- Published on Monday, 21 April 2014 10:06
- Written by Genilee Parente
The Valve Manufacturers Association welcomed its first chairman from a Canadian company when Ivan Velan, executive vice president, Velan, Montreal, Quebec, was sworn into office at the 75th annual meeting last fall. But Ivan Velan brings other unique factors to the position as well.
The most significant is that he comes from a valve company with one of the strongest family ties in the valve world. His father A.K. Velan, who is chairman, founded the company in 1950 and all three of A.K.’s sons are involved and hold stock in the business. Ivan’s brother Tom is the CEO and president and his other brother Peter worked in the company for 35 years and continues on the Board of Directors. Two of the 12 third-generation Velans have worked in the company and show interest in continuing to do so.
“When you have that strong an involvement, the business becomes part of the family,” Ivan says. “It makes for some interesting dynamics, but provides tremendous opportunity for family members. At the same time, it creates additional incentive for its owners (family members) to optimize the results.”
A Colorful History
While there are other valve companies in North America that have been around much longer than Velan, few have a past that has roots in another area of the world. The Velan family escaped from communist Czechoslovakia to Switzerland in 1948, and came to Canada in 1949 when Ivan was just four.
Company founder A.K., who originally looked into moving to the United States, settled in Montreal after visiting the U.S. and becoming disillusioned with the segregation that was occurring at the time.
The Montreal area was closer to Europe in its feel, with mountains not far from the city. While A.K. originally considered getting into double-knit textiles, “people were not ready for that product yet,” Ivan says. But A.K., who had a master’s degree in mechanical engineering, created a new design for a steam trap to eliminate condensate from steam piping. He started producing that product and successfully sold it to many organizations, including the U.S. Navy.
In response to a request from a steam trap user at Bath Iron Works in Maine, A.K. also designed a high-pressure valve for a unit where two valves were combined with bypass piping and a steam trap. This was given the name “Piping King” and was the true start of the Velan valve business.
“A.K. rented space on the second floor of another family manufacturing business, bringing in machines through a second-story window. My mother helped with packaging; valves were tested in a research lab at McGill University. It was a typical seat-of-the-pants start-up,” Ivan says.
However, the business grew rapidly, helped along by the forward-looking A.K., who traveled the world selling his products, and introduced the valve manufacturing processes.
By the time Ivan was grown and in college, it was a multi-million-dollar company. Peter, the middle son, who had an engineering degree from McGill, had begun working in the family business, but Ivan had no intentions of following him.
“I wanted to be a hockey player. I excelled, but I wasn’t good enough to play pro, and wanted to keep my teeth,” he says. Instead, he got a bachelor’s degree from Loyola of Montreal, and then went to the University of Michigan to obtain a master’s in business administration, hoping to go into consumer marketing. He married his high school sweetheart Penny while in Michigan and was considering offers by several major food companies upon graduation.
However, he had already dabbled in several areas of the family business, including working on the shop floor in the summers, which he said gave him an appreciation of how difficult it is to be a machine operator and to work in machine shop conditions. Another summer experience planted the seed that eventually led to his career.
“When I had just finished third-year university, my father proposed that I go on an around-the-world business trip for six weeks during the summer of 1967 to appoint new distributors in export markets. I said, ‘Well, dad, I don’t really know that much about valves.’”
But he went anyhow and at 21, traveled to 10 countries and brought home many orders.
“To my surprise I found the whole experience interesting, challenging and exciting. And even though I didn’t intend to go into the business, when the time came and dad made me an offer, I realized I didn’t really want to work for a cereal company. It was Peter that finally persuaded me to join in 1970,” he says.
Today, Ivan is responsible for sales in North America and is involved in most other areas of the business, with the exception of engineering design.
He served on the board of directors for Velan Inc. from the early 1970s until stepping aside in 2013 and making his seat available for his son Rob. Ivan was chairman of the board between 2003 and 2011.
His Views on the Industry
Velan has seen many changes in his 45 years in the valve business, and he notes those changes by decade.
