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Gear Industry
Results of Research on Trends in Employment,
Outsourcing, Machine Tool Investment and
Other Gear Industry Business Practices
In October, Gear Technology conducted an anonymous survey tured. They work for gear manufacturing job shops (42%), captive
of gear manufacturers. Invitations were sent by e-mail to thousands shops at OEMs (48%) and shops manufacturing gears for maintenance,
of individuals around the world. More than 400 individuals at gear spares and their own use (10%).
manufacturing locations responded to the online survey, answering The survey covers gear manufacturing around the world, with
questions about their manufacturing operations and current chal- 58% of respondents working in the United States, and 42% outside the
lenges facing their businesses. United States.
The respondents considered here all work at locations where A full breakdown of respondents can be found at the end of this
gears, splines, sprockets, worms and similar products are manufac- article.
6%
Undecided
31%
14% Extremely Optimistic
Slightly Optimistic
44%
Fairly Optimistic
Most in the gear industry would tell you it’s been another From reading through the responses, our editors got the feel-
good year. Based on our research, gear manufacturers around ing that growth would be even faster in 2008 if the materials,
the world clearly remain optimistic about their future. In fact, machines and workers were available to make more gears.
the number who are slightly optimistic or better about their “Finding the capital to support growth” was one of the
ability to compete over the next five years is 88% (essentially major challenges facing a corporate executive at a company that
equivalent with last year’s 91%). manufactures timing gears in Mexico.
Employment increased at 55% of gear industry operations, “Getting new machines fast enough” was the significant
roughly the same as last year. Most expect that employment at challenge cited by a corporate executive at a gear manufacturing
their operations will increase again next year—if they can find job shop in Denmark.
and keep qualified employees—an issue which continues to be “Having difficulty in finding skilled help is slowing the
one of the most significant facing the industry. growth of the company,” said a manufacturing production
“Developing and retaining a skilled workforce to support the worker for an aerospace gear manufacturer in California.
increased complexities in current and future processes” is one Sales rose for most in 2007, and most expect them to con-
of the biggest challenges facing a manufacturing engineer at a tinue to rise in 2008. 71% saw sales volumes rise in 2007 (the
U.S. material handling equipment manufacturer. Many others same percentage as last year). 75% expect further increases next
had similar comments. year (slightly higher than last year).
Most respondents at gear manufacturing locations also Thanks to the weak dollar, most U.S. respondents are seeing
saw large increases in their production volumes in 2007. 69% increases in exports, and their concerns aren’t so much about
reported at least some increase, with more than 20% of respon- foreign competition as they are about increased competition
dents indicating their production volumes increased by more from their fellow U.S. manufacturers. Corporate executives
than 20% over 2006. at more than one gear manufacturing job shop cited domestic
And it doesn’t appear to be slowing down in 2008, either. In competition as the most significant challenge facing their busi-
fact, more respondents predicted production increases for 2008 nesses.
(79%) than experienced production increases in 2007. A number of Canadian respondents indicated their difficulty
“Can’t make stuff fast enough,” said a design engineer for a in selling to America because the weak U.S. dollar makes their
U.S. manufacturer of wind turbine gears. products more expensive.
