SIC 3357
DRAWING AND INSULATING OF NONFERROUS WIRE



This classification covers establishments primarily engaged in drawing, drawing and insulating, and insulating wire and cable of nonferrous metals from purchased wire bars, rods, or wire. Also included are establishments primarily engaged in manufacturing insulated fiber optic cable. Establishments primarily engaged in manufacturing glass fiber optic materials are included in SIC 3229: Pressed and Blown Glass and Glassware, Not Elsewhere Classified, while those manufacturing fabricated wire products from purchased wire are classified in SIC 3496: Miscellaneous Fabricated Wire Products.

NAICS Code(s)

331319 (Other Aluminum Rolling and Drawing)

331422 (Copper Wire Drawing)

331491 (Nonferrous Metal (except Copper and Aluminum) Rolling, Drawing, and Extruding)

331522 (Fiber Optic Cable Manufacturing)

335929 (Other Communication and Energy Wire Manufacturing)

Industry Snapshot

Nonferrous wire manufacturers shipped $19.1 billion worth of products in the late 1990s, up from $15.2 billion in 1995. While shipment values increased, so too did the cost of raw materials and capital investment. The performance of specific industry segments varied at the turn of the twenty-first century. For example, copper wire shipments increased from $774 million in 1999 to $869 million in 2000, and shipments in the aluminum rolling and drawing sector increased from $1.48 billion in 1999 to $1.61 billion in 2000, while the nonferrous metal (except copper and aluminum) rolling, drawing, and extruding sector saw shipments decline from $6.19 billion in 1999 to $6.03 billion in 2000.

Manufacturers involved in drawing and extruding nonferrous wire and cable supply five primary markets with various types of products manufactured from aluminum and copper—the two most widely utilized non-ferrous metals—and other nonferrous metals. These products, ranging from fiber optic cable to insect wire screening, are drawn or extruded from wire bars or rods, a process that essentially winnows the larger bar and rod shapes into wire or cable. The wire and cable is then insulated with assorted materials such as paper, rubber, or other materials, including polyethylene and polyvinyl chloride. Once insulated, the wire and cable is used in an assortment of applications, including wiring for residential and commercial buildings, communication networks, power distribution, automobiles, and appliances.

Historically, the five primary markets for the industry's products have been communication industries; electric utilities; automobile, truck, and boat manufacturers; the construction industry; and manufacturers of home appliances and industrial machinery. Since the conclusion of World War II, the composition of the industry's primary markets has remained unchanged, although the order of importance of each market to the industry has fluctuated.

Organization and Structure

In the nonferrous wire drawing and insulating industry, approximately 380 companies in the United States were deriving the bulk of their revenue from the fabrication and insulation of wire and cable at the close of the twentieth century. These companies, many of which owned more than one manufacturing establishment, operated roughly 545 separate manufacturing facilities. Of these facilities, 357—or nearly 65 percent—employed 20 or more workers. The average size of a wire drawing and insulating establishment, in terms of the number of employees per establishment, was more than twice the size of the average manufacturing establishment.

Geographically, a majority of the industry's manufacturing establishments were located in the northeastern United States. By value of shipments, Indiana, Georgia, North Carolina, Illinois, and Texas lead the list. In terms of the greatest number of establishments located in one state, California led the nation with 60 manufacturing establishments.

Manufacturing establishments in this industry have historically been relatively expensive to operate, with operating costs at more than three times the national average. This has been attributed primarily to the high price of raw materials needed to operate a wire drawing and insulation manufacturing establishment. The required production machinery was also appreciably more expensive than the national standard posted by other manufacturing establishments.

Background and Development

The wire and cable manufacturing industry has changed enormously over the years because of technological progress, both in its own operations and in the systems and needs of its customers. The modern wire and cable manufacturing industry emerged in the late nineteenth and early twentieth century, a time during which the industrialization of the United States created a need for wire and cable products and provided a means for their production.

Once America became an industrialized nation, wire became a fundamental product underpinning the nation's growth, both industrially and commercially. For years, copper had been the preferred metal for a majority of the wire and cable manufacturing industry's products; its high conductivity elevated the metal above all others. Aluminum, which would eventually gain widespread acceptance in the industry, was first introduced as a cable conductor during the 1930s, but did not represent an appreciable portion of the market until the 1950s, when a tightened supply of copper forced manufacturers to search for an alternative.

Manufacturers' selection of aluminum to augment their copper supply came at an opportune time in the country's development: the population was rapidly expanding, creating a housing boom; televisions and radios were being manufactured at unprecedented levels; a community antennae television (CATV) market was burgeoning; more automobiles were being manufactured; and electric power generation in the country was about to begin two decades of exponential growth. Wire and cable manufacturers served each of these markets, experiencing enviable growth as the nation enjoyed an age of prosperity. By the beginning of the 1970s, the industry had evolved into a $3 billion entity, primarily due to the growth of the national economy over the previous two decades.

The use of aluminum by the industry's products, however, particularly in the wiring of residential homes, caused considerable anxiety for some manufacturers when the U.S. Consumer Product Safety Commission (CPSC) filed a lawsuit against 26 manufacturers in 1977. Charging that 1.5 million homes wired with aluminum between 1965 and 1973 were in danger of catching fire, the CPSC sought to force manufacturers responsible for producing the wire to pay for rewiring at an estimated cost of $300 per home.

The potential for fire stemmed from the poorer conductivity of aluminum when compared to copper. Since aluminum was less conductive than copper, more aluminum was required to form a wire, which created a thicker stock that wire installers were unable to fit tightly into wall outlets. This led to loose connections that, in turn, caused the wiring to overheat. The problem was corrected for all homes wired after 1973, but the scare sent aluminum's share of the wiring market cascading downward from 17.0 percent to 1.4 percent during the 1970s.

