SIC 3443
FABRICATED PLATE WORK—BOILER SHOPS



This classification includes establishments primarily engaged in manufacturing power and marine boilers, pressure and nonpressure tanks, processing and storage vessels, heat exchangers, and weldments and similar products; these are made by cutting, forming, and joining metal plates, shapes, bars, sheets, pipe mill products, and tubing to custom or standard design for factory or field assembly. Excluded from this category are establishments primarily involved in manufacturing warm air heating furnaces, which are classified in SIC 3585: Air Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment. Those establishments primarily engaged in manufacturing nonelectric heating apparatus other than power boilers are classified in SIC 3433: Heating Equipment, Except Electric and Warm Air Furnaces. Also excluded from the fabricated plate work classification are manufacturers of household cooking apparatus and those manufacturing industrial process furnaces and ovens. The former are covered in SIC 3631: Household Cooking Equipment, and the latter are listed under SIC 3567: Industrial Process Furnaces and Ovens.

NAICS Code(s)

332313 (Plate Work Manufacturing)

332410 (Power Boiler and Heat Exchanger Manufacturing)

332420 (Metal Tank (Heavy and Gauge) Manufacturing)

333415 (Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing)

Industry Snapshot

Plating—the application of a thin metal layer on a surface to enhance wearing quality, prevent leakage, and protect against corrosion—is used in the fabrication of many products. The manufacturing process generally is consigned to manufacturers involved in the fabricated plate work industry. Although the bulk of the industry's shipments comprises a multitude of products manufactured through plating processes, the core of the fabricated plate work industry essentially includes the manufacturing of power and marine boilers and various types of plate tanks and storage vessels.

Power boilers, as classified by the American Society of Mechanical Engineers, operate at greater than 15-psig steam pressure and are intended for stationary service, which excludes locomotive boilers from the scope of the fabricated plate work industry. Boilers operating at 15 psig steam pressure or lower, known as low-pressure heating boilers, are classified in SIC 3433: Heating Equipment, Except Electric and Warm Air. Power boilers, designed to operate at high pressures and temperatures, generate steam to provide power for utility companies and for various industrial processes. The boiler itself consists of two principal parts: the furnace, which provides heat, usually by burning fuel, and the boiler proper, in which water is converted to steam by the heat piped in from the furnace. A steam engine derives its power from steam generated under pressure in a boiler. Marine boilers are designed and fabricated for use aboard a wide range of vessels, including tugboats, ocean liners, oil drilling barges, freighters, and aircraft carriers.

Organization and Structure

The fabricated plate work industry is comprised of large and small manufacturing facilities. In 1997, a total of 25,074 workers were employed by 1,034 fabricated plate work establishments.

Geographically, fabricated plate work manufacturing occurs throughout much of the United States, with 43 states containing 5 or more manufacturing facilities. The bulk of manufacturing activity in the mid-1990s took place in Texas, Pennsylvania, California, Ohio, and Oklahoma. Together, these states contained 712 manufacturing establishments, which generated $3.6 billion in sales and accounted for 38.9 percent of the total domestic shipments delivered by the industry. These states employed 37.2 percent of the industry's workforce.

Texas, with 210 establishments, contained the greatest number of fabricated plate work manufacturing facilities in any one state and had the highest total revenue collected and shipment volume, posting $987.5 million in sales and accounting for 11 percent of the industry's total shipments. Although California's 181 establishments topped Pennsylvania's 127, Pennsylvania came in second in terms of revenue and shipments with $864.3 million in sales and 9.5 percent of total U.S. shipments. California garnered third place with $576.7 million in total sales, which was 6.3 percent of total U.S. shipments.

Background and Development

The origins of the fabricated plate work industry may be traced to the early development of boilers, which began in the Middle Ages when inventors experimented with the idea of harnessing the power of steam. For centuries, improvements were made in both the theory of deriving power from steam and in steam generators themselves. Seventeenth-century inventor Giovanni Battista della Porta was the first to discover that when steam condensed in a closed vessel it created a vacuum that could draw up water. Thomas Savery, an English engineer working in the late seventeenth century, created the first machine to provide mechanical power by utilizing steam. By 1800, vast improvements had been made in designing steam engines and boilers, but the expense involved in developing prototypes was prohibitive.

