A recent post in the Hydraulics & Pneumatics magazine’s discussion group on LinkedIn asks: Is fluid power on the decline?
As a person who worked in the industry for 10 years and has provided consulting services to the industry for the past 16 years, I believe it is—especially in the United States. And, if they don’t wake up immediately, they’ll find themselves in the history books and museums alongside dinosaurs—extinct.
Like a precision military assault, the fluid power industry is getting hammered on several fronts: technology competition, the environment, government regulations and knowledge loss. The environment, government regulations and knowledge loss have teamed up to open a gaping hole in the fortress allowing a full frontal attack by technology competition.
And, like Great Britain during World War II, the industry has done very little to combat the forces working against them. While some have acknowledged defeat and quit the battle, most of the industry, it seems, have yet to realize they’re under attack or their survival is at risk.
In order to understand why the struggle for survival is being waged, we have to understand a bit of the industry’s history and the product lifecycle curve.
The use of compressed air dates back over 2000 years to ancient Greece. The industry’s genesis came in the 1880s during the industrial revolution. What some call the beginning of the modern fluid power era came just after World War I, and the industry really took off after World War II.
In the 1980s, foreign competition, like Festo, Joucomatic (now ASCO Numatics) and SMC, started coming to the United States and establishing operations. Also, during this period the industry had its largest sales levels.
Starting in the mid 1990s and continuing into the new millennium, the founders of some of the industry’s powerhouses became of retire age. During this period component shipments remained relatively constant, cost per component decreased and profit levels shrank to high single digits. This combination commenced the consolidation of the industry that continues today.
These are clear indicators of an industry in decline, as shown above. Now, let’s take a look at how the assault is being waged.
The environment and government regulation opens the hole.
December 1970, the US Environmental Protection Agency was established to protect human health and to safeguard the natural environment—air, water, and land. Over the next 27 years scientists and governments worldwide came to the conclusion that the earth was warming, and much of its cause can be attributed to the emission of greenhouse gases (GHG) due to the generation of electricity through the use of coal.
In 1997, industrialized nations signed a treaty to reduce GHG emissions called the Kyoto Protocol. A year later, the US Department of Energy announced the Compressed Air Challenge. Its goal was to reduce the consumption of electricity used to generate compressed air by improving its efficiency 20% by 2010.
On December 12, 2008, the European Union signed an agreement—to surpass the Kyoto Protocol—which will reduce greenhouse gases emissions by 20% from 1990 levels, increase energy efficiency by another 20% and double the use of renewable energy by 2020. Germany has a loftier goal of 40% and doubling energy productivity—currently at 27%.
Hydraulic oil is considered a hazardous waste. Companies not disposing of the used oil in accordance with federal and state laws can be and are sued. Some states, like Illinois, are not only going after the waste disposal companies, but are suing the end user who sold the oil to the disposal company. I learned this when I recently spoke to one plastic injection and blow molding firm who was sued by the Illinois EPA because the firm they hired to recycle and disposal of their hydraulic fluids didn’t dispose of the used oil properly.
To mitigate this type of liability in the future, the firm has worked with all their injection and blow molding equipment suppliers to change all of their 30+ machines to all electric actuation. Industries like HVAC, one of the largest users of pneumatic actuators, have begun eliminating compressed air actuation of dampers and moving to electric actuation. So because of the environment and governmental regulations hydraulic and pneumatic actuation is being replaced at a much greater pace than most realize.
Some companies, like SMC, have begun promoting the reduced air consumption and energy savings of their actuators and valves. But at the same time they, like Festo, Parker Hannifin, Bimba, Norgren and many others, have begun transforming their pneumatic cylinders into electric actuators. At Pack Expo, the Festo salesperson who met me in their booth was more excited to tell me about their electric actuators than he was their servopneumatic systems, which he knew nothing of.
And like any good prize fighter, electric actuator companies, like Intelligent Actuator, see their opening and are pounding away at the fluid power industry with their ads promoting eco-friendly products and lifecycle costs significantly less than pneumatic actuation.
Consolidation not limited to manufacturers.
