SIC 3535
CONVEYORS AND CONVEYING EQUIPMENT



This category covers establishments primarily engaged in manufacturing conveyors and conveying equipment for installation in factories, warehouses, mines, and other industrial and commercial establishments. Establishments primarily engaged in manufacturing farm elevators and conveyors are classified in SIC 3523: Farm Machinery and Equipment; those manufacturing passenger or freight elevators, dumbwaiters, and moving stairways are classified in SIC 3534: Elevators and Moving Stairways; and those manufacturing overhead traveling cranes and monorail systems are classified in SIC 3536: Overhead Traveling Cranes, Hoists, and Monorail Systems.

NAICS Code(s)

333922 (Conveyor and Conveying Equipment Manufacturing)

Industry Snapshot

Conveying systems have been an integral part of mining operations for nearly a century, but manufacturing industries have also become dependent on them. Regulations mandated by the Occupational Safety and Health Administration (OSHA) limited human exposure to certain harmful materials, requiring more extensive machine automation. With increased automation, conveying systems became an absolutely necessary part of operating a manufacturing plant.

Global competition has forced business owners to look for ways to cut costs and improve productivity. In industrial firms, again, automating production processes are a way to help reach their goal. While ways to do this vary with the type of business and the degree to which production processes are repeatable, most manufacturing firms looked at material handling systems as a possible answer. It is for these reasons that material handling systems manufacturers experienced considerable growth during the profit-driven 1980s and the cost-cutting 1990s. The value of shipments continued to increase into the late 1990s and early 2000s, growing from $6.3 billion in 1997 to $6.8 billion in 2000.

However, as with most mining and manufacturing support industries, builders of conveyors and conveying equipment were limited by industry-related economic cycles. Senior management officials, who were directly accountable to stockholders, heavily scrutinized the installation of non-value added equipment. Such investment was often viewed as an unnecessary expense, especially when the company's financial health was in question. Therefore, the conveying system industry was reliant on a company's willingness to invest in itself.

Organization and Structure

The conveying system industry is highly specialized, and therefore almost totally self-contained. While the industry relies heavily on suppliers for many of the materials consumed, the design and assembly of the systems is usually performed at one facility. Armed with design engineers and production facilities, the industry is capable of meeting individual material movement challenges in industries ranging from mining to heavy manufacturing to the airline industry. Standard equipment is produced in the pre-engineered sector of the industry.

About 50 percent of the manufactured products in this industry were dedicated to unit handling conveyors and conveying systems, with an additional 4 percent dedicated to these systems' parts, attachments, and accessories. Another 27 percent of the product share was dedicated to bulk material handling conveyors and conveying systems, with about 10.5 additional percent dedicated to these systems' parts, attachments, and accessories. The remainder of the industry (approximately 8.5 percent) was allotted to miscellaneous conveyors and conveying equipment.

Background and Development

The first conveying systems were developed to draw water from wells in the ground. This method was used in various applications over the centuries, but conveying systems really gained importance with the development of the mining industry. In the beginning, mine cars were used as buckets to haul coal or other ores to the earth's surface. Mine cars have been replaced with continuous conveying systems such as belt conveyors, steel-apron conveyors, and chain-conveyors, which are used to haul as much as 5,000 tons per hour on lower-grade slopes and 1,300 tons per hour on steep slopes. Since wages accounted for most of the production costs in the mining industry, mechanization was necessary. Likewise, as the government began to regulate worker safety and workers' compensation claims, the initial expense of installing a mechanized system seemed like a good investment because the systems could minimize workers' contact with hazardous materials and reduce physical strain.

Although mining has long been the greatest force in the conveying system industry, the growing presence of production lines since Henry Ford's development of the assembly line has expanded the industry and brought new challenges. As machines were created to perform at higher capacities, the conveying systems delivering the materials to the machines had to meet these capacities. For example, in some beverage industries today, conveying systems are required to maintain a flow of up to 1,600 units per minute.

The worldwide recession of the late 1980s and early 1990s affected the mining industry significantly. In countries where commodity prices fell, some mining operations ceased due to production costs exceeding the market value of the extracted raw materials. Capital expenditures in this area fell as well, with investment in conveying systems being an unjustifiable expenditure.

