SIC 3084
PLASTICS PIPE



This category covers establishments primarily engaged in manufacturing plastics pipe. Establishments primarily engaged in manufacturing plastics pipe fittings are classified in SIC 3089: Plastics Products, Not Elsewhere Classified.

Naics Code

326122 (Plastic Pipe and Pipe Fitting Manufacturing)

Industry Snapshot

Establishments manufacturing plastics pipe shipped an estimated $5.9 billion worth of product in 2000. Although the industry has grown fairly steadily over the past decade, it has lagged behind the growth of plastics products in general.

In the late 1990s, however, plastics pipe as a commodity maintained a large advantage over competitors in nonplastics piping. Although markets stagnated in the 1980s and early 1990s, plastics piping markets grew at a rate four times faster than that of nonplastics markets. In addition, research and development spurred new products and cheaper methods of production. The continuing advancements in processing technology are opening new markets and applications throughout the world.

Organization and Structure

In 1999 an estimated 298 establishments were engaged in the production of plastics pipe. In 1996, each establishment employed an average of approximately 49 employees, 34 of which were production workers. The estimated number of employees overall in 1999 was 16,300.

In terms of major geographic concentration, the largest number of establishments were located in the Pacific region of the United States—including Alaska and Hawaii—followed by the west South Central region. California had the largest number of establishments, followed by Texas, North Carolina, Indiana, and Florida.

Market concentration was relatively high in the plastics pipe industry. In 1999, it was estimated that the five largest companies accounted for approximately 38 percent of the entire industry's sales. Dominant players in the plastics pipe industry were Phillips Chemical Company, with 1998 revenues of $1.0 billion; Central Sprinkler Corporation, (a division of Tyco International), with 1998 revenues totaling $187.0 million; and Advanced Drainage Systems, with 1998 revenues of $160.0 million. Most of the leading companies were private companies. In fact, 31 of the top 50 companies were private companies.

Consolidation was evident in this industry. One noteworthy partnership announced in 1999 was a joint venture between Phillips Chemical and Chevron Chemicals. The two companies have a combined value of $6.1 billion, and finalization of the venture was expected in mid-2000.

Background and Development

Plastics pipe was first manufactured commercially in the United States in 1940, when the Southern California Gas Company used a type of plastics pipe, butyrate pipe, to distribute natural gas. Prior to that time, polyvinyl chloride (pvc) pipe had been used in Germany as early as 1930. Then, plastics pipe was being produced as well by several U.S. companies for use in chemical services. Plastics pipe production in the U.S. commenced in 1948 with the development of polyethylene pipe for water services. Initial applications of the new pipe included use on farms for drainage and various applications in the petroleum industry.

Plastics pipe and tubing is the final stage of value-added production into consumer or industrial products. In general, plastics manufacturing is as follows: plastics materials (monomers) are chemically altered to produce polymers, which are then mixed with certain materials to impart certain characteristics such as durability, flexibility, and chemical resistance. Then, other manufacturing processes are used to produce final products such as plastics pipe. The production processes specific to plastics pipe manufacturing—processes including a variety of methods such as coating, extrusion, molding, and laminating—allow for continuous production of piping. Plastics pipes have various functions for long and short distance transportation of fluids. Also, plastics pipes have various intermediary purposes for final use in building construction.

Plastics soften but do not melt when heated, thereby allowing them to change shape without losing cohesion. Before the 1930s, industrial products were largely based on coal as the basic chemical feed stock. The surge and rapid expansion of the production and consumption of plastics was directly related to the advent of petroleum as the main chemical feedstock. Thus, the petroleum and plastics industry are intrinsically related, and petrochemicals provide the basis for mass production of plastics, and conversely, plastics provided petroleum with their main downstream market.

The boom in plastics piping in the post-World War II period is intertwined with the boom in plastics manufacturing, which has a close relation to the advancement of consumer society in the United States, most notably the substitution of plastics material for other materials such as copper, aluminum, and steel. This enabled the use of plastics products to seriously challenge metal or alloy applications in such fields as aerospace, transportation, electricity, and engineering industry. In general, the plastics industry is the single, most-important "downstream" industry in the petrochemicals value-added chain. Plastics products are produced by various chemical processes that allow the formation of usable products by heating, milling, or extrusion.

Retail sales of plastics pipe for various applications were up to $500,000 by 1948 and annual sales volume grew to $10 million by 1952. The new major classes of rigid thermoplastics pipe, namely acrylonitrile-butadiene-styrene (ABS) and polyvinyl chloride (PVC) were introduced in 1949 and 1950, respectively, and became widely used in new markets, competing effectively with other materials such as steel and copper piping. Plastics piping became widely used in drain, waste, and vent applications; natural gas distribution; and in the chemical industry. Styrene rubber pipe for sewer and drainage services became common material by around 1956. This was followed by other successful materials—thermoplastics piping, acetal, polypropylene, and polyvinyl dichloride. Sales grew to $25 million in 1957, $75 million in 1963, $100 million in 1964, and $120 million in 1965.

