State of the

Gear Industry 2 010

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 of gear manufacturers. Invitations were sent by e-mail
to thousands of individuals around the world. More than 300
individuals responded to the online survey, answering ques-
tions about their manufacturing operations and current chal-
lenges facing their businesses.
The respondents considered here all work at locations
where gears, splines, sprockets, worms and similar products
are manufactured. They work for gear manufacturing job
shops (39 percent), captive shops at OEMs (60 percent) and
shops manufacturing gears for maintenance, spares and their
own use (1 percent).
The survey covers gear manufacturing around the world,
with 50 percent of respondents working in the United States,
and 50 percent outside the United States.
A full breakdown of respondents can be found at the end
of this article.
continued

www.geartechnology.com November/December 2010 GEARTECHNOLOGY 29

 “Fast delivery.”
What Factors Are Presenting —Owner of a European manufacturer of pumps
Significant Challenges to Your Business?
“Federal tax policy, excessive corporate governance, lack
“Capacity and capital.” of tort reform and unrealistic environmental compliance
—VP of sales at a U.S. manufacturer of aerospace gears requirements.”
—Corporate executive at a U.S. manufacturer of high-speed
“Capital constraints.” gear drives
—Corporate executive at an Indian manufacturer of automo-
tive gears and shafts “Finance.”
—Design engineer at a European manufacturer of automobile
“Changing political policy and related changes.” transmissions
—Corporate executive at a U.S. manufacturer of buses
“Finding enough added value.”
“Prices in China and India.” —Corporate executive at a European manufacturer of auto-
—Sales professional at a U.S. manufacturer of powder metal motive actuators
gears
“Frequently changing demand requirements.”
“Corruption in the purchasing system of the mining indus- —Manufacturing engineer at an Indian automobile OEM
tries.”
—Manufacturing engineer at a gear job shop in Africa “Fuel economy.”
—Corporate executive at a U.S. manufacturer of truck axles
“Customers shipping jobs and work overseas.”
—Corporate executive at a U.S. gear manufacturing job shop “General business confidence. As a pure jobbing shop, we
depend on our customer base having the demand confidence
“Difficulty in obtaining sufficient quantities of steel for gear to place orders.”
manufacturing.” —Corporate executive at a European gear manufacturing job
—Engineer at a U.S. manufacturer of construction & off- shop
road equipment
“Getting business.”
“Distance from our main customers.” —Corporate executive at a U.S. gear manufacturing job shop
—Production manager at an Indian manufacturer of transmis-
sion gears “Getting reverse engineering done and getting gears manu-
factured at a reasonable cost.”
“Documentation.” —Owner of a U.S. manufacturer of racing transmissions
—Manufacturing engineer at a U.S. aerospace & defense
OEM “Increasing demand.”
—Corporate executive at an Indian gear manufacturing job
“Because exports are so significant, sustained export mar- shop
kets are key to our sustenance.”
—Corporate executive at an Indian manufacturer of automo-
bile transmissions
93% of Gear Industry Respondents are Optimistic How Do Respondents Describe their Manufacturing
About their Ability to Compete over the Next Five Years Operations and Technology?
1% 1%
Extremely Pessimistic It’s Amazing We Still
2% Have Customers
Slightly Pessimistic 29%
4% Extremely 19%
Undecided Optimistic World-Class,
5% 21st Century
Facilities and
Equipment Beginning
to Show Their Age
19%
Slightly 27%
Optimistic Good, but
Room for
Improvement

45%
Fairly Optimistic
48%
Competitive with most
in Our Industry

30 GEARTECHNOLOGY November/December 2010 www.geartechnology.com

 “Material cost.”
What Factors Are Presenting —Corporate executive at a Far East manufacturer of automo-
Significant Challenges to Your Business? tive components

“International presence, Asia customs duties, availability of “The development of new technologies.”
a new facility.” —Production worker at a European gearbox manufacturer
—Corporate executive at a European gear manufacturing job
shop “OEM consolidation.”
—Sales professional at a U.S. manufacturer of couplings
“Lack of demand.”
—Manufacturing engineer at a European gear manufacturing “Offshore quality issues.”
job shop —Corporate executive at a U.S. manufacturer of driveshafts

“Lack of skilled labor is an enormous problem!” “President Obama.”

