WWW.IBISWORLD.

COM Machinery Maintenance & Heavy Equipment Repair Services in the USAugust 2019   1

Scheduled maintenance: Revenue will rise as

economic growth drives equipment depreciation
This report was provided to
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IBISWorld Industry Report 81131

Machinery Maintenance &
Heavy Equipment Repair
Services in the US
August 2019 Griffin Holcomb

2 About this Industry 17 International Trade 29 Revenue Volatility

2 Industry Definition 18 Business Locations 29 Regulation and Policy
2 Main Activities 30 Industry Assistance
2 Similar Industries 20 Competitive Landscape
3 Additional Resources 20 Market Share Concentration 31 Key Statistics
20 Key Success Factors 31 Industry Data
4 Industry at a Glance 20 Cost Structure Benchmarks 31 Annual Change
22 Basis of Competition 31 Key Ratios
5 Industry Performance 23 Barriers to Entry 32 Industry Financial Ratios
5 Executive Summary 24 Industry Globalization
5 Key External Drivers 33 Jargon & Glossary
7 Current Performance 25 Major Companies
9 Industry Outlook 25 John Wood Group PLC
11 Industry Life Cycle 25 KRC Machine Tool Services
25 Tech-24
13 Products and Markets 26 Lee Shuknecht & Sons Inc.
13 Supply Chain
13 Products and Services 27 Operating Conditions
15 Demand Determinants 27 Capital Intensity
15 Major Markets 28 Technology and Systems

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WWW.IBISWORLD.COM Machinery Maintenance & Heavy Equipment Repair Services in the USAugust 2019   2

About this Industry

Industry Definition This industry provides maintenance performs automobile welding services,
and repair (M&R) for commercial, it does not conduct general automotive
industrial, agricultural and other types and electronic repairs, which are
of machinery and equipment (M&E). performed by the Auto Mechanics
Services include motor repair, blade (IBISWorld report 81111) and
sharpening and commercial Electronic and Computer Repair
refrigeration repair. While this industry Services (81121) industries.

Main Activities The primary activities of this industry are

Industrial machinery and equipment M&R
Commercial and service-industry machinery and equipment M&R
General-purpose machinery and equipment M&R
Heavy machinery and equipment M&R
Reselling merchandise
Commercial refrigeration M&R
Hydraulic equipment M&R
Welding repair services (e.g. automotive, general)

The major products and services in this industry are

M&R of agricultural, construction, mining and forestry machinery M&E
M&R of commercial and service sector M&E (excluding refrigeration)
M&R of commercial refrigeration equipment
M&R of industrial M&E
Resale of merchandise
Other M&R

Similar Industries 33661a Ship Building in the US

This industry repairs and overhauls ships at shipyards.

48819 Aircraft Maintenance, Repair & Overhaul in the US

This industry repairs and services aircraft.

48821 Rail Maintenance Services in the US

This industry repairs and services railroad cars and engines.

48839 Dry Docks & Cargo Inspection Services in the US

This industry repairs and overhauls ships at floating dry docks.

81111 Auto Mechanics in the US

This industry performs automotive repair (except welding) and maintenance.

81121 Electronic & Computer Repair Services in the US

This industry repairs and maintains electronic and precision equipment.

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About this Industry

Similar Industries 81141 Appliance Repair in the US

This industry repairs and maintains home and garden equipment (e.g. sharpening or installing blades and
continued saws).

Additional Resources For additional information on this industry

www.maintenance.org
Association of Asset Management Professionals
www.nam.org
National Association of Manufacturers
www.plant-maintenance.com
Plant Maintenance Resource Center
www.smrp.org
Society for Maintenance & Reliability Professionals
www.bls.gov
US Bureau of Labor Statistics

IBISWorld writes over 1000 US

industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com

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Industry at a Glance
Machinery Maintenance & Heavy Equipment Repair Services in 2019

Key Statistics Revenue Annual Growth 14–19 Annual Growth 19–24

Snapshot
$38.7bn -0.5% 2.3%
Profit Wages Businesses

$3.0bn $14.0bn 68,327

Revenue vs. employment growth Industrial production index
Market Share
There are no major 15 120
players in this
10 115
industry
5 110
% change

Index
0 105

-5 100

-10 95
Year 11 13 15 17 19 21 23 25 Year 11 13 15 17 19 21 23 25
Revenue Employment
SOURCE: WWW.IBISWORLD.COM
p. 25
Products and services segmentation (2019)
4.7%
M&R of commercial
Key External Drivers 6.0% refrigeration equipment
Industrial Resale of merchandise
production index
13.6 %
Consumer spending M&R of agricultural, construction,
mining and forestry machinery M&E
36.2%
M&R of industrial M&E
Private investment in
industrial equipment
and machinery
Demand from
agriculture, forestry,
fishing and hunting 15.2%
M&R of commercial and service
Value of construction sector M&E (excluding refrigeration)

p. 5
24.3% SOURCE: WWW.IBISWORLD.COM
Other M&R

Industry Structure Life Cycle Stage Mature Regulation Level Light

Revenue Volatility Medium Technology Change Medium
Capital Intensity Low Barriers to Entry Medium
Industry Assistance None Industry Globalization Low
Concentration Level Low Competition Level High

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31

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Industry Performance
Executive Summary   |   Key External Drivers   |   Current Performance
Industry Outlook   |   Life Cycle Stage

Executive Summary Operators in the Machinery Maintenance construction. The value of residential
and Heavy Equipment Repair Services construction has grown at an annualized
industry perform maintenance and repair rate of 3.5% during the current five-year
(M&R) services on machinery and period. Strong growth from these clients
equipment (M&E) used broadly across has been able to make up for declines in
the US economy, including in the other industry verticals. Industry
agricultural, construction, retail and operators are increasingly offering
manufacturing sectors. Typically, preventive and predictive maintenance
increased production and equipment use services to downstream businesses,
drives demand for M&R services, as which has also supported revenue growth
equipment tends to wear faster the more during the period.
it is used. Nevertheless, the industry has The industry is expected to grow over
declined marginally during the period the five years to 2024. A broad increase in
production and increased level of
corporate profit will continue to drive
The
industry has declined marginally due to investment in industrial and
volatility in the industrial production index and manufacturing equipment during the
outlook period, which includes repairs and
private investment in the industry regular maintenance. Corporate profit is
estimated to grow at an annualized rate of
due to volatility in the industrial 1.4% during the outlook period, an
production index and private investment indicator of growth. Furthermore, as
in the industry, which is beginning to economic growth continues, downstream
rebound. Ultimately, IBISWorld expects business activity and profit margins are
industry revenue to decrease at an expected to continue rising, leading to
annualized 0.5% to $38.7 billion over the sustained demand for M&R services. As
five years to 2019. In 2019 alone, industry new M&E investments made during the
revenue is anticipated to decline 0.2%. current period begin to depreciate,
Despite volatility, the industry has demand for industry services is expected to
been able to generate a majority of grow consistently over the next five years.
revenue from repairs to commercial and As a result, industry revenue is expected to
industrial clients, including those in increase at an annualized rate of 2.3% to
nonresidential, residential and heavy $43.4 billion over the five years to 2024.

Key External Drivers Consumer spending When the IPI rises, the machinery and
When consumer spending increases, so does equipment (M&E) that these industries
business activity for commercial and service use depreciates in value and requires
industries. This causes the M&E that these more-frequent maintenance and repairs
industries use to depreciate, necessitating (M&R), thereby boosting demand for
more-frequent M&R and raising demand industry services. The IPI is expected to
for industry services. Consumer spending is rise in 2019, representing a potential
expected to rise in 2019. opportunity for the industry.

Industrial production index Private investment in industrial

The industrial production index (IPI) equipment and machinery
measures output from the mining, Private investment in industrial
manufacturing, electric and gas sectors. equipment and machinery represents the

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Industry Performance

Key External Drivers total annual expenditure by businesses that these industries use deteriorate
continued on industrial equipment, transportation and require more-frequent repairs,
equipment and all other equipment not bolstering demand for industry repair
classified as computers or software. This services. Demand from agriculture,
includes expensed and capitalized M&R forestry, fishing and hunting is
projects conducted by industry operators. expected to increase in 2019; however,
Although new purchases are not included the high level of revenue volatility for
in industry revenue, it provides a future this sector poses an ongoing potential
source of support for industry operators threat to the industry.
through regular maintenance and any
future repairs. In 2019, private Value of construction
investment in industrial equipment and The Construction sector (IBISWorld
machinery is anticipated to increase. report 23) is a key downstream market
for M&R service operators. As
Demand from agriculture, construction activity increases, the M&E
forestry, fishing and hunting used by the sector depreciates in value
Agricultural and forestry industries are and increasingly requires repairs, raising
key downstream markets for M&R demand for this industry’s services. The
operators. As agricultural and forestry value of construction is expected to
business activity increases, the M&E increase marginally in 2019.