Applications became very wide-spread in construction and building, as piping of all sizes pervaded the economic development of the post-World War II period in the United States. New standards for municipal building codes were being written, and new standards were adopted to provide for the now dominant use of plastics pipe. In addition, the competitive effect on other materials products, such as steel and copper pipe producers, was such that manufacturers sought to protect their markets by acquiring manufacturers and distributors. This was especially important in oil piping where hundreds of miles of tubular goods are involved.

Plastics pipe's competitive advantage over various metals was the result of many factors, not the least of which was low cost. In addition, plastics pipe offers other advantages to users in that it is lightweight and resistant to varying environmental conditions. It is also relatively easy to install, minimizes solid deposits, has low frictional losses, and has self-insulating characteristics. However, metal pipes exhibit superior performance in some applications where temperature and pressure are significant factors.

Specific among plastics pipe's many applications are water supply and distribution, including water utilities, municipal water treatment plants, chemical feed lines, sludge lines, and water distribution; natural gas distribution; drain, waste, and vent services, where plastic is resistant to chemicals; industrial uses, including food and beverage piping, acid and corrosive drain lines, chemical, electric and communication conduits, water and gas service, and general drainage; and irrigation of farm and ranch systems, including movement of water and gas, fertilizer and insecticide.

In any case, the 1960s and 1970s were boom times for plastics in general and plastics piping in particular. Approximately 55 companies were engaged in the manufacture of plastics pipe by the mid-1970s. From 1964 to 1970 total sales more than doubled from 150 million pounds to 345 million pounds. In 1967, sales were 320 million pounds valued at $240 million dollars. By 1969, plastics pipe accounted for 1 to 2 percent of the $5 billion per year total pipe market, and was growing at a rate of about 15 percent per year, about two times as fast as the growth of the chemical industry. Sales topped the $500 million mark by the mid-1970s. Steel would lose 5 percent of its market to plastic pipe—over $100 million in sales—while copper lost 50 percent, and aluminum lost 20 percent.

Current Conditions

The underground piping market is the largest use segment of plastics pipe—water, drain, waste, vent, sewer and drain, gas, irrigation, conduit and pressure—and remains the largest market for plastics piping not only in the United States but in the world. The industry shipped $5.9 billion worth of goods in 2000, compared to $5.2 billion in 1999.

Significant recycling advances have been made in the industry but the portion of total plastics recycled remains low compared with total production or consumption. The industry responded to public pressure to develop environmentally safer products and to advance recycling into all of its product areas. Efforts were made between the industry and federal, state, and local governments to evaluate the merits of various policies.

While new technologies will further the trend toward the replacement of non-plastics materials with plastics, there is some concern over the feasibility of plastics recycling which may lead some to shift back to older materials such as aluminum, copper, and other metals. From the production side, industry efforts to implement computer-aided design and manufacture (CAD/CAM) is expected to lead to drastic reductions in costs, reductions in turnover time, and decrease some of the environmental concerns by minimizing material waste. These continuing advancements in process technology remain the key factors behind the plastics piping products' success and future growth.

Workforce

Except for a blip in the mid-1990s, total employment in the plastics pipe rose steadily in the last decade of the century, from 19,790 in 1997 to 23,071 in 2000.

In 1990, the major occupational categories for the entire plastics products industry were: plastics molding machine operators, assemblers and fabricators, and packers and packagers. The Bureau of Labor Statistics forecasted that all of these occupational categories would grow by the year 2005, reflecting the projected growth in demand for the industry's products. However, the occupation that made up the bulk of the industry's employment in 1987, plastic molding machine operators, was projected to grow 29.5 percent by 2005, trailing 12 other categories in projected job growth. The percentage of production workers within total employment has drifted downward slowly since 1972 to about 77 percent in the late 1990s from 80 percent in 1972.

The job categories with the largest projected growth (ranked by projected percentage growth) into 2005 were largely nonproduction jobs: sales and related workers were projected to grow by 69 percent by 2005; industrial production managers have a projected growth of 64.2 percent; industrial machinery mechanics are expected to increase by 50.9 percent; tool & die makers have a projected growth of 44.9 percent. Blue collar worker supervisors; hand packers and packagers; inspectors, testers, and graders; freight, stock, and material movers; and extruding and forming machine operators occupations were forecast to grow by 35.8 percent.

While average hourly earnings of production workers in plastic pipe production rose from $3.30 in 1972 to $13.02 in 2000, the purchasing power of these money wages actually declined over the same period. General payroll per employee, adjusted for inflation, actually fell over this same period. In terms of value added per production worker, money wages per hour rose about twoand-one-half times while the value added per hour by these production workers increased over three times, indicating a shift in income distribution away from wages and toward profits. (When comparing industry figures for plastic piping over time, plastic piping was included as part of SIC 3079: Miscellaneous Plastics Products in 1972, and the workforce figures were calculated on the 1972 SIC basis.)

Further Reading

Chasis, David A. Plastic Piping Systems. Industrial Press, Inc., 1988.

Darnay, Arsen J., ed. Manufacturing USA. 6th ed. Detroit: The Gale Group, 1999.

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

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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