Chapter 3 - Industry issues

Abstract

This chapter highlights a number of issues faced by the valve industry. Mergers and acquisitions continue to be a major factor affecting the industrial valve market. These acquisitions have led to the major companies further extending their product ranges and customer base, with some increasing their global spread. As an alternative to a merger, a group of European medium-sized, owner-operated manufacturers of industrial valves formed the “European Valve Alliance” in March 2002. Mergers, acquisitions, and globalization are also an increasing feature of the major valve end-user industries. This is leading to a reduction in the customer base and is frequently associated, in the case of multinationals, with a consolidation of their procurement arrangements and, in a number of cases, the establishment of worldwide alliances with valve manufacturers. The valve industry has become much more price and cost sensitive. This trend is enforced as the large users reduce the list of their preferred suppliers to reduce the costs of tendering exercises and increasingly require discounts. In an effort to increase competitiveness, valve manufacturers are aggressively targeting cost savings. Lean enterprise programs and the use of Six Sigma tools are widespread as companies seek to reduce waste and improve consistency and reduce cycle time.