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Study Overview
Economic Uncertainty Continues to Dampen Valve Shipments
This study is intended to serve as an effective planning guide for control valve, actuator, and positioner suppliers and
new entrants to the business. Control valves regulate the rate of fluid flow as the position of the valve plug or disk is
changed by an actuator. Control valves are used to maintain a process variable as close as possible to the desired set
point.
In 2009, the global economic downturn continued to depress control valve supplier revenues, pushing down sales by
nearly 4 percent overall compared to 2008. Uncertainty about when the recovery will start and what shape it will take
continued to haunt suppliers in 2009 as many suppliers� backlog orders diminished sharply during the course of the
year as new orders remained sluggish. Suppliers focused on aftermarket services and the chemical industries suffered
the worst in 2009, as the demand for aftermarket services and chemicals for the automotive industry fell precipitously
on a global basis. Suppliers focused heavily on the upstream oil & gas industry fared the best during 2009 as long-
term project activity continued. Despite ongoing activity in some emerging countries, new order activity remains
sluggish overall, and will have to pick up significantly for a complete recovery to take place in the control valve
market.
Strategic Issues
The global control valve market has fallen on hard times as the world continues to wait for a clear sign that the global
economic recession has ended. Even the rapidly expanding developing nations are not immune to this phenomenon.
Consequently, control valve suppliers find themselves competing fiercely over dwindling opportunities. Key supplier
recommendations and strategies for success in the global control valve market are analyzed in this study and include:
• Address changing workforce demographics
• Increase service capabilities
• Benchmark the value of digital postioners
Profiles for the major suppliers servicing this market are included. Each profile reviews the company�s business,
products, and services as it applies to this market segment. Profiles include ABB, AUMA, Control Components,
Dresser, Emerson Process Management, Flowserve, General Electric, Hiter, Invensys, Kurimoto, Metso, Mokveld
Valves, Nakakita Seisakusho, Nihon KOSO, Rotork Controls, SAMSON, Siemens, SPX Flow Control, Tyco Flow Control,
Yamatake, Yokogawa Electric.
The year 2009 was a difficult one due to the global economic downturn for many control valve suppliers, with some of
the key global suppliers suffering double-digit percentage revenue declines. Other suppliers’ shipments, however,
were buoyed by the strong backlog they had at the beginning of the year. Overall, shipments for control valves were
down nearly 4 percent from 2008. The current year, 2010, looks to be even more grueling for control valve suppliers
as they continue to face soft global demand, this time without the support of a healthy backlog. Despite the current
pessimism, there remain a number of factors pointing towards long-term control valve growth according to a new ARC
Advisory Group study.
Control valves are widely used in manufacturing applications to optimize production and lower cost in a wide range of
industries, and are poised for moderate growth in the long term. “Manufacturers have recognized that automation is
key to survival in the global economy and there are crucial factors that will continue to drive the use of automation,
fueling control valve market growth. These automation drivers include growing demands for energy savings, higher
productivity, increased production accuracy, better product quality, greater manufacturing agility to satisfy changing
market demands, additional condition monitoring, better process control, increased safety functionality, greater
capability for collaborative processes, and additional assurance regarding regulatory compliances,” according to Senior
Analyst David Clayton, the principal author of ARC’s “Control Valve Worldwide Market Outlook”.
Demand for Additional Electric Power Generation in Emerging Countries Is Also Key
Capital spending for power generation has grown substantially in developing countries in recent years, especially in
China, with high growth in India expected in the near future. The rapid expansion of the Chinese economy, especially
in manufacturing, is in some cases limited by the availability of power, so pressure to develop more generation
capacity is intense. This problem is magnified in India, where unreliable power infrastructure often affects
manufacturing and has caused many companies to build their own power generation facilities, creating substantial
demand from both public and private sources. Similar, but less intense, pressures are being felt in other emerging
economies.
Developing economies, such as China, India, and Brazil also feel the effects of the global economic crisis, shedding
many growth points compared to the extremely high growth levels experienced through 2008. The developing
economies, however, remain the primary growth engine for the global control valve marketplace. Emerging
economies, such as those in the BRIC (Brazil, Russia, India, and China) countries, and the Middle East will continue to
prop up the global control valve market with increasing consumer demand from the growing global middle class, a
healthy lending environment for capital investments that project solid returns, and the need for producing and saving
energy to cope with rapidly rising energy demands and costs across the globe.
