NEWS RELEASE                                                                                         October 2017

Navigating the New Market Route for High Performance Products and Services

The Industrial Internet of Wisdom (IIoW) will radically change the way high performance products are selected. The opportunities for higher margins and increased market share dictate a unique sales effort.

McIlvaine can provide the tools to help suppliers create the needed sales program.

High performance products are those whose quality justifies a price above the minimum specification. General performance products are sold based on price and service.  There is no reason to conduct total cost of ownership analyses. 

In the past it has been very difficult to analyze total cost of ownership of various high-performance product alternatives.  As a result, high performance products have been sold the same way as the general performance products.  The sea change is the new ability of the purchaser to determine the lowest total cost of ownership (TCO).  With IIoT empowered by IIoW the corporate buyer will have the TCO for each of the alternatives and make his decisions accordingly.  The main role of the sales group will be to make sure the buyer has an accurate TCO.

At companies such as BASF, Rio Tinto, Arcelor Mittal, and Duke Power IIoT and Remote Monitoring is enabling corporate specialists to analyze the performance of every valve, pump, filter, and turbine in the global fleet of plants.  IIoW is in its infancy but as it grows it will provide not only the total cost of ownership but the guide to new and better products.

IIoW utilizes the data analytics provided by IIoT and provides the interconnection between end users, suppliers, and subject matter experts to create the TCOs and more importantly create new products with lower TCOs.  The interconnections need to be as prolific in IIoW as in IIoT.  They include

  • Supplier personnel in each product group and geography interconnecting with peers around each of the 1000 large purchasers of combust, flow and treat products and services (McIlvaine can identify the opportunity for each product for each of the 1000 purchasers)
  • Owner-operator personnel in each plant and in each role interconnecting around processes and products used in more than one of the plants (McIlvaine has a beta site for BHE Energy)
  • All players interconnecting with each other in new ways
    • User controlled groups expanding scope to create decision systems and through digital technologies become international (Suppliers with lowest TCO can support and sponsor this activity)
    • Supplier controlled groups focused on total cost of ownership studies (Major HEPA filter competitors combining forces to provide TCO for gas turbine inlet filtration)
    • Associations expanding role to create decision systems and periodic webinars to integrate with annual meetings
    • Individual User programs for suppliers expanding to create IIoW (examples are AEP Bro Forum and the SABIC bi annual conference and exhibition)
  • Creation of Subject Matter Ultra Experts (SMUEs).   Tomorrow’s experts will master the massive TCO data generated from IIoT.  The SMUE will need to be very focused and to continually utilize and help create the decision systems around his specialty.  The suppliers of the high-performance products with the lowest TCO products will benefit from the SMUE validation of their claims.

IIoT is growing up but IIoW is in its infancy.  Suppliers have the opportunity to grow along with it.  McIlvaine has a program to help them do so. 

For more information contact Bob McIlvaine at This email address is being protected from spambots. You need JavaScript enabled to view it.   or 847-784-0012 ext. 112.

 

NEWS RELEASE                                                                                         October 2017

Two Thousand Companies make or influence most of the Pump Purchases

In 2018 purchases of industrial pumps will exceed $56 billion.  Most of these purchases will be made or influenced by 2000 companies and just 20,000 people.  In N019 Pumps World Market McIlvaine is projecting the individual company purchases.  Forecasts for 200 purchasers are presently displayed but more will be added each month. The 200 companies will purchase 20 percent of the total.   Several large company purchases will exceed $500 million each.  The top 20 companies will account for 7 percent of the total.

The concentration of purchases varies by industry.  The top three oil and gas purchasers will account for more than 15 percent of the oil and gas pump purchases.  The top 17 power companies will account for 55 percent of the pump purchases for power applications. The Shenhua merger with Guodian creates a company which will make 9 percent of the pump purchases in the power industry. 

The top three mining companies will account for 12 percent of mining pump purchases.  The top seven pharmaceutical manufacturers will represent 20 percent of the pharmaceutical purchases. The food manufacturing pump purchases are more fragmented.  The top 10 purchasers will account for just 12percent of the total. The top three pulp and paper purchasers will carve out a 12 percent share.

