SIC 3532
MINING MACHINERY



This category includes establishments primarily engaged in manufacturing heavy machinery and equipment used by the mining industries, such as coal breakers, mine cars, mineral cleaning machinery, concentration machinery, core drills, coal cutters, portable rock drills, and rock crushing machinery. Establishments primarily engaged in manufacturing construction machinery are classified in SIC 3531: Construction Machinery and Equipment; those manufacturing well-drilling machinery are classified in SIC 3533: Oil and Gas Field Machinery and Equipment; and those manufacturing coal and ore conveyors are classified in SIC 3535: Conveyors and Conveying Equipment.

NAICS Code(s)

333131 (Mining Machinery and Equipment Manufacturing)

Industry Snapshot

Mining machinery and equipment manufacturers experienced a downturn in the late 1990s. Diminishing demand for domestically produced minerals fueled the initial decline, decreasing mining activity substantially. To combat weakened demand, mining equipment companies relied on the export market for business opportunities, but this market has been far from stable. The Asian economic crisis of the late 1990s decimated exports of mining equipment, as did the collapse of the Russian economy. Mining equipment shipments in 2000 were valued at $2.053 billion, compared to $3.003 billion, in 1998.

Organization and Structure

The mining equipment industry is highly dependent on mining activity in the United States and the world. When demand for mined materials is high, mine operators order new machinery; when demand is low, orders fall off. Mining machinery manufacturers are cushioned somewhat from demand cycles because different kinds of mines use similar machinery. Thus a decline in coal mining, for example, may be offset by a boom in salt mining.

The market share divisions within this industry were split among several categories. Underground mining machinery claimed 30.9 percent of the industry in 1997, up from 15.4 percent in 1995. In 1997, crushing, pulverizing, and screening machinery held 21.6 percent of the market, a jump of over 10 percent from 1995. Drills and other mining machinery, not elsewhere classified, controlled 5.3 percent of the market, down from 9.4 percent two years earlier. The remaining categories accounted for the other 42.2 percent.

The mining machinery industry draws its supplies from a variety of sources. Mill shapes and forms made from carbon alloy, stainless steel, copper, and aluminum are the most highly consumed materials. Castings from gray and malleable iron, steel, aluminum, and copper, and forgings from iron and steel are also heavily consumed. Fabricated structural metal products, speed changers, gears, industrial high-speed drives, and roller bearings constitute other significant materials consumed by the industry.

In 1997, 297 establishments manufactured mining machinery and equipment. Of this total number, 129 were larger companies that employed 20 or more workers. West Virginia led all other states in the number of businesses engaged in this industry, with 38 factories; Pennsylvania was home to 27 mining machinery manufacturers, followed by Illinois with 18. In terms of shipment volume, Pennsylvania generated the highest dollaramount with $703.4 million, 26.6 percent of total industry-wide shipment value. West Virginia placed second, with shipments worth $223.4 million, 8.5 percent of the total.

Background and Development

Mining came late to the United States, for early surveyors assumed that there were no significant mineral resources to be found in the country. Politicians and statesmen arguing over currency shortly after the Revolutionary War ruled out gold and silver because the United States supposedly did not have the resources to produce this type of exchange. Benjamin Franklin said, "Gold and silver are not the produce of North America, which has no mines." Another eighteenth-century observer, Cornelius de Pauw of the Netherlands, remarked that "In all the extent of America there are found but few mines of iron, and these so inferior in quality to those of the old continent that it cannot even be used for nails." As history has shown, these remarks proved wildly presumptuous. Explorers moving westward across the country in the nineteenth century discovered rich reserves of gold, silver, lead, copper, iron, nickel, coal, and many other ores and minerals. The country proved far richer than any of the original settlers imagined.

The first mechanisms to dig and extract mineral resources from the earth were hammers, chisels, shovels, and buckets. More advanced operations used single cars on rail ways to convey materials to the surface of underground mines. The hammer and chisel were the first instruments to be replaced by pneumatically-powered cutting devices. British inventors were nearly one decade ahead of the Americans in the development of mechanical power to cut into the ground. In 1850, a Glasgow mine owner proved compressed air could be used to power underground machinery. By 1853, a cutting chain machine was developed, which matured into a machine called the Gartsherrie, patented in 1864. The Gartsherrie is considered the precursor of modern coal cutters.

A rock drill was invented and patented by Simon Ingersoll in 1870. After Ingersoll's patent changed hands several times and improvements to his invention had been made, Addison Rand was able to persuade mining companies to use his new technology instead of hammers and chisels. The two inventors came together in 1905 and advertised themselves as "the largest builder of air power machinery in the world." Ingersoll's side of the operation specialized in construction work, while Rand's specialized in underground mining. Today, Ingersoll-Rand is a highly diversified company with many interests, most of which are related to its origins in mining.

