a

2018 ANNUAL REPORT ON THE U.S. FLUID POWER INDUSTRY Foreword

Welcome to our sixth annual report on the U.S. fluid power industry—one of the most important yet least understood industries in the U.S. economy. Most people do not know that:

• Fluid power ( and ) is a workhorse across the U.S. economy, the technology of choice for dozens of industries and hundreds of applications. • In 2018, the manufacture of fluid power components was a $23.5 billion industry in the United States. It was also competitive worldwide, with 2018 exports valued at $6.5 billion. Fluid power systems transmit more power • It is estimated that 862 companies in the United States employ more than 67,149 people in the manufacture of fluid power components, representing an annual payroll of more than $4.3 billion. in a smaller space than other forms of power • Fluid power has a major downstream economic impact. Ten key industries that depend on fluid power include an estimated 23,200 companies in the United States, employing more than 778,056 people for an annual transmission, making fluid power payroll of more than $49.5 billion. • Fluid power and the industries it serves depend on a highly educated workforce, leading to investment in new the technology of choice across dozens fluid power education and training resources. More two-year and four-year colleges are teaching fluid power. of industries and hundreds of applications. • Fluid power systems consume a major portion of our nation’s energy. Existing technologies and best practices have been shown to reduce energy use in some fluid power systems by 30% or more. • The fluid power industry is identifying and addressing key research challenges to continue meeting the needs of its diverse customer base. • Fluid power has an active industry/academic coalition that focuses on these key research challenges. FLUID POWER IS A Significant industry and government resources support this important cause.

In short, contrary to some reports, fluid power is a modern and thriving technology. To learn more or to have me speak to your company or organization, please contact me. I love telling our industry’s important story. WORKHORSE ACROSS Best regards, THE U.S. ECONOMY

Fluid power includes hydraulic and pneumatic Eric Lanke President/CEO technologies, which both use a fluid under National Fluid Power Association [email protected] pressure to transmit power from one place to another. In hydraulics, the fluid is a . In pneumatics, it is a gas.

2018 Annual Report on the U.S. Fluid Power Industry | 3 Here’s what fluid power can do in some of its top markets: Aerospace Food Processing and Packaging Lawn and Garden Equipment Material Handling Only fluid power can lift a jumbo jet, bank Only fluid power can keep today’s food Only fluid power can deliver the perfect Only fluid power can keep global supply and roll a fighter plane, and keep a rocket production processes clean and safe. cut for your backyard or favorite golf course. chains moving. on course.

Agricultural Machinery Biomedical Cars and Trucks Metalworking and Machine Tools Mining Machinery Oil and Gas Machinery Only fluid power can feed the world by Only fluid power can precisely control Only fluid power can make cars and trucks Only fluid power can push, pull, press, Only fluid power can reach and remove Only fluid power can energize the world planting and harvesting massive fields. the life-saving and sustaining equipment easy to steer and stop and provide the cut, and transform raw materials into valued material without sparking disaster. by bringing energy from deep in the earth. in our nation’s hospitals. regenerative power to boost fuel efficiency. finished products.

The two fluid power technologies offer these industries and others unique advantages:

Hydraulics Pneumatics • High power-to-weight ratio • Inexpensive and lightweight • High torque at low speed • Simple control systems • Ability to hold torque constant • Clean and non-reactive in magnetic environments • Ruggedness and reliability • Speed and precision

Construction Machinery Entertainment Factory Automation Power Generation Only fluid power can build roads Only fluid power can animate the rides Only fluid power can automate the heavy Only fluid power can harvest energy from and buildings, moving mountains and monsters at our amusement parks. and precise manufacturing processes the wind and waves. when necessary. that keep our economy moving.

For more examples, check out our social media hashtag #ONLYFLUIDPOWERCAN

4 | 2018 Annual Report on the U.S. Fluid Power Industry 2018 Annual Report on the U.S. Fluid Power Industry | 5 25.0 23.5

21.1 21.3 21.4 20.3 20.7 20.0 19.2 18.3

16.0 15.0

12.4

10.0

BILLIONS of U.S. DOLLARS BILLIONS of U.S. 5.0

0.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 est.

Shipments of U.S. Fluid Power Products | In 2018, the manufacture of fluid power components was a $23.5 billion industry in the United States. It is the highest total in the history or the industry.

20.0 6.0 18.2 18.0 5.3 5.3 5.3 5.1 5.2 15.8 16.0 16.2 5.0 4.9 16.0 15.4 15.6 4.6 14.6 4.4 14.0 13.9 4.0 3.9 12.0 12.1 3.3 3.0 FLUID POWER IS A  10.0 9.1 8.0 2.0 6.0 4.0 1.0 BILLIONS of U.S. DOLLARS BILLIONS of U.S. $23.5 BILLION BUSINESS 2.0 DOLLARS BILLIONS of U.S. 0.0 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 est. est. IN THE UNITED STATES Shipments of U.S. Hydraulic Products | Shipments of U.S. Pneumatic Products | The manufacture of hydraulic products was a $18.2 The manufacture of pneumatic products was a $5.3 billion business in 2018, 77% of the fluid power total. billion business in 2018, 23% of the fluid power total.

