Explosives

SIC 2892

Companies in this industry

Industry report:

This industry covers establishments primarily engaged in manufacturing explosives. Establishments primarily engaged in manufacturing ammunition for small arms are classified in SIC 3482: Small Arms Ammunition, and those manufacturing fireworks are classified in SIC 2899: Chemicals and Chemical Preparations, Not Elsewhere Classified.

Historically, the explosives industry has been closely aligned with the coal mining industry. According to the Institute of Makers of Explosives (IME), the coal industry consumed 67 percent of explosives manufactured in the United States in the mid-2000s and remained the largest application for explosives use in the United States. The explosives industry was predicted to grow in reaction to the demand for coal, which was expected to continue to increase throughout the mid-2000s, due partly to rising costs of oil and natural gas. Growing concerns about security also affected the industry.

Traditionally, explosives such as black powder are used in the United States to mine for minerals, break rock, clear fields, and build roads. After Alfred Nobel invented dynamite and the blasting cap required to make it explode, he licensed his discoveries in the United States. Mines could be dug deeper and more quickly with dynamite, thereby making mining more profitable.

By 1905, E.I. DuPont de Nemours and Company, one of the largest U.S. explosives companies, supplied 56 percent of the production of explosives in the United States. DuPont continued to strengthen its hold on the market, and by 1907, the U.S. government had begun antitrust proceedings against the company. In 1912, DuPont was forced to divest segments of its business, which resulted in Atlas Chemical Industries and the Hercules Powder Company. Later, Atlas was purchased by Imperial Chemical Industries PLC, DuPont's explosives division was sold to Explosives Technologies International, and Hercules' explosives division was sold to Dyno Nobel, Inc.

In the early years of the industry, the volatile nature of explosives played a significant role in the organization of explosives manufacturers. Companies operated numerous small plants to ensure that their entire business would not be wiped out in the event of an explosion. In addition, plants were located near the consumer rather than the raw materials sources because of the danger in transporting the product.

Products of the explosives industry changed dramatically over the years. Ammonium nitrate mixed with fuel oil (ANFO), was invented in 1953. Since 1959, it has become the most widely utilized explosive in surface coal mining. By the early 1990s, ANFO held 75 percent of the market. Thus, dynamite declined in importance from about 1 billion pounds in the mid-1950s to approximately 100 million pounds in 1993. Because of the drastic decline in the use of dynamite, manufacturing plants for that product decreased from 30 in the 1950s to just one, which was owned by Dyno Nobel, in 1993. In place of dynamite, emulsions gained popularity in the 1990s because of their water resistance and low density.

The U.S. branch of Dyno Nobel, Inc., remained an industry leader in the mid-2000s and significantly increased its size in May 2003 when it merged with the explosives business of Ensign-Bickford Industries. Dyno Nobel had 2007 sales of $1.38 billion and employed 3,675 people. Orica USA Inc. of Watkins, Colorado, was also a leading supplier of commercial explosives and detonating systems to the mining, quarrying, and construction markets. Orica reported 700 employees and sales of $500 million for 2008.

In the mid-2000s, 88 establishments were in operation in the explosives manufacturing industry, down from 103 in 1997. The industry employed 5,566 workers in 2005. Of these, 3,694 were production workers, who earned an average of $17.68 an hour. The value of explosives industry shipments declined from $1.24 billion in 1997 to $896 million in 2002, then rose to $997 million in 2005. Of the total shipments, industrial explosives accounted for 41 percent; blasting accessories for 26 percent; and other explosives and propellants, including jet starters and military detonators, for about 26 percent. Of the industrial explosives manufactured in the United States in the early 2000s, 98 percent were ammonium-nitrate based explosives. Coal mining remained the largest domestic user of explosives and accounted for 67 percent of explosives manufactured in the United States. Quarry mining and nonmetal mining were the second largest users of explosives and accounted for 13 percent of sales. Other industries that used explosives were construction (9 percent) and metal mining (8 percent). Miscellaneous use made up the remaining 3 percent. Wyoming used the most explosives, followed by West Virginia, Kentucky, and Indiana.

After the 1993 World Trade Center bombing in New York City and the 1995 bombing of the Federal Building in Oklahoma City, there was a push at the federal level to require that all explosives and potential explosive components such as fertilizer be manufactured with taggants, which are color-coded, multilayered particles. These particles bear a unique signature and can be seen under a microscope, enabling the identification of the manufacturer's batch lot by an explosives expert. Manufacturers of commercial explosives were strongly opposed to placing taggants in commercial explosives, mainly due to cost and possible safety and quality implications. In 1996, Congress enacted anti-terrorism legislation that mandated the study of the feasibility of placing identification taggants in explosives. This study was the responsibility of the Department of the Treasury's Bureau of Alcohol, Tobacco and Firearms (ATF), and the National Academy of Sciences (NAS) was contracted to conduct a third-party examination. The NAS report was completed and issued in March 1998, concluding that it was not appropriate to require commercial explosives to contain identification taggants considering the level of threat in the late 1990s. As of the mid-2000s, the use of taggants in explosives was still a controversial topic.

Following the September 11, 2001, terrorist attacks on the United States, public and government awareness of explosives was again heightened. The Homeland Security Act was enacted in 2002, and the new Department of Homeland Security became involved in working with the ATF and other agencies in the regulation of the explosives industry. The Safe Explosives Act of 2003 required manufacturers of explosives to submit to the ATF samples of material and chemical information upon request and resulted in regulations on explosive manufacture, possession, and transfer.

The production of ANFO was also placed under scrutiny, and in 2005, Congress introduced two bills to tighten restrictions and enhance regulations on companies that produced agricultural-grade ammonium nitrate.

In 2007, U.S. explosives sales reached 3.15 million metric tons with Wyoming, West Virginia, and Kentucky responsible for 47 percent of sales. Of the 3.15 million metric tons, ammonium nitrate-based explosives consumed 3.11 million metric tons, which represented 99 percent of U.S. industrial explosives consumption. Coal mining remained the principle application for explosives with 66 percent of total explosives consumption, followed by quarrying and nonmetal mining responsible for 12 percent of total explosives sales, while the construction sector consumed 11 percent and metal mining used 8 percent.

The long awaited Secure Handling of Ammonium Nitrate Act originally introduced in the House of Representatives (H.R. 3197) in 2005 was signed into law on December 26, 2007. Under the act, the U.S. Department of Homeland Security (DHS) has the authority to regulate the establishments and individuals that produce, sell, or distribute ammonium nitrate-based fertilizer.

According to industry statistics, in the late 2000s, there were 238 establishments engaged in manufacturing explosives, valued at $2 billion, with industry-wide employment of 6,687 workers. The explosives sector accounted for 55.9 percent in market share with shipments totaling $1.5 million. The majority of operations in descending order were California with 6.7 percent, Florida with 5.9 percent, Pennsylvania with 5.5 percent, and Colorado with 1.7 percent. Of these, Colorado was responsible for the bulk of shipments that totaled $1 billion in 2008. While explosives consumption grew in 2008, projections called for a decline for 2009.

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