Switchgear and Switchboard Apparatus

SIC 3613

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing switchgear and switchboard apparatus. Important products of this industry include power switches, circuit breakers, power switching equipment, and similar switchgear for general industrial application; also, switchboards and cubicles, control and metering panels, fuses and fuse mountings, and similar switchboard apparatus and supplies. Relays and switches in electronic devices and industrial controls are classified elsewhere. This industry was reclassified in 1987. Thus, figures from prior years include additional product categories.

Industry Snapshot

A switchgear is used to interrupt or reestablish the flow of electricity in a circuit. It generally is used in combination with metering, protective, and regulating equipment to protect and control motors, generators, transformers, and transmission and distribution lines. A switchboard is comprised of one or more panels with various switches and indicators that are used to route electricity and operate circuits.

Switchgears typically are concentrated at points where electrical systems make significant changes in power, current, or routing, such as electrical supply substations and control centers. Switchgear assemblies range in size from smaller, ground-mounted units to large walk-in installations and can be classified as outdoor or indoor units. Commercial and industrial assemblies are usually indoors, while utilities and cogeneration facilities are more likely to have outdoor gear. Manufactured for a variety of functions and power levels, all switchgears conform to standards set by the Institute of Electrical and Electronic Engineers (IEEE), the American National Standards Institute (ANSI), or the National Electrical Manufacturers Association (NEMA).

Metal-clad switchgear assemblies are the most common devices used in electricity distribution. They usually contain circuit breakers, which can be deactivated; primary circuits, such as transformers; insulating materials; interlocks, which ensure that circuit breakers can be safely inserted into and removed from the assembly; and instrument panels that control the assembly. A metal-clad power center switchgear is used to regulate and route power in high-voltage applications. Similarly, a medium-voltage vac-clad switchgear is used in circuits involving transmission and distribution lines and motors. Other common types of assemblies used in electrical distribution include metal-clad interrupter, low voltage, and station-type cubicle switchgears.

Low voltage panel boards and distribution boards represented about 33 percent of industry revenues early in the twenty-first century's first decade, and circuit breakers made up about 26 percent of sales. Switchgear units and fuses accounted for about 32 percent and 6 percent of shipments, respectively. Miscellaneous parts and apparatus comprised the remainder of output.

The market for switchgears and related apparatus is highly fragmented. Approximately one-fifth are classified as fixed capital investments, mostly by utilities and power generation companies, and numerous sectors consume less than 10 percent of the industry's product. This wide range of endpoints includes office buildings, industrial building applications, refrigeration and heating equipment manufacturers, residential home builders, and communications industries. About 15 percent of production is exported. According to the U.S. Census Bureau, in 2009 the total value of shipments was $10.5 billion, down from $11 billion in 2008 but up from the $8 billion shipped in 2006.

Background and Development

Power transformation technology was conceived as early as 1830 by Michael Faraday and Joseph Henry, who discovered the theory of electromagnetic induction, but the first commercially practical manual switching systems emerged during the late 1800s to service the flourishing telephone industry. By the late 1880s, shortly after Alexander Graham Bell's invention of the telephone in 1876, the telephone switchboard had evolved to a state where thousands of calls could be switched and connected at the same time. The first automatic switching system was introduced at the 1881 Paris Electrical Exposition, and a workable system had been patented by 1889. A similar device was installed in New Jersey in 1914. Using electrical impulses, it raised and rotated a shaft in a series of movements to make a contact.

The need for gear that would protect and control high-power electric circuits, which constitutes most of the equipment in this industry, resulted from advances in electricity during the early 1900s. Lee De Forest's 1906 invention of the electron tube and a plethora of subsequent breakthroughs spawned a huge demand for electricity in the United States. As the country built its massive electrical power infrastructure, sales of fuses, control panels, and all types of switchgears soared. Notably, the Rural Electrification Administration, which was established in 1935, and other government initiatives expended massive funds to try to bring electricity into every American home.

Electricity demand swelled during the mid-1900s as new applications for electric power, such as air-conditioning and television, became popular. In addition, post-World War II U.S. economic growth resulted in a great demand from industry for circuit control and protection apparatus. Equipment also improved as manufacturers developed means of reducing arcing (damaging sparks that occur when switches are activated), and integrated circuits were applied to switchboards and control devices. By the late 1970s, manufacturers of switchgear and switchboard equipment were shipping about $5 billion worth of goods annually and employing a workforce of more than 66,000.

Industry sales effectively stagnated during the 1980s, continuing a trend started in the 1970s. Indeed, the rampant expansion of the U.S. electric power infrastructure had subsided. Total U.S. electric utility capacity increased a modest 20 percent between 1978 and 1990--pitiful in comparison to growth during the 1950s and 1960s. Industry revenue growth was well below inflation rates during the early 1980s, rising to only $5.5 billion by 1986. Official industry content was changed in 1987, reducing sales volume to about $4.9 billion. Sales continued to increase slightly, at an annual rate of less than 2 percent during the late 1980s, to about $5.5 billion by 1990.

