corrosion resistant materials you will use the McIlvaine OEM Networking Directory daily. Check it out at: 53DI OEM Networking Directory.

300 Large Oil and Gas Projects Account for 80 Percent of the Flow Control and Treatment Purchases

Some oil and gas projects include hundreds of millions of dollars of pumps, valves, filters, compressors and other flow control and treatment equipment. The top 300 projects each year account for more than 80 percent of the purchases. McIlvaine tracks these in the bi-weekly Oil, Gas, Shale, Refining E-Alert.

October 30 Oil and Gas E Alert covering Two Week Period
Project Name	Description	Total Amount $ Millions	Flow Control Treat $ Millions	Order Yr 20+
Enbridge	Canadian pipeline	38,000	300	16-19
Odebrecht	Pipeline in Peru	4,000	40	17-19
Golar	FLNG off Cameroon	8,000	90	17
Saudi Arabia's PetroRabigh	Petrochemical and refining complexes	10,000	200	16-18
Dung Quat Refinery	New refinery in Vietnam	4,000	90	16
Rosneft	New refining and petrochemical complexes in Eastern Russia	10.000	200	17-19
10 Additional Large Projects	LNG, refining, extraction	50,000	1,000	16-19
Total		124,000	1,920

Sixteen projects reported in the latest bi-weekly issue account for close to $2 billion of purchases of flow control and treatment equipment. The scope includes oil and gas extraction, LNG, gas-to-liquids processing, and tar sands processing.