Industrial production index Consumer spending

120 4.0

115 3.5

3.0
110
% change
Index

2.5
105
2.0
100 1.5

95 1.0
Year 11 13 15 17 19 21 23 25 Year 13 15 17 19 21 23 25

SOURCE: WWW.IBISWORLD.COM

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Industry Performance

Current The Machinery Maintenance and Heavy

Equipment Repair Services industry is Industry revenue
Performance mostly composed of small, independently
15
run operators that provide a variety of
machinery and equipment repair services 10
for a wide range of commercial and
industrial businesses. Clients include 5

% change
those in agriculture, mining,
manufacturing, construction, forestry 0

and food service industries, among many

-5
others. Over the five years to 2019,
revenue for the industry is estimated to -10
decline at an annualized rate of 0.5% to Year 11 13 15 17 19 21 23 25
$38.7 billion, which includes a 0.2%
decline in revenue in 2019 alone. During SOURCE: WWW.IBISWORLD.COM

the current period, the industry has

experienced volatility from private residential and nonresidential construction
investment, which peaked at the coupled with an increased demand from
beginning of the period. However, the important downstream markets such as
industry has benefited from an increase in forestry, logging and agriculture.

Demand drivers The vast majority of demand for the Alongside growth in production,
industry is generated by industrial, increased levels of corporate profit and low
commercial and manufacturing interest rates drove an annualized increase
businesses, including those in the in private investment in industrial
agriculture, forestry and mining machinery and equipment (M&E),
markets. Over the five years to 2019, including M&R expenditures. Over the five
demand for machinery and heavy years to 2019, the value of private
equipment maintenance and repair investments in industrial M&E increased
(M&R) services has increased due to at an annualized rate of 1.9%. Likewise,
increased production among industrial, increased production also drove
commercial and manufacturing investment in metalworking machinery,
businesses. IBISWorld measures the which is primarily used by the
level of production from these construction, automobile and mining
industries using the industrial sectors. Due to increased production,
production index (IPI), which measures industrial and manufacturing businesses
output from the mining, increased their use of M&E. This grew
manufacturing, electric and gas demand for M&R services, which are
industries as reported by the US necessary to ensure the optimal
Federal Reserve. Over the five years to functioning of M&E, and contributed to
2019, the IPI has increased at an industry revenue growth over the five years
annualized rate of 1.1% due to to 2019. During periods of high equipment
improvements in commodity prices and use, M&E tend to wear more quickly,
consumer spending. driving demand for industry operators.

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Industry Performance

Predictive Preventative maintenance, meaning the and artificial intelligence has resulted in
maintenance services planned or scheduled maintenance of the growing use of maintenance
machines or equipment, has long helped programs that use sensors to monitor
to support industry revenue by providing operational conditions. Techniques
an additional source of demand alongside include oil particle analysis,
repair services. Preventative maintenance thermography, temperature and
aims to prevent future breakdowns and vibration monitoring and ultrasound
extend the lifespan of machines and measurement to detect wear, hotspots,
assets through regular check-ups. For leaks and imbalances. Such technologies
clients, preventative maintenance use stored historical data and analyze
services provide a degree of protection current performance to better predict
from the high costs of major machinery when M&R services will be needed.
repairs and costly stalls in production Predictive maintenance programs have
caused by broken machinery. become popular among clients due to the
Predictive maintenance, which has cost savings they enable, and industry
evolved as a more efficient and accurate operators have increasingly begun
method of preventative maintenance, has offering such services. For example,
become increasingly common over the industry player John Wood Group PLC
five years to 2019. The continued provides data integration and analytics
development of the Internet of Things services alongside M&R services.

Industry profit and The average industry profit margin has

increased over the five years to 2019. In Despitegrowth in demand
participation
2019, profit (measured as earnings before for repair services, industry
interest and taxes) is estimated to
account for 7.8% of industry revenue, up
employment is estimated
from 7.5% in 2014 despite growth in total to decline
wage expenditure. Over the five years to
2019, wage outlays rose at an annualized to weak revenue growth and a significant
rate of 1.3% to $14.0 billion, driven 2.6% decline in the number of companies
primarily by an increase in the average operating in the industry the same year.
wage during the period. As a result, industry employment has
Despite growth in demand for repair still not recovered, resulting in an
services during the period, industry overall annualized decline. Additionally,
employment is estimated to decline at an the number of industry establishments
annualized rate of 0.1% to 259,751 repair has also declined slightly over the five
staff. This is primarily a result of a strong years to 2019, falling an annualized 1.1%
5.3% decline in employment in 2016 due to 69,993.

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Industry Performance

Industry The Machinery Maintenance and Heavy

Equipment Repair Services industry is
maintenance and repair (M&R) services
and bolster industry revenue. The
Outlook expected to return to growth over the five industry is well positioned for growth
years to 2024. A projected increase in the trends emerging across a broad range of
industrial production index (IPI) and markets. Overall, IBISWorld projects
growth in overall investments in industry revenue to grow an annualized
industrial machinery and equipment 2.3% to $43.4 billion over the five years
(M&E) will sustain demand for to 2024.

Continued growth in With economic growth expected to

continue over the next five years, the Thenumerous sectors that
downstream demand
numerous sectors that the industry serves the industry serves are
are expected to follow suit. IBISWorld
anticipates that the IPI will grow at an expected to grow
annualized rate of 0.7% over the next five
years. This is anticipated to drive M&R metalworking machinery, which is
spending, since the increased use of M&E forecast to increase at an annualized rate
tends to accelerate wear as the level of of 2.0% over the five years to 2024.
production grows. The US Federal Reserve has indicated
Alongside increased production, that it will pursue additional interest rate
corporate profit is projected to increase increases. This could put downward
an annualized 1.4%, enabling businesses pressure on new M&E purchases and
to invest in their M&E, including increase demand for repair services,
expensed and capitalized M&R services. presenting a potential opportunity for
Over the five years to 2024, private industry operators over the next five
investment in industrial M&E is years. In addition, the industry is
anticipated to increase an annualized expected to benefit from demand for
3.0% despite interest rates fluctuation, M&R services from new purchases and
due to continued growth in corporate investments made over the past five years,
profit and consumer spending. Likewise, since even newer assets require regular
these factors are also expected to drive maintenance checks and repair services to
increased private investment in ensure they are functioning optimally.

Increasing reliance on Over the next five years, industrial and store data on equipment performance,
software commercial equipment will increasingly which then provides a more accurate
use software and technology for a variety of estimate for when certain parts and
functions, which is expected to have varied components need to be replaced.
effects for industry operators. Predictive Meanwhile, equipment manufacturers
maintenance is anticipated to benefit that produce highly technical and
industry operators if they can leverage such software-reliant equipment are
technologies and provide integrated anticipated to draw revenue away from
maintenance services for clients, who will the industry. For example, highly
be drawn to the demonstrated cost savings technical farm machinery is increasingly
of such technologies. Predictive only able to be serviced directly by the
maintenance uses sensors to monitor and manufacturer, drawing important

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Industry Performance

Increasing reliance on revenue away from industry operators. equipment themselves or to send it to
software continued For most tractors and other machines, industry operators for repair. While
the only way to silence an error message several states have enacted legislation to
is with a special diagnostic tool. Only mitigate this, the issue ultimately
authorized dealers and manufacturers remains contentious and unresolved. In
are permitted to operate the tool to the meantime, it is expected to continue
protect the proprietary software of the to pose a threat to the industry over the
manufacturer. As a result, this has made next five years by drawing repair revenue
it almost impossible for farmers to fix away from operators.

More M&R Growth in the outsourcing of M&R work

is expected to positively affect industry Growth in the outsourcing
outsourcing
revenue. Many businesses that use of M&R work is expected
machinery and heavy equipment retain
their own staff to handle routine M&R
to positively affect industry
needs. However, businesses are revenue
increasingly finding it less expensive and
more effective to contract out their M&R maintain full-time repair staff. In
needs. The use of independent addition, outsourcing M&R services gives
maintenance contractors can help companies better access to specialized
downstream companies operate more technicians who would not be cost-
competitively by enabling them to focus effective to retain as full-time employees.
on their core business. It is also less This outsourcing trend is expected to
costly for companies to hire outside grow over the next five years, having an
repair services to perform maintenance increasingly positive impact on demand
during scheduled shutdowns than it is to for industry services.

