The Slowing U.S. Gearing Market

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When gear manufacturers around the world talk about the state of the economy in their countries, the United States stands out as the tallest pygmy.  Much of Europe is in recession, the emerging economies are not emerging and, even though economy in the United States has weakened, we’re still growing but at a much slower rate.

In 2010, AGMA partnered with the economic forecasting firm IHS Global Insight. Their economists used AGMA’s historical data for the gearing industry to develop a forecasting model both for the aggregate U.S. industry and for 10 user industries that buy the bulk of the industrial, marine, and aerospace gearing produced in the United States. (Because of the special nature of automotive gearing and the variety of forecasters in that segment, AGMA does not typically include automotive gearing and our forecast.)

In October, Global Insight reported that the U.S. would face moderate economic growth in 2013 including gear manufacturing. They noted that the expansion has weak momentum, exports and business capital spending have decelerated, consumers and business owners were cautious in their spending, and we face the possibility of continued political division which would make resolving the U.S. debt crisis and impending tax increases difficult to manage. On the bright side, they noted that in the United States housing and vehicle markets have been recovering and should continue to do well in the near term.

Other positive forces include a gradual rise in employment, pent-up demand for business capital equipment, real (adjusted for inflation) income growth and low interest rates for borrowers through at least 2014. Offsetting the positive forces were weak wage gains, the loss of substantial wealth in the housing sector, potential tightening and fiscal spending, and rising food prices.

At the macro level, the economists expect annual GDP growth, adjusted for inflation to remain below 3% until 2015. Even though slower than the “full employment growth rate,” strengthening housing markets and net exports will continue to support the economy in the next three years. They put the probability of a recession at 20%.

The fastest-growing markets for gearing products in 2012 were power equipment, mining and oil field equipment, material handling equipment, construction machinery, railroad equipment, metalworking machinery, and aerospace. Each of these sectors grew between 10% and 20% in 2012. Industrial machinery, shipbuilding and agricultural machinery were flat or slightly down for the year.

In stark contrast, for 2013 the outlook is that only aerospace will have double-digit growth; each of the other sectors will be flat or down. Metalworking machinery, industrial machinery, railroad equipment and shipbuilding are anticipated to decline slightly.

Domestic demand for 2013 which is comprised of U.S. production less exports plus imports is expected to be flat with growth resuming in 2014.

Looking at U.S. gear bookings and shipments, the space between shipments and demand is filled by net imports. With other markets in recession or slowing greatly, it is only natural that international manufacturers will look to the U.S. market maintain their production in the next few years.

Fortunately, U.S. exports of gearing products have been strong with our neighbors Canada and Mexico being the two top countries we ship to, followed by China, Brazil, Belgium, and Australia.

Sources of imports in 2012 were led by China, (22% of all imports), Germany, Japan, and Italy.  Imports from all of Europe accounted for almost 50% of gearing products shipped to the United States.

Over the past year, we have seen the continued deterioration of markets in Europe, Asia, and the emerging markets compounded by the risk of a failure of the U.S. Congress to address what is commonly referred to as the fiscal cliff, meaning mandated, automatic cuts in government spending compounded by the expiration of tax cuts which could divert substantial funding from taxpayers away from consumption and investment to increased taxes.

As a result, the Global Insight economists have revised their forecast downward each quarter of 2012 to the point that they anticipate zero growth in the demand for gearing products in 2013 followed by 6.5% growth in 2014 and 9.4% growth in 2015.

AGMA Welcomes Its Newest Members
A.M. Castle & Company
www.amcastle.com
Founded in 1890, A. M. Castle & Co. is a global distributor of specialty metal and plastic products and supply chain services, principally serving the producer durable equipment, oil and gas, commercial aircraft, heavy equipment, industrial goods, construction equipment, retail, marine and automotive sectors of the global economy.  Within its metals business, it specializes in the distribution of alloy and stainless steels; nickel alloys; aluminum and carbon.

Accelerated Machine Design & Engineering  
www.accmach.com
AMDE accelerates the design and production of industrial, agricultural and construction equipment and consumer products. We offer a blend of high-level engineering and analysis combined with production-based detail design. We also provide single-source manufacturing and assembly.

Afton Chemical Corporation
www.aftonchemical.com
Afton Chemical Corporation – part of the NewMarket Corp. family of companies, develops and manufactures petroleum additives that help fuels burn cleaner and more efficiently, engines run smoother, and machines last longer.  We offer performance fuels and refinery chemicals, such as gasoline performance additives, diesel fuel additives, lubricity improvers, and cold flow improvers,; driveline products, such as automotive gear oil and automatic transmission fluid; engine oils; industrial products, such as antiwear and R&O hydraulic oils, industrial specialty chemicals, industrial gear oils, and grease.

Air Gear Industries International Inc.
www.airgear-intl.com
Air Gear Industries International, Inc. is a certified repair station that has developed specialized proprietary processes that allows us to refurbish gears, splines, shafts and components that prior to this would have been considered unsalvageable.  All repairs are FAA approved with 8110.3’s. All other repairs are done to FAA approved tech data in accordance with the latest approved technical data repair process specifications and overhaul manuals as applicable.

