SIC 3052
RUBBER AND PLASTICS HOSE AND BELTING



This category covers establishments primarily engaged in manufacturing rubber and plastics hose and belting, including garden hoses. Establishments primarily engaged in manufacturing rubber tubing are classified in SIC 3061: Molded, Extruded, and Lathe-Cut Mechanical Rubber Goods and SIC: 3069: Fabricated Rubber Products, Not Elsewhere Classified. Those companies manufacturing plastics tubing are classified in SIC 3082: Unsupported Plastics Profile Shapes. Those establishments manufacturing flexible metallic hoses are classified in SIC 3599: Industrial and Commercial Machinery and Equipment, Not Elsewhere Classified.

NAICS Code(s)

326220 (Rubber and Plastics Hoses and Belting Manufacturing)

Industry Snapshot

More than 200 companies make hoses and belting in the United States. The industry shipped $4.24 billion worth of goods and spent $2.1 billion on materials in 2000. Manufacturing companies range from a myriad of small shops filling niche markets all the way up to several firms producing broad product lines with sales approaching or exceeding $1 billion a year.

Hose and belting products find usage in a wide variety of industries. Hoses are used in such varied markets as automobiles, construction, and oil and gas. Transmission belting is used to help power cars, industrial machinery, agricultural equipment, household appliances, and construction equipment. Flat belting, commonly known as conveyor belting, finds usage from traditional markets such as mining and material handling as well as in lighter weight applications such as food handling and airline luggage conveyor systems.

Economies of scale are difficult to achieve except for some of the larger firms because a large number of products need short runs, and many of the lines have differences in chemical compounds and machinery needs. States with the greatest volume of hose and belt production include Colorado, Nebraska, North Carolina, and Ohio.

Rubber remains the predominant material in the market, accounting for between 70 and 80 percent of the products. For example, rubber is the main material for hoses, except in garden hoses, where plastic takes the majority of the share. Other materials, though, are expected to make some inroads as higher performing products are needed.

Organization and Structure

Much of the structure of the hose and belting industry is organized around how the product gets to its end user—either in the original equipment (OE) or replacement market. Looking at the automotive market, the OE market is much more straightforward, as most of the products are sold directly to the auto makers.

Sales to the aftermarket, though, are a bit more complicated, going through either a three-step or two-step distribution process. In the three-step process, the manufacturer sells his hose or belting to a wholesale distributor that handles automotive parts lines. The distributor in turn sells the product to what is known as a jobber, an example of which would include the NAPA store chain. The final step is for the jobber to sell the hose and belting to the installer—the repair shop that does work on automobiles, for example. Some manufacturers have increasingly tried to shorten the process by skipping the initial step and selling directly to the jobber.

Historically, this has been the most efficient way to get to market, ensuring that there is plenty of inventory in the aftermarket so that people can get the necessary parts for their car at almost any time. Hose and belt manufacturers, however, have had to shift with the times as the places where people get their automobiles serviced have evolved. While the total number of outlets for repair service has remained virtually unchanged, the make-up has changed considerably.

Prior to the growth in popularity of self-serve gasoline stations, about 150,000 gas stations in the United States also offered automotive service. By 1990, however, that number had declined to approximately 100,000. Conversely, the number of repair-only shops had grown from 110,000 to 140,000. Moreover, import car owners used to be much more likely to get their automobiles fixed at the dealer; but that has changed as repair shops have become more attuned to repairing imports. The number of retail auto stores also increased, from about 27,000 in 1980 to 40,000 a decade later, taking additional volume away from the jobbers.

Through all these changes, the hose and belt makers have had to ensure that their distribution system is getting the parts to the proper outlet in a timely fashion. Distribution also plays an important role in the industrial hose and belt markets. Many of these distributors also serve as fabricators, placing needed attachments and accessories onto the basic hose and belts for their final usage. The distributors in this sector also are more likely to play a role in OE accounts, especially for an account that needs to have local inventory. As for the aftermarket, a major portion of the business is sold through distribution sectors, although some hose and belt makers do sell some product directly to the end user.

Distributors also play a major role in times of over-capacity. While only four to five firms make broad lines across many industries, there are enough niche manufacturers to ensure stiff competition in all product areas. This situation gives the distributor an advantage in getting a lower price on products.

Types of Products. A hose is a flexible pipe or conduit that is intended to serve as a means to move material from one place to another. The three basic elements of a hose are the tube, carcass, and cover. The tube is the part of the hose that comes in contact with the fluid and therefore must be resistant to the material. The carcass gives the hose strength to withstand any forces, external or internal, that might be encountered, while the cover protects the product from environmental forces.