—Manufacturing engineer at a U.S. manufacturer of aero- —Design engineer at a U.S. manufacturer of satellites
space gearboxes
“Rapid price changes of materials.”
“Lead time for low-cost countries.” —Manufacturing engineer at a U.S. manufacturer of plastic
—Design engineer for a U.S. manufacturer of agricultural film
components
“Retention of skilled people as other industries’ business
“Legacy information technology and business software improves and people are in demand.”
stifles innovation.” —Manufacturing engineer at a U.S. manufacturer of truck
—Manufacturing engineer at a U.S. manufacturer of axles
enclosed gear drives
“Rising costs of all employee benefits in addition to health
“Local and state regulations.” care, i.e. 401K plans, auto, etc. Also, corporate taxation
—Corporate executive at a U.S. aerospace gear manufacturer rates discourage savings for offsetting future business cli-
mate weakness.”
“Machine availability.” —Corporate executive at a U.S. manufacturer of enclosed
—Corporate executive at a U.S. aerospace gear manufacturer gear drives

“Management decisions.” “Running out of factory space, where we are now in the pro-
—Design engineering manager at a U.S. manufacturer of cess of looking for larger premises or additional space.”
gears and drives —Design engineer at a European manufacturer of gearboxes
continued

43% of Gear Industry Respondents Work at Most Gear Industry Respondents Expect
Locations where Employment Increased in 2010 Employment to Increase in 2011
34% 49%
35% 50%
28% 45%
30%
40% 38%
25%
35%
20% 30%
25%
15%
8% 13% 20%
10% 7% 15% 6%
7% 4% 4%
5% 10% 2%
5% 1% 1%
0% 0%
Increased more than 20%
Increased more than 11-20%

Increase more than 20%

Increase more than 11-20%
Increased more than 1-10%

Increase more than 1-10%

Decreased 1-10%
Stayed the Same

Decrease 1-10%
Decreased 11-20%
Decreased more than 20%

Stay the Same

Decrease more than 20%

Decrease 11-20%

www.geartechnology.com November/December 2010 GEARTECHNOLOGY 31

 What Factors Are Presenting What Are Your Company’s
Significant Challenges to Your Business? Greatest Manufacturing/Engineering
“Seasonal changes in order placement.” Challenges for 2011?
—Design engineer at a U.S. gearbox repair facility “1. Inconsistency in government policies. 2. Law and order
situation 3. Fluctuation in currency exchange rate. 4. Rising
“Shortage of steel and anti-friction bearings.” energy costs. 5. Volatile political situation.”
—Design engineer at a U.S. manufacturer of off-highway —Production manager at a Middle East manufacturer of
transmissions motorcycle gears
“Steel prices.” “Ability to continue quality improvements.”
—Technical manager at a European manufacturer of agricul- —Corporate executive at a U.S. gear manufacturing job shop
tural drives
“Ability to cut production costs on a continuous basis to
“Still a buyers market. We need oil at $90 a barrel.” retain the competitive edge.”
—Purchasing manager at a U.S. manufacturer of centrifugal —Corporate executive at an Indian manufacturer of agricul-
pumps tural transmissions
“The Obama uncertainty factor makes our customers’ indus- “Being competetive in Asia.”
tries hesitate, making it tough for us to gain projects that are —Quality manager at a U.S. manufacturer of transmissions
right now non-existent.” and axles
—Sales professional at a U.S. engineering consultancy
“Can’t find skilled aerospace gear engineers. We have to
“To sustain and improve the quality levels of our product.” train them, and that takes a lot of time.”
—Design engineer at an Indian manufacturer of two- and —Corporate executive at a U.S. manufacturer of aerospace
three-wheel vehicles gears and gearboxes
“Tough competition, cost reduction, worker demand.” “Capability of manufacturing at low cost.”
—Production worker at an Indian gear manufacturing job —Manufacturing engineer at an Indian automobile OEM
shop
“Competing with Chinese product.”
“Understanding the ramp-up of our customers and their —R&D manager at a European manufacturer of wind tur-
future inventory demands.” bines
—Sales professional at a U.S. gear manufacturing job shop
“Climate Change and the following switch in technologies.”
—Sales manager at a European manufacturer of turbo gear-
box units
62% of Respondents Saw Production Volumes Increase 71% Expect Production Volume to Increase in 2011

