Transportation Equipment, NEC

SIC 3799

Companies in this industry

Industry report:

This industry consists of establishments primarily engaged in manufacturing transportation equipment not elsewhere classified. The transportation equipment classified under this industry includes specialty vehicles and all-terrain vehicles for military, industrial, and agricultural purposes; towing bars and systems and trailers for transporting animals; recreational vehicles, such as snowmobiles, water jet-skis, golf carts and recreational all-terrain vehicles; boat trailers; and wheelbarrows. Associated establishments involved in manufacturing industrial vehicles are discussed in SIC 3537: Industrial Trucks, Tractors, Trailers, and Stackers.

According to Dun and Bradstreet (D&B), 1,660 establishments operated in the category of transportation equipment not elsewhere classified in 2010. Industry-wide employment totaled approximately 21,362. Companies in this industry tended to be smaller in size, with about 76 percent employing fewer than 10 workers. The Annual Survey of Manufactures reported that overall shipments for the industry were valued at $5.2 billion in 2009, down from $7.6 billion in 2008. By 2010, revenues had rebounded somewhat to $7.0 billion, according to D&B.

The largest sector in the transportation equipment market (not elsewhere classified) was recreational vehicles, specifically, all-terrain vehicles (ATVs), which accounted for 36 percent of industry sales in 2010. Other important segments of the recreational vehicle segment included snowmobiles, golf carts, and go carts. The remaining sales came from other types of equipment and vehicles such as trailers and trailer equipment, including horse trailers, boat trailers, and automotive trailers; pushcarts; off-highway electric cars; and other miscellaneous products such as ski lifts and horse-drawn carriages. The technology for manufacturing the diverse array of powered products in these segments was very much the same.

Shipments of all-terrain vehicles (ATVs), snowmobiles, golf carts, and personal watercraft totaled more than $4.5 billion in 1997. This was a sharp increase from the industry's level of shipments only five years earlier and, in several categories, represented gains of 100 percent or better. By 2002, shipment values had increased 24 percent, reaching $5.9 billion. Shipments of gasoline- or electric-powered ATVs, for example, climbed from $341 million in 1992 to $934 million in 1997, reaching a high of $3.4 billion in 2002. In 2007, more than 752,000 ATVs were sold, a 50 percent increase from 2002. Sales of self-propelled golf carts more than doubled from $382 million in 1992 to $768 million in 1997, improving 21 percent to $969 million in 2002.

All-terrain vehicles, built with wide tires for driving over difficult terrain and road conditions, originally were produced primarily for military purposes. For this reason, the prosperity and growth of this segment of the industry was long dependent on government defense spending. With decreases in defense spending during the 1990s, manufacturers of all-terrain vehicles began to diversify.

In 1954, Polaris Industries became the first American manufacturer to produce snowmobiles. In the United States, snowmobile sales reached their peak in 1971, having more than 500,000 sold. In the late 1970s and early 1980s, snowmobile sales decreased dramatically due to high energy costs, overbuilding by manufacturers, and snowless winters, according to Forbes. By 1983, only 87,000 snowmobiles were sold in the United States. At the beginning of the 1990s, however, sales figures and profits began to increase again, with Polaris's revenues almost doubling between 1994 and 1996. Sales were still slow in the first decade of the 2000s due to light winters. This adversely affected most companies within the industry, including Polaris, as the company sold 40 percent fewer snowmobiles in 2006 as it did during 2005. The combination of poor snowmobile sales with lackluster ATV sales partially contributed toward Polaris's decision to reduce workforce levels in the mid-2000s. More than half the snowmobiles in the United States are located in three states: Michigan, Minnesota, and Wisconsin.

Despite the negative news of declining sales, the companies within this industry continued to strive to make advances. Eco-friendly technologies in development by Arctic Cat focused on the production of an alternative fuel compatible ATV, a twin-cylinder diesel that runs on a 20 percent biodiesel/80 percent diesel mix. Also, Polaris attempted to expand its customer base to young girls with a new line of ATVs and related equipment dubbed "Pink Power."

Nevertheless, the safety of such products received scrutiny as statistics continued to demonstrate that many serious or fatal accidents occurred involving younger children who drive or are passengers on ATVs on private property. Attempts to pass laws to set age limits and helmet requirements were typically unsuccessful, although in 2009 the Consumer Product Safety Improvement Act went into effect, which banned the manufacture of ATVs for children under 12 that contained more than a specific amount of lead. This law was overturned in 2011 with the passage of H.R. 2715, which exempted ATVs for children from the law.

The use of ATVs continued to be a subject of debate into the early 2010s, with manufacturers on one side and safety advocates on the other. The latter pointed to statistics such as those from the Consumer Product Safety Commission that showed that there were 816 ATV-related deaths in 2007. Manufacturers, on the other hand, claimed to be doing everything they could to meet strict safety standards and that it was not the vehicles that were unsafe but rather the riders.

A report by IBISWorld cited little growth in the late 2000s due to the poor economic conditions and the fact that people purchase products in this category only when their discretionary income is high. However, the report also stated that revenues would increase between 2011 and 2016 and that "as firms increasingly rely on technology, demand for transportation equipment will heighten." Other factors expected to affect the market included acquisitions, increased imports of finished parts and components, and advances in research and development.

Most of the companies that did manufacture products in this industry in the early 2010s had interests in different segments. One of the industry leaders was the Nordic Group of Companies Ltd. of Baraboo, Wisconsin, which acted as an umbrella for several different companies, some of which produced hardware, transportation and off-highway seating, golf carts, and other multiuse, low-speed vehicles as well as automotive parts. Nordic's annual sales were around $2.5 billion in the late 2000s, and the company employed 2,500. Medina, Minnesota-based Polaris Industries Inc. was one of the largest manufacturers of off-road vehicles such as ATVs as well as snowmobiles and Ranger-brand vehicles. The company reported 2010 sales of nearly $2.0 billion with a workforce of 3,000 employees. Although Polaris sold in Europe and North America, the United States accounted for 70 percent of sales. Forest River Inc. of Elkhart, Indiana, which made towable RVs, including pop-up campers, luxury motor homes, and cargo trailers, had 2010 sales of $568 million with 6,000 employees. Finally, Arctic Cat Inc. of Thief River Falls, Minnesota, a maker of 30 different types of ATVs and 40 models of snowmobiles, had sales of $464 million in 2010 with about 1,300 employees.

Although this market was heavily influenced during the 1990s by foreign competition, coming largely from Japanese and Canadian firms--Canada's Bombardier Inc., manufacturer of the popular Ski-Doo brand snowmobile and Sea-Doo personal watercraft, in particular--by 2003 many of these competitors had left the market.

Japanese companies active in the U.S. transportation equipment market included Suzuki Motor Corp., which marketed the QuadRunner ATV; Yamaha Motor Company Ltd., producer of the WaveRunner personal watercraft and the Kodiak line of ATVs; Honda Motor Company Ltd., the world's largest manufacturer of ATVs; and Kawasaki Heavy Industries Ltd., producer of the Mule line of ATVs and the Jet Ski personal watercraft.

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