In 1800, a landmark development in the history of boiler development occurred when Richard Trevithick put together a steam engine and boiler, which eventually, through the addition of tubes carrying gases from a fire, increased the heating surface and efficiency of the boiler. Several decades after Trevithick's achievements, John Stevens, an American engineer, developed one of the first boilers in which tubes carried water to be converted to steam, instead of gases from a fire. This "water-tube" boiler represented the culmination of roughly 50 years of work by Stevens in his efforts toward constructing an efficient steam system to power ships along the Hudson River. By the mid-nineteenth century, further improvements had been made in the water-tube design, which allowed the water to circulate more easily, provided more heating surface, and lowered the risk of boiler explosions.

During this time, boiler design was fostered by the industrialization of Great Britain. The shift from an agrarian and commercial society to an industrial society was prompting a similar transition in the United States, shaping that country into a modern manufacturing nation. Steam powered both of these industrialization movements; the power it provided proved intrinsic to the movement toward large and distinct manufacturing industries. In the United States, residences and local industries were the primary users of these steam generators until the latter half of the nineteenth century. At that time, the applications for steam power broadened and spurred the emergence of a market segment for the fabricated plate work industry that would fuel its growth throughout the twentieth century.

The unveiling of this new use for steam took place at the 1876 U.S. Centennial Exhibition in Philadelphia, during which the practicality of generating electricity by steam power was demonstrated to the attending public. Five years later, four boilers were powering the Brush Electric Light and Power Co. in Philadelphia, the nation's first commercial electric generating station, marking the beginning of a new era for both the United States in general and boiler manufacturers in particular. From this time forward, power boilers in mills and factories appeared with increasing frequency, particularly in sugar refining companies, as the industrialization of the United States neared its greatest intensity.

Similar advances had been made with marine boilers, another integral product that bolstered the U.S. fabricated plate work manufacturers, helping them to form a genuine, organized industry after the turn of the century. Beginning with the Great Britain in the early nineteenth century, marine engineers began exploring the possibilities of providing power to becalmed ships through steam. Eventually sails and masts were discarded and boilers became the sole source of power for ships of all classes and sizes, from the 1,154-ton Britannica , which "sailed" from Liverpool to Boston in 1840, to the Monitor and the Virginia , two iron-hulled steamboats pitted against each other during the American Civil War.

By the time boilers had become common in American industry, marine boilers also were fueling a majority of the U.S. vessels on water. Accordingly, by the end of the nineteenth century, fabricated plate work manufacturing, essentially comprising the fabrication of power and marine boilers, was being conducted in earnest. In 1889, the American Boiler Manufacturers' Association (ABMA) was chartered with elevating the standards of boiler design and manufacture and preventing the production and sale of boilers deemed unfit for safe operation. Moreover, the establishment of a national association for boiler manufacturers cohered a loosely organized group of manufacturers, marking the formal beginnings of the boiler shop, or fabricated plate work industry in the United States.

Before the fledgling industry could emerge as an integrated and uniform group of manufacturers, national boiler manufacturing standards needed to be created and the alarming frequency of boiler explosions needed to be quelled, something the formation of the ABMA had failed to do. Another association with a vested interest in the production of boilers, the American Society of Mechanical Engineers (ASME), also had failed to curb the number of accidents related to boiler explosions, despite formulating a code entitled "Standard Method for Steam Boiler Trials" in 1884. In 1914, a committee under the purview of ASME published the "Boiler and Pressure Vessel Code," which provided manufacturers with standard specifications for the design, fabrication, installation, and inspection of boilers and pressure vessels. The adoption of nationwide standards helped to curtail the number of boiler explosions and provided manufacturers with a universal manufacturing language in which to communicate and enabled them to produce higher-quality boilers that conformed to the diverse needs of their customers.

