SIC 3354
ALUMINUM EXTRUDED PRODUCTS



This classification covers establishments primarily engaged in extruding aluminum and aluminum-based alloy basic shapes, such as rod and bar, pipe and tube, and tube blooms, including establishments producing tube by drawing.

NAICS Code(s)

331316 (Aluminum Extruded Product Manufacturing)

Industry Snapshot

The process of extruding aluminum has been compared to squeezing toothpaste from a tube, with the metal (initially in the form of extrusion billet) taking the shape of the die through which it has been pressed. While commercially pure aluminum is used in some extrusion applications, more often the aluminum is mixed with other metals—particularly magnesium and silicon—to form alloys. Aluminum extrusions are used to make windows, doors, and gates; as components in cars, trucks, and jet aircraft; in the manufacture of major appliances, furniture, and electrical equipment; and in a host of other applications, ranging from cranes to athletic goods.

The aluminum extrusion industry exhibited strong growth during the late 1990s when U.S. aluminum industry shipments of extruded aluminum shapes and tubes increased 15.2 million pounds to reach nearly 4.06 billion pounds. The value of industry shipments grew to $6.05 billion in 2000. The construction industry is the largest consumer of extruded aluminum products. However, in the late 1990s and early 2000s, the aluminum extrusion industry made substantial gains in the automotive sector—which offers the greatest potential for the industry's expansion. Extruded aluminum is classified in one of three key markets by the Aluminum Association—the shapes market, pipe and tube, and extruded rod and bar.

Organization and Structure

To some extent, the extrusion segment may be divided between the commodity-like output of large producers, which may be said to be sold by the pound, and specialty production of smaller makers, sold by the part. As in other industries, extruders have their areas of specialization. Some work primarily in certain alloy series, while others specialize in close tolerances, miniature shapes, or extremely large shapes.

The aluminum extrusion industry consolidated substantially during the 1980s and 1990s. Between the mid-1980s and mid-1990s, about 40 aluminum extruders went out of business, and a number of independent aluminum extruders were swallowed up by the biggest players. According to the U.S. Census Bureau, 160 companies were involved in the aluminum extruding business in 1997. Of this total number, 151 had 20 or more employees. California, Ohio, and Indiana were home to the greatest number of aluminum extruders.

The trend toward consolidation was furthered in 1996, when Alumax Inc. bought the largest privately owned extruder, Cressona Aluminum. Two years later, Alcoa Inc. acquired Alumax for $3.8 billion. In early 1997, Reynolds Metals announced that it would sell its aluminum extrusion plant in El Campo, Texas, to Tredegar Industries, which had highly profitable extruding operations. In 1999, Alcoa made a $4.4 billion hostile bid for Reynolds. Finally, in July of 1999, Easco Inc. (the largest American independent aluminum extruder after Cressona was subsumed) was purchased by Caradon Inc., the U.S. division of Great Britain's Caradon PLC.

Background and Development

The first aluminum extrusion press in North America was opened by Alcoa in New Kensington, Pennsylvania, in 1904. During the 1930s large strides were made in the extrusion process, permitting the formation of virtually any type of aluminum cross section for a wide variety of applications. During World War II, the use of aluminum in aerospace applications grew rapidly, as the strength of Allied air forces was key to the war effort. In the postwar period, extruders continued to expand, benefiting from the growth in the residential housing sector.

The extrusion segment has been subject to the same price volatility shown by other sectors of the aluminum industry. Moreover, the extruded aluminum products industry rides on the fortunes of its primary consumers—the construction and transportation sectors. The recession of the early 1990s, which affected the automobile and housing market, also damaged the extrusion industry. Total extruded products dropped from 3.07 billion pounds in 1988 to 2.5 billion pounds in 1991 and 2.86 billion pounds in 1992. Shipments rose steadily from 3.09 billion pounds in 1993 to 3.93 billion pounds in 1997.

Current Conditions

The extruded aluminum products industry was strong in the late 1990s. Buoyed by the American economic boom that drove car sales, new home and building construction, as well as infrastructure construction, extruded aluminum's future prospects looked bright. Despite the economic downturn of the early 2000s, which undermined several major industries, an unprecedented decline in interest rates bolstered both the automotive and the home construction markets, which kept demand for extruded aluminum products strong.

Automotive. The automobile sector presents the greatest opportunity for the aluminum extrusion industry. Aluminum products of all types (both castings and extrusions) have become increasingly essential to automotive manufacturers. Since aluminum is lighter than steel, iron, and copper and is easily recyclable, the metal fits well with a strategy of reducing energy consumption. In 1991, the average American car had 182 pounds of aluminum; by 1999, aluminum content had risen to 248 pounds.

Although aluminum castings are typically used much more frequently in the automotive industry than extruded products, extruded products have begun to play an essential role in the sector. In 1999, 7.5 percent of all automotive aluminum was in the form of extrusions. Shipments of extrusions for use in passenger cars, trucks, and buses rose from 865 million pounds in 1994 to 1.17 billion pounds in 1998. In February of 1999, General Motors announced that it would use extruded aluminum in its bumper beams for all its Buick, Oldsmobile, and Pontiac cars. With each bumper weighing about 26 pounds, GM estimated that it would incorporate an additional 8.3 billion pounds of extruded aluminum each year, according to American Metal Market. Moreover, GM also utilized aluminum extrusion alloys to make engine cradles in two Chevrolet car lines, as well as radiator enclosures in Chevrolet, GMC, and Cadillac light trucks.

