WELCOME

Weekly selected highlights in flow control, treatment and combustion from the many McIlvaine publications.

• Briefs
• Coal Fired Boiler Component Market is Large and Slowly Growing
• The DowDupont recommendations for Advanced Manufacturing and McIlvaine thoughts on IIoT and IIoW

Briefs

Coal Fired Boiler IIoT and Market Webinar on April 25: You can see from the analysis below that the combust, flow and treat market for coal fired boilers is very slow growing but is very large. International component suppliers can penetrate the Asian Market.  To find out how just register at 

Click here to Register for the Webinars

Municipal Wastewater: The webinar last week covered the growing Asian market for Combust, Flow & Treat (CFT) products but also documented the large replacement market in the U.S. and Europe. In the future large operators, consultants, and system suppliers will make most of the CFT purchasing decisions.  You can view the webinar at  https://youtu.be/Yl_AGdDWbr0 . You can also subscribe for 3 months at no change to

Municipal Wastewater Decisions

Forecasting Purchases of CFT Equipment for each Large Chemical Producer: Unlike coal fired power or municipal wastewater where one plant is similar to another chemical plants differ greatly.  The best way to obtain accurate forecasts is to create factors that can be applied to production capacity. The problem with a company such as BASF is that there are many different products being produced. This necessitates separate forecasts for MDI, chlorine and other products. It took a Power point presentation with 118 slides just to create the foundation from which each specific product can be analyzed and forecasts determined.  For more information on this initiative  Click Here. 

Coal Fired Boiler Component Market is Large and Slowly Growing

The market for combust, flow and treat (CFT) products for coal fired boilers is large and not shrinking. It is larger than represented in many reports. Forecasts for purchases of each type of product is made possible by detailed analysis of the MW of capacity and each specific variable impacting the market for a product.  In the past the change in capacity has been overshadowed by new environmental regulations.  Over the last 40 years there has been wave after wave of investment as one region after another adopted air and water pollution emission limits.  There is still a wave in the ASEAN nations and India, but this wave is overshadowed by the 2000 GW of environmental equipment which needs to be constantly repaired and replaced.

The starting point to determine the market for CFT products is the installed generation capacities.  The difference in installed capacity from one year to the next equals new builds less retirements. Pumps, valves, nozzles, blowers and similar components need to be replaced every 10-15 years.  So, unless the growth rate is higher than 6%/yr to 10%/yr the replacement market will be larger than the new market.  In a high growth country such as India the new build expenditure will be greater than the replacement, but the total investment will still be small compared to that in a country such as China with 1000 GW of coal fired capacity. The compound annual growth rate (CAGR) for installed capacity ranges from 7% in West Asia to a negative 5% in NAFTA.  In two regions capacity will be shrinking.  But the component market will be substantial even if it is being reduced by 2-3% per year.

(Megawatts)

The result will be a very large but mature market for CFT components.  This contrasts to the market for new coal fired boilers and environmental control systems which will be much lower than in the past.  Consider the market in 1974 in the U.S. OPEC cut off oil to the U.S. Utilities panicked and ordered 70,000 MW of new coal fired boilers within a few months. From 1974 to 2018 less than 70,000 MW of new capacity was actually installed in the U.S.  So, the order rate has been negative for the last 44 years. China has initiated FGD and SCR programs which in just a few years resulted in 400,000 MW of environmental retrofits.

Those days are gone. Not only have these big sudden markets disappeared but the technology has become standardized.  This means that Indian and Chinese companies are supplying systems at prices which exclude international competition.  The same is not necessarily true of components. There could be some system exceptions. The problem is that the international system suppliers do not have the profits to reinvest in R&D.

Let's take rare earth extraction as an example. The Philadelphia Electric MgO FGD system coincidently makes a perfect rare earths feed stock in the HCl/particulate scrubber.  DOE and the Chinese government are pursuing the expensive micronizing of fly ash landfills rather than the much more cost effective in situ approach, but no vendor is attempting to leverage this very big potential.

