Increasing Flow Control and Treatment Product Gross Margins
The best way to raise prices without losing business is to provide a product
which justifies a higher initial price. To accomplish this you need to:
·
Develop a superior product
·
Convince the customer as to the value
Develop a Superior Product
McIlvaine is currently preparing a Decision Guide on choke valves for oil and
gas applications. These are tough applications and require custom valves
designed for severe service. This is only part of the story according to George
Gorman of the Valve Institute.
The success or failure of a valve rests not only on the valve merits but on how
it is applied. Subsea pipeline valve needs are different from sub-sea
Christmas tree needs. Both are certainly different from the needs at the surface
or on shore. The best valve choice requires detailed knowledge of the unit
operations. When it comes to subsea valves his Institute is dedicated to
providing insights on best choices with separate training courses on subsea
pipeline and Christmas tree valves.
But what are the needs of the long-time valve practitioner? Does he need
an even more robust system? Input from a number of both supplier and end
user experts in the McIlvaine Insights discussions leads to the conclusion that
considerable analysis and discussion is needed. Muktiadi Rahardjo of Shell
is the valve and sealing specialist at the Shell Pernis refinery and, based on
this experience, recommends better communication relative to valve issues.
He cited a lack of application knowledge on the part of some vendors and the
inability to utilize the wisdom existing within the end user community.
If you rank the impact of a product on the process, the valve is at the bottom
of the rankings. The product using the valve, e.g. a pump system, will be more
important by virtue of the fact that it typically would include a pump and at
least three valves. The scrubber company product which includes the
valves, pumps, fans, nozzles and scrubbing tower is obviously of most impact on
the process. So, if we agree that process knowledge is necessary to provide the
best valves, then it follows that even more process knowledge is needed for
suppliers of the sub processes What can we conclude from all of this?
·
IN ORDER TO DEVELOP A SUPERIOR PRODUCT YOU HAVE TO UNDERSTAND THE PROCESS WHERE
THE PRODUCT WILL BE APPLIED.
·
TO CONTINUE TO PROVIDE THE SUPERIOR PRODUCT YOU HAVE TO KEEP UP WITH PROCESS
CHANGES AND NEW REGULATORY AND OTHER CUSTOMER NEEDS.
·
FOCUS YOUR PRODUCT DEVELOPMENT EFFORTS BY PRIORITIZING CUSTOMER NEEDS IN SUCH A
WAY TO MAXIMIZE MARGINS AND PROFITABILITY.
Convince the customer that you have the best product
The best product is defined here as the product with the lowest total cost of
ownership. This definition is couched in the broadest terms. It has
to take into account the severity of the service but also the criticality.
A peaking gas turbine which cycles a few times per year and can be easily
accessed for maintenance is in a non-critical application compared to the
base-loaded turbine which is in operation 24/7 and cycles hundreds of times per
year.
It is easy to pick the lowest cost product but much more difficult when you have
to assess the lifetime cost based on both severity and criticality. The
first step in creating a convincing program is to understand how decisions will
be and could be made.
·
Decision making is a series of classifications. Whether it is the initial
bidders list, the criteria in the specifications or the ultimate selection the
decision maker is moving from one set of classifications to the next.
·
The elements of the classifications are: what, which, why and how.
In order to be successful you have to convince some people of just the
“what” and “which” and others you also need to add the “why.” The “how” is
the big challenge which provides credibility to the other elements.
o
What
are the classifications? If you are going to remove SO2,
should you consider wet limestone, wet lime, dry sorbent injection, spray
driers, or seawater scrubbing?
o
Which
of the classifications are best?
o
Why
is one the best choice?
o
How
does the product perform uniquely enough to justify the prediction that it will
result in the lowest total cost of ownership?
·
The what, which and why can be communicated through normal sales channels.
The decision guides add clarity. The problem is that the credibility
depends on the “how.” It is a lot easier to claim the highest efficiency
or lowest maintenance cycle than it is to prove it.
McIlvaine recognizes the challenge of convincing customers that a product has
the lowest total cost of ownership and has a whole program to address it:
4 Lane Knowledge Bridge to the End User
$23 Billion High Performance Pump Revenues Projected for 2017
Nearly half the industrial pumps which will be sold next year will classify as
high performance. According to the latest forecast in Pumps: World
Markets sales of high performance pumps in 2017 will reach $23 billion.