6 | 2018 Annual Report on the U.S. Fluid Power Industry 2018 Annual Report on the U.S. Fluid Power Industry | 7 7.0 6.5 6.0 5.9 5.9 5.7 5.3 5.5 5.5 5.0 4.7

4.0 3.5 3.0 2.6 2.0

1.0 BILLIONS of U.S. DOLLARS BILLIONS of U.S. 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Growth of U.S. Fluid Power Exports | Fluid power is also strongly competitive around the world, with 2018 exports valued at $6.5 billion. This is also the highest value we’ve seen in the history of the industry.

1.2

1.0

0.8 CANADA MEXICO

0.6 CHINA GERMANY UNITED KINGDOM FLUID POWER IS 0.4 BRAZIL AUSTRALIA JAPAN SINGAPORE

0.2 FRANCE COMPETITIVE DOLLARS BILLIONS of U.S. 0.0

WORLDWIDE Exports to Major Trading Partners | Our top five export destinations are Canada, Mexico, China, Germany and the United Kingdom.

8 | 2018 Annual Report on the U.S. Fluid Power Industry 2018 Annual Report on the U.S. Fluid Power Industry | 9 It is estimated that 862 companies in the United States employ more than 67,149 people in the manufacture of fluid power components, representing an annual payroll of more than $4.3 billion.

States with the highest number of Fluid Power Manufacturing Employees: FLUID POWER EMPLOYS 51-100 31-50 1-30 0

67,149 PEOPLE IN THE There are fluid power employers in47 of the 50 states, with the highest concentrations in California, Texas, Illinois, Michigan and Ohio. UNITED STATES While these employers fill traditional positions in management, finance, sales, and engineering, they most specifically seek: • Design engineers who can design fluid power systems and • Mechanics who can assemble and install fluid power systems components as well as develop new concepts, applications and components, as well as troubleshoot and maintain systems and improvements to existing installations. on machines used in every facet of industry. • Sales engineers who can market and sell fluid power • Technicians who can operate machines equipped with fluid systems and components, working closely with fluid power systems as well as manufacture and test fluid power power manufacturers, distributors and customers. systems and components.

10 | 2018 Annual Report on the U.S. Fluid Power Industry 2018 Annual Report on the U.S. Fluid Power Industry | 11 Dozens of U.S. industries depend on fluid Ten key industries that depend on power technology to keep operations fluid power include an estimated 23,200 running & products competitive. companies in the United States, employing more than 778,056 people for an annual

The top five hydraulic markets (shown in white) represent 53% of all hydraulic component sales. payroll of more than $49.5 billion.

Construction Machinery 21% 29% Other

1% Plastics Machinery 1% Paper Machinery Agricultural Machinery 13% 1% Aerospace Product & Parts 1% Metalworking & Machine Tools 2% Power Generation 3% Mining Machinery Automotive (Inc. Light Trucks) 7% 4% Lawn & Garden 4% Oil & Gas Machinery Material Handling (Inc. Conveying) 6% 6% Class 4-8 Trucks (Inc. Vocational Trucks)

The top five pneumatic markets(shown in white) represent 31% of all pneumatic component sales.

59% Other States with the highest number of Fluid Power Dependent Employees:

1,000-2,000 501-1,000 101-500 0-100

1% Oil & Gas Machinery 1% Sawmill & Wood-working Machinery 1% Printing Machinery 2% Metalworking & Machine Tools 2% Packaging Machinery Employers who depend on fluid power are in all 50 states, with the highest concentrations in 3% Material Handling (Inc. Conveying) California, Texas, Illinois, Michigan, Ohio, Pennsylvania, New York and Florida. Class 4-8 Trucks (Inc. Vocational Trucks) 14% 4% Food Processing 4% Automotive (Inc. Light Trucks) Semiconductor 5% 4% Medical Equipment

Generally speaking, pneumatics is diversified into many more individual markets than hydraulics.

12 | 2018 Annual Report on the U.S. Fluid Power Industry 2018 Annual Report on the U.S. Fluid Power Industry | 13 Fluid power and the industries it serves depend on a highly educated workforce.

Investment continues in new fluid power education and training resources, and more two-year and four-year colleges are teaching fluid power.

Fluid power systems consume a significant Number of 2-year and 4-year colleges portion of our nation’s energy. in the NFPA Educator Networks 10-12 4-6

The U.S. Department of Energy says fluid power systems are responsible for up to 3% of the energy consumed in the United States, 7-9 1-3 through fluid power’s many mobile, industrial and aerospace applications. Many of these systems are well-designed and well-maintained, making them energy efficient, but others lack proper design and maintenance. Some of these systems can reduce energy use through existing technologies and best practices, including:

