The new ARC Advisory Group study, driven by strong project activity, concluded that the worldwide control valve market experienced double-digit growth in 2006. The worldwide market for control valves is expected to grow at a compounded annual growth rate (CAGR) exceeding 5% over the next five years. The market, which approached $4 billion in 2006, is forecasted to exceed $5 billion in 2011.
The global control valve market is in the midst of a phase of unprecedented growth due to booming greenfield plants in developing countries and exploding investment in oil and gas exploration and production. “Much of the growth in the forecasted period will occur over the next two years as new construction projects in Asia soar and the oil and gas market boom continues. Following this increase, ARC Advisory Group expects a short-term dip in global control valve sales as the period of breakneck growth comes to an end. Long-term, year-on-year growth is then expected to taper to traditional levels,” says Senior Analyst David Clayton, the principal author of ARC’s “Control Valve Worldwide Outlook.”
Other results of the study indicate that effectively meeting global customer demand with reasonable lead times requires significant planning and investment as strong demand for control valves strains many suppliers’ manufacturing capacities. Protecting needed capacity and lead times require establishing long-term agreements with foundries across the globe. Ensuring strong global delivery and service capabilities require investing heavily in manufacturing and project engineering capabilities throughout the world, with a particular focus in high-growth future markets, such as China, India, Dubai, Saudi Arabia and Russia. Those suppliers who chose not to make these necessary investments were unprepared for the recent spike in demand.
Many of the leading control valve suppliers are adding wireless connectivity to their digital positioner products, because wireless not only allows manufacturers to connect valves to their systems, but also serves as a justification for them to replace older pneumatic positioners with digital devices. Control valve suppliers are increasingly collaborating with manufacturers and wireless standards bodies, such as SP100 and the Wireless HART initiative, to develop standards-based wireless digital positioners that fulfill customer needs and expectations.
Finally, though China still represents significant growth opportunities, the Middle East has quickly become the regional market offering control valve suppliers the greatest growth potential. There are signs that China is slowing construction of new manufacturing plants to keep its economy from overheating. Foreign investment in China is also tapering off, as cheap labor—arguably one of China’s most attractive attributes—and land have become more expensive due to the country’s booming economy. On the other side, suppliers can expect increasing growth opportunities in the Middle East due to its high concentration of oil and gas activities.