25% 22% 22% 45% 40%

18% 40%
20% 35%
15% 30% 24%
15% 24%
11% 25%
10% 20%
7% 15% 7%
5%
5% 10%
5% 2% 3%
0%
0% 0%
Increased more than 20%

Increased more than 11-20%

Increase more than 20%

Increased more than 1-10%

Increase more than 11-20%

Increase more than 1-10%

Stayed the Same

Decreased 1-10%

Decrease 1-10%
Decreased 11-20%

Decreased more than 20%

Stay the Same

Decrease 11-20%

Decrease more than 20%

32 GEARTECHNOLOGY November/December 2010 www.geartechnology.com

 “Consolidations to control cost.”
What Are Your Company’s —Manufacturing engineer at a U.S. manufacturer of aero-
space and defense components
Greatest Manufacturing/Engineering
Challenges for 2011? “Developing new products.”
—Design engineer at a U.S. manufacturer of bearings
“Conclude site expansion toward 2011–2014 demands.” “Do more with less.”
—Production manager at a European gearbox manufacturer —Design engineer at a U.S. manufacturer of off-highway
transmissions
continued

58% Saw Sales Volume Increase in 2010 50% Work at Locations where Capital Spending
Increased in 2010
30% 26%
35%
25% 30%
30%

20% 17% 25%

20% 20%
15% 19% 20%
15%
9% 15%
10%
10% 8% 10% 7% 8%
7% 4%
5%
5%
0%

Increased more than 20%

0%

Increased more than 11-20%

Increased more than 1-10%

Stayed the Same

Decreased 1-10%

Decreased 11-20%
Increased more than 20%

Decreased more than 20%

Increased more than 11-20%

Increased more than 1-10%

Stayed the Same

Decreased 1-10%

Decreased 11-20%

Decreased more than 20%

70% Expect Sales Volume to Increase in 2011 49% Expect Capital Spending at their Locations
to Increase in 2011
45% 41% 38%
40% 40%
35% 35%
29%
30% 30%
20% 23% 25%
25%
20% 20%
13%
15% 9% 15%
7%
10% 10% 6%
4%
5% 2% 5% 3% 4%
0% 0% 0%
Increase more than 20%

Increase more than 11-20%

Increase more than 20%

Increase more than 1-10%

Increase more than 11-20%

Increase more than 1-10%

Stay the Same

Stay the Same

Decrease 1-10%

Decrease 11-20%

Decrease 1-10%
Decrease more than 20%

Decrease 11-20%

Decrease more than 20%

www.geartechnology.com November/December 2010 GEARTECHNOLOGY 33

 What are the Most Significant Challenges Facing Gear Industry Companies?

Overall Economy
Material Costs
Finding Skilled Labor
Foreign Competition
Energy Costs
Supply Chain Issues
Currency Fluctuations
Cost of Healthcare
Auto Industry Woes
0 1 2 3 4 5 6 7
Average 1-10 Ranking (with 10 being the most significant challenges)

Machine Tool Purchase Plans 2011

Non-Gear Machine Tools

(Turning, Milling, etc.) 61%
Gear Hobbing Machines 53%
Gear Inspection Equipment 49%
Gear Grinding Machines 35%
Heat Treat Equipment 33%

Deburring Equipment 27%

Gear Shaping Machines 23%

Broaching Machines 21%

Bevel Gear Machines 20%

Gear Tooth Honing Machines 15%
Gear Shaving Machines 12%
Spline Rolling Equipment 11%
0% 10% 20% 30% 40% 50% 60% 70%
Of those planning to purchase capital equipment, the percentage planning to purchase in each category

Green or Sustainable Manufacturing Implementation ISO 9000 Implementation

8%
Nonexistent
28%
In Place
14% 9%
Planned Planned
10%
Partially
23% Implemented
Nonexistent

35% 74%
Partially implemented In Place

34 GEARTECHNOLOGY November/December 2010 www.geartechnology.com

 “Getting business.”
What Are Your Company’s —Corporate executive at a U.S. gear manufacturing job shop
Greatest Manufacturing/Engineering “Getting new product started and funded.”
Challenges for 2011? —Corporate executive at a U.S. manufacturer of buses

“Enhancing capacity while reducing manpower.” “Government funding.”