Profit and industry The average industry profit margin rate of 1.2% to $14.8 billion over the five
participation (measured as earnings before interest years to 2024. The number of industry
and taxes) is expected to increase slightly enterprises is anticipated to increase in
from 7.8% of industry revenue in 2019 to line with revenue, a trend that has
8.2% in 2024 due to revenue growth that developed over the decade. Over the five
outpaces growth in total wage years to 2024, the number of industry
expenditure. Total wage expenditure is enterprises is anticipated to increase an
anticipated to increase at an annualized annualized 0.5% to 69,934.

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Industry Performance
Life Cycle Stage Technological change in M&R tools and techniques
keeps pace with advancements in M&E serviced
Downstream markets are clearly defined
A trend toward outsourcing M&R
services supports growth

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Industry Performance

Industry Life Cycle The Machinery Maintenance & Heavy equipment (M&E) maintenance and
Equipment Repair Services industry is repair (M&R) work ensures the
in the mature phase of its life cycle. Machinery Maintenance and Heavy
Thisindustry Over the 10 years to 2024, industry Equipment Repair Services industry
is M
 ature value added (IVA), which measures an stable demand for its services. In
industry’s contribution to the US addition, greater automation on
economy, is projected to increase at an production lines and the continued
annualized rate of 1.4%. Comparatively, evolution of M&E used in construction,
US GDP is forecast to rise an oil drilling, agriculture and refrigeration
annualized 2.0% during the same has ensured a large and varied market for
period. While IVA is expected to grow specialized M&R services.
at a slower pace than GDP, other Industry operators have introduced
factors, such as clearly defined products new services and technologies to keep
and downstream markets, establish the pace with advancing technologies in
industry as mature. downstream markets. Over the past five
While demand for industry services years, improved diagnostic tools have
can vary depending on the performance enabled the proliferation of predictive
of downstream industries, the broad maintenance services. Such technology
scope of downstream markets that and service offerings are expected to
demand industry services as well as the continue to generate revenue for the
constant need for machinery and industry over the 10 years to 2024.

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Products & Markets

Supply Chain   |   Products and Services   |   Demand Determinants
Major Markets   |   International Trade   |   Business Locations

Supply Chain KEY BUYING INDUSTRIES

11 Agriculture, Forestry, Fishing and Hunting in the US
This sector requires repair and maintenance services for farming equipment.
21 Mining in the US
This sector requires repair and maintenance services for drilling and exploration equipment
and motors.
23 Construction in the US
This sector requires repair and maintenance services for construction equipment.
33351 Metalworking Machinery Manufacturing in the US
This industry requires repair and maintenance services for metalworking equipment.
49311 Public Storage & Warehousing in the US
This industry requires repair and maintenance services for materials-handling equipment.
49312 Refrigerated Storage in the US
This industry requires repair and maintenance services for commercial refrigeration equipment
and materials-handling equipment.

KEY SELLING INDUSTRIES

42 Wholesale Trade in the US
Wholesalers provide a full range of machinery and equipment parts. These parts are
sometimes included in the service fee or sold by the repairer as a separate item.
42361 Electrical Equipment Wholesaling in the US
Spare parts and wiring are purchased from electrical wholesalers.
42374 Refrigeration Equipment Wholesaling in the US
Replacement parts for commercial refrigeration systems, including equipment for refrigerated
trucks and vans, are purchased from refrigeration wholesalers.
42472 Gasoline & Petroleum Wholesaling in the US
Oils and lubricants are purchased from petroleum products wholesalers.

Products and Services M&R for industrial equipment Machinery Manufacturing industry
and machinery (IBISWorld report 33351). Industry
In 2019, maintenance and repair (M&R) operators also repair and maintain saws
services for industrial equipment is and other equipment used in wood
anticipated to account for 36.2% of total product industries, molding machinery
revenue for the Machinery Maintenance used in plastic product manufacturing
and Heavy Equipment Repair Services establishments and packing equipment
industry. While machinery is heavily used used by food and drink producers.
in most sectors of the technologically Finally, the industry does a large amount
advanced US economy, it is particularly of work on pumps, compressors, engines
prevalent in manufacturing. As a result, and a variety of other types of general-
US manufacturers regularly demand the purpose machinery used throughout the
industry’s services. Industry operators manufacturing sector.
provide M&R services on a wide range of
industrial machinery and equipment M&R of commercial and service
(M&E), including the metal cutting, industry equipment
grinding, buffering, drilling and polishing M&R services for commercial and service
M&E produced by the Metalworking sector M&E represents a large source of

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Products & Markets

Products and Services Products and services segmentation (2019)

continued 4.7%
M&R of commercial
refrigeration
6.0% equipment
Resale of merchandise
13.6%
M&R of agricultural, construction,
36.2%
M&R of industrial M&E
mining and forestry machinery M&E

15.2%
M&R of commercial and service
sector M&E (excluding refrigeration)

24.3%
Total $38.7bn Other M&R SOURCE: WWW.IBISWORLD.COM

income for the industry. M&R of such equipment in their operations that needs
equipment (excluding commercial to be regularly repaired. Agricultural
refrigeration equipment) is estimated to machinery includes large combine
account for 15.2% of industry revenue, harvesters, which are vehicles that quickly
while M&R of commercial refrigeration and efficiently harvest grain, cotton and
equipment is estimated to account for other crops. Forestry equipment includes
4.7% of industry revenue. feller bunchers, harvesters and skidders.
Industry operators repair and maintain These machines are used to fell trees,
numerous types of commercial and service remove their branches, cut them into logs
sector M&E categorized under this service and move them out of the forest into
segment. Such M&E includes fryers, trucks for long-distance transport.
stoves, ovens and dishwashers used in the Construction equipment includes
kitchens of restaurants, hotels and bars. It tractors, bulldozers, cranes, cherry
also includes such equipment as washing pickers and other machines used to
machines and dryers used at dry cleaners. transport equipment, goods and workers
Commercial refrigeration includes large across a worksite. Finally, mining
refrigerators used by butcher shops, equipment includes drills, ore crushers,
restaurants and other facilities that must continuous mining machines and various
preserve food. It also includes other heavy equipment and machinery.
refrigerator equipment used in medical
laboratories, as well as refrigerated Repair services for other
display cases and ice machines found in types of equipment
supermarkets and gas stations. The remaining services include other
miscellaneous M&R work and the resale of
M&R of agricultural, construction, mining merchandise. Industry operators purchase
and forestry machines and equipment parts for use in servicing M&E. They also
The industry derives an estimated 13.6% salvage old but functioning parts to be
of its revenue from the provision of M&R used in future repairs or rebuilds. Industry
work on agricultural, construction, mining operators are able to earn some revenue
and forestry M&E. The agricultural, via the resale of such new and used parts.
construction, mining and forestry sectors In addition, industry operators purchase
use a substantial amount of heavy old M&E, repair it and resell it.

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Products & Markets

Demand Downstream industry activity Technological changes

Determinants The largest determinant of demand for Technological advances in the M&E
the Machinery Maintenance and Heavy serviced by industry operators have a
Equipment Repair Services industry is multilayered effect on demand for industry
the level of downstream business activity. services. When new and more efficient
The more activity within the models of M&E are manufactured,
manufacturing, service, agricultural, downstream clients of often take the
mining, construction and other sectors, opportunity to replace old outmoded
the more these sectors will use machinery M&E. This reduces demand for industry
and equipment (M&E). As M&E usage services, as newer M&E tend to require
increases, its depreciation will increase as fewer repairs than older M&E. However,
well. This leads to greater demand for businesses that purchase such new M&E
maintenance and repair (M&R) services. are more likely to hire industry operators
for M&R services because they usually do
Investment in new machinery not have in-house technicians who are
As downstream industries increase their qualified to do so. The overall effect of the
business activity, the M&E that they use introduction and adoption of new,
depreciates. Higher depreciation rates technologically advanced M&E is therefore
are beneficial to the Machinery a short-term fall but medium- to long-term
Maintenance and Heavy Equipment increase in demand for industry services.
Repair Services industry when profit
margins are low and the cost of new Outsourcing
machinery is high. Under these The extent to which businesses in
circumstances, businesses will opt to downstream industries outsource M&R
repair their M&E as much as possible to to third parties as opposed to using
avoid expensive investments in new in-house staff affects demand. The use of
M&E. However, when business profit independent maintenance contractors
margins are high and new machinery is can help downstream companies operate
relatively inexpensive, companies will more competitively by enabling them to
tend to purchase new M&E instead of focus on their core business. It is also less
repairing old M&E. In sum, when costly for companies to hire outside
investment levels are low, companies will repair services to perform maintenance
opt to invest in the repair of old M&E, during scheduled shutdowns than it is to
leading to greater demand for industry hire repair staff full-time. Finally,
services. However, when investment outsourcing M&R services provides
levels are high, companies will purchase companies better access to specialized
new M&E and reduce their demand for technicians who would not be cost-
industry services. effective to retain as full-time employees.

