Storage Batteries

SIC 3691

Companies in this industry

Industry report:

This category is comprised of establishments primarily engaged in manufacturing storage batteries, including alkaline cell storage batteries, rechargeable batteries, lead acid storage batteries, nickel cadmium storage batteries, and other types of storage batteries.

Industry Snapshot

The storage battery industry is driven by industry needs for small, long-lasting, cost-effective storage or rechargeable batteries. Batteries have been named as the limiting factor in the design of products ranging from laptop computers to electric automobiles. They are important in supplying starting and lighting power for conventionally fueled vehicles; supplying emergency power for various applications; for load-leveling or supplying additional power during peak demand as part of electrical utility systems; and as a supplement to solar, wave, or wind power. In the late 2000s and early 2010s, they also were widely used for handheld electronic products such as digital cameras, video cameras, cell phones, and netbooks. Uninterruptible power supply systems, usually designed to combat drops in power for personal computers (PCs), have created a new market for storage batteries.

In all these applications, the main feature of the storage battery is that it can retain energy supplied from an external electrical charge, while the electrochemical reaction within primary batteries cannot be reversed. The value of storage battery industry shipments was $9.9 billion in 2009. The industry sector was fairly evenly split between alkaline cell storage batteries and lead acid batteries. Rechargeable batteries and nickel cadmium storage batteries made up smaller segments of the industry.

Organization and Structure

Approximately 450 major U.S. establishments competed in the storage battery industry in 2009. Of those, nearly 75 percent employed fewer than 50 employees. The overall market was dominated by large manufacturers such as Energizer Holdings and Spectrum Brands, parent company of the Rayovac brand, and by companies specializing in SLI (starting, lighting, and ignition) and industrial storage batteries, such as Exide Corp. and EnerSys Inc. that gained market share through acquisitions of related manufacturers since the earliest days of the industry.

Background and Development

Credit for the invention of the first true storage battery has been given to Gaston Plant, for a lead-acid battery he developed in 1859. It was made of two coiled lead strips separated by a cloth. However, his storage battery required charging by primary cells, a process taking months to years. The introduction of the French "Faure Electric Accumulator" two decades later generated excitement in Europe, Great Britain, and the United States. The vision was for the devices to be delivered to homes and businesses daily, like milk deliveries. Demand for electric, rather than gas, streetlights was strong from the beginning, and electrical lighting in the home gradually became a status symbol. However, similar designs of batteries patented by Faure and American Charles Brush resulted in patent litigation, which paralyzed U.S. storage battery manufacturers for four years.

Electricity was not readily available on a large scale until the 1880s. This gave impetus to the development of storage batteries, used for over 35 years while alternating current systems were developed and perfected. The batteries used were large enough to power more than 2 million homes for an hour. Although AC power began to carry more of the load, storage batteries continued to be used in the operation of electrical switches in power networks. The appearance of "horseless carriages" in the 1890s also fueled demand for storage batteries.

In the early days of the automobile, storage batteries were seriously considered as an alternative to horses and internal combustion engines. Storage batteries powered horseless racing carriages and electric cabs. However, the batteries could not compete in long-distance travel and use declined as roads improved. However, they continued to be well suited for town travel since gasoline vehicles had to be hand-cranked, which was a risky prospect. Storage batteries helped provide a solution for this difficulty, making the electric passenger car obsolete. The first automobile to use an electric starter as standard equipment was the 1912 Cadillac.

The use of electric street trucks continued into the 1930s. By this time, storage batteries powered household appliances, boats, and the first submarines. In World War II they also powered torpedoes, aircraft radios, and commercial broadcast stations. In addition, they were used to power local telephone exchanges and intercontinental repeater stations. Storage batteries excelled in other industrial uses, such as powering electric shuttles in mines and battery-powered trains, which became quite popular in Germany. Golf carts provided an important market for the batteries as well.