For more information on this study, please visit our Market Research section.
The worldwide control valve market enjoyed yet another year of historic double-digit growth between 2006 and 2007,
and strong revenue growth is expected to continue at a CAGR of 6% over the next five years. The market reached
US$4.8 billion in 2007 and is forecasted to exceed $6.4 billion in 2012, according to a new ARC Advisory Group study.
Does 2007 represent the peak year for growth in the market? It was too early to tell halfway through the year, but
indications show that growth could once again approach historic levels in 2008, with many of the leading control valve
suppliers experiencing strong backlog with no slowdown in sight.
�Control valve suppliers continued to post strong revenue growth in the first quarter of 2008. Though the North
American and European markets have slowed somewhat, suppliers are relatively immune, thanks to increased demand
in developing markets, such as China, India, and the Middle East, which provided strong project activity, particularly in
the oil & gas sector,� according to Senior Analyst David Clayton.
Hydrocarbon driver
Suppliers reported big project wins in the oil & gas, refining, and petrochemical industries in the first quarter of 2008.
Though the North American and European markets have slowed somewhat, suppliers are relatively immune, thanks to
increased demand in developing markets, such as China, India, and the Middle East.
Worldwide growth of energy production continued unabated through 2007. Global oil & gas companies continue to reap
unprecedented windfall profits thanks to historically high oil prices, even as exploration costs increase and international
politics play a greater role.
The value of oil has also caused oil & gas companies to work to improve their monitoring processes to prevent product
loss and optimize production, which will require increased adoption of intelligent field devices, including control valves.
Technology advances
Remaining competitive in developed markets requires a different set of product investments. Many of the �Brownfield�
projects in the developed regions are now implementing FDT-based PAM solutions to provide access to data embedded
in a diverse set of smart field devices and other production equipment from multiple vendors running on various
communication protocols throughout the company.
To take advantage of this opportunity, control valve suppliers have been active in developing device type managers
(DTMs) that enable their digital positioners to work with FDT-based PAM solutions. Many control valve suppliers are also
designing their digital positioners to support EDDL for HART, Foundation Fieldbus, and Profibus as well.
Another important product investment control valve suppliers are considering is the development of WirelessHART
products, now that the HART Version 7 specification with WirelessHART has been approved. WirelessHART entails
much more than simply adding a radio to HART field devices.
The development of WirelessHART positioners enhances the functionality of HART devices, and preserves the viability
of HART valve positioners indefinitely. ARC estimates only 10-15% of the nearly 25 million installed HART devices are
connected to PAM systems. WirelessHART may be the enabler needed to connect these installed devices to PAM
systems.
Taking full advantage of the robust project activity in developing markets requires significant product investment as well.
Many control valve suppliers have been forced to expand their control valve line sizes and high pressure class ratings to
compete in these markets.
Many of the new projects in the Middle East require extremely large valves capable of withstanding extreme
temperatures while providing tight shutoff capabilities. High pressure applications in deep offshore oil wells, that often
exceed 30,000 feet, require high thrusts/torque capabilities from control valves as well.
Challenges remain
While the extremely robust growth occurring in developing markets provides control valve suppliers a tremendous
opportunity to grow their business, establishing a global supply and logistics system and designing new products for the
changing needs of the global control valve market, are key challenges control valve suppliers must overcome, says
ARC.
The ability to guarantee delivery times is more difficult now than ever before as demand for control valves continues to
increase from developing markets around the globe, and many control valve suppliers face manufacturing constraints.
To ensure strong global delivery and service capabilities, control valve suppliers are finding it necessary to invest heavily
in manufacturing and project engineering capabilities throughout the globe, with a particular focus in developing markets.
On the supply-side of the equation, long-term agreements with foundries in North America, Europe, and Asia remain
critical to protect needed capacity and lead times. Those suppliers who did not establish long-term agreements with
foundries during the lean years were not prepared for the strong surge in demand and are finding it difficult to secure the
valve castings necessary to meet demand