Fabricated Plate Work

SIC 3443

Companies in this industry

Industry report:

This classification includes establishments primarily engaged in manufacturing power and marine boilers, pressure and nonpressure tanks, processing and storage vessels, heat exchangers, and weldments and similar products. These are made by cutting, forming, and joining metal plates, shapes, bars, sheets, pipe mill products, and tubing to custom or standard design for factory or field assembly. Excluded from this category are establishments primarily involved in manufacturing warm air heating furnaces, which are classified in SIC 3585: Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment. Those establishments primarily engaged in manufacturing nonelectric heating apparatus other than power boilers are classified in SIC 3433: Heating Equipment, Except Electric and Warm Air Furnaces. Also excluded from the fabricated plate work classification are manufacturers of household cooking apparatus and those manufacturing industrial process furnaces and ovens. The former are covered in SIC 3631: Household Cooking Equipment, and the latter are listed under SIC 3567: Industrial Process Furnaces and Ovens.

Industry Snapshot

Plating, which is the application of a thin metal layer on a surface to enhance wearing quality, prevent leakage, and protect against corrosion, is used in the fabrication of many products. The manufacturing process generally is consigned to manufacturers involved in the fabricated plate work industry, which was valued at $13.6 billion in 2010 by Dun and Bradstreet. The largest percentage of revenues came out of North Carolina and Wisconsin, which together generated almost half of the industry's total revenues in 2010. Although the bulk of the industry's shipments comprises a multitude of products manufactured through plating processes, the core of the fabricated plate work industry essentially includes the manufacturing of power and marine boilers and various types of plate tanks and storage vessels.

Power boilers, as classified by the American Society of Mechanical Engineers, operate at greater than 15-psig (pound-force per square inch gauge) steam pressure and are intended for stationary service, which excludes locomotive boilers from the scope of the fabricated plate work industry. Boilers operating at 15-psig steam pressure or lower, known as low-pressure heating boilers, are classified in SIC 3433: Heating Equipment, Except Electric and Warm Air. Power boilers, designed to operate at high pressures and temperatures, generate steam to provide power for utility companies and for various industrial processes. The boiler itself consists of two principal parts: the furnace, which provides heat, usually by burning fuel, and the boiler proper, in which water is converted to steam by the heat piped in from the furnace. A steam engine derives its power from steam generated under pressure in a boiler. Marine boilers are designed and fabricated for use aboard a wide range of vessels, including tugboats, ocean liners, oil drilling barges, freighters, and aircraft carriers. Although at the end of the first decade of the 2000s the overall industry was faced with challenges brought on by the unprecedented weakened economy, there were signs of a recovery on the horizon by the turn of the decade.

Background and Development

The origins of the fabricated plate work industry may be traced to the early development of boilers, which began in the Middle Ages when inventors experimented with the idea of harnessing the power of steam. For centuries, improvements were made in both the theory of deriving power from steam and in steam generators themselves. The seventeenth-century inventor Giovanni Battista della Porta was the first to discover that when steam condensed in a closed vessel, it created a vacuum that could draw up water. Thomas Savery, an English engineer working in the late seventeenth century, created the first machine to provide mechanical power by utilizing steam. By 1800, vast improvements had been made in designing steam engines and boilers, but the expense involved in developing prototypes was prohibitive.

In 1800, a landmark development in the history of boiler development occurred when Richard Trevithick put together a steam engine and boiler that added tubes carrying gases from a fire, which increased the heating surface and efficiency of the boiler. Several decades after Trevithick's achievements, John Stevens, a U.S. engineer, developed one of the first boilers in which tubes carried water to be converted to steam, instead of gases from a fire. This "water-tube" boiler represented the culmination of roughly 50 years of work by Stevens to construct an efficient steam system to power ships along the Hudson River. By the mid-nineteenth century, further improvements were made in the water-tube design, which allowed the water to circulate more easily, provided more heating surface, and lowered the risk of boiler explosions.

During this time, boiler design was fostered by the industrialization of Great Britain. The shift from an agrarian and commercial society to an industrial society prompted a similar transition in the United States, shaping that country into a modern manufacturing nation. Steam powered both of these industrialization movements as the power it provided proved to be an intrinsic part of the movement toward large and distinct manufacturing industries. In the United States, residences and local industries were the primary users of these steam generators until the latter half of the nineteenth century. At that time, the applications for steam power broadened and spurred the emergence of a market segment for the fabricated plate work industry that would fuel its growth throughout the twentieth century.

