Motor & Generator Manufacturing
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Industry Overview
US manufacturing of electric motors and generators involves about 400 companies with combined annual revenue of about $10 billion. Major companies include AMETEK, Baldor Electric (part of Switzerland-based ABB), Franklin Electric, and Regal Beloit, as well as divisions of Emerson Electric and GE. The US industry is highly concentrated: the 50 largest companies generate more than 80 percent of revenue.
The global motor and generator manufacturing industry has revenues of about $90 billion annually. Major companies based outside the US include ABB (Switzerland), Mitsubishi Electric and Nidec (Japan), Schneider Electric (France), and Siemens (Germany).
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 capital-intensive: average annual revenue per employee is about $300,000.
Exports of motors and generators, which represent about half of US production, go primarily to Mexico and Canada. Imports account for more than 60 percent of the US market. Mexico is the largest foreign supplier of motors and generators to the US market.
Products, Operations & Technology
Fractional horsepower motors (fractions of one horsepower) and integral horsepower motors (multiples of one horsepower) are the largest product categories; other products include "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 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. 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.
