SIC 3431
ENAMELED IRON AND METAL SANITARY WARE



This category includes establishments primarily engaged in manufacturing enameled iron, cast iron, or pressed metal sanitary wares, such as bathtubs, sinks, toilets, and other bathroom and household plumbing fixtures. Nonmetallic plumbing products are listed in SIC 3088: Plastic Plumbing Fixtures, SIC 3261: Vitreous Sanitary Ware, and SIC 3469: Porcelain Enameled Kitchen, Household, and Hospital Ware.

NAICS Code(s)

332998 (Enameled Iron and Metal Sanitary Ware Manufacturing)

Industry Snapshot

Metal sanitary ware manufacturers compete in the household, commercial, and industrial plumbing product markets, producing products made of cast iron, enameled iron and steel, and stainless steel. Traditionally, these markets are directly influenced by the nation's construction markets and, therefore, are extremely cyclical.

During the 1990s, the increased use of plastic and fiberglass plumbing products reduced the demand for iron and steel plumbing products. In response to this change, manufacturers have developed composite materials that combine the strength and durability of metal with the lightweight and rustproof features of plastic and fiberglass products. A steady demand for stainless steel products, especially kitchen sinks, has kept approximately 90 manufacturers in business in the 1990s, despite two severe slumps in the U.S. construction market. The economic boom late in the decade pushed industry shipments to $1.68 billion in 2000, compared to $1.59 billion in 1999. The cost of materials increased from $598 million in 1999 to $659 million in 2000, while employment grew from 9,535 workers to 10,275 workers over the same time period.

Organization and Structure

Traditional wholesale distribution of plumbing products to building contractors is supplemented by retail distribution of plumbing products to the do-it-yourself consumer market. Typically, metal sanitary ware manufacturers distributed products through independent wholesale distributors of building products. Any advertising was of a technical nature and was aimed at the knowledgeable plumbing professional. Recently, the growth of replacement/remodeling markets for building products has increased profitability of plumbing products marketed directly to the consumer. In response, manufacturers have expanded marketing efforts, focusing on a consumer more concerned with function and style than with the technical specifications of the product.

Background and Development

The fate of the plumbing producer has always been tied to the health of the nation's new construction markets. Economists label the demand for new construction a leading indicator of this industry's growth because it provides insight into the future conditions of the overall economy. Hence, a decline in the demand for new construction usually precedes a slowdown in the nation's gross national product (GNP) growth. This held true in the recessions of 1982 and 1991, as construction activity began to decline a year before the rest of the economy slid into recession. Metal sanitary ware manufacturers felt the recessions early as well, as demand for their products fell with slowed construction activity.

During the 1980s, several trends in the construction industry impacted metal sanitary ware producers. Severe declines in construction activity in 1980 and 1982 caused many manufacturers to shut down. The number of metal sanitary ware manufacturing establishments dropped to 77 in 1982. After these severe declines, however, construction demand boomed in 1983 and 1984, as consumer optimism fueled demand for new houses. In addition, an unprecedented cut in the tax on capital gains implemented by the Reagan administration suddenly made business investment in commercial offices, stores, residential condominiums, and apartments extremely attractive. As a result, demand for both residential and commercial plumbing products boomed in the mid-1980s.

By the end of 1990, however, the construction industry suffered a serious decline, as housing starts fell to near record lows. The industry employed approximately 6,000 workers in 1995, 5,000 of whom were involved in production. The decrease in profit margins has caused production workers' wages to remain stagnant. Despite yearly productivity gains, workers' wages have barely kept up with inflation. Production workers' hourly wages have hovered around $11.00 during the mid-1980s and early 1990s.

The cause of the decline was primarily attributed to an oversupply of commercial office space and residential housing caused by the building spree of the mid-1980s. Analysts suggested that this glut in the supply of newly constructed properties would take many years to clear, holding down construction growth well into the 1990s. While metal sanitary ware manufacturers suffered through this latest downturn in construction, the decline was not as deep as was expected. This was attributed to plumbing ware manufacturers' success in the less cyclical home remodeling market.

In the late 1980s, remodeling projects and do-it-yourself repairs became popular hobbies for many homeowners. Disgust over the high cost of plumbing repairs and the urge to modernize bathrooms and kitchens led many people to undertake plumbing projects they would have avoided only a few years earlier. As a result, manufacturers often marketed installation guides to consumers in the form of books or videos.

On the other hand, the move toward larger bathrooms with jacuzzis and whirlpools threatened metal sanitary ware manufacturers' bathtub market. Shower stall and wall-surround bathtubs with whirlpool technology can not feasibly be made using cast iron and enameled steel. In response, several metal sanitary ware manufacturers developed composite materials that combined the features of steel and cast iron with the lighter weight and ease of transportation and installation of plastics and fiberglass products. Acceptance of these composite materials would allow metal sanitary ware manufacturers to take advantage of demand for more luxurious bathtub products. The industry was successful in shifting its focus from bathtubs to the kitchen and sink markets. In fact, sales for the industry doubled in the 1980s, despite a fall in bathtub market share from 62 percent to 38 percent during the decade.