It is possible to greatly improve the accuracy of market forecasts for components by obtaining accurate capacity forecasts and then to relate the investment for each component as a function of capacity. The following segments need to be considered. Incremental new systems, new systems which replace retired systems, replacement components, repair and service of existing components.

Over the life of the average pump, blower or high-performance valve the cost of repair will exceed the original cost. As a result, the largest markets for component suppliers are at existing plants in countries with a large installed base.

The movement to IIoT and Remote O&M adds the potential to expand the service and advisory opportunity and to negotiate yearly contracts which can be fixed price or on a partnership basis where the owner and supplier share the savings.

Since owners will be armed with total cost of ownership data due to IIoT and data analytics, the supplier will want to spend the time to prepare a total cost of ownership evaluation. If this is not the lowest then he will need to invest in R&D and be able to submit the Lowest Total Cost of Ownership Validation (LTCOV).

It is highly desirable and possible to forecast the purchases for the few hundred enterprises which buy or influence the majority of the component purchases. Let's use FGD components as an example.

FGD Example:   FGD consumables include lime, limestone, water treatment chemicals, filtration cartridges and belts, membranes, dust bags, seals, balls for ball mills, general performance analyzers and similar items.  Minor replacements include nozzles, valves, general performance pumps and mist eliminators.  Repairs are needed for high performance pumps, dampers, high performance valves, scrubber linings, continuous emissions monitoring systems, fans and high-performance analyzers. 

Many FGD systems in the U.S., Japan and Europe were installed in the 1980s.  These systems are being updated with extensive automation and in some cases new scrubber vessels. New pumps and fans are also being installed.  In part this is due to end of life issues but often upgrades are required to meet tougher regulations.

The yearly FGD capacity additions have peaked both quantitatively and in terms of percent increases. In the 1980s the new yearly additions were 20,000 MW per year but in the early 1980s this represented as much as 20 percent of the installed capacity.  At the peak in 2005 the yearly additions were 90,000 MW but only represented 10 percent of the total installed capacity.  Now orders for new systems have dropped to 60,000 MW per year but this represents only 4 percent of the installed capacity.

What this means is a big change in the ratio between markets for new systems and the purchases for existing systems.  The market for new systems in 2018 will only be $3 billion while the purchases for existing systems will be $16 billion. Most of the new purchases will be in a few Asian countries.  The total $19 billion market will be dominated by relatively few end users and suppliers according to the latest forecast in 

N027 FGD Market and Strategies.

Many of the decisions are increasingly being made by OEMS and EPCs. Let's take the example of flow control components such as pumps, valves, fans and dampers. For new systems the end user will not often directly purchase these components.  Large FGD system suppliers will typically purchase or specify the specific brand and product.

FGD system suppliers are making a big effort to serve their existing customers with O&M services which include component replacement.  In the future third party O&M will become commonplace as explained in

N031 Industrial IoT and Remote O&M.

The remote monitoring of every valve, pump, fan and damper will generate unique knowledge for the corporate utility personnel and OEMs.  As a result, a few thousand people in 31 corporations will make more than 70 percent of the purchase decisions for high performance FGD components.

The market report provides forecasted purchases by each of the large operators and OEMS.  Detailed profiles of the FGD OEMS are also provided.  Detailed profiles of the operators are found in 42EI Utility Tracking System which also tracks individual projects on a weekly basis.

For more information click on the markets click on  N027 FGD Market and Strategies   or contact

Bob McIlvaine at rmcilvaine@mcilvainecompany.com This email address is being protected from spambots. You need JavaScript enabled to view it.    847-784-0012 ext. 112

The DowDupont recommendations for Advanced Manufacturing and McIlvaine thoughts on IIoT and IIoW

Andrew Liveris is the executive chairman of DowDuPont, a $73 billion holding company (the two giant chemical companies merged in September). Mr. Liveris will relinquish the role of executive chairman of the combined company April 1. Co-lead director Jeff Fettig will assume that role at the company.

