Laminated Plastics Plate, Sheet, and Profile Shapes

SIC 3083

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing laminated plastics plate, sheet, profiles, rods, and tubes. Establishments primarily engaged in manufacturing laminated flexible packaging are classified in SIC 267 Converted Paper and Paperboard Products, Except Containers and Boxes.

Industry Snapshot

This industry confronted the prospect of its own maturation at the start of the twenty-first century. Industry shipments fell steadily beginning in 1997, from $3.19 billion. As a result, companies began to devise inventive means of driving continued growth, such as increasing service. However, maturation of the industry inevitably led to consolidation, as with other industries.

According to industry statistics, over 500 establishments engaged in manufacturing laminated plastics plate, sheet, profiles, rods, and tubes with industry products valued at nearly $968 million in 2008 and industry-wide employment of 15,301. The majority of plants were located in California, Ohio, Texas, Pennsylvania, and Florida.

Background and Development

Laminated plastic plate and sheet products are defined technically as plastic materials consisting of superimposed layers of synthetic resin-impregnated or -coated filler that have been bonded together by means of heat and pressure to form a single piece. Plastic sheet is distinguished from plastic film by its thickness, with sheet being more than 0.010 of an inch thick. Sheet is known for its resistance to corrosion and is used in applications from building construction to the production of appliances and other consumer durables. When discrete separate layers of plastics are joined together by an adhesive, heat, or other method, the finished product is called a laminate. The term "composite" is used to describe sheets that result when two or more plastics are combined.

The history of laminated plastics can perhaps be best understood in the context of the development of the plastics industry in general. Some have referred to the twentieth century as the "plastic century," when plastics technology applications were thought to be virtually limitless. In some respects this optimism was justified, as plastic in general began to make vast inroads as a lighter replacement for steel and other natural materials. With the boom in consumer spending following World War II, the idea of what some referred to as a "plastics utopia" was not very far-fetched. After the mid-1950s, laminated plastic was everywhere, with applications proliferating at an unprecedented rate.

One of the earliest and most famous names in laminated plastics history is Formica, the trade name developed by the Formica Corporation (Formica Laminate) over 80 years ago, spawning a vast array of products. It was during the 1950s that Formica took on its most characteristic use as kitchen countertops. Formica was sold as a durable, nonporous material that required only the wipe of a damp cloth to clean the surface. Eventually, Formica surfaces could imitate any type of surface.

Formica laminate was perfected by two former Westinghouse employees, Daniel J. O'Conor and Herbert A. Faber. They developed a process for making rigid laminated sheets that could be cut into various shapes. The Formica Insulation Company started in Cincinnati in 1913 as a venture of these two enterprising former Westinghouse employees. The new product was called "Formica" to distinguish it from other products such as Westinghouse's "Bakelite-Micarta," which had distinguished itself from the previous "Micarta." While early laminates were dark in color and homogeneous, it was not long before Formica's surface could hold any color, pattern, or texture, including stone, wood, and textile. Other companies, such as Redmanol Company and Bakelite (founded by plastics pioneer Leo Baekeland), as well as small companies such as Continental Fibre and Diamond State Fibre, were all selling virtually the same product in the 1920s and 1930s. Sales of laminates boomed as laminate panels covered the interiors of railroad cars, decorative laminates covered the lobbies of many buildings, and Formica laminate even lined the Queen Mary ocean liner.

By the 1950s, technological change, lower resin prices, and new thermoplastic materials derived from petroleum led to a massive proliferation of laminates. Technological applications in the consumer appliance industry, including washing machines, vacuum cleaners, and refrigerators, all benefited from Formica parts. During this time, Formica became widely used as a kitchen countertop surface. Shortly afterward, the company made dinette tops and chairs. Industry competition became fierce. By 1950 weekly production of Formica dinette sheets was 55,000 units, compared to 28,000 units two years earlier.

In the 1950s, the plastics industry expanded at a rate that was far more rapid than most other U.S. industries. Plastic laminate applications boomed as well, especially in consumer industries. In 1969, Formica ceased production of industrial grade laminate, one of its first applications. In 1971, the company received a patent for the development of a heavy-ink process used as another surface texturing technique. One year later a metallic laminate line was produced. In 1982, Formica laminate went three-dimensional by way of ColorCore, a surfacing material that made it possible to achieve volumetric as well as intaglio or cameo effects.

Establishments engaged in the manufacture of plastic plates, sheets, and related products shipped goods valued at $2.3 billion in 1993 (not adjusted for inflation). This figure remained in line with a generally flat trend in the industry at the end of the 1990s. The total value of shipments increased 5 percent from 1987 to 1990. The industry lagged behind the growth of plastics products in general, which experienced growth in shipments of more than 17 percent during the same period.

The relatively flat trend in laminated plastic plate and sheet production was attributed to several economic forces. Continuing weakness in the manufacturing sector due to the prolonged economic recession undoubtedly contributed to the stagnation in the demand for the industry's products during the late 1980s and early 1990s. On the positive side, however, laminated plastic makers have been able to maintain an advantage over competitors in non-plastic plate and sheet. In addition, research and development resulted in better products and cheaper methods of production. Continuing advances in processing technology opened markets throughout the world, most notably the recycling market.

