August 2023 - Hose + Coupling
Pursuing the Niche Markets in Hose and Coupling
In the Air, Water, Energy markets, and specifically in hose and
coupling
there is a notable difference between sales and cost control, it
is the organized attention to detail.
The House and Coupling Industry achieves EBITDA of 15-20% but should
be moving the numbers 10 points higher.
The way to do it is to devote the same attention to detail.
Every AWE company uses systematic cost analysis and should do
the same with sales.
Another salient fact is that there is no giant
Hose and coupling market. There are hundreds of thousands of niche
markets which can be aggregated to provide a total.
World Valve Market
Individual $94,000 niches can be combined like LEGO blocks into
various niche combinations.
IDEX sells pumps, valves, fittings and related products and is
achieving 30% EBITDA. The mission statement alludes to the niche
focus.
Companies should gather comprehensive information about each niche and then
pursue those which will result in high EBITDA and at least a 20% market share.
Millions of statistics need to be maintained. It starts with facts which then
are multiplied by factors.
The end result is a high EBITDA aggregation of niche markets (1).
A market niche of $10 million with 10 sub niches fits all the criteria as shown
below.
A company with revenue of $100 million and 30% EBITDA would be targeting 50
niches and 500 sub niches. It would also need to track thousands of other sub
niches which it elects not to pursue.
It also needs to assess the competition and then create value
propositions in each niche. These need to be validated by company employees. A
Directory of Niche Value Propositions has been prepared as per the following
index excerpt.
Excerpts from the index to the AWE Value Proposition Directory
1086 |
KSB Sisto |
hydrogen swing check valve |
1087 |
ITT Habonim |
Hydrogen cryogenic ball valves |
1088 |
Bray |
Hydrogen double offset butterfly
valve |
1089 |
Swagelok |
Hydrogen needle valve |
1090 |
Velan |
Hydrogen double offset Butterfly
valve |
1091 |
Ampo |
Hydrogen ball valve |
1092 |
Marmon Ind, |
Coal plant ww. treatment |
1093 |
Camfil |
GT air filter |
1094 |
ITT |
FGD knifegate valve |
1095 |
MHI |
CO2 absorber |
1096 |
MHI |
Hydrogen fired gas turbine |
1097 |
MHI |
FGD limestone scrubber |
The Value Proposition summaries are included as per this example of the MHI CO2
absorber for bioenergy plants.
MHI CO2 ABSORBER VP:
# 1095 |
|||||||
Company |
Location |
Industry |
Process |
Products |
|||
MHI |
Europe, Americas, Asia |
Bioenergy |
CO2 capture |
K21 absorber |
|||
Value Proposition: With aa new
absorbent MHI can capture more
than 99% of the CO2 with low
solvent losses |
|||||||
Contact:
xxxxxx, Product manager,
email xxxxxx phone xxxxxxxx
mobile xxxxxxxxxxxxxxx |
|||||||
Contact:
xxxxxx, Product manager,
email xxxxxx
phone xxxxxxxx
mobile xxxxxxxxxxxxxxx |
|||||||
|
The value propositions of OEMs shape the markets for the component suppliers.
The MHI breakthrough to reach 99% CO2 recovery promises to make small CO2
recovery systems attractive. Waste
to Energy and other smaller CO2 generators in the UK will have both a pipeline
to take the CO2 away as well as an efficient way to remove the CO2.
Relatively high investments are required in pumps, valves, compressors,
hose, fittings and stainless steel. Companies such as Ingersoll Rand and Atlas
Copco are creating niches by acquiring companies which make the pumps and
valves. They can be combined with the compressors into packages.
Following the lead of the finance department the statistics can be utilized to
create very specific guidance for salesmen. This salesman for a filter company
sells pulse jet valves along with the filters. Hose and couplings for dust
discharge are sold along with unit collectors. Pumps are sold as part of
scrubber systems. The number of days to spend each year in each application is
budgeted.
Promotional expenses can be determined the same way. The template allows
$100,000 of promotional expense per niche. California represents 3% of the
revenue or $30 million. So, the promotional budget would be $1.5 million.
The advertising and exhibition investment should ensure the validation of the
value propositions for the sub-niches. The California market will benefit from
some combination of local, national, and international promotion. It is likely
that $1 million would be allocated to national and international promotion and
only $500,000 to strictly local promotion.
Make the CFO happy and emulate finance in the sales program.
(1)
Most Profitable Market Program published by the Mcilvaine Company