Steam, Gas, and Hydraulic Turbines, and Turbine Generator Set Units

SIC 3511

Companies in this industry

Industry report:

This industry covers establishments primarily engaged in manufacturing steam turbines; hydraulic turbines; gas turbines, except aircraft; and complete steam, gas, and hydraulic turbine generator set units. Also included in this industry are manufacturers of wind and solar powered turbine generators and windmills for generating electric power. Establishments engaged in manufacturing nonautomotive type generators are classified in SIC 3621: Motors and Generators; those manufacturing aircraft turbines are classified in SIC 3724: Aircraft Engines and Engine Parts; and those manufacturing windmill heads and towers for pumping water for agricultural use are classified in SIC 3523: Farm Machinery and Equipment.

Industry Snapshot

According to the U.S. Census Bureau, 24,600 people were employed in the manufacture of turbine and turbine generator set units in the late 2000s. Sixty-three percent of employees were production workers earning an average of $24.20 an hour. The value of industry shipments increased steadily throughout 2000s, from $7.9 billion in 2000 to $9.7 billion in 2008. Wind energy in particular was a major segment by the 2010s.

Background and Development

While early steam engines were reliable generators of electricity, they were big, heavy, inefficient devices. The modern steam turbine was developed in the late nineteenth century to replace them. Westinghouse shipped its first steam turbine in 1897, a few years before rival General Electric. By 1910, the largest steam turbine-generator unit could produce 30,000 kilowatts, compared with just 1,200 kilowatts ten years earlier. By 1940, single turbine units with a capacity of 100,000 kilowatts were in general use. During the 1950s and 1960s, steam turbines continued to dominate an expanding power-generation market, as fossil fuel prices remained low and ever-larger steam turbines were brought on line. In the 1980s, however, additions to the power capacity of utilities slowed because of erratic growth in consumption and the difficult political climate for utilities in many states.

In 1986, General Electric(GE) introduced a new series of advanced gas-fired turbines that turned around its faltering power systems segment. GE's relatively small and inexpensive gas turbines were ideal for utilities seeking to adjust to fluctuating demand by adding capacity selectively. In 1994, operating profits of its power division business reached a record $1.2 billion on $5.9 billion in sales.

Just one year later, however, profits had fallen about one-third, to $770.0 million, due to several factors. Because of design flaws that could lead to cracks, GE had to make one of the biggest and most expensive recalls in the electric power business. In total, 22 GE turbines in the United States and overseas had to be shut down to be fixed; an additional 28 being shipped or installed required retrofitting with new components. GE has also lost some orders to competitors in Asia, including a key contract in China.

In the industry downturn of the 1980s, Westinghouse nearly exited the business, but by the mid-1990s, it was doing better. In 1996, Westinghouse won a coveted partnership with Shanghai Electric Corp. of China. It also landed contracts in April 1996 valued at nearly $300.0 million to build power plants in South Korea and Pakistan. In the late 1990s, the company was joined with TECO Electric and Machinery Co. and later was renamed TECO-Westinghouse Motor Company. By the late 2000s, TECO-Westinghouse had entered the wind turbine industry.

Wind Power.
Small wind turbines were set up in rural areas of the Midwest during the early twentieth century, but power from utilities largely displaced them during the 1930s. As oil prices surged in the 1970s, however, renewable energy resources became popular, and the wind industry was resuscitated. Tax relief was offered for wind farms, and research was greatly expanded. About 14,000 wind turbines were installed between 1980 and 1985, the vast majority of them in California. When oil prices dropped below $20 a barrel and tax incentives were eliminated, however, much of the domestic wind industry collapsed and was not renewed until gas prices skyrocketed again in the 2000s.

In the wind power segment, one of the largest U.S. companies in the late twentieth century was Kenetech of Livermore, California, founded in 1979 as U.S. Windpower. In early 1995, the company seemed to be poised for a turnaround. It made major sales to India and South Wales as well as to Palm Springs and Minnesota. However, a March 1995 decision by the FERC that freed California utilities from the requirement that they buy wind power cost the company contracts worth $945.0 million. Wind power needed this regulatory support because it remained uneconomical, in part because of the short fatigue life (five years) of a wind turbine's major components and their expensive replacement costs. At best, Kenetech could produce power at five cents per hour, compared to three cents per hour for conventional natural gas plants. In the wake of this regulatory change, Kenetech first laid off 115 employees, or about 12 percent of its work force. By June 1996, the company had filed under Chapter 11 of the U.S. Bankruptcy Code.

Nearly all the companies that entered the wind turbine business in the early 1980s--when the industry was in its heyday--had disappeared by the end of the decade. By 1987, only three manufacturers of the larger-scale turbines used by utilities were still in business, and only one was producing turbines in significant numbers. In March 1995, the U.S. wind power industry received a fatal blow: the Federal Energy Regulatory Commission (FERC) overturned a decision that had forced utilities in California--the key U.S. market--to buy wind-generated power. However, by the 2000s, the outlook was much brighter, and overseas demand was on the rise. The European wind power industry was doing well because of the European Union's encouragement of renewable energy resources. China also was looking to wind power as a way of reducing the pollution generated by its utilities.

Due in part to the growth of overseas markets in the late 1990s, the value of industry shipments increased significantly during this time period. Between 1997 and 2000, shipments grew by more than $2 billion, increasing from $5.85 billion in 1997 to $7.95 billion in 2000. The cost of materials jumped from $2.86 billion in 1997 to $4.56 billion in 2000.

