SIC 3356
ROLLING, DRAWING, AND EXTRUDING OF NONFERROUS METALS, EXCEPT COPPER AND ALUMINUM



This classification covers establishments primarily engaged in rolling, drawing, and extruding nonferrous metals other than copper and aluminum. The products of this industry are in the form of basic shapes, such as plate, sheet, strip, bar, and tubing. Excluded from this classification are establishments primarily engaged in recovering nonferrous metals and alloys from scrap or dross. Such establishments are classified in SIC 3341: Secondary Smelting and Refining of Nonferrous Metals. Those establishments primarily engaged in manufacturing gold, silver, tin, and other foils, except aluminum, are classified in SIC 3497: Metal Foil and Leaf; and those establishments manufacturing aluminum foil are classified in SIC 3353: Aluminum Sheet, Plate, and Foil.

NAICS Code(s)

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

Industry Snapshot

The industry shipped $6.03 billion worth of product in 2000, down from the $7.05 billion shipped in 1997. In the late 1990s approximately 184 establishments derived the bulk of their revenue from the rolling, drawing, or extrusion of nonferrous metals other than aluminum and copper. More than half of the manufacturing establishments operating in this industrial sector employed 20 people or more, while the typical establishment employed 90 workers, slightly more than twice the size of the average manufacturing establishment involved in all other manufacturing industries.

Geographically, semi-fabricated metal manufacturing establishments were concentrated primarily in Pennsylvania, New Jersey, New York, and Michigan. The mid-Atlantic states, the Great Lakes region, and New England contained the greatest number of establishments, though production was also distributed throughout the South and West.

As with the other branches of the metal industry, the operating costs in the semi-fabricated metal industry are significantly higher than the costs incurred by the average manufacturing establishment. The cost of materials for production continued to decline from highs established in the early 1980s. In 2000 material costs reached $3.3 billion, down from $3.6 billion in 1999 and $4.01 billion in 1997.

Organization and Structure

Nonferrous metals are utilized by nearly every manufacturing industry in the United States and abroad, their existence critical to the production of a wide variety of products from tin cans to semiconductors. The metals used by manufacturers to produce their products are purchased from three types of metal manufacturers, depending on the particular needs of the buyer: primary metal manufacturers, secondary metal manufacturers, and semi-fabricated metal manufacturers, each of which share an interdependent relationship with the other. Primary manufacturers produce metal by subjecting particular extracted ores to various metallurgical processes, thereby creating metal in its most basic form. Secondary manufacturers smelt, refine, and sometimes blend metal recovered from the shaping and trimming of primary metal during production and fabrication, or from recycled metal. The metal produced by these two types of manufacturers leaves the production site in either large bar or block form known as ingot. As ingot, the metal exists in a convenient and efficient state for storage or shipping, ready for delivery to manufacturers requiring metal cast in this form, or ready to be shipped to a facility equipped to further shape or extrude the metal.

These latter facilities, the semi-fabricated metal manufacturing establishments classified in this industry, take metal in its basic form, then roll, draw, or extrude the massive bar or block ingot into various shapes to make the metal suitable for a wide variety of applications. As semi-finished products, the metal is formed into plate, sheet, strip, bar, or tubing, then delivered to manufacturers involved in a multitude of industries.

Establishments in this sector are involved in shaping and forming precious metals, nickel, titanium, magnesium, lead, zinc, and other nonferrous metals (copper and aluminum are not included). The production of magnesium, lead, tungsten, molybdenum, and other nonferrous metal shapes account for 28.3 percent of production. Nickel and nickel-based alloys comprise 26.3 percent, while precious metals, titanium, and unclassified non-ferrous rolling and drawing account for 20.5, 19.35, and 5.4 percent of production, respectively.

Background and Development

Historically, growth in the semi-fabricated metal industry depended on the metal market as a whole; if demand for particular metals experiences an increase, then semi-fabricators generally enjoy a commensurate upswing in business. As a result, the industry's history mirrored the growth and decline of primary and secondary nonferrous metal producers, functioning as a dependent arm of the metal manufacturing industry and realizing earnings from the sundry markets that spur activity in the primary and secondary metal manufacturing industries.

Following World War II however, a number of technological developments directly benefited semi-fabricated, nonferrous metal manufacturers. These stand as noteworthy achievements peculiar to the industry, and enabled manufacturers to play a more prominent role in the metal industry.