The unveiling of this new use for steam took place at the 1876 U.S. Centennial Exhibition in Philadelphia, during which the practicality of generating electricity by steam power was demonstrated to the attending public. Five years later, four boilers powered the Brush Electric Light and Power Co. in Philadelphia, the nation's first commercial electric generating station, marking the beginning of a new era for the United States in general and boiler manufacturers in particular. From this time forward, power boilers in mills and factories appeared with increasing frequency, particularly in sugar refining companies, as the industrialization of the United States neared its greatest intensity.

Similar advances were made with marine boilers, another integral product that bolstered the U.S. fabricated plate work manufacturers, helping them form an organized industry in the early nineteenth century. Beginning with the vessel the Great Britain in the early nineteenth century, marine engineers began exploring the possibilities of providing power to becalmed ships through steam. Eventually, sails and masts were discarded and boilers became the sole source of power for ships of all classes and sizes, from the 1,154-ton Britannica, which "sailed" from Liverpool to Boston in 1840, to the Monitor and the Virginia, two iron-hulled steamboats pitted against each other during the American Civil War.

By the time boilers became common in U.S. industry, marine boilers also were fueling a majority of the U.S. vessels on water. Accordingly, by the end of the nineteenth century, fabricated plate work manufacturing, which essentially comprised the fabrication of power and marine boilers, was conducted in earnest. In 1889 the American Boiler Manufacturers' Association (ABMA) was chartered with elevating the standards of boiler design and manufacture and preventing the production and sale of boilers deemed unfit for safe operation. Moreover, the establishment of a national association for boiler manufacturers joined a loosely organized group of manufacturers, marking the formal beginnings of the boiler shop, or fabricated plate work, industry in the United States.

Before the fledgling industry could emerge as an integrated and uniform group of manufacturers, national boiler manufacturing standards needed to be created and the alarming frequency of boiler explosions needed to be quelled, something the formation of the ABMA had failed to do. Another association with a vested interest in the production of boilers, the American Society of Mechanical Engineers (ASME), also had failed to curb the number of accidents related to boiler explosions, despite formulating a code entitled "Standard Method for Steam Boiler Trials" in 1884. In 1914, a committee under the purview of ASME published the "Boiler and Pressure Vessel Code," which provided manufacturers with standard specifications for the design, fabrication, installation, and inspection of boilers and pressure vessels. The adoption of nationwide standards helped to curtail the number of boiler explosions. It also provided manufacturers with a universal manufacturing language in which to communicate and enabled them to produce higher-quality boilers that conformed to the diverse needs of their customers.

Once ASME's Boiler Code gained widespread acceptance, many of the internal organizational problems of the fabricated plate work industry were resolved, or at least made more manageable, which facilitated, and in some cases invigorated, the industry's growth. Technological improvements in the design of boilers followed at a rapid pace, as the burden of spearheading future design and production innovations fell to the companies involved in the industry, rather than to the independent engineers.

Several historic achievements followed the publication of the Boiler Code, the first of which involved the opening of the Edgar Steam Electric Station in Weymouth, Massachusetts. The electric station, operated under the aegis of the Boston Edison Co., opened in 1925 with a high-efficiency turbine and boiler system able to produce electricity at the rate of one kilowatt-hour per one pound of coal. For its time, this ratio represented a considerable leap in efficiency since conventional power plants who were on the cutting edge of technology consumed 5 to 10 pounds per kilowatt-hour, and the station remained a model of efficiency until it was dismantled and sold to a South American power company in the 1970s.

Thirty-three years after the Edgar Steam Electric Station demonstrated to the world the efficiency of steam-generated electrical stations, President Dwight D. Eisenhower tripped a switch that activated the first North American commercial central electric-generating station to utilize nuclear energy. Located in Shippingport, a town northwest of Pittsburgh, the Shippingport Atomic Power Station was designed by the Westinghouse Electric Corp., the Division of Naval Reactors of the Atomic Energy Commission for the Department of Energy, and the Duquesne Light Company. Generating 60,000 kilowatts of electricity, the Shippingport Station was small compared to the generating capacity of similar electric stations to follow, but it heralded the advent of a new method for generating electricity, a process that incorporated the use of boilers.

In 1960, the first commercial geothermal electric-generating station in North America began operating in Sonoma County, California, north of San Francisco. This geothermal field, from which generators received naturally produced steam, was first discovered in 1847 and tapped in the early 1920s, but the steam and hot water billowing from the earth proved too corrosive for pipes and other equipment of the 1920s. By the late 1950s, however, significant advances in anticorrosion technology enabled the Pacific Gas and Electric Co. to successfully generate steam from the Sonoma field, which further broadened the applications for boilers in the production of energy.

