Instrumentation Sector, 2007

U.S. Market Overview

The instrumentation industry manufactures a diverse range of technically advanced products. The industry can be segmented into three major sub-sectors: 1) Measuring and controlling instruments, which are used in most processing plants in the U.S.; 2) Laboratory and optical instruments, which are crucial to the pharmaceutical industry for drug research, are equally important to the clinical diagnostics market and are also used extensively in scientific research; and 3) Electronics test and measuring instruments, which are used by the electronics industry to test semiconductors and printed circuit boards; by the computer industry to test disk drives; and by the telecommunications industry to test voice, data, and video infrastructure.

The U.S. instrumentation market -- the largest in the world -- totaled $32.2 billion in 2005. The United States is the largest producer and consumer of instrumentation in the world. U.S instrumentation industry shipments totaled $36.8 billion in 2005, an increase of 8 percent from 2004 levels. United States instrumentation shipments represent approximately 37 percent of the estimated $100 billion global market. U.S. exports of instrumentation products were $23.5 billion in 2005, while imports totaled $18.9 billion, resulting in a net trade surplus of $4.6 billion. The U.S. instrumentation industry employed 171,111 workers in 2005. Eighty-eight percent of all U.S. instrumentation manufacturers are Small-to-medium sized (SMEs) companies.

The United States instrumentation industry is very fragmented, highly competitive, technologically advanced, and globally integrated. As with other high-tech industries, restructuring, consolidation, mergers and acquisitions are key elements of growth in today’s marketplace. Global competition drives new standards of quality while spurring manufacturing cost reduction. The keys to success include selling price, the performance capabilities of an instrument, state-of-the-art technology, technical support, and aftermarket service.

By virtue of being the largest instrumentation market in the world, the U.S. has attracted many foreign investors looking to gain market share, set up distribution centers, service centers and manufacturing facilities. Since the 1990s there have been many large and small U.S. acquisitions made by foreign companies – the bulk of these acquisitions have been made by large European multi-national corporations. Some of the larger acquisitions include Invensys plc (UK) purchasing Foxboro Controls; ABB Group (Sweden/Switzerland) purchasing Fischer & Porter and Bailey Controls; and Siemens (Germany) purchasing Moore Products. The U.S. Manufacturing operations of these U.S. companies have been fully integrated into the global supply chain.