The McIlvaine Company has consulted for Dupont and Dow periodically over the entire 44 years since incorporation. Some of the consulting has been technical including provision of a test scrubber to better measure performance. Marketing advice has been provided for RO membranes, Teflon gloves, Tyvek garments, the larger water market and the potential for amine scrubbing and sulfuric acid production for the power industry. One assignment relative to water markets addressed the Dow U.S. vs. international capability. Therefore, we read with interest the recent comments of Mr. Liveris on this subject.

Liveris is the author of Make It in America: The Case for Reinventing the Economy, in which he writes that America's economic growth and prosperity depends upon a strong manufacturing sector. According to Liveris, there is a widespread lack of understanding among the public of what today's manufacturing - which he referred to as advanced manufacturing - actually consists of. (Definitions vary, but the OECD defines advanced manufacturing technology as computer-controlled or micro-electronics-based equipment used to make products.) Liveris stated, "We are generating a new wave of technology to generate a knowledge economy. And a knowledge economy will need things made. They'll just be made differently."

Advanced manufacturing might include making smartphones, solar cells for roofs, batteries for hybrid cars, or innovative wind turbines. Liveris said he had visited a DowDuPont factory the previous week that is working on advanced compasses to enable wind turbines with blades the size of football fields. The goal is to produce blades light and efficient enough to make wind power a viable reality. "That's technology. That's advanced manufacturing," he said.

Liveris said that 7.5 million technology jobs left America between 2008 and 2016 because the country wasn't supplying appropriate candidates. The reaction of many businesses was to re-locate to "the Chinas, the Indias, and the places that were supplying that sort of skill." In the United States right now, he said, there are half a million technology jobs open, but American educational institutions are only graduating roughly between 50,000 and 70,000 candidates per year, so there's a "massive under-supply." In the next three years, there will be 3.5 million jobs created, and Liveris said the U.S. might only be able to fill about 1.5 million of them through a combination of graduation and immigration. "Unless immigration is fooled with, which is a whole other issue."

According to Liveris, a critical reason for America to revive its manufacturing sector is to promote innovation. "Something that we at Dow and many of us in manufacturing know: If you have the shop floor, if you make things, you have the prototype for the next thing, so you can innovate." Conversely, if you stop making those things, your R&D diminishes dramatically, he said.

Liveris called advanced manufacturing "the best path for the United States" and said, "We're so naturally suited for it if we'd just get the policies to help us."

A big proponent of STEM education, Liveris said that American schools are not graduating the workers we need. "We have convinced ourselves that a four-year college degree of the skills we used to have in the last century is what we should still keep producing." He said that re-tooling American education needs to happen immediately, with STEM education incorporated at every level including elementary school. STEM is a curriculum based on the idea of educating students in four specific disciplines - science, technology, engineering and mathematics - in an interdisciplinary and applied approach.

Why the Industrial Internet of Wisdom should be a major factor in STEM and advanced manufacturing.

During much of the period when McIlvaine was consulting for Dow Midland there were accelerated retirements and other methods to cope with the shift of a good percentage of production to overseas locations. The retiring people typically were the most experienced. 

The concept of the Internet of Wisdom to empower IIoT includes connecting knowledge and people. It involves knowledge systems led by not just subject matter experts (SMEs) but subject matter ultra-experts who continually learn as they help improve the decision systems and guide the users. In this manner you retain the services of the senior people and with the construction of the decision system ensure that their knowledge will not be lost.

The McIlvaine IIoT and Remote O&M service champions the use of SMUEs to be a third-tier source of wisdom in the monitoring of all the combust, flow and treat components. They are available in crises and through cloud access can be instantly provided with necessary details. Their work on the decision systems will result in guidance by the operators in the developing countries and ensure that the crises are kept to a minimum.

Mr. Liveris makes a very good point about building advanced manufacturing in the U.S. However, the more basic products made by Dow/Dupont need to be produced near to the end markets. The development of Dow subject matter experts and decision systems will generate a number of high level jobs in the U.S. This can be in addition to the STEM-trained personnel who will be working in advanced manufacturing. Many aspects of the more basic STEM program can also be enhanced by some access to the decision systems.