Automatic Controls for Regulating Residential and Commercial Environments and Appliances

SIC 3822

Companies in this industry

Industry report:

Establishments in this industry are primarily engaged in manufacturing temperature and related controls for heating and air-conditioning installations and refrigeration applications, which are electrically, electronically, or pneumatically actuated, and which measure and control variables such as temperature and humidity. Also included are automatic regulators used as components of household appliances. Automatic controls for regulating residential and commercial environments include heating, ventilating, air-conditioning (HVAC) unit controls and building monitoring controls for temperature and humidity modulation. Automatic controls for appliances include oven temperature controls, dryness controls for clothes dryers, controls for gas burners, and refrigeration thermostats and pressure controls. Establishments primarily engaged in manufacturing industrial process controls are classified in SIC 3823: Industrial Instruments for Measurement, Display, and Control of Process Variables; and Related Products; those manufacturing motor control switches are classified in SIC 3625: Relays and Industrial Controls; those manufacturing switches for household appliances are classified in SIC 3643: Current-Carrying Wiring Devices; and those manufacturing appliance timers are classified in SIC 3873: Watches, Clocks, Clockwork Operated Devices, and Parts.

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 first decade of the 2000s had slowed considerably by 2007 and within the next two years came to a virtual halt as the country endured one of the worst economic recessions in decades. According to the U.S. Census Bureau, in 2008 the value of shipments in this industry was approximately $2.9 billion; by 2009 that figure had dropped to $2.4 billion. That year the industry employed 10,646 workers, down from more than 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, were also 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 began to be 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 saved energy and money for department and grocery stores. In these cases, computerized systems were 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 rebounded 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.

In 2008, 313 establishments operated in this industry, and their shipments totaled $3.1 billion, which was an increase over 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 one-fourth of industry shipment values, followed by thermostats, inherent motor protectors, and computerized energy control systems for buildings.

Current Conditions

After suffering from a downturn during the economic recession of the late 2000s, the manufacture of automatic environmental control manufacturing for regulating residential, commercial, and appliance use began to turn the corner toward recovery in 2011. The construction industry was recovering, albeit slowly, which was expected to aid the industry into the middle and later years of the second decade of the twenty-first century. According to the U.S. Bureau of Labor Statistics, output in the overall navigational, measuring, electromedical, and control instruments manufacturing industry, of which this industry was a part, was expected to increase about 3.3 percent annually between 2008 and 2018, resulting in an output of 128.1 billion chained dollars by 2018. Employment was expected to decline minimally, by less than 1 percent per year, during the same time period, with employees in the overall navigational, measuring, electromedical, and control instruments manufacturing industry totaling around 434,400 by 2018. Although the expected decrease in employment from 2008 to 2018 was slight, the industry had already suffered a huge drop of more than 67 percent in employment numbers in the previous ten years.

Industry Leaders

The industry's largest establishment, Honeywell International Inc. of Morristown, New Jersey, reported $33.3 billion in sales in 2010, with a significant portion of that coming from its Automation and Control segment. A global company that employed around 130,000 people and operated in approximately 95 countries, Honeywell generated about half of its revenue outside the United States. Honeywell manufactures products for 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, was another industry leader, with 2010 sales of $24.2 billion. The company employed approximately 127,700 workers that year and operated more than 250 manufacturing plants around the world. About half of company sales came from outside the United States.

America and the World

In the early 2010s, the United States had a trade deficit in the environmental controls industry segment. In 2010, imports in this industry totaled $900 million while exports were valued at brought in $414 million. China was especially important to this industry because it was the world's leading air conditioner manufacturer.

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 "talked" 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.

Many automatic control manufacturers developed control systems that provided networked, web-based systems capable not only of providing facility controls but also of detecting and troubleshooting problems. For example, in 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.

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