U.S. Fluid Power Industry

2017 ANNUAL REPORT ON THE U.S. FLUID POWER INDUSTRY

National Fluid Power Association www.nfpa.com At a glance: An American workhorse Fluid power (hydraulics and pneumatics) is the technology of choice for dozens of industries and hundreds of applications—and a workhorse of the U.S. economy.

$21.7 BILLION $5.9 BILLION 67,000 PEOPLE It’s a $21.7 billion dollar industry And the industry’s impact is global, that, here in the U.S., directly employs with exports valued at $5.9 billion. more than 67,000 people and indirectly supports jobs for 775,000 more.

Let’s take a closer look at uid power—enduring and essential.

Hydraulics and pneumatics both use a uid to transmit power from one place to another.

LIQUID GAS In hydraulics, the uid is a liquid – usually oil. In pneumatics, it’s a gas – usually compressed air.

Fluid power systems typically use valves to control direction, speed, force and torque. They can handle challenges from tunnel-boring through hard rock to precision placement of delicate machine components.

Hydraulic Advantages: Pneumatic Advantages: 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

Top Hydraulic Markets Top Pneumatic Markets

21% Construction Machinery 13% Class 48 Trucks (including vocational trucks) 14% Agricultural Machinery 5% Automotive (including light trucks) 9% Automotive (including light trucks) 4% Food Processing 6% Class 48 Trucks (including vocational trucks) 4% Medical Equipment 6% Material Handling (including conveying) 3% Packaging Machinery 4% Oil & Gas Machinery 3% Material Handling (including conveying) 4% Lawn & Garden 3% Semiconductor

0% 5% 10% 15% 20% 25% 30% 0% 5% 10% 15% 20% 25% 30%

© NFPA, 2017 Annual Report on the U.S. Fluid Power Industry Driving growth in our industry U.S. manufacturing of uid power components reached a record-high $21.7 billion in 2017. Seventy-ve percent of that total comes from hydraulic products, and 25 percent from pneumatic.

Shipments of U.S. Fluid Power Products

25.0

21.1 21.3 21.7 20.3 20.7 19.2 20.0 18.3 16.6 16.0

15.0 12.4

10.0 BILLIONS OF U.S. DOLLARS BILLIONS OF U.S.

5.0

0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Estimated

Percent Growth in U.S. Fluid Power Exports Growth of U.S. Fluid Power Exports

TOP 10 DESTINATIONS, 2012 – 2017 7.0 HONG KONG 69% 5.9 5.9 6.0 5.7 JAPAN 49% 5.5 5.5 5.3 GERMANY 37% 5.0 4.7 MIDEAST 33% 4.0 EUROPE/OTHER 31% 3.4 3.5 UNITED KINGDOM 30% 3.0 2.6 CHINA 24%

BILLIONS OF U.S. DOLLARS BILLIONS OF U.S. 2.0 ASIA/OTHER 22%

MEXICO 13% 1.0

CANADA 9% 0.0 0% 10% 20% 30% 40% 50% 60% 70% 80% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

© NFPA, 2017 Annual Report on the U.S. Fluid Power Industry Directly employing thousands in the U.S. An estimated 862 companies employ 67,149 people to manufacture uid power pumps, motors, valves, cylinders, actuators, hoses and ttings—with an annual payroll of more than $4.3 billion.

States with the highest number of Fluid Power Manufacturing Employees:

51 – 100 11 – 50 1 – 10 0

Source: U.S. Census Bureau 2016 data

© NFPA, 2017 Annual Report on the U.S. Fluid Power Industry Indirectly supporting jobs for thousands more Ten key industries that depend on uid power represent an estimated 23,200 U.S. companies and 778,056 employees—with an annual payroll of more than $49.5 billion.

States with the highest number of Fluid Power Dependent Employers:

1,001 – 3,000 501 – 1,000 101 – 500 28 – 100

Source: U.S. Census Bureau 2016 data

© NFPA, 2017 Annual Report on the U.S. Fluid Power Industry Looking ahead: Advancing technology NFPA’s Technology Roadmap for the Fluid Power Industry identies key research challenges— addressed with the help of a network of research laboratories and U.S. universities.

What uid power users want to better serve their customers:

Increased productivity Enhanced performance More uptime Lower total equipment costs Easier, more predictable maintenance Quieter, safer machines

Related R&D goals for uid power systems and components:

Increase energy eciency Improve reliability Reduce size while maintaining or increasing output Add “smart” capabilities Reduce environmental impact Further develop energy storage capabilities Widen scope for fast, accurate uid power control

© NFPA, 2017 Annual Report on the U.S. Fluid Power Industry Looking ahead: Improving sustainability Because uid power systems consume signicant energy, the NFPA promotes best practices to increase their energy eciency. Independent research shows these practices can cut energy use by nearly a third.

Best Practices for Best Practices for HYDRAULIC SYSTEMS PNEUMATIC SYSTEMS Eliminating parasitic losses Eliminating pressure drop Eective ow control Repairing leaks Smart use of accumulators Reducing pressure Pressure reducing valves Evaluating plumbing and storage Load-sensing pumps Optimizing air blow Pressure compensated pumps Employing intermediate bore-size cylinders Servo valves Correctly sizing components Hydraulic power units vs. electric motors

© NFPA, 2017 Annual Report on the U.S. Fluid Power Industry Looking ahead: Education Fluid power and the industries it serves depend on a highly educated workforce. The NFPA sees increasing investment in resources for uid power training, including courses at two-year and four-year colleges.

Number of 2-year and 4-year colleges in the NFPA Educator Network:

10 – 12 7 – 9 4 – 6 1 – 3

© NFPA, 2017 Annual Report on the U.S. Fluid Power Industry Driving growth, advancing change Today’s uid power technology delivers essential value to key industries throughout the U.S., keeping the industry on a forward path.

Tomorrow’s uid power technology has the potential to provide even greater productivity, eciency and sustainability, creating a forward path for the world.

To learn more: Visit www.nfpa.com

© NFPA, 2017 Annual Report on the U.S. Fluid Power Industry Data on industry manufacturing and exports are drawn from more than 85 manufacturers of uid power products by NFPA’s Condential Shipment Statistics (CSS) program, the industry’s only monthly source of aggregated data on SOURCES orders and shipments. Member companies are surveyed, data is compiled by a third party, and the results are sent to participants. Our goal is to help users understand trends and anticipate change in the industry.

Data on jobs and payroll are from the 2016 U.S. Census.