Once ASME's Boiler Code gained widespread acceptance, many of the fabricated plate work industry's internal, organizational problems were resolved, or at least made more manageable, facilitating—and in some cases invigorating—the industry's growth. Technological improvements in the design of boilers followed at a rapid pace, as the onus of spearheading future design and production innovations fell to the companies involved in the industry, rather than to the independent engineers.

Several historic achievements followed the publication of the Boiler Code, the first of which involved the opening of the Edgar Steam Electric Station in Weymouth, Massachusetts. The electric station, operated under the aegis of the Boston Edison Co., opened in 1925 with a high-efficiency turbine and boiler system able to produce electricity at the rate of one kilowatt hour per one pound of coal. For its time, this ratio represented a considerable leap in efficiency—conventional power plants competing on the vanguard of technology were consuming 5 to 10 pounds per kilowatt hour—and the station remained a model of efficiency until it was dismantled and sold to a South American power company in the 1970s.

Thirty-three years after the Edgar Steam Electric Station demonstrated to the world the efficiency of steam generated electrical stations, President Dwight D. Eisenhower tripped a switch that activated the first North American commercial central electric-generating station to utilize nuclear energy. Located in Shippingport, a town northwest of Pittsburgh, the Shippingport Atomic Power Station was designed by the Westinghouse Electric Corp., the Division of Naval Reactors of the Atomic Energy Commission for the Department of Energy, and the Duquesne Light Co. Generating 60,000 kilowatts of electricity, the Shippingport Station was small compared to the generating capacity of similar electric stations to follow, but it heralded the advent of a new method for generating electricity, a process that incorporated the use of boilers.

In 1960, the first commercial geothermal, electric generating station in North America began operating in Sonoma County, California, north of San Francisco. This geothermal field, from which generators received naturally produced steam, was first discovered in 1847 and then tapped in the early 1920s, but the steam and hot water billowing from the earth proved too corrosive for pipes and other equipment of the 1920s. By the late 1950s, however, significant advances in anticorrosion technology enabled the Pacific Gas and Electric Co. to successfully generate steam from the Sonoma field, which further broadened the applications for boilers in the production of energy.

These benchmark events in the development of additional uses for boilers, coupled with the increasing utilization of boilers by the industrial sector, accelerated the growth of the fabricated plate work industry. By the early 1960s, boiler shop manufacturers—producing power and marine boilers, pressure and non-pressure tanks, processing and storage vessels, heat exchangers, weldments, and various other plate products—represented a $1.5 billion a year industry. Consistent improvements in design and the increased requirements of U.S. industry led to the fabrication of massive boilers, some of which were able to generate 6.5 million pounds of steam per hour, heated by furnaces approximating the size of 40 medium-sized houses. In the electrical power field, the use of boilers in thermal power plants, which accounted for roughly 80 percent of all electrical power generated in the nation, was pervasive, as boiler manufacturers benefited from their position as suppliers of equipment essential to a diverse customer base.

As the industry entered the 1970s, the demand for power boilers remained strong, stronger than manufacturers were able to satisfy. However, growing concern for the potentially harmful effects of additional electrical generating facilities on the environment began to make the selection of future power plant sites difficult. Consequently, an electrical production deficit existed during the late 1960s, which sparked a wave of concern by utility operators regarding the availability of the equipment necessary to construct additional facilities, as demand outpaced supply. During the 1960s, this gap between production and consumption created a commensurate gap between new orders for power boilers and the production of power boilers. This gap narrowed by the beginning of the 1970s, when electric utility operators began ordering steam-generating equipment in advance as a hedge against an anticipated shortage of power boilers. For manufacturers in the fabricated plate work industry, particularly those focusing on the fabrication of power boilers, this panic boosted sales volume. The value of power boiler shipments increased 18 percent from 1969 to 1970, the culmination of a decade that saw industry-wide power boiler revenue climb from $341 million in 1963 to $631 million in 1970.

