Spun-off from SPX Corporation in September 2015, SPX Flow, Inc. was formed to pursue a more flow-focused strategy and capitalise on the organisation's strengths for the global food and beverage, power and energy and industrial markets. SPX first acquired a flow-related business, Lightnin Mixers, in 1998 through the merger with General Signal. Three more companies joined in 2001 – Waukesha Cherry-Burrell pumps and valves, Brann+Luebbe metering and dosing pumps and Dollinger filtration products – in the acquisition of United Dominion Industries. There were further smaller acquisitions of Copes Vulcan, M&J Valve, Hankison and Johnson Pump, and all the businesses were consolidated under a single management team. By 2007 the flow business had grown to annual revenues of more than $1 billion and the company focused on specific end-markets – process equipment for food and beverage, air treatment products and pumps, and flow control products for the power and energy markets.
Leading supplier to the dairy and food industry APV was acquired in 2007, while the purchase of ClydeUnion Pumps in 2011 significantly expanded the global reach of the company in the power and energy industry. ClydeUnion had been formed through the combination of Clyde Pumps and Union Pumps, Clyde Pumps having previously acquired the Weir Pumps business in 2007. With the ClydeUnion acquisition, the final product lines of SPX Flow were greatly increased and include critical pressure pumps, metering systems, dosing pumps, speciality valves and valve closures, chemical injection skids, filtration and air dehydration equipment. The Power and Energy division of SPX Flow now serves the oil and gas industry, nuclear and other conventional power industries.
Nuclear developments in China
One of the major growth areas for SPX Flow recently in the power and energy sector has been in the Chinese nuclear industry. As Colin Elcoate, vice-president Business Development, Power of SPX Flow explains, the company's historic strength in the country has been a major building block. “China has been a stronghold for us for some time,” he says. “We had established a good installation base of 300-400 pumps through a wide variety of projects all over the country. Consequently we needed to look at how we serviced these installations. The Chinese nuclear industry is quite a close-knit community, so we decided that the best way was to establish regional meetings where we could meet the engineers and inform them of all the latest advances and upgrades. In this way we have been able to build strong links within the industry.”
However, as the Chinese nuclear industry has developed, a much greater quantity of process equipment has been sourced locally rather than imported. Colin Elcoate explains: “This has occurred through a mixture of the establishment of local companies designing and building their own products and joint ventures with overseas companies, through to companies wholly-owned by overseas producers but with a Chinese manufacturing facility. However, China has big ambitions in the nuclear industry and we are very keen to be a part of it.”
A residual heat removal pump, which is now being delivered to Tian Wan in China.
China has embarked on a transformation of its energy mix. There are currently initiatives to improve the environmental footprint of the coal power generating industry, while the development of gas powered stations are also underway. In addition, there is considerable investment in the renewable energy sector at present. However, nuclear energy is firmly part of this mix and China continues to plan new projects every year.
“China is looking for a balanced portfolio in its energy market, but to meet demand and help address environmental issues nuclear is going to be a huge part of what they do,” says Colin Elcoate. “They also see it as a big opportunity to develop technology for the future and use this expertise in nuclear projects elsewhere in the world. So we are now seeing them coming to the market with new designs for export markets. This presents us with new opportunities because many of the Chinese suppliers do not have a global support network. As a result they are interested in forming partnerships with western companies to meet these export opportunities.
“They are also investing in decommissioning and have established a European office to service this. Having built all these reactors in China, they are ultimately going to face the same decommissioning and clean up issues that the rest of the world does, so they are now investing in that knowledge. They want to grow this capability in Europe, so they can take this back to China when it is required.”
Chinese nuclear expertise now extends across a number of key technologies – small modular rectors, fast breeder reactors to Generation IV reactors. “China has a great many operational reactors right now,” adds Colin Elcoate. “They are gaining experience at a more rapid rate than the rest of the world, because no-one else is building any new facilities. China now has a lot of experienced people in the industry and their capability is fantastic. They have built US, Canadian, Russian and French reactors at home, and have learned from all these experiences.”
SPX Flow is now actively pursuing some of these new opportunities available in the Chinese nuclear industry. “We are seeing three to four new projects a year in China and we have started early engagement in their export projects, for which the timing is still uncertain. However, it is a fascinating dynamic,” says Colin Elcoate.
A large concrete volute pump being installed in China. These pumps are made by ClydeUnion Pumps in Glasgow, UK.
Pump market over-capacity
While the long term future for the Chinese nuclear sector looks good, there have been problems in the local pump industry. Although there are many factors at play, Colin Elcoate believes that between all the western OEMs and local suppliers, there is definitely over-capacity in the pump market at the moment and the Fukushima disaster in Japan was a major factor. “After Fukushima, every nuclear project in the world stopped and the biggest impact was felt in China,” he says. “We managed to continue to service existing power stations undertaking upgrades and safety work, however, new projects have only gradually come back on-line.”
