Industrial Machinery Manufacturing

Industry Overview

The manufacture of machinery in the US involves about 30,000 companies with combined annual revenue of $300 billion. Large companies include Caterpillar and Deere, and divisions of GE and other large corporations. The industry is highly fragmented because most companies specialize in producing a particular type of machinery. Most companies have annual sales between $10 and $500 million and operate in a relatively small field, but may produce dozens of variations and models of the same basic product.

Competitive Landscape

Demand for machinery depends strongly on the health of the US economy and various subsectors such as the construction industry. The profitability of individual companies is tied to engineering expertise and efficient production operations. Small companies can compete effectively if they produce machinery with unique characteristics. The industry is capital-intensive and fairly automated: average annual revenue per worker is about $225,000.

Products, Operations & Technology

The major subsections of the industry are farm and construction machinery, manufacturing machinery, metalworking machinery, commercial machinery, and general machinery such as engines and pumps. While some products, such as tractors or heaters, are finished products, others, like motors, are components used in further production, and some, like textile looms, are custom-designed for a particular manufacturing process.

Manufacture involves producing and assembling components. Companies either make or buy components and various types of mechanical, hydraulic, and electrical control systems. Manufacturing often involves forging, machining, and welding activities that require skilled labor. Products often have a high engineering content. Product design usually involves CAD systems, which sometimes are hooked directly into a computer-aided manufacturing (CAM) process.

Production is typically on an assembly line, except for the largest pieces of machinery, which may be assembled at a customer's site. Machinery is typically complex, often consisting of thousands of moving parts. Computer controls have become an important feature of many products. Companies may produce many variations of a single product such as a motor, which limits the efficiency of assembly operations.

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