Motor, Generator, Pump, and Compressor Mfg
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Industry Overview
US manufacturing of electric motors, generators, pumps, and compressors involves about 1,000 companies, with combined annual revenue of $20 billion. Big manufacturers include AO Smith, IDEX Corp, Franklin Electric, and operating divisions of large companies like GE, Ingersoll Rand, and Emerson Electric. The industry is highly concentrated: the 50 largest companies control about 80 percent of each market segment.
Competitive Landscape
Industrial and manufacturing companies drive demand. The profitability of individual companies depends on efficient production. Small companies can compete by specializing. While larger companies, like GE, produce mainly a standard line of products, smaller companies are more likely to adapt products for customers' special needs. The industry is fairly automated: average annual revenue per worker is close to $200,000.
Products, Operations & Technology
Products include about $9 billion of electrical motors and generators, $7 billion of pumps, and $4 billion of air and gas compressors. Fractional horsepower motors (fractions of one horsepower) account for the majority of motor and generator production; followed by integral horsepower motors (multiples of one horsepower); "prime mover" generators (powered by prime movers like diesel or steam engines); and motor-generator sets. Almost all motors and generators are sold to industrial users (both as components in product manufacture and for industrial process use), as sources of power for industrial use, and as emergency electrical sources for commercial users.
The three major types of pumps and compressors are rotary gear, centrifuge, and piston (reciprocating) types. Customers buy 40 percent of pumps for industrial process applications, such as moving water and chemicals; 10 percent for oilfield applications; 15 percent for household water and drainage systems; and 10 percent for product dispensing systems (such as gas and soda pumps), car circulation systems, and industrial spraying equipment. About 60 percent of compressors are used in refrigeration systems and industrial and commercial process systems, and 20 percent in industrial spraying systems, mainly paint spraying.
The very large number of specialized uses for basic industrial machines has prevented the emergence of dominant competitors. Good economies of scale in manufacturing exist for some commodity-type products like medium electric motors, but the large variety of types and sizes of products limit production runs, and therefore limit cost advantages for large producers. Even a $100 million company may produce dozens of variations of its major product.
The production process is similar in that it requires precision machining of metal components, so that various moving parts work with the most efficient use of energy. Most generators, pumps, and compressors are powered by motors. Usually there are only a few moving parts, but these must fit precisely. The products also have various electrical controls and are typically sold to other manufacturers that incorporate them into other products.
A production plant typically has various machine tool stations and metal presses, where raw materials, like steel, brass, aluminum, and copper, and semi-finished parts like castings are shaped. In assembly areas, the manufactured parts and other purchased parts are combined into the finished product. Although most precision work is done automatically by sophisticated machinery, a large amount of manual labor is required to feed the machinery and assemble the product.
Manufacturers use computer technology to improve the inventory, manufacture, and service components of the business. Electronic data interchange (EDI) helps manufacturers exchange order and product information with suppliers and customers, while shop-floor automation and resource systems help in production and planning. Material handling and logistics systems aid in moving, storing, shipping, and tracking delivery of products.