When looking at the characteristics of the different product lifecycle segments, you’ll recognize that the fluid power industry is in decline. This is evident by the reduction of profitably and the inability to grow organically. This is leading manufacturers and distributors alike to consolidate to grow and to mitigate or eliminate pricing pressures. But there are issues with consolidation, such as elimination of workforce and product integration problems.
Consolidation is not only a trend from a manufacturing and distribution standpoint. It’s also a trend at the end user level. End users are consolidating suppliers to make purchasing and inventory control less costly. That’s why you’re seeing fluid power distributors take on other motion control components and systems—so they can be a one-stop-shop vendor. And, the distributor trade association change its name to The FPDA Motion & Control Network.
Fluid power isn’t sexy.
As a mature industry that arose from the baby boom generation, the industry is seeing this generation of engineers and leaders retire and pass away causing a loss of the technical knowledge and intellectual property that built the industry. The industry acknowledged they’re in trouble from this standpoint at a 2007 international summit in which heads of all the world’s fluid power trade associations agreed to find a solution to the problem.
The problem being that the engineers, designers and mechanics coming out of school over the past decade or so have little to no interest in, or knowledge in the fundamentals of, fluid power. As a May 2007 Design Product News (Canada) article put it, fluid power is not sexy. Electricity is. Therefore, these engineers, designers, and mechanics are specifying electric actuation as the main mode of motion control.
Is the industry prepared for the realities of a changing world?
Today, electric motion control is equivalent to the pneumatic fluid power sector, or roughly $9 billion dollars. All reports indicate that electric motion control growth is expected to stay even with or outpace pneumatic motion control. It’s also expected to dig deeper into the hydraulic sector as well, especially since some of the major earthmoving equipment manufacturers have started to replace hydraulics with electric actuators in certain applications.
While there will be a place for all 3 motion control actuation methods in machinery design, the industry needs to pull their collective heads out of the sand and wake up to the reality at hand. Where is the industry—the NFPA (National Fluid Power Association), CETOP, etc.—in driving and promoting energy efficiency.
The United States is nearly 10 to 15 years behind Europe and Japan in technological studies in efficient fluid power product design.
Why hasn’t the industry taken steps to promote efficient and practical machine design to reduce the consumption of compressed air and electricity? At every trade show I attend, I see machinery, shake my head and say to myself who designed this. The fluid power actuation systems being used are rudimentary, impractical and inefficient. Who’s fault is this? It lays at the feet of the industry because the trend in machine design is to seek assistance from the technology manufacturers and distributors who are supposed to know their products.
Why haven’t they been more proactively promoting alternative fluids, such as vegetable-based oils, to replace petroleum-based fluids in hydraulic systems? Water hydraulics has been around for at least 20 years now, but the industry has done little to nothing to educate end users of its benefits. Where has the industry been to combat the negative press of hydraulic leakage and pneumatic lubrication? I believe there are plenty of fitting technologies available today that don’t leak, and pneumatic systems that need no lubrication.
How many manufacturers are aware that they must begin calculating, identifying and installing energy consumption and efficiency numbers into their advertising, and promotional and technical literature in order to service the European market? I’d have to say NONE! But that is the reality of the situation.
Are US fluid power manufacturers ready for this reality? I don’t think so.
Are they ready for the reality that their products must meet ROHS? Are they ready for the reality that their products must meet new ISO safety standards? Are they ready to discuss their products in terms of lifecycle costs? Probably not.
However, it is not too late to stave off being minimized or extinct. Research on new energy efficient products must be accelerated. The industry must band together to promote their value to mankind just like other industries have done in the past. Not just videos posted on YouTube or handed out at fluid power functions, but a strategic marketing communications campaign to advance the industry. And, the industry must take a more concerted effort to educate today’s students—starting in the grade schools—about the simplicity of the technology.
If they do these things, the industry will postpone the decline. If they don’t, I am sorry to say they will end up in the history books and museums alongside dinosaurs—extinct.
Watch for our next article: Don’t kill the fluid power industry just because humans misapply the technology.