SIC 3566
SPEED CHANGERS, INDUSTRIAL HIGH-SPEED DRIVES, AND GEARS



Firms in this industry manufacture speed changers, industrial high-speed drives, and gears. Hydrostatic drives are classified under SIC 3594: Fluid Power Pumps and Motors ; automatic transmissions are in SIC 3714: Motor Vehicle Parts and Accessories ; and aircraft power-transmission devices are found in SIC 3728: Aircraft Parts and Auxiliary Equipment, Not Elsewhere Classified.

NAICS Code(s)

333612 (Speed Changers, Industrial High-Speed Drive, and Gear Manufacturing)

Industry Snapshot

The industry provides basic mechanical power transmission components used in most industrial machinery. It demonstrated slow but steady growth throughout the late 1990s, with the value of shipments increasing from $2.39 billion in 1997 to $2.47 billion in 2000. Companies in this industry downsized during the late 1990s; the total number of employees decreased from 16,182 in 1997 to 15,477 in 2000. Over the same time period, the number of production workers fell from 11,231 to 10,944. Over a quarter of the industry's shipments were generated by only four establishments. Trends affecting this industry during the late 1990s included automation production technology and government restrictions on industrial waste.

Background and Development

Typical manufacturing includes metal grinding, cutting, degreasing, and surface finishing (including hardening). Such metalworking includes basic metal-shaping, heat treatment, and metallurgic modifications using chemicals during processing.

The origin of the gear concept remains uncertain. It was not one of the basic five "simple machines" defined by Hero of Alexandria (the wheel and axle, the lever, the pulley, the wedge, and the screw), but it probably evolved from the screw. Until the Industrial Revolution, craftsmen used the gear primarily in small mechanisms like clocks, or to guide and locate machinery components. The idea of using it to transmit power in larger machines did not gain prevalence until the 19th century in England.

In America, the technology and the expertise of local artisans to produce quality gears lagged behind Europe until near the end of that century. In 1896, F.W. Fellows patented a gear-shaping machine that could turn out a wide variety of gears quickly and cheaply. The rise of the "American system" of mass manufacturing on an assembly line made such tools quickly popular, displacing the traditional hand-chiseled and filed gears of Europe. These two machine concepts became the dominant technology used in the manufacture of almost all gears in the United States and elsewhere.

By the 1990s, however, the advantages of mass production faded in the face of demands for more flexibility in the design and delivery of individual part orders. Gear manufacturers shifted to heavily automated production systems using Statistical Process Control (SPC), Computerized Numerical Control (CNC), and Just-In-Time (JIT) philosophies. These systems allowed greater precision and faster production shifts. Three-dimensional, computer-digitized master components maintain closer tolerances than can be achieved even with a skilled craftsman, and allow the same master to be used as a benchmark at production facilities around the globe.

In 1995, industry shipments reached $2.13 billion, according to the U.S. Department of Commerce's Annual Survey of Manufactures , up from the 1992 value of $1.82 billion. In 1992 there were 256 companies in this industry, with the largest four companies accounting for 28 percent of the total value of shipments. In 1995, firms in this industry averaged 142 employees per establishment, although the largest four establishments (by sales) each had 900 employees or more.

Since the industrial process of making large quantities of gears produces large amounts of waste by-products, the Environmental Protection Agency (EPA) targeted the industry as a waste minimization opportunity in 1992. In particular, it noted that the use of trichloroethane as a degreasing agent would eventually need to be replaced with other chemical solvents or a more advanced technology like ultrasonics. Trichloroethane is one of 17 chemicals listed by the EPA as an industrial toxin. International agencies have identified trichloroethane as an ozone-depleting substance contributing to global warming. For this reason, production of trichloroethane for emissive uses was banned in 1995 under amendments to the Clean Air Act of 1992. Chemical manufacturers have attempted to preserve sales by offering alternative chlorinated solvents as replacements to trichloroethane.

Current Conditions

According to the U.S. Census Bureau, 266 establishments operated in this category in the late 1990s. Industry-wide employment totaled 15,477 workers receiving a payroll of more than $613 million in 2000. Of this number, 10,944 employees worked in production, putting in more than 21 million hours to earn wages of almost $385 million. Overall shipments for the industry in 2000 were valued at almost $2.48 billion.

Industry Leaders

Nashville-based MagneTek Inc. Lighting and Electronics Div. led the industry with sales of $860 million for its fiscal year ended June 30, 1997. Dayco Products Inc. of Dayton, Ohio, followed with $850 million in sales for its fiscal year ended February 28, 1998. Baldor Electric Co. of Forth Smith, Arkansas, placed third in the industry with 1998 sales of more than $589 million. Fasco Motors Group of Chesterfield, Missouri, generated $470 million in 1997 sales. Gleason Corp. of Rochester, New York, filled out the top 5 industry leaders with 1998 sales of $409 million.

Workforce

Employment in this industry peaked in 1974 at 27,000, then dropped to 17,400 in 1986 before recovering to 19,300 by 1988. Employment has steadily fallen since that time, however. By 2000, the industry employed 15,477 people, with 10,944 production workers. The average hourly wage in this industry in 2000 was $18.29. The leading states in employment were Illinois, Indiana, New York, and Wisconsin.

Further Reading

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

Hoffman, John. "Chlorinated Solvents on a Phaseout Course." Chemical Marketing Reporter , 25 September 1995.

Infotrac Company Profiles, 17 February 2000. Available from http://web4.infotrac.galegroup.com .

Moody's Industrial Manual , New York: Investors Service, Inc., 1996.

Standard & Poor's Register of Corporations, Directors and Executives. New York: McGraw-Hill, 1996.

U.S. Census Bureau. 1995 Annual Survey of Manufactures. Washington: GPO, 1996.

U.S. Census Bureau. 1997 Economic Census , 17 February 2000. Washington, D.C.: GPO, 1999. Available from http://www.census.gov/prod/ec97/97m3336b.pdf .

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

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