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Mcilvaine Insights |
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No. 69 July 12, 2018 |
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Mcilvaine Insights |
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No. 69 July 12, 2018 |
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WELCOME
Forecasts of Pump Purchases for
each of the 6730 Largest
Customers
There is a sea change in the way
industrial pumps will be
purchased in the future.
Join us July 18 at 10:AM
in a free webinar to discuss
this sea change. Here is a
summary of what we will discuss
Pump suppliers are now
generating revenues of $56
billion.
However, operators are
spending $471 billion per year
to own, operate and maintain
those pumps. Furthermore the
decisions regarding 84 percent
of these expenditures are being
made by 15,000 companies and
less than 30,000 individuals,
all of whom can be identified
and pursued well in time to
provide maximum influence on
their choices.
There are 10,000 of the largest
pump purchasers who will make 52
percent of the pump decisions.
There are 5,000
consultants, plant and system
suppliers who will make 32
percent of the decisions.
1.
Forecasting the Purchases of
Each Company
The first step in navigating the
sea change in the market is to
forecast the purchases which
will be made by each of these
15,000 companies.
The majority of the purchase
decisions will be made by end
users.
However plant, system and
other suppliers will also be
either direct purchasers or
decision makers.
For a new plant (greenfield) the
end user is likely to provide a
bidder list but the plant,
system supplier or engineering
firm will probably make the
specific pump choice.
Most of the replace and upgrade
decisions will be made by the
end user. The following chart is
from a pump supplier
perspective. It segments the
present purchases.
It does not include the
associated products sold by
non-pump companies such as the
VFD, motor or distributor
packages.
Presently most of the repair and
service decisions are made by
the end user.
Guide and control
revenues generated by pump
companies are small. However, "IIoT
and Remote O&M" is creating the
sea change in the market and has
the potential to greatly expand
pump company revenue and impact
market share.
10,000 end users will account
for 52 percent of the purchases.
5,000 plant, system and other
suppliers will account for 32
percent of the total. These
targeted companies will spend
$47 billion for pumps in 2019.
Targets are divided into large
and small. 6730 large end users
will spend $28.5 billion for
pumps next year. This will
account for more than 50 percent
of total purchases. Smaller
targets will spend 18.5 billion.
These 6730 companies can be
considered the low hanging
fruit.
Each will average pump
purchases of over $4 million.
The purchasers in the oil
and gas and power industries
will spend the most whereas the
flood control and electronics
companies will spend the least.
A number of purchasers spend
more than $300 million per year
for pumps.
Relatively few A/Es, plant
suppliers and system suppliers
will account for most of the
$17.9 billion purchased by
non-users.
Large power plant system
suppliers such as MHPS, Doosan,
GE, Siemens and B&W are major
purchasers even though some have
a limited range of pumps. Some
large oil and gas contractors
have pump divisions but they are
mostly in specialty areas such
as oil extraction.
Suez, BEWG and Veolia are
examples of companies who both
own
water and wastewater
plants, operate others and also
design and offer systems using
pumps.
Some companies are consultants,
OEMs and operators.
Jacobs CH2M designs and
builds plants in various
industries. It operates
municipal wastewater plants in a
number of countries.
Bechtel, SNC Lavalin, and
Sinopec are also active in all
three categories.
Sinopec spends $700
million/yr for pumps of which
$600 million is for chemical and
oil/gas operations and the
balance is for design and supply
for others.
These purchasers can be
identified and pursued in a
program offered by the McIlvaine
Company and explained at
www.mcilvainecompany.com
2.
Making the Sale to Each of the
10,000
With increasing use of data
analytics and continuous
monitoring of pump performance
purchasers will be making very
informed decisions.
Demonstration of lowest total
cost of ownership will become
the basis for making sales.
McIlvaine has extensive services
on process systems using pumps.
This includes sedimentation and
centrifugation, macrofiltration,
cross flow membranes, cooling,
heat exchange systems and boiler
feedwater systems.
There are two services on
scrubbers. One is for power
plant FGD and another is for
industrial scrubbers.
Pump purchases for scrubber
systems are $800 million per
year. This includes
service and repair parts as well
as replacement and greenfield
pumps. It includes both the
power plant FGD and the
industrial scrubber
applications. Two hundred
scrubber companies account for
90 percent of the sales of pumps
for new scrubber systems which
amounts to $180 million.
In addition McIlvaine provides
Decision Systems for coal fired
boilers, gas turbines, municipal
wastewater, ultrapure water and
refining.
With these resources pump
suppliers can gain the knowledge
they need to make validated
lowest total cost of ownership
(LTCOV) analyses.
3.
Expanding the Revenue Base with
Total Solutions
The pump manufacturers have the
opportunity to work with end
users as well as plant and
system suppliers to provide edge
computer packages built around
continual innovations in pump
design and applications.
The revenue potential is
somewhere between the present
$56 billion and the total
present pump yearly costs of
$471 billion.
Pump companies can supply
more of the auxiliaries such as
variable speed drives which are
now furnished by others.
They can generate
additional hardware and service
revenues to reduce the $147
billion spent on pump
maintenance.
They can provide the guide and
control packages to reduce the
$235 billion spent on pump
energy.
Studies show that more
than 30 percent energy savings
is already economical.
Energy costs in the U.S.
are less than 50 percent of the
costs in Europe and many Asian
countries. So this savings is
even more significant outside
the U.S.
Pump companies with knowledge of
the processes, the customers
site specific factors and the
edge software packages to
integrate with end user cloud
systems have the opportunity to
expand revenues and more
importantly raise EBITA at the
same time.
You can register for the webinar
July 18 at
Free
Market Webinars
More information on the business
program is found when you
Click
Here Details on the pump market report with forecasts for the 200 top purchasers is provided at Advice on the edge computer package and the future of pump automation is found at
N031 Industrial IOT and Remote
O&M
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