54
% of Respondents % of Respondents
% of Respondents % of Respondents % of Respondents
% of Respondents
% of Respondents % of Respondents
% of Respondents % of Respondents
0%
5%
10%
15%
20%
25%
30%
% of Respondents
% of Respondents
0%
5%
10%
15%
20%
25%
30%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
79%
0%
10%
20%
30%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0%
5%
10%
15%
20%
25%
30%
0%
5%
10%
15%
20%
25%
30%
0%
10%
20%
30%
40%
50%
0%
5%
10%
15%
20%
25%
30%
35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0%
5%
10%
15%
20%
25%
30%
40%
45%
50%
10%
20%
30%
40%
50%
60%
0%
5%
10%
15%
20%
25%
30%
35%
0%
10%
20%
30%
40%
50%
60%
Increased
0%
60%5%
40%10%
50%15%
25%
30%
35%
0%
60% 5%
10%
15%
20%
25%
30%
35%
61%
Increase Increase Increased Increase
Increase Increased Increased more than Increase Increased
21%
Increase more than more than Increase Increase more Increased
21%
16%
3%
more than more than more than more
35% 16%
20% Increased Increased
3%
21%
more than
7%
21%
more than more than 20% 20% more
16%
more than
3%
more
7%
16%
3%
20% 20% 20% than 20% than 20% more than
7%
more than 20%
7%
20% 20%
Employment
than 20% than 20% 20%
Increased 20% 20%
Increase Increase Increase
Increased Increased Increased Increase
22%
Increase Increased
18%
Increase 11-20%
8%
11-20% Increase
22%
Increase Increased
18%
11-20%
8%
11-20%
22%
15%
18%
11-20%
22%
11-20% Increased Increased
8%
18%
11-20% 11-20%
8%
11-20% 11-20%
15%
11-20% 11-20% 11-20% 11-20%
15%
Change
11-20% 11-20%
Change
Increased
at their
Increase Increase Increase
in
26%
Increase Increased Increased Increased Increase Increased
45%
Increase
71%0%Saw Production
Expected
GEARTECHNOLOGY
1-10% 1-10% Increase Increase Increased
15% 50%
Change45%
1-10%
26%
Expect Production
26%
1-10%
Change
45%
1-10% Increased Increased
50%
45%
1-10%
33%
Change
1-10% 1-10%
Expected 50%
50%
1-10%
33%
1-10% 1-10%
33%
1-10% 1-10% 33%
in
Stay the Stayed the Stay the
Change
Stay the Stayed the Stayed theStayed the
16%
Stay the Stay the Stay the Stayed the
14%
same same Stay the Stay the
16%
Stayed the
28%
14%
16%
in
16%
14%
same same same Stayed the Stayed the
Production
14%
28%
29%
28%
same same same
28%
same
29%
Location
same
29%
same
29%
same same
Change in Employment
Decrease Decreased
in Employment
Decrease
Employment
Decrease
5%
DecreaseDecrease
9%
Decreased DecreasedDecreased Decrease Decreased
9%
Decrease Decrease
5%
1-10%
9%
Volume
5%
1-10%
9%
5%
9%
7%
9%
9%
1-10% Decreased Decreased Decreased
9%
1-10% 1-10% 1-10% 1-10% 1-10%
7%
1-10% 1-10%
7%
1-10%
vs.
1-10%
7%
1-10% 1-10% 1-10% 1-10%
vs.
Expected Change in Employment
Employment
vs. 2006
Decrease
vs. 2006
2006
Decreased
3%
Decreased DecreasedDecreased Decrease
1%
1%
Decrease Decrease
2006
11-20%
3%
3%
2008
3%
1%
1%
1%
1%
11-20%
5%
1%
1%
11-20% 11-20% 11-20% 11-20% Decreased Decreased Decreased
5%
11-20% 11-20% 11-20% 11-20% 11-20%
5%
11-20% to Increase
2%
2%
20% of Gear Industry Respondents Expect
more
2%
more than more thanmore than
2%
2%
2%
55% of Gear Industry Respondents Work at
more than
2%
more
2%
2%
4%
2%
more
2%
more
2%
4%
20% more than more than more than
4%
4%
20% 20% 20% 20% 20% than 20% than 20% 20%
November/December 2007
Volume to Increase in 2007
20% 20%
Locations Where Employment Increased in 2007
in 2008
% of Respondents
% of Respondents % of Respondents
% of Respondents
% of Respondents % of Respondents
% of Respondents % of Respondents
% of Respondents
% of Respondents % of Respondents
% of Respondents Respondents
% of% of Respondents % of%Respondents
of Respondents
0%
5%
10%
15%
20%
25%
