SIC 3563
AIR AND GAS COMPRESSORS



This category covers firms primarily engaged in manufacturing air and gas compressors for general industrial use, and non-agricultural spraying and dusting equipment. It does not include manufacturers of refrigeration and air-conditioning compressors, which are classified in SIC 3585: Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment; pneumatic pumps and motors for fluid power transmission, classified in SIC 3594: Fluid Power Pumps and Motor; agricultural spraying and dusting equipment, classified in SIC 3523: Farm Machinery and Equipment; or laboratory vacuum pumps, classified in SIC 3821: Laboratory Apparatus and Furniture.

NAICS Code(s)

333912 (Air and Gas Compressor Manufacturing)

Industry Snapshot

Although air and gas compressors are vital to scores of commercial and industrial products and activities, compressor manufacturing is a small and mature industry within the industrial machinery sector. Products from this $5 billion industry are used in the chemical industry, steel mills and blast furnaces, energy-related extraction industries, pipelines and well-drilling, and general construction. Despite slow and often cyclical business, several of the industry's top producers have managed to turn a healthy profit, especially on newer technology and after-market parts.

In the late 1990s some 269 U.S. companies manufactured air and gas compressors and related devices. They employed almost 21,600 workers, including 12,465 production workers, and had a collective payroll of $884 million in 2000. The vast majority of air compressor makers operated small facilities with fewer than 100 employees, but a relatively low number of larger facilities supplied the lion's share of output.

Organization and Structure

The number of U.S. establishments manufacturing air and gas compressors grew during the 1990s, reaching 314 in 1997, up from 254 just five years earlier. Historically, manufacturing in this industry has been heavily concentrated; in 1977 more than half the industry's employees worked in the four largest facilities, and 79 percent of all facilities employed fewer than 100 workers. By 1992 this had changed somewhat—while 79 percent of all facilities still employed fewer than 100 workers, diffusion was more evident in the larger firms. The 56 firms that had more than 100 employees accounted for 81 percent of all workers.

The use of compressed air and gas can be divided into three major categories, according to the Compressed Air and Gas Handbook: compressed air and gas for process services, compressed air for power, and compressed air for general industrial applications.

Process services include chemical alterations like combustion, nitrogen fixation, polymerization, hydrogenation and alkylation, and change of state operations like quenching, drying, and atomization. Products that result from these types of procedures include liquid fuels, plastics, synthetic rubber, ammonia, and fertilizers.

Power uses utilize the potential energy of stored compressed air to directly perform work. The tools and devices powered by compressed air are termed pneumatic. They generally perform more slowly than electric tools but are faster than hydraulic and provide smooth power application. The energy potential can be translated into rotation and torque with the use of rotary air motors, vanes, or air turbines. Reciprocating motion and direct force provide easily controllable presses, clamps, and feeding devices. Air pressure can be used to accelerate a mass such as a pile driver or pavement breaker. Blowguns use the air pressure stream directly to move materials such as chips, debris, and paint. Air can displace fluids, semi-fluids, and solids to drive materials through pipelines. When air and liquid are mixed, the resulting bubbling action provides agitation, mixing, and aeration.

Industry uses of compressed air include plant maintenance and the powering of pneumatic tools for production line work. This has been especially important for automation of thread-tightening, pressing, hammering, feeding, positioning, and safety-control sensors.

Background and Development

The world's first pump was probably the force or air pump built by Ktesibios of Alexandria about 270 B.C. He used a cylinder and plunger arrangement to pump air through pipes of various lengths, creating the first water organ. The water was used to maintain a steady air pressure in the system. Simple air pumps and bellows provided low-pressure compressed air for such devices as organs and blacksmith furnaces, but major advancements in compressor technology had to wait until the arrival of the Industrial Revolution.

Generally the term compressor was applied to any blower that produced compressed air in excess of 40 psi. Below that pressure, the device is simply called a blower or industrial fan. With new industrial processes came new demands for flexibility of power sources. Coupling the air pump to a steam engine showed the potential of air power. By 1900, the stationary air compressor was a common tool for industry, albeit a massive one requiring bulky, space-consuming foundations. In 1900, the portable compressor made its debut by the simple expedient of placing wheels under some of the smaller stationary engines. Until 1910, the most common power for such compressors was the steam engine or an oil engine. The main application for the devices was for rock drilling. The invention of a lightweight air drill spurred development of the portable compressor.

