550 companies will be buying most of the pumps in 2018.(1) Sinopec will be buying 7.6 percent of all the pumps purchased in the oil and gas sector this year and 1 percent of all the industrial pumps. The top four purchasers will be in the oil and gas sector as will eight of the top twelve purchasers. The other four will be power companies. The top 550 includes companies in refining, chemical, pulp and paper, mining, food, stone and pharmaceutical industries. Half of the top 12 purchasers will be China based. The largest U.S. purchaser, ExxonMobil, is fifth in oil and gas and sixth overall. There are no other U.S. companies with pump purchases projected above USD $200 million. The next four U.S. companies in terms of purchases are shown on the forthcoming chart.
The rankings do include EPCs. Bechtel and AECOM will be the largest EPC purchasers. BASF will be the largest purchaser among chemical manufacturers (USD $170 million). Rio Tinto will be the leading pump purchaser in the mining segment (USD $103 million). In pulp and paper, International Paper will be the largest purchaser. Sixty percent of the pumps purchased by the 550 companies will be high performance. These are pumps whose quality justifies a price above the minimum specification. General performance products are sold based on price and service. In the past, it has been very difficult to analyze total cost of ownership of various high-performance pump alternatives. As a result, high performance pumps have been sold the same way as the general performance products. The sea change is the new ability of the purchaser to determine the lowest TCO.
With IIoT empowered by the Industrial Internet of Wisdom (IIoW), the corporate buyer will have the TCO for each of the alternatives and make his decisions accordingly. The main role of the sales group will be to make sure the buyer has an accurate TCO.(2) At companies such as BASF, Rio Tinto, Arcelor Mittal and Duke Power, IIoT and Remote Monitoring is enabling corporate specialists to analyze the performance of every pump, in the global fleet of plants.
IIoW is in its infancy but as it grows it will provide not only the total cost of ownership but the guide to new and better products. IIoW utilizes the data analytics provided by IIoT and provides the interconnection between end users, suppliers and subject matter experts to create the TCOs and, more importantly, to create new products with lower TCOs. The interconnections need to be as prolific in IIoW as in IIoT. They include:
• Supplier personnel in each product group and geography interconnecting with peers around each of the 550 large purchasers.
• Owner-operator personnel in each plant and in each role interconnecting around processes and products used in more than one of the plants.
• User controlled groups expanding scope to create decision systems and through digital technologies become international (suppliers with lowest TCO can support and sponsor this activity).
• Supplier controlled groups focused on TCO studies.
• Associations expanding role to create decision systems and periodic webinars to integrate with annual meetings.
• Individual user groups expanding to create IIoW.
• Creation of Subject Matter Ultra Experts (SMUEs). Tomorrow’s experts will master the massive TCO data generated from IIoT. The SMUE will need to be very focused and to continually utilize and help create the decision systems around his specialty. The suppliers of the high-performance pumps with the lowest TCO products will bene_ t from the SMUE validation of their claims.
Pump suppliers have an additional reason to focus their efforts on the top purchasers. These are the companies who will conduct and validate the products with the lowest total cost of ownership. Smaller purchasers will be relying on these TCO analyses to make their choices. As a result, there will be a big sea change in the high-performance pump market.
References (1) Pumps: World Market published by the McIlvaine Company. (2) IIoT and Remote O&M published by the McIlvaine Company.
About the Author: Robert McIlvaine is the President and Founder of The McIlvaine Company, which publishes reports across worldwide pump and valve markets. He was a pollution control company executive prior to 1974, when he founded The McIlvaine Company. He oversees a staff of 30 people in the USA and China.