Drawing and Insulating of Nonferrous Wire

SIC 3357

Industry report:

This classification covers establishments primarily engaged in drawing, drawing and insulating, and insulating wire and cable of nonferrous metals from purchased wire bars, rods, or wire. Also included are establishments primarily engaged in manufacturing insulated fiber optic cable. Establishments primarily engaged in manufacturing glass fiber optic materials are included in SIC 3229: Pressed and Blown Glass and Glassware, Not Elsewhere Classified, while those manufacturing fabricated wire products from purchased wire are classified in SIC 3496: Miscellaneous Fabricated Wire Products.

Industry Snapshot

Manufacturers involved in drawing and extruding nonferrous wire and cable supply five primary markets with various types of products manufactured from aluminum and copper--the two most widely utilized nonferrous metals--and other nonferrous metals. These products, ranging from fiber optic cable to insect wire screening, are drawn or extruded from wire bars or rods, a process that essentially winnows the larger bar and rod shapes into wire or cable. The wire and cable is then insulated with assorted materials such as paper, rubber, or other materials, including polyethylene and polyvinyl chloride. Once insulated, the wire and cable is used in an assortment of applications, including wiring for residential and commercial buildings, communication networks, power distribution, automobiles, and appliances.

Historically, the five primary markets for the industry's products have been communication industries; electric utilities; automobile, truck, and boat manufacturers; the construction industry; and manufacturers of home appliances and industrial machinery. Since the conclusion of World War II, the composition of the industry's primary markets has remained unchanged, although the order of importance of each market to the industry has fluctuated.

Nonferrous wire manufacturer's shipments reached $33.6 billion in 2008. An estimated 584 establishments were primarily engaged in drawing, drawing and insulating, and insulating wire and cable of nonferrous metals from purchased wire bars, rods, or wire in 2009. On average, each nonferrous wire manufacturer generated an estimated $43.0 million in sales and employed 68.

Organization and Structure

In the nonferrous wire drawing and insulating industry, nearly 1,000 establishments in the United States were deriving the bulk of their revenue from the fabrication and insulation of wire and cable in the late 2000s. The average size of a wire drawing and insulating establishment, in terms of the number of employees per establishment, was more than twice the size of the average manufacturing establishment.

Manufacturing establishments in this industry have historically been relatively expensive to operate, with operating costs at more than three times the national average. This has been attributed primarily to the high price of raw materials needed to operate a wire drawing and insulation manufacturing establishment. The required production machinery was also appreciably more expensive than the national standard posted by other manufacturing establishments.

Background and Development

The wire and cable manufacturing industry has changed enormously over the years because of technological progress, both in its own operations and in the systems and needs of its customers. The modern wire and cable manufacturing industry emerged in the late nineteenth and early twentieth century, a time during which the industrialization of the United States created a need for wire and cable products and provided a means for their production.

Once America became an industrialized nation, wire became a fundamental product underpinning the nation's growth, both industrially and commercially. For years, copper had been the preferred metal for a majority of the wire and cable manufacturing industry's products; its high conductivity elevated the metal above all others. Aluminum, which would eventually gain widespread acceptance in the industry, was first introduced as a cable conductor during the 1930s, but did not represent an appreciable portion of the market until the 1950s, when a tightened supply of copper forced manufacturers to search for an alternative.

Manufacturers' selection of aluminum to augment their copper supply came at an opportune time in the country's development: the population was rapidly expanding, creating a housing boom; televisions and radios were being manufactured at unprecedented levels; a community antennae television (CATV) market was burgeoning; more automobiles were being manufactured; and electric power generation in the country was about to begin two decades of exponential growth. Wire and cable manufacturers served each of these markets, experiencing enviable growth as the nation enjoyed an age of prosperity. By the beginning of the 1970s, the industry had evolved into a $3 billion entity, primarily due to the growth of the national economy over the previous two decades.

The use of aluminum by the industry's products, however, particularly in the wiring of residential homes, caused considerable anxiety for some manufacturers when the U.S. Consumer Product Safety Commission (CPSC) filed a lawsuit against 26 manufacturers in 1977. Charging that 1.5 million homes wired with aluminum between 1965 and 1973 were in danger of catching fire, the CPSC sought to force manufacturers responsible for producing the wire to pay for rewiring at an estimated cost of $300 per home.

The potential for fire stemmed from the poorer conductivity of aluminum when compared to copper. Because aluminum was less conductive than copper, more aluminum was required to form a wire, which created a thicker stock that wire installers were unable to fit tightly into wall outlets. This led to loose connections that, in turn, caused the wiring to overheat. The problem was corrected for all homes wired after 1973, but the scare sent aluminum's share of the wiring market cascading downward from 17.0 percent to 1.4 percent during the 1970s.