These benchmark events in the development of additional uses for boilers, coupled with the increasing utilization of boilers by the industrial sector, accelerated the growth of the fabricated plate work industry. By the early 1960s, boiler shop manufacturers, who produced power and marine boilers, pressure and non-pressure tanks, processing and storage vessels, heat exchangers, weldments, and various other plate products, represented a $1.5-billion-a-year industry. Consistent improvements in design and the increased requirements of U.S. industry led to the fabrication of massive boilers, some of which were able to generate 6.5 million pounds of steam per hour, heated by furnaces approximating the size of 40 medium-sized houses. In the electrical power field, the use of boilers in thermal power plants, which accounted for roughly 80 percent of all electrical power generated in the nation, was pervasive as boiler manufacturers benefited from their position as suppliers of equipment essential to a diverse customer base.

The demand for power boilers remained stronger than manufacturers were able to satisfy at the beginning of the 1970s. However, growing concern for the potentially harmful effects of additional electrical-generating facilities on the environment began to make the selection of future power plant sites difficult. Consequently, an electrical production deficit existed during the late 1960s, which sparked a wave of concern by utility operators regarding the availability of the equipment necessary to construct additional facilities to supply the increasing demand. During the 1960s this gap between production and consumption created a commensurate gap between new orders for power boilers and the production of power boilers. This gap narrowed by the beginning of the 1970s, when electric utility operators began ordering steam-generating equipment in advance as a hedge against an anticipated shortage of power boilers. For manufacturers in the fabricated plate work industry, particularly those focusing on the fabrication of power boilers, this panic boosted sales volume. The value of power boiler shipments increased 18 percent from 1969 to 1970, the culmination of a decade that saw industry-wide power boiler revenue climb from $341 million in 1963 to $631 million in 1970.

The 1970s, however, marked a turning point for the fabricated plate work industry. During the mid-1970s, utility companies became increasingly concerned about the availability of fuel, environmental exigencies, and the future demand for energy, which resulted in an energy crisis. Energy conservation efforts and soaring energy costs sharply reduced new orders for utility boilers. The fabricated plate industry also experienced a lull, reflecting the losses incurred by nearly every manufacturing industry in the United States during the energy crunch.

Revenue from the production of power boilers fell from more than $1 billion in 1974 to $860 million in 1978, and boiler production fell from 90 million pounds of capacity to 36.5 million pounds, prompting manufacturers to plead for federal intervention. In response, the National Energy Act and the Industrial Fuel Use Act were passed in 1978. Although the government hoped such measures would reduce the number of industrial boilers dependent on gas and oil for fuel, the fabricated plate work industry hoped they would invigorate the stagnant boiler market. Neither occurred, as both manufacturers and their customers became confused about which fuel was to be used.

As a result of the somewhat bleak prospects facing manufacturers in the industry, expected profit margins were reduced in the early 1980s, and competition intensified for the dwindling number of new orders. Some manufacturers exited the business entirely to mitigate their losses, and others began to concentrate on retrofitting and converting existing boilers. Although the latter were able to stave off the negative effects of the six-year downturn, their strategy did not preclude serious losses. Nationwide energy conservation by the industry's primary industrial and utility markets effectively imposed a limit on the extent to which boiler manufacturers could recover. In 1980, the Department of Energy estimated that the concerted movement toward conservation reduced the growth in energy demand to half the growth rate of the gross national product, an unsettling discovery considering that the two growth rates had historically been about equal.

Consequently, manufacturers entered the mid-1980s struggling to maintain their precarious presence in the boiler and fabricated plate work market. Electric utilities at this time operated old electric generating equipment approaching the end of its economic life, but boiler manufacturers did not expect to realize any significant wave of new orders until the early 1990s, as electric utility operators forestalled the purchase of new equipment as long as possible. An increasing percentage of the industry's work continued to be the rebuilding and refurbishing of older units, but for a considerable number of manufacturers this type of work did not generate enough money to sustain operations, and the roster of fabricated plate work manufacturers shrank.

By the late 1980s, conditions had not greatly improved. Manufacturing operations were consolidated, and some facilities were shut down due to decreased demand. As manufacturers looked toward the future, a reversal of the depressed state of the industry was largely predicated on the equipment-purchasing decisions by electric utility companies and a return to more aggressive capital-expansion programs by the industrial sector, which were stunted by the recessive economic conditions of the early 1990s.

