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The 42nd Annual Turbomachinery Symposium and 29th International Pump Users Symposium took place in early October in Houston, Texas. Almost six thousand attendees enjoyed aprogram consisting of short courses, tutorials, technical sessions, discussion groups and 325 exhibits.
The keynote session was opened by Dr. Dara Childs, Director of Texas A&M’s Turbomachinery Laboratory which organizes the event. He introduced Vincent Volpe, Dresser-Rand’s CEO and President, who discussed the hallenges to business due to the cost pressures of short-term commodity price volatility acting against a backdrop of strong long-term demand. He showed bullish energy predictions for the next twenty years, with almost all of the gains coming from markets outside of North America and Europe.
“It is difficult to react to the spikes in commodity prices and sustain an economic model,” said Volpe. “This makes it hard for customers to decide whether a project will be viable or not.”
As a result of this pressure he considers there is a risk of returning to the old days of procurement when bids were submitted according to client specification and contracts largely went to the lowest bidder. Capex was king. This procurement-driven picture was displaced in the late nineties by vendor alliances and a renewed emphasis on lifecycle costs. In other words, Opex became a far more important a factor.
“Unfortunately, Capex is becoming the pre-eminent factor in procurement, which could set the industry back 30 years,” said Volpe. He conceded that price pressure was not going away, so offered a solution of renewed vendor partnerships as well as customer/vendor alliances to break the cycle. But he said this can only be achieved by using technology and stressing total system and package costs (Capex and Opex) rather than individual components. If each vendor engineers its products to integrate well with those it is commonly associated with, overall structural costs can be brought down considerably in a sustainable fashion without the need to squeeze suppliers’ margins.
(The complete version of this story appears in the Nov/Dec issue of Turbomachinery International)