Portable air compressor market more than just a lot of air

Diesel Progress North American Edition, Nov, 1997 by Charles R. Yengst

The North American portable air compressor market includes 11 suppliers operating in a very mature and price-driven market. During the past five years, the market has grown about 30 percent, reaching a plateau of 14,000 to 15,000 units in 1995 and 1996. While the majority of these sales are machines rated between 160 to 200 cfm, the machines range from about 75 cfm to 1600 cfm.

About 90 percent of all air compressors are sold into rental situations - either dealer rental fleets or independent rental houses. The remaining 10 percent are absorbed by mine operators, contractors or governmental agencies. Faced with reduced direct sales to contractors and the tremendous rise in resales and lease options, dealers have been forced to maintain greater numbers of rental units in order to maintain cash flow and profitability.

The premier company in compressors is Ingersoll-Rand. I-R holds almost 40 percent of the market and has held that position year in and year out for the past five years. In fact, I-R has held that distinction for most of the past 20 years. Atlas-Copco, along with Chicago Pneumatic, which it owns, accounts for approximately 15 percent of the market, followed by Sullair and Sullivan closely tied in the third position, each with about 11 percent market share. LeRoi (8 percent) and GrimmerSchmidt:(6 percent) are the other two major contenders.

Four other companies - Smith, Lindsay, MMD and MQ Power - compete for the remaining 10 percent of the market.

Sullair faces a big problem in the air compressor market in the near future, in view of the fact that Atlas Copco has acquired Prime Equipment, the big independent rental house and one of Sullair's major distributors and customers in North America. Atlas made the acquisition in June and one might assume that within six months or so, Sullair will be faced with declining orders for its compressors. Estimated North American production for the major manufacturers is in the range of 16,000 to 17,000 units annually at present. The largest importer of machines is Atlas Copco, which imported about 40 to 45 percent of its sales for 1996. Atlas accounts for about half of the total imports that come into the North American market. Atlas, as noted earlier, produces in both Europe and North America, but its primary manufacturing is in Europe.

Other suppliers that import compressors are Multiquip (MQ Power) and Mitsui Machinery Distribution (MMD). Multiquip is supplied from CompAir in England, while the MMD product line of Airman compressors comes from Hokuetsu of Japan.

Ingersoll-Rand, Sullair, Sullivan and GrimmerSchmidt are the primary exporters from North America. Asia accounts for the largest percentage of exports, followed by Latin America.

Trends over the past five years have been slow in developing. Gasoline engines, for example, are still found on some models rated between 80 and 175 cfm, but diesel engines are predominant in the larger machines above 175 cfm. The leading engine suppliers for these machines are Deere, Deutz and Cummins for the popular, mid-sized machines, with Caterpillar, Cummins and Detroit Diesel engines used primarily for the larger 1000 to 1600 cfm machines.

Reducing noise levels of air compressors is always a goal for the manufacturers. Manufacturers have reduced sound levels through the use of composites, foam filled and dual-walled fiberglass and several companies now offer machines rated as low as 70 dB(A), down considerably from the levels of 5 to 10 years ago.

Also contributing to productivity and efficiency of these machines are features such as capacity control, a design that automatically adjusts the compressor to match air consumption. A line lubricator has also been developed that provides additional lubricants to power tools.

While the market for portable machines has continued to be strong the past three years, it is likely that sales in North America will continue to have very little growth through 1998. Some cyclical action is expected after 1998, with perhaps a 10 to 15 percent drop near the end of the decade. Going into the next century, sales should again be growing, although levels of demand are expected at or near current levels. Manufacturers are concentrating on foreign markets for future growth.

Charles R. Yengst is president of Yengst Associates, Inc., a market research company headquartered in Wilton, Conn. E-mail: yengst@netaxis.com