One of these technological advances made two of the less widely used metals more popular in the semi-fabricated metal industry. In 1964, after the conclusion of a seven-year research and development program financed by the U.S. Air Force and conducted by Republic Aviation Corp., a method was found by which titanium could be extruded more thinly than previously possible and at significantly lower costs, a capability that greatly enhanced titanium's applicability to the then burgeoning jet airplane and aerospace industries. In 1963, one year before the extrusion process was fully developed, 5,000 tons of titanium were consumed in the United States. Five years later, U.S. consumption had climbed to 25,000 tons and showed no signs of slowing. During this five-year period, enormous technological strides in extracting the metal from its ores were achieved under a joint venture between Reactive Metals Inc. and Titanium Metals Corporation of America.

As the production of a supersonic transport aircraft neared completion in the late 1960s, domestic titanium consumption approached 80,000 tons annually, largely because supersonic transports and other high-speed aircraft required an appreciably greater percentage of titanium than slower aircraft because of temperature resistance qualities. Consequently, supersonic transports were 80 percent titanium, while slower aircraft such as Boeing Company's 727, were manufactured with less than 2 percent titanium. As the nation's space program intensified, the applications for titanium broadened, leading to widespread use of titanium in the aviation and aerospace industries in the 1990s.

Shortly after the titanium extrusion process was developed, another nonferrous metal began a similar rise in popularity, once again as the result of an extensive research and development program. This time the work was conducted outside U.S. borders by Canada's Cominco, Ltd., the world's largest producer of refined lead and zinc during the late 1960s. In 1964, concurrent with the conclusion of the U.S. Air Force's titanium research program, Cominco began exploring possible methods to improve the extrusion technology of zinc. Five years later, a suitable method was discovered that enabled zinc to be extruded without tearing, cracking, or sticking to the dies, problems that had restricted the use of zinc in the past. Prior to Cominco's discovery, zinc occasionally had been rolled or drawn, but it was more commonly known in the metal industry for its galvanizing and die casting properties. The capability to extrude the metal however, greatly improved the metal's suitability for a host of component parts used in the production of automobiles and appliances. By using zinc, manufacturers could match colors more accurately, giving zinc an aesthetic advantage over aluminum and other metals. Consequently, the use of zinc by semi-fabricated metal manufacturers began in earnest during the 1970s, eventually becoming one of the key metals utilized by the industry in the early 1990s.

Essentially affected by the same market factors that dictate the economic health of primary and secondary metal manufacturers, semi-fabricated metal manufacturers entered the mid-1990s bolstered by the strong performance of some metals and negatively affected by the static performance of others. Rarely is the industry's future easy to ascertain since its overall performance is dependent on the separate markets for individual metals, which frequently experience divergent bouts of growth and decline.

Emerging from the recessive early 1990s, however, the semi-fabricated metal industry's future was shaped by the encouraging strength of the lead market and the discovery of several new consumer markets for titanium. The zinc markets remained weak due to high levels of supply. Nickel prices remained unsettled due to strong supply and weak global demand for stainless steel, the principle end-use for nickel. Overall, the industry shipped $2.9 billion worth of product in 1996, up marginally from its 1992 low of $2.7 billion in shipments and well below its high of $3.6 billion in 1989.

The worldwide demand for lead continued to expand through 1996 and record consumption and production continued through 1997. This increase was largely attributable to an increase in storage battery production and battery replacement, the primary end-uses of lead. Prices rose in 1996, but were tempered by fallout from the Sumitomo commodities trading scandal, which depressed the market price for many nonferrous metals. Demand for lead was especially strong in the United States, but was weak in Europe and Japan due to sluggish economic growth.

Titanium producers entered the 1990s facing substantial cutbacks in defense spending and fluctuating demand for aircraft parts. However the development of high-content titanium golf equipment brought a change in fortune for the industry. Titanium golf club heads increasingly replaced traditional wood heads in the mid-1990s. The light metal offered golfers a larger and more favorable hitting surface. Titanium shipments increased from 34.4 million pounds in 1992 to 43.6 million in 1995. Moreover, titanium found its way into such diverse consumer products as eyeglass frames, cameras, bicycles, inline skates, cookware, and watches. Titanium product producers looked to increase this new segment of the industry not only as a substitute for falling defense needs, but to cushion the cyclical changes traditionally experienced in the commercial aviation industry, a large titanium consumer.