Purchases for municipal wastewater are dispersed. The Chicago Metropolitan Sanitary District with seven plants will spend $80 million for pumps in 2018.  This represents just 0.44 percent of the world municipal wastewater total.  Suez both owns and operates plants and functions as an EPC and accounts for significant purchases of pumps.

2018 Pump Purchases ($ millions)

Company

Type

Corporate
Location

Industry

Pump Purchases
$ millions

AbbVie Operator U.S. Pharmaceutical 15
ADM Operator U.S. Food 11
AECCOM EPC U.S Power 30
AECOM EPC U.S Wastewater 20
AECOM EPC U.S Other 70
AECOM  EPC U.S Total 120
AEP Operator U.S. Power 36
Akzo Nobel Operator Netherlands Chemical 38
Air Liquide Operator France Chemical 37
Antofagasta Operator London Mining 13
Anglo American Operator London Mining 26
Anheuser Busch Operator Belgium Food 13
Anhui Conch Operator China Stone 50

EPCs are important purchasers in many industries.  Jacobs has acquired CH2M and is an important EPC and operator in wastewater and some other industries.

The rapid adoption of IIoT and Remote O&M is leading to centralized decision making relative to pumps.  In the near future just 20,000 people will be making most of the high performance pump decisions.  High performance accounts for 60 percent of the total pump revenues.

The forecasts are displayed in a number of different ways including one by purchase rankings.  This provides management with a target list of most important prospects.   The display by industry will be most useful to the industry specialists.  The location display can be used by the local sales personnel. This identification of the corporate potential by country supplements the detailed forecasts in the report which are segmented by country, industry, and pump type.

For more information on this report click on   N019 Pumps World Market

For information on a marketing program to address this new environment click on:

  Marketing Program for Combust, Flow and Treat

For answers to questions contact Bob McIlvaine at This email address is being protected from spambots. You need JavaScript enabled to view it.   847 784 0012 ext. 112

NEWS RELEASE                                                                                         September 2017

Flow and Treat Purchases by U.S. Municipal Wastewater Treatment Plant Operators will exceed $13 billion this Year

U.S. Municipal wastewater treatment plant operators are anticipated to spend $13.2 billion for flow and treat products and services next year. The majority of these purchases will be made by just 50 operators and 30 engineering/consulting firms.

Chicago MSD operates seven wastewater reclamation plants.  It is also expanding its scope by encouraging nearby food processors to send waste to the plant for conversion to biogas. This will increase its sludge processing, compressor and air pollution control purchases. The Chicago Metropolitan Sanitary District includes seven reclamation plants.  Los Angeles Sanitation’s operations are approximately half the size of those in Chicago.

2018 Municipal Wastewater Purchases

U.S. $ millions

  U.S. Los Angeles Chicago MSD
Guide 1100 11 22
Control 1800 18 36
Measure 900 9 18
Valves 1000 10 20
Macrofiltration (belt presses, sand filters) 500 5 10
Pumps 2000 20 40
Treatment Chemicals 1400 14 28
Sedimentation and Centrifugation 900 9 18
Variable Speed Drives and Motors 1000 10 20
Turbines, Fans, and Compressors 2200 22 44
RO/UF/MF Cross Flow Membrane Systems 250 3 6
Air Pollution Control 200 2 4
Total 13,250 133 266

McIlvaine is forecasting flow and treat product and service expenditures for 550 operating companies and 400 OEMS, EPCs and process sub system companies worldwide.  The wastewater purchases in many countries are concentrated among just a few operators.  Suez operates more than half the plants in Chile and serves 20 million people with wastewater treatment in China.

In the U.S. the engineering/consulting firms play a big role.  The merger of CH2M and Jacobs creates an entity which is both designing and operating wastewater treatment plants.  The estimated flow and treat decisions influenced by this company are in excess of $600 million/yr.

