Enameled Iron and Metal Sanitary Ware

SIC 3431

Companies in this industry

Industry report:

This category includes establishments primarily engaged in manufacturing enameled iron, cast iron, or pressed metal sanitary wares, such as bathtubs, sinks, toilets, and other bathroom and household plumbing fixtures. Nonmetallic plumbing products are listed in SIC 3088: Plastic Plumbing Fixtures, SIC 3261: Vitreous Sanitary Ware, and SIC 3469: Porcelain Enameled Kitchen, Household, and Hospital Ware.

Industry Snapshot

Metal sanitary ware manufacturers compete in the household, commercial, and industrial plumbing product market producing products made of cast iron, enameled iron and steel, and stainless steel. Traditionally, these markets are directly influenced by the nation's construction markets and therefore are extremely cyclical.

The increased use of plastic and fiberglass plumbing products, as well as so-called "space-age materials," reduced the demand for iron and steel plumbing products in the late twentieth century. In response to this change, manufacturers developed composite materials that combine the strength and durability of metal with the lightweight and rustproof features of plastic and fiberglass products. A steady demand for stainless steel products, especially kitchen sinks, kept approximately 80 manufacturers in business in the first decade of the twenty-first century. By 2003 the construction industry was beginning to boom again, and with it, sales rose in this industry. In 2005, value of product shipments totaled almost $1.3 billion, compared to almost $1.2 billion in 2002, according to the U.S. Census Bureau. After the housing boom of the mid-years of the first decade of the 2000s crashed, however, sales of enameled iron and metal ware fell with it. By 2008, value of shipments was down to $880.4 million, dropping again in 2009 to $679.7 million.

According to industry statistics from Dun & Bradstreet, there were an estimated 186 manufacturers of enameled iron, cast iron, or pressed metal sanitary wares such as bathtubs, sinks, toilets, and other bathroom and household plumbing fixtures in 2010. Together these establishments generated $467.5 million in sales and employed 9,037 people. Wisconsin was the number one state in terms of revenues in the industry, accounting for 33 percent of the nation's total. Pennsylvania was second, with 21 percent, followed by California with 13 percent. North Carolina employed the most people in the industry. Other top employing states were California, Wisconsin, and Illinois.

Organization and Structure

Traditional wholesale distribution of plumbing products to building contractors is supplemented by retail distribution of plumbing products to the do-it-yourself consumer market. Typically, metal sanitary ware manufacturers distributed products through independent wholesale distributors of building products. Any advertising was technical and was aimed at the knowledgeable plumbing professional. At the beginning of the twenty-first century, the growth of replacement/remodeling markets for building products increased the profitability of plumbing products marketed directly to the consumer. In response, manufacturers expanded their marketing efforts, focusing on a consumer more concerned with function and style than with the technical specifications of the product.

Background and Development

The fate of the plumbing producer has always been tied to the health of the nation's new construction markets. Economists label the demand for new construction as a leading indicator of this industry's growth because it provides insight into the future conditions of the overall economy. Therefore, a decline in the demand for new construction usually precedes a slowdown in the nation's gross national product (GNP) growth. This held true in the recessions of 1982 and 1991 as construction activity began to decline a year before the rest of the economy slid into recession. Metal sanitary ware manufacturers felt the recessions early as well, as demand for their products fell with slowed construction activity.

During the 1980s, several trends in the construction industry affected metal sanitary ware producers. Severe declines in construction activity in 1980 and 1982 caused many manufacturers to shut down. The number of metal sanitary ware manufacturing establishments dropped to 77 in 1982. After these severe declines, however, construction demand boomed in 1983 and 1984 as consumer optimism fueled demand for new houses. In addition, an unprecedented cut in the tax on capital gains implemented by the Reagan administration suddenly made business investment in commercial offices, stores, residential condominiums, and apartments extremely attractive. As a result, the demand for both residential and commercial plumbing products boomed in the mid-1980s.

