Fabricated Pipe and Pipe Fittings

SIC 3498

Companies in this industry

Industry report:

This industry covers establishments primarily engaged in fabricating pipes and pipe fittings from purchased metal pipe by processes, such as cutting, threading, and bending. Establishments primarily engaged in manufacturing cast iron pipe and fittings, including cast and forged pipe fittings that have been machined and threaded, are classified in SIC 3321: Gray and Ductile Iron Foundries; those manufacturing welded and heavy riveted pipe and seamless steel pipe are classified in SIC 3317: Steel Pipe and Tubes; and those manufacturing products, such as banisters, railings, and guards from pipe, are classified in SIC 3446: Architecture and Ornamental Metal Work.

The U.S. fabricated pipe and pipe-fitting industry, valued at almost $2.5 billion in 2010, is strongly dependent on the health of the domestic construction industry. After enduring tough economic conditions in the late 1980s and early 1990s, the industry rebounded in the mid-1990s, aided by improvements in both the domestic and international economic climates, along with the replacement of old manufacturing processes. In the late 1990s, pipe, valve, and fitting manufacturers experienced marked gains in the industry's ability to meet the steady demand for fire protection flow control products. The industry also achieved success via increased global competitiveness. Overseas producers have been chased away from the U.S. market by increased domestic quality, lower dollar valuations, and strong antidumping legislation. Despite these positive developments, industry shipment values suffered a 21 percent decline, falling from $4.7 billion in 2001 to $3.7 billion in 2004. Shipments continued to fall as the United States entered an economic recession at the end of the first decade of 2000s.

Employment highs in the industry were recorded in 1979, when 32,900 production employees worked in the industry's manufacturing facilities. These numbers steadily dwindled, and continued employment decreases resulting primarily from technological advances and improvements made to production processes, continued into the early twenty-first century. The number of production workers dropped 25 percent from 24,767 in 2001 to 18,565 in 2004. During the same period, wages fell 18 percent, from $695 million in 2001 to $569 million in 2004. For the broader category of other fabricated metal product manufacturing, a 7.9 percent workforce reduction to 22,000 employees was projected between 2004 and 2014. This followed an actual 10.3 percent drop from 1994 to 2004, when totals fell from 310,000 to 278,000. Among the industry-related occupations expected to decrease the most by 2014 were metal and plastic machine setters, operators, and tenders along with tool and die makers.

Because of the focus in the first decade of the twenty-first century on providing solutions and products to meet individualized needs, the industry strove to develop and use new technologies in order to stay competitive, including computer and electronic technologies. For instance, The Shaw Group equipped all of its U.S. and international facilities with induction bending machines and other automated machines, the latest in pipe manufacturing equipment. As of 2006, each of the company's facilities produced approximately 10,000 tons of pipe spools each month.

According to the U.S. Census Bureau's Statistics of U.S. Businesses, 765 establishments operated in this category in 2004. Industry-wide employment totaled 24,021 workers receiving a payroll of nearly $883 million. Some 18,565 employees worked in production in 2004, putting in almost 36 million hours to earn wages of about $569 million.

Throughout 2007, demand for U.S. pipe fabricators was booming, and industry leader The Shaw Group was setting the stage to capitalize on that growth. The company announced plans to expand operations 30 percent in anticipation of increased demand for fabricated industrial pipe, especially from the power, refining, and petrochemicals markets. The company acquired Mid States Pipe Fabrication, Inc., one of the top five pipe fabricators in the United States. In addition, the company announced expansion was underway at its facility in Walker, Louisiana, increasing production an estimated 30 percent.

However, by mid-2008, the worldwide economic meltdown took hold of the manufacturing sector, including the fabricated pipe and pipe fittings sector. From the number of operations to the number of workers employed within the industry, figures began to plummet. Companies were seeking cost-cutting measures and shedding part of their workforce, not as an option but as a necessity as demand for construction dwindled.

The manufacturing sector had to contend with an economic recession, a credit crisis, and high energy costs at the end of the first decade of the 2000s. "Overall activity in the manufacturing sector failed to grow in January 2009 for the twelfth consecutive month," according to a report released by the Institute for Supply Management (ISM) in February 2009. Despite economic uncertainty, the ISM projected the manufacturing sector would advance 5.7 percent in 2010, following a 10.7 decline in 2009.

By 2011 things were looking up for the industry, although it had lost hundreds of workers and many businesses had closed their doors during the recession. According to Dun & Bradstreet (D&B), 910 establishments engaged in fabricating pipe and pipe fittings from purchased metal pipe in 2010, down from 978 in 2008. D&B also reported that employment dropped from 29,925 in 2008 to 27,013 in 2010. Texas had the most establishments in the industry, with 130, followed by California with 105. Louisiana, California, and Michigan were the top three states in terms of revenues, with each accounting for about 8 percent of the market share in 2010. Major categories in the industry were tube fabricating (contract bending and shaping); pipe fittings, fabricated from purchased pipe; and pipe couplings, fabricated from purchased pipe manufacturers.

The Shaw Group Inc. of Baton Rouge, Louisiana, remained the industry behemoth in the early 2010s. Annual sales in 2010 were approximately $7 billion with 27,000 employees. The company served many diverse industries, due in large part to acquisitions. Another significant company in the industry was Harsco Corp. of Camp Hill, Pennsylvania, with 2010 sales of $3 billion and 19,300 employees.

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