Chongqing Zhizhan Gear Transmission Co. Ltd
www.cqzzcd.cn
Chongqing Zhizhan Gear Transmission Co., Ltd was founded in 2008. We are a professional manufacturing company specializing in manufacture of various kinds of Gleason helical bevel gears and Klingelnberg spiral bevel gears.

Gears and Gear Drives (India) Pvt. Ltd. 
www.gearsandgeardrives.com
Gears & Gear Drives (India) Pvt Ltd is an established innovator of actuator custom solutions and product offerings that include Linear Actuators, Worm Gear Screw Jacks, Electro Mechanical Linear Actuator, Electric Cylinders and Bevel Gear Boxes.

Geographe Enterprises   
www.geographe.com.au/
Geographe Enterprises is an Australian owned provider and manufacturer of customized engineering solutions to the mining, exploration, earthmoving and mineral processing industries. It is a leading technology focused manufacturer of geared products and wear components to suit major mining, earthmoving, processing and drilling mobile equipment and fixed plant.

KCGM
www.superpit.com.au
Based in Kalgoorlie, Western Australia, The Super Pit produces up to 850,000 ounces of gold every year and its operation far outweighs any other mining center in Australia. The Super Pit is the biggest gold open pit mine in the country. The Super Pit is managed by Kalgoorlie Consolidated Gold Mines (KCGM) and owned (50/50) by Newmont Australia and Barrick Gold Corporation

Kinetics Drive Solutions Inc.
www.kdsolutionsgroup.com
Kinetics Drive Solutions Inc. (KDS) is an advanced transmission and vehicle drive systems company with unique technologies in Infinitely Variable Transmission (IVT) systems. KDS offers individual designs in IVT Drive and Control applications and furthermore offers solutions combining low costs and optimum flexibility for vehicle applications to meet modern mobility requirements. KDS conducts design, development, and test programs on a wide range of drive line components and will also develop specialized instruments, control systems, test apparatus, and data acquisition systems for complete system implementation.

Niigita University  
www.niigata-u.ac.jp
Niigata University is located in the City of Niigata, a key metropolis on the Sea of Japan.  Niigata is the only government ordinance-designated city on that coast and thus is the region’s leading municipality.  The university is nestled between the Sea of Japan and the Echigo Plain.  The university boasts two campuses: the Ikarashi Campus and the Asahimachi Campus.

North Street Cooling Towers Pvt. Ltd.
www.nsctpl.com
North Street was founded as specialists in customised designed towers for commercial and industrial use. As we continue to meet the challenges of our customers, for higher efficiency and greater volume, we have developed our manufacturing process to meet the individual requirements of our customers’ needs from manufacturing, upgradation, service & maintenance, with full back up of spare parts & components supplies.

Paulo Products Company
www.paulo.com
Paulo Products Company offers a wide variety of heat treating, brazing and metal finishing solutions as well as a broad range of metallurgical and engineering services. In addition to the Cleveland facility, Paulo operates plants in St. Louis and Kansas City, Mo., Nashville and Murfreesboro, Tn.

Rave Gears, LLC
www.ravegears.com
Located in Sequin, TX, Rave Gears, LLC specializes in spiral bevel gears, gear cuttings and precision gear grinding.

Robust Gear and Industries 
www.robustgear.com
Robust Gear has been manufacturing the highest quality custom, precision gears and machinery parts for over twenty-five years. Our current customer base is representative of a variety of industries including:Aerospace,packaging and pharmaceutical, equipment manufacturing, Mining, Oil refineries, Railways, Forestry mills, Steel mills, Marine applications, Atomic energy applications

Rock Island Arsenal
www.ria.army.mil
Established as both an arsenal and a center for the manufacture of leather accoutrements and field gear, Rock Island Arsenal provides manufacturing, logistics, and base support services for the Armed Forces. The Arsenal is the only active U.S. Army foundry, and manufactures ordnance and equipment, including artillery, gun mounts, recoil mechanisms, small arms, aircraft weapons sub-systems, grenade launchers, weapons simulators, and a host of associated components

University of Huddersfield
www.hud.ac.uk
The University of Huddersfield is a growing centre of research and excellence located in Huddersfield, West Yorkshire, United Kingdom.

Upwind Solutions
www.upwindsolutions.com
UpWind Solutions is the wind industry’s leading third party provider of asset management operations and maintenance services. Our team of highly experienced wind industry experts is committed to providing a higher standard of service to the growing fleet of North American wind turbines.

Niigita University  
www.niigata-u.ac.jp
Niigata University is located in the City of Niigata, a key metropolis on the Sea of Japan.  Niigata is the only government ordinance-designated city on that coast and thus is the region’s leading municipality.  The university is nestled between the Sea of Japan and the Echigo Plain.  The university boasts two campuses: the Ikarashi Campus and the Asahimachi Campus.

