2016 Annual Report on the U.S. Fluid Power Industry National Fluid Power Association www.nfpa.com

© NFPA, 2016 Annual Report on the U.S. Fluid Power Industry Executive Summary Fluid power (hydraulics and pneumatics) is a workhorse of the U.S. economy. It is a cross- cutting technology of choice for dozens of industries and hundreds of applications. In 2016, the manufacture of fluid power components was a $19 billion industry. The U.S. fluid power industry is strongly competitive around the world, with 2016 exports valued at $5.5 billion. It is estimated that 862 companies in the United States employ more than 67,149 people in the manufacture of fluid power components, representing an annual payroll of more than $4.3 billion. Fluid power has a significant downstream economic impact. Ten key industries that depend on fluid power are estimated to represent more than 23,200 companies in the United States, employing more than 778,056 people with an annual payroll of more than $49.5 billion. Fluid power and the industries it serves depend on a highly-educated workforce. Investments in new fluid power education and training resources are occurring and more 2-year and 4-year colleges are teaching fluid power. © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Executive Summary cont. Fluid power systems consume a significant portion of our nation’s energy. Existing technologies and best practices have been shown to reduce energy use in fluid power systems, in some cases by up to 30% or more. Through the Technology Roadmap for the Fluid Power Industry, the industry is identifying and addressing key research challenges that will continue to meet the needs of its diverse customer base. Fluid power has an active industry/academic coalition that focuses on these key research challenges. Recent breakthroughs have been made in increasing energy efficiency, increasing energy storage capabilities, and reducing the size of fluid power components and systems. Future directions of fluid power research will additionally focus on improving its reliability, building “smart” components and systems, and reducing its environmental impact. A new effort to address the specific manufacturing needs of the fluid power industry has begun. This effort will seek to leverage several key manufacturing technologies to improve the production and performance of fluid power components and systems. © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Enduring and Essential Fluid power systems transmit more power in a smaller space than other forms of power transmission, making it the cross-cutting technology of choice for dozens of industries and hundreds of applications. Advantages of hydraulics include: High power to weight ratio High torque at low speed Ability to hold torque constant Ruggedness and reliability Advantages of pneumatics include: Inexpensive and lightweight Simple control systems Clean and non-reactive in magnetic environments Speed and precision Making hydraulics essential for: Construction machinery Agricultural machinery Heavy trucks Material handling machinery Mining machinery Oil and gas machinery Metalworking machinery Making pneumatics essential for: Automotive manufacturing Packaging machinery Food processing machinery Medical equipment Semiconductor manufacturing © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

© NFPA, 2016 Annual Report on the U.S. Fluid Power Industry Industry Size In 2016, the manufacture of fluid power components was a $19.0 billion business in the United States. It was the second year of decline after five straight years of industry growth, but still remains 14.5% higher than its pre-recession high in 2008. © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Industry Size The manufacture of hydraulic products was a $14.2 billion business in 2016, 75% of the fluid power total. The manufacture of pneumatic products was a $4.8 billion business in 2016, 25% of the fluid power total. © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

© NFPA, 2016 Annual Report on the U.S. Fluid Power Industry Exports In 2016, the value of U.S. exports of fluid power was $5.5 billion. Exports have increased 17% since the 2011, and are 62% higher than pre-recession high in 2008. The top ten destinations for export growth over the last five years account for 48% of all U.S. fluid power exports. © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

© NFPA, 2016 Annual Report on the U.S. Fluid Power Industry Jobs & Economic Impact Based on 2015 U.S. Census Bureau data, it can be estimated that 862 companies employ 67,149 people in the manufacture of fluid power pumps, motors, valves, cylinders, actuators, hoses, and fittings, with an annual payroll of more than $4.3 billion. © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Downstream Impact - Markets Fluid power has a significant downstream economic impact. Dozens of U.S. industries depend on fluid power technology for their operations and for the competitiveness of their products. Top Hydraulic Markets Construction Machinery Agricultural Machinery Automotive (light trucks) Class 4-8 Trucks (vocational) Material Handling (conveying) Lawn and Garden Automotive (light trucks) Food Processing Medical Equipment Top Pneumatic Markets Class 4-8 trucks (vocational) Packaging Machinery Material Handling (conveying) © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Downstream Impact - Jobs Based on 2015 U.S. Census Bureau data, ten of these industries—construction machinery, oil and gas machinery, food product machinery, metalworking machinery, material handling equipment, packaging machinery, automobile and light duty motor vehicles, heavy duty trucks, medical equipment, and other general purpose machinery—represent 23,200 companies in the United States, employing 778,056 people with an annual payroll of more than $49.5 billion. © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Education & Training = 1 - 3 = 4- 6 = 7 - 9 = 10 - 12 Fluid power and the industries it serves depend on a highly-educated workforce. Investments in new fluid power education and training resources are occurring, and more 2-year and 4-year colleges are teaching fluid power. NFPA maintains a network of these colleges, and their regional distribution across the country is increasing. Number of 2-year and 4-year colleges in the NFPA Educator Network = 1 - 3 = 4- 6 = 7 - 9 = 10 - 12 © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