The criteria for this category are both severe and critical service. Those
pumps which have to be engineered to withstand corrosion, abrasion, high
temperature and pressure are classified as in “severe service.” Those
which must meet high purity and safety requirements such as found in the food
and pharmaceutical industry are classified as in critical service. High
performance pumps are further distinguished by being specially engineered and
not being stocked commodity products.
These pumps are used in many different industries. The oil and gas
applications are the largest with predicted purchases next year in excess of $6
billion. A relatively small percentage of municipal wastewater pumps are
classified as high performance. But, since the wastewater pump market is so
large, even a small percentage results in a $3 billion annual high performance
pump market. The chemical and refining industries will also be major purchasers.
The power industry will be a bigger market in Asia than in other regions.
A number of new ultra-supercritical coal-fired power plants are under
construction. Each will have millions of dollars of high performance
pumps.
International suppliers have a large share of the high performance pump market
and a smaller share of the commodity pump market. It will continue to be
easier for an international company to penetrate a local market with its high
performance products rather than its commodity products.
Greater profits can be reaped from high performance pump sales because of the
higher gross margins. On the average it is estimated that the gross margin
from a high performance pump sale is 35 percent versus just 25 percent for a
commodity pump. So, despite the smaller market size of the high
performance pump market, the gross profit will be higher.
Each industry can be segmented into five different uses:
Use |
High Performance Needs |
Water Intake |
Extraction from wells, lakes and
streams involves some
pre-treatment. High
performance pumps are required
in some pre-treatment schemes
and where intake water is
corrosive e.g. some wells. |
Cooling |
Cooling is either once through
or recirculating through cooling
towers. There are few high
performance pump requirements. |
Combustion |
Power producers and industrial
plants requiring steam and power
need high performance boiler
feedwater pumps. |
Process |
Many process schemes incorporate
high performance pumps to move
or convert a product. |
Wastewater |
Wastewater with abrasive solids
or corrosive chemicals requires
high performance pumps. |
In the power industry, combustion is the largest application due to the boiler
feedwater requirements. In most other industries, the process use is the
greatest. The processes can be further segmented by function.
Function |
High Performance Pump Needs |
Transport to or from storage |
Medium |
Transport to the next process |
Medium |
Play a role in the product
creation |
High |
Utilities such as lubrication,
hydraulic power, heating and
cooling |
Low and not included in the
forecasts |
Extraction and measurement of
samples |
Low |
The processes which play a role in product creation can be further segmented by
the type of change with which they are involved.
Process |
High Performance Pump Needs |
Examples |
Mixing |
medium |
Fluid-to-fluid or gas-to-fluid
e.g. wastewater pump which moves
and aerates or ammonia pump
which disperses fluid in gas
stream to react with NOx |
Heat/Cool
|
medium |
Cryogenic and LNG high
temperature foods which must not
be damaged by transport |
Separation |
high |
Feed and discharge from
centrifuges, filter presses,
clarifiers. In wet mineral size
reduction and separation, there
are highly abrasive slurries. |
Dehydration/ Evaporation |
high |
Slurries created in
crystallization, pumps at
high pressure to move liquor
through spray drier nozzles |
Reaction/Absorption |
high |
Varying temperatures, fluid
state and pressure needs of the
reactor or absorber.
Function is often to recycle and
disperse. |
Cleaning or blasting |
high |
Develop pressures to clean scale
from castings and fracture shale |
Disinfection |
medium |
Dispersions of large quantities
of chemicals in liquid |
Displacement |
high |
Water injection to displace oil |
Pump suppliers should seek to understand as much as possible about the
industries, processes and functions within those processes where their pumps
might be used. The pump designers can provide solutions and not just
hardware if they can first understand the needs. Sales and senior
management need to understand the processes in order to better predict future
market opportunities.
For more information on
N019 Pumps World Market,
click on:
http://home.mcilvainecompany.com/index.php/markets/2-uncategorised/116-n019
Utility E-Alert Tracks Billions of Dollars of New Coal-fired Power Plants on a
Weekly Basis – May 27, 2016
Here are some headlines from the Utility E-Alert.