Major Markets Customers in industrial sector equipment (M&E) by most manufacturing

Manufacturing and industrial clients and industrial businesses. Manufacturing
represent the largest market for the industries that use industry services
Machinery Maintenance and Heavy include the Metalworking Machinery
Equipment Repair Services industry and Manufacturing industry (IBISWorld report
are forecast to generate 39.5% of industry 33351), wood product manufacturing
revenue in 2019. This is in line with the industries, plastic product manufacturing
particularly heavy use of machinery and industries, food product processors, textile

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Products & Markets

Major Markets Major market segmentation (2019)

continued
1.2%
Nonprofit
organizations 2.7%
14.9% Individual clients
Agricultural, construction,
mining and forestry sector 4.4%
Government entities

39.5%
Industrial sector
16.6%
Commercial and food service

20.7%
Total $38.7bn All other businesses
SOURCE: WWW.IBISWORLD.COM

mills and a variety of other manufacturing largest source of industry revenue and
industries. This customer segment is are expected to account for 14.9% of
estimated to have expanded as a share of revenue in 2019. These industries tend
revenue over the five years to 2019 due to to make very heavy use of M&E in their
increased industrial production. operations, which involve the
movement of very heavy loads of
Commercial businesses materials, resources and equipment.
and service providers For example, the forestry industry
Commercial businesses and food service makes heavy use of equipment used in
providers are estimated to account for 16.6% the felling and transportation of
of total industry revenue in 2019. Retail, timber, while the mining industry
wholesale and service industries tend to be must use heavy equipment and
much less capitally intensive than industries machines such as draglines and drills
in the manufacturing sector, instead relying to collect and transport large
more on labor in their operations. However, quantities of heavy minerals.
some of these industries make relatively
heavy use of M&E in their operations. For Other
example, fryers, ovens, stoves and Other important market segments for
dishwashers are crucial for the operation of the industry comprise all other business
restaurants. Commercial refrigeration types, which are estimated to account
equipment is used in supermarkets, grocery for 20.7% of revenue in 2019. In
stores, gas stations and a variety of other addition, a small amount of revenue is
retail, wholesale and service industries. This generated from services provided to
market segment has risen as a percentage of individuals, government entities and
industry revenue over the past five years as nonprofit organizations, which are
aggregate retail, wholesale and service sector estimated to account for 2.7%, 4.4%
demand has grown. and 1.2% of revenue, respectively, in
2019. Federal, state and local
Agricultural, construction, mining government agencies as well as
and forestry industries nonprofit organizations hire industry
Agricultural, construction, mining and operators to make repairs of
forestry businesses represent the third- miscellaneous M&E.

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Products & Markets

International Trade The Machinery Maintenance & Heavy As an industry that provides a service,
Equipment Repair Services industry industry operators do not export and
does not engage in international trade. import products.

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Products & Markets

Business Locations 2019

West
AK
0.4 New
England
ME
Great Mid- 0.5

Lakes Atlantic 1 2
NY 3
WA MT ND 3.7
5 4
1.9 0.7 MN
Rocky
0.6 2.5
WI
OR Mountains SD
0.7
Plains 2.3 MI
3.7
PA
4.3
6
7
1.4 ID IA OH 9 8
0.7 WY 3.9
0.6
NE
2.0
IL IN WV VA
4.5 2.5 2.3

West NV
1.3 0.9
KY
UT MO
1.6 NC
0.6
1.2 CO KS 2.2 3.3
1.9 1.3 TN
SC
Southeast
1.4
CA 1.7
8.3
OK AR GA
1.9 1.2 AL 3.0
AZ MS 1.7
1.5 NM
0.8 Southwest 1.0

TX LA
2.7 FL
9.3 5.6

West Establishments (%)

HI Less than 3%
0.3 Additional States (as marked on map) 3% to less than 10%
1 VT 2 NH 3 MA 4 RI 10% to less than 20%
0.2 0.4 1.3 0.2 20% or more

5 CT 6 NJ 7 DE 8 MD 9 DC
0.8 1.8 0.2 1.4 0.0

SOURCE: WWW.IBISWORLD.COM

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Products & Markets

Business Locations Establishments in the Machinery

Distribution of establishments vs. population
Maintenance and Heavy Equipment
Repair Services industry are located close
30
to concentrations of companies using
machinery and equipment (M&E) on
which industry operators perform 20
maintenance and repair (M&R) services.
As a result, industry operators are well

%
represented in populous areas of the 10
country, which tend to correspond to
concentrations of manufacturing, retail
and construction companies. Since the 0
industry also repairs mining and

West

Great Lakes

Mid-Atlantic

New England

Plains

Rocky Mountains

Southeast

Southwest
agricultural equipment, there are also
many industry establishments located in
regions with substantial mining and
agriculture activity. Based on data from Establishments
the US Census Bureau’s County Business Population
Patterns reports, the three US regions SOURCE: WWW.IBISWORLD.COM

with the largest share of industry

establishments are the Southeast, the industry with direct demand for M&R. In
Great Lakes and the Southwest. addition, there is substantial agricultural
activity in all of the Great Lakes states,
The Southeast and the region contains many large
The Southeast accounts for the highest metropolitan areas with large commercial
share of industry establishments, with and service sectors. The large size of these
an estimated 26.2% of the US total. This combined sectors provides substantial
is in line with the region’s leading share demand for industry services.
of the US population, at 25.7% of the
US total. The Southeast is heavily The Southwest
represented in the construction sector, The Southwest accounts for the third-
and these construction operators largest number of industry
demand M&R work on heavy machinery. establishments with an estimated 13.4%
The region also has a large share of the US total. Texas is home to two-
of the nation’s manufacturing and thirds of the region’s industry
forestry establishments. establishments. It is also the US state
with the overall largest number of
The Great Lakes industry establishments, with an
The Great Lakes is the second-largest estimated 9.3% of the US total. Texas’s
region in terms of industry high population; large service,
establishments, with an estimated 16.9% construction and manufacturing sectors
of the US total. The region is home to a and high concentration of oil drilling
high concentration of manufacturing activity contribute to its heavy
plants, in part due to the region’s place as representation of industry operators.
the center of the auto industry. The region Additionally, the hot climate of the
is also home to a substantial mining sector Southwest is harder on refrigeration
that both supports regional manufacturing equipment. As a result, many M&R
and provides the Machinery Maintenance operators devoted to commercial
and Heavy Equipment Repair Services refrigeration are located in the region.

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Competitive Landscape
Market Share Concentration   |   Key Success Factors   |   Cost Structure Benchmarks
Basis of Competition   |   Barriers to Entry   |   Industry Globalization

Market Share The Machinery Maintenance and Heavy that 69.0% of companies are
Concentration Equipment Repair Services industry has a nonemploying, owner-operated
very low level of market share businesses, while the vast majority of those
concentration, with no company industry operators that do employ workers
Level
accounting for more than 5.0% market manage a single establishment and employ
Concentration in share. This industry is highly fragmented, fewer than 20 workers. The level of market
this industry is L ow and no major company has cornered a share concentration is expected to remain
significant slice of the market for low given the ease with which sole
maintenance and repair (M&R) work proprietors can enter and exit the industry
through widespread geographical reach or as well as the limited benefits of economies
vertical integration. IBISWorld estimates of scale in this industry’s operations.

