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5 years, there had been substantial changes in the market. These are shown in Tables 1
and 2 of Appendix A.
The first major change was that submersible technology was becoming more sophisticated
and demanding. It was no longer possible for solid engineering to compete with companies
that could provide the sophisticated technology that could operate at depth. For the market
had changed. First, the easier sites had been worked out and exploration companies were
entering deeper and deeper waters. Secondly, the scope of undersea work had changed
as mineral exploration, communication systems and research became important elements
in the use of undersea submersibles. All these required much greater design flexibility
which Burke could barely provide. As a result, in the submersible market, the company
was generally considered as a subcontractor, and only as lead contractor in supplying
newly industrialising countries (see Tables 3, 6, 7 of Appendix A).
These pressures had the inevitable consequence on profitability from this section of the
business. Burke, because of its historic position in the market, was still well known by the
500 or so customers, throughout the world, who were involved in undersea exploration and
commercial exploitation. The company was still automatically asked to quote for relevant
work.
This market position was strengthened by its presence at the key exhibitions, of which the
Northern Diving Exhibition was the most important in the UK. Though there were
handsome profits at the sophisticated end of the submersible market sector,
subcontracting had steadily become less and less profitable. Burke had concentrated on
servicing the developing world where customers still preferred the complete systems that
the company manufactured.
Burke Engineering and the Valve Market
Fortunately, as the submersible work declined, the company's general engineering and
valve production work increased. Chemical plants, operating at higher temperatures and
pressures, were producing more toxic and corrosive substances which required robust
systems that could cope with such extremes. There were similar problems in nuclear
power, and its popularity had proved a valuable additional market for Burke products.
By the time that you were appointed MD, Burke was experiencing problems with the valve
market. Though it also continued to grow overall, and show considerable increases in
profitability for those companies that could match the growing market demands, other
companies were suffering from a combination of factors.
The first was that the type of valves demanded had started to change. With the increasing
sophistication of the production processes, manufacturers began to require valves that
could be opened or closed under central control, or motorised valves. As microprocessor
technology became cheaper and easier to install, more sophisticated manufacturers
offered 'smart' valves. These could sense changes in concentration and activity in the
piping system, and take the appropriate action to control the process. The market was, as
a result, changing rapidly towards more sophisticated products. The market trends over
the last 5 years is in Table 2 in Appendix A.
The advent of expert systems, the concentration in each industrial sector, and the worries
about safety following such accidents as that at Union Carbide, in Bhopal in India, were
likely to speed up the market growth of such products. The most rapid application of such
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