The 1970s, however, marked a turning point for the fabricated plate work industry. During the mid-1970s, utility companies became increasingly concerned about the availability of fuel, environmental exigencies, and future demand for energy, resulting in an energy crisis. Energy conservation efforts and soaring energy costs sharply reduced new orders for utility boilers. The fabricated plate industry also experienced slackening, reflecting the losses incurred by nearly every manufacturing industry in the United States during the energy crunch.

Revenue garnered from the production of power boilers fell from more than $1 billion in 1974 to $860 million in 1978, and total boiler production fell from 90 million pounds of capacity to 36.5 million pounds, prompting manufacturers to plead for federal intervention. In response, the National Energy Act and the Industrial Fuel Use Act were passed in 1978. Although the government hoped such measures would reduce the number of industrial boilers dependent on gas and oil for fuel, the fabricated plate work industry hoped they would invigorate the stagnant boiler market. Neither occurred, as both manufacturers and their customers became confused about which fuel was to be used.

As a result of the somewhat bleak prospects facing manufacturers in the industry, expected profit margins were reduced in the early 1980s, and competition intensified for the dwindling number of new orders. To mitigate their losses, some manufacturers exited the business entirely, and others began concentrating more on retrofitting and converting existing boilers. Although the latter were able to stave off the negative effects of the six-year downturn, their strategy did not preclude serious losses. Nationwide energy conservation by both of the industry's primary markets—industrial and utility—imposed, in effect, a limit on the extent to which boiler manufacturers could recover. In 1980, the Department of Energy estimated that the concerted movement toward conservation had reduced the growth in energy demand to half the growth rate of the gross national product, an unsettling discovery considering that the two growth rates, historically, had been roughly equal.

Consequently, manufacturers entered the mid-1980s struggling to maintain their precarious presence in the boiler and fabricated plate work market. Electric utilities at this time were operating old electric generating equipment approaching the end of its economic life, but boiler manufacturers did not expect to realize any significant wave of new orders until the early 1990s, as electric utility operators forestalled the purchase of new equipment as long as possible. An increasing percentage of the industry's work continued to be the rebuilding and refurbishing of older units but, for a considerable number of manufacturers, this type of work did not generate enough money to sustain operations, and the roster of fabricated plate work manufacturers shrank.

By the late 1980s, conditions had not improved greatly. Manufacturing operations were consolidated and some facilities were shut down due to decreased demand. As manufacturers looked toward the future, a reversal of the depressed state of the industry was largely predicated on the equipment purchasing decisions by electric utility companies and a return to more aggressive capital expansion programs by the industrial sector, both of which were stunted by the recessive economic conditions of the early 1990s.

Approximately 1,034 U.S. companies were involved in producing fabricated plate work in 1997. This figure reflected the latest of a decade-long decline in the number of manufacturers engaged in the industry. The sharpest decline occurred from 1982 to 1987, when the number of participants dropped from 1,743 to 1,584. Total revenue garnered by the industry during the 1980s declined as well, dropping from $8.23 billion in 1982 to a low of $6.15 billion in 1986. In the late 1980s, however, the industry's performance improved, as revenue increased for three consecutive years to conclude what otherwise had been a decade of consistent decline. In 1987, the industry's revenue total increased to $6.79 billion, then leapt to $7.81 billion the following year.

Since 1990, there has been a steady growth in the number of fabricated plate work manufacturers with the largest increase from 1991 to 1992, when the number jumped from 1,694 to 1,942, leveling off in 1993 to 1,922. As the industry entered the 1990s, its sales volume eclipsed the total recorded in 1982, climbing to $8.65 billion in 1990. In 1993 revenue reached $9.11 billion, fell slightly to $8.94 billion in 1994, but rebounded to $10.08 billion in 1995. Shipments climbed to $11.30 billion in 1997, and by 1999 totaled more than $13.0 billion. Growth in this industry was expected to be slow due to trends away from replacement and large units.

