Reaching Around the World

One of the most profound changes occurring over the last few decades has been the globalization of business. VMA and its members began to recognize the need to reach out beyond U.S. and Canadian boundaries back in the 1980s. Because of that need, the Valve Manufacturers Association published its first edition of the North American Catalog of Valves in 1984. The idea was to assemble key information about all VMA members that manufactured valves and to disseminate that information around the world.

Now in its 10th edition, the catalog continues to play the critical role of telling buyers circling the globe about the quality products engineered and made by U.S. and Canadian valve, actuator and control manufacturers. The printed catalog, published as a stand-alone product, contains key contact and descriptive information about all 80 VMA manufacturing members and features articles that cover key valve applications, product selection and specifying tips. (The catalog is available through The VMA Store on www.VMA.org.)

A product matrix within the catalog is a useful guide to see who makes what at a glance. Valve Magazine replicates that matrix (see pages 24-27 of the digital edition) as a handy reference for readers. However, we caution that what’s featured in this matrix are products that may be classified in different ways by different companies, and there are far more products made than can be included in the limited space available, so this list is by no means exhaustive. Readers will find more information about company product lines and capabilities by visiting their websites.

To coincide with the release of the catalog, Valve Magazine talked to several member companies about what going international means to their companies.

SPREADING THEIR WINGS

Companies in the valve industry entered the global picture at various points in the last few decades and in a number of ways.

For example, Conval (Somers, CT) has been in the global marketplace for four decades. According to Mike Hendrick, vice president of marketing and sales, who has worked with the company two of those decades: “We got into China very early. Our high-temperature valves are used in power and refining and chemical processes. The big equipment manufacturers such as Westinghouse sold products that used Conval components to China. That’s how we entered the global picture.”

In other words, “We went along for the ride. Back then [in the beginning], we were called for spare parts, but now we have a sales office and service centre, and a full range of services in China.”

Tom Velan, president and CEO of Velan (Montreal, Quebec) explains that his company also got into the global marketplace very early, but for a different reason. Tom’s father (and the company founder) A.K. Velan was an immigrant from what was once the Soviet-dominated Czechoslovakia, so A.K. blazed a distribution trail in Europe and the Middle East in the 1950s.

Riad Haffar, vice president of sales at Fluoroseal Specialty Valves (Montreal, Quebec), says his company began looking into the international market almost as soon as he and his partners purchased the company from Tyco in 1999. At that time, Fluoroseal sales were localized in the U.S. market. “But we had a specialized product and knew there was a need for it in the international market,” says Haffar.

AUMA Actuators, Inc. (Canonsburg, PA) was founded in another country (Germany) in 1964, but Rich Oaks, marketing manager, says the company’s management realized very early that it needed to be global in scope. AUMA established international agents as early as the late 1960s, and in 1976, AUMA USA became the company’s first overseas international subsidiary. Today, AUMA has wholly-owned subsidiaries in 19 countries and agents (representatives) in 22 other countries.

CHANGING CHALLENGES

Valve companies that got into the business early have found the issues they face have evolved over the years.

“Fifty years ago, just traveling and communicating was a challenge. The planes were super slow, and there was no such thing as faxes, not even a telex,” Tom Velan remembers.

He started with the family business in the 1970s. In 1972: “We [Velan] participated in the first exhibition in China, which was just after Nixon visited. It was an interesting time there!” The company’s first trips revealed “very primitive factories, and everyone was in their Mao suits,” Velan reminisces.

Oaks also recounts that some of AUMA’s most significant early issues involved communication. “Getting the detailed information required to provide the technically correct product was a challenge,” he says. “But this has been greatly eased in the past 20 years or so by significantly enhanced technology tools such as email and the internet, which allow us to share files and information instantaneously (electronically).”

Hendrick says Conval experienced early challenges in regards to financial set-ups. For example, “When we went into India 30 years ago, the usual safe methods of transactions like letters of credit weren’t as effective. The customer wouldn’t necessarily sign off on the receiving of the goods so sometimes it took monumental effort to get the money released,” he explains. Computers changed that situation dramatically, he added.

For Fluoroseal, which entered the global marketplace later than the other two companies, the challenges had more to do with name recognition.

“For our very specific product, there were just two major players,” Haffar says. “But we were the newcomer, so we had to work very hard to nurture our contact network. Internationally, it takes extra effort.”

BENEFITTING FROM A WORLD MARKET

Most companies agree that globalization has been a positive development for their companies and that it created many opportunities for the future.

For Fluoroseal, the North American Free Trade Agreement (NAFTA) was an important component of internationalization efforts. “With it [NAFTA], we started doing business with the U.S. and Mexico on a fair trade basis,” says Haffar.

In Europe, the company began by opening up a sales office and warehouse in Germany. This kind of expansion requires what Haffar calls a “personal touch.”

“You need to be local, so we work hard to get the right distributor wherever we go. You have to be sure they’re very much involved in the local market, with enough coverage, and that the distributor is loyal to the company. Getting the right distributor is a hugely important part of the process, and training them well has certainly paid off for us,” Haffar says.