Although hoses can be referred to by their usage—such as gasoline, air, or garden hoses, manufacturers and users generally classify the products by the method of reinforcement. The common hose types include:

Knitted Hose. A flexible product knitted in an open-loop manner. The garden hose is a typical example of this kind of product. This type generally is subjected only to low pressure.

Braided Hose. One of the more common hose types, it is produced when a single or multiple ends of yarn cord or wire are woven over the tube. The size and type of reinforcement material, as well as the angle, help establish the strength of the hose. These hose types find a variety of usage, from air, water, garden, spray, or low-pressure liquid transfer, to more demanding applications like hydraulic, steam, and high-pressure transfer of liquid and gases.

Wrapped Fabric Hose. This type of hose is reinforced with an impregnated woven fabric that can be applied by hand or machine. This makes for a stiff, bulky hose that is commonly used in suction or vacuum applications.

Wire Spiraled Hose. Used for hose facing high-impulse pressures, wires are placed in opposite directions to counter the twisting effect of applying the spiral wire.

Woven Jacket Hose. Looms are used for circular weaving of jackets for the hose; often used for fire hoses. The design allows the hose to lie flat when not transporting water, for more efficient storage.

Hand-Built Hose. Used to make the large hose that needs great strength and excellent crush resistance. Uses include rotary drill hoses and oil suction and discharge hoses.

Belting. Power transmission belts are more commonly known as V-belts. Given their name because they transmit power and motion between V-shaped sheaves, the belts are made in numerous sizes and lengths. V-belts are preferred where there is limited space. Major applications are in automotive, industrial, agriculture, fractional horsepower, and recreational uses. In automotive use, though, a poly-V, or serpentine belt, has become much more popular in newer car models.

Flat belting also is used in some limited power transmission applications, but the overwhelming use for these products is in conveying uses. Basic components of conveyor belts include the carcass, which bears the load and is usually made of several piles of rubber-coated textile fabric or a single layer of steel cable; the rubber cover, which must resist wear, cracking, and element pressures; the breaker, which improves adhesion between the carcass and cover; and the skim coating, used to hold the load-bearing plies together.

Conveyor belts are used for a variety of purposes, from the grocery market check-out stand, to coal mines where coal is conveyed from deep within the mine, to growing applications in recycling and waste management programs.

Background and Development

This industry has undergone significant change over the past several decades. In the automotive market—the top market for hose and transmission belting—a catalog of about 50 V-belts and 100 hoses covered most of the cars on the road shortly after World War II. Cars became more complicated, however, and smaller cars that required smaller engine compartments assumed increased market share ever since the 1970s and 1980s. Hose and belt manufacturers responded with products that conformed to the new size and weight demands of the automotive market.

The serpentine belt also made great inroads over the years. While designs at one time had several V-belts in the engine compartment, producers discovered that one serpentine belt could drive a number of accessories simultaneously, resulting in weight and space savings. In 1982, there were approximately 50 sizes of serpentine belts; a decade later that number had increased to up to 250.

Belts and hoses also last much longer in the modern era of manufacturing. Such products used to last 10,000 miles. In the modern era, however, hoses and belts commonly last for 40,000 miles or more of use.

Current Conditions

The value of industry shipments grew steadily throughout the 1990s, peaking at $4.48 billion in 1999, before declining slightly to $4.24 billion in 2000. The cost of materials increased from $2.04 billion in 1999 to $2.08 billion in 2000. The total number of employees in the industry decreased from 26,030 to 25,175 over the same time period, and payroll costs decreased from $841 million to $821 million.

The rubber hose and belting industry is directly related to the general economy. As the economy grows or declines, so does the rubber hose and beltingindustry. This industry is also related to the seasons of the year. Demand, especially for hoses, tends to increase in the third quarter as consumers prepare their vehicles for autumn. Demand then tends to slack off in November and December.

Although the automotive industry has traditionally represented the largest market for hoses and belting, aerospace was also becoming a significant area for growth in this industry in the late 1990s and was expected to continue to be an important market. As the aerospace industry grows in response to increasing demand for commercial aircraft, the need for hoses and belts to be used in those aircraft also increases.

Industry Leaders

Gates Corporation, Dayco Products Incorporated, and Plastic Specialties and Technologies Incorporated were the top three companies in this industry in sales in 1999.