Just over 1,000 U.S. companies were involved in producing fabricated plate work in the late 1990s. This figure reflected the latest of a decade-long decline in the number of manufacturers engaged in the industry. The sharpest decline occurred from 1982 to 1987, when the number of participants dropped from 1,743 to 1,584. Industry revenue during the 1980s declined as well, dropping from $8.23 billion in 1982 to a low of $6.15 billion in 1986. In the late 1980s, however, the industry's performance improved, and revenue increased for three consecutive years to conclude what otherwise had been a decade of consistent decline. In 1987, the industry's revenue total increased to $6.79 billion, and it jumped to $7.81 billion the following year.

Plate demand and sales were strong going into the early years of the first decade of the 2000s. However, with the economy sluggish in the aftermath of the terrorist attacks on the United States on September 11, 2001, significantly weaker business was reported for the last four months of that year and early 2002. At that time there were signs of a modest recovery, with some inventory levels reduced and demand and prices increasing. Although sales at the mill level were actually strong, some industry insiders suggested it was due to mill lead times being extended and the desire to replenish inventory before plate prices rose again.

After the sluggish years of the early 2000s, the manufacturing industry began to show signs of growth. By 2005, sales in the industry reached $3.4 billion. Sales and shipments are predominately derived from the industry's five primary product groups of heat exchangers and steam condensers; fabricated steel plate; steel power boilers, parts, and attachments; metal tanks and vessels, custom fabricated at the factory; and fabricated plate work not conforming to the parameters of standard fabricated plate work. In accordance with the wide range of products manufactured by the industry, products in the latter category were the most abundantly produced by fabricated plate work manufacturers, generally accounting for about one-fifth of the industry's total shipments.

Standard fabricated plate work represented the industry's second largest product category, followed by heat exchangers and steam condensers, steel power boilers and their parts and attachments, and metal tanks and vessels manufactured in a factory setting and according to customer specifications. The remainder of the industry's products comprised storage tanks, nuclear reactor steam supply systems, and gas cylinders.

Despite the industrial and energy construction markets progress in the mid-2000s, the volatile economic conditions returned, to unprecedented levels. "What in the summer of 2008 remained a boom time and seller's market for vendors, contractors and designers seemingly overnight turned into either a stagnant environment or a highly competitive buyer's market," Fred Lyon wrote in Today's Boiler in the spring of 2009, adding that "Scarce commodities became available at historically more reasonable prices, forecasted labor shortages did not develop, and perhaps most importantly, industrial and utility customers significantly reduced their planned capital expenditures for 2009."

Earlier predictions were realized in 2009 when total U.S. shipments of fabricated metal products fell 10.7 percent by February 2009 compared to February 2008, while new orders declined 17.5 percent. Exported fabricated metal products fell 19.7 percent in January 2009 compared to a year earlier as well. While Canada and Mexico were the chief foreign consumers of U.S. fabricated metal products, both declined that year as well, seeing declines of 15.5 percent and 24 percent, respectively.

Current Conditions

According to Dun and Bradstreet, 2,562 establishments operated in the fabricated plate work (boiler shop) manufacturing industry in 2010. A majority of these businesses were small, with about 76 percent employing fewer than 50 workers. There were several large companies as well, with about 215 employing more than 100 people. Texas was by far the number one state in terms of number of establishments in the industry with 263; California was second with 219, and Ohio was a distant third with 131. However, North Carolina accounted for the largest percentage of revenues, garnering more than $5 billion in 2010, followed by Wisconsin with $1.7 billion. Other important states in terms of revenues in the industry included Massachusetts ($792.9 million), Ohio ($767 million), and Texas ($676.9 million).

Although the industry had experienced tough times during the late 2000s, like most U.S. manufacturing sectors, many expressed hope for the future as the second decade of the twenty-first century began. A September 2011 report by IBISWorld predicted about the overall structural metal product manufacturing industry that "as construction activity rebounds during the coming years, so will the industry's fortunes." It was expected that "profitability will increase as manufacturers ramp up their production, and increases in the price of inputs will be easier to pass on to consumers." Upcoming challenges in the industry included fluctuations in steel and aluminum prices as well as an influx of lower cost imports.

Industry Leaders

The largest company involved in the fabricated plate work industry in the early 2010s was McDermott International Inc., based in Houston, Texas, with 2008 sales of about $6.5 billion and 26,400 employees. McDermott Inc., controlled by McDermott International Inc., earned its position in the industry largely through a merger in 1978 with The Babcock & Wilcox Co., resulting in Babcock & Wilcox as a subsidiary in McDermott's Power Generation Systems and Equipment Division. Formed in 1867 as Babcock, Wilcox and Co., the company's roots actually stretch back to 1856, when a 26-year-old engineer from Rhode Island, Stephen Wilcox, applied his knowledge of water circulation theory to perfect a new boiler concept utilizing inclined water tubes. Later referred to by Thomas Edison as "the best boiler God has permitted man yet to make," the success of Wilcox's system persuaded him and his friend George Herman Babcock to form Babcock, Wilcox and Co.

