Increasing Flow Control and Treatment Product Gross Margins
The best way to raise prices without losing business is to provide a product
which justifies a higher initial price. To accomplish this you need to:
Develop a superior product
Convince the customer as to the value
Develop a Superior Product
McIlvaine is currently preparing a Decision Guide on choke valves for oil and
gas applications. These are tough applications and require custom valves
designed for severe service. This is only part of the story according to George
Gorman of the Valve Institute. The success or failure of a valve rests not only
on the valve merits but on how it is applied. Subsea pipeline valve needs are
different from sub-sea Christmas tree needs. Both are certainly different from
the needs at the surface or on shore. The best valve choice requires detailed
knowledge of the unit operations. When it comes to subsea valves his Institute
is dedicated to providing insights on best choices with separate training
courses on subsea pipeline and Christmas tree valves.
But what are the needs of the long-time valve practitioner? Does he need an even
more robust system? Input from a number of both supplier and end user experts in
the McIlvaine Insights discussions leads to the conclusion that considerable
analysis and discussion is needed. Muktiadi Rahardjo of Shell is the valve and
sealing specialist at the Shell Pernis refinery and, based on this experience,
recommends better communication relative to valve issues. He cited a lack of
application knowledge on the part of some vendors and the inability to utilize
the wisdom existing within the end user community.
If you rank the impact of a product on the process, the valve is at the bottom
of the rankings. The product using the valve, e.g. a pump system, will be more
important by virtue of the fact that it typically would include a pump and at
least three valves. The scrubber company product which includes the valves,
pumps, fans, nozzles and scrubbing tower is obviously of most impact on the
process. So, if we agree that process knowledge is necessary to provide the best
valves, then it follows that even more process knowledge is needed for suppliers
of the sub processes What can we conclude from all of this?
IN ORDER TO DEVELOP A SUPERIOR PRODUCT YOU HAVE TO UNDERSTAND THE PROCESS
WHERE THE PRODUCT WILL BE APPLIED.
TO CONTINUE TO PROVIDE THE SUPERIOR PRODUCT YOU HAVE TO KEEP UP WITH PROCESS
CHANGES AND NEW REGULATORY AND OTHER CUSTOMER NEEDS.
FOCUS YOUR PRODUCT DEVELOPMENT EFFORTS BY PRIORITIZING CUSTOMER NEEDS IN SUCH
A WAY TO MAXIMIZE MARGINS AND PROFITABILITY.
Convince the customer that you have the best product
The best product is defined here as the product with the lowest total cost of
ownership. This definition is couched in the broadest terms. It has to take into
account the severity of the service but also the criticality. A peaking gas
turbine which cycles a few times per year and can be easily accessed for
maintenance is in a non-critical application compared to the base-loaded turbine
which is in operation 24/7 and cycles hundreds of times per year.
It is easy to pick the lowest cost product but much more difficult when you have
to assess the lifetime cost based on both severity and criticality. The first
step in creating a convincing program is to understand how decisions will be and
could be made.
Decision making is a series of classifications. Whether it is the initial
bidders list, the criteria in the specifications or the ultimate selection the
decision maker is moving from one set of classifications to the next.
The elements of the classifications are: what, which, why and how. In order to
be successful you have to convince some people of just the what and which
and others you also need to add the why. The how is the big challenge which
provides credibility to the other elements.
o What are the classifications? If you are going to remove SO2, should you
consider wet limestone, wet lime, dry sorbent injection, spray driers, or
seawater scrubbing?
o Which of the classifications are best?
o Why is one the best choice?
o How does the product perform uniquely enough to justify the prediction that it
will result in the lowest total cost of ownership?
The what, which and why can be communicated through normal sales channels. The
decision guides add clarity. The problem is that the credibility depends on the
how. It is a lot easier to claim the highest efficiency or lowest maintenance
cycle than it is to prove it.
McIlvaine recognizes the challenge of convincing customers that a product has
the lowest total cost of ownership and has a whole program to address it: 4 Lane
Knowledge Bridge to the End User
$23 Billion High Performance Pump Revenues Projected for 2017
Nearly half the industrial pumps which will be sold next year will classify as
high performance. According to the latest forecast in Pumps: World Markets sales
of high performance pumps in 2017 will reach $23 billion.