Current Conditions

Plate demand and sales were strong going into 2000 and early 2001. However, with the economy sluggish and the aftermath of the events of September 11, the last four months of 2001 saw significantly weaker business that carried into early 2002. At that point, there were signs of a modest recovery, with some inventory levels reduced and demand and prices increasing. Although sales at the mill level were actually strong, some industry insiders suggested that was due to mill lead times being extended and the desire to replenish inventory before plate prices rose again. Total plate shipments were down 3.7 percent in 2001, with 2.09 million tons in shipments compared to 2.17 million tons shipped in 2000. According to the U.S. Census Bureau's Annual Survey of Manufactures , total value of shipments in 2001 were approximately $12.11 billion, down from the 2000 high of about $14.62 billion. Exports were off 6 percent in 2001, whereas imports climbed 33.9 percent, adding to U.S. plate manufacturers' problems.

Analysts predicted an upturn in late 2002 in some markets, while others were expected to improve in 2003. Also, imports were expected to decrease due to the weakened U.S. dollar and new import tariffs taking effect in March 2002.

Sales and shipments are predominately derived from the industry's five primary product groups: heat exchangers and steam condensers; fabricated steel plate; steel power boilers, parts, and attachments; metal tanks and vessels (custom fabricated at the factory); and fabricated plate work not conforming to the parameters of standard fabricated plate work. This last product category, attesting to the wide range of products manufactured by the industry, was the most abundantly produced product by fabricated plate work manufacturers, accounting for 20.1 percent of the industry's total shipments. Standard fabricated plate work represented the industry's second largest product category, accounting for 16.7 percent of total shipments, followed by heat exchangers and steam condensers, which accounted for 14.4 percent. Steel power boilers and their parts and attachments represented 10.3 percent of the industry's shipments and were closely trailed by metal tanks and vessels manufactured in a factory setting and according to customer specifications, which represented 10.2 percent. The remainder of the industry's products comprised storage tanks (5.3 percent), nuclear reactor steam supply systems (5.5 percent), and gas cylinders (3.7 percent).

Industry Leaders

Ranked according to sales volume, the three largest companies involved in the fabricated plate work industry in 2002 were McDermott Inc., based in New Orleans, Louisiana, with sales of about $1.75 billion and 18,200 employees; Columbus, Ohio-based Worthington Cylinder Corp., with $1.5 billion in sales and 1,500 workers; and Babcock & Wilcox Co. of Barberton, Ohio.

McDermott Inc., controlled by McDermott International Inc., earned its position in the industry largely through a merger in 1978 with The Babcock & Wilcox Co., resulting in Babcock & Wilcox as a subsidiary in McDermott's Power Generation Systems and Equipment Division. Formed in 1867 as Babcock, Wilcox and Co., the company's roots actually stretch back to 1856, when a 26-year-old engineer from Rhode Island, Stephen Wilcox, applied his knowledge of water circulation theory to perfect a new boiler concept utilizing inclined water tubes. Later referred to by Thomas Edison as "the best boiler God has permitted man yet to make," the success of Wilcox's system persuaded him and his friend George Herman Babcock to form Babcock, Wilcox and Co.

Initially, the two partners sold a majority of their boilers to sugar refineries. Then, in 1881 the company began supplying the boilers for the country's first central electric power station at the Brush Electric Light and Power Co. in Philadelphia. In subsequent years, Babcock & Wilcox boilers would continue to represent the vanguard of power generation technology, pioneering significant advances in utility steam generation design and marine boiler development. Moreover, the company helped to shape the industry by playing an instrumental role in the development of the American Society of Mechanical Engineers' Boiler and Pressure Vessel Code in 1914.

Into the early 1990s, Babcock & Wilcox continued to set the pace for other companies involved in the industry, thriving as a major supplier of nuclear steam generating equipment, critical heat exchanges, and replacement recirculating steam generators. Employing approximately 20,000 workers, McDermott Inc. garnered $2.3 billion in sales for 1995. In April 1997, Babcock & Wilcox was awarded a $35 million contract to design and manufacture steam generator components for a nuclear plant in China that was expected to be completed in 1999.

