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systems were in the most developed economies: West Germany, Switzerland and Japan.
UK manufacturers were much slower in appreciating the advantages of such systems, so
the market was far smaller than in nearby continental Europe. Companies using such
valves found that though they were individually far more expensive than the traditional
type, they needed fewer of them, and they could achieve more cost efficient management
of the production process.
As a result, this trend in valve engineering looked set to continue. Burke Engineering's
approach to this market had been haphazard. Though there were an estimated 12,500
companies or 'buying' points in the market for tailor made products; and a much larger
number for standard valves from specialist industrial wholesalers (of which there were an
estimated 400 in the industrialised world).
Profit margins for products sold through such outlets were, as might be expected,
significantly lower than for the more sophisticated products, and were generally only viable
for companies with high levels of capital investment in automated production processes.
The average 'smart' valve sold for around €3,000; the motorised valve for around €1,500,
and the traditional valve from €12 for the smallest, to €400 for the largest. Promotion in this
market was largely by advertisements in relevant technical publications, and employing a
highly skilled and technically qualified sales force to service customer requirements for
products built to exact specifications. Sales through the wholesalers were dominated by
those large companies that could achieve economies of scale through high volume
production of a small number of standard valves.
Burke Engineering and General Engineering
The third market in which Burke operated was general engineering and contracting. Most
of this was for the local water authorities, and involved small scale construction of pumping
stations, water and sewage works. Most of this work was carried out by construction
companies, but Burke acted as a subcontractor in manufacturing valves and pipes for
particular applications. Investment in water infrastructure had declined throughout the
United Kingdom following restrictions on government grants both at local and national
level.
With new European Community directives on water quality, such expenditure was bound
to rise as the water companies moved from public to private ownership. It was, however,
unlikely that this would significantly increase the amount of business for Burke, as the
construction companies became steadily more engineering orientated and carried out a
greater proportion of work within the company. However, specialist valve manufacturers
would inevitably see a substantial increase in the level of demand in the short term, and it
was possible that Burke could benefit from such developments.
There were no available estimates for the volume of such general engineering work either
in the United Kingdom or overseas. All the evidence tended to support the view that major
companies were gaining a greater share of business, and that though the market was
profitable for these companies, it was becoming increasingly less so for the
subcontractors, a similar position to the submersible sector.
Competitive Environment - the Submersible Sector
Three main types of company operated in the submersible sector. Submarine
manufacturers were major competitors within their own national markets but, because of
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