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Defining the filtration market
March 2005
Filtration Industry Analyst
Ken Sutherland looks at the problems encountered in assessing market sizes when parameters are not clearly defined. When I was younger, I had the good fortune to work for Peter Rowe, a brilliant experimentalist who went on to hold the Ramsay Chair of Chemical Engineering at University College London in the UK. We were working in the (then) relatively unfamiliar field of fluidisation when applied to solid processing in nuclear fuel production. It was a very empirical subject, with experimental data published by a number of universities and research institutes. One of Peter’s pet hates was the use by some workers of experimental correlations, with equations for best-fit curves involving factors and indices with four or five significant figures – much more than could be justified by the accuracy of the basic data. He would look aghast at a published diagrams showing a mass of experimental points all over the graph – and a straight line drawn through them. He was so incensed by this kind of thing that he wrote a seminal paper for the Institution of Chemical Engineers, in which he took a set of random numbers and, by suitable manipulation and plotting on log-log paper, he was able to demonstrate a linear relationship, where none could possibly exist. Ever since that time, I have taken a somewhat cynical view of published data when it is not entirely clear what the basic assumptions are, and how accurate the experimental method is. This cynicism covered both my experimental and equipment supply life, and my later career in industrial market research. I was reminded of this when doing work recently on market assessments for filtration equipment and for filter
media for the Profile of the International Filtration and Separation Industry: Market Prospects to 2009, published by Elsevier. The standard method for any piece of market research is first to gather together all the pieces of information relevant to the market in question, whether in one’s own possession, or that of one’s company, and then any available from published sources, in print or on the internet. This desk research phase will then show where gaps exist in one’s knowledge of the market, and what “experimental” work must be designed to fill the gaps. This experimental work – the field research – involves identifying the key players in the market, both as suppliers and end-users, and getting out of the office in order to interview them. Some respondents will prove to be very knowledgeable about the whole market, while some others will only know their own niche market, but all will have useful contributions to make. The final phase of the work involves putting all of the facts together, and from them extracting as accurate an estimate of market size as possible, together with forecasts of sector growth trends for as far into the future as it is sensible to go. (This means about five years – any longer and unforeseeable movements in world economics and political events will have too great an impact). It is in the gathering of existing information that the problem of misunderstanding is most likely to occur. Some published figures are highly questionable – for example, a year or two ago, a responsible engineering journal published an article on developments in filter media which began “Recent reports show the filtration market growing at a rate of about 35% per year”. Would that it were, for all our sakes –
but the figure is nearer to 3.5% than 35 % – perhaps a decimal point had fallen by the wayside! The same article continued: “The total global filtration market is valued at about US$3.25 billion”, which seems to have lost another decimal point, since, even at its most basic, the global market is at least US$30 billion. Some of the more believable figures contained in published sources are difficult to use, because of lack of information as to the actual scope of the estimate. For example, in data on the filter media market, the estimate may be for the basic material (in its ‘roll-goods’ state), or for the material as it leaves the converter, i.e. cut to shape with appropriate seals or gaskets, or as a replaceable module, or even fully mounted in some kind of housing. In the case of filtration or sedimentation equipment, this could cover the basic equipment item, or the item plus all the ancillary equipment necessary to make it work (such as drive motors or pumps), or the item once fully installed in place, ready to run. One series of reports covers the total cost of owning and operating the separation equipment, which is an enormous figure. Each of these steps up in elaboration means a considerable increase in unit cost, and hence a significant increase in the apparent market size – hence it is essential in the use of any market estimates to know as much as possible about the scope of the estimate. There are several organisations, apart from Elsevier, which publish market surveys on a variety of equipment types, BCC, Fredonia, Frost & Sullivan, McIlvaine being the ones known to produce reports in the filtration arena. Each of these will issue a press release for a new report, and this will usually be picked up and reported in Filtration Industry Analyst or in
Filtration & Separation. These press releases are, of course, intended to attract the eye of the potential purchaser of the study, and they give just enough detail to do this job. But the seeker after market information (who is not prepared to buy all these reports) has to interpret a number of incomplete figures. These usually differ widely in their apparent market size estimates and so only give boundary figures for any closer estimate. One of the problems of definition of market coverage is whether or not the estimate includes the domestic sector. While any one household has only a small individual use of filters, by the time that vacuum cleaner bags, coffee filters and percolators, point-of-use water filters, and owner-changed engine filters are totalled for the very large number of households in the developed world, this becomes a major end use. It follows that the reader of any report on market sizes must ensure that the scope of coverage of the report is clearly defined, both as to what is included and what is not. This is a point that I pay particular attention to in the market surveys that I write for Elsevier. Profile of the International Filtration and Separation Industry: Market Prospects to 2009 is available from www.filtsep.com. Ken Sutherland has run his process engineering and market research consultancy, Northdoe, for nearly 30 years. Northdoe is largely concerned with filtration and other such separation technologies. He was a coauthor of Elsevier’s Decanter Centrifuge Handbook, and has also written the second edition of Elsevier’s Handbook of Filter Media. More recently he has written Elsevier’s A to Z of Filtration. He can be contacted on +44 1737 242499.
