Automatic Controls for Regulating Residential and Commercial Environments and Appliances

Industry Snapshot

The primary customers for the products of this industry are equipment and appliance manufacturers, electrical contractors, and large industrial users. The market for environmental controls is principally affected by activity in residential and commercial construction. The boom in housing construction of the late 1990s and early 2000s slowed considerably in the mid-2000s. In 2008, the value of shipments in this industry was approximately $3.1 billion, up from $2.9 billion the previous year. The industry employed approximately 13,387 in 2007, down from over 17,000 in 2002.

Organization and Structure

This industry is composed of two groups: manufacturers of automatic controls used in residential and commercial HVAC units and manufacturers of automatic controls used in household appliances and industrial equipment. Manufacturers of automatic controls for HVAC units primarily distribute their products to suppliers for building construction and contracting firms. For industrial upgrades of HVAC systems, the controls also are sold directly to end users. Manufacturers of automatic controls for household appliances and industrial equipment typically are subsidiaries or divisions of large establishments, where other subsidiaries or divisions of the same establishment use the controls to assemble appliances and equipment.

Background and Development

Major Products
HVAC unit controls are the industry's major product. These controls are produced for residential and commercial buildings and come in a variety of styles to meet industrial needs. Factories using temperature and humidity-sensitive chemicals and materials require highly sophisticated environmental controlling systems. Computerized HVAC monitoring and controlling have made some printing plants more efficient. Such systems provide information for facility operators to electronically monitor HVAC operations from a central location and independently provide cooling and heating of water pumps in ways that save energy.

Another major product line for this industry consists of automatic igniters and thermostats for appliances and equipment. These controls include gas-fired igniters used for water heaters and gas stoves in the food-service industry; thermostats used in office equipment, such as photocopiers; custom-designed thermostats for medical equipment, such as blood analyzers and respiratory humidifiers, and home kitchen appliances.

As environmental control equipment has grown in size and sophistication, basic designs of automatic controls have undergone considerable changes. Heavy wiring and cables have been replaced by hydraulic systems and low-voltage ignition starters. Electrical controls also have been used increasingly for their high sensitivity and fast response capabilities. In laboratories and factories, pneumatic controls used in exhaust and ventilating systems have been replaced by digital controls, which basically are electronic versions of the original pneumatic devices.

Environmental and Energy Concerns.
Concerns about the environment and resulting legislation have helped this industry to grow. Environmental issues created an increased demand for systems that control air quality and conserve energy. In the 1990s, for example, companies in the United States invested significant capital on devices to lower air, water, and solid waste pollution. Factories from a variety of industries are continuing to monitor and control pollution through the purchase and implementation of highly sensitive control systems.

Along with energy conservation, energy management systems (EMS) also have kept this industry active in redesigning and improving their products; energy management systems are computerized control systems implemented mostly by the utility industry, but also by large manufacturers with their own power stations. Automatic controls have been altered and redesigned for energy efficiency to work within these systems and for the HVAC units in the buildings in which they are stored. Computerized energy management systems, on a smaller scale, also are being installed in commercial buildings as a result of the Comprehensive National Energy Policy Act of 1993. These systems combine monitoring and controlling of HVAC units with security, lighting, and fire safety systems.

Hotels, department stores, and grocery stores, all large users of energy, began implementing energy management systems in the 1980s. In hotels, for instance, automatic controls on heating and air-conditioning units are regulated by sensors in individual rooms that detect whether the rooms are occupied; the controls also are linked to the hotel's front desk in order to respond to check-ins and check-outs. For hotel owners, these systems cost an average of $120,000 in 1991, but their energy-cost savings were estimated to be $30,000 annually. Similarly, energy management systems have saved energy and money for department and grocery stores. In these cases, computerized systems are monitored for a chain of stores by a centralized network. According to Steve Thompson of McRae's department stores, "[the] automated system has not only maintained the chain's standards for temperature and humidity, but has also strengthened them."

The industry entered the 1990s experiencing small growth following the decline in construction of residential and commercial buildings. This modest growth, along with small sales margins, limited research and development in new technologies and investment in new facilities. In addition, as a result of the weak economy at the time, many companies chose to upgrade their existing HVAC systems. Upgrading increased commercial repair and maintenance, but sales of new HVAC systems rebounding by the end of the decade.

In the 2000s, the industry was dominated by a few large companies that continued to compete in a saturated market by increasing efficiency in their products, such as improving circulation control, compressor design, and network automation. Products became increasingly standardized, causing companies to differentiate themselves by other means, such as expansion into the global market. Deregulation of electricity was expected to be a significant factor in the HVAC industry's future.

Current Conditions

In 2008, 313 establishments operated in this industry, and their shipments totaled $3.1 billion, which was an increase of the previous two years. In the mid- to late 2000s, controls for major appliances such as refrigerators, freezers, ovens, vending machines, and air conditioners accounted for approximately a quarter of industry shipment values, followed by thermostats, inherent motor protectors, and computerized energy control systems for buildings.

Industry Leaders

The industry's largest establishment, Honeywell reported nearly $36.6 billion in sales in 2008, with $14 billion coming from its Honeywell Automation and Control Solutions (ACS) strategic business group located in Golden Valley, Minnesota. A global company operating in more than 95 countries, Honeywell generates a large percentage of its revenue outside the United States. Honeywell manufactures products for three segments within this industry: homes and buildings, industry, and space and aviation. For homes and buildings, Honeywell makes thermostats, gas valves, and other residential heating and cooling controls. For industry, the company provides HVAC controls and digital control systems for use with computerized energy management systems. The company's space and aviation segment manufactures environmental controls and guidance system controls.

Emerson Electric Company, of St. Louis, Missouri, is another industry leader, with 2008 sales of $24.8 billion. The company employed approximately 140,700 workers that year. About half of company sales came from outside the U.S.

America and the World

In the 2000s, the United States had a trade deficit in the environmental controls industry segment. As of 2008, imports totaled $900 million while exports brought in $476 million. China was especially important to this industry in the mid- to late 2000s, building 60 to 70 percent of all air conditioners worldwide.

Research and Technology

In early 2000, Quantum Group of San Diego, California, announced a carbon monoxide sensor system that was able to detect and respond to small changes of carbon monoxide within seconds, regardless of humidity. A joint venture among emWare, Motorola, GE, Sunbeam, and AT&T produced a system for networking smart, non-PC devices such as home appliances; business products; and security, lighting, and heating systems. At the same time, a similar line of smart appliances was introduced by Sunbeam: these appliances "talk" to each other when plugged in to coordinate tasks. They included a coffeemaker, electric blanket, smoke detector, stand mixer, bathroom scale, alarm clock, and kitchen console.

By the mid-2000s, many automatic control manufacturers were developing control systems that provide networked, Web-based systems capable not only of providing facility controls but also of detecting and troubleshooting problems. For example, in early 2005, Control Products introduced the FA-1-CCA, which could monitor temperature from a remote location. If the temperature drops/rises beyond a certain degree or the power fails, the system automatically calls up to three phone numbers. Temperature and power status also can be checked remotely by telephone. As another example of advancing technology, an increasing number of controllers offered flash memory that stored system settings in case of a power outage. As soon as power is restored, the control automatically resets the system to the previous settings.

In the home market, networking and wireless technology also were making inroads. For example, in 2005, Smarthome Inc. began to market innovative lighting and appliance remote controls. LampLinc II and ApplianceLinc II provide keypad remote control access to lighting and household appliances. The more advanced PowerLinc II is a computer interface that connects to a personal computer via a serial or USB port, which can control lighting, appliances, cooling/heating, and alarm systems.