PVF Roundtable becomes sector’s focal point

BY MORRIS R. BESCHLOSS

PVF and economic analyst

Tuesday, February 19, 2008, has become a red-letter day in the history of the pipe-valve-fitting sector. It’s the day that the 20-year-old PVF Roundtable graduated to the position of focal point for the fastest-growing element of the world’s flow control industry.

With a record attendance of 180, a superb industry speaker (Dr. Barry Lawrence of the Texas A&M Industrial Distribution School), and a network of outstanding industry executives, the Roundtable reached a new peak -- the ultimate centerpoint of pipe-valve-fitting activity.

The Roundtable owes its eminent status to the following factors:

• The location of its headquarters and its quadrennial meeting place in Houston, Texas, where the plurality of this industry sector’s distribution, specifications, end use, purchasing and contracting is transacted.
• There is no substitute for this location, which encompasses the area between Corpus Christi in the South and Beaumont in the West.
• There is no other industry locus which serves as the meeting point of the shakers and movers of both the upstream and downstream aspects of flow control served by PVF. Upstream defines the source, such as production, while downstream describes end use applications.
• A superb airport, Bush International, provides direct contact with every major airport in the U.S., allowing easy access to the four well-planned meetings scheduled on the third Tuesday in February, May, July and October.
• The May meeting is reserved for the presentation of The Wholesaler’s PVF Hall of Fame. This honors manufacturers and distributors that have set the pace for this fast-growing sector’s enormous success. The PVF economic panel during the asa annual convention is a joint venture of The Wholesaler and the Roundtable.
• Don Caffee, secretary/treasurer, is the man who communicates the organization’s pragmatic growth, founded by Sid Westbrook, partner in one of the nation’s outstanding master distributors. Don has been an industry stalwart and head of ValPers, a personnel search firm, and advisor to potential mergers and acquisition prospects.
• The PVF Roundtable is indispensable to the message that pipe-valve-fittings have graduated to the level of an independent sector, not dependent on integration with plumbing-heating-cooling products -- both of which have a life of their own.

This does not denigrate the fact that a large percentage of PVF products are sold by a distribution system catering to contractors, original equipment manufacturers and the downstream side of flow control systems. However, the Roundtable puts in sharp focus that PVF follows its own star and business cycles.

For instance, the present residential construction sector is in deep recession, while heavy construction and energy development are in the throes of a boom.

One of the most significant examples of this realization is that Ferguson, the nation’s largest purveyor of PHCP/PVF products, has set up a commercial/industrial delineation under Rob Braig, a veteran industry executive.Michael Horner, former president of recently acquired Richmond-based Frischkorn, is ably assisting Braig in integrating other Ferguson PVF distributors into this new matrix. One recent aspect of this new concentration is the maintenance of the acquired names which have a strong, identifiable following. Also of recent vintage is Bill Tavenner, who has been appointed director of the Commercial Business Group, concentrating on the distributor/mechanical contractor relationship.

All distributors and manufacturers active in the PVF sector would be well-served to join up with this dynamic organization. For details, call Don Caffee at 800/364-7171.

Those at all levels of the distribution channel are welcome. Since this is a worldwide organization, origin of manufacture is not an inhibiting factor, as long as certification and specification standards are met.

The Roundtable is supported by all of the PVF industry’s media, and I’m on the Board of Directors. I give the Roundtable two thumbs up!

Coal industry impeded by ‘green’ groups

Coal, which provides one-half of America’s power generating energy supply, is under extreme assault by “environment protection” pressure groups. But having failed to curb the use of coal by invoking fear of global warming, greenhouse gases and co2 emissions, such powerful organizations as Rainforest Action Network have successfully put pressure on the nation’s largest banks.

Although such attempts to throttle the use of coal for purposes of power generation have been attempted repeatedly in the past, the current assault may prove to be the most serious yet, since it entails the cut-off of financing for current and future projects. Three of Wall Street’s biggest investment banks announced early in February that they will make it increasingly difficult for companies to get financing to build coal-fired power plants in the U.S.

Citigroup, Inc., J.P. Morgan Chase & Co. and Morgan Stanley have announced their conclusion that the Environmental Protection Agency will cap greenhouse gas emissions from power plants in the foreseeable future. The banks will require utilities seeking financing for plants in the interim to prove their economic viability under potentially stringent federal caps on carbon dioxide, the main man-made precipitator of greenhouse gases.

This action punctuates the latest fear by the U.S. business community that government emission capping inspired this move’s immediacy, and what could be its ultimate consequences.

This move to restrict financing is the latest obstacle to the utilization of coal, America’s most prevalent power generating commodity. Although providing an enormous component of powering U.S. electric power, it emits large amounts of co2. In response to such financial pressure, the U.S. government recently pulled support for Project Future Gen, that many utilities saw as a step toward burning coal cleanly. The current restrictive standards, which will apply to all but the smallest plants, result from months of negotiations among the three previously listed major banks and some of the biggest U.S. utilities and environmental groups. These standards will put a severe crimp into coal-dependent utilities that haven’t yet factored the future price of co2 emissions into their planning.

The banks are between a rock and a hard place. Already hard-pressed by the current credit crunch, they don’t want to be saddled with debt that implodes because of the imposition of government emission caps. These would require power plants to buy large numbers of extra pollution allowances. Congress is already considering legislation that would force companies whose emissions exceed allowances to buy more from companies that already have more than needed.

Although the big banks deny that environmental groups have pressured them to forego financing to coal-fired plants, it’s a practical certainty that government agencies, in collusion with “Green Group” are attempting to promote the utilization of renewable energy, when building new power plants.

Two environmental groups -- Environmental Defense and Natural Resources Defense Council -- worked with the banks to develop extremely strict standards.

As would be expected, such major utilities as American Electric Power are protesting the confiscatory costs that will have to be factored into their overall expenses. And this is coming at a time when future demand is outstripping supply by two to one. Such a turn of events could foretell brownouts and blackouts later in the decade. Whatever new power is made available will be impacted by inflationary price increases. This is especially true as nuclear power and natural gas availability are not prepared to fill the gap.

With coal in the cross hairs of antagonistic environmental groups, the possibility of coal-to-oil conversions, so prevalent in Canada’s Alberta Province, is not destined to get off the ground. This consigns America’s energy industry to the mercy of biofuels, increasingly proven to be an impotent replacement for crude oil derivatives.

China, which does not have environmental restrictions placed on their coal use, is experiencing severe shortages of that energy source. This could be a major source of income for U.S. exporters if the “Greenies” would be deterred from their attempts to consign 500 million tons of U.S. coal to the trash heap.

Coal’s use and prices have skyrocketed to previously unforeseen levels. Not only China, which builds a new power generating station every four days, but Russia, which exports an increasing amount of its oil, is relying on coal for power generation. The same is true of most other emerging nations that still find coal the most cost-effective and available source for expanding their power generating capability.

Morris R. Beschloss, a 51-year veteran of the pipe, valve and fitting industry, is PVF and economic analyst for The Wholesaler.