There is a metamorphosis in the way purchases will be made in the near future. Process management system suppliers are providing monitoring and control of every valve, pump, and filter from remote monitoring centers.  Suez is monitoring hundreds of plants from its European base.  The equivalent of millions of total lowest cost of ownership analyses are continually generated.  This development will profoundly change the route to market as explained in N031 Industrial IOT and Remote O&M.

Profiles of the 100 largest operators and EPCs worldwide are included in 62EI North American Municipal Wastewater Treatment Facilities and People Database  which is being expanded to include the major worldwide purchasers.

Detailed forecasts for each of the 550 major purchasers are shown in the relevant market reports listed at http://home.mcilvainecompany.com/index.php/markets

NEWS RELEASE                                                                                         October 2017

Five Companies will be Responsible for 39 Percent of the Combust, Flow and Treat Purchases in the Nuclear Power Sector Next Year

Global nuclear power generation is now predicted to grow by 2.3 percent per annum out to 2035, mainly due to 11 percent annual growth in China. China’s operating nuclear generating capacity will double over the next five years under the country’s recently-published 13th Five-Year Plan.

Under that plan, over the next five years combust flow and treat hardware and parts expenditures for existing plants next year will be four times greater than for new plants.  Guide, control, and measure hardware investments will be ten times greater for existing plants than new ones in 2018.  Service and remote monitoring will be 50 times greater for existing plants than the new ones (during the first year of operation).

Over 90 percent of the combust, flow and treat expenditures will be made by fewer than 50 companies.  Thirty-nine percent will be made by just three operators and one supplier.

Bechtel has completed more than 74,000 megawatts of new nuclear generation capacity, and has performed engineering and/or construction services on more than 80 percent of nuclear plants in the United States and 150 worldwide. It employs 2,200 nuclear professionals, which include approximately 150 internationally recognized technical specialists who have been published widely, and have participated in developing industry standards and guidelines.  It is a major influence in ten percent of the combust, flow and treat decisions.

EDF has acquired Areva and then restructured the New NP reactor business to allow minority share purchases by Mitsubishi Heavy Industries and Assystem. In addition to operating 70,000 MW of nuclear power in France the company is negotiating the sale of nuclear power plants in China, India, South Africa and Saudi Arabia. Therefore, it is responsible for 20 percent of the nuclear combust, flow and treat decisions.

Korea Electric Power (KEPCO) is a nuclear power operator with a capacity of 23,116 MW.  It is operating 25 nuclear power units as of 2016 with five under construction. It will make five percent of the combust, flow and treat purchasing decisions in 2018.

Exelon has consolidated nuclear power operations in the U.S. and is now operating plants with a capacity of over 19,000 MW.  It will make four percent of the 2018 combust, flow and treat decisions.

Nuclear Power Plant Combust, Flow and Treat Purchases 2018 - $ millions
  World EDF Bechtel KEPCO Exelon
Percent 100 20 10 5 4
Guide 1400 280 140 70 56
Control 2200 440 220 110 88
Measure 1200 240 120 60 48
Valves 2000 400 200 100 80
Macrofiltration (Belt Presses, Sand Filters) 200 40 20 10 8
Pumps 1100 220 110 55 44
Treatment Chemicals 1400 280 140 70 56
Sedimentation and Centrifugation 300 60 30 15 12
Variable Speed Drives and Motors 600 120 60 30 24
RO/UF/MF Cross Flow Membrane Systems 200 40 20 10 8
Air Purification and Protection 400 80 40 20 16
Total 11,000 2200 1100 550 440

These estimates are very approximate and involve problems with the precise defined scope.  Orders are booked in one period.  Revenue might be realized in a series of succeeding periods. The purchasing decision may be shared between the OEM, the EPC and the operator.  Some decisions will be made at the plant level.  Others will be made at the corporate level. However, with the rapid deployment of IIoT more and more decisions will be made at the corporate operator level.  Process management system companies will be an increasing influence.

Forecasts for the individual purchasers provide an important tool for suppliers. Most already have separate sales efforts for the large purchasers.  IIoT will result in most decisions being made or specified at the corporate level. So the OEM sales effort will need to expand.