Key Success Factors Ability to respond to clients’ Ability to quickly adopt new technology
requests in a timely manner Industry operators must be able to adapt
Machine breakdowns need to be addressed to the new technologies used in clients’
IBISWorld identifies as soon as possible to minimize production machinery by learning to apply new M&R
250 Key Success downtime. Industry operators need to techniques and tools.
Factors for a have parts and experienced staff available
business. The most to respond to clients’ needs quickly. Highly trained and skilled workforce
Technicians must be well trained and
important for this
Securing contracts with knowledgeable of the latest technology in
industry are: large manufacturers their M&R field. They should also be
Major manufacturers can offer a large skilled at performing M&R on a range of
volume of maintenance and repair machinery and equipment types.
(M&R) work to industry operators on a
contract basis. Maintenance of excellent
customer relations
Proximity to key markets Repeat business largely depends on
Most M&R work is completed at clients’ building strong relationships with
facilities, so industry operators must be clients. In this largely local industry,
located near target customers to strong customer relations can also serve
maximize their on-site presence and to as good marketing by promoting word-
reduce transportation costs. of-mouth advertising.

Cost Structure Cost structures for operators in the Wages

Benchmarks Machinery Maintenance & Heavy The industry is highly labor-intensive, with
Equipment Repair Services industry is technical expertise representing the
widely dependent on size, location, and primary value this industry brings to
techniques adopted by industry clients. As a result, industry wage costs are
operators, among others. Consequently, high and are expected to account for 36.1%
cost structures can fluctuate on an of industry revenue in 2019. Over the five
operator by operator basis. What years to 2019, wages costs have slightly
follows is a discussion of the average increased as a share of industry revenue,
industry operator. up from 33.0% of revenue in 2014.

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Competitive Landscape

Cost Structure Increased wage expenditure is a result parts quickly to minimize the downtime
Benchmarks of increases in employment and in the of clients’ machinery. This need forces
average industry wage. The average operators to maintain inventories of
continued
industry wage has increased because commonly used parts. Despite
industry operators find the value in more fluctuating demand for industry services,
knowledgeable, experienced workers, purchases maintain a significant share of
including employees who have taken overall costs.
courses in mechanical drawing,
mathematics and electronics. As a result, Profit
the industry’s employees have been able Industry profit, defined as earnings
to demand increasingly higher salaries before interest and taxes, is expected to
over the past five years. equal 7.8% of total industry revenue in
2019, up from 7.5% in 2014. Growth in
Purchases the overall US economy has benefited the
Purchases represent the industry’s industry over the past five years. Since
largest cost and are expected to account industry revenue often exhibits a
for 47.2% of revenue in 2019. Purchase medium level of volatility, this can
costs are primarily composed of new and translate to slight volatility in profit
used spare parts, lubricants and other margins. Declines in revenue typically
equipment used in the maintenance and put downward pressure on profit
repair (M&R) of machinery and margins since certain costs are fixed and
equipment. To remain competitive, a certain amount of purchases must be
operators must be able to access spare made in advance.

Sector vs. Industry Costs

Average Costs of
all Industries in Industry Costs
sector (2019) (2019)
100 n Profit
9.6 7.8 n Wages
n Purchases
80 n Depreciation
29.9 36.1 n Marketing
n Rent & Utilities
n Other
Percentage of revenue

60

21.0
40
3.4
1.5 47.2
6.7
20
27.9
1.9 0.3
2.8 3.9
0
SOURCE: WWW.IBISWORLD.COM

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Competitive Landscape

Cost Structure Depreciation Rent

Benchmarks Depreciation costs are estimated to account Rent costs, which are expected to
for 1.9% of industry revenue, reflecting the account for 1.4% of industry revenue in
continued
low level of capital investment required in 2019, are relatively high in
this industry. Significant investment in comparison with many other
buildings is usually not necessary since the industries, as a large portion of
bulk of M&R work is performed onsite at smaller industry enterprises rent the
clients’ facilities. The low level of properties from which they operate.
depreciation is also reflective of the
industry’s high number of nonemployer Utilities
contractors, which generally lack the Utilities costs are anticipated to account
financial backing required for large for 1.4% of industry revenue in 2019.
amounts of capital investment. As a result, Basic utilities required for day to day
depreciation costs are mainly composed of operation include heat, electric, water
tools and diagnostic equipment, company among others.
vehicles and computers.
Other
Marketing All other costs, including, administrative
The industry is expected to spend 0.3% of and legal functions among other
industry revenue on marketing expenses miscellaneous expenditures, account for
in 2019, unchanged from 2014. 3.9% industry revenue in 2019.

Basis of Competition Competition within the Machinery deliver this high-quality service, industry
Maintenance and Heavy Equipment operators must hire and retain high-
Level & Trend Repair Services industry is high. quality workers, representing a further
IBISWorld estimates that in 2019 there basis of competition within this labor-
 ompetition
C in this will be 70,253 companies operating in the intensive industry.
industry is H
 ighand industry. Of these, 91.2% of them are Industry operators often also
the trend is S teady estimated to employ fewer than 20 differentiate themselves by offering
workers. The large number of small warranties and gaining certification as
companies compete heavily for market approved repair mechanics of specific
share, particularly within local and M&E manufacturers (e.g. Caterpillar).
regional areas. Additionally, the provision of strong
service prior to and after repair work can
Internal competition add substantial value and give an
Price is an important basis of competition industry operator a further competitive
in this industry, particularly because advantage. Such services include the
machinery and equipment (M&E) repair provision of detailed quotes, after sales
services are often seen as money-saving service, follow up service and preventive
alternatives to purchasing new maintenance services.
equipment. However, work quality is Finally, the speed at which
even more critically important because contractors can reach client sites to
unsuccessful repair work is readily attend to breakdowns and complete
discernible to clients. Industry companies maintenance and repair (M&R) services
must maintain high-quality work to is an important basis of competition
attract repeat customers and build strong within the industry. Any delay in the
reputations within the industry. To repair of a critical piece of machinery or

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Competitive Landscape

Basis of Competition equipment can massively slow down or Services industry, downstream industries
continued even stop a company’s operations. As a may either hire the services of the M&R
result, the costs to clients of broken divisions of M&E manufacturers or repair
equipment can be much higher than their equipment themselves. M&E
repair fees, causing this industry’s manufacturers, such as leading
clients to demand service that is as fast construction equipment manufacturer
as possible. Caterpillar, offer their own M&R services
to clients that purchase their equipment.
External competition Since these M&R divisions of M&E
Demand for this industry’s services manufacturers are not included in this
contracts when downstream companies industry, these divisions represent a
do not outsource M&R work or decide to substantial form of external competition
purchase new equipment instead of to the industry. In addition, many
repairing current M&E. Instead of companies choose to employ their own
contracting operators in the Machinery mechanics to maintain and repair the
Maintenance & Heavy Equipment Repair equipment they use.

Barriers to Entry New maintenance contracts can be

difficult to win because clients generally Barriers to Entry checklist

Level & Trend prefer to work with service suppliers they Competition High
have known for long periods of time and Concentration Low
 arriers to Entry
B that have strong reputations for Life Cycle Stage Mature
in this industry are maintenance and repair (M&R) work in Capital Intensity Low
Mediumand S  teady their industry. As a result, breaking into Technology Change Medium
the Machinery Maintenance and Heavy Regulation and Policy Light
Equipment Repair Services industry is Industry Assistance None
made easier by having relevant
experience from earlier work at an SOURCE: WWW.IBISWORLD.COM

established M&R shop or by working as

an engineer or technician at a major workforce can be difficult for new
machinery and equipment (M&E) entrants into the market.
manufacturer. Enterprises entering the Initial capital costs range from very
industry require highly skilled workers, low to very high depending on which
who can be difficult to find and demand market a new operator wants to serve.
competitive salaries. Employee The majority of industry operators are
qualifications differ depending on the small-scale businesses that require little
M&E being worked on, with experience capital to begin operations. However,
or trade school necessary for some those industry establishments that
positions and college degrees necessary service the machines of certain
for others (these positions typically technologically advanced industries may
require an engineering background). require substantial startup costs in
Finally, workers in this industry must terms of personnel and equipment;
continually update their skills to keep operators with these clients generally
pace with technological advancements operate with higher profit margins
in the machinery they operate. As a because their high barriers to entry
result, finding a properly trained minimize competition.

