What’s in Store for 2013?

Speakers were generally optimistic about the next year, but that does not mean that there are no bumps in the road to economic recovery in the U.S. and around the world. “If you’re worried about the economy falling apart in the next couple of quarters, don’t,” said Beaulieu. “The world will continue as you know it for the next several quarters.” According to Beaulieu, one of the biggest obstacles to economic recovery is perception. “Sixty-nine percent of the American population thinks we’re still in a recession. That’s not true,” he said.

Halloran echoed this sentiment, saying, “Fiscal uncertainty at this time in the cycle is much higher than previous cycle. While we are in the midst of a mid-cycle slowdown, and there is still a question of how bad Europe’s economy can go, a growth environment exists in almost all process controls end markets in 2012.” He advised that the best strategy for manufacturers is to be as low cost as possible, but compete on quality. The shift toward higher efficiency and greater automation is driving the most successful players.

For valve manufacturers, international power generation is a good segment to develop. Kevin Geraghty – VP of Power Generation at Nevada Energy advised, “China is the biggest market for electricity. If you want a place where your product will go, most likely it’s not in the U.S., not even in the near future. Emerging markets are the place.” Geraghty also stated emphatically that existing coal in the U.S. power generation industry is on life support, and the potential for new coal is dead.

Mike Higgins of AREVA stressed the importance of nuclear in the power mix. Not only is the population growing in what are called the “developing” nations, they want a higher standard of living. He said, “A huge demand for power is coming through the pike worldwide, and we can’t get there through coal. Nuclear is a better alternative.” From the perspective of valve manufacturers, nuclear is very important. “The valve intensity of the nuclear technologies is huge,” said Higgins. “There is a huge economic impact when nuclear plants are developed.”

Another area of growth in the U.S. is, for the first time in a long time, the petrochemical industry, thanks in large part to the development and production of shale gas. According to Mark Eramo VP of IHS Chemical, because natural gas is a source of the primary feedstock for the essentials of chemical production, the newly discovered abundance and low price are encouraging petrochemical producers to bring production back to the U.S. Valve manufacturers can look at the possibility of new refineries, or the re-opening of shuttered refineries as potential opportunities.

John Spears, President of Market Research at consulting firm Spears and Associates, warned that a combination of flat oil prices, weak NGL prices, and slowly recovering gas prices is likely to keep operators cautious about their near-term plans for capex and drilling activity through 2013. With growth and pricing constrained, operators and OFS firms alike are expected to focus on margin/share improvement, selective acquisitions/divestitures, and new market opportunities.

The hydrocarbon processing industry is changing, said Mark Peters of Oil and Gas Financial Journal, in large part because of what he termed the “golden age” of gas. Peters said that, if the U.S. is allowed to develop offshore resources and shale and Canada develops the oil sands as it should, the U.S. could reach fundamental energy resource independence within 5 to 7 years. Reasonable energy prices should see the development of additional U.S. manufacturing capacity and a resurgence in domestic manufacturing. “Gas has great potential that we know how to use, and it has the capability to impact everything in the U.S. in manufacturing and in the petrochemical industry,” he said.

Stuart Kemp, Assistant General Counsel at Halliburton Energy Services, is one of the voices urging responsible development of unconventional natural gas. He advised that, despite popular wisdom to the contrary, there has never been one confirmed instance of any groundwater contamination anywhere in the world resulting from the process of hydraulically fracturing shale rock.

At the 2011 market outlook meeting, Tom Decker, vice president and Mid-Atlantic area manager of Brown and Caldwell noted, the forecast was basically flat, equipment was down and construction sank about 10% in the water and wastewater sector. However, things are looking up for the next year, as environmental regulations and the crumbling infrastructure in developed nations will require spending on repairs and retrofits. The real growth in the sector, however, is internationally, where the population is moving into mega cities that require huge fresh and wastewater systems.

Kate Kunkel is Senior Editor of Valve Magazine. You may reach her at kkunkel@vma.org