—Corporate executive at an Indian gear manufacturing job —Design engineer at a U.S. manufacturer of satellites
shop
“Implementing a zero-defect mindset.”
“Finding R&D support for solving gear distress associated —Manufacturing engineer at a South American manufacturer
with new technologies.” of automotive transmission parts
—Corporate executive at a U.S. manufacturer of enclosed
gear drives “Implementation of newer technology.”
—Sales manager at a U.S. gear manufacturing job shop
“Finding a solution to controlling price and reducing our
lead times and order quantities.” “Improving quality consistency.”
—Design engineer at a U.S. manufacturer of agricultural —Corporate executive at a European manufacturer of speed
components reducers

“Finding qualified engineers.” “Improved materials for lower product cost. Advanced ana-
—Marketing manager at a U.S. manufacturer of gears and lytic modeling.”
gear drives —Corporate executive at a U.S. manufacturer of high speed
gear drives
“Finding skilled labor.”
—Engineering manager at a European manufacturer of agri- “Improving quality levels and going green.”
cultural transmissions —Corporate executive at a Far East manufacturer of sprockets

“Getting more involved in automotive industry.” “Increasing car axle manufacturing business.”
—Purchasing manager at a European manufacturer of gear- —Corporate executive at a U.S. manufacturer of truck axles
boxes continued

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 Six Sigma Implementation Lean Manufacturing Implementation

14%
24% Nonexistent
In Place
9%
35%
Planned
Nonexistent

47%
In Place
30%
12% 30% Partially
Planned Partially Implemented
Implemented

Statistical Process Control (SPC) Implementation Annual Sales Volume of Company

8% 6%
$100,000- $0-$99,999
$499,999
22% 18% 4%
Nonexistent 37% $1 billion + $500-$999
In Place 5% million
$500,000-
$999,999
7%
9% $100-$499
Planned million
14%
$1-$4.99
million 6%
$50-$99
32% million
Partially
Implemented 11%
$5-$9.99 20%
million $10-$49.99
million

Type of Operation Job Title/Function of Respondent

1% 4% 5%
Quality Control Other
Other
4%
Purchasing
21%
Corporate
Management
39%
Job Shop 21%
Design Engineering
14%
Manufacturing
60% Production
OEM
14%
Marketing 17%
& Sales Manufacturing
Engineer