North Street Cooling Towers Pvt. Ltd.
www.nsctpl.com
North Street was founded as specialists in customised designed towers for commercial and industrial use. As we continue to meet the challenges of our customers, for higher efficiency and greater volume, we have developed our manufacturing process to meet the individual requirements of our customers’ needs from manufacturing, upgradation, service & maintenance, with full back up of spare parts & components supplies.

Paulo Products Company
www.paulo.com
Paulo Products Company offers a wide variety of heat treating, brazing and metal finishing solutions as well as a broad range of metallurgical and engineering services. In addition to the Cleveland facility, Paulo operates plants in St. Louis and Kansas City, Mo., Nashville and Murfreesboro, Tn.

Rave Gears, LLC
www.ravegears.com
Located in Sequin, TX, Rave Gears, LLC specializes in spiral bevel gears, gear cuttings and precision gear grinding.

Robust Gear and Industries 
www.robustgear.com
Robust Gear has been manufacturing the highest quality custom, precision gears and machinery parts for over twenty-five years. Our current customer base is representative of a variety of industries including:Aerospace,packaging and pharmaceutical, equipment manufacturing, Mining, Oil refineries, Railways, Forestry mills, Steel mills, Marine applications, Atomic energy applications

Rock Island Arsenal
www.ria.army.mil
Established as both an arsenal and a center for the manufacture of leather accoutrements and field gear, Rock Island Arsenal provides manufacturing, logistics, and base support services for the Armed Forces. The Arsenal is the only active U.S. Army foundry, and manufactures ordnance and equipment, including artillery, gun mounts, recoil mechanisms, small arms, aircraft weapons sub-systems, grenade launchers, weapons simulators, and a host of associated components

University of Huddersfield
www.hud.ac.uk
The University of Huddersfield is a growing centre of research and excellence located in Huddersfield, West Yorkshire, United Kingdom.

Upwind Solutions
www.upwindsolutions.com
UpWind Solutions is the wind industry’s leading third party provider of asset management operations and maintenance services. Our team of highly experienced wind industry experts is committed to providing a higher standard of service to the growing fleet of North American wind turbines.

Learn at Your Own Pace with AGMA Online Programs
AGMA has a great training lineup in 2013 which can be found on at www.agma.org! In addition to classroom classes that range from hands-on basic training in gear manufacturing to the six advance gear engineering classes, there are several popular online courses that offer individuals training 24/7 wherever they happen to be.

AGMA’s Online Workforce Training Series in gear manufacturing is a self-paced program that includes three courses: Fundamentals of Gearing, Gear Inspection and Hobbing. As the student progresses through the courses, there are tests and certificates of completion for each. This series became a benefit of membership last spring and many companies have been quick to take the opportunity to train all of their employees on the basics at no charge.

• Fundamentals of Gearing is a comprehensive overview of the industry. It begins with a little history of gearing and proceeds through parallel axis gear basics, the involute tooth form, diametrical pitch/module, pitch and pressure angle. The course finishes by defining a series of 37 crucial terms used in gearing.
• Parallel Gear Inspection is a more advanced course that examines the why and how of inspecting gears. Students will review several inspection methods and when to use each. The course offers instruction in reading and understanding inspection charts routinely available from modern inspection equipment.
• Hobbing is designed to present the basics of hobbing to hobbing machine operators, gear technicians, and engineers. It covers the hobbing process, hob cutting tool terminology, generating gears, hobbing machine terminology, measuring, mounting, and truing the hob, mounting and truing the work piece, basic part inspection, and tooth size and runout.
If you can’t make it to a class location for Detailed Gear Design or Gear Failure Analysis, the next best thing is the online video course version of these two in-demand courses taught by experts in the field!
• Detailed Gear Design, with Ray Drago, provides gear engineers, gear designers and application engineers with knowledge about how to improve gear designs and gain new insight into concepts presented through illustrations and demonstrations.
• Gear Failure Analysis, with Bob Erichello, provides a comprehensive understanding of the reasons for gear failure and how to prevent it in a clear, well organized and easily understood manner.

Now in addition to the individual online rate, there are group rates if you want to train five or more employees and even lower group rates if you wish to train ten or more individuals with these online programs. Each person is still able to take the course online at their own pace, complete the test, and receive their certificate of completion.

The creation of all of these online training courses was made possible by grants from the AGMA Foundation.

Last, but not least, the AGMA Webinar Series provides a rare opportunity to learn from and interact with the experts in the gear industry. Train your whole office with no travel expense or time away from the office. All you need is a computer with Internet access and a speakerphone to join in the Webinar. You can watch the presentation, submit questions and participate in audience polls. Participate alone or with colleagues. New live webinars are being added to the schedule throughout the year and the archived webinars are always available when you are. Just purchase a download or a CD package – both provide the complete presentation and handouts.

Wherever you are or however you like to learn, AGMA has a class for you.