SIC 3613
SWITCHGEAR AND SWITCHBOARD APPARATUS



This category covers establishments primarily engaged in manufacturing switchgear and switchboard apparatus. Important products of this industry include power switches, circuit breakers, power switching equipment, and similar switchgear for general industrial application; also, switchboards and cubicles, control and metering panels, fuses and fuse mountings, and similar switchboard apparatus and supplies. Relays and switches in electronic devices and industrial controls are classified elsewhere. This industry was reclassified in 1987 thus figures from prior years include additional product categories.

NAICS Code(s)

335313 (Switchgear and Switchboard Apparatus Manufacturing)

Industry Snapshot

A switchgear is used to interrupt or reestablish the flow of electricity in a circuit. It is generally used in combination with metering, protective, and regulating equipment to protect and control motors, generators, transformers, and transmission and distribution lines. A switchboard is comprised of one or more panels with various switches and indicators that are used to route electricity and operate circuits.

Switchgears are typically concentrated at points where electrical systems make significant changes in power, current, or routing, such as electrical supply substations and control centers. Switchgear assemblies range in size from smaller, ground-mounted units to large walk-in installations and can be classified as outdoor or indoor units. Commercial and industrial assemblies are usually indoors, while utilities and cogeneration facilities are more likely to have outdoor gear. Manufactured for a variety of functions and power levels, all switchgear conforms to standards set by the Institute of Electrical and Electronic Engineers (IEEE), the American National Standards Institute (ANSI), or the National Electrical Manufacturers Association (NEMA).

Metal-clad switchgear assemblies are the most common devices used in electricity distribution. They usually contain: circuit breakers, which can be deactivated; primary circuits, such as transformers; insulating materials; interlocks, which ensure that circuit breakers can be safely inserted into and removed from the assembly; and, instrument panels that control the assembly. Metal-clad power center switchgear is used to regulate and route power in high-voltage applications. Similarly, medium-voltage vacclad switchgear is used in circuits involving transmission and distribution lines and motors. Other common types of assemblies used in electrical distribution include metal-clad interrupter, low voltage, and station-type cubicle switchgear.

Low voltage panel boards and distribution boards represented about 30 percent of industry revenues in the late 1990s, and circuit breakers made up about 26 percent of sales. Switchgear units and fuses accounted for about 26 percent and 8 percent of shipments, respectively. Miscellaneous parts and apparatus comprised the remainder of output.

The market for switchgear and related apparatus is highly fragmented. Approximately 21 percent of purchases in the late 1990s were classified as fixed capital investments, mostly by utilities and power generation companies. Six percent of industry output was used in office buildings, and industrial building applications consumed approximately five percent of production. Other significant market segments included refrigeration and heating equipment manufacturers, residential home builders, and communications industries. About 7 percent of production was exported. In 2000, the total value of shipments was $9.2 billion, compared to $7.4 billion in 1997.

Background and Development

Power transformation technology was conceived as early as 1830 by Michael Faraday and Joseph Henry, who discovered the theory of electromagnetic induction. But the first commercially practical manual switching systems emerged during the late 1800s to service the flourishing telephone industry. By the late 1880s, shortly after Alexander Graham Bell's invention of the telephone in 1876, the telephone switchboard had evolved to a state where thousands of calls could be switched and connected at the same time. The first automatic switching system was introduced at the 1881 Paris Electrical Exposition, and a workable system had been patented by 1889. A similar device was installed in New Jersey in 1914. Using electrical impulses, it raised and rotated a shaft in a series of movements to make a contact.

The need for gear that would protect and control high-power electric circuits, which constitutes most of the equipment in this industry, resulted from advances in electricity during the early 1900s. Lee De Forest's 1906 invention of the electron tube and a plethora of subsequent breakthroughs spawned a huge demand for electricity in the United States. As the country built its massive electrical power infrastructure, sales of fuses, control panels, and all types of switchgear soared. Notably, the Rural Electrification Administration, which was established in 1935, and other government initiatives expended massive funds to try to bring electricity into every American home.

Electricity demand swelled during the mid-1900s as new applications for electric power, such as airconditioning and television, became popular. In addition, post-World War II U.S. economic growth resulted in a great demand from industry for circuit control and protection apparatus. Equipment also improved as manufacturers developed means of reducing arcing (damaging sparks that occur when switches are activated), and integrated circuits were applied to switchboards and control devices. By the late 1970s, manufacturers of switchgear and switchboard equipment were shipping about $5 billion worth of goods annually and employing a work force of more than 66,000.