Though the industrial revolution was dependent on abundant supplies of coal to generate power, the coal mining industry lagged far behind others in using machinery to ease the work of men. Men manually shoveled coal into coal cars well into the twentieth century. Keith Dix, author of What's a Coal Miner to Do? , wrote: "It is ironic that the advance in technology and management, which gave modern industry its momentum, bypassed the one industry on which most others depended." By 1948, roughly 33 percent of the country's underground coal continued to be loaded by hand.

Joseph Joy, who was responsible for the mechanization of coal loading, is considered the single most significant inventor in this industry; he was awarded 106 patents between 1904 and 1944. Joy developed the Joy Loader in response to two insistent demands: American industry's demand for an increasing supply of coal and newly organized mineworkers' demand for improvements in working conditions that were frequently subhuman. Following the development of the Joy Loader, men would no longer need to shovel coal by hand, though many would lose their jobs as a result. The Joy Manufacturing Company, known today as Joy Technologies Incorporated, claimed that Joy Loaders accounted for 72 percent of all coal loaded mechanically by 1954.

During the 1970s, the U.S. Government pushed the development of new mining technologies through legislation on health and safety, air and water pollution, and environmental protection of the land mined. Such efforts changed the face of the mining industry, requiring skilled staff to operate and maintain mechanized production. Productivity in underground coal mines was hampered due to additional resources required to prevent accidents, black lung disease, and acid-runoff. In surface mining, additional resources were necessary to meet land restoration standards and to negotiate with those who claimed the land for agricultural purposes. Mining machinery manufacturers sought to capitalize on the changing industry by providing machines to do the required jobs.

The mining equipment industry suffered a substantial drop in shipments during 1982, when shipments were valued at $2.1 billion. By 1983 they fell to $1.5 billion and only recovered to $1.6 billion by 1991. The industry continued a slow growth trend with total sales at approximately only $1.7 billion in 1996.

By the 1980s, U.S. Government interest in mining was concerned with addressing import-export imbalances. A 1986 report suggested that foreign penetration of the U.S. machinery market was primarily due to the strength of the dollar, high domestic material and capital costs, and generous financing and credit terms offered by some foreign governments to support export sales. The report projected that U.S. mining equipment manufacturers would face a steadily growing export market, shifting to Latin America, Asia, and Africa. Current world events, such as the North American Free Trade Agreement, the emergence of Korean and Taiwanese manufacturers, and the plea from South Africa, a major mining country, to lift trade sanctions, underscore the significance of these projections and the importance for U.S. manufacturers of developing the export market.

Due to the high price of new mining machinery, the used-machinery market was very healthy, especially outside the United States. This demand created an incentive for thieves to steal equipment, which is a relatively easy task. Machinery is usually left in unsecured areas, and is easy to start, difficult to trace, and easy to sell. The increase in equipment thefts in the early 1980s spurred Deere & Company to issue a Manufacturer's Certificate of Origin (MCO),which was adopted by the Construction Industry Manufacturers Association in 1983. Since then more than 20 manufacturers have used the MCO, which has reduced the thefts of certain machinery. As used equipment buyers become more aware of the frequency of machinery theft, more MCOs have been requested upon the purchase of used-equipment.

U.S. manufacturers maintained a significant, though not a leading, share of the world mining machinery industry in the early 1990s. The strongest competitors in the world market were Japan, Germany, France, Canada, South Korea, Taiwan, and South Africa. While mining in the United States dropped sharply due to a worldwide surplus of metal and mineral supplies, mining abroad expanded quickly, opening new markets for U.S. manufacturers. The largest potential market was the former Soviet Union, which had vast amounts of natural resources. Although much of this marketplace was speculative in the early 1990s, analysts suggested that the way to jump-start the economy of Russia and the other nations was to enter the world marketplace through the sale of these resources. Many of the former Soviet Union's mines were in dire need of modernization and capital investment, providing a ready market for U.S. mining machinery equipment.

Current Conditions

The mining equipment industry's reliance on exports was the source of many of its challenges in the late 1990s. Asia—once a key market for mining equipment—had suffered from a severe economic downturn in 1997. Once-busy mining operations in China and Australia slowed or halted production, thereby limiting the amount of equipment they needed. At the same time, other Asian industries also cut back production in the wake of downturn. As factories limited production, they needed less coal, which adversely impacted the mining equipment industry as well. According to the Wall Street Journal , "coal consumption … slowed world-wide" in the late 1990s. Russia's mining operations encountered hard times, as well, and U.S. equipment manufacturers watched as this important market for their goods dried up.

