SIC 3624
CARBON AND GRAPHITE PRODUCTS



This category covers establishments primarily engaged in manufacturing carbon, graphite, and metal-graphite brushes and brush stock; carbon or graphite electrodes for thermal and electrolyticuses; carbon and graphite fibers; and other carbon, graphite, and metal-graphite products.

NAICS Code(s)

335991 (Carbon and Graphite Product Manufacturing)

Industry Snapshot

Carbon and graphite products manufacturing establishments were responsible for shipments worth approximately $2.06 billion in 2000. The total value of shipments during the 1990s had reached a peak in 1997 at $2.34 billion; the lowest total value for the decade was $1.16 billion in 1990.

The lackluster performance of the industry in the 1980s and until the late 1990s was attributed to the effect of several economic forces that created product oversupply and excess capacity in the industry. One of the main causes cited for almost two decades of industry stagnation was the decline of the steel industry, a prime market for the industry's products. In addition, world demand for carbon and graphite electrodes plummeted, due to the development of more efficient electrode performance in steel production. This decline in demand for carbon and graphite electrodes for use in steel production, coupled with the strength of the dollar in the 1980s and early 1990, allowed rival foreign producers to increase their profitability in the U.S. market, which adversely affected the industry's output and profitability.

On the positive side, structural changes in the industry led to a rebound in the late 1990s, including growth in some export markets. Although the industry was a perennial net importer of carbon and graphite products, the volume of carbon and graphite exports continued to increase steadily throughout the late 1990s.

Organization and Structure

In 1997, approximately 99 establishments were engaged in the production of carbon and graphite products. These establishments employed approximately 110 workers each, 80 of which were employed as production workers. For the same year, the average value added per production worker was more than $120,000. This figure showed significant improvement over the 1994 figure for the industry, which was about $84,500.

In 1997, the product share was split between two product classes—electrodes, which claimed 45.7 percent of the market, and all other graphite and carbon products, which claimed the remaining 54.3 percent. Graphite electrodes for use in electrolytic cells and electric furnaces represented the largest portion of the electrode product share.

Geographically, the greatest number of establishments producing carbon and graphite products in 1997 were located in the steel production region in the Northeast and in the South. Ranked by the number of establishments per state, Pennsylvania ranked first with 18, followed by Pennsylvania with 15, California with 12, New York with 7, Connecticut with 6, and Alabama with 5.

The bulk of the industry's revenue was garnered by a limited number of manufacturers. The leading three companies accounted for almost 90 percent of the total industry's output in 1996. It was estimated that UCAR International Inc., with sales of $947 million, accounted for more than 50 percent of industry sales in 1998. The other two dominant companies in the carbon and graphite products industry were: Keystone Consolidated Industries Inc. of Dallas, with $370 million in sales and 2,100 employees in 1998; and Carbide/Graphite Group Inc. of Pittsburgh, with $240.1 million in sales and 965 employees in 1999. The remaining market was controlled by about 20 companies. All of the top companies in the industry are private concerns.

Background and Development

The products composing the carbon and graphite products industry were mostly carbon products of a very high carbon content, including both natural and synthetic graphites. Carbon's hardest form is known as diamond; graphite is its softest form. Graphite appears naturally in three forms: amorphous, which is the last stage of the coalification process; crystalline flake, which is used in brake linings and pencils; and lump, used mostly in batteries and found primarily in Sri Lanka.

Synthetic carbon and graphite comes in three basic product categories. Electrodes composed the industry's largest product category. Making up more than half of the industry's products, electrodes are used in all types of electric furnaces. Graphite fibers are the second largest category of graphite products. Synthetic powder, made from scraps that are pulverized into a powder, make up the bulk of the remainder of synthetic products.

Industrial uses of graphite and carbon began in the early 1800s. In 1800, Sir Humphry Davy (1778-1829) used carbon in the electric arc, which used an electrode made out of charcoal. By 1857, after seven years of experiments with new electrodes yielding a purer carbon, De Grasses B. Fowler patented the process of making carbon plates by mixing ground coke with tar and shaping the mixture under pressure in molds. Soon after, in 1877, Charles F. Brush and Washington H. Laurence of Cleveland began to experiment with carbon electrodes, and by 1878, Brush was manufacturing electrodes.