9
DEFINING THE MARKET
DEFINING THE FILTRATION MARKET
Filtration Industry Analyst
Ken Sutherland looks at the problems encountered in assessing market sizes when parameters are not clearly defined. When I was younger, I had the good fortune to work for Peter Rowe, a brilliant experimentalist who went on to hold the Ramsay Chair of Chemical Engineering at University College London in the UK. We were working in the (then) relatively unfamiliar field of fluidisation when applied to solid processing in nuclear fuel production. It was a very empirical subject, with experimental data published by a number of universities and research institutes. One of Peter’s pet hates was the use by some workers of experimental correlations, with equations for best-fit curves involving factors and indices with four or five significant figures – much more than could be justified by the accuracy of the basic data. He would look aghast at a published diagrams showing a mass of experimental points all over the graph – and a straight line drawn through them. He was so incensed by this kind of thing that he wrote a seminal paper for the Institution of Chemical Engineers, in which he took a set of random numbers and, by suitable manipulation and plotting on log-log paper, he was able to demonstrate a linear relationship, where none could possibly exist. Ever since that time, I have taken a somewhat cynical view of published data when it is not entirely clear what the basic assumptions are, and how accurate the experimental method is. This cynicism covered both my experimental and equipment supply life, and my later career in industrial market research. I was reminded of this when doing work recently on market assessments for filtration equipment and for filter
media for the Profile of the International Filtration and Separation Industry: Market Prospects to 2009, published by Elsevier. The standard method for any piece of market research is first to gather together all the pieces of information relevant to the market in question, whether in one’s own possession, or that of one’s company, and then any available from published sources, in print or on the internet. This desk research phase will then show where gaps exist in one’s knowledge of the market, and what “experimental” work must be designed to fill the gaps. This experimental work – the field research – involves identifying the key players in the market, both as suppliers and end-users, and getting out of the office in order to interview them. Some respondents will prove to be very knowledgeable about the whole market, while some others will only know their own niche market, but all will have useful contributions to make. The final phase of the work involves putting all of the facts together, and from them extracting as accurate an estimate of market size as possible, together with forecasts of sector growth trends for as far into the future as it is sensible to go. (This means about five years – any longer and unforeseeable movements in world economics and political events will have too great an impact). It is in the gathering of existing information that the problem of misunderstanding is most likely to occur. Some published figures are highly questionable – for example, a year or two ago, a responsible engineering journal published an article on developments in filter media which began “Recent reports show the filtration market growing at a rate of about 35% per year”. Would that it were, for all our sakes –
but the figure is nearer to 3.5% than 35 % – perhaps a decimal point had fallen by the wayside! The same article continued: “The total global filtration market is valued at about US$3.25 billion”, which seems to have lost another decimal point, since, even at its most basic, the global market is at least US$30 billion. Some of the more believable figures contained in published sources are difficult to use, because of lack of information as to the actual scope of the estimate. For example, in data on the filter media market, the estimate may be for the basic material (in its ‘roll-goods’ state), or for the material as it leaves the converter, i.e. cut to shape with appropriate seals or gaskets, or as a replaceable module, or even fully mounted in some kind of housing. In the case of filtration or sedimentation equipment, this could cover the basic equipment item, or the item plus all the ancillary equipment necessary to make it work (such as drive motors or pumps), or the item once fully installed in place, ready to run. One series of reports covers the total cost of owning and operating the separation equipment, which is an enormous figure. Each of these steps up in elaboration means a considerable increase in unit cost, and hence a significant increase in the apparent market size – hence it is essential in the use of any market estimates to know as much as possible about the scope of the estimate. There are several organisations, apart from Elsevier, which publish market surveys on a variety of equipment types, BCC, Fredonia, Frost & Sullivan, McIlvaine being the ones known to produce reports in the filtration arena. Each of these will issue a press release for a new report, and this will usually be picked up and reported in Filtration Industry Analyst or in
Filtration & Separation. These press releases are, of course, intended to attract the eye of the potential purchaser of the study, and they give just enough detail to do this job. But the seeker after market information (who is not prepared to buy all these reports) has to interpret a number of incomplete figures. These usually differ widely in their apparent market size estimates and so only give boundary figures for any closer estimate. One of the problems of definition of market coverage is whether or not the estimate includes the domestic sector. While any one household has only a small individual use of filters, by the time that vacuum cleaner bags, coffee filters and percolators, point-of-use water filters, and owner-changed engine filters are totalled for the very large number of households in the developed world, this becomes a major end use. It follows that the reader of any report on market sizes must ensure that the scope of coverage of the report is clearly defined, both as to what is included and what is not. This is a point that I pay particular attention to in the market surveys that I write for Elsevier. Profile of the International Filtration and Separation Industry: Market Prospects to 2009 is available from www.filtsep.com. Ken Sutherland has run his process engineering and market research consultancy, Northdoe, for nearly 30 years. Northdoe is largely concerned with filtration and other such separation technologies. He was a coauthor of Elsevier’s Decanter Centrifuge Handbook, and has also written the second edition of Elsevier’s Handbook of Filter Media. More recently he has written Elsevier’s A to Z of Filtration. He can be contacted on +44 1737 242499.
9
DEFINING THE MARKET
DEFINING THE FILTRATION MARKET