Miscellaneous Structural Metal Work

SIC 3449

Industry report:

This category includes establishments primarily engaged in manufacturing miscellaneous structural metal work, such as metal plaster bases, fabricated bar joists, and concrete reinforcing bars. Also included in this industry are establishments primarily engaged in custom roll-forming of metal.

According to industry statistics, the total number of operations engaged in the manufacturing miscellaneous structural work classification fell throughout the mid-to late 2000s, bottoming out at 1,354 in 2009. Consequently, the workforce also shrunk to 19,642. The industry shipped $1.99 billion in structural metal products that year, down from $2.4 billion in 2008.

California and Texas led in market share with 9.5 percent and 9.4 percent, or 128 and 127 manufacturing facilities, respectively. The two states combined to employ 4,747 workers. New York followed with 5.1 percent in market share, or 69 establishments. Other top performers were Illinois with 4.8 percent, Ohio with 4.7 percent, Michigan with 4.6 percent, and Florida with 4.0 percent. These six states collectively shipped $957.9 million in miscellaneous structural metal products.

Closely related to the construction and automobile industries, structural metal work manufacturers were heavily affected by the recession of the late 1980s and early 1990s, following a $1 billion boom in shipments between 1986 and 1988. After dropping sharply in the early 1990s, shipment values recovered and leveled out in 1993.

One reason for this stagnation was the industry trade deficit between the United States and its foreign competitors. Customers of steel firms were adversely affected by complaints filed by U.S. firms against foreign steel manufacturers concerning this trade deficit. The deficit continued into the mid-1990s, as imports of steel drastically increased in 1996 to the second-highest tonnage ever; 29 billion net tons of steel were imported, up 19.5 percent from 1995. The deficit, combined with U.S. steel producers' protests, diminished business at U.S. ports, increased prices for steel products, and left a shortage of specialty plate and sheet products previously supplied by foreign suppliers. As a result, some U.S. steel-using firms were contemplating relocation to Canada, Mexico, and other Pacific Rim countries.

In the mid-1990s, the industry focused on cost reduction through process improvement and materials research. CF&I Corp. invented a new process that produced rails continuously for a quarter of a mile, reducing both the need for welding and construction costs. Ford Motor Co., in partnership with Alcan Rolled Products Company, experimented with the effects of hybrid aluminum-steel sheet metal on an the fuel economy, durability, service, and performance of automobiles. A rigid rod-polymer, developed in 1995, had the capability to replace structural metals, such as stainless steel and aluminum. The polymer, which is four times stiffer than conventional plastics and can be injection molded, extruded, or compressed, posed a threat to the structural metal industry.

In the first three quarters of 1998, Japan "dumped" almost 5.5 million tons of steel, selling it below manufacturing costs into the United States; this represented a 157 percent increase over 1997 U.S. imports. Domestic prices fell in response, as did domestic production. Officials blamed imports for the loss of 10,000 steel industry jobs. The fabricating segment of the industry, however, did not suffer as much as production did, since fabrication took advantage of the low prices of its raw materials.

By 2003, however, the market began to rebound. According to the American Iron and Steel Institute (AISI), 2003 shipments from American steel mills increased 6.5 percent over 2002. In fact, shipments increased more than 19 percent when comparing only December 2002 and December 2003. Since 2003, the industry has experienced periods of fluctuations. The Precision Metalforming Association (PMA) reported the total number of all steel products imported declined by 12 percent from 2004 to 2005. The Annual Survey of Manufactures reported that overall shipments for the industry were valued at about $40.2 billion in 2004. This decline was followed by a 32 percent increase of import shipments in the first half of 2006 from that same time in 2005. In general, the employment outlook for the architectural and structural metals manufacturing industry was expected to grow steadily from 316,000 in 1992 to nearly 480,000 by 2012 based on an expected increase in automation and reductions in production-related employment, while job prospects should increase for sales personnel, industrial production managers, and cost estimators.

