NEWS RELEASE July 2023
Pursuing the Niche AWE Markets
In the Air, Water, Energy markets there is a notable difference between sales and cost control, it is the organized attention to detail. The AWE Industry achieves EBITDA of 15-20% but should be moving the numbers 10 points higher.
The way to do it is to devote the same attention to detail. Every AWE company uses systematic cost analysis and should do the same with sales.
Another salient fact is that there is no giant market. There are hundreds of thousands of niche markets which can be aggregated to provide a total.
Flowserve just purchased Velan to create the world’s 2nd largest valve company with revenues of close to $1 billion and EBITDA of 15%. Revenues are only a little over 1% in a market of mostly industrial process applications. When you add the small discrete valves and commercial and other applications the market is over $200 billion/yr. It takes a minimum of at least 20% market share before you 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 sells pumps, valves, fittings and related products and is achieving 30% EBITDA. The mission statement alludes to the niche focus.
Companies should gather comprehensive information about each niche and then pursue those which will result in high EBITDA and at least a 20% market share. Millions of statistics need to be maintained. It starts with facts which then are multiplied by factors. 
The end result is a high EBITDA aggregation of niche markets.
A market niche of $10 million with 10 sub niches fits all the criteria as shown below. 
A company with revenue of $100 million and 30% EBITDA would be targeting 50 niches and 500 sub niches. It would also need to track thousands of other sub niches which it elects not to pursue. It also needs 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 following index excerpt.
The Value Proposition summaries are included as per this example of the MHI CO2 absorber for bioenergy plants.
The value propositions of OEMs shape the markets for the component suppliers. The MHI breakthrough to reach 99% CO2 recovery promises to make small CO2 recovery systems attractive. Waste to Energy and other smaller CO2 generators in the UK will have both a pipeline to take the CO2 away as well as an efficient way to remove the CO2. Relatively high investments are required in pumps, valves, compressors, hose, fittings and stainless steel. Companies such as Ingersoll Rand and Atlas Copco are creating niches by acquiring companies which make the pumps and valves. They can be combined with the compressors into packages.
Following the lead of the finance department the statistics can be utilized to create very specific guidance for salesmen. This salesman for a filter company sells pulse jet valves along with the filters. Hose and couplings for dust discharge are sold along with unit collectors. Pumps are sold as part of scrubber systems. The number of days to spend each year in each application is budgeted.
Promotional expenses can be determined the same way. The template allows $100,000 of promotional expense per niche. California represents 3% of the revenue or $30 million. So, the promotional budget would be $1.5 million.
The advertising and exhibition investment should ensure the validation of the value propositions for the sub-niches. The California market will benefit from some combination of local, national, and international promotion. It is likely that $1 million would be allocated to national and international promotion and only $500,000 to strictly local promotion.
Make the CFO happy and emulate finance in the sales program.
For more information on the directory or the Most Profitable Market program contact Bob Mcilvaine at 847 226 2391 or This email address is being protected from spambots. You need JavaScript enabled to view it.
