BY PETER CLEAVELAND

VMA’s annual valve shipment forecast had some positive news for the industry: modest growth for the second year in a row.

Considering what has happened in the general economy, that’s pretty good news, according to VMA Chairman Max Mitchell, president for Crane Fluid Handling Group.

“Although the rise is slight compared to some year-to-year increases early in this decade, the fact we’ve managed to maintain steady momentum through a difficult economy shows how strong the valve and actuator industry is,” he says. And things should continue to improve at a faster pace over the next few years, he adds.

Mitchell’s upbeat assessment on the valve industry was echoed early this year by general figures on industry. For example, the Institute for Supply Management’s ISM Report on Business for February 2011 shows that the Purchasing Managers’ Index (PMI) continued a 19-month trend to reach 61.4, a level not seen since May of 2004. That report says that much of the increase has been driven by an accelerating growth in exports, which parallels what the valve industry has experienced.

Figures from the VMA forecast show that part of the reason shipments remained steady (and in fact, except for a decline in 2009, increased slightly) during the past recession is because domestic shipments stayed about the same but exports have risen. In 2009, exports were at about $717 million; by 2010, they had grown to $751 million, and they are forecast at more than $761 million for 2011. This growth is a departure from the fairly even rates of exports over the past decade, as shown in Figure 1.

Figure 1. While domestic shipments fell over the last few years, exports
continued to grow steadily as they have for most of the decade.

“European markets [for the valve industry] are still flat while North America is showing signs of recovery,” says Mike Mason, executive vice president, Emerson Process Management - Fisher Division.

Mason says most of the growth over the next few years will come from Asia and the Middle East. While slow recovery in the U.S. and Europe will eventually bring consumption of goods and services back to earlier levels, Asia and the Middle East have favorable demographics. “The major Asian economies, which have growing populations with larger spending power, are going to drive an increased need for commodities and energy,” Mason says. On the other hand, isolated parts of Asia will not do so well, he adds. For example, Japan likely will not see growth in demand.

Barry Glickman, president, Dresser Flow Technologies, feels the valve industry global growth year-over-year will be a bit greater than the 1.5% in 2011 that VMA predicted for North America. He says that markets in South America, Asia and the Middle East will be particularly strong.

HOW DID WE GET HERE?

To make sense of what’s happening this year and in the immediate future, it’s useful to look at data released by VMA on trends over the past decade.

Valve shipments in 2010 at $3.85 billion were the strongest they’ve been over that decade except for that peak in 2008 at $4.0 billion in sales (Figure 2.) They started the decade off at about $3.1 billion.

Figure 2. Valve shipments in 2010 of $3.85 billion are the strongest they’ve
been over the decade except during their peak in 2008 at $4.0 billion in sales.

In looking at end-user industries, of the 15 markets tracked by VMA in 2010, water & wastewater had the largest share at about 18%, followed by chemical (17%), petroleum production and petroleum refining (each at about 12%), and power generation (11%) (Figure 3). This distribution seems to have changed little over the past few years (Figure 4).

Figure 3. Of the 15 markets tracked by VMA in 2010, water & wastewater had the largest share, followed by chemical, petroleum production and petroleum refining, and power generation.