Seeing Opportunity in the Boiler-Industry Challenges of 2007

I am pleased to report that 2006 was a very good year for the boiler industry. Sales in most segments were in respectable double digits and, as of early December, ABMA sales of watertube boilers were enjoying a triple-digit increase over 2005 sales.

The drivers of these increased sales appear to have been:

  • Efforts to extract as much productivity from existing plants as possible.
  • The search for greater efficiency in times of unstable fuel prices.
  • Strides toward fuel flexibility.
  • The lessening of natural-gas pressures.
  • The construction of ethanol and biodiesel plants.
  • Industrial Boiler MACT decisions.
  • The continued development of coal-fired central-station plants.
  • Ongoing environmental retrofits.
The words "challenges" and "opportunities" often are used to differentiate between the positives and negatives likely to affect markets. In the case of the boiler industry, our challenges in 2007 also are our opportunities. Some of them are:
  • Global uncertainty associated with geopolitical upheavals in the Middle East and Far East.
  • Even greater pressures exerted by global competitiveness, a move away from routinely approved trade treaties by a wary U.S. Congress, fewer U.S. tax incentives to relocate overseas, and more attention to labor and environmental criteria in multilateral trade treaties.
  • Unstable energy costs.
  • Cataclysmic shortages of qualified engineering, skilled-labor, and field-construction personnel, combined with volatility in raw-materials availability and cost.
  • Persistent patchwork emissions regulations at the local, state, and regional levels as local jurisdictions act to wrestle leadership from an inactive federal government.
  • The courts activating and reinterpreting laws to cover gaps as the federal government acts to nail down national climate-change legislative and regulatory policies.
  • An aging boiler fleet demanding efficient operation and timely maintenance balanced against new boiler systems offering immediate and exponential savings in efficiency and lower emissions.
  • Precarious policies on natural-gas-supply exploration, the importation of LNG, electricity-grid replacement, and railroad construction and maintenance.
  • The evolution of the "green buildings" market and a subtle shift away from first-cost/quick-payback issues to greater equipment durability, sustainability, low maintenance, and operational flexibility.
  • The increasing role of instrumentation and controls in ensuring efficiency of operation and maintenance, as well as formal certification programs for equipment installers and operators.
  • The need to promote the boiler and combustion-equipment industry as relevant and innovatively responsive to power and hot-water needs. ABMA will work very hard in the coming year to fulfill its commitment to protect and enhance the growth, profitability, and stature of our diverse industry and maximize all members' competitiveness.

An intense bipartisan desire for cooperation and "results" will make for a busy 2007 before inertia and gridlock set in leading up to the November 2008 elections. After some initial legislative efforts to set in concrete some Democratic election promises, energy and environmental issues—including conservation, clean-coal technologies, industrial gasification, renewable and opportunity fuels, and ultra-high-efficiency combustion equipment—will be at the top of the U.S. Congressional agenda. All that we can hope for is some semblance of certainty on which this industry and its customers can base their decision-making. Posturing, tests of strength, and continued Pyrrhic legislative victories will result in the same type of do-nothing Congress as the one just retired and do nothing to burnish an outgoing White House legacy. We have our work cut out for ourselves.

In the meantime, from the members, officers, and staff of ABMA, best wishes for the happiest and most prosperous of new years.

Randy Rawson
American Boiler Manufacturers

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