CPSC's revelation, however, did not dissuade manufacturers from using aluminum as a key raw material in the production of wire and cable. By the late 1980s, manufacturers purchased more primary aluminum than any other nonferrous metal to produce wire and cable products.

As the wire drawing and insulating industry entered the mid-1990s, manufacturing activity resumed its pre-recession levels, thanks largely to continuing strengths in the construction industry and increasing use of fiber optic cable by the telecommunications industry. Strong private residential housing starts augured well for manufacturers involved in producing building wire. Other wire and cable markets effected recoveries as well, enabling the industry to stanch its shrinking revenue volume. The brightest prospect for the industry's future lay in the growth of the fiber optics industry, for which the wire drawing and insulating industry supplies fiber optic cable.

From 1989 to 1993, U.S. shipments of fiber optic equipment--including optical fiber and cable as well as other products excluded from the wire drawing and insulating manufacturing industry--increased 13 percent annually. In the mid-1990s, the world market for fiber optic equipment was estimated to be $5 billion, a market in which U.S. manufacturers maintained a lead over European and Japanese producers, although the gap separating the United States from other manufacturers was closing. As the conventional markets supporting cable and wire manufacturers' core business once again fueled the industry's growth, those manufacturers able to afford the costly nature of exploring "next-generation" technology began turning to the production of fiber optic cable in increasing numbers.

Superconducting markets blossomed at the turn of the century. In December 1999, industry leader Intermagnetics General Corp. (IGC) of Latham, New York, entered a $1 million contract to supply superconducting wire to Samsung Advanced Institute of Technology. The superconducting wire was used in nuclear fusion magnets in Samsung's Korean National Fusion Project and the Korean Superconducting Tokamak Advanced Research (KSTAR) project. This deal represented the second such supply agreement between IGC and Samsung, with projections calling for orders of 20 additional metric tons of niobium-tin wire through the year 2001.

The telecommunications industry downturn in 2000 prompted many industry players to begin shifting their focus to other key markets such as electric utilities; automobile, truck, and boat manufacturers; the construction industry; and manufacturers of home appliances and industrial machinery.

With housing and automobile sales robust in the United States in the mid-2000s, the demand for drawing and insulating of nonferrous wire was strong across all segments. The construction sector fell off later in the decade, and the home appliances sector slumped along with it.

Industry shipments for aluminum rolling and drawing jumped from $1.67 billion in 2005 to $1.97 billion in 2006. Meanwhile, copper wire drawing increased from $3.81 billion to $4.35 billion; nonferrous metal (except copper and aluminum) rolling, drawing, and extruding went from $5.40 billion to $7.10 billion; and other communication and energy wire manufacturing climbed from $11.13 billion in 2005 to $13.79 billion in 2006.

Current Conditions

Aluminum rolling and drawing shipments fell to $1.61 billion in 2008. However, demand for copper wire drawing exhibited impressive results, increasing to $7.75 billion in 2008. Demand for nonferrous metal (except copper and aluminum) rolling, drawing, and extruding also continued to rise, reaching $9.65 billion in 2008, as did demand for fiber optic cable manufacturing, which increased to $1.68 billion in 2008. The other communication and energy wire manufacturing sector lost its luster when shipments fell to $12.97 billion in 2008. Despite the stagnant conditions within the overall construction and automobile industries, demand for fiber optic cable was thriving, largely due to the demand for Internet audio and video file manipulation.

Mid-2007 brought one of the worst global economic downturns that eventually took its toll on the nonferrous wire manufacturing industry as demand dwindled. With a staggering unemployment rate of 9.9 percent in March 2009, Indiana took a direct hit with the announcement of nonferrous wire plants either closing permanently, downsizing, or filing for Chapter 11 bankruptcy protection.

Industry Leaders

Agilent Technology Inc.'s revenues remained consistent through the mid-2000s before falling to $4.48 billion in 2009. The company reported 16,800 employees in 2009. Corning Inc.'s interest in the area of technologies reported revenues $5.39 billion for 2009 and 23,500 employees. General Cable Group's 44 manufacturing facilities throughout some 20 countries posted revenues of $4.38 billion in 2009, with a workforce of 11,300 employees.

Workforce

Total employment in the wire drawing and insulation industry declined throughout the 1980s and 1990s. A large percentage of this decline was attributable to the diminishing number of production jobs; in 1982, there were 50,000 production workers employed by the industry, but by 199, their numbers had fallen to 44,100. In 1997, however, the industry's 446 establishments employed 51,371 production workers. Overall in 2006, 992 establishments employed 71,182 workers.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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