Hydraulic systems: Pneumatic systems: The NFPA Educator Network includes 86 two-year colleges Four-year universities: and 55 four-year universities throughout 14 states, with • Understand fluid power benefits and limitations • Eliminating parasitic losses • Eliminating pressure drop the highest concentrations in Wisconsin, Illinois and Texas. • Controlling flow • Repairing leaks • Understand concept and theory of fluid power laws and NFPA works with these schools to teach the competencies principles, including energy transfer and power efficiency • Smart use of accumulators • Reducing pressure most needed by fluid power industry employers: • Understand fluid power components and circuits • Pressure reducing valves • Evaluating plumbing and storage Two-year colleges: • Understand machine requirements and translate into • Load sensing pumps • Optimizing air blow • Read circuit diagrams and understand the function of fluid power system requirements • Pressure compensated pumps • Employing intermediate bore-size cylinders components in fluid power systems • Apply design, simulation and analysis tools to fluid power components and systems • Servo valves • Correctly sizing components • Determine and perform calculations to move loads in fluid power systems (e.g., torque, speed, power) • Size components in fluid power systems • Hydraulic power units vs. electric motors • Specify and size fluid power system components (e.g., pumps, • Integrate sensing and electronic control functions with fluid valves, cylinders, hoses, filters, reservoirs, accumulators) Several companies perform audits to identify and troubleshoot weaknesses in power systems. One such provider reports power components and systems that when these technologies and best practices are implemented, energy savings average 30%, and the cost of implementation is • Analyze and troubleshoot problems with fluid power systems • Work hands-on with fluid power components and systems recouped in 4-5 months. • Program and connect electronic controls for fluid power systems • Inspect and analyze for product failure, and develop • Promote safe working conditions with pressurized systems corrective action

14 | 2018 Annual Report on the U.S. Fluid Power Industry 2018 Annual Report on the U.S. Fluid Power Industry | 15 The fluid power industry is identifying and addressing key research challenges.

NFPA’s Technology Roadmap for the Fluid Power Industry identifies key research challenges for the industry to continue meeting the needs of its diverse customer base.

Fluid power customers want to provide their customers with:

 Increased productivity Increased Lower total and and performance availability/uptime lifecycle costs

NFPA’S TECHNOLOGY Increased ease Quieter machines Machines that comply / predictability of maintenance with safety regulations ROADMAP HELPS THE To meet these needs, the fluid power industry must tackle seven broad research challenges, identified in the 2017 NFPA Technology Roadmap: • Increase the energy efficiency of fluid power components • Reduce the environmental impact of fluid power components INDUSTRY IDENTIFY and systems. and systems (e.g., lower noise, eliminate leaks). • Improve the reliability of fluid power components and systems • Improve and apply the energy storage capabilities of fluid (e.g., increase uptime, reduce maintenance requirements, power components and systems. make fluid power safe and easy to use). AND ADDRESS ITS KEY • Improve and widen the scope of application for fast, accurate, • Reduce the size and weight of fluid power components and cost-effective fluid power control. systems while maintaining or increasing their power output. • Build “smart” fluid power components and systems (i.e., ones RESEARCH CHALLENGES that perform self-diagnostics and troubleshooting and offer “plug and play” integration).

16 | 2018 Annual Report on the U.S. Fluid Power Industry 2018 Annual Report on the U.S. Fluid Power Industry | 17 A nationwide network of research universities and laboratories work with the fluid power industry

to address the research challenges identified by theNFPA Technology Roadmap.

FLUID POWER HAS AN ACTIVE INDUSTRY/ While much of the funding for this research comes from the In 2017, the U.S. Department Energy began a $5-million-a- industry itself, two recent government initiatives have dramatically year research program to improve the efficiency of fluid ACADEMIC COALITION increased the network’s size and scope. power systems in off-highway vehicles. This program has created research infrastructure through significant funding for three national In 2006, the National Science Foundation gave the University of laboratories, and to date funded three large research projects: Minnesota a $40 million grant to create the Center for Compact and Efficient Fluid Power (CCEFP), an engineering research center • Efficient, Compact, and Smooth Variable Propulsion Motor THAT FOCUSES ON ITS KEY focused on fluid power technology. Through the CCEFP, hundreds of awarded to the University of Minnesota industry-directed research projects have been completed, helping to create a new generation of academic research faculty for fluid power. • Hydraulic Electric Architectures for Mobile Machines awarded The CCEFP’s most recent funded projects include: to the University of Minnesota RESEARCH CHALLENGES • Individual Electro-Hydraulic Drives for Off-Road Vehicles • Polymer-Enhanced Fluid Effects on Mechanical Efficiency of Hydraulic Pumps awarded to the Milwaukee School awarded to Purdue University of Engineering and the University of California at Merced These projects represent just a small portion of the research • Seamless Electric to Hydraulic Conversion awarded to collaborations between the fluid power industry and its the University of Minnesota and the University of Wisconsin academic partners.

18 | 2018 Annual Report on the U.S. Fluid Power Industry 2018 Annual Report on the U.S. Fluid Power Industry | 19 a

DRIVING GROWTH, ADVANCING CHANGE

Today’s fluid power technology delivers essential value to key industries throughout the U.S., spurring advancement for the industry.

Tomorrow’s fluid power technology has the potential to promote even greater productivity, efficiency and sustainability, driving advancement for the world.

To learn more, visit www.nfpa.com

National Fluid Power Association  6737 West Washington Street | Suite 2350  Milwaukee, WI 53214  (414) 778 3344