Metal Foil and Leaf

SIC 3497

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing gold, silver, tin, and other metal foil (including converted metal foil) and leaf. Also included are establishments primarily engaged in converting metal foil (including aluminum) into wrappers, cookware, dinnerware, and containers, except bags and liners. Establishments primarily engaged in manufacturing plain aluminum foil are classified in SIC 3353: Aluminum Sheet, Plate, and Foil.

Industry Snapshot

Aluminum foil, the bulk of which is converted into food containers and packaging for food and other products, is a major component of this industry. The bulk of the industry's output consists of laminated aluminum foil rolls and sheets for flexible packaging uses, especially foil-paper laminate, and of converted, unmounted aluminum foil packaging products. Consequently, the fortunes of the industry are closely tied to the prosperity of the food packaging industry.

The remainder of the industry's output consists of unconverted metal foil and leaf and converted foil for non-packaging applications, many of which are on the cutting edge of technology, especially in the field of electronics. The industry is thus divided between those facets producing everyday household products, such as aluminum foil popcorn containers, and high-technology foils, such as ultra-thin (3 microns) copper foil, to answer industry demands for the miniaturization of electronic components.

According to industry statistics, there were an estimated 101 establishments engaged in manufacturing gold, silver, tin, and other metal foil (including metal foil) and leaf valued at $452.2 million in 2009, down from $908.2 million in 2008, with industry-wide employment at 4,758 workers. Two words that best describe the direction of the aluminum foil industry were continuous growth, especially when it came to the development of new uses for aluminum foil, such as insulation material. However, the industry was stymied in 2009 by a deep recession that cut growth across nearly all sectors of the U.S. economy.

Organization and Structure

The largest segment of the metal foil and leaf industry is served by the Aluminum Foil Container Manufacturers Association, headquartered in Savannah, Georgia. This association, founded in 1955, was comprised of six general member companies and three supplier member companies in 2010. Its journal, Paper, Film and Foil Converter, provides information to producers in the industry.

Firms involved in the production of metal foil and leaf are not generally involved in the production of metals. As Hamilton Bowman wrote in his Handbook of Precision Sheet, Strip and Foil, a foil producer's "operations are generally confined to the cold rolling, heat treating, flattening, slitting, and edge conditioning of coils of flat-rolled metal produced for him by a basic mill." However, the scope of operations in the industry widened considerably in the late twentieth century as the use of foil for containers, packaging, electronics, and holograms became increasingly important.

Background and Development

Metalsmiths have produced flat metal sheets for centuries. In its earliest form, metal foil was produced by hammering malleable metal against a flat surface. As early as the seventeenth century, metal foils were produced by hand-operated rolling mills. These early mills made use of two parallel iron cylinders through which metals were passed in a number of successive stages, depending on the thickness of foil desired. Thinner products were referred to as sheet and thicker products as plate. By the mid-nineteenth century, a great many powered rolling mills were in use in Europe and the United States. The use of parallel cylinders continued as the dominant method of foil production in the late 2000s, and hammering techniques continued to be used in the production of gold leaf and foil.

By the end of the nineteenth century, continuous-process roller mills came into use. These mills differ substantially from their predecessors. Instead of reducing the metal to the desired thickness by making a series of passes, continuous-process mills operate on a longer piece of metal that is flattened to the desired thickness by being passed once through a series of roller pairs set at ever-closer distances to each other. These mills substantially reduce the cost of production by optimizing the flow of materials and reducing setup times.

Until the mid-1920s, continuous-process mills, which are also called tandem or strip mills, were not able to produce widths greater than 24 inches. More powerful mills were developed that could accommodate greater widths, and narrower widths subsequently were produced by slitting broader widths of material.

Many different metals are converted to foils, among them copper, gold, lead, magnesium, nickel, platinum, silver, tin, and zinc. Foil is generally defined as being 0.005 inches or less in thickness. Some foil producers also manufacture precision sheet and strip, which are materials between 0.015 and 0.005 inches in thickness.

The cold rolling of foil and precision sheet and strip requires much greater precision than the cold rolling of thicker sheets. Variations in thickness, temper, and finish need to be more controlled. Consequently, foil is produced at much slower speeds than thicker sheets, and complex systems are required to monitor variation. Key developments in the post-World War II years included the use of smaller diameter rollers, the more rigid mounting of rollers, and more sophisticated drive mechanisms and systems of control.

Larger-diameter rollers have the disadvantage of greater surface contact with the rolled metal. Greater force is required to overcome the greater frictional resistance of large rollers. Thus, for any given amount of energy used, large rollers reduce sheet thickness by lesser amounts than smaller rollers. The greater flexibility of smaller rollers requires that they be backed up by large adjacent rollers called backup or support rolls. In four-high mills, each contact roller is backed up by a single support roll. In cluster mills, each contact roller is typically backed by nine support rolls. Steckel mills are four-high mills in which the rolls are not driven. Metal sheet is instead pulled through the rolls, permitting a great deal of thickness control, though somewhat less reduction per pass than a standard four-high mill. Large-diameter, two-high mills permit reductions of only 10 percent per pass, whereas four-high mills permit reductions of 50 to 60 percent and cluster mills reductions of 75 percent per pass. Smaller contact rollers enable not only greater reductions but also less variation in foil thickness.