30%
35%
40%
0%
5%
10%
15%
20%
30%
35%
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0%
5%
10%
15%
20%
25%
30%
35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0%
5%
10%
15%
20%
25%
30%
35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0%
5%
10%
15%
25%
30%
35%
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
5%
10%
15%
20%
25%
30%
35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
0%
5%
10%
15%
20%
25%
30%
35%
0%
5%
10%
15%
20%
25%
30%
35%
40%
75%
20% 9%
more thanmore than Increase Increased
Increased
9%
more thanmore than Increase more than more thanmore than
16%
more than
more than more than
16%
9%
9%
more than
more than
13%
21%
13%
20%
21%
20% moremore
than than moremore
thanthan
16%
16%
20% 20%
13%
20%
13%
20%
21%
21%
16%
16%
Increase
Increase Increased
Increased
14%
14%
11-20% 11-20%
16%
16%
18%
25%
18%
14%
25%
14%
11-20%11-20% 11-20%11-20%11-20% 11-20% 11-20% 11-20% 11-20% 11-20%
18%
25%
18%
25%
11-20%
11-20% 11-20%
11-20%
www.geartechnology.com
48% Work
Locations
Increase Increase
Expected
Increase
Expected
IncreasedIncreased
Sales
Increase Increased
Increased Increase
Increase Increase Increase Increased
Increased IncreasedIncreased
19%
19%
19%
18%
19%
18%
1-10% 1-10%
18%
18%
32%
1-10% 1-10%
37%
32%
32%
1-10% 1-10%
37%
1-10%
37%
1-10% 1-10%
Capital Spending
atSales
Sales
StayStay
Stay the the the Stay the StayedStayed the
the Stayed the
Stayed the Stayed Stayed the
Stay Stay
the the Stay the Stay the Stayed the the Stayed the
38%
38%
38%
38%
same 42%
17%
18%
42%
17%
18%
same
Sales Volume17%
17%
Volume
to Increase
Locations
Decrease
Decrease DecreaseDecrease Decreased
Decreased Decreased Decreased
Decreased Decrease Decreased Decreased
4%
Decrease DecreaseDecrease Decreased
Change8%
4%
3%
4%
4%
8%
Increased
8%
3%
6%
3%
8%
6%
1-10%
3%
42% Change
in
Sales Volume Change in 2007
in 2007
3%
Decreased
in 2008
DecreaseDecrease Decrease
Where
Decreased Decreased
4%
in 2008
Decreased
in3%
DecreaseDecrease Decreased
2%
1%
3%
4%
in 2008
3%
11-20%
1%
11-20%
4%
42% Change in 2008
11-20%11-20%
4%
6% in 2008
2%
1%
11-20%
1%
2008
11-20% 11-20% 11-20% 11-20%
2007
Decrease
2%
11%
more than more than moremore moremore
thanthan
0% Expect Sales Volume Increase in 2008
3%
2%
2%
11%
more thanmore than than than more than more thanmore than
3%
2%
11%
3%
2%
2%
20% 20%
11%
20% 20% 20% 20% 20%20%
20% 20% 20% 20% 20% 20% 20% 20%
Not a single U.S. respondent mentioned any worries about
China. But more than a few outside the U.S. did.
“The biggest challenge beyond finding good skilled labor
is cheap competition who have low overhead cost and worth- �������
less machinery but are ready to give you the challenge,” said a �����������������������
manufacturing engineer at an Indian gearbox manufacturer.
“The Chinese currency is not free floating,” said a purchas-
ing agent at a transmission manufacturer in India, “which makes
Chinese imports cheaper.” ������
A significant number of respondents (43%) reported that
capital spending increased at their locations in 2007, and about
the same number (44%) expect that the increases will continue
in 2008.
We also asked respondents specifically about their biggest
manufacturing and engineering challenges. Overwhelmingly,
the responses came back: reduce costs, shortening lead time and
improve quality.
When respondents mentioned quality, they weren’t so much
concerned about the quality of individual parts or specific qual-
ity levels. Rather, they are becoming acutely aware of the need
for improved quality systems. Lean manufacturing seemed to be
of the most interest.
