SIC 3823 Industrial Instruments for Measurement, Display, and Control of Process Variables, and Related Products

SIC 3823

This category includes establishments primarily engaged in manufacturing industrial instruments and related products for measuring, displaying (indicating and/or recording), transmitting, and controlling process variables in manufacturing, energy conversion, and public service utilities. These instruments operate mechanically, pneumatically, electronically, or electrically to measure process variables such as temperature, humidity, pressure, vacuum, combustion, flow, level, viscosity, density, acidity, alkalinity, specific gravity, gas and liquid concentration, sequence, time interval, mechanical motion, and rotation.

Establishments primarily engaged in manufacturing electrical integrating meters are classified in SIC 3825: Instruments for Measuring and Testing of Electricity and Electrical Signals; those manufacturing residential and commercial comfort controls are classified in SIC 3822: Automatic Controls for Regulating Residential and Commercial Environments and Appliances; those manufacturing all liquid-in-glass and bimetal thermometers and glass hydrometers are classified in SIC 3829: Measuring and Controlling Devices, Not Elsewhere Classified; those manufacturing recorder charts are classified in the Commercial Printing industries; and those manufacturing analytical and optical instruments are classified in SIC 3826: Laboratory Analytical Instruments and SIC 3827: Optical Instruments and Lenses.

NAICS CODE(S)

334513

Instruments and Related Product Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables

INDUSTRY SNAPSHOT

Approximately 900 U.S. companies manufactured process control instruments (PCIs) in the mid-2000s. The value of all industry shipments in 2003 was $6.94 billion. Although the industry declined slightly during 2002 and 2003 due to recessive economic conditions, by 2004 PCI shipment values were once again showing positive gains. Despite the two-year slowdown, because of the industry's technology-intensive products, wide variety of product types, and the tendency of end-user industries to continuously invest in process improvements, PCI shipment values have remained relatively stable in recent years, averaging $7.25 billion from 1999 to 2003.

Although smaller firms (less than 100 employees) accounted for 90 percent of the industry's establishments, the 10 percent of companies with more than 100 employees accounted for approximately 65 percent of the industry's total value of shipments in the mid-2000s. As computerized advanced process control techniques continued to become the norm in U.S. industry, PCI end-users increasingly demanded more accurate sensing devices and process control computers (or "controllers") capable of providing real-time direction of a sophisticated range of manufacturing process operations.

The largest single segment of the PCI industry in the mid-2000s was electronic systems. Both nonunified and unified architecture types accounted for approximately 25 percent of shipment values. Other components among the broad array of PCI products included industrial multifunction process computers (5 percent), transmitters producing standardized electronic analog transmission signals (5 percent), and various types of mass flow instruments (5 percent). In recent years, intense competition from foreign PCI manufacturers challenged U.S. producers at home; at the same time, growing markets in Asia, Eastern Europe, and the former Soviet Union offered U.S. producers opportunities to expand their leading role in the international PCI marketplace.

ORGANIZATION AND STRUCTURE

At the heart of industrial process control is the measurement of certain variables, such as temperature and pressure, used in manufacturing processes to transform raw materials into finished products. Measurements made by sensors, meters, or other measuring instruments on the manufacturing process line are sent by a transmitting device to an indicator or recorder for display and/or to a controller (or to a computer) where the data are compared to a pre-established set of parameters. The controller calculates the difference between the measured data and the programmed "setpoint" values and, if necessary, adjusts the process variables to conform to the desired parameters. This feedback-and-response cycle is called a loop, and continuous, repeating loops are performed during the industrial process to ensure product quality, efficient use of raw materials, and process safety. Processes typically involving control include reacting, heating and cooling, distilling, petroleum refining, and pulp and paper manufacturing.

PCI End-Users

The PCI industry is tightly linked to its end-user industries and to the process or so-called "wet" industries in particular. Capital expenditures by these industries on plant and process improvements have a direct effect on the profits of PCI manufacturers. The process industries use raw materials in fluid or bulk solid form for product manufacture and include the chemical, petroleum, petrochemical, pharmaceutical, pulp and paper, food processing, plastics, and municipal water and waste treatment industries.

Historically, the process industries have accounted for almost two-thirds of all PCI purchases. The chemical industry alone traditionally purchases 25 percent of all PCI shipments, followed by the petroleum (19 percent), pulp and paper (11 percent), and food processing industries (7 percent). Other important purchasers include non-process or discrete-piece manufacturing industries, which manufacture iron, steel, and nonferrous metals (such as aluminum and copper), glass and ceramic products, textiles, and machine tools; mining industries; and electric and gas utilities.

Competitive Structure

In spite of historically strong growth performance and high technology product groups, the PCI industry has traditionally been undervalued by the financial community. This sometimes prevented PCI companies from attracting the capital necessary to maintain growth and made firms in the industry ideal targets for acquisition by foreign and domestic companies. Although changes in the PCI industry's structure challenged the traditional hold of the largest companies in the 1990s, the major producers still dominated the industry and were the leaders in sales and employment in the mid-2000s. Due to advances in digital technology, however, PCI system integration capabilities and product compatibility increased considerably. As a result, manufacturers who formerly dominated the industry faced competition from firms whose products could be tied into larger manufacturers' systems, thereby allowing these smaller firms to penetrate closed markets.

An increasing number of end-user manufacturers sought out PCI vendors who could provide them with complete integrated systems for their process control applications. Instrument manufacturers who formerly produced only components were thus forced to broaden their product lines. Despite increasing system compatibility, PCI vendors still competed in the areas of price, quality, added features, delivery, reputation, reliability, and service.

Legislation

Antipollution regulations by the Environmental Protection Agency (EPA)—the largest single regulatory influence on the PCI industry—required manufacturers to purchase instruments to monitor and control their industrial waste levels. Mandated spending to...

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