Mining and Oil & Gas Machinery Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 700 mining and oil and gas machinery manufacturers in the US produce machinery used in the exploration and extraction of minerals and petroleum resources. Machinery may be highly specialized to perform a specific task or made more versatile by equipping them with various attachments. Many firms in this industry have an international presence or compete with foreign firms in their domestic market.

Dependence on Oil & Gas Production

The number of new oil and gas wells drilled and their productivity and longevity drive demand for machinery, sales of parts and attachments, and service revenue.

Fewer Coal Mines, Less Output

The number of coal mines in the US has been on a decline, reducing equipment sales opportunities for mining machinery manufacturers.

Industry size & Structure

A typical manufacturer of mining and oil and gas machinery operates out of a single location, employs 75 workers, and generates about $22 million annually.

    • The mining and oil and gas machinery manufacturing industry consists of about 700 companies that employ about 53,300 workers and generate $15.8 billion annually.
    • The heavy machinery segment is dominated by large, technologically-advanced firms with broad market reach. Not only do these large firms produce a wide range of products, but most have international operations and extensive dealer networks.
    • The mining machinery segment of the industry is concentrated with the 20 largest firms representing 75% of its revenue. The oil and gas machinery segment is slightly less concentrated with the 20 largest firms representing 66% of its revenue.
    • The aftermarket segment, which includes replacement parts, attachments, service, and refurbishment, is fragmented with many smaller firms competing based on price, breadth of products, and proximity to customers. Mining and oil and gas machinery manufacturers may partner with aftermarket suppliers to obtain parts and attachments and broaden their equipment options.
    • Large companies with US manufacturing operations include Caterpillar, Komatsu Mining (P&H, Joy, Montabert), Epiroc, Boart Longyear. and TMG Manufacturing.
    • The industry competes domestically and internationally with foreign-based manufacturers including Terex, Sandvik, XCMG, Sany, and Metso Minerals.
                                  Industry Forecast
                                  Mining and Oil & Gas Machinery Manufacturers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  May 6, 2022 - Fear of Oil Price Drop Discourages Drilling
                                  • Oil production by US energy companies is essentially flat and unlikely to increase substantially for at least another year or two, according to The New York Times. Despite high prices for oil and gas, which typically drive investment in drilling and extraction equipment, and surging company profits, most US oil businesses aren’t pumping more oil because the industry and investors are afraid oil and gas prices won’t stay high, the Times writes. Of executives at 141 oil companies surveyed by the Federal Reserve Bank of Dallas in mid-March, 60% said investors don’t want companies to produce a lot more oil because they fear it will hasten the end of high oil prices. Government forecasters predict that US oil production will average just 12 million barrels a day in 2022, and increase by roughly another million in 2023.
                                  • The White House’s recent move to invoke the Defense Production Act (DPA) to boost mineral development will provide federal money to help jump-start new mines or expand existing ones, Greenwire reported. Under the DPA, the Pentagon will be required to inject capital into a host of US mining business activities. The Biden Administration in late March ordered the Defense Department to consider at least five metals — lithium, cobalt, graphite, nickel, and manganese — as essential to national security under the DPA because they are used to make the batteries used in clean energy technology. Currently, the US largely relies on other nations for the mining and processing of these metals. The National Mining Association believes the order offers a broad range of authorities to promote domestic mining activity, an indicator of demand for mining machinery manufacturers.
                                  • Adoption of digital and remote technologies has made a five-year leap forward, due largely to the need to keep workers safe during the pandemic and operate under travel restrictions, according to the global head of mining at ABB. Machinery manufacturers have developed the ability to engineer, produce, and install mining machinery through remote support. Firms are using connectivity tools to collaborate on designs with clients remotely, which saves time and travel cost as well as speeds project completion. Using digital and remote technologies also allows firms to collaborate across the supply chain, bringing suppliers into the project planning and machinery production phases to identify challenges, set informed deadlines, and hit key performance indicators (KPI).
                                  • ● Higher oil and gas prices tend to drive more domestic exploration, drilling and development because profit margins are higher, and can lead to investment in drilling and extraction machinery. The spot price of West Texas intermediate (WTI) crude increased to $123.64 per barrel in March 2022, reaching a high not seen since 2008. The break-even price for the average oil well drilled in shale fields is roughly $45 a barrel. The spot price of natural gas has been highly volatile in early 2022. Prices spiked to $6.70 per million British thermal units (Btus) in early February but settled in the $4-5 range for the rest of February and most of March. Prices began to rise again at the end of March to exceed $8 per million BTU in May 2022.
                                  • Coal power generation in the US and the European Union is forecast to have increased almost 20% in 2021 but not reach 2019 levels. By contrast, estimated growth of 12% in India and 9% in China will push coal power generation to record levels in both countries. Accounting for the rebound in global industrial output, overall coal demand worldwide is expected to have increased 6% in 2021, bringing it close to the record levels it reached in 2013 and 2014.
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