While sales and production are up, and most gear manufac-
turing operations are growing, it’s clear from the responses of
this survey that most gear manufacturers are under enormous
pressure. They need to reduce lead times, they need to improve
throughput. They’re looking at automation and quality manage-
ment programs. They’re desperate for qualified employees.
But still, they’re hopeful.
������
Current Delivery Time for New Orders
33%
35%
% of Respondents
30%
25% 18% 18%
20% 33%
12%
35%
15%
% of Respondents
10%
30%
10%
4% 3% 2%
25%
5% 18% 18%
0%
20%
12%
15%
15 than 15
than 2 weeks
9-12 months
12-15 months
10%
10%
months months
4% 3% 2%
5%
0%
More than More
2 weeks
9-12 months
12-15 months
Less than Less
17%
20%
50% 6% 12% 7% 3%
10%
40% 1%
0%
30%
17%
���������������
Faster by 1-10%
Faster by 11-20%
Faster by more
11-20%by 11-20%
more by more
1-10% by 1-10%
20% �������������������������������
6% 12% 7% 3%
than 20% than 20%
than 20% than 20%
10%
0%
1% ����������
Slower by Slower
Slower by Slower
Faster by 1-10%
Faster by 11-20%
Faster by more
About the same
Slower by Slower
�����������
Delivery Time vs. 2006
������� �����������������
�������� ����������������� ������������
�����
80% In Place
% of Respondents
70%
60% Partially
50% Implemented
40% Planned
30%
20%
Nonexistent
10%
0%
Statistical Process
Manufacturing
ISO 9000
Six Sigma
5s
Control (SPC)
Lean
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American Broach & Machine Co. is to offer sales, tech support, service
and engineering for these world class gear grinding machines in North America.
—Corporate executive at a gear manufacturing job shop to customers' needs, have established miniGears
in IL as the reliable partner in gear calculation, en-
gineering design and development, testing and
“Exceptionally poor management.” production of gears and complete kinematic mech-
—Design engineer for a U.S. Tier 1 automotive component anisms.
supplier ISO/TS 16949:2002 certified
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“Process improvement.”
—Quality control manager at an OEM of gear drives in
Taiwan 60
“Raising skill level of inexperienced employees, and then 1% 2% Roll-Forming
being able to keep them.”
Plastic Injection
Molding 50
—Design engineer for an OH-based OEM of gear drives 4% Other
0.5%
“Reducing lead times.”
Powder
40
# of Respondents
Metal
—Manufacturing engineer at a WI-based OEM of heavy
equipment
Age of
AgeManufacturing Location
of Manufacturing Location
60
ming
50
40
# of Respondents
30
20
10
0
1850s
1860s
1870s
1880s
1890s
1900s
1910s
1920s
1930s
1940s
1950s
1960s
1970s
1980s
1990s
2000s
Half of gear industry respondents work in facilities originally built before 1967
18% 16%
World-Class, 13%
21st Century $0-99,999
$10-49.99
million
27%
Good, But Room for
Improvement
28%
47% $100,000-
39% 999,999
Competitive with $1-9 million
Most in Our Industry
www.logan-mmk.com
574-735-0225
10%
10%
State of the Gear Industry: Who Responded Type16% 16%
of Operation $100,000- $100,000-
Sales $1Volume of$100,000-
Company
$0-99,000
10%
$0-99,000
$499,000
$499,000
16% billion+
$1 billion+
$0-99,0005%5%
$499,000 $500,000-
$500,000-
$1 billion+
Outside
Outside 5% $500,000-
4%
$999,000
$999,000
USA
USA 13% 13% 4% $999,000
Outside
thethe
USAUSA USA58%
58% 13%
$100$100 million-