36 GEARTECHNOLOGY November/December 2010 www.geartechnology.com


What Are Your Company’s
Greatest Manufacturing/Engineering
Challenges for 2011?
“Increasing quality of manufactured bevel gears.”
—Manufacturing engineer at a European gear manufacturing
job shop
“Increasing production levels to meet rapidly increasing
sales opportunities.”
—Manufacturing engineer at a U.S. manufacturer of con-
struction and mining transmissions
“Increasing sales of inventory that I currently have been
manufacturing.”
—Owner of a U.S. manufacturer of racing transmissions
“Introduction of large-scale assembly processes.”
—Corporate executive at a European manufacturer of actua-
tors
“Keeping up with customer demand.”
—Manufacturing engineer at a U.S. manufacturer of plastic
products
“Keeping engineering and manufacturing costs in line with
expectations.”
—Design engineer at a U.S. gear and gearbox repair facility
www.geartechnology.com
“Maintaining correct staff abilities to meet stringent con-
tract targets.”
—Design engineer at a European automotive transmission
consultancy
“Maintaining existing equipment with higher overall equip-
ment effectiveness.”
—Manufacturing engineer at a U.S. manufacturer of rack and
pinion steering gears
“Maintaining our competitive advantage and increasing
sales.”
—Design engineer at a European design engineering firm
“Maintaining product cost with highest quality standards.”
—Production worker at an Indian automobile OEM
“Manufacturing efficiencies.”
—Sales manager at a U.S. gear manufacturing job shop
“Many new complex jobs in queue for processing.”
—Corporate executive at a U.S. manufacturer of aerospace
gears
“Material costs and equipment depreciation-obsolescence.”
—Field service manager for a U.S. gear drive manufacturer
“Meeting foreign competition.”
—Corporate executive for a U.S. manufacturer of gears and
geared assemblies
continued
November/December 2010 GEARTECHNOLOGY 37
 How Do Respondents Describe their Manufacturing
Operations and Technology? What Are Your Company’s
1% Greatest Manufacturing/Engineering
It’s Amazing We Still
Have Customers Challenges for 2011?
19%
World-Class,
5% 21st Century “Need to upgrade our gear cutting technology with little
Facilities and capital.”
Equipment Beginning —Corporate executive at a U.S. manufacturer of aerospace
to Show Their Age
gears
27%
Good, but
Room for “Implementing new processes.”
Improvement —Sales manager at a U.S. manufacturer of powder metal
components
48%
Competitive with most
“New production developments, multitasking.”
in Our Industry —Corporate executive at a European manufacturer of ground
gears

“No university-trained gear engineers available.”

—Manufacturing engineer at a U.S. manufacturer of gears
and drives
Primary Method of Manufacture
“Qualified and skilled personnel.”
1%
2% Roll Formed —Engineering manager at a Canadian manufacturer of gears
Plastic and drives
3%
Other
1% “Quality control and heat treatment.”
Powder Metal —Manufacturing engineer at an African gear manufacturing
job shop
16%
Forged
“Quality employees.”
—Corporate executive at a U.S. manufacturer of driveshafts

“Reducing costs.”
77% —Manufacturing engineer at a U.S. manufacturer of custom
Cut Metal
bearings

“Resources and training.”

—Design engineering manager at a U.S. manufacturer of
industrial gears

Primary Industry of Respondent Capital Spending for 2010

4%
9% $10-$19.99
Vehicles other 26% 4% million
than Automotive 11% Automotive None 22%
$100,000-$499,999
Other
7% 7%
Motion $5 -$9.99
Control/ million
Factory
Automation
10%
$20 million +
9%
Construction/
Off-Road 14%
Equipment 11% Less than
Aerospace $100,000
22%
28% 16% $1-$4.99
Heavy Industry $500,000- million
$999,999

38 GEARTECHNOLOGY November/December 2010 www.geartechnology.com

 “To manufacture various types of product with a minimum
What Are Your Company’s tolerance, or more precisely to supply product to a 0.005
accuracy. At present we are up to 0.015.”
Greatest Manufacturing/Engineering —Production manager at an Indian gear manufacturing job
Challenges for 2011? shop

“To meet the increase in demand without deterioration of

“Reversing the economic climate made worse by the Obama quality.”
regime. All sized private sector businesses are critical to the —Design engineer at an Indian manufacturer of two- and
U.S. economy. We do not need more do-nothing, perpetually three-wheel vehicles
brain-dead government jobs! When it comes to what drives
our country, Obama and his ideologues are immature, child- “To supply the current increased demand as well as add new
ish, ideological bozos.” parts.”
—Application technician at a U.S. provider of technical ser- —Corporate executive at an Indian gear manufacturing job
vices shop

“Shorter delivery time requirements.” “Winning orders in an increasingly competitive market.”

—Sales manager at a U.S. manufacturer of couplings —Corporate executive at a European gear manufacturing job
shop
“Skilled manpower.”
—Heat treating manager at an Indian manufacturer of trans-
mission gears

“Staying ahead of our competitors with innovative products.

Trying to balance sales demand with manufacturing capac-
ity.”
—Design engineer at a European manufacturer of torque
multipliers

“The economy. Will it continue to grow?”

—Design engineer at a U.S. manufacturer of automobile
transmissions

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