Current Conditions

In the late 1990s, strong demand from the thriving aerospace industry led to increased titanium consumption and earnings. By 1999 aerospace demand accounted for 41 percent of titanium consumption. Then, in May 1999, prices for titanium ingot plummeted 25 percent to between $5.75 and $5.90 per pound, a drop of more than $1 since the third quarter of 1998. Boeing Commercial Airplane Group, the largest end-market customer for titanium, fixed the price it paid for titanium at $7.62 per pound when supplies were tight, thus buoying the industry some. However, Boeing's orders rose from 563 aircraft in 1998 to 620 in 1999, but fell 22 percent to 480 in 2000, thus exerting less of a compensatory effect on the industry that year. In fact, titanium orders industry-wide were down 15 percent in 1999 and projections called for the depressed market to continue until 2003.

Total industry shipments declined steadily throughout the late 1990s, falling from $7.05 billion in 1997 to $7.04 billion in 1998 and $6.19 billion in 1999. By 2000, the value of shipments had dropped to $6.03 billion. Employment in the industry followed suit, falling from 25,484 workers in 1997 to 23,828 workers in 2000.

Industry Leaders

The Essex Group Inc. of Fort Wayne, Indiana, which went public in a February 1997 stock offering, led the industry with 1998 sales of $1.8 billion. In 1999 Essex merged with Superior Telecommunications Inc. to form Superior Essex Communications Group and Superior Essex Industrial Group. New York City-based TGB Industries Inc. posted sales of $770 million in its fiscal year ended November 30, 1997, according to Infotrac databases. Titanium Metals Corp., a subsidiary of Tremont Corp. of Denver, Colorado, generated revenues of $708 million in 1998. Boeing contracted Titanium Metals to supply as much as 70 percent of its titanium.

Workforce

In October 1997, 240 employees at the Essex Group's Columbia City, Indiana building-wire plant (belonging to Lodge 113, Local 2520 of the International Association of Machinists and Aerospace Workers) went on strike to reduce their hours to a regular 40-hour week. Two years later the industry was laying off workers in order to salvage what profit they could from lean times.

Total employment in the semi-fabricated metal industry fluctuated throughout the 1980s, effecting slight, sporadic gains, then suffering proportionate declines. In 1982 the industry employed 20,000, and by the mid-1990s, employment fell to 15,500, reflecting general consolidation and cost-cutting in the industry. Employment made a slight recovery and by 1997 totaled 17,237.

Production workers are generally employed on a full-time basis and earn more per hour than their counterparts in other manufacturing industries. The industry had nearly three times the average payroll per establishment in 1994 as did the rest of the manufacturing sector. Average payroll per employee in 1994 was $35,419 versus $30,620 for the wider manufacturing category. In 1997, 69 percent of the labor force worked in production, earning an average hourly wage of $17.15.

Further Reading

Allegheny Teledyne Incorporated Report 10-K for the Year Ended 12-31-96. Securities and Exchange Commission. 27 March 1997.

"An Overlooked Metal Broadens Its Appeal." Business Week, 17 May 1969, 124.

Bierck, Richard. "How Golf Saved a Defense Supplier Hole in One." U.S. News & World Report, 2 December 1996, 56.

Chase, Martyn. "Aerospace woes have rapid effect on titanium field." American Metal Market, 20 October 1999.

Haflich, Frank. "Hard times hurt leading US titanium producers." American Metal Market, 6 October 1999.

Haflich, Frank. "Strong aero demand boost titanium earnings." American Metal Market, 25 April 1997.

Haflich, Frank. "Titanium ingot slides lower." American Metal Market, 5 May 1999.

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

"Striking Workers at Essex Group Plant in Indiana to Vote on Contract." Knight-Ridder/Tribune Business News, 9 October 1997.

Stundza, Tom. "What the Trading Scandal Did!" Purchasing, 6 October 1996.

"Superior, Essex renamed." American Metal Market, 31 May 1999.

Tremont Corporation Report 10-K for the Year Ended 12-31-96. Securities and Exchange Commission. 31 March 1997.

U.S. Department of Commerce. Annual Survey of Manufactures. Washington: GPO, 1996.

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