By the end of 1990, however, the construction industry suffered a serious decline as housing starts fell to near record lows. The industry reported about 6,000 employees in 1995, 5,000 of whom were involved in production. The decrease in profit margins caused production workers' wages to remain stagnant. Despite yearly productivity gains, wages barely kept up with inflation. Production workers' hourly wages hovered around $11.00 during the mid-1980s and early 1990s.

The cause of the decline was primarily attributed to an oversupply of commercial office space and residential housing caused by the building spree of the mid-1980s. Analysts suggested that this glut in the supply of newly constructed properties would take many years to clear, holding down construction growth well into the 1990s. While metal sanitary ware manufacturers suffered through the downturn in construction, the decline was not as deep as expected. This was attributed to plumbing ware manufacturers' success in the less cyclical home remodeling market.

In the late 1980s, remodeling projects and do-it-yourself repairs became popular hobbies for many homeowners. Disgust over the high cost of plumbing repairs and the urge to modernize bathrooms and kitchens led many people to undertake plumbing projects they would have avoided only a few years earlier. As a result, manufacturers often marketed installation guides to consumers in the form of books or videos.

On the other hand, the move toward larger bathrooms with Jacuzzis and whirlpools threatened the bathtub market of metal sanitary ware manufacturers. Shower stall and wall-surround bathtubs with whirlpool technology cannot feasibly be made using cast iron and enameled steel. In response, several metal sanitary ware manufacturers developed composite materials that combined the features of steel and cast iron with the lighter weight and ease of transportation and installation of plastics and fiberglass products. Acceptance of these composite materials was expected to allow metal sanitary ware manufacturers to take advantage of demand for more luxurious bathtub products. The industry also successfully shifted its focus from bathtubs to the kitchen and sink markets. Sales for the industry doubled in the 1980s, despite a fall in bathtub market share from 62 percent to 38 percent during the decade.

The demand for stainless steel kitchen sinks offset the decline in demand for cast iron and enameled steel bathtubs. While sales nearly doubled during the 1980s, profit margins for the industry declined steadily. As a percentage of total costs, material costs grew from 42 percent to 52 percent during the decade. The decline in profit margins was the direct result of a skyrocketing increase in the cost of materials for stainless steel production.

Entering the 1990s, metal sanitary ware manufacturers faced predictions of several years of slow growth in the construction market. This forced the industry to seek growth through other markets, especially the replacement and remodeling of plumbing fixtures. In addition, plumbing manufacturers faced a more environmentally aware consumer who demanded efficient, water-conserving plumbing products. Concern for the environment caused metal sanitary ware manufacturers to use recycled metals and to provide more efficient products. Many states, for example, passed legislation requiring that all new toilets use only 1.6 gallons of water per flush as opposed to the traditional 3.5 gallons per flush.

The growth in remodeling and replacement markets for plumbing products was attributed to the increasing desire of homeowners to entertain within the home. This phenomenon was expected to affect plumbing ware manufacturers for many years. Especially fruitful for metal sanitary ware manufacturers was the increased emphasis on the kitchen and the basement in the scheme of the house. Stainless steel was the most popular material for kitchen and bar sinks, primarily because of its low price and ease of installation for the do-it-yourself homeowner.

However, in the mid- to late 1990s, new construction was again on the rise. The Turner Corp., the nation's leading builder at the time, announced that first quarter results for 1997 were up 14 percent from 1996 to $1.2 million in net income. When combined with continued growth in the remodeling and replacement markets, favorable growth in the sanitary ware market was expected. U.S. manufacturers' shipments of metal plumbing fixtures were approximately $757 million in 1995.

According to the U.S. Census Bureau, 88 establishments operated in this category in the late 1990s. Industry-wide employment was 10,275 with workers receiving a payroll of over $365 million in 2000. Within this workforce, 7,029 of these employees worked in production, putting in more than 14 million hours and earning wages of over $205 million. Overall shipments for the industry were valued at almost $1.7 billion in 2000.

After the dismal early years of the first decade of the twenty-first century, the economy and the residential and commercial construction industries were back on the rise. This was good news for the metal sanitary ware manufacturing segment, which had $1.2 billion in product shipments in 2002, according to statistics from the U.S. Census Bureau. There were an estimated $474 million in sales of kitchen sinks, $66 million in wash sinks, and $24 million in bar sinks in the middle of the decade, which represented healthy growth from estimated 2002 figures of $419 million, $60 million, and 21 million, respectively. In 2005 shipments were valued at $1.28 billion.