The market for automotive, commercial, and industrial storage batteries had long been considered mature and highly competitive by the 1990s. This competition drove many smaller manufacturers out of business as prices fell because of excess capacity. Successful producers of these types of batteries attempted to maximize economies of scale since new technologies were often quite expensive to introduce. Replacement batteries made up over 80 percent of the automotive battery market. An emphasis on technological improvement was most evident with suppliers for military and space programs, electric vehicles, laptop computers and cellular phones, and power management accessories.

Environmental legislation has driven carmakers to develop electric vehicles. Laws were introduced in various states requiring carmakers to sell a certain number of emissionless vehicles. The limiting factor in efforts to create such vehicles was the creation of storage batteries that were light and powerful, yet cost effective. Recycling efforts were another important subject in the storage battery industry because many metals used, such as cadmium, posed health and environmental risks. Recycled metals also form an important part of commodity supplies, particularly recovered lead.

A key indicator of the competitive nature of the storage battery industry in the late 1990s was the Ralston Purina Co.'s decision to spin off its Eveready Battery Co. (now Energizer Holdings) in June 1999. The battery division had experienced hard times. Duracell International Inc., which claimed a 50 percent share of the U.S. battery market, sued Eveready, which claimed a 19 percent market share, over the latter's advertising of superiority for its Energizer batteries. Moreover, Eveready backed out of the rechargeable battery business in the face of stiff competition from Asian battery manufacturers. In November 1999 Ralston Purina finalized the sale of its Energizer Power Systems Original Equipment Manufacturer rechargeable battery business to Tucson-based Moltech Corporation.

Industry shipments grew from $4.25 billion in 1998 to $4.95 billion in 2000. Over the same period, the cost of materials increased from $2.22 billion to $2.58 billion, and employment rose from 21,900 to 23,346 workers. Production workers in 2000 numbered 18,807, earning an average of $15.15 per hour. In 2001, a recession negatively affected the battery industry. Shipment values fell by 16 percent in 2001, to $4.1 billion, and dropped another 17 percent in 2002 to $3.4 billion.

During 2003 the overall economy showed signs of recovery, but the battery industry remained in the doldrums, with shipment values falling slightly to $3.2 billion. Revenues were down across all battery types, except for a small increase in the batteries used in hearing aids. However, by 2004, activity and revenues increased, and the Consumer Electronics Association predicted that the industry would grow approximately 9 percent during 2005.

By the late-2000s, batteries had market penetration of more than 90 percent (compared to toilet paper at 95 percent), and the average U.S. household owned 25 to 30 devices that depended on batteries for full or partial power. Because of the high-drain, advanced technology of many of these devices, especially digital cameras, the industry trend was for high performance, rechargeable batteries. Further, the 10 percent market share held by rechargeable batteries was expected to increase.

Standard alkaline batteries dominated the market with a 70 percent market share. The automotive battery sector remained flat during the mid-2000s due to sluggish auto sales and industry overcapacity. In 2008, the industry reported shipments of nearly $6.3 billion in batteries, up from $5.3 billion the previous year and $4 billion in 2006.

Current Conditions

In 2009, according to Dun and Bradstreet, industry sales totaled $9.9 billion. Industry revenues were concentrated in two sectors: alkaline cell storage batteries and lead acid batteries. Firms that produced alkaline cell storage batteries numbered 49, or 10.9 percent of the industry; these firms employed 2,051 and generated $4 billion in revenues. Firms that produced lead acid batteries totaled 46, or 10.2 percent; these companies employed 5,450 and generated $4.28 billion in revenues. Nearly two-thirds of the industry fell within the general category of storage batteries. These 282 companies, which tended to be smaller in terms of sales, employed 8,422 and generated $880.6 million in revenues. Firms that produced rechargeable batteries numbered 68 firms, 2,617 employees, and $727 million in revenues. Nickel cadmium storage batteries was a smaller portion of the industry, with just four firms, 18 employees, and $1.5 million in revenues.

Because of the infiltration of battery-dependent devices in the marketplace, consumers continued to purchase batteries even during the recession, most notably during 2009. Consumers did tend to purchase cheaper batteries during the economically difficult period. According to a report by the Freedonia Group in 2010, consumers ' use of batteries was expected to grow modestly, by 2 percent annually, through 2012.