UTILITY E-ALERT
#1274 – May 27, 2016
Table of Contents
COAL – WORLD
The
41F
Utility E-Alert
is issued weekly and covers the coal-fired projects, regulations and other
information important to the suppliers. It is $950/yr. but is included in the
$3020
42EI
Utility Tracking System
which has data on every plant and project plus networking directories and
many other features.
DATE |
HOT TOPIC HOUR
AND DECISION
GUIDE SCHEDULE
The opportunity
to interact on
important issues |
June 16, 2016
Decisions |
FGD and Acid Gas Separation - Issue
and options for SO2
and other acid gas separation
from coal-fired power, cement,
steel, and waste incineration
plants. |
TBA
Decision Guide |
LIFO vs FIFO filter pulsing to
maximize acid gas capture
-
Last sorbent on the cake is
first removed. How do we change
that to FIFO?
|
TBA
Decision Guide |
Molecular Sieve Switching Valves
-
Which of three designs is best
under each of the varying
conditions found? What materials
and coatings are needed? |
TBA
Decision Guide |
Choke Valves
-
What designs work best given the
sand, water, pressures and other
challenges for surface and sub
surface applications? |
July 14, 2016
Markets |
Desalination
-Thermal
vs. Membrane; energy recovery,
pump, valve, compressor and
chemicals options;
power/desalination combinations. |
August 25, 2016
Markets |
Oil, Gas, Refining
-
Supply and demand; impact on
flow control and treatment
products; regional impacts
e.g. subsea in North Atlantic
vs. shale in the US vs. Oil
Sands in Canada. |
TBA
Markets |
Food
- Analysis
of 12 separate
applications within food and
beverage with analysis of valve,
pump, compressor, filter,
analyzer and chemical options;
impact of new technologies such
as forward osmosis. |
TBA
Markets |
Municipal Wastewater
-
Quality of pumps, valves,
filters, and analyzers in
Chinese and Asian plants; new
pollutant challenges; water
purification for reuse. |
TBA
Markets |
Mobile Emissions
-Reduction
in CO, VOCs, and particulate in
fuels, oils, and air used in on
and off road vehicles; impact of
RDE and failure of NOx
traps and the crisis in Europe
created by the focus on clean
diesel. |
Click here to Register for the Webinars
FGD and Acid Gas Separation - Issue
and options for SO2 and other acid gas separation from coal fired
power, cement, steel, and waste incineration plants.
Click Here
to Register
This free webinar will be held at 10:00 AM on June 16. A collaborative
format will be used to discuss decision guides on acid gas removal for coal
fired power, cement, steel, waste to energy, and glass plants. The
decision guides already prepared on these subjects will be updated and quickly
displayed during the meeting. Discussion will revolve around controversial
issues. Subscribers to Power Plant Air Quality Decisions and Industrial Air
Plants and Projects can access the guides at any time. End users also have
access upon request. Information on new developments is continually solicited.
For questions contact Bob Mcilvaine at
rmcilvaine@mcilvainecompany.com
847-784-0012 ext. 112.
LIFO vs. FIFO filter pulsing to maximize acid gas capture
-
Last sorbent on the cake is first removed. How do we change that to FIFO? Click
here to participate in the preliminary analysis.
Direct Sorbent injection is becoming increasingly popular. Much of the acid gas
is removed on the cake formed in the pulse jet filter. It is critical that
the unreacted or last in sorbent is not the first out. The LIFO vs FIFO
accounting concept may apply. Input on this subject is solicited from
sorbent, dust collector, bag and valve suppliers. Over the next few months
we will assemble an analysis and decision guide on maximizing acid gas capture
in the bag filter. A webinar will be scheduled for early Fall to discuss the
findings. For more information contact Bob McIlvaine at
rmcilvaine@mcilvainecompany.com
847-784-0012 ext. 112
Molecular Sieve Switching Valves
Molecular sieves are used to dehydrate gas. The valves used in switching from
one sieve bed to another are subject to severe service including zeolite
particles and corrosive, hot conditions. There is considerable controversy on
the best valve designs and materials choices. Over the next few months we will
assemble an analysis and decision guide on this subject. The preliminary
analysis is provided at
Severe
Service Valve Technologies and Markets.