The expanded opportunities for Velan are broad, according to Tom Velan. “We sold [products] in 75 countries last year, and Velan has its own production in Asia and Europe, which has allowed production and sales around the world.”

Last year, Velan’s largest export market was China. “My father always makes the joke that we make the valves made ‘for’ China instead of ‘in’ China,” Tom says.

Rich Oaks says several areas of business have changed drastically because of globalization. On the technical end, “The best examples are global standards that define the mechanical mounting interface between the valve and the actuator,” he says.

On the commercial end, “Many projects are global in nature and employ global sourcing. For us, that means we have to coordinate the technical product specification for a specific project between our company here in the U.S. and several global sister companies or agents,” Oaks says.

Also, globalization has brought changes that have created new layers of challenge.

According to Conval’s Hendrick, “Ten years ago, 70% of our business was done in North America. Now, 70% is done out of North America.”

That’s the positive for the company. However, “On the down side, we have probably three times as many competitors as we had before. India, China, Europe and all over the world are heavy competition because they have low-cost labor,” he says.

AUMA’s Oaks also notes that 30 years ago, the company’s competition varied by country or continent, but today, there is no significant difference by area: several common, large, global competitors have a presence just about everywhere.

Another trend arising because of globalization, a trend that may be beneficial to this side of the ocean, has to do with the reality that end users often weigh heavily in favor of lower-priced offshore products. Despite this fact, more companies today are considering what is called the “True Cost of Offshoring.” That true cost goes beyond the traditional consideration of lower labor rates as a reason to move manufacturing offshore or purchase from offshore companies. The trend is to add a much wider berth of factors into the cost calculations.

Harry Moser of The Reshoring Initiative talks about what some of those factors are. He lists quality, manufacturer support, traveling costs to check on suppliers and lengthy shipping schedules as expenses that need to be considered when dealing with offshore companies. Meanwhile, labor rates are increasing in Asia, which may further offset the balance.

ADAPTING TO GLOBAL REALITIES

Most valve companies today say the process of manufacturing itself has been changed by globalization.

Hendrick points out that the global economy requires heightened efficiency. “We’ve kept up with all the systems,” he says, but that upkeep has required additional resources. For example, “For a new plant, we brought in millions of dollars of high-tech equipment so that we could take some of the manpower out of it. We let the machines do some of the thinking,” he says. That technology, along with Lean practices, has been responsible for the company’s success.

“But it goes beyond that,” Hendrick explains. For example, “There are now new codes all the time. The boiler regulations can be as onerous as the N stamp in nuclear.”

A significant challenge is that requirements are different in different locations, “so while it’s very difficult to work your way through [these various requirements], you also have to be on top of all of it all the time,” he says.

“The API code was set for valves, ASME 3 for nuclear, and that was supposed to help standardize, but then other countries have different rules and regulations,” he adds. “ISO is supposed to handle that, but it hasn’t quite worked out that way.”

For Fluoroseal, going global also meant new practices put into place to get approvals from different types of international clients. “That took us to a new level from specialty manufacturing to maintenance, repair and operations,” Haffar says. In some place, the company has had to change its scope of manufacturing to become more volume driven.

To meet international needs, the company now produces a product that has a cast base, but with added capabilities, making the company vertically integrated—it now has its own foundries and manufacturing plants so it doesn’t have to rely on outside suppliers.

Fluoroseal does this to maintain control over quality and to enable the company to “cope with the demand volume while still keeping the special alloys and specialty products,” Haffar says.

For Velan, globalization has required purchasing from suppliers around the world as it was adopting more efficient manufacturing techniques. Some of those techniques have come from other countries. For example, Velan has adopted the Kaizen method for improving productivity. “Those improved techniques came from Japan, went to America, then went back out around the world,” Tom Velan explains. The company also now has a Lean program as well as total process improvement practices. These quality control processes have been building upon themselves “for quite awhile. It is a continuous process of improvement. Our factories look very different now than they did even six or seven years ago,” he says.

Velan agrees that the variety in standards is a challenge.

“There used to be a move towards using international standards, but now we’re seeing Brazil and Mexico coming into specs where the valves must also meet the local norms and requirements,” Tom Velan says. This reaches down as far as levels such as welder qualifications in some areas, “and it’s almost impossible to meet the standards of all jurisdictions. It’s not that one is better than another, they’re just different.”

According to Rich Oaks, globalization has underlined the need to furnish consistent quality while minimizing costs. That has made AUMA a much more efficient, leaner manufacturing organization. “Technologies both on the manufacturing floor (computer numerical control machines) and in processes (software and employee training) have been key ingredients,” he says.

For manufacturers, distributors and end users, globalization has forever changed the way business is conducted. Those who are already deeply embedded in international business have found that not only have they expanded their reach to foreign shores, they’ve taken many valuable lessons about how to do business back to this side of the ocean.

Kate Kunkel is senior editor for Valve Magazine. Reach her at kkunkel@vma.org.