By 2007, the pending economic downturn had put a strain on new residential construction and remodeling, which translated into sluggish conditions for the metal sanitary ware manufacturers and their bottom lines. "Remodelers reported another drop in major home improvements and expectations for future work have also declined," Lonny Rutherford noted in Plumbing & Mechanical in November 2008, adding that "A slight increase in minor remodeling projects for owner-occupied homes suggests customers are cutting back on home improvement spending."

By 2008, the U.S. Census Bureau reported that value of shipments in the enameled iron and metal sanitary ware manufacturing industry had dropped to $880.4 million, and that figure decreased again in 2009 to $679 million.

Current Conditions

By 2010, the economy was starting to recover, which was good news for the construction industry and thus for the enameled iron and metal sanitary ware manufacturing industry. That year, U.S. housing starts numbered 587,000, up from the historic low of 554,000 in 2009, according to the National Association of Home Builders. Although this figure was still far below the pre-recession levels, which had reached 1.8 million in 2006, industry participants had hopes for continuation of an upward trend into the early 2010s.

Another positive market for the industry in the early 2010s was the remodeling sector. In its August 1, 2011 issue, Bob Miodonski of Plumbing & Mechanical magazine interviewed Michael Werner, president of Gerber Plumbing Fixtures in Woodridge, Illinois, who indicated he felt that the repair and remodel market held the most promise for the industry: "If you look at the U.S. housing stock, more than 40 percent is more than 30 years old. Those homes have kitchens and baths that haven�t been remodeled recently. There are currently more than 100 million toilets out there that are 3.5 gallons or greater. When you look at the need to conserve water and how much money people spend on their water and sewer bills--and at the few homes being built--there will be a great pent-up demand for repair and remodel." Werner also noted that the industry would continue to face challenges, though, especially in the areas of raw material and labor costs.

The top-selling product in the industry in 2010 was sinks made from enameled iron, cast iron, or pressed metal bathroom fixtures, which claimed 22 percent of the market share, according to Dun & Bradstreet. Bathroom fixtures, including sinks, held 20 percent of the market share, whereas bathtubs, drinking fountains, other plumbing fixtures, and shower stalls, in that order, contributed the next largest percentage of revenues, with sales of $32.5 million, $28.5 million, $11.7 million, and $10.6 million, respectively. Smaller categories included urinals and portable metal toilets.

Industry Leaders

Most of the companies in this industry were small, with 80 percent employing fewer than 50 workers. One of the largest companies that was a leader in the industry was Kohler Co., located in Kohler, Wisconsin, which reported revenues of an estimated $4.6 billion in 2010 with 27,000 employees. In addition, Elkay Manufacturing Company of Oak Brook, Illinois, had 2010 sales of $480 million and 4,300 employees; and the more diversified Headwaters Inc. of South Jordan, Utah, had $654.7 million in sales and 2,860 employees in 2010.

America and the World

The U.S. market for plumbing ware fixtures does not include a high percentage of imported products. The added cost of shipping large cast iron and enameled steel products overseas usually makes imports too expensive for the U.S. market. This lack of import competition has given U.S. producers of plumbing ware products a luxury that many other industries do not enjoy. On the other hand, the export of manufactured metal sanitary ware is limited for the same reasons. This makes U.S. producers highly vulnerable to the fluctuations of the domestic market for plumbing products. The stainless steel sink market was more open to foreign competition because the products are lightweight and therefore do not incur the high shipping costs of cast iron and enameled steel products.

The majority of U.S. trade in metal sanitary ware products occurs with Canada and Mexico. Transportation costs related to these markets are minimal. Companies in the United States also compete in many overseas markets through foreign production in proximity to the particular market. Either through direct ownership of a plant on foreign soil or through licensing agreements with foreign manufacturers, U.S. companies participate in foreign markets while eliminating expensive shipping costs.

© 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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