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Competitive Landscape

Industry The Machinery Maintenance and Heavy maintenance and repair (M&R) service
Globalization Equipment Repair Services industry’s providers are domestically owned and
level of globalization is low since it does operate on a local level. John Wood
Level & Trend not participate in international trade. Group PLC (Wood Group), which is
Moreover, few companies operating in headquartered in Scotland, is the largest
 lobalization
G in this this industry are foreign owned. With the foreign-owned M&R provider in the
industry is L owand exception of some larger repair United States. However, Wood Group’s
the trend is S  teady companies that are affiliated with US industry-specific segment is estimated
multinational manufacturers, the to generate less than 5.0% of total
majority of machinery and equipment industry revenue in 2019.

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Major Companies
There are no Major Players in this industry   |   Other Companies

Other Companies The vast majority of operators in the single company possessing the resources
Machinery Maintenance and Heavy or capacity to capture a market share
Equipment Repair Services industry are greater than 5.0%. While manufacturers
small, nonemployers; of industry of machinery and equipment (M&E) are
operators that are employers, 91.2% also often involved in maintenance and
employ fewer than 20 workers. The repair (M&R), they are not included in
industry is highly fragmented, with no this industry.

Other Company Founded in 1982, John Wood Group Stock Exchange and employs 60,000
Performance PLC (Wood Group) is a multinational workers globally. The company operates
company with headquarters in under three segments: asset life cycle
Aberdeen, Scotland. The company solutions west, asset life cycle solutions
John Wood Group operates in 60 countries, including the east and specialist technical solutions.
PLC United States. Wood Group provides Its maintenance services are generally
Market Share: 1.0% operations and maintenance services to performed on-site at oil and gas
clients across a broad range of industrial exploration, production and
markets, including oil and gas, power distribution facilities. In 2019,
and clean energy, environment and IBISWorld estimates that Wood Group
infrastructure and mining industries. will earn $408.7 million from industry-
Wood Group is listed on the London specific US operations.

Other Company Tech-24, a subsidiary of Commercial before acquiring Service Solutions

Performance Foodservice Repair Inc. (CFR), was Group in 2015. Currently, Tech-24
founded in 1982 and is currently operates in 25 states and employs over
headquartered in Greenville, SC. The 500 technicians. Equipment serviced by
Tech-24 company provides on-site foodservice the company includes commercial
Market Share: 0.2% equipment repair and maintenance for cooking equipment, refrigeration
convenience stores, quick service equipment and beverage equipment. In
restaurants, restaurants, coffee shops 2019, IBISWorld estimates industry-
and concessions operations. In July relevant revenue for the company to be
2014, the company merged with CFR $76.0 million.

Other Company KRC Machine Tool Services (KRC) estimated 50 employees. Services include
Performance provides M&R services for a wide variety onsite machine tool repair services,
of machine tool makes and models. The machine tool laser calibration, leveling
company services end users as well as and alignment, scraping services,
KRC Machine Tool representing original equipment machine relocation and installation and
Services manufacturing (OEM) tool companies preventative and predictive maintenance
Market Share: N/A such as Mazak and Flow Waterjet. KRC services. In 2019, IBISWorld estimates
was founded in 1989 and is currently industry-relevant revenue for the
located in Independence, KY with an company to be $7.6 million.

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Major Companies

Other Company Lee Shuknecht & Sons Inc. (Shuknecht & includes front loaders, dump trucks and
Performance Sons) was established in 1974 and is back hoes from brands such as CAT, John
currently located in Elba, NY. The Deere, Kubota and CAS. Agricultural M&R
company provides construction services include expertise in sharpening
Lee Shuknecht & equipment repair and rebuilding services equipment blades and repair services for
Sons Inc. and agricultural machinery repair and manure spreaders, plows, seed bed
Market Share: N/A rebuilding services. Alongside this, harvesters and feed wagons, among many
Shuknecht & Sons manufactures custom others. In 2019, IBISWorld estimates
onion harvesting equipment. Construction industry-relevant revenue for the
equipment serviced by the company company to be less than $1.0 million.

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Operating Conditions
Capital Intensity   |   Technology & Systems   |   Revenue Volatility
Regulation & Policy   |   Industry Assistance

Capital Intensity The Machinery Maintenance and Heavy

Equipment Repair Services industry has Capital Intensity
Capital units per labor unit
a low level of capital intensity. In 2019,
Level
IBISWorld estimates that industry 0.5
The levelof capital operators spend $0.05 on capital for
intensity is L ow every dollar spent on labor. While 0.4

industry operators use a wealth of tools 0.3

to diagnose and fix machinery, their
0.2
dependence on human labor is far
greater. To provide clients with adequate 0.1
maintenance and repair (M&R) services,
0.0
industry operators must hire highly Economy Other Services Machinery
skilled machinery mechanics and (except Public Maintenance &
Administration) Heavy Equipment
maintenance workers. Machinery Repair Services
Dotted line shows a high level of capital intensity
mechanics are skilled technicians who SOURCE: WWW.IBISWORLD.COM
diagnose problems and carry out repairs
for complex industrial, commercial, installing and calibrating new machinery.
agricultural and other types of Maintenance workers inspect machinery
machinery. They are also responsible for and equipment and carry out routine

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Operating Conditions

Capital Intensity maintenance work including the operators are requiring increasingly
continued lubrication and cleaning of machinery. In skilled laborers as well as more-advanced
addition, they may also carry out small M&R tools. While this trend has
repairs. Comparatively, industry capital expanded industry labor costs in absolute
expenditures are primarily composed of a terms, it has simultaneously caused an
range of tools and computerized absolute increase in industry capital
diagnostic equipment. expenditure. As a result, industry capital
As industry services have become more intensity has remained relatively stable
computerized and complex, industry over the five years to 2019.

Technology and The Machinery Maintenance and Heavy Instruments such as infrared cameras
Systems Equipment Repair Services industry and vibration monitors are now in
undergoes regular technological change widespread use by larger industry
Level in line with technological advancements operators to assess maintenance
in the machinery and equipment (M&E) requirements on machines without the
The level
of on which industry operators perform need for disassembly. These techniques
technology change maintenance and repair (M&R) services. can determine abnormal hotspots and
is M
 edium Over the past five years, most M&E has leaks of air, gas and steam. They can also
become increasingly complex and indicate misalignment, out of balance
dependent on electronic controls. For conditions and bearing defects. Oil
example, steel mills are increasingly particle analysis is an additional tool for
adopting electric arc furnaces in their preventive maintenance technicians, and
operations. Electric arc furnaces, which can reveal early signs of bearing wear, the
shoot electricity between electrodes to state of a hydraulic fluid or the
burn pig iron and other materials to performance of a filter. Such preventative
produce steel, require specific technical and predictive maintenance services are
knowledge to maintain and repair. In very attractive because they can save
addition, oil and natural gas extraction clients the higher cost of repairing M&E
has become increasingly complex as after it has already broken down, which is
fracking and other drilling techniques particularly costly because production
have become commonplace. As a result, must be stopped when machinery breaks.
the M&E that these industries use has Other advancements in industry
also become more complex, requiring services have focused on helping clients
more advanced M&R services. Such stay in compliance with environmental
advancements in M&E have occurred in regulations and otherwise reduce their
almost all industries that the industry carbon footprints. For example, California
serves. As a result, the industry has been has instituted a leak inspection, repair and
forced to adopt new technology to maintenance requirement for commercial
continue to satisfy clients’ M&R needs. refrigeration systems that will reduce their
The diagnosis equipment that the greenhouse gas impact. The regulations
Machinery Maintenance & Heavy took effect in 2011 and are expected to
Equipment Repair Services industry uses result in the complete remodeling of all
is also undergoing technological retail and service industry refrigeration
development. Diagnosis equipment systems by 2028. Compliance with this
enables industry operators to provide regulation requires the services of the
high-quality predictive and preventative Machinery Maintenance & Heavy
maintenance services to clients. Equipment Repair Services industry,

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Operating Conditions

Technology and which will need to adapt the tools it uses for new types of industry services is
Systems to perform these new services. As these expected to grow, requiring further
regulations are implemented, demand technological development.
continued

Revenue Volatility Over the five years to 2019, the core need for industry services prevent
Machinery Maintenance and Heavy large swings in industry revenue year
Equipment Repair Services industry has over year, the industry is nonetheless
Level
exhibited a moderate level of revenue greatly affected by the business cycle. For
The level
of volatility volatility. The industry serves a large example, during times of economic
is M
 edium portion of the US economy, including the distress, demand is typically low, due to
construction, mining, agricultural, companies’ hesitancy to invest in
forestry and industrial sectors. These machinery and equipment (M&E)
sectors may perform differently during repairs. However, when the economy
the same period of time, so when demand improves, demand for industry services
for industry services from one sector trends upward, as businesses tend to
declines, it may rise in another. In have enough capital at their disposal to
addition, while broad demand and the invest in M&E repairs.