Initially, the two partners sold a majority of their boilers to sugar refineries. In 1881, the company began supplying the boilers for the country's first central electric power station at the Brush Electric Light and Power Co. in Philadelphia. In subsequent years, Babcock & Wilcox boilers continued to represent the vanguard of power-generation technology, pioneering significant advances in utility steam generation design and marine boiler development. Moreover, the company helped to shape the industry by playing an instrumental role in the development of the American Society of Mechanical Engineers' Boiler and Pressure Vessel Code in 1914. Babcock & Wilcox continued to set the pace for other companies involved in the industry, thriving as a major supplier of nuclear steam generating equipment, critical heat exchanges, and replacement recirculating steam generators. During the mid-2000s, the company's boilers produced power for more than one-third of the total U.S. electric generators that were boiler-powered.

Other industry leaders were Columbus, Ohio-based Worthington Industries Inc., with $2.4 billion in 2010 sales and 8,400 workers; Chicago Bridge & Iron Co., whose parent company, based in Sweden, had $3.6 billion in 2010 sales and 12,600 employees; and Alfa Laval Inc. of Richmond, Virginia, with $55 million in 2010 sales and 711 employees.


According to the U.S. Census Bureau, of the four categories listed by NAICS here, in 2009 the plate work and fabricated structural product manufacturing industry employed the most people, with 148,159 workers. Approximately 69 percent of these were production workers earning an average hourly wage of $19.05. The second largest group was air-conditioning and warm air heating equipment and commercial and industrial refrigeration equipment manufacturing, which employed 86,454 workers, 69 percent of whom were production workers earning $18.46 an hour on average. Third, metal tank (heavy gauge) manufacturing employees numbered 26,712, of whom 71 percent were production workers earning an average wage of $22.42 an hour. And finally, there were 21,832 workers in the power boiler and heat exchanger manufacturing industry, with 67 percent of production workers earning $22.58 an hour on average.

In terms of the total payroll per establishment, the fabricated plate work industry's workforce expenditures were slightly less than the average payroll expenditures for all other manufacturing industries, largely because the fabricated plate work industry employed fewer workers per establishment than the average for manufacturing industries.

Research and Technology

During the late twentieth century, two technological developments in particular enabled manufacturers in the industry to increase production efficiency and improve the quality of their products. One of these advances, acoustic emissions technology (AET), had been available to manufacturers of metal-related products for centuries. However, it was not utilized in the production of fabricated plate work until the 1980s, when it became an inevitable extension of the rapid technological advancements achieved by the computer industry as a whole during the decade.

The use of AET emerged as a viable and effective means to gauge the quality of plate work, and its adoption by manufacturers quickly spread. Acoustic emission, the sound produced by various types of materials during production processes, was first used commercially by those involved in the production of pottery. Potters relied on the audible cracking sounds clay pots produced while cooling in a kiln. These sounds enabled the practiced listener to determine which pots would eventually crack. An application more closely related to the type employed by fabricated plate work manufacturers, however, was used by tin manufacturers, who listened to the sounds of smelted tin, known as "tin cry," to detect structural flaws in the manufactured metal. For manufacturers involved in the fabricated plate work industry, acoustic emissions provided similar information in identifying the inherent structural weaknesses of their products.

Perhaps the most valuable contribution that monitoring acoustic emissions provided was the ability of manufacturers to determine the rate of deterioration of their products, rather than merely the condition of the metal at the time of inspection. Moreover, the structural integrity of metal could be determined without cutting into it, which conventional methods required. By the late 1980s, AET was embraced by manufacturers throughout the United States and regarded in the industry as the most reliable method of monitoring the structural defects of fabricated plate work during production.

Complementing the emergence of AET, the fabricated plate work industry also benefited from the increasing advances in computer design and software applications, helping manufacturers to reduce the operating and production costs of their products and to improve their designs. The advent of computer-aided design (CAD) especially provided manufacturers with an invaluable tool to determine the most economical and efficient design of power boilers and other products manufactured by the industry. Additional software applications, which were designed for use in industrial settings and were able to perform tasks that previously used a considerable portion of research and development expenditures, reinforced the industry's dependence on computers to effectively compete in a market that demanded the most sophisticated resources available.

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