© NFPA, 2016 Annual Report on the U.S. Fluid Power Industry Energy and Efficiency Fluid power systems consume a significant portion of our nation’s energy, and well-designed and well- maintained fluid power systems can be very energy efficient. Unfortunately, many working fluid power systems are not well designed nor well maintained. Many technologies and best practices exist to maximize the energy efficiency of fluid power systems, including: Hydraulic systems: Eliminating parasitic losses Effective flow control Smart use of accumulators Pressure reducing valves Load sensing pumps Pressure compensated pumps Servo valves Hydraulic power units vs. electric motors Pneumatic systems: Eliminating pressure drop Repairing leaks Reducing pressure Evaluating plumbing and storage Optimizing air blow Employing intermediate bore-size cylinders Correctly sizing all components Several companies perform audits to identify and troubleshoot weaknesses in working fluid power systems. Data provided by one these companies indicate that when these technologies and best practices are implemented, average energy savings are 31%, and the cost of implementation is recouped within 4-5 months. © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Technology Roadmap Customer Drivers Research Challenges NFPA’s Technology Roadmap for the Fluid Power Industry identifies the key research challenges that the industry is addressing for fluid power to continue meeting the needs of its diverse customer base. Customer Drivers Research Challenges Customer drivers are the business or technology objectives of fluid power customers. They help them serve the needs of their own customers, and are not necessarily connected to their use of fluid power. Research challenges are the broad areas of attention that must be addressed if fluid power is to meet or better meet the customer needs described by the drivers. Increasing the energy efficiency of fluid power components and systems Improving the reliability of fluid power components and systems (e.g., increasing up-time, reducing maintenance requirements, making fluid power safe and easy to use) Increased productivity and performance Reducing the size of fluid power components and systems while maintaining or increasing their power output Increased availability/ up-time Building “smart” fluid power components and systems (i.e., ones that perform self-diagnostics and troubleshooting and that integrate easily with “plug and play” functionality) Lower total cost and life cycle costs Reducing the environmental impact of fluid power components and systems (e.g., lowering noise, eliminating leaks) Increased ease/predict-ability of maintenance Improving and applying the energy storage capabilities of fluid power components and systems © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Research & Development The Center for Compact and Efficient Fluid Power (CCEFP) is a network of fluid power research laboratories, academic faculty and graduate students at several U.S. universities. The CCEFP works with the fluid power industry to tackle the research challenges identified in NFPA’s Technology Roadmap for the fluid power Industry. Its research successes include: High Efficiency Excavator The use of individual pump displacement control to directly command hydraulic actuators has demonstrated 40% fuel savings on an excavator. Efforts are currently underway to incorporate hybridization into the system for even greater fuel savings. Strain Energy Accumulator Free Piston Engine/Pump Precise piston motion control is necessary for reliable operation of a free piston engine pump that can directly convert liquid fuel combustion into hydraulic power. The demonstration of this technology merges the engine and pump into one compact assembly. Current accumulators use either compressed gas or springs to store energy. Conversely the CCEFP carbon nanotube elastomeric accumulator safely stores energy as strain. Energy savings greater than 25% have been demonstrated over existing pneumatic systems. Improving Energy Storage Capabilities Reducing the Size of Systems Increasing Energy Efficiency © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

Manufacturing Roadmap A second technology roadmap—this one focused on improvements in how fluid power components are manufactured—was published in the past year. It reveals several cross-cutting themes that are specific to the fluid power industry, including the need for: High precision coupled with multiple product configurations and small orders sizes Single piece flow (batch size of one) Increased production rates Quality levels that are matched to requirements that reflect real world operation Environmentally friendly processes To help address these themes, the Fluid Power Manufacturing Roadmap identifies specific research needs associated with fluid power’s adoption of the following manufacturing technologies and processes: Coatings Micro-machining Composites/engineered plastics Sintered metals Additive manufacturing Batch-free heat treating Robotics Hybrid manufacturing Metrology In-process sensing, feedback, and control © NFPA, 2016 Annual Report on the U.S. Fluid Power Industry

2016 Annual Report on the U.S. Fluid Power Industry National Fluid Power Association www.nfpa.com