Regulation and Policy There are few government regulations equipment must obtain the
that directly affect the Machinery Environmental Protection Agency’s
Maintenance and Heavy Equipment (EPA) Section 608 certification prior to
Level & Trend Repair Services industry. A notable engaging in this work.
 he level of
T exception to this, is the regulation of the Although the industry is subject to
Regulation is maintenance and repair (M&R) of limited government regulation, industry
Lightand the refrigeration equipment. Due to the operators that work on some types of
harmful effects that coolants within machinery and equipment (M&E) must
trend is S
 teady
refrigeration equipment can have on the adopt certain voluntary industry-backed
environment, mechanics who repair such standards or certifications to be deemed

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Operating Conditions

Regulation and Policy properly qualified to handle such and maintenance manual format for
continued equipment. For example, the many of the machines that industry
International Organization for operators service. M&R enterprises that
Standardization has published heavy attempt to operate in noncompliance
machinery standards that cover test with these standards will receive little to
methods, safety requirements, operation no demand for their services.

Industry Assistance The Machinery Maintenance and Heavy improvement of the nation’s
Equipment Repair Services industry infrastructure. This led to an increase in
receives no direct assistance from the the use of construction machinery
Level & Trend government. However, the federal nationwide, causing this machinery to
 he level of
T government can enact policies that depreciate quicker, which temporarily led
Industry Assistance stimulate growth in the sectors that to greater demand industry services.
is N
 oneand the industry operators serve, the benefits of Similarly, farm subsidies increase
which trickle down to industry demand for industry services from
trend is S
 teady
companies. For example, the American agricultural clients, while energy
Recovery and Reinvestment Act of 2009 subsidies stimulate demand from clients
committed $27.5 billion toward the in the oil and natural gas industries.

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Key Statistics
Industry Data Industry
Revenue Value Added Establish- Wages Domestic Industrial pro-
($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand duction index
2010 31,742.1 13,816.6 75,315 73,654 234,575 -- -- 11,150.3 N/A 94.1
2011 35,898.4 14,674.5 75,232 73,498 239,036 -- -- 11,587.3 N/A 97.1
2012 38,002.7 15,676.9 75,301 73,615 247,381 -- -- 11,914.6 N/A 100.0
2013 37,921.8 16,086.9 74,462 72,631 255,635 -- -- 12,636.0 N/A 102.0
2014 39,657.3 16,728.1 74,021 72,085 261,479 -- -- 13,079.7 N/A 105.2
2015 39,847.9 17,129.6 73,514 71,653 261,793 -- -- 13,344.0 N/A 104.1
2016 38,866.8 16,195.6 71,415 69,767 248,039 -- -- 12,930.9 N/A 102.1
2017 36,037.1 16,864.2 68,871 67,483 252,363 -- -- 13,440.6 N/A 104.4
2018 38,778.6 17,723.9 70,445 68,788 260,214 -- -- 13,979.8 N/A 108.6
2019 38,690.5 17,687.2 69,993 68,327 259,751 -- -- 13,953.4 N/A 111.1
2020 39,871.9 18,064.3 70,418 68,629 262,667 -- -- 14,163.9 N/A 112.4
2021 40,889.2 18,382.8 70,808 68,917 265,102 -- -- 14,341.2 N/A 112.9
2022 41,648.0 18,628.5 71,073 69,105 266,801 -- -- 14,468.0 N/A 113.5
2023 42,470.0 18,890.6 71,437 69,389 268,835 -- -- 14,613.3 N/A 114.1
2024 43,391.9 19,209.5 72,065 69,934 272,045 -- -- 14,816.4 N/A 114.8
Sector Rank 6/28 6/28 7/28 7/28 7/28 N/A N/A 7/28 N/A N/A
Economy Rank 247/694 171/694 95/694 93/694 140/694 N/A N/A 136/694 N/A N/A

Annual Change Industry Establish- Domestic Industrial

Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand production index
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2011 13.1 6.2 -0.1 -0.2 1.9 N/A N/A 3.9 N/A 3.2
2012 5.9 6.8 0.1 0.2 3.5 N/A N/A 2.8 N/A 3.0
2013 -0.2 2.6 -1.1 -1.3 3.3 N/A N/A 6.1 N/A 2.0
2014 4.6 4.0 -0.6 -0.8 2.3 N/A N/A 3.5 N/A 3.1
2015 0.5 2.4 -0.7 -0.6 0.1 N/A N/A 2.0 N/A -1.0
2016 -2.5 -5.5 -2.9 -2.6 -5.3 N/A N/A -3.1 N/A -1.9
2017 -7.3 4.1 -3.6 -3.3 1.7 N/A N/A 3.9 N/A 2.3
2018 7.6 5.1 2.3 1.9 3.1 N/A N/A 4.0 N/A 4.0
2019 -0.2 -0.2 -0.6 -0.7 -0.2 N/A N/A -0.2 N/A 2.3
2020 3.1 2.1 0.6 0.4 1.1 N/A N/A 1.5 N/A 1.2
2021 2.6 1.8 0.6 0.4 0.9 N/A N/A 1.3 N/A 0.4
2022 1.9 1.3 0.4 0.3 0.6 N/A N/A 0.9 N/A 0.5
2023 2.0 1.4 0.5 0.4 0.8 N/A N/A 1.0 N/A 0.5
2024 2.2 1.7 0.9 0.8 1.2 N/A N/A 1.4 N/A 0.6
Sector Rank 6/28 13/28 20/28 23/28 15/28 N/A N/A 14/28 N/A N/A
Economy Rank 207/694 348/694 492/694 567/694 421/694 N/A N/A 374/694 N/A N/A

Key Ratios Imports/ Exports/ Revenue per Share of the

IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2010 43.53 N/A N/A 135.32 35.13 3.11 47,534.05 0.09
2011 40.88 N/A N/A 150.18 32.28 3.18 48,475.13 0.09
2012 41.25 N/A N/A 153.62 31.35 3.29 48,162.96 0.10
2013 42.42 N/A N/A 148.34 33.32 3.43 49,429.85 0.10
2014 42.18 N/A N/A 151.67 32.98 3.53 50,021.99 0.10
2015 42.99 N/A N/A 152.21 33.49 3.56 50,971.57 0.10
2016 41.67 N/A N/A 156.70 33.27 3.47 52,132.53 0.09
2017 46.80 N/A N/A 142.80 37.30 3.66 53,259.00 0.09
2018 45.71 N/A N/A 149.03 36.05 3.69 53,724.24 0.10
2019 45.71 N/A N/A 148.95 36.06 3.71 53,718.37 0.09
2020 45.31 N/A N/A 151.80 35.52 3.73 53,923.41 0.09
2021 44.96 N/A N/A 154.24 35.07 3.74 54,096.91 0.09
2022 44.73 N/A N/A 156.10 34.74 3.75 54,227.68 0.09
2023 44.48 N/A N/A 157.98 34.41 3.76 54,357.88 0.09
2024 44.27 N/A N/A 159.50 34.15 3.77 54,463.05 0.09
Sector Rank 13/28 N/A N/A 5/28 9/28 12/28 4/28 6/28
Economy Rank 189/694 N/A N/A 491/694 122/694 528/694 361/694 171/694

Figures are in inflation-adjusted 2019 dollars. Rank refers to 2019 data. SOURCE: WWW.IBISWORLD.COM

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Industry Financial Ratios

Apr 2017 - Mar 2018 by company revenue
Apr 2014 - Apr 2015 - Apr 2016 - Apr 2017 - Small Medium Large
Mar 2015 Mar 2016 Mar 2017 Mar 2018 (<$10m) ($10-50m) (>$50m)

Liquidity Ratios
Current Ratio 1.2 1.7 1.5 1.6 1.6 n/a n/a
Quick Ratio 1.0 1.2 1.0 1.0 1.0 n/a n/a
Sales / Receivables (Trade Receivables
Turnover) n/c 47.7 999.9 17.6 17.6 n/a n/a
Days’ Receivables 0.4 7.7 0.4 20.7 20.7 n/a n/a
Cost of Sales / Inventory (Inventory Turnover) n/a n/a n/a n/a n/a n/a n/a
Days’ Inventory n/a n/a n/a n/a n/a n/a n/a
Cost of Sales / Payables (Payables Turnover) n/a n/a n/a n/a n/a n/a n/a
Days’ Payables n/a n/a n/a n/a n/a n/a n/a
Sales / Working Capital 65.2 16.0 133.8 13.8 13.8 n/a n/a

