In the Air , Water , and Energy markets , specifically with regard to stainless steel , there is a notable difference between sales and cost control analysis . The difference can be seen in how well the analysis is organized and the attention that is paid to detail . The stainless steel achieves Earnings Before Interest , Taxes , Depreciation , and Amortization ( EBITDA ) of 15-20 %, but this percentage could , and should , be 10 points higher .

By Bob McIlvaine , President & Founder – The McIlvaine Company

One of the ways that companies could increase their EBITDA is to devote the same attention to detail on sales as is paid to cost control . Every Approval Workflow Engine ( AWE ) company uses systematic cost analysis and the same should be done with sales .

To do so , companies should gather comprehensive information about each industry niche they are involved with , and then pursue those which will result in high EBITDA ; the goal should be at least a 20 % market share . Millions of statistics need to be maintained , and once the facts are compiled , they need to be assessed and then multiplied by various factors .

Selecting Niches

A salient fact is that there is not a single giant stainless steel market . Hundreds of thousands of niche markets can be aggregated to provide a total . Individual niches worth US $ 94,000 , can be combined like LEGO blocks into various niche combinations .

For example , Flowserve purchased Velan to create the world ’ s 2 nd largest valve company with revenues of close to $ 1 billion and an EBITDA of 15 %. Revenues account for a little over 1 % in a market of mostly industrial process applications . When one adds the small discrete valves and other applications , the market is over USD $ 200 billion / yr . It takes a minimum of at least 20 % market share before an induvial can hope for EBITDA in the 25 to 30 % range . Velan sells double-offset butterfly valves for hydrogen service and is achieving more than 20 % market share in this niche . The goal is to achieve this capability across all pursued niches . IDEX similarly sells pumps , valves , fittings , and related products and achieves 30 % EBIT- DA . The mission statement alludes to the niche focus . The result is a high EBITDA aggregation of niche markets . 1

A company with revenue of USD $ 100 million and 30 % EBITDA would be targeting 50 niches and 500 sub-niches ; it would track thousands of other sub-niches that

Segment

Figure 1 : World valve market .

Revenue $ billions

it elects not to pursue . It would also need to assess the competition and then create value propositions in each niche . These need to be validated by company employees . A Directory of Niche Value Propositions has been prepared as per the index excerpt , see Figure 5 .

Creating Value Propositions

The value propositions of OEMs shape the markets for component suppliers . The MHI breakthrough to reach 99 % CO 2 recovery promises to make small CO 2 recovery systems attractive . Waste to Energy and other smaller CO 2 generators in the UK will have both a pipeline to take the

CO 2 away as well as an efficient way to remove the CO 2

. Relatively high investments

Segments $ Each Description

Total 150 2 75,000,000,000

Process 75 800,000 94,000

Process and Discrete

Basic Valve Report

are required in pumps , valves , compressors , hoses , fittings , and stainless steel . Companies such as Ingersoll Rand and Atlas Copco are creating niches by acquiring companies which make pumps and valves . They can be combined with the compressors into packages .

The Value Proposition summaries are included as per the example ( Figure 6 ) of the MHI CO 2 absorber for bioenergy plants .

Following the lead of the finance department , statistics can be utilized to create very specific guidance for a salesperson . For example , a salesperson for a filter company sells pulse jet valves along with the filters . They also sell hose and couplings for dust discharge are sold along

Figure 2 .

Figure 3 .

Niche Template

14 Stainless Steel World Americas - August 2023 | www . ssw-americas . com