Valves and Pipe Fittings, NEC

SIC 3494

Industry report:

This category includes establishments primarily engaged in manufacturing metal valves and pipe fittings, not elsewhere classified, such as plumbing and heating valves, and pipe fittings, flanges, and unions, except from purchased pipes. Establishments primarily engaged in manufacturing plastic pipe fittings are classified in SIC 3089: Plastics Products, Not Elsewhere Classified; those manufacturing plumbing fixture fittings and trim are classified in SIC 3432: Plumbing Fixture Fittings and Trim; and those manufacturing fittings and couplings for garden hoses are classified in SIC 3429: Hardware, Not Elsewhere Classified.

In 2010, 25,224 people were employed in the miscellaneous valve and pipe fittings manufacturing industry, according to Dun & Bradstreet. At one time most of the companies were medium-sized or smaller, but mergers and acquisitions reshaped the industry during the early twenty-first century, creating heavily diversified companies. For example, in 2011 major valve and pump maker Crane Co. was also involved in the snack food industry, and Parker-Hannifin Corp. developed products for the aerospace industry.

The valves and pipe fittings industry relies heavily on both the oil and the construction industry. The domestic oil industry had been depressed since the mid-1980s, but the retrofitting of pipes in the housing market served to maintain a level of stability through the first half of the first decade of the 2000s. The economic decline at the end of the first decade of the 2000s, however, put a damper on the industry. In 2010 more than 54 percent of the establishments in this industry reported engaging in the manufacture of valves and pipe fittings not elsewhere classified, and a smaller percentage claimed the production of plumbing and heating valves as their main activity, according to Dun & Bradstreet.

Two decades earlier, the 1990s had brought industry growth because of changes in fire sprinkler laws. A fire in a Puerto Rico hotel in the early 1990s caused the federal government to review and change laws regarding automatic fire sprinkler systems in buildings exceeding six stories. Additionally, a low-rise hotel fire in Chicago that killed 15 people in 1993 caused the federal automatic fire sprinkler laws to change regarding buildings lower than seven stories. As a result, many buildings started retrofitting to comply with new safety regulations. A secondary consequence was an increase in demand for many of the products manufactured in this sector.

The market grew in the middle of the first decade of the 2000s, due in part to a housing boom. This was demonstrated by the sales of industry leader Parker-Hannifin Corp., which increased from $5 billion in 2001 to $9.4 billion in 2006, representing a nearly 47 percent increase. In addition, Crane Co.'s sales jumped 30 percent from $1.5 million in 2001 to $2.1 billion in 2005. Localized markets resulted in demand coming from such varied markets as chemical plants, pharmaceutical companies, oil and gas producers, and highway construction. The overall domestic demand was primarily in petroleum production and refining, water and sewage, and construction. Sales trends in control valves began to increase in 2003 due to expansion in other markets, and this growth persisted as new projects forced manufacturers to become more involved in the planning stages of products rather than focusing solely on outputs.

Competition from foreign markets continued to increase, however, especially as the reduced value of Asian currencies essentially gave buyers discounted prices. In 2003 U.S. manufacturers went to court to stop the glut of Chinese products being dumped in the domestic market, although large numbers of dumping continued to be reported in the 2010s. Steel makers got some relief from trade tariffs in 2002, although stainless steel fittings and flanges were not included, leaving those in the industry poised for more difficulty in keeping U.S. companies competitive. Some predicted that the lower quality of foreign products would eventually reduce foreign competition.

Despite foreign competition, U.S. manufacturers had an edge in technologies, product development, and knowledge, and increased work in this area helped keep U.S. companies competitive in the global marketplace. For example, in late 2003 Parker-Hannifin offered CAD drawings of its industrial and commercial products for use in designs to suit customers' individual needs. In July 2006, Tyco Fire & Security and Engineered Products & Services (TFS/TEPS) awaited patent approval on a sprinkler system designed for cold storage facilities. Many companies were exporting roughly half of their products, buoyed by more business being conducted via e-commerce and the Internet. In the middle of the first decade of the 2000s, shipments from this industry increased modestly, primarily due to increased foreign demand, which outpaced domestic demand.

A report in 2008 by ARC Advisory Group found "the dynamics of the global control valve market have reversed 180 degrees; from historic growth, to a historic recession." Companies in the industry tried to prepare for some tough years in 2009 and 2010, and global demand was expected to start to increase slightly between 2011 and 2013. Meanwhile, competition intensified in the fluid power valves and hose fittings sectors while U.S. manufacturers waited for the worldwide economy to rebound.

Current Conditions

According to Dun & Bradstreet, there were an estimated 591 establishments engaged in manufacturing metal valves and pipe fittings, not elsewhere classified, in 2010. Valued at $1.7 billion, the industry employed 25,224 workers. On average, each establishment employed 48 workers and generated about $4.8 million in revenues. The majority of establishments were located in California, Texas, Pennsylvania, Ohio, and New Jersey. Major categories in this industry included manufacturers of pipe fittings; field sprinkler systems; plumbing and heating valves; and couplings, except pressure and soil pipe.

Industry Leaders

In 2011 long-time industry leader Tyco International announced it would split into three different publicly traded companies: residential security, commercial fire protection and security, and flow control products and services. The latter division, Tyco Flow Control, produced valves and related products. In 2008 Tyco International had reported overall sales of more than $20 billion with 118,000 employees worldwide. Another industry leader was the large and diversified Parker-Hannifin Corp., based in Cleveland, Ohio, which had sales of $12.3 billion in 2010 and 54,800 employees. The more product-specific Flowserve Corp. of Irving, Texas, reorganized in 2010 and reported fiscal-year sales of $4 billion with 15,000 employees. Stamford, Connecticut-based Crane Co., which had five divisions, reported $2.2 billion in 2010 sales with 10,500 employees. All of these companies operated in dozens of countries worldwide.

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