Mechanical Power Transmission Equipment, NEC

SIC 3568

Companies in this industry

Industry report:

The mechanical power transmission equipment, not elsewhere classified, industry comprises companies that manufacture mechanical power transmission equipment and parts for industrial machinery. Products include ball joints, pulleys, bearings, drive chains, sprockets, shafts, couplings, and other parts. Companies that make transmission devices for vehicles and aircraft are covered in SIC 3714: Motor Vehicle Parts and Accessories and SIC 3728: Aircraft Parts and Auxiliary Equipment, Not Elsewhere Classified, respectively.

According to the U.S. Census Bureau, 243 establishments operated in this category for part or all of 2007. Industry-wide employment totaled approximately 16,328 workers receiving a payroll of more than $784 million. Companies in this industry tended to be small to medium in size with about 75 percent employing less than 500 workers. The industry shipped $4.7 billion in 2008, up from a total of $4.24 billion in 2007, and according to the 2006 Annual Survey of Manufactures, shipments for the industry were valued at nearly $3.31 billion in 2006. Additionally, a total of 10,360 employees worked in production in this industry in 2006, slightly less than the 2004 total of 10,525.

Products in this classification are divided into two segments: plain bearings and bushings and mechanical power transmission equipment (excluding speed changers, drives, and gears), with the latter leading the industry with about 80 percent of shipment values in 2002.

Power transmission refers to the transfer of power through mechanical devices. The invention of the steam engine by James Watt in 1765 and the development of the internal combustion engine during the mid-1800s greatly expanded applications for power transmission equipment and played an important role in the Industrial Revolution. The industry realized its greatest growth during the U.S. economic expansion following World War II. By the early 1980s, makers of miscellaneous transmission equipment were shipping about $2 billion in goods annually.

The effects of global competition seriously cut into the profits of U.S. manufacturers during the 1980s. In an effort to sustain profitability, miscellaneous transmission manufacturers increased productivity through automation and restructuring. As real output rose, the industry workforce shrank more than 13 percent during the decade, from more than 27,000 to about 24,000, and dropping to 21,800 in 1992. With the recovery of the economy in the mid-1990s, however, employment figures began to rise. By 1995, industry employment had climbed to 22,700, a 4 percent increase over 1992 figures, although still almost 6 percent below the employment figures at the end of the previous decade.

Industry employment levels were comparable in 1999, with 21,966 workers, but declined more than 27 percent in 2004 to 15,912 workers. Meanwhile, overall wages fell only 14 percent, from about $823 million in 2000 to $705 million in 2004. The overall industrial engine, turbine, and power transmission equipment manufacturing industry suffered a loss of 21,000 positions between 1994 and 2004. From 2004 to 2014, the U.S. Department of Labor projected an additional loss of 15,000 positions.

Despite efficiency gains, a recession in the late 1980s and early 1990s reduced profits for many competitors. Sales dropped about 2.5 percent in 1992 with the industry shipping goods worth $2.4 billion. By 1994 the total value of goods shipped reached $2.79 billion, an increase of 16.4 percent, and in 1995 that total rose to $2.89 billion, a further increase of 3.5 percent. Shipments of $3.25 billion in 1997 represented a jump of 12.5 percent over the industry's showing in 1995.

The mechanical power transmission equipment (not elsewhere classified) manufacturing industry reached more than $3.4 billion in total shipment values in 2000, but by 2004 this number dropped nearly 21 percent to about $2.7 billion.

In 2002 Wisconsin had the highest shipment values, with nearly $420 million, and the highest number of establishments in the industry with 23. Ohio was second, with shipment values of more than $237 million. Texas placed second in number of establishments with 22, and third in shipment values, which totaled nearly $144 million. The U.S. Department of Labor projected small levels of growth in output for the industrial engine, turbine, and power transmission equipment manufacturing industry by 2014.

In 2007 the industry leader was Rockwell Automation Inc. of Milwaukee, Wisconsin, with sales of $5.7 billion and approximately 21,000 employees. Perfection Clutch of Timmonsville, South Carolina, was second with 2005 sales of nearly $5.6 billion and 21,000 employees. Neapco LLC of Pottstown, Pennsylvania, was third with sales of nearly $48.4 million and 525 employees in 2007.

The industry imported some $2 billion in goods from 75 countries in 2008 while exporting $1.5 billion to 158 countries. According to industry statistics, there were an estimated 518 establishments engaged in manufacturing mechanical power transmission equipment and parts for industrial machinery in 2010 with a value of $6.16 billion and industry-wide employment of 22,457 workers. Of the 518 manufacturing plants, 237 or 45.8 percent produced power transmission equipment, not elsewhere classified, with shipments valued at more than $2.7 billion in 2010 and 7,601 workers. The average establishment employed 46 workers who generated about $14.9 million in revenues. California, Texas, and Michigan shared nearly 27 percent of market share, and, Wisconsin, Pennsylvania, and Massachusetts collectively accounted for $4.56 billion in industry shipments.

Other products that fell within this industry classification in 2010 that were high in demand included flexible shafts that generated $350.7 million; shaft couplings, including rigid, flexible, and universal joint, among others, shipped $153 million in goods; plain bearings manufacturers garnered $138.8 million; joints and couplings added $130.6 million; bearings, bushings, and blocks manufacturers were responsible for $128.7 million and producers of clutches, except vehicular, had earnings of $125.7 million.

Rockwell Automation Inc. reported sales totaling $4.857 million in 2010, an increase of 12 percent over some $4.332 million in 2009. The company employed more than 19,000 workers. Perfection Clutch Co. reported $28 million in 2010, while Neapco LLC, the leading supplier to Ford Motor Co., generated $600 million in 2010 with an estimated 2,200 employees.

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