The price of acrylonitrile-butadiene-styrene (ABS) resins increased in October 1999, bolstering profits for companies in this industry. Companies such as GE Plastics, Dow Plastics, and others explained that increased prices were a result of the rising costs of raw materials as well as the tightening global market. Between 1999 and 2000, the cost of materials increased from $1.27 billion to $1.42 billion. By 2004, that figure had dropped somewhat to $1.10 billion.

The hurricanes that hit the southeastern United States in 2005 had an impact on the industry. According to Charlie Crew of GE Plastics, the entire raw materials supply chain for ABS was significantly disrupted by Hurricanes Katrina and Rita, and supplies of ABS were very tight. The capacity of production of two of the three materials needed to make ABS decreased. According to the American Chemistry Council, the hurricanes knocked out 55 percent of acrylonitrile capacity and 85 percent of styrene capacity in North America. Due to the shortages, as well as increased raw materials and energy costs, price increases were expected for ABS and other related products in the industry. Despite these challenges, the industry expected 1 to 2 percent growth in ABS production in the United States, compared to an projected 7 to 8 percent increase in demand worldwide. Total shipments in the industry were $2.55 billion in 2005.

Current Conditions

Laminated plastics finished products producers accounted for 37.8 percent of the market with 5,041 employees who were responsible for the bulk of industry shipments of $467.3 million. Producers of thermoplastics laminates, including rods, tubes, plates, and sheet with 7.6 percent of industry share shipped $73.8 million in goods, while producers of laminated plastics sheets who were responsible for 6.1 percent in market share generated $98.7 million.

By mid-2008, the worldwide economic meltdown left no industry untouched, including the plastics sector. According to the American Chemistry Council (ACC) Plastics Industry Producers' Statistics (PIPS) Group, resin production declined 12.3 percent, as did sales that fell to 101.5 billion pounds in 2008, a 10.1 percent decline compared to 2007. More importantly, this marked a seven-year low for the industry.

Although the price of acrylonitrile-butadiene-styrene (ABS) resins increased, ABS demand fell by 35 percent during the first half of 2009, according to Chemical Market Associates, Inc. (CMAI). With construction at a standstill, coupled by the downturn in the auto industry, ABS demand dwindled. That trend was about to change as the economic downturn worsened, compelling ABS producers to bolster their prices as a result of higher feedstock prices.

Worldwide ABS demand was projected to grow 4.4 percent annually between 2008 and 2010, reaching 5.8 million metric tons. The electrical/electronic markets were expected to consume 31 percent of ABS, compared to appliance manufacturers who would consume 24 percent.

Industry Leaders

Of the companies that focused primarily on this industry (as opposed to Dow Chemical Co. of Midland, Michigan, which focused on multiple other industries), the industry leader was SABIC Innovative Plastics of Pittsfield, Massachusetts, a business unit of Saudi Basic Industries Corp. (SABIC), which was founded in September 2007 with the acquisition of the industry leader GE Plastics. The company had 30,000 global employees and reported 2006 revenues of $6.65 billion.

Spartech Corp. of Clayton, Missouri, garnered $1.49 billion in sales for its 2006 fiscal year. With 3,400 employees, Spartech operated 39 plants. Its approximately 7,300 customers included equipment manufacturers in the auto parts, electronics, toys, and building materials industries. Packaging firms made up about 25 percent of its total sales. The company launched a line of environmentally friendly products in 2006 called the Green Initiative, which accounted for about 6 percent of the company's total sales. Spartech Corp.'s revenues fell from $1.45 million in 2007 to $1.39 billion in 2008. In order to pay down its debt, the company sold its plastic wheel assembly business in 2009.

Wilsonart International Inc. of Temple, Texas, a subsidiary of Illinois Tool Works, was another leader in the industry, with 2004 sales of $742 million and 3,400 employees. Wilsonart International Inc.'s parent company, Tool Works Inc. canceled earlier plans to sell Wilsonart in 2009.

Workforce

In the early 2000s, 40 percent of industry employees were operatives, and 25 percent were laborers. Officials, managers, and professionals made up 13 percent, and 8 percent were salespeople or office workers. The remaining percentage was made up of technicians, craft workers, and service workers. A majority of the workers in the industry were men (70 percent). Ethnically, 68 percent were white, 18 percent were Hispanic, 9 percent were black, and the remainder were of other ethnicity.

In 2005, employment declined somewhat from the previous year to 10,067 workers. Industry employment grew steadily throughout the mid- to late 2000s, until it reached 15,301 workers in 2008.

Research and Technology

U.S. producers continually developed products and processes. Their efforts were reflected through the computerization of nearly all aspects of the laminated plastics production cycle, including design, manufacture, and distribution. Specifically, this meant increased applications of computer-aided design and computer-aided manufacturing. At the sales level, these innovations included individualized customer design, which is expected to lead to shorter delivery times and better quality control. By allowing manufacturers to determine precise product demand, these methods of production and delivery will allow users of these techniques to achieve quick delivery and short turnover times.

All these innovations not only increase productivity and reduce unit costs, but also involve major investments in computer-automated machinery. As a result, firms have tried to reduce relative labor costs, which remain high compared to other plastics industry groups. With their economies of scale and access to internally generated funds, the large companies will be in a better position to implement these expensive operations. This will undoubtedly lead to a pattern of technological change that is anything but uniform across firms in the industry.

Most firms in the industry recognized the trend toward recycling and were devoting considerable research efforts to developing recyclable materials and technologies that hold potentially profitable applications.

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