The criteria for this category are both severe and critical service. Those pumps
which have to be engineered to withstand corrosion, abrasion, high temperature
and pressure are classified as in severe service. Those which must meet high
purity and safety requirements such as found in the food and pharmaceutical
industry are classified as in critical service. High performance pumps are
further distinguished by being specially engineered and not being stocked
commodity products.
These pumps are used in many different industries. The oil and gas applications
are the largest with predicted purchases next year in excess of $6 billion. A
relatively small percentage of municipal wastewater pumps are classified as high
performance. But, since the wastewater pump market is so large, even a small
percentage results in a $3 billion annual high performance pump market. The
chemical and refining industries will also be major purchasers. The power
industry will be a bigger market in Asia than in other regions. A number of new
ultra-supercritical coal-fired power plants are under construction. Each will
have millions of dollars of high performance pumps.
International suppliers have a large share of the high performance pump market
and a smaller share of the commodity pump market. It will continue to be easier
for an international company to penetrate a local market with its high
performance products rather than its commodity products.
Greater profits can be reaped from high performance pump sales because of the
higher gross margins. On the average it is estimated that the gross margin from
a high performance pump sale is 35 percent versus just 25 percent for a
commodity pump. So, despite the smaller market size of the high performance pump
market, the gross profit will be higher.
Each industry can be segmented into five different uses:
Use High Performance Needs
Water Intake Extraction from wells, lakes and streams involves some
pre-treatment. High performance pumps are required in some pre-treatment schemes
and where intake water is corrosive e.g. some wells.
Cooling Cooling is either once through or recirculating through cooling towers.
There are few high performance pump requirements.
Combustion Power producers and industrial plants requiring steam and power need
high performance boiler feedwater pumps.
Process Many process schemes incorporate high performance pumps to move or
convert a product.
Wastewater Wastewater with abrasive solids or corrosive chemicals requires high
performance pumps.
In the power industry, combustion is the largest application due to the boiler
feedwater requirements. In most other industries, the process use is the
greatest. The processes can be further segmented by function.
Function High Performance Pump Needs
Transport to or from storage Medium
Transport to the next process Medium
Play a role in the product creation High
Utilities such as lubrication, hydraulic power, heating and cooling Low and not
included in the forecasts
Extraction and measurement of samples Low
The processes which play a role in product creation can be further segmented by
the type of change with which they are involved.
Process High Performance Pump Needs Examples
Mixing medium Fluid-to-fluid or gas-to-fluid e.g. wastewater pump which moves
and aerates or ammonia pump which disperses fluid in gas stream to react with
NOx
Heat/Cool medium Cryogenic and LNG high temperature foods which must not be
damaged by transport
Separation high Feed and discharge from centrifuges, filter presses, clarifiers.
In wet mineral size reduction and separation, there are highly abrasive
slurries.
Dehydration/ Evaporation high Slurries created in crystallization, pumps at high
pressure to move liquor through spray drier nozzles
Reaction/Absorption high Varying temperatures, fluid state and pressure needs of
the reactor or absorber. Function is often to recycle and disperse.
Cleaning or blasting high Develop pressures to clean scale from castings and
fracture shale
Disinfection medium Dispersions of large quantities of chemicals in liquid
Displacement high Water injection to displace oil
Pump suppliers should seek to understand as much as possible about the
industries, processes and functions within those processes where their pumps
might be used. The pump designers can provide solutions and not just hardware if
they can first understand the needs. Sales and senior management need to
understand the processes in order to better predict future market opportunities.
For more information on N019 Pumps World Market, click on:
http://home.mcilvainecompany.com/index.php/markets/2-uncategorised/116-n019
Utility E-Alert Tracks Billions of Dollars of New Coal-fired Power Plants on a
Weekly Basis May 27, 2016
Here are some headlines from the Utility E-Alert.
UTILITY E-ALERT
#1274 May 27, 2016
Table of Contents
COAL WORLD
First 800 MW Supercritical Thermal Power Plant in Karnataka, India
Commissioned
EPH bids for Rybnik Coal-fired Power Plant in Poland
Doosan Babcock wins Contract for Biomass Conversion of Coal-fired Power Plant
in UK
Egyptian Power Plant orders 27 KSB Pumps
The 41F 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 42EI Utility Tracking System which has data on every
plant and project plus networking directories and many other features.