As with all manufacturing industries, challenges to the steel industry in the mid-to late 2000s were expected to come from inequitable foreign market competition. Tax incentives on exports, offered through the Federal FSC/ETI bill, were strongly opposed by American manufacturers, as was the World Trade Organization's policy on taxes that the AISI identified as a "double tax" on U.S. products that contributed to the difficulty of competition in the global market, as well as sustaining stable growth in the manufacturing sector. AISI and PMA have aligned with other steel associations to improve the industry, including lobbying to the U.S. government for support of various trade laws.

The miscellaneous metalwork sector was responsible for more than half, 58.7 percent, of the industry in market share by 2008, with 819 manufacturing facilities, a workforce of 10,993 workers, and $1.3 billion in revenues. The manufacturing of bars or concrete reinforcing constructed from fabricated steel held 32.9 percent of the market share with 459 operations and 7,161 employees. Other important industry categories based on revenue were fabricated bar joists that shipped $172.4 million in products, custom roll formed products that shipped $93.2 million; fabricated bar joists and concrete reinforcing bars that shipped $62.4 million, metal plaster bases that shipped $36.1 million, steel curtain walls for buildings that shipped $18.1 million, and metal curtain walls that shipped $16.3 million.

The unprecedented deteriorating market conditions continued to linger as a result of the global deep recession. Moreover, material costs and increased pressure from manufacturers in China contributed to the industry's downturn. In mid-2008, the price of hot-rolled steel stood at more than $1,000 per ton, which was the highest recorded in U.S. history. Despite the industry's efforts to curtail imports, the industry trade deficit between the United States and its foreign competitors remained an uneven playing field. By March 2009, steel shipments plunged 54.8 percent compared to the same time period in 2008, according to the Steel Import Monitoring and Analysis (SIMA), the tracking system used by the U.S. Department of Commerce. AISI reported that mid-2009 shipment values fell 55.3 percent in the automotive industry and the construction industry dipped 56 percent below 2008 levels.

Some industry insiders were concerned most with the negative effect of low-priced imports. Thomas J. Gibson, president and CEO of AISI, noted in a press release in June 2009 that "import market share is staying at high levels even at a time when our domestic steel industry is operating at only a 46 percent of capability and there are widespread layoffs."

During 2009, apparent consumption of steel in the United States feel by more than 32 percent. (Apparent usage refers to steel delivered to the marketplace from domestic suppliers and importers; real usage takes into account steel also drawn from inventories.) According to a forecast by World Steel Association, as reported by American Metal Market in October 2010, "Aided by stock building and a recovery in manufacturing, apparent steel usage in the United States is expected to grow 32.9 percent this year and another 9.4 percent in 2011 to 86.1 million tonnes, bringing the figure back to 79.7 percent of the 2007 level."

As a result, many companies within this industry faced very difficult to dire business conditions during 2009. However, those that survived anticipated that the worst times for this cycle were behind them. To weather the tough business conditions, many firms cut costs, condensed their operations, reduced their workforces, and delayed or canceled capital projects. Some closed their doors, as the number of firms in the industry declined. If business returns, as projected by the World Steel Association, those firms that managed to stumble through 2009 will be leaner and trimmer for upcoming growth opportunities. Many questions remained within the steel market, however, concerning the industry 's future. In particular, China 's demand and production capacities were expected to continue to impact the global marketplace.

Pittsburgh-based Allegheny Technologies Inc. (ATI) led the industry with 2008 revenues of $5.3 billion and 9,600 employees. In 2009 the company 's revenues dropped to $3.1 billion. Las Vegas-based Tang Industries Inc. is a holding company that includes several metal-related subsidiaries including National Materials through which it engages in steel stamping, scrap trading, aluminum extrusions, die casting and recycling and metal fabrication. The company, which is privately run, had 2009 sales of $7.9 billion.

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