The water industry market

May 1997

Pump Industry Analyst

THE WATER INDUSTRY MARKET

segment dedicated to serving

tention to the efficient use of

the fields of sanitation, heat-

water at the point of consump-

ing and ventilating and related areas including drinking,

tion. This could be achieved

washing,

sumer through metering and the price mechanism. There are however numerous ways

gardening

and

partly by rationing the con-

Some Problems of Definition and Estimation

pumps for recreational purposes. This is a large and important part of the pump

of reducing water demand tor

By Eric Potts

industry in the EU. In recent

certain functions and recy-

years growth rates have ex-

cling used water. Exhibitors

ceeded the average for the pump industry as a whole.

at the recent ISH exhibition in Frankfurt, Germany dem-

Although the EU authorities

onstrated, for example, the

would like to develop the

availability of pumps with

PRODCOM series on indus-

macerators

trial pump production, the pre-

amount of water used in toilet

sent system

surveying the industry as a

flushing; p u m p s / o r recycling used water tot garden irriga-

whole by product type. This

tion; or pumps to transfer that

Consultant Editor

The movement and control of water is the biggest single application for pumps. Despite the growth of the process industries, the handling of clean or ditry water, the provision of heating, ventilation and sanitary services, gardening and recreation presents one of the largest market opportunities for pump manufacturers. The range of products involved is extremely wide and individual manufacturers of water pumps often have difficulty estimating their particular market sector's potential. The process raises problems of definition. Not least is the need to avoid describing as water pumps those pumps used in the pumping of water where it is being used as a general medium for the transport of materials in an industrial process. This type of application is not recognised to be part of the water industry and most companies' sales analysis would not include them as such. It is clear when talking with manufacturers in many sectors of the water pump business that they do not find it easy to obtain verifiable market data suitable to their needs. This creates difficulties when considering the possibility of diversifying into markets allied to their sector. They may have the necessary technical knowhow, market acceptance and capital required to be adventurous. Nonetheless they are reluctant to consider diversification if the market intelligence to support their decision making is not to hand, or if

they think the process of acquiring it will be expensive and time consuming.

is limited to

is creating problems in that the unit price of pumps de-

to

reduce

the

water collected in rain water butts for services other than potable. Many of the pumps

A solution, particularly for the

fined by their configuration

established pump manufactur-

may vary from say US$40 to

ing nations in the EU, could be

US$10 000. Many types of

to improve national statistics.

domestic pump and associated

The USA has moved in the

'hobby pumps', as they are

direction of better identifica-

sometimes referred to, tall

tion of the market for domestic

within the lower end of the

and related pumps in national

price range. What is needed is

statistics. They have clarified

some market description to

aspects of their pump indus-

differentiate between items

try's structure by separating

with quite dissimilar functions

out a category called 'Domes-

which tall under the same ge-

facturers' point of view as there are in the USA. Products lot the heating and

tic'. Generally one does not

neric pump type. Otherwise

ventilating market were ex-

expect that manufacturers will

mere statistical series on par-

subscribe to the view that the

ticular types of pump will do

hibited on all the leading manufacturers' stands at ISH.

aim of improving statistics

little to excite the seeker after

covering their industry is to

enlightenment.

lead competition into their

In sectors such as the energy, power and process industries, secondary information sources can serve as a surrogate authority on trends in pump demand. An analysis of power station construction in terms of MW by type of station or refinery extensions by process and barrels per day is a good guide to new or replacement business for boiler feed pumps or API 610 units. This is not the case in many sectors of the water industry. It is becoming increasingly important in Europe to pay at-

markets. However is it not likely that they would welcome new national statistics similar to the USA series if they felt the information was useful, relevant to their sector and

available without

too

much inconvenience? This article therefore would like to draw attention to the concept of market segmentation in developing information sources at national level. The brief to support the case uses evidence drawn trom the

displayed for these duties incorporated

variable

speed

controls tot greater efficiency.

<

At present no comprehensive or easily accessible statistical indicators exist in the EU for monitoring trends in demand in these developing water markets from the pump manu-

These included commercial and

domestic, industrial

heating pumps displayed together with booster sets, pressurizing units and chilled water pumps. All had the option of manual and automatic controls. Due to the relatively underdeveloped state of EUROSTAT's statistical services, there is no direct route for acquiring a European wide picture of total output, derived market demand or trends in either series. A surprising aspect of EUROSTAT is that what may be reported in one country may be suppressed in