A webinar will be scheduled for early Fall to discuss the findings. For more
information contact Bob McIlvaine at
rmcilvaine@mcilvainecompany.com
847-784-0012 ext. 112
Choke Valve Decision Guide and Webinar
Mcilvaine is compiling a continually updated Decision Guide for operators of
choke valves used in oil and gas and other industries for fluid control.
Contaminants such as sand integrated into varying mixtures of water, oil,
methane and other gases provide both operational and maintenance challenges. The
guide will identify the major applications and then the performance of various
designs and various materials for specific conditions. The Guide will be the
basis of a recorded discussion to be conducted in early fall 2016. The
guide will be offered free of cost to any end user. It will also be
published in Industrial Valves: World Markets and Strategies. The wisdom
of the industry is sought in order to make this guide the best it can be.
Input is welcomed from any and all sources. White papers, articles and other
data to further the discussion would be most helpful. The background information
and part of the analysis has been prepared and is displayed at
Choke
Valve Decision Guide.
For more information contact Bob McIlvaine at
rmcilvaine@mcilvainecompany.com847-784-0012
ext. 112
Details on Webinars
McIlvaine conducts periodic webinars which are in a discussion format and are
free of charge to all participants. The displayed material and recordings are
free to purchasers of the products and services and by subscription to others.
Format: 50-90 minute recorded discussion using McIlvaine display material.
The session will be free of charge to all participants but registration is
required.
Approach: There are two types of webinars. One is focused on Markets and
directed to suppliers. The other is focused on aiding purchasers make the best
Decisions relative to purchases of flow control and treatment equipment and
services.
Markets HTH
General overviews of the market including size and major variables will be
discussed with heavy emphasis on technology and regulatory drivers. The
presentation will be based on the latest information appearing in Mcilvaine
multi-client reports. Questions and views from both subscribers and
non-subscribers are encouraged.
Decisions HTH
McIlvaine has been publishing information systems on pollution control since
1974. Each subject is organized by the pollutant control technology e.g. fabric
filter, scrubber etc. There are search capabilities to retrieve information on
any application. The newest addition has been slide deck systems displaying the
issues and options relative to a specific applications. Coal-fired power,
cement, steel, and waste combustion decision slide decks are continually
updated.
The continually updated slide decks are displayed on the applicable Decision
System. It is recommended that participants view the slide deck in advance
of the session and be prepared with questions and views.
Value to purchasers and specifiers: Your questions and interests will be
prioritized in the discussion. You will get a monthly newsletter and have
continuing access to the system and multiple ways to interface in the future
along with a networking directory of suppliers.
Value to Suppliers: You have the opportunity to provide data to be
considered at no charge. If you are also a subscriber you will see the summaries
in advance and be able to shed light on issues and options not properly covered
in the slide deck. If you are a subscriber you will receive the monthly
newsletter and continuing yearly access to the system including networking
directories.
44I Power
Plant Air Quality Decisions
includes 1ABC, 3ABC, 4ABC, 9ABC decision services but not 2ABC. So those with
multiple technologies and at least partial focus on power will find this
combination most cost effective.
Applicable Services for Hot
Topic Hours** |
|||||||
Pollutant |
Industry |
Fabric Filter
(1ABC) |
Scrubber
(2ABC) |
Precipitator
(4ABC) |
FGD & DeNOx
(3ABC) |
Air Pollution
(9ABC) |
Gas |
FGD and Acid Gas |
Coal |
|
|
|
X |
X |
|
Sewage |
|
X |
|
|
X |
|
|
WTE |
|
X |
|
|
X |
|
|
Cement |
|
X |
|
|
X |
|
|
Steel |
|
X |
|
|
X |
|
*Included in custom system |
Sponsored Webinars
allow suppliers to take
advantage of all the valuable
information on their power point
presentations. Click
here for details |
Free Sponsored Webinars
·
Albemarle
- Cement MACT
·
Aquatech
·
NVISTA
·
Midwesco - Bagfilter Performance
Analyzer
·
Pavilion
·
Sick Maihak
- Cement MACT
·
Tekran Instruments
- Cement MACT |
----------
You can register for our free McIlvaine Newsletters at:
http://home.mcilvainecompany.com/index.php?option=com_rsform&formId=5
Bob McIlvaine
President
847-784-0012 ext 112
rmcilvaine@mcilvainecompany.com
www.mcilvainecompany.com