Building and Construction. The use of aluminum extruded products in the building and construction sector has remained relatively flat since 1988. The market sagged in the recession of the early 1990s, but recovered to earlier levels in the late 1990s, when 1.41 billion pounds of extruded aluminum products were used in building and construction each year. The shapes market and the pipe and tube market were particularly important to the building and construction industry. Roughly 1.4 billion pounds of shapes, as well as an additional 400 million pounds of pipe and tube, were employed each year in building and construction in the late 1990s.

In an effort to boost demand, some extruders began providing customers with an increasing number of value-added services downstream. By offering a variety of machines for extra processing, extruders helped their customers get new products to market more quickly and saved them the costs of investing in the equipment themselves. This also reduced questions of accountability for poor quality, since the customer didn't have to send the parts on to a fabricator or finisher before using them. While some observers note that providing additional services hasn't always resulted in increased profitability, they add that it has helped in developing customer loyalty.

Aircraft. The market for aircraft aluminum extrusions was depressed during the early 1990s because of the decline in U.S. military spending and a drop in orders for commercial airplanes. The aviation market appeared to have recovered by 1995, when Universal Alloy sold 10 million to 15 million pounds of light shapes, its largest market, compared with about half that in 1993. Despite the positive outlook, however, the use of extruded aluminum products in aircraft slumped in 1998. According to American Metal Market , "the only weak spot" in the whole aluminum extruded products industry in 1998 was "the aircraft/aerospace sector." Increased military spending in the early 2000s, fueled by the September 11 terrorist attacks, was expected to help increase demand for aircraft aluminum extrusions.

Bridges. Extruders have been eyeing the infrastructure market for new demand, including the tens of thousands of bridges that need to be refurbished. While most of the work will probably go to producers of other materials, with each repair requiring perhaps 50,000 pounds of aluminum, even a small share of the market would generate significant sales. One factor weighing in favor of aluminum extrusions is that processes are now available to tailor parts to individual bridge design; they can then be quickly assembled and virtually snapped together, significantly reducing the time the bridge has to be closed for reconstruction.

Industry Leaders

Alcoa is the world's leading extruder of aluminum, operating numerous extrusion facilities around the world. In the United States, Alcoa produces extrusions primarily at several locations, including Chandler, Arizona; Lafayette, Indiana; Baltimore, Maryland; Tifton, Georgia; and Delhi, Louisiana. With the 1998 sales of over $15 billion, Alcoa employed over 103,000 workers. It has been a primary force in the massive consolidation of the aluminum extrusion sector. In 1998, Alcoa acquired Alumax, and handily increased its extrusion capacity with the transaction. A mere two years earlier Alumax had acquired Cressona Aluminum, which was as the time the largest independent extruder in the United States. Alcoa's growth spurt continued. In 1999, Alcoa made a bid to take over Reynolds Metals, its largest competitor in the United States.

Workforce

The manufacturing facilities of the major producers are heavily unionized; the two major unions are the Aluminum, Brick, and Glass Workers and the United Steelworkers. Contract talks between these unions and the major producer have a significant influence on pay rates throughout the industry.

Workers in the extruded aluminum products industry numbered 30,713 in 2000, of which 24,646 were directly involved in production. These production employees worked an average of 41 hours per week, and earned an average wage of $13.59 per hour. With the greatest number of aluminum extrusion employees, Indiana was home to some 2,720 workers in the late 1990s, followed by California with 2,351, and Florida with 1,820.

Further Reading

Courter, Eileen. "Despite Gains, Extrusion Market's Still a Dogfight." American Metal Market, 4 September 1996.

Ducker Research Company. "Report on Aluminum Content in 1999 North American Passenger Cars and Light Trucks: Executive Summary," 28 December 1999. Available from http://www.aec.org/ducker_report.htm .

——. "Extrusions on the Rise." American Metal Market, 27 September 1995.

Haflich, Frederick. "Aluminum Extruder Sees Light; Firming Aircraft Market Prompts Expansion." American Metal Market, 8 February 1996.

Owen, Jim. "Flat '96 Not Necessarily Bad News for Extruders." American Metal Market, 12 January 1996.

Pinkham, Myra. "New Auto Applications Drive Extrusion Demand." American Metal Market, 25 February 1997.

Regan, Bob. "Aluminum Extrusions Register 'Good Year'." American Metal Market, 2 July 1999.

"Reynolds's Metals to Sell Aluminum Extrusion Plant to Tredegar Industries." PR Newswire, 7 March 1997.

Schroeder, Manfred. "Extruders Press for Further Shipment Gains." American Metal Market, 12 July 1995.

United States Census Bureau. "Aluminum Extruded Products Manufacturing," 23 October 1999. Available from http://www.census.gov/prod/ec97/97m3314c.pdf .

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

Wrigley, Al. "GM in Big Aluminum Switch." American Metal Market, 5 February 1999.



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