9

Pump Industry Analyst

May 1997

another. That this may be on the grounds of confidentiality does not reduce feelings of frustration and that EUROSTAT's present charter requires revision. This sector of the water market is distinct from that sector covering bulk supplies such as water extraction and boreholes

and

rivers,

pipeline

transfer and treatment before delivery through the mains. It has a clear identity of its own especially in its channels of promotion. In Italy and Germany, for example, major exhibitions are held, devoted exclusively to the presentation of equipment, plant, systems and software for this market. The recent holding of ISH in Frankfurt is a prime example of this kind of exhibition. About fifteen pump manufacturers, including international groups, were exhibiting products for the sanitation, heating and air conditioning markets. The products on display were of EU design and manufacture. Four of the exhibitors were companies listed in the world's

'Top

Ten'

pump

manufacturers. Taking into account the companies at ISH, their combined output in Europe for this market could exceed US$2.0 billion. This total may include some vertical pumps for borehole applications outside the definition 'domestic' and also other types for industry applications. This uncertainty is due to the lack of differentiation in EU statistics and the need to rely on companies' filed accounts ti3r market intelligence. Notwithstanding such problems, the total could account for possibly 15 per cent of world output of pumps for liquids. In terms of percentage share of EU total

10

pump production, the figure is much higher. The computerized database service at ISH providing product identification at each of the Exhibitor's stands listed the following pump types in this m a r k e t domestic water supply, drainage, pressure boosting, hand, domestic, commercial and industrial hot water circulating, tank, garden, barrel and sewage pumps. In addition to the estimated EU output of US$2.0 billion for this market, there are contributions from the USA and Japan to take into account. The US Department of Commerce reported sales of domestic pumps worth approximately US$450 million in 1995 under unique code numbers separate from the main body of industrial pumps. This arrangement is less confusing than in the EU where mass volume, low price domestic and related pumps are hidden among the general industrial statistics. It is clear therefore that the market for pumps for sanitary, heating and ventilation purposes in both the domestic and non domestic sectors plus related sectors in garden and 'hobby' pumps is one of the largest in the world. Furthermore it is one component of the overall pump market. There would appear to be a good case in the EU for reviewing policy on die collection of statistics purely by pump generic type. In the pump industry it is clear that a major business sector such as the one reviewed above is sadly neglected by present procedures. An approach using the concept of market segmentation might be of more help to the industry. Of real use~ would be the introduction of a heading such as domestic with appropriate size differentiations recognized by the industry.

PUBLICATIONS UK PUMP SALES AND TRADE DATA The Office for National Statistics' PRQ31 Pumps, Product Sales and Trade Data for Quarter 2 1996 is now available. This quarterly Product Sales and Trade report gives UK product sales by value and volume, aggregated total products for the industry, exports and imports at product level, balance of trade, the product net supply to the UK market and a rolling span of five quarters of data. The report is based on UK manufacturers' returns to the Office for National Statistics PRODCOM (PRODucts of the European COMmunity) statistical enquiry.

PRQ31 Pumps, Product Sales and Trade Datafor Quarter 2 1996, ISBN 011 537230 X, with a £120 subscription price, is available from The Stationery Office Publications Centre, PO Box 276, London SW8 5DT, UK. Tel: +44 (0)171 873 8200; Fax: +44 (0)171 873 8200.

UK PUMP MARKET SEES 8% G R O W T H The latest pump report from Market & Business Development Ltd (MBD) estimates the 1996 UK pump market at £893 million. According to the study, The

UK Pumps Market Development, the sector expanded 8 per cent during the year. The pump sector picked up particularly in the second half of the year, reflecting improved levels of investment in the water and sewerage sector and increased capital expenditure in the chemical sector.

The UK Pumps Market Development is priced at £240 for a single report or £320 for an annual subscription which includes quarterly updates for 12 months. Fully updated every quarter with the latest trends and developments with five year forecasts, the study is available from Market & Business Development Ltd, Premier House, 22 Deansgate, Manchester M3 IPH, UK. Tel: +44 (0)161 839 2739; Fax: +44 (0)161 839 9320.

THE ENGINEERS B U Y E R S G U I D E 1997 The new edition of The Engineers Buyers Guide is available from Miller Freeman Information Services. Now in its 100th year, The Engineer Buyers Guide 1997 is a comprehensive directory for the engineering industry, and contains updated information covering every aspect of mechanical, electrical, metal and process engineering. A Buyers' Guide section includes a listing of more than 4600 products and services available to the engineering industry; a Brand & Trade Names section provides information on manufacturers of special brands; and a Company Data section contains detailed contact information for more than 14 500 manufacturers and suppliers. Priced at £72, the directory is available from Jennifer Abegha, Miller Freeman Information Services, Riverbank House, Angel Lane, Tonbridge, Kent TN9 1SE, UK. Tel: +44 (0)1732 362666; Fax: +44 (0) 1732 367301.