As one component of the greater material handling industry, conveyers found new importance in the flexible manufacturing systems (FMS) methodology during the 1980s. However, as this theoretical approach was moving in one direction, manufacturers were concentrating more on productivity in terms of cost reduction. The installation of FMS was often cost prohibitive and limiting to companies reliant on reacting quickly to changing market needs. Yet, in terms of lowering costs through increased quality and efficiency to increase profitability, the material handling improvements through FMS were justifiable costs. Companies with existing conveying systems that wished to increase productivity through improved material handling techniques provided a market for the retrofitting segment. Manufacturing industries, particularly where machining is a large portion of value-added production, employ palletization work-holding principles in everyday operations. These principles transfer materials from one machining center to another on the same workholding device, eliminating setup time.

As of 1994, the conveyor industry was characterized by very low expenditures for plant investment, only about $89.4 million for the entire industry and $123,683 average expenditures per establishment (more than 60 percent below the total manufacturing industries average).

Current Conditions

The late 1990s brought record results industry wide in shipments and new orders, according to the Conveyor Equipment Manufacturers Association (CEMA). Both shipments and new orders set records in 1997, at $6.36 billion and $5.8 billion, respectively. Shipments continued to rise in 1998, setting a new record of $6.55 billion. After dipping slightly to $6.53 billion in 1999, shipments again reached record levels at $6.84 billion in 2000. Industry executives attributed these strong results to the capital investment trend that improved the flow of work and speeded the processing of orders.

Industry Leaders

Atlanta-based Siemens Energy and Automation Inc. led the industry with $1.8 billion in sales for the fiscal year ended September 30, 1997, the most recent results available on Infotrac. Heil Co. of Chattanooga, Tennessee came in second with 1998 sales of $1.4 billion. Nesco Inc. of Mayfield Heights, Ohio, followed with 1998 sales of $1.1 billion. Joy Mining Co. of Warrendale, Pennsylvania generated $930.0 million for its fiscal year ended October 31, 1997. FKI Industries Inc. of Fairfield, Connecticut, rounded out the top 5 with $790.0 million in sales for its fiscal year ended March 31, 1999.

Workforce

Employment levels in this industry dropped during the 1980s and 1990s as automation increased. In 1982 employment was 36,400 nationwide, falling to 30,600 by 1993. However, this figure rose to 33,100 in 1994 and to 40,370 in 2000 as the industry continued to grow. Production workers numbered 23,455 and earned an average hourly wage of $15.15 in 2000, compared to $14.14 in 1997.

With average earnings of $12.78 per hour in 1994, employees were paid 6 percent over the average reported by all other forms of manufacturing in the nation. However, workers were spending 4 percent more time on the job than most other manufacturing workers, which implies overtime compensation was granted.

The strongest employment opportunities in the industry in future years will most likely be found in the fields of service and technical support rather than in the production of new units. While employment of machine assemblers in the general construction and related machinery industry was expected to increase by almost twothirds by 2005, significant cuts were expected in almost all other areas, particularly machine builders and operators and clerical staff.

America and the World

The Commonwealth of Independent States (CIS) did not implement conveying systems in mining operations until the early 1990s. Rather, inefficient trucks remained the material handling equipment of choice at mining pits and quarries. Demand for conveying technology increased in response to increased demand for fuel efficiency. Various combinations of dead-end and lateral-field conveyors were being used for maximum fuel efficiency. The industry in the former Soviet Union also enjoyed productivity increases of between 11 and 25 percent, which were accomplished by implementing a material storage location midway through the conveying system. Other benefits enjoyed were increased worker safety by the automated equipment and decreased labor costs.

Conveying systems were used extensively by the Japanese, who invested heavily in automation. Japan's use of high-tech systems caught the attention of U.S. manufacturers, who by the mid-to late 1980s started experimenting with new approaches to material handling. One application that became a buzzword in manufacturing is "palletization." In automated systems, material is transported on a pallet through a conveying system. When pallets are designed as work-holding devices, personnel and machining resources are maximized and productivity increases. Leaving the machine operator free to set up machines, the material flow is refined because both horizontal and vertical machining centers can interface with palletized work-holding devices.

While the economy provides one set of influences on making business decisions, the U.S. government provides another. OSHA continues to impose regulations concerning worker safety. In applications where hazardous waste or dangerous fumes are employed, robotics and automated machining centers are the only solution for meeting government regulations.

While the Europeans and Asians do not regulate worker safety to the same degree as the United States, they do investigate ways to increase quality and productivity at minimal costs. The Japanese government provides programs for funding robot application development, education, tax credits, and loans to purchase the equipment.