Current Conditions

As the United States looked for more environmentally sound and efficient systems to power the country, wind energy became a more viable solution. According to the American Wind Energy Association, a record 10,000 megawatts (MW) of new wind capacity was added in the United States in 2009. This addition brought the total U.S. wind power capacity to 35,600 MW--enough to power 9.7 million homes. Texas accounted for the most total capacity, at 9,405 MW, followed by Iowa (3,670 MW), California (2,723 MW), Washington (1,908 MW), and Oregon (1,821 MW). As of 2009, five states generated more than 5 percent of their electricity needs from wind power: Iowa (14.2 percent), Minnesota (9.4 percent), North Dakota (8.1 percent), Oregon (6.4 percent), and Colorado (5.8 percent). Thirty-six states had utility-scale wind projects in place.

Industry Leaders

GE Energy of Atlanta, Georgia, had 2009 revenues of $37 billion and 85,000 employees. In addition to being a leader in the gas turbine industry, GE had more than 14,000 wind turbines installed worldwide. According to the American Wind Energy Association, GE Energy's 1.5-MW wind turbine accounted for 40 percent of all the new capacity added in the United States in 2009.

Foster Wheeler was founded in 1927 with the merger of the Power Specialty Company and the Wheeler Condenser and Engineering Company. In 2010, the company had 14,729 employees in its two divisions--Global Engineering and Construction Group and The Global Power Group--and offices in 28 countries. The Global Power Group accounted for about 34 percent of total company revenues in 2009. Headquartered in Clinton, New Jersey, the firm had 2009 revenues of $6.8 billion.

Other industry leaders included Cameron International (formerly Cooper Cameron), of Houston, Texas, with 2009 sales of $5.9 billion; Sequa Corp. of New York with sales of $2.25 billion in 2009 (Chromalloy Gas Turbine was its largest business division); Houston-based McDermott International Inc. with 2009 sales of almost $6.2 billion; and Teleflex Inc. of Limerick, Pennsylvania, with 2009 sales of about $1.9 billion.

America and the World

During the early twenty-first century, the turbine market increasingly became international in scope. Major American and European manufacturers strengthened their presence in each other's markets. For example, in 2010, GE joined with Norwegian energy companies Statoil, Lyse, and Gothenburg Energy to research plans to install up to five demonstration wind turbines, four off-shore and one on-shore. The initiatives proposed the installation of four 4.0-megawatt off-shore, direct drive wind turbines and one on-shore direct drive machine. GE also had plans to expand its wind turbine manufacturing and service facilities in the United Kingdom, Germany, and Sweden, and in July 2010, it was awarded a $300 million contract to install gas turbines and services for the Salalah Independent Water & Power Project (IWPP) in the Dhofar region of southern Oman.

Wind energy continued to be a major area of growth into the 2010s. According to a report by Emerging Energy Research (EER), capacity of offshore wind turbines increased from 70 megawatts to 1.5 gigawatts between 2002 and 2010. EER predicted that figure would rise to 45 gigawatts by 2020, with much of the growth occurring in Europe, especially the United Kingdom, which had launched a program for a major expansion of offshore wind energy. In the United States, Texas accounted for almost one-third of the nation's total installed wind capacity.

Research and Technology

Many of the advances in gas turbines in the 2000s had their roots in jet engine technology, as manufacturers adopted techniques perfected for the airlines and the Pentagon for power generation. Older gas turbines have a thermal efficiency of 25 percent--they capture and convert to electricity about one-quarter of the energy value of their fuel--versus a 33 percent thermal efficiency posted by steam turbines. Using the technologies developed for aircraft, however, newer gas turbines reached thermal efficiencies of 40 percent. Other gas turbines achieved even higher efficiency levels through combined cycle generation, in which the turbines use the exhaust gases from the turbine to boil water into steam, which is then used in a steam turbine to generate additional electricity. A variation of this method is to boil water with the exhaust gases and inject some of the steam back into the gas turbine, so it is running on a combination of gases and steam. According to the Gas Turbine Association, by the late 2000s, combined cycle efficiency rates had reached 60 percent.

Assisted by computer designed technology, researchers in the 2000s worked to find ways to produce smaller gas turbines as well as to control emissions that would meet ever-stringent government pollution control measures.

The wind industry also made progress on several fronts that had historically hampered its growth. One major problem for the industry was the variability and intermittent nature of wind. Traditional, fixed-speed wind turbines had a relatively low capacity factor compared with other energy sources because they were not able to take advantage of the full range of wind velocities. Improvements in wind turbine design and technologies, however, allowed finer control of power output at both low and high wind speeds. Other advances, including more accurate weather forecasting, improved methods of picking the best sites for wind farms, and blades that can better cope with the destructive effects of dead insects, contributed to more efficient wind energy production.

GE maintained its position as a top firm in developing cutting-edge technology in the wind turbine industry. The firm's plans to install new wind turbines off the shore of Norway was one example. According to Investment Weekly News, "both initiatives will feature the largest wind turbine in GE's fleet, a 4.0-megawatt machine that includes a 110 meter rotor. GE's 4.0-110 incorporates advanced drive train and control technologies and GE's innovative technology that eliminates the need for gearboxes."

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