December 2015 - Water Market Insights 175

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 locally and 46% 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.

· Detailed forecasting of markets is available with individual reports displayed at:

· Detailed analysis of projects is available with a number of annual subscriptions explained at: Databases

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.

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.

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

§ Summit Power signs Construction Contract for Coal Gasification Power Plant near Penwell, TX

§ EPA proposing to extend Compliance Date for BART Emission Limits for SO₂ at P.H. Glatfelter

§ Engie to sell India, Indonesia Assets as it seeks to exit Coal-based Projects

§ Jimah East Power plans ultra-supercritical 2,000 MW Coal-fired Power Station in Jimah, Malaysia

§ Two Phase 1,320 MW Coal-fired Power Station proposed for Kalapara, Bangladesh

§ Proposed 300 MW Coal-fired Power Station in Banovici, Bosnia and Herzegovina

§ MVR Waste Incinerator in Germany is a Template for Coal-fired Power Plants

The 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 Utility Tracking System which has data on every plant and project plus networking directories and many other features.

McIlvaine webinars offer the opportunity to view the latest presentations and join discussions while sitting at your desk. Hot Topic Hours cater to the end users as well as suppliers while the Market Updates cater to the suppliers and investors. Since McIlvaine records and provides streaming media access to these webinars there is a treasure trove of value only a click away. McIlvaine webinars are free to certain McIlvaine service subscribers. There is a charge for others. Hot Topic Hours are free to owner/operators. Sponsored webinars provide insights to particular products and services. They are free.