DATE HOT TOPIC HOUR AND DECISION GUIDE SCHEDULE
The opportunity to interact on important issues
June 16, 2016
Decisions FGD and Acid Gas Separation - Issue and options for SO2 and other acid
gas separation from coal-fired power, cement, steel, and waste incineration
plants.
Click here for more information and to register
TBA
Decision Guide LIFO vs FIFO filter pulsing to maximize acid gas capture - Last
sorbent on the cake is first removed. How do we change that to FIFO?
Click here to participate in the preliminary analysis
TBA
Decision Guide Molecular Sieve Switching Valves - Which of three designs is best
under each of the varying conditions found? What materials and coatings are
needed?
Click here to participate in the preliminary analysis
TBA
Decision Guide Choke Valves - What designs work best given the sand, water,
pressures and other challenges for surface and sub surface applications?
Click here to participate in the preliminary analysis
July 14, 2016
Markets Desalination -Thermal vs. Membrane; energy recovery, pump, valve,
compressor and chemicals options; power/desalination combinations.
August 25, 2016
Markets Oil, Gas, Refining - Supply and demand; impact on flow control and
treatment products; regional impacts e.g. subsea in North Atlantic vs. shale in
the US vs. Oil Sands in Canada.
TBA
Markets Food - Analysis of 12 separate applications within food and beverage
with analysis of valve, pump, compressor, filter, analyzer and chemical options;
impact of new technologies such as forward osmosis.
TBA
Markets Municipal Wastewater - Quality of pumps, valves, filters, and analyzers
in Chinese and Asian plants; new pollutant challenges; water purification for
reuse.
TBA
Markets Mobile Emissions -Reduction in CO, VOCs, and particulate in fuels, oils,
and air used in on and off road vehicles; impact of RDE and failure of NOx traps
and the crisis in Europe created by the focus on clean diesel.
Click here to Register for the Webinars
FGD and Acid Gas Separation - Issue and options for SO2 and other acid gas
separation from coal fired power, cement, steel, and waste incineration plants.
Click Here to Register
This free webinar will be held at 10:00 a.m. on June 16. A collaborative format
will be used to discuss decision guides on acid gas removal for coal fired
power, cement, steel, waste to energy, and glass plants. The decision guides
already prepared on these subjects will be updated and quickly displayed during
the meeting. Discussion will revolve around controversial issues. Subscribers to
Power Plant Air Quality Decisions and Industrial Air Plants and Projects can
access the guides at any time. End users also have access upon request.
Information on new developments is continually solicited. For questions contact
Bob McIlvaine at rmcilvaine@mcilvainecompany.com 847-784-0012 ext. 112.
LIFO vs. FIFO filter pulsing to maximize acid gas capture - Last sorbent on the
cake is first removed. How do we change that to FIFO? Click here to participate
in the preliminary analysis.
Direct Sorbent injection is becoming increasingly popular. Much of the acid gas
is removed on the cake formed in the pulse jet filter. It is critical that the
unreacted or last in sorbent is not the first out. The LIFO vs FIFO accounting
concept may apply. Input on this subject is solicited from sorbent, dust
collector, bag and valve suppliers. Over the next few months we will assemble an
analysis and decision guide on maximizing acid gas capture in the bag filter. A
webinar will be scheduled for early Fall to discuss the findings. For more
information contact Bob Mcilvaine at rmcilvaine@mcilvainecompany.com
847-784-0012 ext. 112.
Molecular Sieve Switching Valves
Molecular sieves are used to dehydrate gas. The valves used in switching from
one sieve bed to another are subject to severe service including zeolite
particles and corrosive, hot conditions. There is considerable controversy on
the best valve designs and materials choices. Over the next few months we will
assemble an analysis and decision guide on this subject. The preliminary
analysis is provided at Severe Service Valve Technologies and Markets. A webinar
will be scheduled for early Fall to discuss the findings. For more information
contact Bob McIlvaine at rmcilvaine@mcilvainecompany.com 847-784-0012 ext. 112.
Choke Valve Decision Guide and Webinar
McIlvaine is compiling a continually updated Decision Guide for operators of
choke valves used in oil and gas and other industries for fluid control.
