December 2015 - Filtration and Centrifugation 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.

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.

State by State Forecasts Needed by Suppliers of Flow Control and Treatment Products and Services

The market for flow control and treatment (N064 Air/Gas/Water/Fluid Treatment and Control: World Market) will be over $350 billion this year. The market has been segmented into 80 countries and sub regions. Some of the smaller countries account for less than 0.1 percent of the total. By contrast, California accounts for 2 percent of the total, so international suppliers need to segment the U.S. by region and, in many cases, by state. This is accomplished in a supplemental report, Analysis & Forecast by Industry & State.

The food segment provides an example. The U.S. flow control and treatment in the food industry represents more than 22 percent of the world total. Expensive pumps and valves are needed to meet the sanitary requirements of food processors. Cross-flow membranes not only provide high purity water and clean wastewater but are concentrating liquids such as juices and corn syrups. Fabric filters are used not only for air pollution control but to capture product in hot gas streams e.g. coffee spray driers.

The U.S. will purchase two hundred and twenty times more food flow control and treatment products and services than Guatemala this year.

FOOD INDUSTRY(%s) BASE YEAR 2014
	2014	2015	2016	2017	2018	2019	2020	2021
United States	21.80	22.30	22.82	23.36	23.92	24.50	25.09	25.69
Canada	1.95	1.98	2.02	2.06	2.09	2.13	2.18	2.22
Mexico	2.39	2.49	2.61	2.73	2.87	3.01	3.17	3.35
Argentina	0.98	1.01	1.04	1.07	1.10	1.13	1.17	1.20
Brazil	3.11	3.17	3.23	3.30	3.36	3.43	3.51	3.59
Chile	0.44	0.45	0.47	0.48	0.50	0.52	0.54	0.56
Colombia	0.69	0.72	0.76	0.79	0.83	0.86	0.90	0.94
Ecuador	0.21	0.22	0.23	0.23	0.24	0.26	0.27	0.28
Guatemala	0.11	0.11	0.11	0.12	0.12	0.13	0.13	0.14

The state analysis segments each industry by state and aggregates it into nine regions. California represents 10 percent of the U.S. food industry flow control and treatment market while the Pacific states account for more than 14 percent.

FIGURE I-2B: U.S. Food Industry - Percent of U.S. 2014 Total
STATE	2014	2015	2016	2017	2018	2019	2029	2021
Alaska	0.32	0.33	0.35	0.36	0.37	0.39	0.40	0.42
California	10.26	10.67	11.10	11.54	12.00	12.48	12.98	13.50
Hawaii	0.22	0.23	0.24	0.25	0.26	0.27	0.28	0.29
Oregon	1.21	1.26	1.31	1.36	1.42	1.47	1.53	1.59
Washington	2.08	2.16	2.25	2.34	2.43	2.53	2.63	2.74
TOTAL Pacific States	14.09	14.65	15.24	15.85	16.48	17.14	17.83	18.54

McIlvaine continues to adjust forecasts based on a number of its own reports plus U.S. census data such as the number of employees in each facility in each industry.

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

NAICS	Alabama Food manufacturing facilities--- # of employees	25	50	200	300	500
3111	Animal Food Manufacturing	39	20	16	3	0
3112	Grain and Oilseed Milling	8	2	4	2	0
3113	Sugar and Confectionery Product Manufacturing	14	13	1	0	0
3114	Fruit and Vegetable Preserving and Specialty Food Manufacturing	8	6	1	0	1
3115	Dairy Product Manufacturing	8	4	1	3	0
3116	Animal Slaughtering and Processing	79	34	9	16	20
3117	Seafood Product Preparation and Packaging	22	9	9	4	0
3118	Bakeries and Tortilla Manufacturing	74	61	9	4	0
3119	Other Food Manufacturing	26	11	8	6	1
3121	Beverage Manufacturing	43	37	2	4	0