NEWS RELEASE February 2023
The Most Profitable AWE Market is an Aggregation of the Top Niches
Air, Water, Energy (AWE) companies such as IDEX and Filtration Group have combined high EBITDA and market share by focusing on small niches. They have generated billions in revenues by aggregating a number of niches.
Ingersoll Rand and Atlas Copco are leveraging niche competence by adding complementary products.
The most profitable market can be an aggregation of $10 million niches with a 20% market share. Annual revenues of $50 million are achievable by pursuing 25 niches. It will take 500 niches to achieve revenues of $1 billion/yr.
There are 1 million niches in the $10 trillion Air, Water, and Energy Market.
Mcilvaine is analyzing various niche strategies to help companies choose the right combination.
Celeros is a spin-off from SPX Flow which is a spin-off from SPX. Celeros niches are in energy and power. In the filtration applications there is a Goldilocks strategy of pursuing requirements between the least and most.
For certain large volume products there are regional and State niches. For example, California is a larger biotechnology market than all but a few countries in the world.
There is a core Air, Water, Energy market of $1 trillion plus $ 9 trillion in adjacencies. Xylem and Flowserve derive 90% of their business in the core market. Emerson derives only 40% in the core market. Splits for 20 companies are discussed.
Pumps are an attractive complementary product for system providers but also for rotating equipment suppliers. Ingersoll Rand has purchased a number of pump companies.
Ultrapure water for chips, and cleanroom HVAC are two b big air, water, energy applications in semiconductor manufacturing. One aspect is the potential niche relocation as the U.S. is subsidizing new chip plants.
The options to strengthen the niches are either organic or through acquisition. The applicable facts and factors are important in determining which path to take.
IIOT provides the way to evaluate and improve product success as well as give the AWE supplier the opportunity to generate aftermarket revenues
The Mcilvaine Company can help you evaluate a single niche or with a complete MPM program.