CPSC's revelation, however, did not dissuade manufacturers from using aluminum as a key raw material in the production of wire and cable. By the late 1980s, manufacturers purchased more primary aluminum than any other nonferrous metal to produce wire and cable products.

As the wire drawing and insulating industry entered the mid-1990s, manufacturing activity resumed its prerecession levels, thanks largely to continuing strengths in the construction industry and increasing use of fiber optic cable by the telecommunications industry. Strong private residential housing starts augured well for manufacturers involved in producing building wire. Other wire and cable markets effected recoveries as well, enabling the industry to stanch its shrinking revenue volume. The brightest prospect for the industry's future lay in the growth of the fiber optics industry, for which the wire drawing and insulating industry supplies fiber optic cable.

From 1989 to 1993, U.S. shipments of fiber optic equipment—including optical fiber and cable as well as other products excluded from the wire drawing and insulating manufacturing industry—increased 13 percent annually, with industry observers calling for still greater growth through the end of the decade. In the mid-1990s, the world market for fiber optic equipment was estimated to be $5 billion, a market in which U.S. manufacturers maintained a lead over European and Japanese producers, although the gap separating the United States from other manufacturers was closing. Some observers expected this market to double in value by the end of the decade, promising lucrative profit potential for manufacturers of fiber optic cable. As the conventional markets supporting cable and wire manufacturers' core business once again fueled the industry's growth, those manufacturers able to afford the costly nature of exploring "next-generation" technology began turning to the production of fiber optic cable in increasing numbers.

Current Conditions

Even as the strong economy of the late 1990s kept the construction industry busy, and the booming technology industries demanded communication and fiber optic cable, this industry experienced some fluctuation. However, the industry experienced some good news at the end of the 1990s. In December 1999, Hewlett-Packard subsidiary Agilent Technologies of Palo Alto, California, agreed to lease $400,000 worth of equipment to Vision Global Corporation for use in the completion of the company's broadband wireless data radio network. Such agreements bode well for the industry, as the boom in wireless communications will require hardware infrastructures using nonferrous wire. This rising demand could offset the effects of falling prices for communications cables and building wire in 1999.

Superconducting markets also blossomed at the turn of the century. In December 1999, industry leader Intermagnetics General Corp. (IGC) of Latham, New York, entered a $1 million contract to supply superconducting wire to Samsung Advanced Institute of Technology. The superconducting wire was used in nuclear fusion magnets in Samsung's Korean National Fusion Project and the Korean Superconducting Tokamak Advanced Research (KSTAR) project. This deal represented the second such supply agreement between IGC and Samsung, with projections calling for orders of 20 additional metric tons of niobium-tin wire through the year 2001.

The telecommunications industry downturn in 2000 prompted many industry players to begin shifting their focus to other key markets such as electric utilities; automobile, truck, and boat manufacturers; the construction industry; and manufacturers of home appliances and industrial machinery. The construction and automobile industries, buoyed by historically low interest rates despite a lagging economy in the early 2000s, appeared to be the most promising markets.

Industry Leaders

IGC generated sales of $102.9 million, for 1999. Of companies that focused primarily on this industry (as opposed to second-place AT & T Network Systems, which garnered little of its $9.2 billion in sales from this industry), Agilent led the pack with $8.3 billion in 1999 sales. Corning created $4.3 billion in overall sales for 1999, with its focus concentrating more and more on its technologies instead of its traditional market of housewares. BICC General of Highland Heights, Kentucky, formerly known as General Cable Corp., generated $2.1 billion in 1999 sales.

Workforce

Total employment in the wire drawing and insulation industry declined throughout the 1980s and 1990s. A large percentage of this decline was attributable to the diminishing number of production jobs; in 1982 there were 50,000 production workers employed by the industry, but by 1996 their numbers had fallen to 44,100. In 1997, however, the industry's 446 establishments employed 51,371 production workers, a marked increase from the previous year, possibly due to the increased demand for high-tech products. These production workers earned an average hourly wage of $17.76.

Further Reading

"BICC General's 2d-Qtr. Net Slides 28 Percent." American Metal Market, 23 July 1999.

Infotrac Company Profiles, 14 January 2000. Available from http://web4.infotrac.galegroup.com .

"Intermagnetics to Supply Additional $1 Million in Superconducting Material for Major South Korean Reactor." PR News-wire, 8 December 1999.

Jones, Stacy. "Booster Turned Goat." Editor & Publisher, 11 October 1997.

Miller, Andy. "A Special Report: Georgia's Private Companies: No. 3: Southwire Cable Manufacturer Wired to International Market." Atlanta Journal and Constitution, 22 September 1996. Available from http://www.elibrary.com/s/cox/ .

Securities and Exchange Commission. Raychem Corp Report 10-Q Quarterly Report for the Period Ended September 30, 1996, 8 November 1996. Available from http://www.sec.gov/cgi-bin/srch-edgar .

Torpy, Bill. "Southwire's Split Personality: Irony and Conflict: The West Georgia Company Is a Study in Contradiction: On Issues Ranging from Environmental Conscience to Politics." Atlanta Journal and Constitution, 12 February 1995. Available from http://www.elibrary.com/s/cox/ .

United States Census Bureau. 1997 Economic Census—Manufacturing. Washington: GPO 2000.

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

U.S. Department of Commerce. Annual Survey of Manufactures, Washington: GPO, 1995.

"Vision Global Corporation Announces Signing of Equipment Lease Documents With Hewlett-Packard Subsidiary, Agilent Technologies." PR Newswire, 1 December 1999.



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