Creative suppliers can turn marketplace challenges into business opportunities.
Suppliers of FRP pipes and tanks agree that the past year has been comparatively slow when it comes to new projects. Few of the major industrial manufacturers who so often demand composite-lined tanks or FRP pipes seem to be undertaking new construction, and in some market segments replacements are slow as well. But a number of indicators suggest that now is the time for fabricators to focus attention on educating end users across several industries about the benefits of FRP compared to alternative materials, as business stands poised to pick up.
A 2015 report from Research and Markets forecasts a modest 3.1 percent increase in the global FRP pipe market from 2015 to 2020. Demand in certain industries – including water/wastewater, chemical/industrial and onshore oil and gas – is expected to drive this growth.
For the optimistic, every challenge presents an opportunity. Fabricators facing the five challenges listed below may find themselves well-situated for opportunities in the coming year.
Challenge #1: Chemical M&A activity has slowed major construction.
Opportunity: Need grows for pipe and tank maintenance and replacements.
“In the chemicals industry, everything has a lifespan,” says John Istre, quality control manager for Resin Systems Inc. in Sulpher, La. That holds true for the pipes currently serving chemical manufacturers. As a result, replacement work is an ongoing need.
In a recent presentation for NACE International, John Busel, vice president of ACMA’s Composites Growth Initiative, noted that in 2014, processing industries, including the chemical industry, saw a direct cost of corrosion as high as $67 billion. It’s one reason that many facilities seem to be focusing on repairs.
Tim Morton, production manager for FiberSystems in Dayton, Ohio, sees this emphasis on repairs versus new construction as a sign of the economic times. “We’re doing replacement fittings or pipes, and the same with tanks,” Morton says. “Not a whole lot of tanks fail, but I have a tremendous amount of work refurbishing tanks.”
For Istre, 2016 has been slow largely as a result of high turnover in the chemical industry. “One of the big things that’s been running the market right now has been the changing of the guard – companies buying out plants,” he says. In fact, A.T. Kearney, a global management consulting firm, notes in its 2016 Chemicals Executive M&A report that a number of megadeals have put 2016 on track as a record year for chemical mergers and acquisitions, potentially twice as high as already-high 2015 levels of activity.