However, car battery sales declined due to the decline in U.S. auto sales in 2009, which fell by 20 percent. According to a 2010 Global Industry Analysts report, global demand for lead acid battery fell by 8 percent during 2009. The original manufacturing market was hit the hardest, experiencing a 12 percent decline. The replacement sector experienced a smaller decline, as consumers continued to replace batteries in existing vehicles but did not purchase new vehicles.

One area of anticipated growth was in the need for batteries for hybrid and electric vehicles. Sanyo Electric Co., which produces batteries for both Ford and Honda hybrids, predicted that the hybrid and electric car market would grow to 11 million vehicles by 2021. As a result, the expansion of the nickel-metal hydride and lithium ion battery segments would expand with this increase in vehicle production. Sanyo was poised to scoop up much of this increased demand by increasing capacity as well as purchasing Panasonic Corp., which had a similar contract to supply batteries to Toyota for its hybrid and electric models.

At the same time, however, a study by the Boston Consulting Group in 2010 suggested that without a breakthrough in battery technology, batteries will remain too expensive to produce and thus to sell to generate significant mass market appeal through 2020. In addition, the reports suggests that, save a major breakthrough, batteries will continue to limit driving distance to 160 to 190 miles per a single charge. Even those that are more optimistic about the possibility for battery advancements, particularly among lithium ion batteries, suggest that real improvement is likely a decade away. Roshan Devadoss, an industry analyst with Frost & Sullivan told Chemistry and Industry, "Post 2020 is when we expect the electric vehicle to occupy a significant part of the car market."

Industry Leaders

In the U.S., Exide Technologies of Alpharetta, Georgia, maker of lead acid automotive and industrial batteries, generated $2.7 billion in fiscal 2010, down from $3.3 billion and $3.7 in sales for the fiscal years 2009 and 2008, respectively. Duracell, which was purchased in 1996 by Gillette Co. and in 2010 operated under the umbrella of Procter and Gamble 's portfolio of companies, had a 25 percent share of the global battery market. In fiscal 2010, P&G reported $78.9 billion in revenues. Its household division, which included brands Ace, Ariel, Dawn, Downy, Duracell, Gain, and Tide accounted for 30 percent of company sales.

Energizer Holdings had sales of $4.25 billion for the fiscal year ending September 30, 2009, with approximately 15,500 employees. About one-half of its sales are in the United States, and about 21 percent come from Wal-Mart. Rayovac Corp., which chased Duracell and Energizer, grew from $432 million in sales and 2,300 employees in fiscal 1997 to $1.4 billion in sales and 6,500 employees in fiscal 2004. In 2005, after purchasing United Industries of St. Louis, Missouri, Rayovac, changed its name to Spectrum Brands, which includes a portfolio of other battery and personal care brands, and relocated its headquarters to Atlanta, Georgia. Sales in 2008 were nearly $2.7 billion with 7,000 employees. The company emerged from bankruptcy on August 28, 2009.

Workforce

Despite a global economic downturn in the late 2000s, employment increased from more than 16,696 in 2006 to approximately 19,818 in 2007 before declining to 18,694 in 2009. Declining employment numbers during the early part of the decade reflected the sluggish economy that diminished revenue and limited production during the first years of the 2000s, as well as an ongoing trend for automation, industry consolidation, and movement of facilities overseas. The decline late in the decade reflects a weak economy and a sharper decline in the automotive sector.

America and the World

According to the U.S. Supplier Relations, the value of battery exports in 2008 was $1.6 billion and the value of imports was $2.8 billion, resulting in a trade imbalance of $1.2 billion.

Research and Technology

Most SLI batteries were the lead-acid variety developed in the late nineteenth century. They are an excellent potential power supply for other applications because of their low cost and availability. They also are easy to recycle. Specialized military and aviation-related applications have called for nickel-cadmium cells, which were popularized through portable radios and other consumer devices. Their cost remained prohibitive for automotive use, however, due to the high cost of cadmium. When used in vehicles, they offer somewhat higher performance than lead-acid batteries but are equally as heavy and much more difficult to recycle.

