Service Industry Machinery, NEC

SIC 3589

Industry report:

Companies in this classification are principally engaged in manufacturing miscellaneous equipment for use in service businesses. Examples of industry products are floor sanding machines, cafeteria food warmers, commercial fryers, sludge processors, sewage treatment equipment, mop wringers, and commercial corn poppers. Household appliances and machinery are classified in 3630: Household Appliances. For more information on the history and structure of U.S. machinery industries, see SIC 3552: Textile Machinery through SIC 3559: Special Industry Machinery, Not Elsewhere Classified.

According to the U.S. Census Bureau, 1,357 establishments operated in this category for part or all of 2004. Industry-wide employment totaled approximately 50,795 workers receiving a payroll of more than $2.2 billion. The industry is extremely fragmented and is dominated by relatively small, specialty manufacturers, with about 82 percent of establishments employing less than 100 workers. The Annual Survey of Manufactures reported that overall shipments for the industry were valued at nearly $11.5 billion in 2005. Additionally, for the overall "all other commercial and service industry machinery manufacturing" category (also including manufacturing categories of automatic vending machines and commercial laundry, dry cleaning, and pressing machines), a combined total of 34,324 employees worked in production in 2004, putting in nearly 69 million hours to earn wages of more than $1.1 billion.

According to data published in the Annual Survey of Manufacturers, there were an estimated 57,598 workers employed within the industry in 2007 before falling to 55,930 workers in 2008. Of the 55,930 workers, 32,779 worked in production some 65.2 million hours compared to nearly 69 million hours in 2004. Wages for both 2007 and 2008 totaled $1.13 billion. Shipment values grew from $12.9 billion in 2007 reaching $13.1 billion in 2008.

The Annual Survey of Manufactures reported the industry was valued at $11.15 billion in 2007, increasing slightly to $11.27 billion in 2008. Commercial cooking and food-warming equipment was responsible for $2.40 billion in 2007 and $2.43 billion in 2008. Commercial and industrial vacuum cleaners, including parts/attachments $501 million in 2007, falling to $496 million in 2008. The miscellaneous machinery products, excluding electrical continued to dominate with shipment valued at $5.85 billion in 2007 and $5.83 billion in 2008. There were an estimated 4,019 establishments in 2009, with California, Florida, and Texas responsible for 30 percent in industry share.

The industry reported 4,019 establishments engaged in manufacturing miscellaneous equipment for use in service businesses with industry-wide employment of 54,417 workers in 2009. The service industry machinery, not elsewhere classified was responsible for 5.6 percent of the overall industry total generating $50.2 million. Manufacturers of industrial water treatment equipment held 25.1 percent of market with shipments that exceeded $1.75 billion. Lastly, Manufacturers of commercial cooking and food warming equipment with a mere 3.2 percent in market share had shipments totaling about $1.3 billion.

Tied as industry leaders for 2005 with sales of $6.6 billion were Graver Water Systems LLC (industrial water treatment equipment) of Cranford, New Jersey, and Prince Castle Inc. of Carol Stream, Illinois (commercial cooking and food warming equipment). These companies were followed by Chemical Methods Associates Inc. of Garden Grove, California, whose 2005 sales totaled $3.3 billion for manufacturing commercial dishwasher equipment.

Graver Water Systems LLC reported revenues of an estimated $5 billion in 2009, down from $6.6 billion in 2005. Although no sales figures were available for Prince Castle Inc., the company reported 345 employees in 2009. New Jersey Chemical Methods Associates Inc. had sales of $4.1 billion in 2009.

The diversity of the industry leaders further demonstrates the fragmentation of the miscellaneous service machine industry. Some of its diverse products include cafeteria equipment, sewer cleaning equipment, water treatment equipment, industrial vacuum cleaners, car washing machinery, janitorial carts, and floor sanding machines.

One of the larger segments of the miscellaneous service machine industry is commercial cooking and food warming equipment, which accounted for about 20 percent of total industry shipment values in 2005. Commercial ranges, deep-fat fryers, griddles, and pressure cookers made up the bulk of that group. Commercial and industrial vacuum cleaners, including parts and attachments, accounted for another 4 percent of the market. The biggest single category was miscellaneous machinery products, which included an array of products ranging from commercial car washing machinery to service industry water heaters. This miscellaneous category alone accounted for half of all industry shipment values in 2005. Of the 1,368 establishments in 2002, California led the group with 195, while Illinois ranked second with 99. However, Florida ranked first with nearly $1.3 billion in shipment values from its 78 establishments.

General industry expansion between 1950 and 1980 resulted in aggregate shipments of more than $2.5 billion by the early 1980s. Steady growth of service industries during the 1980s, particularly food services, resulted in rapid expansion. Sales went from about $2.6 billion in 1983 to $3.4 billion by 1986, and to $4.9 billion by 1990. The 1990s witnessed even more dramatic growth as industry shipments jumped just over 90 percent to $9.3 billion by 1997. As the industry's revenues grew steadily through the 1980s and 1990s, employment bumped from 31,000 in the early 1980s to nearly 57,000 by 1997. However, by 2004 the number of employees dropped by about 11 percent to 50,795. This workforce reduction also has been experienced by the general industry category of "commercial and service industry machinery manufacturing." Some 27,000 positions were lost between 1994 and 2004, and 30,000 additional jobs are projected to be eliminated by 2014, as estimated by the U.S. Department of Labor. Productivity increases and the import of parts from foreign countries were cited as primary causes.

Otherwise, opportunities for most related occupations between 2004 and 2014 were uneven and dependent upon the type of work involved, according to the U.S. Department of Labor. Workers in the general commercial and service industry manufacturing segment maintained the highest average hourly wages of production or nonsupervisory workers in the larger machinery manufacturing industry ($18.36) in 2004. Assembly and fabrication jobs, which account for about 25 percent of the workforce, will likely experience a slight decline. However, engineering positions are in high demand due to the constant need to achieve advances in equipment technology. Professional and management occupations will remain relatively stable, particularly when compared to other machinery manufacturing industries.

Despite U.S. economic malaise in the early 1990s, most service machinery manufacturers performed well into the second half of the decade. Sales of commercial food service equipment, for example, grew 38.4 percent from $1.3 billion in 1992 to $1.8 billion in 1997. Shipments of commercial and industrial vacuum cleaners, including parts and attachments, jumped 66.9 percent from $319.5 million in 1992 to $533.2 million in 1997. For the service industry machinery (not elsewhere classified) in general, shipment values have increased by about 14 percent since 1997, from nearly $9.5 billion to $11.5 billion in 2005. Regardless of this particular industry's growth, the larger "commercial and service industry machinery manufacturing" category is anticipating steady annual losses in output through 2014, according to a 2002 report from the U.S. Department of Labor.

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