The situation in the United States was not much better. Copper prices were near record lows, which stalled copper mining operations. Nevertheless, in July of 1999, P&H Mine Pro, the above-ground mining business of Harnischfeger Industries received a substantial order. Southern Peru Copper Corp. purchased over $20 million of equipment for its expanding Cuajone copper mine in southwestern Peru. P&H sold two electric mining shovels, three rotary blasthole drills, and a large wheel loader in this transaction.

Industry shipments fell from $3.003 billion in 1998 to $2.151 billion in 1999 and to $2.053 billion in 2000. The cost of materials declined from $1.54 billion in 1998 to $1.12 billion in 2000. Over the same time period, the total number of industry employees dropped from 14,599 to 11,237.

Industry Leaders

The leading mining equipment manufacturing company in 1998 was the Milwaukee-based Harnischfeger Industries. Harnischfeger's operations included P&H MinePro Services, which produced above-ground mining equipment and Joy Mining Machinery, which focused on below-ground equipment, as well as a pulp and papermaking machinery division. With its mining equipment sales for 1998 topping $1.2 billion, Harnischfeger controlled about 70 percent of the total market. Despite its considerable size, though, Harnischfeger had fallen on hard times. Like others in the industry, it struggled to overcome disappearing markets in Asia and Russia. Moreover, the company sought to diversify in the late 1990s, which left it dangerously overextended. Harnischfeger cut 20 percent of its work force in August of 1998. In 1999, the company was forced to enter Chapter 11 restructuring proceedings. Other key players in the industry included Texas-based Letourneau, Inc., Bucyrus International, and Svedala Industries, Inc., which manufactured mineral processing equipment, grinding mills and crushers.

Workforce

The employment level in this industry dropped sharply between 1984 and 1987, to 13,600 people. From 1989 to 1991, employment rose about 10 percent from the 1987 level, but then began to decline again in 1992. In 2000, mining machinery and equipment manufacturers employed 11,237 people, of which only 7,244 were production workers. The employees directly involved in production earned an average wage of $15.04 per hour, and worked an average of about 40 hours each week. Pennsylvania was home to the greatest number of workers in this industry, with 2,821 in 1997, and West Virginia followed with 1,235.

U.S. Department of Labor projections for the year 2005 indicate that the workforce of the mining machinery industry will change significantly. Welders and cutters, who account for the largest segment in this industry, are expected to reduce their numbers by 11.1 percent. Others facing drops of 10 percent or more include assemblers, welding machine setters, machine builders, secretaries, inspectors, truck and tractor operators, and material handlers. Machinists are expected to increase employment levels by 6.8 percent, sales workers by 18.2 percent, mechanical engineers by 9.5 percent, numerically controlled machine tool operators by 9.5 percent, industrial machinery mechanics by 18.3 percent, industrial production managers by 15.7 percent, engineering technicians by 6.0 percent, combination machine tool operators by 8.3 percent, and coating/painting/spraying machine operators by 7.5 percent.

Research and Technology

Mining equipment is considered mature in terms of design and innovation. Therefore, any improvements rely on research and development of new materials and advanced sensing, control, and computer techniques. Innovations in technology have typically sought to achieve gains in productivity or worker safety. The dangers of underground mining prompted underground machinery designers to develop remote controlled and automated mining systems. These systems reduce production costs, increase productivity, and increase worker safety.

Other technological devices are found in surface mining, where sensing and control systems are frequently installed. Blast hole drills employ automated systems that regulate the speed and feet rate of the drill bit. Mining shovels have on-board microprocessors, which relay information and record data. Because they can be added to existing equipment, these technologies have been developed by many manufacturers.

Another new machine is Caterpillar's autonomous truck control system, which was introduced to the commercial market in 1998 in limited numbers. The benefits of the driverless robot mine truck include: it's less expensive than hiring human truck drivers; it works continuously with no breaks; and it will operate in remote locations, such as northern Canada, where it is difficult to hire and get truck drivers to the machines at all. The Caterpillar truck was one of several robot mine trucks that was expected to be in general operation worldwide by the year 2000.

Further Reading

Darnay, Arsen J., ed. Manufacturing U.S.A. 5th ed. Detroit: Gale Research, 1996.

Laing, Jonathon. "Grave Digger: How Harnischfeger's Flashy Chieftan Drove the Firm to Ruin" Barron's 12 July 1999.

Leach, Mark, et. al. "Machinery (Construction and Mining)." The Value Line Investment Survey (Part 3 - Ratings and Reports). 8 November 1996.

National Mining Association. "Mining Equipment Statistics" Available at http://www.nma.org/eqipstats.html

Quintanilla, Carl. "Harnischfeger Has Loss, To Cut workforce 20 Percent" Wall Street Journal 27 August 1998.

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

Woof, Mike. "Look - No Hands!" World Mining Equipment , December 1996



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