Workforce

Total employment in the fabricated plate work industry declined sharply during the 1980s, falling most precipitously from 103,200 people to 71,200 between 1982 and 1986, a period during which the industry's aggregate revenue experienced a commensurate decline. Toward the latter half of the decade, as sales recovered slightly, the industry's employment base grew. As the industry entered the 1990s, employment increased but was still far below the employment total of the early 1980s.

Total employment in the industry fell from 81,500 people in 1990 to 73,500 in 1991. By 1993, the number had begun to climb back with 76,200 total employees, and levels reached more than 80,000 in 1994 and 97,900 in 1999. After reaching a high of some 98,500 employees in 2000, the downturn in the industry the following year caused the total workforce to decline to approximately 91,183 in 2001.

Of the people employed in the industry, an over-whelming majority were employed as production workers, while salaried employees—those performing managerial, administrative, or technical duties—composed the balance of the industry's workforce. In 1994, the typical fabricated plate work manufacturing establishment employed 33 production workers and 13 salaried employees.

In general, production workers in the fabricated plate work industry are employed on a full-time basis. In 2001, the approximately 69,792 production workers employed by the industry received an average hourly wage of $14.06.

In terms of the total payroll per establishment, the fabricated plate work industry's workforce expenditures were slightly less than the average payroll expenditures for all other manufacturing industries, largely because the fabricated plate work industry employed fewer workers per establishment than the average for manufacturing industries.

Research and Technology

During the 1980s, two technological developments in particular enabled manufacturers in the industry to increase production efficiency and improve the quality of their products. One of these advances, acoustic emissions technology (AET), had been available to manufacturers of metal-related products for centuries but was not utilized in the production of fabricated plate work in a widespread fashion until much later. The other, computer-aided design, or CAD technology, was developed in the 1980s as an inevitable extension of the rapid technological advancements achieved by the computer industry as a whole during the decade.

The use of AET emerged during the 1980s as a viable and effective means to gauge the quality of plate work, and its adoption by manufacturers quickly spread. Acoustic emission, the sound produced by various types of materials during production processes, was first used commercially by those involved in the production of pottery. Potters relied on the audible cracking sounds clay pots produced while cooling in a kiln. These sounds enabled the practiced listener to determine which pots would eventually crack. An application more closely related to the type employed by fabricated plate work manufacturers, however, was used by tin manufacturers, who listened to the sounds of smelted tin, known as "tin cry," to detect structural flaws in the manufactured metal. For manufacturers involved in the fabricated plate work industry, acoustic emissions provided similar information in identifying the inherent structural weaknesses of their products.

Perhaps the most valuable contribution that monitoring acoustic emissions provided was the ability of manufacturers to determine the rate of deterioration of their products, rather than merely the condition of the metal at the time of inspection. Moreover, the structural integrity of metal could be determined without cutting into it, which conventional methods required. By the late 1980s, AET was embraced by manufacturers throughout the United States and regarded in the industry as the most reliable method of monitoring the structural defects of fabricated plate work during production.

Complementing the emergence of AET, the fabricated plate work industry also benefited from the increasing advancements in computer design and software applications during the 1980s, helping manufacturers to reduce the operating and production costs of their products and to improve their designs. The advent of CAD, in particular, provided manufacturers with an invaluable tool to determine the most economical and efficient design of power boilers and other products manufactured by the industry. Additional software applications—designed for use in industrial settings and able to perform tasks that previously had consumed a considerable portion of research and development expenditures—reinforced the industry's dependence on computers to effectively compete in a market that demanded the most sophisticated resources available.

Further Reading

"Boilermakers." 1998-99 Occupational Outlook Handbook , 2000. Available from http://stats.bls.gov .

"Employment Statistics." Bureau of Labor Statistics , 2000. Available from http://www.bls.gov .

Pinkham, Myra. "Plate's Picking Up, But … Service Centers Are Buying Plate, But the Rebound in End-User Demand is Lagging." Metal Center News , August 2002.

"US: Carbon Steel Plate Market Stalls." Metal Bulletin PLC , 18 Novemer 2002.

U.S. Census Bureau. Annual Survey of Manufactures , 20 December 2002. Available from http://www.census.gov .



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