The demand for stainless steel kitchen sink offset the decline in cast iron and enameled steel bathtub demand. While sales nearly doubled during 1980s, profit margins for the industry declined steadily. As a percentage of total costs, material costs grew from 42 percent to 52 percent during the decade. The decline in profit margins was the direct result of a skyrocketing increase in the cost of materials for stainless steel production.

Entering the 1990s, metal sanitary ware manufacturers faced a construction market in which slow growth was predicted for several years. This forced the industry to seek growth through other markets—mainly, the replacement and remodeling plumbing fixtures market. In addition, plumbing manufacturers faced a more environmentally aware consumer who demanded efficient, water conserving plumbing products. Concern for the environment caused metal sanitary ware manufacturers to use recycled metals and to provide more efficient products. Many states, for example, passed legislation requiring that all new toilets use only 1.6 gallons of water per flush as opposed to the traditional 3.5 gallons per flush.

The growth in remodeling and replacement markets for plumbing products was attributed to the increasing desire for homeowners to entertain within the home. This phenomenon was expected to affect plumbing ware manufacturers for many years to come. Especially fruitful for metal sanitary ware manufacturers was the increased emphasis on the kitchen and the basement in the scheme of the house. Stainless steel was the most popular material for kitchen and bar sinks, primarily because of its low-price and ease of installation for the do-it-yourself homeowner.

In the mid-to late 1990s, however, new construction was again on the rise. The Turner Corp., the nation's leading builder, announced that first quarter results for 1997 were up 14 percent from 1996 to $1.2 million in net income. This, in combination with continued growth in the remodeling and replacement markets, could in turn spur favorable growth in the sanitary ware market as well. U.S. manufacturers' shipments of metal plumbing fixtures totaled approximately $757 million in 1995.

Current Conditions

According to the U.S. Census Bureau, 88 establishments operated in this category in the late 1990s. Industry-wide employment totaled 10,275 workers receiving a payroll of more than $365 million in 2000. Within this workforce, 7,029 of these employees worked in production, putting in more than 14 million hours to earn wages of more than $205 million. Overall shipments for the industry were valued at almost $1.7 billion in 2000.

Industry Leaders

Masco Corp. of Taylor, Michigan led the industry with 1998 sales of over $4.3 billion behind the strength of 31,700 employees. Second-place U.S. Plumbing of Piscataway, New Jersey generated sales of $3.6 billion in 1997, with 13,000 workers. Rounding out the top three was Kohler Co. of Kohler, Wisconsin with over $2.2 billion in 1998 sales and 18,000 employees. Other industry leaders included Esstar Inc. of New Haven, Connecticut; Shelter Components Corp. of Elkhart, Indiana; and Moen Inc. of North Olmsted, Ohio.

America and the World

The U.S. market for plumbing ware fixtures does not include a large percentage of imported products. The added cost of shipping large cast iron and enameled steel products overseas usually makes imports too expensive for the U.S. market. This lack of import competition has given U.S. producers of plumbing ware products a luxury that many other industries do not enjoy. On the other hand, the export of metal sanitary ware manufacturers is limited for the same reasons. This makes U.S. producers highly vulnerable to the fluctuations of the domestic market for plumbing products.

The majority of U.S. trade in metal sanitary ware products occurs with Canada and Mexico. Transportation costs to these markets are minimal. Companies in the United States also compete in many overseas markets through foreign production in proximity to the particular market. Either through direct ownership of a plant on foreign soil, or through licensing agreements with foreign manufacturers, U.S. companies participate in foreign markets while eliminating expensive shipping costs.

The protection from foreign competition for U.S. metal sanitary ware producers has saved many domestic manufacturing jobs. Primarily, production job declines have been caused by productivity improvements; however, two significant occurrences threatened to change this in the 1990s. First, the stainless steel sink market was more open to foreign competition because these products are lightweight and, therefore, do not incur the high shipping costs of cast iron and enameled steel products. Secondly, the North American Free Trade Agreement (NAFTA) gave metal sanitary ware manufacturers access to low wage production workers without the large addition in shipping costs usually associated with foreign production.

Further Reading

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

"Male Plumbing." Advertising Age , 4 October 1999.

United States Census Bureau. 1995 Annual Survey of Manufactures. Washington, D.C.: GPO, 1997.

United States Census Bureau. "Enameled Iron and Metal Sanitary Ware Manufacturing" 1997 Economic Census-Manufacturing. Washington, D.C.: U.S. Department of Commerce, 1999. Available from http://www.census.gov/prod/ec97/97m3329l.pdf .

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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