“In the 70s, North American manufacturers were servicing mostly North American customers and doing so using North American components,” he says. Asia was just developing. Nuclear power was a major factor in power plant construction, he said. Velan was, and is, heavily involved in that industry.
In the 80s, Ivan said the defining issue was an increasing capture of market share by quarter-turn valves, which had started as plain ball valves and evolved into butterfly and other quarter-turn variations.
“A host of new ideas came out about how to take advantage of the ease of operation and lower cost of actuation,” Velan says.
The 80s were also defined by increased emphasis on automation; the decline of nuclear because of Three Mile Island incident in 1979 and Chernobyl in 1986; and the rise of Japanese competition, which resulted in anti-dumping actions by VMA and valve companies, he says.
During the 90s, globalization of both manufacturers and end users was rampant: “North American and European companies were seeing the writing on the wall, and manufacturers scrambled to move operations to places like China and India, meaning a shift in jobs and market emphasis,” he says.
By the 2000s, the industry had accelerated consolidation across both geographic and product lines; computers and enterprise resource planning systems had become an essential part of daily operations; and many valves and actuators became “smart.”
“Today, we are in an information age with so much available with a click. We have smart actuators, chips put on valves that can store all kinds of information about the components in valves, and seemingly infinite data on all matters in general— stored, categorized and instantly available. When you look at the pace of change in the last 20 years, you see that it’s undeniable there will be radical changes with tremendous effects going forward,” Velan says.
He says that another significant change he’s seen is his 45 years in the valve business is that there are many new levels of complexity involved in making a sale and running a business.
“In this day and age, it takes far more than a good valve design that is made the right way in a good machine shop,” he says.
“We have to think about fluctuating currency exchange rates, export controls, conflict minerals, foreign corrupt practices, safety integrity level (SIL) programs, codes of conduct, corporate social responsibility practices, fugitive emissions guidelines, enhanced qualification testing of valves, restrictions on country of origin for components and fully assembled valves, terms and conditions for contracts—all in an environment that is very litigious especially in the U.S.
“Because of globalization, companies have to adapt to a wide range of valve standards that affect design and the ability to sell—from the Manufacturers Standardization Society to American Petroleum Institute to International Standards Organization to the different European country standards such as DIN, GOST, BSS, IBR in India and so on,” he says.
Heading Up VMA
Velan’s main priority as new chair of VMA will be to optimize the existing programs.
“VMA is well known in the valve industry, and we are at the forefront of some important developments. I don’t intend to have an agenda much different from my recent predecessors, but I’m open to new ideas and hope members will let us know new directions where we should go.”
The association is a venue for networking and sharing war stories, a voice for the valve industry to government bodies and a conduit for information through its meetings and VALVE Magazine, he says. Most recently, it has taken an initiative to meet an immediate need: replacing the aging management of members and customers.
“Despite automation and globalization and all the complexities, this is still a people business. The industry needs to replace those skilled individuals who are getting ready to retire. Programs such as Valve Basics and the educational arm of the association are helping to do that,” he says.
Opening membership to the distributors is also a key effort right now and Velan says he hopes that by fall there will be a dozen to two dozen distributors who are members of VMA.
“As we did in the past when we added actuator manufacturers, associate [supplier] members, and valve repair shops, adding distributors is a logical step as they are an integral part of the supply chain.”
A speaker at the recent VMA Leadership Conference pointed out that in the past, distributors were an extension of the valve manufacturers’ sales and marketing effort, he points out. But this has largely changed, especially with the large distributors, to a situation in which distributor are extensions of the purchasing efforts of end users and engineering, procurement and construction companies.
The other issue Velan sees as important in the near future is that the international picture is showing signs of allowing more production to move back to North American shores. Many valve users are realizing that initial cost savings from purchasing valves from low-cost countries does not translate into low total long-term cost of ownership, Velan says.
“We are hoping that the historical trend that occurred with increasing Japanese competition and growth leading to the appreciation in the value of the yen will occur in places such as China and India leading to more onshoring than offshoring going forward. The tide may turn to bringing jobs and production back to North America,” he says.
Meanwhile, he says VMA is committed to serving the interests of its members in every way possible.