Table of Contents

Executive Summary

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TABLE OF CONTENTS

EXECUTIVE SUMMARY INTRODUCTION Definitions Economic Background Political Climate Interest Rates Inflation

Exchange Rates Taxation

Household Income and Consumer Expenditure Output

Investment

Forecasts

Methodology

Exchange Rates

Abbreviations

MARKET SIZE

Market Overview and Trends, 1994-1998 Market Segmentation

Factors Affecting Demand

Forecast Segmentation, 1999-2003 PRODUCTION

Overview

Critical Success Factors

INTERNATIONAL TRADE

Imports

Implications for Importers

Exports

Trade Surplus/Deficit

DISTRIBUTION

INDUSTRY STRUCTURE

Overview

Company Profiles

Asco Joucomatic (formerly Fisher Gulde)

Alfa Laval Saunders (formerly Saunders Valve Company) British Engines (BEL Valves)

Crane

Fisher-Rosemount

Goodwin International

Hopkinsons (part of The Weir Group)

IMI Bailey Birkett

Kent Introl

Keystone Valve (UK)

Neles Automation (formerly Neles Controls) Spirax-Sarco

END USERS

Chemical Industry

Construction

Electricity Generation

Food and Drink Processing

Gas Supply

Oil and Gas Production

Pulp and Paper Industry

Water Industry

MAGAZINES

TRADE ASSOCIATIONS

LIST OF TABLES

1. Economic Indicators On The UK Economy, 1992-2000 2. The UK Market For Valves, 1994-1998

3. The UK Market For Valves, By Type, 1994-1998

4. Proportional Importance Of The Different Products In The UK Market For Valves, By Type, 1994-1998

5. Forecast UK Market For Valves, 1999-2003

6. Forecast UK Market Segmentation for Valves, By Type, 1999-2003

7. UK Production Of Valves, 1994-1998

8. UK Production Of Valves, By Type, 1994-1998

9. UK Imports of Valves, 1994-1998

10. UK Value Imports Of Valves, By Country Of Consignment, 1994-1998

11. UK Volume Imports Of Valves, By Country Of Consignment, 1994-1998

12. UK Imports Of Valves, By Type, 1994-1998

13. UK Exports Of Valves, 1994-1998

14. UK Exports Of Valves, By Country Of Destination, 1994-1998 47

15. UK Exports Of Valves, By Type, 1994-1998

16. UK Trade Surplus (Deficit) Of Valves, By Type, 1994-1998 17. Financial Summary Of Asco Joucomatic, 1997 And 1998

18. Turnover Of Asco Joucomatic, By Geographical Region, 1997 And 1998

19. Financial Summary Of Alfa Laval Saunders, 1993-1997

20. Turnover Of Alfa Laval Saunders, By Product, 1997

21. Financial Summary Of British Engines, 1994-1998

22. Turnover Of British Engines, By Geographical Region, 1994-1998

23. Financial Summary Of Crane, 1993-1997

24. Financial Summary Of Fisher-Rosemount, 1994-1998

25. Turnover Of Fisher-Rosemount, By Geographical Region, 1994-1998

26. Financial Summary Of Goodwin International, 1994-1998

27. Turnover Of Goodwin International, By Geographical Region, 1994-1998

28. Financial Summary Of The Weir Group, 1994-1998

29. Turnover Of The Weir Group, By Geographical Region, 1998 30. Financial Summary Of Hopkinsons, 1993-1997

31. Financial Summary Of IMI Bailey Birkett, 1993-1997

32. Turnover Of IMI Bailey Birkett, By Geographical Region, 1993-1997

33. Financial Summary Of Kent Introl, 1993-1997

34. Turnover Of Kent Introl, By Geographic Region, 1993-1997 35. Financial Summary Of Tyco International, 1994-1998

36. Net Sales Of Tyco International, By Division, 1997 and 1998

37. Financial Summary Of Keystone Valve (UK), 1993-1997

38. Turnover Of Keystone Valve (UK), By Geographical Region, 1993-1997

39. Financial Summary Of Neles Controls, 1993-1997

40. Turnover Of Neles Controls, By Geographic Region, 1993-1997

41. Financial Summary Of Spirax-Sarco, 1993-1997

42. UK Capital Expenditure By The Chemical Industry, 1994-1998 90

43. Capital Expenditure By The UK Chemical Industry, By Purpose Of Investment, 1994-1998

44. Proportional Importance Of Capital Expenditure By The Chemical Industry, By Type Of Investment, 1994-1998

45. Capital Expenditure By The UK Chemical Industry, By Sector, 1994-1998

46. Proportional Importance Of Capital Expenditure By The UK Chemical Industry, By Sector, 1994-1998

47. Capital Expenditure By The UK Chemical Industry, By Region, 1997 And 1998

48. Forecast Capital Expenditure By The Chemical Industry, 1999-2003

49. Total Construction Output In Great Britain, By Sector, 1994-1998

50. Forecast Construction Output In Great Britain, By Sector, 1999-2003

51. Housing Starts And Completions In Great Britain, By Sector, 1994-2000

52. UK Capital Expenditure In The Electricity Generation Industry, 1994-1998

53. UK Electricity Generated, By Type Of Plant, 1994-1998109 54. UK Capital Expenditure By The Electricity Generation Industry, By Company, 1994-1998