Industry sales effectively stagnated during the 1980s, continuing a trend started in the 1970s. Indeed, the rampant expansion of the U.S. electric power infrastructure had subsided. Total U.S. electric utility capacity increased a modest 20 percent between 1978 and 1990—pitiful in comparison to growth during the 1950s and 1960s. Industry revenue growth was well below inflation rates during the early 1980s, rising to only $5.5 billion by 1986. Official industry content was changed in 1987, reducing sales volume to about $4.9 billion. Sales continued to slightly increase at an annual rate of less than 2 percent during the late 1980s, to about $5.5 billion by 1990.

Slack demand for new electric power infrastructure, recessed construction sectors, weak industrial demand, and a generally despondent U.S. economy hindered many industry participants in the early 1990s. Sales slipped in 1991 and fell again in 1992 by one percent in inflation adjusted terms. Likewise, in 1993 shipments rose only 4.5 percent before inflation, despite an overall U.S. economic recovery and a surge in new construction. Furthermore, the long term industry outlook was lamentable going into the mid-1990s. Domestic demand for new switchgear was expected to likely decline further, or stagnate, and because most switchgear was rugged and durable, replacement activity offered limited profit opportunities.

Current Conditions

The value of product shipments grew steadily throughout the late 1990s. In 1997 shipments totaled $7.48 billion. They reached $7.8 billion in 1998, $8.4 billion in 1999, and $9.2 billion in 2000. Modest growth was expected to continue at 1 to 2 percent annually through 2002, and demand was expected to be concentrated on electronic switchgear.

Developments in technology, as well as increased overseas acquisitions, are expected to increase the export market on into the twenty-first century. In the late 1990s, sales to Canada represented 20 percent of the market; 15 percent for Mexico; 11 percent to the Dominican Republic; and 7 percent to Japan. Exports were expected to increase 6 percent annually through 2002. The United States imported most switchgear industry products in the late 1990s from Mexico.

Industry Leaders

There were roughly 583 establishments manufacturing switchgear in the late 1990s. Despite growth there has been steady corporate consolidation in the industry as companies merged with and acquired rivals in an effort to boost capital and take advantage of other economies of scale.

The biggest manufacturer of switchgear and switchboard equipment in 1999 was Liebert Corp., of Columbus, Ohio, with $500 million in sales. Second was Micro Switch Division, of Freeport, Illinois, with $440 million in sales. Third was Schlumberger Inc., of Norcross, Georgia, with $370 million in sales.

Workforce

Approximately 43,300 workers served this industry in 2000. In addition to slack demand, productivity gains contributed to work force reductions during the 1980s and early 1990s. Specifically, factory automation and advanced information systems allowed many manufacturers to boost international competitiveness and retain profits in spite of stagnant markets. Likewise, the long-term employment outlook for makers of switchgear was generally poor. The number of jobs for assemblers and fabricators, which make up almost 30 percent of the work force, was expected to decline by more than 40 percent between 1990 and 2005, according to the Bureau of Labor Statistics. Most labor positions were expected to fall 10 to 30 percent. Opportunities for engineers and sales professionals, on the other hand, were expanding and an increase by approximately 15 percent by 2005 was expected.

In 2000 the average work week was 43 hours with 5.3 of overtime. The average wage for production workers, who numbered 30,983, was $15.50 per hour.

Research and Technology

The switchgear and switchboard industry invests relatively little in research and development. In the early 1990s, for example, companies invested an average of $2,720 per employee back into their business, compared to about $5,520 spent by the average U.S. manufacturer. One of the most important areas of technological advancement in the early 1990s was switchgear that integrated sulfur hexafloride gas (SF6). SF6 has insulation and arc-quenching properties that could be used to reduce damage caused by arcing. The newer switches are safer, more reliable and require less maintenance than conventional switchgear.

Further Reading

Darnay, Arsen J., ed. Manufacturing USA. 5th ed. Farmington Hills, MI: Gale Group, 1996.

Economic Census 1997. Bureau of the Census. 2000. Available from http://www.census.gov .

Employment Statistics Bureau of Labor Statistics. 2000. Available from http://www.bls.gov .

United States Census Bureau. 1995 Annual Survey of Manufactures. Washington: GPO, 1997.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

U.S. Industry and Trade Outlook '99. The McGraw-Hill Companies, 1999.

Ward's Business Directory of U.S. Private and Public Companies. Detroit: Gale Group, 1999.



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