In 1896, E.G. Atcheson patented a process that transformed amorphous carbon to synthetic graphite by heat treatment, which laid the foundation for the modern graphite industry. A succession of inventions followed in the electrothermal field, all of which required electrodes of carbon or graphite for their applications. For example, in 1896, H.Y. Castner patented a process that involved heating carbon electrodes with electricity so that a graphite-like form of carbon was produced. By 1899, the Atcheson Graphite Company was formed in Niagara Falls, New York, producing electrodes for Castner's electrochemical processes, with most of the production being exported to Europe, which was the center of the industry at the time.

In 1906, the first steel made with electric power was manufactured in the United States by the Holcomb Steel Company in Syracuse, New York, using German electrodes. As the industry progressed, larger and larger electrodes were needed. By 1914, there was a vast expansion in electric furnace capacity and in the electrochemical industry, leading to a rise in the demand for electrodes of all varieties. The 30-inch carbon electrode was produced in 1927 and the 40-inch carbon electrode followed a year later. Graphite electrodes progressed similarly, but at a slightly slower pace, with the 14-inch electrode introduced between 1914 and 1918. By 1937, the size of graphite electrodes reached 20 inches. At that time, Germany, England, France, Italy, and Sweden made graphite and amorphous electrodes. Carbon products were made in most countries including Europe and Japan.

By 1959, many new products followed. Filamentary carbon was made into graphite cloth and eventually carbon and graphite cloth, felt, yarn, tape, and fibers were to follow. These products had the desirable properties of not melting at high temperatures or under high pressures. Such applications for carbon and graphite increased exponentially, with many new firms capitalizing on the thermal stability, electrical conductivity, thermal conductivity, and corrosion resistance of carbon and graphite fibers.

By the early 1980s, world demand began to collapse because of the decline in consumption of graphite electrodes, particularly by the steel industry. This decline was attributed to improved electrode performance as well as lower priced electrode imports. By 1985, leading producer Union Carbide suspended production at its Clarksville, Tennessee, plant. A lower cost of production at the company's facilities in Yabucoa, Puerto Rico, and Columbia, Tennessee, attributed to this closure. It reopened the Clarksville facility in 1987.

At that time, costs were rising and carbon products firms were experiencing poor profitability. Union Carbide was not the only firm experiencing poor profitability and excess capacity. Fierce domestic and foreign competition was making it hard to meet rising costs in new carbon electrode plants. Declining demand led to overcapacity in electrodes, due mostly to low operating rates in steel mills. Coupled with this was the decline in the U.S. steel industry caused by heightened competition from foreign producers. Another key factor was the increased costs of fuels, such as natural gas used to carbonize coal to make carbon and graphite. Foreign competition was strengthened further by the strength of the U.S. dollar at the time, which increased prices of U.S. goods in proportion to foreign goods, and enabled consumers to purchase lower priced products from rival producers, predominantly the Italian and Japanese companies. Lastly, alternative products (titanium diboride electrodes were substituted for carbon or graphite) provided a 25-percent savings on electrical energy, which is a major expense in aluminum smelting. Accordingly, key aluminum producers, such as Kaiser Aluminum, Alcoa, and Alcan, began using titanium diboride instead of carbon or graphite.

Current Conditions

After peaking at $2.34 billion in 1997, the value of industry shipments began to decline, falling from $2.30 billion in 1998 to $2.09 billion in 1999 and to $2.06 billion in 2000. The cost of materials dropped from $1.09 billion in 1997 to $1.03 billion 2000. Over the same time period, the total number of industry employees fell from 10,691 to 9,959.

Workforce

From 1991 to 1997, total employment in carbon and graphite production rose from 8,400 people to about 10,900 employees, before falling to 9,959 in 2000. Production worker employment fell from 7,400 in 1988 to 6,000 in 1991, and rose to more than 8,000 in 1997, before declining to 7,313 in 2000. That year, production worker wages reached $15 per hour.

Further Reading

Darnay, Arsen J., ed. Manufacturing USA, 5th ed. Farmington Hills, MI: Gale Group, 1996.

United States Census Bureau. "Carbon and Graphite Product Manufacturing." 1997 Economic Census: Manufacturing Industry Series. June 1999.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .



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