Coverage Ratios
Earnings Before Interest & Taxes (EBIT) /
Interest 4.1 5.0 4.3 6.3 6.3 n/a n/a
Net Profit + Dep., Depletion, Amort. / Current
Maturities LT Debt n/a n/a n/a n/a n/a n/a n/a

Leverage Ratios
Fixed Assets / Net Worth 3.3 0.7 3.4 1.3 1.3 n/a n/a
Debt / Net Worth 6.4 1.0 3.2 1.4 1.4 n/a n/a
Tangible Net Worth 13.1 31.7 14.2 32.4 32.4 n/a n/a

Operating Ratios
Profit before Taxes / Net Worth, % 34.0 27.8 30.6 27.9 27.9 n/a n/a
Profit before Taxes / Total Assets, % 6.4 8.8 9.8 7.8 7.8 n/a n/a
Sales / Net Fixed Assets 5.3 10.8 4.4 7.9 7.9 n/a n/a
Sales / Total Assets (Asset Turnover) 1.8 2.3 1.1 2.0 2.0 n/a n/a

Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading n/a n/a n/a n/a n/a n/a n/a
Cash after Operations 10.8 11.8 21.4 13.3 13.3 n/a n/a
Net Cash after Operations 9.1 11.5 22.2 13.0 13.0 n/a n/a
Cash after Debt Amortization 7.1 4.2 3.9 3.5 3.5 n/a n/a
Debt Service P&I Coverage 2.3 1.7 1.8 3.4 3.4 n/a n/a
Interest Coverage (Operating Cash) 5.5 7.2 5.2 7.1 7.1 n/a n/a

Assets, %
Cash & Equivalents 12.9 21.9 19.7 17.6 17.6 n/a n/a
Trade Receivables (net) 16.9 19.0 12.0 21.5 21.5 n/a n/a
Inventory 9.4 10.4 2.7 5.3 5.3 n/a n/a
All Other Current Assets 3.2 0.8 1.1 4.1 4.1 n/a n/a
Total Current Assets 42.5 52.1 35.4 48.5 48.5 n/a n/a
Fixed Assets (net) 51.8 40.7 50.7 40.0 40.0 n/a n/a
Intangibles (net) 2.0 0.7 4.9 6.7 6.7 n/a n/a
All Other Non-Current Assets 3.7 6.5 8.9 4.9 4.9 n/a n/a
Total Assets 100.0 100.0 100.0 100.0 100.0 n/a n/a
Total Assets ($m) 41.6 98.4 91.9 82.6 82.6 n/a n/a

Liabilities, %
Notes Payable-Short Term 14.9 11.5 7.2 18.2 18.2 n/a n/a
Current Maturities L/T/D 2.4 2.9 6.6 4.7 4.7 n/a n/a
Trade Payables 19.4 6.7 5.3 6.5 6.5 n/a n/a
Income Taxes Payable n/a 0.2 n/a n/a n/a n/a n/a
All Other Current Liabilities 5.2 13.0 10.6 7.2 7.2 n/a n/a
Total Current Liabilities 41.9 34.3 29.8 36.6 36.6 n/a n/a
Long Term Debt 39.5 30.5 46.2 23.5 23.5 n/a n/a
Deferred Taxes 0.7 0.4 n/a n/a n/a n/a n/a
All Other Non-Current Liabilities 2.8 2.3 4.9 0.7 0.7 n/a n/a
Net Worth 15.1 32.4 19.1 39.1 39.1 n/a n/a
Total Liabilities & Net Worth ($m) 41.6 98.4 91.9 82.6 82.6 n/a n/a

Maximum Number of Statements Used 30 46 37 40 40 n/a n/a

Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more
than 260,000 statements of member financial institutions’ borrowers and prospects.
Note: For a full description of the ratios refer to the Key Statistics chapter online.

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Jargon & Glossary

Industry Jargon BEARINGA machine component that restricts and PREVENTIVE MAINTENANCERoutine inspections and
controls the movement of parts. Used in a large number parts replacements designed to prevent unforeseen
of machines on which this industry operates. breakage of equipment and machinery.
ELECTRIC ARC FURNACEMachinery used to produce THERMOGRAPHYThe use of infrared technology to
steel by shooting electricity between electrodes to burn spot irregularities in machinery and equipment that
pig iron and other materials. cannot be detected by the naked eye.
PREDICTIVE MAINTENANCENoninvasive techniques VIBRATION MONITORINGThe reading of machinery
that detect the earliest signs of equipment malfunction vibrations and comparison of findings with previous
to determine when a repair should be made. readings as a means of detecting machinery faults.

IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY CONCENTRATIONAn indicator of the
new companies struggle to enter an industry, while low dominance of the top four players in an industry.
barriers mean it is easy for new companies to enter an Concentration is considered high if the top players
industry. account for more than 70% of industry revenue.
CAPITAL INTENSITYCompares the amount of money Medium is 40% to 70% of industry revenue. Low is less
spent on capital (plant, machinery and equipment) with than 40%.
that spent on labor. IBISWorld uses the ratio of INDUSTRY REVENUEThe total sales of industry goods
depreciation to wages as a proxy for capital intensity. and services (exclusive of excise and sales tax); subsidies
High capital intensity is more than $0.333 of capital to on production; all other operating income from outside
$1 of labor; medium is $0.125 to $0.333 of capital to $1 the firm (such as commission income, repair and service
of labor; low is less than $0.125 of capital for every $1 of income, and rent, leasing and hiring income); and
labor. capital work done by rental or lease. Receipts from
CONSTANT PRICESThe dollar figures in the Key interest royalties, dividends and the sale of fixed
Statistics table, including forecasts, are adjusted for tangible assets are excluded.
inflation using the current year (i.e. year published) as INDUSTRY VALUE ADDED (IVA)The market value of
the base year. This removes the impact of changes in goods and services produced by the industry minus the
the purchasing power of the dollar, leaving only the cost of goods and services used in production. IVA is
“real” growth or decline in industry metrics. The inflation also described as the industry’s contribution to GDP, or
adjustments in IBISWorld’s reports are made using the profit plus wages and depreciation.
US Bureau of Economic Analysis’ implicit GDP price INTERNATIONAL TRADEThe level of international
deflator. trade is determined by ratios of exports to revenue and
DOMESTIC DEMANDSpending on industry goods and imports to domestic demand. For exports/revenue: low is
services within the United States, regardless of their less than 5%, medium is 5% to 20%, and high is more
country of origin. It is derived by adding imports to than 20%. Imports/domestic demand: low is less than
industry revenue, and then subtracting exports. 5%, medium is 5% to 35%, and high is more than
EMPLOYMENTThe number of permanent, part-time, 35%.
temporary and seasonal employees, working proprietors, LIFE CYCLEAll industries go through periods of growth,
partners, managers and executives within the industry. maturity and decline. IBISWorld determines an
ENTERPRISEA division that is separately managed and industry’s life cycle by considering its growth rate
keeps management accounts. Each enterprise consists (measured by IVA) compared with GDP; the growth rate
of one or more establishments that are under common of the number of establishments; the amount of change
ownership or control. the industry’s products are undergoing; the rate of
technological change; and the level of customer
ESTABLISHMENTThe smallest type of accounting unit
acceptance of industry products and services.
within an enterprise, an establishment is a single
physical location where business is conducted or where NONEMPLOYING ESTABLISHMENTBusinesses with
services or industrial operations are performed. Multiple no paid employment or payroll, also known as
establishments under common control make up an nonemployers. These are mostly set up by self-employed
enterprise. individuals.
EXPORTSTotal value of industry goods and services sold PROFITIBISWorld uses earnings before interest and tax
by US companies to customers abroad. (EBIT) as an indicator of a company’s profitability. It is
calculated as revenue minus expenses, excluding
IMPORTSTotal value of industry goods and services
interest and tax.
brought in from foreign countries to be sold in the
United States.

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Jargon & Glossary

IBISWorld Glossary VOLATILITYThe level of volatility is determined by WAGESThe gross total wages and salaries of all
averaging the absolute change in revenue in each of the employees in the industry. The cost of benefits is also
continued past five years. Volatility levels: very high is more than included in this figure.
±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
±3%.

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