55. Forecast UK Capital Expenditure By The Electricity Generation Industry, 1999-2003

56. UK Capital Expenditure By The Food & Drink Processing Industry, 1994-1998

57. UK Investment In Food And Drink Process Plant, By Sector, 1994-1998

58. Forecast UK Capital Expenditure By The Food & Drink Processing Industry, 1999-2003

59. UK Capital Expenditure By The Gas Supply Industry, 1994-1998

60. Market Share of British Gas Trading (BGT) In The 2 500+ Therms Per Year Market, By Market Sector, 1997

61. UK Process Plant Expenditure By The Gas Supply Industry, 1994-1998

62. Forecast UK Capital Expenditure By The Gas Supply Industry, 1999-2003

63. Capital Expenditure By The UK Oil & Gas Production Industry, 1994-1998

64. Capital Expenditure By The UK Oil & Gas Production Industry, By Type Of Equipment, 1994-1998

65. Proportional Importance Of Capital Expenditure By The UK Oil & Gas Production Industry, By Type Of Equipment, 1994-1998 131

66. Forecast Capital Expenditure By The UK Oil & Gas Production Industry, 1999-2003

67. UK Paper And Board Market, 1994-1998

68. UK Paper And Board Industry's Consumption Of Waste Paper, 1993-1997

69. Forecast UK Paper And Board Market, 1999-2003

70. Forecast Segmentation Of The UK Paper And Board Market, 1999-2003

71. Capital Investment In The UK Paper And Board Industry, 1994-1998

72. Capital Expenditure In The UK Paper And Board Industry, By Type Of Project, 1998

73. Total UK Paper And Board Industry Investment, By Product Type, 1994-1998

74. UK Paper And Board Industry Investment, By Product Type, 1994-1998

75. UK Capital Expenditure By The Water Industry, 1994-1998143 76. UK Capital Expenditure By The Water Industry, By Region, 1994-1998

77. UK Capital Expenditure By Water Service Companies, By

Company, 1994-1998

78. Forecast UK Capital Expenditure By The Water Industry, 1999-2003

79. Forecast UK Capital Expenditure By The Water Industry, By

Region, 1999-2003

LIST OF DIAGRAMS

1. Turnover of Alfa Laval Saunders, By Geographical Area, 1997 57

2. Turnover of Alfa Laval Saunders, By End User Industry, 1997 61

3. UK Process Plant Expenditure By The Chemical Industry Compared With The Industry Total, 1994-2002

4. UK Process Plant Expenditure By The Electricity Generation Industry Compared With The Industry Total, 1994-2003

5. UK Process Plant Expenditure By The Oil & Gas Production Industry Compared With The Industry Total, 1994-2003

6. UK Process Plant Expenditure By The Water Industry Compared With The Industry Total, 1994-2003

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EXECUTIVE SUMMARY

The UK market for valves is estimated to have increased by 1 percent during 1998 to a value of ?781.1 million (euro1115.9 million) at msp. However, in real terms this represented a marginal decrease in demand reflecting low levels of investment in several important end user industries and the maturity of the UK valves market. Demand for valves is growing rather slowly, as very few end user industries have increased their demand for new valves beyond the annual average replacement rate.

MSI estimate that some 20 percent of the UK market for valves was accounted for by valves used in conjunction with pneumatic and hydraulic equipment in 1998, making it the largest sector of the UK valves market during the year. The sector had an estimated value of ?152.4 million (euro217.7 million) at msp.

MSI forecast negligible growth in the UK market for valves in real terms during 1999. The market is expected to decline by 3 percent in 2000 as capital and plant investment, particularly in the oil & gas and chemical industries, is reduced. Modest growth is forecast during the remainder of the forecast period as improving market conditions for many end users and increasing demand for digital "smart" valve systems are countered with uncertainty over the timing and effects of the UK's entry into the euro. Indeed, the total UK market is forecast to increase by just 1 percent between 1999 and 2003, reflecting the increasingly difficult trading conditions facing both valve manufacturers and end user industries and the maturity of the valves market.

MSI estimate that the production of valves in the UK increased by some 15 percent between 1994 and 1998 to reach a value of ?860.5 million (euro1229.3 million) despite a 4 percent decrease during 1987. However, in real terms output declined during the review period as domestic demand from end users contracted. The increasing importance of imports in the UK valves market continued to suppress prices among UK producers, which impacted upon the total value of output in each year.

The level of UK imports of valves is believed to have increased by 20 percent to ?760.8 million (euro1135.5 million) at cif between 1994 and 1997, reflecting growth in the UK economy and increases in manufacturing production. Trade sources report that the increase in imports entering the UK was mainly due to manufacturers in other countries actively targeting the UK market. This led to growing demand for valves amongst UK based end users. MSI believe that this was exacerbated during the latter half of the review period as the high value of Sterling increased the price competitiveness of imported goods and European manufacturers sought relief from depressed home markets. However, in 1998 imports declined by a marginal 2 percent.

The level of UK exports of valves increased by some 28 percent between 1994 and 1998 to reach a value of ?822.8 million (euro1175.4 million) at fob, despite a 3 percent decline in exports during 1998. This decline is believed to have been due to the strength of Sterling and economic turmoil in important export markets in the Far East and South America. The development of export markets has become of paramount importance to UK valve manufacturers during the 1990s as a means of countering steadily declining demand among UK based end users.

Sales by distributors are usually of standardised valves and accounted for an estimated 53 percent of total UK sales. An estimated 35 percent of the UK valve market in 1988 is thought to have been accounted for by direct sales. The balance comprised valves supplied by OEMs and contractors.

The late 1990s have been a period of heightened merger and acquisitional activity in the UK valve industry, and many smaller specialist companies are now subsidiaries of larger multinational organisations. An example of this is Charles Winn (Valves), which was acquired by Tyco International in April 1998.

Text © 1999 MSI

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