SIC 3822
AUTOMATIC CONTROLS FOR REGULATING RESIDENTIAL AND COMMERCIAL ENVIRONMENTS AND APPLIANCES



Establishments in this industry are primarily engaged in manufacturing temperature and related controls for heating and air-conditioning installations and refrigeration applications, which are electrically, electronically, or pneumatically actuated, and which measure and control variables such as temperature and humidity; also included are automatic regulators used as components of household appliances. Automatic controls for regulating residential and commercial environments include heating, ventilating, air-conditioning (HVAC) unit controls and building monitoring controls for temperature and humidity modulation. Automatic controls for appliances include oven temperature controls, dryness controls for clothes dryers, controls for gas burners, and refrigeration thermostats and pressure controls. Establishments primarily engaged in manufacturing industrial process controls are classified in SIC 3823: Industrial Instruments for Measurement, Display, and Control of Process Variables; and Related Products ; those manufacturing motor control switches are classified in SIC 3625: Relays and Industrial Controls ; those manufacturing switches for household appliances are classified in SIC 3643: Current-Carrying Wiring Devices ; and those manufacturing appliance timers are classified in SIC 3873: Watches, Clocks, Clockwork Operated Devices, and Parts.

NAICS Code(s)

334512 (Automatic Environmental Control Manufacturing for Regulating Residential, Commercial, and Appliance Use)

Industry Snapshot

The total value of shipments in this industry decreased slightly in the early 1990s, but it has been gradually rising since then. The total for 1997 was about $2.9 billion; this figure increased to $3.3 billion in 2000.

Customers for these products are primarily equipment and appliance manufacturers, electrical contractors, and large industrial users. The market for environmental controls is principally affected by activity in residential and commercial construction. In addition, the market for American manufacturers is greatly affected by foreign competition, which has been rising since the 1980s.

Organization and Structure

This industry is composed of two groups: manufacturers of automatic controls used in residential and commercial HVAC units and manufacturers of automatic controls used in household appliances and industrial equipment. Manufacturers of automatic controls for HVAC units primarily distribute their products to suppliers for building construction and contracting firms. For industrial upgrades of HVAC systems, the controls are also sold directly to end users. Manufacturers of automatic controls for household appliances and industrial equipment are typically subsidiaries or divisions of large establishments, where other subsidiaries or divisions of the same establishment use the controls to assemble appliances and equipment.

Background and Development

Major Products. HVAC unit controls are the industry's major product. These controls are produced for residential and commercial buildings and come in a variety of styles to meet industrial needs. Factories using temperature and humidity-sensitive chemicals and materials require highly sophisticated environmental controlling systems. Computerized HVAC monitoring and controlling have made some printing plants more efficient; such systems provide information for facility operators to electrically monitor HVAC operations from a central location and independently provide cooling and heating of water pumps in ways that save energy.

Another major product line for this industry is automatic igniters and thermostats for appliances and equipment. These controls include gas-fired igniters used for water heaters and gas stoves in the food-service industry; thermostats used in office equipment, such as photocopiers; and custom-designed thermostats for medical equipment, such as blood analyzers and respiratory humidifiers, and kitchen appliances for the home.

As environmental control equipment has grown in size and sophistication, basic designs of automatic controls have undergone considerable changes. Heavy wiring and cables have been replaced by hydraulic systems and low-voltage ignition starters. Electrical controls have also been used increasingly for their high sensitivity and fast response capabilities. In laboratories and factories, pneumatic controls used in exhaust and ventilating systems have been replaced by digital controls, which are basically electronic versions of the original pneumatic devices.

Environmental and Energy Concerns. Concerns about the environment and the resulting legislation have helped this industry to grow. Environmental issues created an increased demand for systems that control air quality and conserve energy. In the 1990s, for example, companies in the United States invested significant capital on devices to lower air, water, and solid waste pollution. Factories from a variety of industries are continuing to monitor and control pollution through the purchase and implementation of highly sensitive control systems.

Along with energy conservation, energy management systems (EMS) have also kept this industry active in redesigning and improving their products; energy management systems are computerized control systems implemented mostly by the utility industry, but also by large manufacturers with their own power stations. Automatic controls have been altered and redesigned for energy efficiency to work within these systems and for the HVAC units in the buildings in which they are stored. Computerized energy management systems, on a smaller scale, are also being installed in commercial buildings as a result of the Comprehensive National Energy Policy Act of 1993. These systems combine monitoring and controlling of HVAC units with security, lighting, and fire safety systems.

Hotels, department stores, and grocery stores, all large users of energy, began implementing energy management systems in the 1980s. In hotels, for instance, automatic controls on heating and air-conditioning units are regulated by sensors in individual rooms that detect whether the rooms are occupied; the controls are also linked to the hotel's front desk in order to respond to check-ins and check-outs. For hotel owners, these systems cost an average of $120,000 in 1991, but their energy-cost savings were estimated at $30,000 annually. Similarly, energy management systems have saved energy and money for department and grocery stores. In these cases, computerized systems are monitored for a chain of stores by a centralized network. According to Steve Thompson of McRae's department stores, "(the) automated system has not only maintained the chain's standards for temperature and humidity, but has also strengthened them."

