Written by Howard A. Lalgee, President

HowardLalgeeIndustrial Machinery Manufacturing

The US industrial machinery manufacturing industry generated a combined annual revenue of $350 billion. 26,000 companies make up a fragmented sector and made up of a number of segments.  The major three companies being Caterpillar, Deere, and divisions of General Electric.

Demand for machinery is driven by the industrial activity of the health, agriculture, construction, and power generation sectors. Efficient production and engineering expertise drives profits.  Larger companies have an advantage of purchasing power, although smaller companies compete by specializing in niche and bespoke products.

Major products 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.

Automobile Parts and Accessories Manufacture

A combined annual revenue of $225 billion is generated by approximately 4,500 companies, the largest being ArvinMeritor, Dana, Delphi, Lear, Visteon, and the automotive division of Johnson Controls.

The demand for auto parts in dependant on new car sales, which in turn is impacted by interest rates.  Profits rely on demand volume, because many costs are fixed and the  difficulty of manufacturing products.  Smaller companies compete by concentrating on a smaller number of products or highly specialized one.

The industry structure is made up of tiers.  Smaller companies are referred to as ‘tier 2’ and :tier 3” suppliers, selling to larger suppliers who in turn are referred to as “tier 1” suppliers, who sell component assemblies and modules to car and truck assemblers such as Ford and General Motors, OEM’s.

Fabricated Metal Parts Manufacturing

The US fabricated metal parts manufacturing industry consists of about 60,000 companies, Major companies in specialty segments include Ball Corporation and Snap-On. The industry is fragmented with the largest 50 companies accounting for 20 percent of the total annual revenue of about $300 billion.  Most companies produce a limited range of  products due to the manufacturing processes required for individual parts.

Demand for products is determine by the needs of other industrial companies, and accordingly linked to economic growth.  Profits rely upon technical expertise and efficient manufacturing.  Larger companies have an economic advantage of purchasing power of raw materials.  Smaller companies compete by focusing on specialized and bespoke products.

The industry consists of several distinct segments, including ornamental and structural metals ($60 billion); forging and stamping ($30 billion); metal valves ($30 billion); metal containers ($20 billion); hardware ($15 billion); springs and wire products ($15 billion); and fasteners ($10 billion). Many companies make products in smaller specialized segments.




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