Forecasts of individual operator purchases are equivalent to pieces of a puzzle. The sales forecast is built upon a picture puzzle for which many of the pieces are missing.  The more pieces which are fitted together, the more accurate the picture becomes.

McIlvaine is providing combust, flow and treat forecasts for more than 550 companies.   They appear in the various market reports.  The guide, control and measure forecasts for individual nuclear power generators and suppliers are included in N031 Industrial IoT and Remote O&M  The nuclear valve forecasts appear in the Industrial Valves World Markets which also has a supplemental analysis for the 5000 high performance valves in an Areva system.  There are market reports covering each of the subject areas found in   MARKETS LINK. The profiles of individual power companies and suppliers are included in the Utility Tracking System 42EI Utility Tracking System.

 NEWS RELEASE                                                                                         September 2017

A New Route to Market for Combust, Flow and Treat Companies

The way to increase revenues and profits for suppliers of combustion systems and components, pumps, valves, automation, filters, scrubbers, centrifuges and other flow and treat products and services is undergoing a major metamorphosis. Much of the change is driven by the new ability to continuously and remotely monitor the performance of each product down to the on-off valve.

Suppliers are looking at organic growth opportunities as well as to acquisitions, collaborations and partnerships. The attractiveness of each route is altered by the avalanche of information about performance of each product which will become increasingly available.

 The organic growth opportunities are changed by

  • A concentration of decision making among 20,000 people at 1000 operating and supplier companies.
  • The potential to add smart product features and increase unit sales prices.
  • The yearly contract potential for all locations of the operator.
  • Service and advisory revenues from continuous monitoring of the product.
  • The potential to provide better and higher revenue products based on the continuous total cost of ownership information which is available to the operator.

The acquisition options are changed by

  • The desire of large purchasers to choose suppliers who can provide solutions for multiple products on a worldwide basis.
  • Since performance of products can be remotely monitored the parent supplier company can provide centralized support for its new acquisitions.
  • The knowledge about smart products is important and can be provided to all subsidiaries more economically than if each group does its own development.
  • Product companies can consider acquiring software companies and instrument manufacturers which allow them to provide a smart package.

The collaboration options are changed by

  • Purchasing decisions will increasingly be made by suppliers of process management systems.
  • Suppliers will need to find process management system partners or develop their own systems.
  • The need for worldwide service means that smaller companies focused on a narrow geography will need to find partners in other areas in order to address the needs of international purchasers.

The sales program will need to change to address the following:

  • The concentration of decision making to just 20,000 people.
  • The easy identification of those decision makers in the digital world.
  • The knowledge level of these decision makers which cannot be matched by local sales people.
  • Purchasers who will want to work with individuals with comparable knowledge at supplier companies.
  • Web communications and other electronic tools to eliminate most of the physical distance barriers.

The Mcilvaine Company can provide insights and advice on strategy development based on

  • 50 million current forecasts of combust, flow and treat products segmented by industry, country and product
  • Additional forecasts as needed for hundreds of millions of products e.g. ball valves for oil and gas pipelines further segmented in to trunnion vs rotary, top entry vs side entry, and for each size from 2 inch to 36 inch.
  • Extensive knowledge regarding IIoT and Remote O&M
  • Process knowledge dating back 43 years plus analysis of future trends 
  • Extensive acquisition analysis experience
    • Evaluated Asea for Brown Boveri in the 1970s prior to formation of ABB
    • Conducted more than 100 acquisition investigations in the combust, flow, and treat area
    • Expert Witness activity
      • Provided expert witness expertise relative to products and markets starting with the Pullman vs J. Ray McDermott in the 1970s
      • Much of this information remains confidential but valuable general insights are gained from details on product pricing, margins, the value of stolen information etc.

Mcilvaine is in a unique position to help you move forward in this new connected world. Mcilvaine consultants are available to assist in small or large projects. When short timelines are needed such as in litigation and acquisition analysis, Mcilvaine can provide quick answers.  In cases where a client is already working with a management consultant Mcilvaine can support that consultant.

For more information contact Bob Mcilvaine at 847 784 0012 ext. 112 or This email address is being protected from spambots. You need JavaScript enabled to view it.

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