million- 4%
10%
Other$100
$999$999 million 16%
million $0-99,000 $1$100,000-
the42%
USA42% 58% million-
12% 12% $1 million-
million-
$499,000 million
10% $999 million OEM
$1 billion+ $4.99$4.99
$15%
million
42% million-
12% $4.99 million $500,000-
8% 8% 48%
Outside USA 13%
$50 million-
$50 million- 9%9% 4%
$999,000
$998%$99 million
million 9% $9.99
$5 million-
$5 million-
the USA 58% $100 million-
$50 million-
24% 24% $5$9.99 million
million
million-
$999 million
$99 million
42% 24% million 12% $4.99 million
$10 million-$49
$10 million-$49 $9.99
million
$1 million-
million
Type
Type of of Operation
Operation Job
Job Title/Function
Title/Function of of Respondent
Respondent
d Type
SalesofVolume
Operation
of Company Job Title/Function
4% of Respondent
4% Other
Quality Other
Quality 1% 1%
5% 5% Consultant
Size
Control
Quality 4% Company
Control
of Other Consultant
1%
5%
3% 3% Control Consultant
Other
Other Job Title/Function of Respondent
Purchasing
Type of Operation 10% 3%
Purchasing
Other
10%10% 16% OEM OEM
$0-99,000 $100,000-
Purchasing
OEM
$499,000
Quality 4%11%
Other 1%25%
10% $1 billion+
48% 5%
48% 19%
5%9% 9% 25%
$500,000- Control Consultant
0-19 Corporate Ve
48% 9%Marketing 25%Corporate
3% 1000+
$999,000 Marketing
13% 4% & Sales Management
Management
Corporate
Other $100 million- & Sales
Marketing
Purchasing
16%
OEM 9% 9%
& Sales Management
20-49
10% $999 million 12% $1 million- Manufacturing
Manufacturing
11%9%
48% $4.99 million
Production
Production
Manufacturing 9% 25%
24%24%
8% Job Job Shop
Shop 500-999
Production
Marketing Corporate
9% 20%20% 24% Design
Design
13%
Management
$99 million Job 42%
Shop
$50 million-
42% & Sales Engineering
Manufacturing Engineering
$5 million-
20%
Manufacturing Design
50-99
42%24% $9.99 million
9%
Manufacturing Engineering
Engineering
Engineering
Manufacturing
$10 million-$49 million 31%
Production
Engineering
100-499 24%
Job Shop
20% Design
42% Manufacturing Engineering
Engineering
Size
Size of of Company
Company Prime
Prime Industry
Industry
Size of Company Prime Industry
3% 3%
WindWind Energy
Energy
Job Title/Function of Respondent 3%
19% 4% Other 11%
11% 5% 5% Wind Energy
19% Vehicles Other
thanthan Prime 8% 8%
Quality of
Size Company
11% 0-19 1% Vehicles
5% Other 14%14%
Industry
5%
19% 1000+ 0-19
1000+
Control Consultant Automotive
Automotive
Vehicles Other than
Other
Other
8% Aerospace
Aerospace
14%
0-19 16% 16% Other
3% 1000+ Automotive Aerospace
16% 20-49
20-49 3% Wind Energy
Purchasing 9% 9%
11% 11% 20-49
11% 1% 1%
5% Motion Motion
9% Control8%
Control
19% 24%24%
11%500-999
500-999 1000+ 0-19 25% 1%Medical
Medical
Vehicles Other than 14%
Automotive
Motion Control Other Automotive
9% Automotive
Medical 24%
500-999 Marketing 13%13%
Corporate 2% 2% Aerospace
Automotive
16% Marine
Marine
& Sales 13%
Management
50-99
50-99 2% 25% 25%
20-49 Marine Heavy
9%
Heavy Industry
Industry
9% 31% 31% 50-99 1% 25%
11%
Manufacturing Heavy
MotionIndustry
Control 24%
500-999 31% 100-499
100-499
Production
Medical
Automotive 10%10%
100-499 24% 2%
13% Construction/
Construction/
10%
20% Design Marine 25% Off-Highway
Off-Highway
Manufacturing
50-99
Engineering Construction/
Heavy Industry Off-Highway
31%
Engineering
100-499
10%
Construction/
Off-Highway
62 GEARTECHNOLOGY November/December 2007 www.geartechnology.com