Future Sales Should Be Pumping

The future of the pump market in the water and wastewater industry is optimistic, as independent research has shown that municipal wastewater plants around the world will spend $5.6 billion for pumps in this year alone. What is even more optimistic is that by 2007, those same expenditures will total $6.8 billion.
Municipal water treatment plants are also slated to be big pump purchasers, as they are expected to spend $3.8 billion on pumps in 2004, while annual spending by 2007 will increase to $4.1 billion.
The total market for industrial pumps will rise from $27 billion this year to $31 billion in 2007.
There are thousands of companies manufacturing pumps with flows that range from a fraction of a gallon per minute (gpm) to more than 500,000 gpm. Centrifugal pumps generate 73% of the total revenues, while conversely, diaphragm pumps generate 9% of the total revenue. The remaining revenue is split between reciprocating and rotary designs.
Research pertaining to the sales forecasts in reference to specific types of pumps has shown that centrifugal pump sales will grow by nearly $4 billion from $21.9 billion in 2003 to $25.8 billion in 2007.
Meanwhile, sales of rotary, reciprocating and diaphragm pumps also will grow more rapidly but from a small base. Specific research has shown that rotary pump sales will exceed $3.5 billion in 2007.

Pump leaders

The pump industry is somewhat fragmented, as there are more than 10,000 companies supplying pumps. Currently, ITT is the largest with sales totaling in the neighborhood of $1.7 billion. The top 10 are listed in Table 1.
The pump revenues drop quickly as one moves down the ranking following the top 10 companies on the list.
For example, Davey Products, which is #100 on the list, has a total annual sales of $35 million. Meanwhile, Flux is #200 on the list with sales of $15 million. Accordingly, the average sales revenue for the 10,000 companies that manufacture pumps is $2.7 million.

Buyers

Municipal wastewater plants will continue to be the largest purchasers with municipal water treatment following in second place. Trailing the wastewater and water treatment industries are the chemical and refining industries as the third and fourth largest segments in 2007, respectively. Meanwhile, the pharmaceutical industry is the fastest growing segment, but still will only reach the $500 million sales level in 2007.
In which area of the globe will pump sales be concentrated? China is the fastest growing geographical market as the country is undergoing major expansions of wastewater treatment plants, which will take place over the next five years. Additionally, irrigation and flood control pump purchases will be larger in China than the next ten largest countries combined and the country will spend more on pumps for new power plants than any other country.
However, U.S. power plants will lead the world in purchases of pumps for existing facilities.
Outside of the U.S., the SARS epidemic slowed Chinese pump projects on existing facilities. Most directly hit are service revenues as foreign companies are limiting travel to the country. But this problem is likely to be temporary with no long-term impact.

Centrifugal sales

Sales of centrifugal pumps to municipal wastewater plants expected for the year 2007 have been compiled and are listed in Table 2.
The U.S. is far and away the leader in purchases of replacment centrifugal pumps. But when it comes to new wastewater treatment plant pumps, China has the edge. The urbanization movement in China, the rising standard of living, and the inadequacy of the present plants has led to great needs for sewage treatment.

Growth trends

The trend toward growth through acquisition continues. However, with 10,000 suppliers, the merger of a few companies has had little total impact on the market. As a result, most acquisitions in the last year have been relatively small.
Recently, Wilo acquired EMU Unterwasserpumpen. Wilo is a world market leader in the field of pumps and pump systems for application in the building services segment. Another transaction involved KSB AG, which acquired Dutch pump manufacturing company DP Industries B.V.
In general, many pump companies continue to enjoy large market shares in very specific application niches. A group of companies may specialize in the stainless steel pumps needed by the food and pharmaceutical industry while another group focuses on the high-pressure pumps needed for steam generators. The market for large pumps in irrigation and flood control is very specialized with only a few companies capturing most of the market.
The major producers of the large custom-made pumps are ITT A-C, Cascade, Ebara, Flowserve, Fairbanks-Morse (Pentair), Johnston, Patterson (Gorman Rupp), MWI, Voith, and Ruhrpumpen (WDM).
Additional manufacturers are ABS, Hyundai, Hitachi and KSB for slightly smaller pumps.
Another trend is toward diversification as ITT and Pentair are pursuing filtration through acquisitions. There is a synergy in that pumps are needed and are an integral part of the filtration process. More importantly, the growth of the filtration sector is higher than that of the pump industry.
A final trend is toward flow control. Thus a company such as Flowserve, through the ownership of both pump and valve companies, becomes an industry leader in the larger flow control sector.

The future

What other areas of the pump industry are poised
for growth?
The move to drier sewage sludges has challenged pump manufacturers to supply pumps for this more difficult service. The accelerating interest and investment in water reclamation has generated a market for reverse osmosis systems. These systems require special high-pressure pumps. Because they are such large energy consumers, there is a big opportunity to reduce overall operation costs by improving pump energy efficiency.

Robert McIlvaine is president of the McIlvaine Co., a consultant services company to the water and wastewater industry. The author can be reached at rmcilvaine@mcilvainecompany.com.

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