Slack demand for new electric power infrastructure, recessed construction sectors, weak industrial demand, and a generally despondent U.S. economy hindered many industry participants in the early 1990s. Sales slipped in 1991 and fell again in 1992 by 1 percent in inflation-adjusted terms. Likewise, in 1993, shipments rose only 4.5 percent before inflation, despite an overall U.S. economic recovery and a surge in new construction.

The value of product shipments grew steadily throughout the late 1990s. In 1997 shipments totaled $7.5 billion. They reached $7.9 billion in 1998, and $8.5 billion in 1999. In 2000, total shipment values increased to $9.9 billion.

An inconsistent economy throughout the first decade of the 2000s slowed production, and total shipment values declined from $9.12 billion in 2001 to $7.89 billion in 2002. The value of shipments increased negligibly to just over $8 billion by 2006, however, but increased to $10.9 billion in 2008. Of that total, switchgear and switchboard equipment totaled approximately $2 billion, or 25 percent, and fuses and fuse equipment accounted for $1.47 billion, or about 20 percent. Switchgear accessories was the third largest product segment with sales of $1.1 billion, or 15 percent of the industry's total.

In 2008 the United States had a minor trade surplus in this industry, exporting $3 billion in product and importing $2.9 billion. Trade was dominated by NAFTA; U.S. exports to Mexico and Canada equaled $545 million and $448 million, respectively. Other countries to which the United States increased exports included the Dominican Republic ($322 million), Germany, and China. Countries with which the United States reduced trade in switchgeard and switchboards included France, Brazil, and Saudi Arabia. More than half of industry imports into the United States arrived from Mexico in 2006.

The industry benefited somewhat from the increased activity in the commercial and industrial building sectors in the mid-2000s. Because switchgears are relatively rugged and durable, replacement sales have limited potential. However, by later in the decade, sales stalled, along with the rest of the U.S. economy.

Current Conditions

At the start of the second decade of the twenty-first century, the overall electrical equipment manufacturing industry in the United States was recovering from the economic recession of the late 2000s. Production had fallen due to both lack of demand and the influx of imports. IBISWorld predicted that companies that offered the most energy-efficient electrical products would be the ones to flourish in the future.

As of 2010, 907 U.S. establishments engaged in the manufacture of switchgear and switchboard apparatus, according to Dun and Bradstreet. Together these companies generated $2.8 billion in sales and employed 36,658 people. Although almost 75 percent of the firms employed fewer than 25 workers, those that employed more than 100 accounted for about 58 percent of all industry revenues. In 2010, Illinois was by far the number-one state in terms of revenues in the industry, with $1.2 billion. It was also home to the most employees in the industry, with 5,513, followed by Ohio (3,167), California (2,471), North Carolina (2,405), and Texas (1,958). The largest category based on sales was fuses and fuse equipment.

Industry Leaders

One of the largest manufacturers of switchgear and switchboard equipment in the early 2010s was Liebert Corp. of Columbus, Ohio, with sales of $477.9 million and 5,100 employees worldwide in 2010. Another leader was the Sensing and Control division of Honeywell Inc., headquartered in Morristown, New Jersey. Honeywell had overall sales of $33.3 billion in 2010.

Workforce

Approximately 33,917 workers served this industry in 2009, down from 35,722 in 2007, according to the U.S. Census Bureau. Production workers made up 68 percent of the workforce and earned an average wage of $20.46 an hour. In addition to slack demand, productivity gains had contributed to workforce reductions during the 1980s and early 1990s. Specifically, factory automation and advanced information systems allowed many manufacturers to boost international competitiveness and retain profits in spite of stagnant markets. Likewise, the long-term employment outlook for switchgear production workers was generally poor. Movement of operations to overseas facilities also threatened to reduce the number of industry-related jobs.

Research and Technology

One of the most important areas of technological advancement in the late twentieth century was switchgears that integrated sulfur hexafloride gas (SF6). SF6 has insulation and arc-quenching properties that can be used to reduce damage caused by arcing. The newer switches are safer, more reliable, and require less maintenance than conventional switchgears. In the mid-2000s, the industry was exploring the use of electronic and wireless technology to make products more responsive, including remote programmability. For example, in 2004, E-T-A Circuit Breakers introduced the ESS60-T, a high-end circuit breaker that offers an internal processor and remote reset and programming. However, new technology comes at a price. Whereas a comparable standard break cost $10, the ESS60-T retailed between $120 and $170. Companies continued to come out with new products into the early 2010s, with each more technologically advanced than the last.

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