Transportation Equipment and Supplies, Except Motor Vehicles

SIC 5088

Companies in this industry

Industry report:

This industry comprises establishments engaged in the wholesale distribution of transportation equipment and related supplies, excluding motor vehicles. Ships (except pleasure craft), combat vehicles, guided missiles, and space vehicles are included in the industry. Self-propelled golf carts, railroad equipment, and aircraft parts and supplies are also included. Establishments primarily engaged in the wholesale distribution of motor vehicles are included in Industry Group 501 (motor vehicles and motor vehicle parts and supplies). Establishments primarily engaged in the wholesale distribution of pleasure boats are included in SIC 5091: Sporting and Recreational Goods and Supplies.

According to the U.S. Census Bureau, 2,605 establishments were engaged in the transportation equipment and supplies wholesaling industry in 2009. Together these companies employed approximately 40,287 people who earned $2.5 billion in wages. The leading states in terms of sales dollars were Washington, Virginia, Florida, and California. In 2011 sales for the industry were around $42 billion.

The U.S. Census Bureau classified this fragmented industry into three separate specialties. By number of establishments, the largest classification was aircraft and aeronautical equipment and supplies, followed by marine machinery, equipment, and supplies wholesalers, and then other transportation equipment and supplies wholesalers, which included sellers of equipment and supplies used by railroads, streetcars, buses, tramways, aerial hoists, and horse-drawn vehicles.

During the early 1990s, the aerospace sector of the industry experienced declines in both the defense and civil segments. Continuing stagnation in the defense market was expected because of continued U.S. government downsizing. The best growth opportunities were for niche segments, such as business and commuter jets, spare parts, and maintenance and overhaul in the commercial sector. Small commercial aircraft running regional services were a growing trend. Industry performance as a whole continued to be mixed as the industry supplanted its defense-based revenues with commercial and industrial sales. The industry grossed an estimated $23 billion in 1996 and employed approximately 37,000 workers.

By the end of the first decade of the 2000s, aircraft and parts wholesalers accounted for about 20 percent of establishments in the industry, while aircraft equipment and supplies by themselves shared about 12 percent of the market. Marine supplies represented less than 12 percent of the total firms. In terms of product sales, the aircraft and aeronautical equipment was the largest, with $33.2 billion sold, followed by used aircraft and aeronautical equipment with sales of nearly $17.7 billion and other new aircraft and aeronautical equipment and supplies with more than $8.6 billion in sales.

One of the industry leaders in the early 2010s was New York City-based Mitsubishi International Corp., with 2011 revenues of more than $2.3 billion. Mitsubishi's rival, Sea Containers America Inc., also based in New York City, filed Chapter 11 bankruptcy in 2006 and in 2011 had sales of just $41.3 million. AAR Corp., headquartered in Wood Dale, Illinois, had sales of $1.7 billion and 6,100 employees. Stewart & Stevenson LLC of Houston, Texas, reported sales of $862 million in 2011 and employed 2,300.

Stewart & Stevenson was awarded a $5 million Systems Technical Support service contract in early 2000 from the United States Army for support of its Family of Medium Tactical Vehicles (FMTV). The contract, administered by the Army's Tank, Automotive, and Armaments Command (TACOM), which was expected to add up to $47 million in total revenue over four years. The company was extremely familiar with the equipment it would maintain because it had manufactured 11,400 FMTVs from 1992 through 1998 for the Army. However, despite this contract, company sales fell to $691 million in 2006.

The air transportation industry was one of the hardest hit in the wake of the September 11, 2001, terrorist attacks on the United States, as well as the increase in the cost of fuel to previously unimagined levels, due in large part to instability in the Middle East. Several major passenger airlines filed Chapter 11 bankruptcy during the first decade of the 2000s, while others reorganized in order to stay in business. Instability throughout the air transportation industry, due in part to high fuel costs, continued into the latter half of the decade and negatively affected wholesalers.

The industry also suffered during the economic recession at the end of the first decade of the 2000s. According to a 2011 report by IBISWorld, however, "As the economy recovers, Americans will return to spending and traveling, which will renew demand for transportation equipment, especially aircraft." Business travel was also expected to improve. Remaining challenges included the trend to bypass wholesalers and the declining value of government defense contracts. The aircraft, marine, and railroad transportation equipment wholesaling industry was also fairly labor intensive. IBISWorld estimated in 2011 that for every dollar absorbed by capital, $2.86 was spent on labor. Labor-intensive tasks in the industry included preparing, checking, and shipping orders.

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