Major advances came in the 1930s, when the two-stage, air-cooled compressor appeared, followed by multi-speed regulation by the end of the decade. The 1950s saw the introduction of the rotary-screw compressor in the United States, which allowed for considerably higher operating speeds in smaller, lighter units. Continued improvements made possible the now common truck-mounted diesel-powered units used by utilities and construction companies as a completely portable and flexible power source.

One industry that especially benefited from the new technology was oil exploration and drilling. In 1938 some oil companies began experimenting with air-powered drills. The technique used a rotating bit and pumped either mud or air through holes in the bit to clear the cutting face. New booster compressors producing 1,500 psi were developed specifically for the industry. By the end of World War II, portable drilling rigs were quickly and efficiently boring shallow wells.

The construction industry borrowed the technology for its blast-hole drillers in 1946. In 1954 it developed its own bottom-hole tool, which used 100 psi compressed air to rotate a carbide-tipped tool. Water-well drills used 250 psi air to clear water from the hole while drilling.

The two most common types of compressors are the positive-displacement and the velocity or dynamic. Positive-displacement machines trap air in a confined space and then reduce the volume of that space to increase the pressure. The bicycle pump is a familiar example of this type of compressor. It need not use a piston assembly, a rotating gear, or a screw mechanism. Such compressors can be powered by electric motors, oil or gas engines, and steam engines or turbines. The most common applications for these compressors are off-shore oil drilling, construction applications, locomotives, ships, mining, and smaller units in machine shops, bakeries, dry cleaning plants, food processing plants, furniture factories, printing plants, textile mills, automotive service shops, and other industrial and commercial applications using compressed air.

The dynamic system uses a fan or turbine mechanism to force the air or gas against the casing by centrifugal force. Such systems often use several stages or series of compression to achieve high pressures. The systems can be either axial, expelling gas along the line of its impeller axis, or radial, expelling gas against the casing by centrifugal force. The most common applications for these devices are in refineries, petrochemical plants, steel mills, ammonia plants, sewage aeration, pipeline boosters, wind tunnels, and supercharging diesel engines.

By the early 1980s, the chemical industry had become one of the largest users of compressors. According to the Monthly Labor Review , in 1982 the chemical industry was using about 10 percent of the compressor industry's output. In comparison, steel mills and blast furnaces took about 7 percent of output. The oil-well and pipeline industries purchased 18 percent of output. Demand in this sector dropped off dramatically in the 1960s but steadily recovered. Compressors are used in both oil drilling and oil field maintenance operations, particularly for secondary recovery efforts. Construction took 18 percent of output. Particularly important in this market category were the sales of portable compressors used to drive pneumatic tools on the construction site where other sources of energy might be restricted.

The general industrial slowdown of the 1980s hit the compressor industry hard. Major clients like the nuclear power industry, oil well and pipeline industry, and the construction industry cut back on orders for new equipment and left existing components idle. A strong U.S. dollar made American products noncompetitive in foreign markets.

By 1988, this started to change. A weakening dollar spurred exports and a general pickup in the manufacturing climate sparked new domestic orders in almost all sectors. The industry continued to modernize production by consolidating facilities and adopting sophisticated CAD/CAM systems and metalworking and casting technologies. New materials and designs were explored to extend the life of components in corrosive environments and to increase reliability.

Current Conditions

Market conditions for compressors and related equipment vary widely by application and region, but in general the industry has struggled with limited growth opportunities. In the late 1990s, most markets—domestic and foreign—were tough, characterized by slack demand and rising international competition. For much of the 1990s the oil and natural gas markets were especially disappointing, as low oil prices made energy companies leery of investing in new equipment. Indeed, for many compressor makers, selling aftermarket parts and accessories became significantly more profitable than selling new compressors. Some industry firms also attempted to cope with sluggish growth by developing economies of scope, such as offering leasing and maintenance services for compressor equipment.

Portable air compressors, ones that have wheels and can be taken from site to site, have proven one of the industry's fastest-growing lines. In the late 1990s according to Census Bureau figures, the U.S. industry shipped some 2.99 million compressors. Almost three-quarters of these, 2.20 million, were portable models. Up to 90 percent of portable units were sold to equipment rental services.

The value of industry shipments grew from $5.65 billion in 1997 to $6.26 billion in 2000. Over this time period, the cost of materials increased from $3.07 billion to $3.29 billion, while employment declined from 24,582 workers to 21,559 workers. Production workers in 2000 totaled 12,465; they earned an average hourly wage of $16.39.