Current Conditions

This industry entered the 1990s experiencing small growth following the decline in construction of residential and commercial buildings. This modest growth, along with small sales margins, limited research and development in new technologies and investment in new facilities. In addition, as a result of the weak economy at the time, many companies chose to upgrade their existing HVAC systems. Upgrading increased commercial repair and maintenance, while sales of new HVAC systems dropped by 3 percent in 1991 and 1992. Sales rebounded to $4.5 billion in the late 1990s, however, and were anticipated to exceed $6.4 billion by 2005, helped along by technological advances and improved service.

In 2000 the industry was dominated by a few large companies that continued to compete in a saturated market by increasing efficiency in their products, such as improving circulation control, compressor design, and network automation. Products became increasingly standardized, causing companies to differentiate themselves by other means, such as expansion into the global market. Deregulation of electricity was expected to be a significant factor in the HVAC industry's future.

Industry Leaders

The industry's largest establishment, Honeywell of Minneapolis, Minnesota, reported $23.7 billion in total sales in 1997, employing more than 120,000 people worldwide. Honeywell is a global company operating in more than 95 countries and generating a large percentage of its revenues outside the United States. Honeywell manufactures products for three segments within this industry: homes and buildings, industry, and space and aviation. For homes and buildings, Honeywell makes thermostats, gas valves, and other residential heating and cooling controls. For industry, the company provides HVAC controls and digital control systems for use with computerized energy management systems. The company's space and aviation segment manufactures environmental controls and guidance system controls.

Other industry leaders included Watsco Inc. of Coconut Grove, Florida, with 1998 sales of about $1 billion and 3,000 employees. Robertshaw Controls Company of Long Beach, California, had about $500 million in sales worldwide in 1997 with more than 5,500 employees. Therm-O-Disc, Inc. of Mansfield, Ohio, had over $338 million in sales in 1997 and more than 5,500 employees.

Workforce

In the early 1990s, more than 49,000 workers were employed in this industry. Nearly 60 percent of these were production workers, including electricians and assembly line workers; their wages were $9.50 per hour. The remaining 40 percent were employed in administration and management and sales capacities; their salaries, unlike those of production workers, varied greatly.

The 2000 level of employment was estimated at 20,357 people receiving hourly wages of about $13.74. The number of people employed in this industry dropped sharply since 1987, with less than half as many people employed in 2000 than in 1987.

America and the World

In 1996 the United States had a trade deficit in the environmental controls industry segment, importing $381 million of products and services while exporting $242 million. The value of exports by the entire measuring and controlling instruments industry, however, was $5.4 billion while imports were almost $4 billion.

China was especially important to this industry in the 1990s. In the 1980s China resembled the United States of the 1950s by building new cities, electric power systems, immense factories, and a much improved highway system. Consumerism was also growing and being fueled by democratic capitalism. In the 1990s, as it narrowed the gap between itself and global competitors, China appeared more like the United States of the 1960s, 1970s, and even the 1980s. High-tech companies have been incredibly important to the economic emergence of this nation and will continue to be necessary into the twenty-first century.

Research and Technology

With the downturn in the real estate market in the late 1980s and early 1990s, building owners and developers became interested in automated building systems as a way of cutting overhead costs and as a marketing device to showcase cost savings and modernization. Technology in these systems included management-regulated HVAC controls to lower energy costs.

Automated building systems have also been developed for in-home use, combining heating and airconditioning control with security and fire and smoke detector systems. Honeywell's TotalHome, an automated home control system, uses a remote control to program room temperature, appliances, lights and locks. More research is expected in this area as consumer interest in these systems increases.

Continued research is also predicted for automatic controls within energy management systems. Some of these projects involve the use of artificial intelligence and complex information systems.

In early 2000, Quantum Group of San Diego, California announced a carbon monoxide sensor system able to detect and respond to small changes of carbon monoxide within seconds, regardless of humidity. A joint venture among emWare, Motorola, GE, Sunbeam, and AT&T produced a system for networking smart, non-PC devices such as home appliances, business products, and security, lighting, and heating systems. At the same time, a similar line of smart appliances was introduced by Sunbeam: these appliances "talk" to each other when plugged in to coordinate tasks. They included a coffeemaker, electric blanket, smoke detector, stand mixer, bathroom scale, alarm clock, and kitchen console.

Further Reading

Bonsignore, Michael. "Balancing Risk and Reward in China." Chief Executive (U.S.) , December 1996, 34.

Darnay, Arsen, J., ed. Manufacturing USA: Industry Analyses, Statistics, and Leading Companies. 5th ed. Farmington Hills, MI: Gale Group, 1996.

"emWare, Invensys, Motorola, GE, Sunbeam and AT&T Team To Deliver Networked Devices for Homes and Businesses." Appliance Manufacturer , January 2000.

Frost and Sullivan. Heating, Venting, and Air Conditioning in Commercial and Institutional Markets Report: 5469—19 , January 2000.

International Trade Administration. "U.S. Aggregate Foreign Trade Data." U.S. Foreign Trade Highlights. Available from http://www.ita.doc.gov/tradestats/ .

"Introducing World's Fastest Solid State Carbon Monoxide Sensor." Appliance Manufacturer , January 2000.

"Time for Smart Talk is Over; Sunbeam Trumps Small Appliance Industry With Smart Appliance Debut." Appliance Manufacturer , January 2000.

United States Census Bureau. 1997 Economic Census—Manufacturing. Washington: GPO, 1997. Available from http://www.census.gov .

——. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufactures. February 2002. Available from http://www.census.gov .



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