The valve manufacturing industry in Canada is heavily dependent on production levels and replacement activity from downstream markets, both of which drive demand for valves. For example, as the chemical, petrochemical and petroleum, water and wastewater systems, power generation and utilities and construction sectors exhibit growth, demand for valves rises. "In 2009, many end users responded to the declining economy by fixing old and outdated valves or by purchasing low-cost valves from global manufacturers,"according to IBISWorld Industry Analyst Sarah Turk. As a result, the industry has contended with mounting competition resulting from an inundation of low-cost, low-quality standardized valves from global manufacturers.

 

Despite increasing competition, valve manufacturing industry has developed a market niche for specialized valves, such as high-quality, customized valves that perform well in corrosive or high temperatures, which have assisted in automating end users' manufacturing production lines. "Furthermore, as the petroleum refining sector exhibited growth during the past five years, demand increased for high-pressure valves with applications in gas drilling and producing, gathering and transporting oil,"says Turk. Additionally, ongoing maintenance, repair and expansion of existing pipelines and refineries, along with other infrastructure, has bolstered demand for valves. As global manufacturing processes became increasingly automated, this trend propped up demand for customized valves.

 

Industry revenue is anticipated to grow at an annualized rate of 2.1% to $1.9 billion during the five years to 2014, including 0.7% growth in 2014, due to strong demand for valves from construction, petroleum refining in addition to water and sewage systems, among other markets. Profit is expected to slightly contract, from 9.0% of industry revenue in 2009 to 8.5% in 2014, as mounting price-based competition from global manufacturers limited the extent to which industry operators could hike up product prices to reflect high input commodity prices and remain competitive.

 

While imports are expected to comprise a larger share of domestic demand, which will cut into growth for the industry, many valve manufacturers will consolidate to cut costs. As a result of lower per-unit costs for increasingly streamlined operations, the valve manufacturing industry will continue to have a market niche for innovative valves with customized applications for end users.