Founded in 1911, Denver-based Gates had 10 hose and belt plants in the United States, two in Canada, and three in Mexico, as well as another 15 facilities around the world in the mid-1990s. The firm has a major presence in automotive, industrial, and hydraulic markets, and posted worldwide 1999 rubber product sales—mainly from belts and hoses—of $1.6 billion.

Dayco, headquartered near Dayton, Ohio, is the largest operating unit of publicly held Mark IV Industries Inc. Dayco had 27 production facilities worldwide, including 14 in the United States, and had annual sales $850.0 million in 1999.

Workforce

Total employment in the industry was estimated at 25,175 in 2000. Of these, about 19,410 were production workers earning about $13.77 an hour, according to government figures. Other occupations include chemists, product designers, engineers, and sales people.

The average number of workers per factory has decreased over the years because of increased productivity traceable to improved processes and automation. In 1972, 19 hose and belt plants in the United States—about 21 percent of facilities—accounted for 76 percent of employment and 75 percent of shipments. A decade later, just 9 plants employed 500 workers or more, accounting for 44 percent of employment and 39 percent of shipments. The average number of workers per plant dropped from 354 in 1972 to 124 in 1987 to just 100 in 1995, and just below 100 in 1996.

America and the World

Importers generally compete more easily in commodity lines than specialty ones, putting pricing pressure on U.S. firms. One trend that increased competition in the United States in this industry was the emergence of transplant auto makers, especially from Japan. As these Japanese firms began production in the United States, it was not uncommon for their traditional domestic suppliers to follow them to America. Examples include power transmission belters MBL (USA) Incorporated, located in Illinois, and Bando Manufacturing of America, which built its plant in Kentucky. There also was an increase in the number of joint ventures between Japanese and U.S. firms to supply the transplant car firms.

Global expansion is also an important force driving leading companies in the industry. "Much of the logic behind the current activity is to supply the global automotive industry," according to the European Rubber Journal.

In July 1995, Britain's Tomkins PLC purchased Gates Rubber Company for $1.2 billion in preferred stock. In return, Gates received a 15.7 percent stake in Tomkins, giving Gates an ever-increasing presence in Europe. Gates is also expanding eastward with two new plants in China and one in India. According to Lo Estenfelder, president of Gates Europe NV, "1996 sales for Gates Europe increased about 4 percent over 1995, which in turn was about 40 percent higher than 1994."

Mark IV, the parent company of Dayco, also plans to expand globally. Mark IV plans to double turnover by 2001 from about $1.0 billion, split 65/35 OE/aftermarket, to about $2.0 billion, splitting sales 50/50, between the U.S. and the rest of the world, according to Kurt Johansson, the president of Mark IV's automotive business. Pointing out Mark IV's joint venture in India and its manufacturing plant in Australia, Johansson commented that most hose and belt suppliers are interested in Asia.

Research and Technology

Rubber hoses, while still used in the overwhelming majority of industrial hose products, will face increased competition from other materials. Driving the need for new materials are a number of factors, such as the evolution of some of the traditional applications of the product. For example, alternate fuels and higher operating temperatures bring different requirements for hose products. When states begin to require higher alcohol content in fuel in order to reduce emissions, the hose materials must change as well. Specialty rubbers, plastic, Teflon, and nylon are among materials expected to challenge commodity rubber.

Like hoses, belts will be impacted by the shrinking of auto engine compartments. Because of hotter temperatures, belt makers will be forced to turn to new materials that will withstand the environment in which they are used. Some of the commodity types of rubber also will face competition from specialty rubbers and plastics.

Further Reading

"Activity Intensifies in Hose Y Belt." European Rubber Journal, December 1996.

Darnay, Arsen, ed. Manufacturing USA. 5th ed. Detroit: Gale Research, 1996.

Fredonia Group, Inc. Study #1033 Abstract Industrial Rubber Products to 2002. 1999. Available from: http://ecnext.imrmall.com/free-scripts/ip_catalog_all.pl?0001&9&1033

"Heavy Duty Belting Digs Up Growth: Mining Stirs Steady Rise For Firms." Rubber Plastics News, June 1996.

Genna, Albert "Growth Is In Repair and Replacement Market." Rubber Plastics News, August 1999.

Plehwe, Dieter. Change and Concentration in the World Rubber Industry. Brussels, Belgium: International Federation of Chemical, Energy and General Workers' Unions.

"Study: Gaskets, H&B Markets to Grow: Replacement Engine Seals to Cool Down." Rubber & Plastics News, February 1995.

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. Bureau of the Census. 1992 Annual Survey of Manufactures. Washington: GPO, Updated 1996. Available from www.census.gov/epcd/ec92/mc92ht30.html



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