Jobs go at Grundfos and KSB but valves sales in all sectors and water industry pump orders stay strong.
Is the heat going out of the global pump market? Third quarter figures released by some of the world’s largest pumps and valves manufacturers are not looking as healthy as many would like.
Grundfos has recently announced that it will be letting 405 employees go and already KSB Group has reduced its global workforce by 129.
The one bright spot for pumps manufacturers seems to be the global water industry.
“If we don’t turn things around, it can erode our financial strength…as well as our global competitiveness
Grundfos CEO Mads Nipper
Despite an €88.8 million (£70m) annual sales revenue fall and having to make job cuts, KSB is taking a positive view on the current state of the global pumps and valves market.
The group recorded an order intake between January and September 2014 improved by €73.3 million to €1,750 million compared with the same period last year.
Without currency translation effects, this growth would have been about €60 million higher.
The increase in orders was primarily attributable to the pump business. In a continuing weak economic environment, KSB says that the global market for pumps has revived in some areas.
Water and wastewater management, industrial plant engineering and energy supply utilities project business showed a positive trend and grew slightly in the first nine months of the year, but with continued high pressure on prices.
Due to the longer delivery times for major projects, the partially improved order situation is not yet reflected in the sales revenue.
Order intake for valves also developed positively and is expected to exceed 2013’s €2,241 million thanks to a major power plant order and purchase orders for liquefied gas valves.
For Xylem, the global water industry also remains a rich source of business.
Third quarter orders exceeded $1 billion (£636m), growing 8% year-on-year. Sales revenue was up by 1% organically to $963 million (£616m).
The company water infrastructure segment, which consists of businesses serving clean water, delivery wastewater transport and treatment, dewatering and analytical instrumentation achieved revenues of $362 million (£231.5m) in the third quarter.
Applied Water, which comprises businesses in residential and commercial building services and industrial and agricultural applications, achieved sales of $362 million (£231.5m), also up 1% on the same period in 2013.
Things look less rosy elsewhere in the global pumps market.
In comparison to KSB, Sulzer’s order intake for the first nine months of 2014 decreased by 3.8% to CHF 2,307 million (€1,915 million) compared with the same period in 2013.
For the full year 2014, adjusted order intake of pump equipment is expected to decrease slightly and Chemtech is forecast to remain flat due to fewer large projects compared with the previous year.
This is particularly the case in the oil & gas industry, where projects are being delayed due to great scrutiny of capital costs by the major oil companies.
Meanwhile, Danish pump manufacturer Grundfos will be letting go of 405 employees worldwide.
Mads Nipper, the company’s chief executive has been reported as saying that Grundfos is growing, but not fast enough.
“Sales don’t meet our ambitions for 2014 and our income has been falling the past years,” Nipper told the Danish press.
“One of our key values is independence, and we want freedom to finance our growth and make decisions about potential investments without having to borrow money.”
The pump market went from growing rapidly to almost stagnating following the financial crisis, he said.
“If we don’t turn things around, it can erode our financial strength…as well as our global competitiveness,” says Nipper.
With a turnover of 23.3 billion kroner (£2.48bn) last year, Grundfos is in the top 25 of Denmark’s biggest companies. In the first two quarters of this year the company made a loss of 301 million kroner.
Without doubt, there are challenges ahead for pump manufacturers as demand stalls.
Where valves are concerned the picture looks brighter.
The surge in the oil and gas industry in the US is stimulating growth as is the gas market in Eastern Europe.
There is also growth in Europe’s food, chemicals and pharmaceuticals industries and several manufacturers have announced major deals in Africa, the Middle East and Asia in recent months.
Making longer term prediction for the valves industry may prove difficult, given the drop in crude oil prices and reduction in refining capacity in Europe.
Whether this will put a hold on planned developments in emerging economies is open to debate.