Contaminants such as sand integrated into varying mixtures of water, oil,
methane and other gases provide both operational and maintenance challenges. The
guide will identify the major applications and then the performance of various
designs and various materials for specific conditions. The Guide will be the
basis of a recorded discussion to be conducted in early fall 2016. The guide
will be offered free of cost to any end user. It will also be published in
Industrial Valves: World Markets and Strategies. The wisdom of the industry is
sought in order to make this guide the best it can be. Input is welcomed from
any and all sources. White papers, articles and other data to further the
discussion would be most helpful. The background information and part of the
analysis has been prepared and is displayed at Choke Valve Decision Guide. For
more information contact Bob Mcilvaine at
rmcilvaine@mcilvainecompany.com847-784-0012 ext. 112.
Details on Webinars
McIlvaine conducts periodic webinars which are in a discussion format and are
free of charge to all participants. The displayed material and recordings are
free to purchasers of the products and services and by subscription to others.
Format: 50-90 minute recorded discussion using Mcilvaine display material. The
session will be free of charge to all participants but registration is required.
Approach: There are two types of webinars. One is focused on Markets and
directed to suppliers. The other is focused on aiding purchasers make the best
Decisions relative to purchases of flow control and treatment equipment and
services.
Markets HTH
General overviews of the market including size and major variables will be
discussed with heavy emphasis on technology and regulatory drivers. The
presentation will be based on the latest information appearing in Mcilvaine
multi-client reports. Questions and views from both subscribers and
non-subscribers are encouraged.
Decisions HTH
Mcilvaine has been publishing information systems on pollution control since
1974. Each subject is organized by the pollutant control technology e.g. fabric
filter, scrubber etc. There are search capabilities to retrieve information on
any application. The newest addition has been slide deck systems displaying the
issues and options relative to a specific applications. Coal-fired power,
cement, steel, and waste combustion decision slide decks are continually
updated.
The continually updated slide decks are displayed on the applicable Decision
System. It is recommended that participants view the slide deck in advance of
the session and be prepared with questions and views.
Value to purchasers and specifiers: Your questions and interests will be
prioritized in the discussion. You will get a monthly newsletter and have
continuing access to the system and multiple ways to interface in the future
along with a networking directory of suppliers.
Value to Suppliers: You have the opportunity to provide data to be considered at
no charge. If you are also a subscriber you will see the summaries in advance
and be able to shed light on issues and options not properly covered in the
slide deck. If you are a subscriber you will receive the monthly newsletter and
continuing yearly access to the system including networking directories.
44I Power Plant Air Quality Decisions includes 1ABC, 3ABC, 4ABC, 9ABC decision
services but not 2ABC. So those with multiple technologies and at least partial
focus on power will find this combination most cost effective.
Applicable Services for Hot Topic Hours**
Pollutant
Industry Fabric Filter
(1ABC) Scrubber
(2ABC) Precipitator
(4ABC) FGD & DeNOx
(3ABC) Air Pollution
Monitoring
(9ABC) Gas
Turbine
Decisions
FGD and Acid Gas
June 16, 2016 Coal X X
Sewage X X
WTE X X
Cement X X
Steel X X
*Included in custom system
** Many of the decision guides also are displayed in the relevant market
reports. Power Plant Air Quality Decisions includes 1ABC, 3ABC, 4ABC, 9ABC
Sponsored Webinars allow suppliers to take advantage of all the valuable
information on their power point presentations. Click here for details
Hot Topic Hour Recordings
See and hear recordings of past Hot Topic Hours (Free for subscribers, $95.00
for non-subscribers)
Chronological
Order Now!
Free Sponsored Webinars
Albemarle - Cement MACT
AMC Power
Aquatech
GE - Mercury Capture
Honeywell
NVISTA
Midwesco - Bagfilter Performance Analyzer
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Sick Maihak - Cement MACT
Tekran Instruments - Cement MACT
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You can register for our free McIlvaine Newsletters at:
http://home.mcilvainecompany.com/index.php?option=com_rsform&formId=5
Bob McIlvaine
President
847-784-0012 ext 112
rmcilvaine@mcilvainecompany.com
www.mcilvainecompany.com