When asked about business conditions for the next three to six months, pump manufacturers present a dismal forecast: Orders from industrial buyers are slow and pricing is competitive. However, there's plenty of product and manufacturers are continuing to pour money into research and development. Still, if there's a quick pick-up in pump demand—which few suppliers appear to be forecasting—buyers could experience a delay in deliveries because so much of manufacturing operates lean today.

A new report published by The Freedonia Group, Cleveland, shows world demand for fluid-handling pumps increasing 5.8% annually through 2006 to a total of more than $35 billion. By contrast, the forecasters say, "the United States—which has registered healthy increases in pump demand over the past several years—will slow." Demand in the U.S. is expected to grow 4.1% to $7.5 billion in 2005.

The National Fluid Power Association (NFPA), Milwaukee, tracks pump shipments as well. For its part, the organization is starting to see the beginnings of a recovery, after the recent recession. Eric Armstrong, economic and statistics services manager, was on hand at the group's Economic Outlook Conference held recently in Milwaukee. "Demand is starting to flatten out, with hydraulic pumps doing a bit better than pneumatic." Hydraulic pumps use liquids to operate; pneumatic use compressed air or other gases. Sales of pneumatic pumps, he says, tend to trail hydraulic by two to three months during a recession. Hydraulic and pneumatic pumps are just two fluid power products manufactured by members of the NFPA and tracked by Armstrong.

Manufacturers of pumps have an outlook similar to that of Armstrong. "Right now we believe we won't see any real signs of recovery until the first quarter of 2003," says one. Another says that demand is "flat at best. There could even be declines. The market seems day-to-day. The stock market is more of a factor than it's ever been." Some bright (end use market) spots for pump manufacturers: the food industry and municipal water facilities.

According to Freedonia, there are about a thousand manufacturers of fluid-handling pumps in the world, with about 50 of these considered by researchers to be significant. The largest and most technically proficient pump manufacturers are located in the U.S., Germany and Japan, with each shipping more than $2 billion in 2001. Other notable producers include China, France and the United Kingdom, with each shipping more than $1 billion in 2001.

The five top pump producers: ITT, Flowserve, Ebara, Grundfos and KSB account for more than 20% of total world demand. These producers generally offer a range of products, targeted at one or more major market segments. The world pump industry has experienced consolidation over the past decade with some of the less competitive players being squeezed out. Freedonia expects further consolidation.

Examples of recent industry consolidation: The Grundfos Group acquired Arnold AG, specialists in submersible mixers, flowmakers and recirculation pumps. ITT Industries bought the Pure Water Division of Waterlink, Inc., complementing the company's line of ITT Industries Fluid Technology's pumps. IDEX entered into an agreement to acquire Rheodyne, L.P., which will become the company's twelfth standalone business and will be operated as part of its Pump Products Group. And Flowserve purchased the Flow Control division of Invensys.

The beginning of the fourth quarter finds manufacturers with a plentiful supply of all pump types. Reports show leadtimes "improving" to "running good." Results of PURCHASING magazine's recent Business Survey show deliveries of pumps running at about three weeks, slightly improved from a 3.1 reading of one year ago. Thirty-nine percent of survey respondents are taking delivery within one week. Still, pump manufacturers say a quick turnaround in the economy could spell shortages for some pump buyers because "manufacturers and distributors are carrying less inventory. They are running very lean systems," one manufacturer says.

For now, pricing remains "very competitive." Says one manufacturer, "With more supply than demand and everyone going after the same pie, it's a buyers' market. Pricing has been aggressive." Recent DRI-WEFA forecasts show prices barely budging (1.7% annual increase) through the end of this year into next. That's after a period of similarly sluggish prices.

Despite the product's maturity, manufacturers continue to invest in innovation and technology (mainly new materials, product design and performance).