Industry Leaders

Ingersoll-Rand Company has long been one of the top U.S. air-compressor manufacturers. By some estimates it was the largest U.S. producer and the world's second-largest. In 1998 its Air and Temperature Control division, which made air compressors and refrigeration equipment, recorded sales of $2.2 billion. With profit margins above 10 percent, the compressor line was considered one of Ingersoll's stronger segments. Based in Woodcliff Lake, New Jersey, the firm brought in a substantial amount of its sales from overseas and thus is particularly sensitive to international economic conditions.

Another important player, Thomas Industries of Louisville, Kentucky, made small custom compressors and vacuum pumps as components for other devices, including printing equipment, vending machines, transportation equipment, and medical and laboratory equipment. Medical applications like oxygen concentrators represented more than a third of Thomas' $177.0 million in 1998 sales. Earnings of $30.7 million that year made for a robust 17 percent net margin. However, the company's profits have slumped in the price-sensitive medical equipment market; Thomas sought out new product niches to sustain its earnings. Like Ingersoll-Rand, Thomas Industries was also heavily dependent on international sales, which made up as much as 40 percent of its revenue in the late 1990s.

Serving a much different market, Cooper Cameron Corp. sold compressors and other pressure-control machinery to oil and gas mining concerns. The Houston-based manufacturer also made general industrial compressor systems through its turbo compressor unit. In 1998 revenues from Cooper Cameron's two compressor-producing units totaled $577.0 million. Net income for the two units that year skidded more than 50 percent to $33.2 million, for a 5.7 percent net margin. The company's exposure to international markets and the cyclical energy business were to blame. In 1999 Cooper sold its flagging rotating compressor business to Rolls Royce.

Workforce

Industrial machinery industries employ a high proportion of skilled trades—about 30 percent of all production workers compared to 26 percent in manufacturing in general. Metal-working craftsmen and machinists are three times more common in this industry than in manufacturing as a whole, while laborers are half as common. The industry's production workers in 2000 earned an average of more than $16.39 an hour, slightly ahead of the manufacturing average. The industry also employs a high proportion of nonproduction workers, indicating a reliance on mechanical engineers. More than 40 percent of the compressor industry's workforce is located in New York, Ohio, Pennsylvania, and Texas.

America and the World

The United States typically incurs a deficit in compressor trade with other nations. In 1997, U.S. firms imported $683 million worth of compressors and vacuum pumps, while exports trailed at $309 million. In 2000 the global market was estimated at $10 to $12 billion.

These numbers, however, don't reflect the global character of many of the industry's leading companies. They have plants and offices around the world and increasingly hunt for opportunities outside the overfed markets of the United States and Europe.

Sweden's Atlas Copco AB is a case in point. The world's largest compressor maker, with an estimated 20 percent share, Atlas Copco manufactures compressor gear in seven countries, including the United States. It has separate assembly plants in seven countries as well. Perhaps most notable, though, is that Atlas Copco decided in the late 1990s to stop making many of its own components and instead import them from cheaper competitors in developing economies. In the late 1990s, Atlas was reportedly behind half of all compressor imports into the United States.

Research and Technology

The majority of compressors manufactured are custom made to a client's specific requirements for use in complex applications where the failure of the compressor could be disastrous. Consequently, manufacturing innovation has stressed flexibility and reliability. As in many traditional manufacturing fields, emphasis has been on efficient, short-run, just-in-time manufacturing processes that allow rapid customization for changing market needs.

New corrosion resistant materials were developed and refinements to old processes adopted. Specially designed metal-forming machines were created for the industry, including combination milling, radial drilling, and facing machines; variable setting grinders that automatically form tapered shafts; and automatic tool changing devices controlled by NC tapes or computer software. Foundry operations for production of compressor casings and core making advanced with rapid-cycle machinery, synchronous fabricating machinery, and a no-bake molding process using a resin binder and catalyst. Closer tolerances were achieved in components by replacing wooden molds and cores with ceramic. Increasing concern over energy efficiency dictated more advanced compressor designs with larger displacements.

Further Reading

Compressed Air and Gas Handbook. New York: Compressed Air and Gas Institute, 1973.

United States Census Bureau. 1996 Annual Survey of Manufactures: Value of Product Shipments. Washington, D.C.: Department of Commerce, 1998.

——. 1997 Census of Manufactures. Washington, D.C.: Department of Commerce, 1999.

——. "Industrial Equipment." 1997 Manufacturing Profiles. Washington, D.C.: Department of Commerce, 1999.

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

Yengst, Charles R. "Portable Air Compressor Market More Than Just a Lot of Air." Diesel Progress North American Edition , November 1997.



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