MECHANICAL CONTRACTING e Continued from p 62 | PVF FORECAST |


possibility of one or two being initiated. Storage of residual nuclear waste continues to be a major issue, discouraging its usage in addition to the negatives already cited. • Transportation. The nation’s


automobile and truck users’ saving grace in limiting dependence on foreign oil has been a reduction of 15% from the 21 million barrels usage of gasoline a day, just three years ago. Abetting the supply/demand balance has been the discovery of the largest land-based find in years, the Bakken Belt, which is now in the process of being developed in the Dakotas and Montana. It also extends into neighboring Canadian provinces. This will produce up to one and a half million barrels a day within the next five years, having a major salutary effect on the usage of PVF products domestically. Although the moratorium on deep


64


sea drilling in the Gulf of Mexico has been lifted, the absence of drilling rigs transferred to Brazil’s Petrobas offshore fields makes a return to previous two million barrels a day drilling levels questionable. Whether this production returns to normal depends on the latent hostility that the current Administration harbors against this method of oil recovery. It’s doubtful that the U.S. will


return to six million barrels a day domestically under present circumstances. However, a substantial decrease in highway car and truck traffic will put less demand pressure on U.S. domestic oil storage facilities. With the Canadian oil sands


industry continuing to expand, U.S. companies are being called upon to provide product and expertise, even though an increasing volume of the converted oil product is headed for China, which has invested in rail lines and a port in British Columbia. A U.S. pipeline to deliver product to Oklahoma and Texas-based refineries is still under dispute, due to the need for Environmental Protection Agency clearance. • Ethanol. This has proven to be a


boon to the agricultural sector, as well as to PVF manufacturers who have helped to develop excess facilities in manifesting the conversion process from corn to the gasoline blend. An overblown agricultural subsidy, together with an extra 45 cents a gallon of ethanol federal spiff has made this controversial blend a major factor in adding to otherwise near bankrupt ethanol converters. Massive shipments overseas have kept


demand for this questionable gasoline supplement at an increasingly high level, thanks to U.S. taxpayer support. Despite the major investment by


oil billionaire T. Boone Pickens, natural gas usage for trucks and buses is limited to government and institutional vehicles. Without a centralized infrastructure available for replenishment and support, this would not seem practical for America’s huge driving distances. Electric cars, such as the Chevrolet Volt are in the embryonic stage, but


Of the three major renewable energy innovations — solar, wind and geothermal — only solar seems to have caught on big time. The most successful breakthrough is now occurring in Arizona, Southern California and other potential areas of development, with an excess of annual sunshine.


limited due to America’s vast distances and the frequency of necessary recharging. • Renewable energy. Of the three


major renewable energy innovations — solar, wind and geothermal — only solar seems to have caught on big time. The most successful breakthrough is now occurring in Arizona, Southern California and other potential areas of development, with an excess of annual sunshine. A $6-billion complex of solar


panel manufacturers is now in the process of implementation, in the Greater Palm Springs area, supported by heavy federal subsidies. However, even in Southern California’s Coachella Valley, the successful development of these renewables is only expected to comprise less than 5% of all powering resources utilized by the middle of the 21st century. • Industrial and Commercial


Construction. The traditional mainstay of mechanical contracting will add little to overall PVF sector growth in 2011-12. With occupancy still well below par in most of the country, only healthcare, religious and educational institutions will


provide substantial demand for PVF- oriented new projects. However, repair and maintenance will prove to be well above average, especially in the manufacturing sector. Most companies are upgrading, mechanizing and automating on the shop floor, in order to obviate the need for additional employment in an uncertain regulatory and healthcare environment. This should provide sizable stimulus for PVF manufacturers. The expertise of mechanical contractors has been widely recognized by the upstream and downstream elements of the fossil fuels industry. The current commercial lull has created new horizons for these professionals. • Exports. The export sector,


which has been a major success story in America’s otherwise drooping post- recession recovery, requires a multitude of manufactured supplies, among which are a vast variety of pipe, valves and fittings. This is being stimulated by the need of Southeast Asia, Brazil, Russia and Eastern Europe, which depend on the American brand name for quality and service. This has become especially effective in the greater demands for domestic product, in light of the frequency of failures among imported


products, which have had their share of negative publicity, due to oil spills, fires and other product-related calamities. All in all, these factors should add


up to a reasonably good year for the PVF sector. If the Administration saw fit to launch a nationwide, shovel- ready infrastructural re-development, it could turn out to be a great year. A beneficial factor for domestic


PVF manufacturers is the emergence of increased demand for the industry’s leading brand names; and the ready access of pipe, valves and fittings offered by such manufacturers. Transparency of points of origin and bills of material are also increasingly being requested. With inventories in the


distribution system currently limited to ‘just in time’ quantities, availability has also become an increasingly decisive factor for order placement. This trend is expected to accelerate in 2011 and future years.;


Morris R. Beschloss, a 54-year veteran of the pipe, valve and fitting industry, is PVF and economic analyst emeritus for sister publication The Wholesaler.


phc january 2011 www.phcnews.com


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