Cold rolling makes metal harder and more brittle. Depending on the thickness of foil desired, cold-rolled metals need to be heat treated, or annealed, to soften them for further reduction. Reductions obtained through cycles of annealing and cold rolling are constrained only by the mechanical limitations of the rolling machinery and by handling considerations.

Development of the metal foil and leaf industry was based on these basic technologies. In Handbook of Precision Sheet, Strip and Foil, Hamilton Bowman wrote that the growth of the industry since the 1960s resulted "as designers have come to appreciate the unique advantages of economy, weight saving, and dimensional precision inherent in these metals."

In 2005 the value of shipments of laminated aluminum foil for flexible packaging use was $1.53 billion, only a slight increase over $14.6 billion in 2002. For fiscal 2004, foils and wraps had approximately $581 million in sales in food and drug sales outlets.

The future of the industry depends in large part on technical developments within and outside of the industry. A number of viable substitutes for metal foil laminates have been developed, cutting into the market for the industry's most important product. Among these new materials were metallized polypropylene, metallized paper, polyethylene, and ethylene vinyl alcohol. However, such new products as extremely thin steel foils and improved foil products for baking suggested the possibility of growth for the core products of the industry.

While sales in this category are traditionally flat, the biggest competitor by the mid-years of the first decade of the 2000s was the variety of convenience plastic storage options available. By 2003, for example, Reynolds had introduced products for the food market, including non-stick foils, in order to tap into consumer preferences for foils for oven use, particularly in the case of meat preparation.

One industry report, titled U.S. Aluminum Market (2006), published by RNCOS, a market research firm, found the U.S. to be increasingly dependent on imported aluminum since it was cheaper to produce, which left domestic producers at a disadvantage. Between labor and energy, it cost U.S. aluminum producing companies about 33 percent more in the smelting of aluminum. Aluminum foil shipments increased 3.5 percent for the first nine months of 2006 to 660,770 tons according to Packaging & Converting Essentials. That trend would continue with shipments of aluminum foil expected to reach over 720,000 tons in 2007.

Current Conditions

In 2009, there were 50 metal foil and leaf producers responsible for nearly half of the industry market share employing 1,697 workers who shipped $77.8 million in products. Based on sales valued at $348.8 million, producers of foil containers for bakery goods and frozen foods were clearly the industry leaders. Other significant industry sectors were those engaged in the manufacturing of copper foil who shipped $8.2 million in products, including 12 mills that produced foil, laminated-to-paper or other materials valued at $12.9 million.

In terms of number of businesses, California led with 15.4 percent in market share, followed by New Jersey (11.9 percent), New York (10.9 percent), and Illinois (10.9 percent). Illinois led all states in sales, accounting for $336.4 million, or 74 percent, of the industry 's total revenues of $452.2 million.

Total revenues for the industry declined sharply in 2009 to $452.2 million, down from $908.2 million in 2008. Depressed demand as the result of an economic recession, which peaked in 2009, was partly responsible for the deflated industry values. In addition, U.S. aluminum leader Alcoa, in an attempt to streamline its operations during the difficult economic environment, sold off its flexible packaging business group, including its aluminum foil and plastic wrap operations, to New Zealand 's Rank Group Limited. These businesses include the brand names Reynolds Wrap, Diamond, Baco, and Cut-Rite. Thus, Reynolds Wrap and Diamond aluminum foils, both industry leaders, were taken out of U.S. statistics as they fell under foreign ownership.

At the end of 2009, Reynolds introduced an aluminum foil that was made from 100 percent recycled aluminum. The recycled aluminum also does not require bauxite mining, which can be detrimental to the environment. Because foil is not recycled as often as other forms of aluminum, such as cans, some end users were looking to more environmentally friendly packaging. For example, in 2010, Wrigley 's announced that it would begin wrapping five of its largest gum brands (Big Red, Doublemint, Juicy Fruit, Winterfresh, and Wrigley 's Spearmint) in paper, saving an estimated 850 tons of aluminum annually from landfills. For its part, the industry sought was to promote recycling.

Industry Leaders

General members of the Aluminum Foil Container Manufacturers Association in 2010 were CM Packaging, HFA Inc./Handi-foil Corporation, Novelis Foil Products, Pactiv Corporation, Penny Plate, Inc., and Schwan 's Global Supply Chain/Mrs. Smith 's Foil.

CM Packaging, located in Lake Zurich, Illinois, was founded over 100 ago. Its 400 employees produce over 1,000 different products. CM Packaging has grown through the years through acquisitions, including Cardinal Container (1978), Progressive Aluminum (1989), Ecko/Glaco (1996), and Packaging Direct (2005).

HFA Inc./Handi-foil Corp., a privately owned company located in Wheeling, Illinois, introduced the retail aluminum bakeware category. Located in LaGrange, Georgia, Novelis Foil Products maintains 36 operating facilities in 12 countries and employs more than 13,000.

Pactiv, which had revenues of $3.4 billion in the late 2000s, is a diversified packaging company with more than 3,500 items in its inventory. Located in Lake Forest, Illinois, Pactiv produced aluminum contains, bakeware, and foils. The Buff family, owners of Penny Plate Inc., located in Haddonfield, New Jersey, are credited with inventing the first disposable (now recyclable) aluminum pie plate in 1948. Schwan 's, known for their frozen pies and home-to-home deliveries, stamps over 14 million pounds of aluminum each year, supplies not only enough pie pans for its own needs but also supplies the food service industry with aluminum packaging products. Schwan 's is located in Pottstown, Pennsylvania.

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