Research and Technology

The food and beverage industries employ conveying systems primarily for their labor savings. Speed, reliability, and performance are emphasized as top priorities of beverage production lines. Production machines are continually being improved to perform at faster rates. However, the production rate of a machine is meaningless unless the conveyor system can deliver the containers on time. Because bottling companies are demanding higher production rates from machines, in some cases as much as 1,600 units per minute or more, material handling equipment manufacturers have had to redesign their products to meet the higher speeds. Computerized process flows have made the industry more sophisticated, allowing for variable speed control through "intelligent" software that accepts feedback from key points in the system.

Although conveyor manufacturers often specialize in designing and installing specialized conveying systems, some companies choose to build the system with internal engineering staff, using pre-engineered components. One such company is Richards-Wilcox Manufacturing Company, a builder of file and shelving products. In March 1993, Richards-Wilcox announced that it built a monorail conveyor system that was proving to be cost effective. The system, called the ZIG-ZAG, is used specifically for heavy components, sometimes weighing as much as a human is allowed to lift by law. The ZIG-ZAG is a continuous loop system that automatically loads and transports the file and shelving components through a final coating process at a rate of 22 feet per minute. At the end of the cycle, the system unloads the components. The system features an overhead transport and assembly system, which saves shop floor space.

Despite the tight world economy, some mining companies have chosen to invest in better conveying systems in light of the potential operational cost-savings. Due to many problems in the early 1970s, Neyveli Lignite Corporation, in India, tried this approach in 1974. As a result Neyveli was very successful through the 1980s. Again faced with problems common to the lignite mining industry, Neyveli announced in 1993 that it had installed a sophisticated system of belt conveyors that operate 24 hours a day. Through this system, Neyveli reported increased production capability, which improved its financial outlook.

Another mining advancement in recent years is Butterley Engineering's Moving Car Bunker system. The system keeps coal mine conveyor belts running at a constant rate through surge control technology. The surge control system is activated when the trunk belt becomes overloaded and coal starts to build up. This is an alternative to conventional design, in which trunk belts respond to peak tonnage. The bunker is designed with open-bottom storage units, coupled together. Each of these units is capable of hauling as much as 3,000 tons of coal.

The Conveyor Equipment Manufacturers Association released a standard for unit-handling conveyors in 1996. Technological developments of particular significance in the later 1990s include faster and quieter belt conveyors, such as the "European" or monofilament belt; self-powered conveyors, dividing the line into smaller zones, without the traditional belts, pulleys, and chains; "intelligent conveyors" being used by AT&T for computer assembly, which refill empty locations on the conveyor automatically; distributed logic control systems, which are used by NCR Corporation to allow assembly of specialized computer models; and more durable modular plastic and stainless steel designs that eliminate rubber belts.

Further Reading

"AT&T Relies Upon Intelligent Conveyors for PC Assembly." Assembly , April 1996.

Conveyors Equipment Manufacturers Association. "Conveyor Industry Reports Favorable Mid-Year Results." 1 October 1999. Available from http://www.cemanet.org (visited 20 January 2000).

——. "Another Record Year for Conveyor Shipments." 17 March 1999. Available from http://www.cemanet.org (visited 20 January 2000).

——. "Conveyor Industry—Another Record Year in 1997." 16 March 1998. Available from http://www.cemanet.org (visited 20 January 2000).

"Conveyor Maker Joins With Detroit Company." Kansas City Star , 18 August 1995.

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

Gyorki, John. "Conveyor Controls Computer Manufacturing Mix." Machine Design , 12 September 1996.

Infotrac Company Profiles. Available from http://web4.infotrac.galegroup.com (visited 20 January 1999).

"Interlake Corp. Reports Earnings for Quarter to Dec. 31." New York Times , 28 January 1997.

Knill, Bernie. "Less Noise and More Speed in Belt Conveyors." Material Handling Engineering , February 1996.

Mancini, Leticia. "Movin' on Down the Line; Conveying Equipment." Chilton's Food Engineering , 17 July 1996.

"Prab Reports Record Profits in 1996." Business Wire , 23 January 1997.

"Self-powered Conveyors Get Smart." Machine Design , 18 April 1996.

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

United States Census Bureau. Survey of Manufacturers. 10 February 2000. Available from http://www.census.gov/prod/www/abs/97ecmani.html .



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