A similar type of battery to the nickel-cadmium, the iron-nickel oxide alkaline battery was invented by Thomas Edison and patented in the United States in 1901, the same year as Jungner's nickel-cadmium battery. Due to poor performance, the iron-nickel oxide batteries did not meet with the same success as the nicads.

Nickel hydrogen batteries were introduced as an alternative to nicads. They possess a greater capacity and boast environmental benefits since they do not contain cadmium. Sanyo Electric was the leader in developing and producing these cells, used in portable telephones, laptop computers, and camcorders, during the early 1990s. Other types of secondary cells invented at the end of the nineteenth century included those utilizing zinc as an electrode. These are used in satellites, military aircraft, submarines, and assorted military equipment. On satellites, they generally are used in conjunction with solar power.

Sony introduced a lithium ion secondary storage battery for use in portable telephones and camcorders. It featured twice the capacity of a hydrogen storage cell and one-third the weight. An innovation among consumer battery manufacturers was announced by Rayovac in 1993: reusable alkaline batteries, a concept traditionally thought unworkable. The company claimed its batteries could hold a charge for up to five years, compared to three months for nicads. In 1993, toy manufacturer SLM International introduced a controversial recharger for ordinary alkaline batteries. In 1994, Duracell Inc. announced its Advanced Battery-Pack Interconnect for nickel-metal-hydride connections, which featured an automatic battery contact cleaner and other refinements. The number of competing designs among manufacturers, in addition to the higher initial cost for rechargeables, seemed to slow this segment's growth.

Nickel-metal-hydride (NiMH) batteries showed great promise in the 1990s for applications involving laptop computers. However, both nickel-cadmium and nickel-metal-hydride (NiMH) batteries deteriorate if they are overcharged. A strategy to combat this has been to install integrated circuits capable of monitoring battery voltage, charge/discharge current, and cell case temperature. Several automobile manufacturers, including General Motors, Honda, and Toyota, gambled that NiMH would become the next generation fuel source for electric vehicles, but by 2010, most attention was still being paid to the lithium ion batteries.

Consumer demand, environmental legislation, and other factors made electric car research a high priority in the last quarter of the twentieth century. Electric utility companies supported research in electric cars, partially to encourage the more consistent use of electricity that would occur from the vehicles being charged during off-peak hours at night. Vehicle traction batteries used to drive vehicles were produced in various configurations. Lead-acid batteries were not powerful enough or light enough for the task.

Other more complex electric vehicle options included hybrid systems involving a battery in addition to an internal combustion engine. The hope was that a practical vehicle of this type would also allow increased efficiency by means such as regenerative braking. Hybrid battery types, including a lead-acid battery for acceleration and a zinc-oxide battery for cruising, were also considered.

During the mid-2000s, the industry continued to push battery technology to keep pace with the needs of the small, high-drain electronics that were popular with consumers, including digital cameras, portable stereos, laptop computers, and mobile phones. To that end, the industry has improved the performance of both high-end disposable and rechargeable batteries. For example, Energizer's e2 Photo lithium battery lasts up to seven times longer in a digital camera than does a regular alkaline battery. The added power meant that the camera could take approximately 600 pictures before replacement, compared to about 80 with normal alkaline batteries. In the mid-2000s, Rayovac introduced a rechargeable NiMH battery and charging system that allowed the battery to be recharged 1,000 times and last four times longer than alkaline AA batteries. Overcoming another barrier, Rayovac's system provided full recharging in just 15 minutes. Methanol-filled fuel cell systems were considered to be the next possible break-through that could challenge lithium ion batteries for performance.

Battery performance in the late 2000s and early 2010s was also pushing the envelope of computer mobility. In the late 2000s, netbooks increased in popularity. Smaller and lighter than a traditional laptop with less processing power, netbooks were marketed for their long battery life--with some batteries holding a charge for up to 13 hours.

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