Aluminum Rolling and Drawing, NEC

SIC 3355

Companies in this industry

Industry report:

This classification refers to establishments primarily engaged in rolling, drawing, and other operations resulting in the production of aluminum ingot including extrusion ingot, and aluminum and aluminum-base alloy basic shapes, not elsewhere classified, such as rolled and continuous cast rod and bar. Establishments primarily engaged in producing aluminum powder, flake, and paste are classified in SIC 3399: Primary Metal Products, Not Elsewhere Classified and those producing aluminum wire and cable from purchased wire bars, rods, or wire are classified in SIC 3357: Drawing and Insulating of Nonferrous Wire.

Industry Snapshot

Aluminum rod, bar, and wire products are often grouped together in a single product category. Wire is made from rod or bar and by definition is less than three-eighths of an inch in diameter, while rod and bar are generally thicker. Electrical transmission lines represent the major end use of rod/bar/wire products, but they are also used to make rivets, nails, screws, and bolts, and parts of machinery and equipment.

After 2001, the U.S. Census Bureau combined this category with the larger industry of aluminum sheet, plate, and foil manufacturing and tracked the statistics together. Overall, the domestic aluminum industry struggled with waning industry shipments in the late 1990s and early years of the first decade of the 2000s. By the mid-2000s, aluminum prices were at an 18-year high.

The aluminum industry overall continued to struggle as the country neared the start of the second decade of the twenty-first century, affected by the global economic recession. The auto market, which historically had represented the largest market for aluminum products, hit bottom in 2009, when auto sales fell to the lowest levels since 1982, according to The Aluminum Association. That year, the auto industry accounted for only 23.7 percent of all U.S. aluminum shipments. Packaging, on the other hand, accounted for 26.5 percent of shipments and construction, 11.9 percent. Nevertheless, by the start of the next decade, aluminum manufacturers of all types were looking toward a recovery in the industry as the economy rebounded, and by June 2011, year-to-date aluminum shipments totaled 1.9 million tons, up almost 12 percent from the year-to-date figures from June 2010.

Background and Development

Rod, bar, and wire production slumped during the late 1980s and early 1990s. In general, aluminum wire dominates the electrical transmission and distribution market, with copper a distant second. During the 1980s, however, demand for electrical transmission lines fell as new construction was lackluster and electricity usage remained flat. Furthermore, use of aluminum wire in buildings fell sharply in the 1980s. In the mid-1970s, aluminum had a 31 percent share of this market, but following the publicity of the hazards of aluminum wire, its share dwindled to 8 percent in 1994. Several of the major aluminum companies thus elected to retreat from the electrical conductor market. In 1994 and 1995, however, there was a recovery in demand for rod, bar, and wire products. Larger shipments to the transmission and distribution sector were a result of increased housing starts and the need to upgrade existing systems. Some producers moved to expand their plants.

Demand for rolled aluminum rod and bar increased throughout the late 1990s, and the value of shipments for this sector reflected those gains, growing from $410.2 million in 1998 to $490.5 million in 2000. However, the value of shipments declined to $370.5 million in 2001 as the U.S. economy, particularly the manufacturing sector, slumped. Rolled aluminum rod and bar accounted for 24.1 percent of total industry shipments in 2001. Aluminum and aluminum-base alloy wire and cable, which accounted for 25.4 percent of industry shipments in 2001, followed a similar pattern of growth in the late 1990s. The value of wire shipments increased from $486.9 million in 1997 to $500.5 million in 2000, before falling to $390.9 million in 2001.

Overall shipments for the combined industry categories aluminum rolling and drawing, not elsewhere classified, and aluminum sheet, plate, and foil manufacturing were more than $14.6 billion in 2004, up from $13.3 billion in 2002, reflecting in part the surge in construction activity in the United States.

Despite earlier projections that aluminum demand would increase 4 to 6 percent annually, however, the domestic aluminum industry began to slow in the second half of the first decade of the 2000s. Shipments of aluminum drawing stock, bare wire and rod and bar totaled 1.1 billion pounds in 2007, down 4.3 percent from 2006. Shipments of aluminum electrical conductors also fell from 750 million pounds or 8.3 percent in 2006 to 688 million pounds in 2007. This was considered the calm before the storm, as total shipments would continue to spiral downward to historic lows by 2009.

Throughout the late 2000s, weakened demand led to producers cutting production as demand for durable goods, especially automobiles, waned. That followed with an historic drop in metal prices even as the cost of raw materials increased. As the economy worsened, industry leader Alcoa was forced to cut its workforce by 15,000 while others idled production or shuttered operations altogether. According to The Aluminum Association, domestic aluminum mills saw orders decline for every product or 21.3 percent in the first quarter of 2009, which included electric wire and cable that fell 6 percent. Despite the deteriorating market conditions facing aluminum producers, worldwide aluminum production was forecast to exceed 51 million tons in 2012, with China and India fueling demand.

Current Conditions

According to industry statistics from Dun & Bradstreet, there were an estimated 179 establishments within the aluminum rolling and drawing (not elsewhere classified) industry in 2010, with annual sales of around $1.4 billion and industry-wide employment of 5,375. Although Florida was home to the most establishments in the industry (34), Ohio accounted for the largest share of revenues, with $1.0 billion. Other important states in terms of revenues were Texas and Michigan. Texas also had the most workers in the industry, followed by Ohio, Michigan, Georgia, and North Carolina.

The aluminum rolling and drawing, not elsewhere classified category accounted for 25.7 percent of the establishments in the industry and $65.8 million in shipped products. Almost 16 percent of establishments were engaged in producing structural shapes of rolled aluminum, a category that was valued at $73.3 million. Other important subcategories were aluminum rail and structural shapes, accounting for 23 percent of establishments and $37.4 million in sales; aluminum wire and cable, with 21 percent of establishments and $20 million in revenues; and aluminum extrusion ingot made in rolling mills, with 17 percent of all establishments and $24.1 million in revenues.

Industry Leaders

One of the leaders in the aluminum rolling and drawing industry was Alcoa Inc. of New York. Alcoa was one of the world's largest producers of aluminum and alumina (aluminum oxide), operating in about 30 countries and deriving approximately 50 percent of its revenues from the United States. In 2010 the company posted sales of $21 billion and employed 59,000 people worldwide. Another much smaller but significant player in the industry was Houston, Texas-based Quanex Building Products Corp., which employed 2,109 people and had revenues of $793 million in 2010.

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