Another major factor has been the fall in the price of oil. As a consequence oil industry investment has been significantly curtailed and this has had an impact on the pump industry. “The thing about the power industry is that it never goes crazy – it just continues growing at 2-3% per year across the globe,” explains Colin Elcoate. “So what has happened in the short term is that pump manufacturers serving both these sectors have refocused their efforts on the power industry and the market has got very competitive. Companies have had to deal with a short term lack of demand and it has been an interesting challenge for everyone.”
Power industry projects
However, the time scale of power industry projects mean that suppliers can ride out economic cycles. “For a nuclear project, from the first conversation to receipt of a purchase order can be five years,” explains Colin Elcoate. “In big oil industry schemes this can be two to three years, while downstream projects may be a year. So we do tend to be on a slightly different economic cycle.” The fall in the price of oil and gas can also provide opportunities in the power generation industry. Colin Elcoate continues: “What has happened in the USA is that gas has become cheap and environmental pressures have placed increased regulations on coal fired power stations. So the shift in the Americas, and the USA in particular, has been towards combined cycle power plants which have been a great opportunity for us. We are seeing 30-40 combined cycle projects a year at present.”
Combined-cycle power plants
A combined-cycle power plant uses both a gas and a steam turbine together to produce up to 50% more electricity from the same fuel than a traditional simple-cycle plant. The waste heat from the gas turbine is routed to the nearby steam turbine, which generates extra power. “The combined cycle power plant is a much simpler product and a smaller order,” says Colin Elcoate. “It is not a standard product and configured to the facility. SPX Flow can offer a broad range of products for these plants and this has put us in good position in this market.”
Colin Elcoate believes that history is firmly on SPX Flow's side when it comes to building strong business partnerships and bidding for pump contracts in the global power generation sector. “The most important thing we have is heritage,” he says. “Everyone in the industry knows that ClydeUnion acquired the former Weir Pumps business, and that Weir Pumps had been in the power industry for 100 years. The one thing that you will always be asked for when submitting a bid is the number of these pumps you have installed around the world.”
As well as a track record in the industry Colin Elcoate adds that SPX Flow offers a wealth of experienced people in the power industry. “We have a proactive sales force,” he explains. “The first look at a particular market is undertaken by business development. They look at global trends and projects coming up. Projects are identified prior to the selection of an EPC (Engineering, Procurement and Construction) company.
For example, for a combined cycle power plant we may identify and contact many of the relevant EPCs, who will request a budget price for pumps as part of the overall bid. When the EPC is selected, firm requests for a quote will be sought and this is where our business development and commercial sales people engaging with the end-user can get involved. We might be able to provide some understanding or contextualise the requirements and see if there is something that we have to offer the EPC or other stakeholders that might make a difference. However, having the resources and personnel to be able to provide long term support is possibly the most important aspect in establishing relationships with the EPC and the end-user.”
Building and maintaining key accounts is also key to being part of a successful bidding process. “With key customers we have three levels of engagement,” explains Colin Elcoate. “Firstly, we have technical people engaged with each other – engineers discussing the latest pump developments. We also hold users’ groups to build relationships and ensure that the end-user is part of the decision-making process and that the pump ultimately meets the specification. Finally, we maintain executive-level contact perhaps once or twice a year. This is where we can discuss how the job has been going outside of the project environment, as well as future collaborations.”
However, managing a project and keeping contact down to the optimum number is also a consideration. “We all need to run a lean workforce,” adds Colin Elcoate. “There will be a lead engineer and lead procurement person, as well as end-user representation. If you are dealing with one office – headquarters or a procurement office – then matters are relatively straightforward. However, for example, if a Spanish EPC has been bidding for a job in Mexico and sourcing parts in India, then you have to juggle this internally.”
Being able to call on experienced people on the ground throughout the world is another area that Colin Elcoate believes SPX Flow is at an advantage. “Local representation is important,” he says. “From initial engagement right through to after-market support, and throughout the life cycle of their project and your product, you have to have someone based locally. They will want a project manager in their own country and when the pump is installed, they will want local engineers doing it. So it is a real advantage if you have people around the world. A lot of the competition in India, South Korea and China have good products, competitively priced and rapid response times, however, they do not have a lot of experienced people elsewhere in the world. In the past we have operated by flying people out from Glasgow to undertake projects around the world. However, those days are now gone. It is a truly global community and people expect you to be on their doorstep.”
Colin Elcoate, vice-president Business Development, Power of SPX Flow.