SIC 3353 Aluminum Sheet, Plate, and Foil
SIC 3353
This classification covers establishments primarily engaged in flat rolling aluminum and aluminum-alloy basic shapes, such as sheet, plate, and foil, including establishments producing welded tube. Also included are establishments primarily producing similar products by continuous casting.
331315
Aluminum Sheet, Plate, and Foil Manufacturing
"The aluminum sheet market is like a box of chocolates: you never know what you're gonna get." With due credit to Forrest Gump, David Hamill of American Metal Market aptly described the volatility of this sector in the mid-1990s. In the 1993-96 period alone, the market bottomed out, peaked, and drew back once more. While the gyrations made life interesting for speculators, they were anathema to users who sought stable, predictable pricing. By the late 1990s, the industry had begun to consolidate considerably—most notably with the merger of giants Alcoa and Reynolds. Industry shipments totaled $11.5 billion in 2001, down from $12.8 billion in 2000. The industry remained relatively flat in 2002 with little growth anticipated during 2003.
Over the past several decades, aluminum makers have been successful in developing new products and taking market share from competitors like steel. Much of the industry's gains could be traced to the intrinsic qualities of the metal—aluminum is strong, lightweight, and eminently recyclable, all qualities that were still highly prized in the 1990s. Skilled management and smart marketing, however, had also been significant factors in the industry's advance. Thus it had come to dominate the beverage can market and had established an increasing presence in automobile manufacturing.
While the industry had done an excellent job in spurring demand, the volatility in aluminum markets was causing more than a few users to have second thoughts about the metal. In the important automotive market—and even in cans—some executives were taking another look at steel. Nevertheless, producers remained optimistic that aluminum's physical traits would make it the metal of choice in a growing variety of applications. The economic conditions of the early 2000s were putting pressure on aluminum as oversupply and lack of demand combined to slow the industry's growth.
Aluminum sheet, plate, and foil represent the aluminum industry's major product group and account for the majority of shipments from aluminum producers. Aluminum is first produced in the form of sheet ingot. These ingots, which may weigh as much as 20 tons, are flat-rolled and rerolled until the desired thickness, or gauge, is achieved. The gauge determines what product has been produced: plate is a quarter-inch thick or more; sheet is .006 inch to .249 inch; and foil is less than .006 inch. Sheet is by far the most widely used form of aluminum and is found in all of the industry's major markets, including containers and packaging (most notably beverage cans) and transportation (i.e. panels for automobile bodies). Plate is used for the skins of jetliners and to make storage tanks, among other heavy-duty applications. Foil is used, of course, to wrap the Thanksgiving turkey, but is also utilized in building insulation and electrical capacitors, as well as a wide variety of packaging applications.
Vertical integration in the aluminum industry is extensive—it goes well beyond the mining, refining, and smelting of primary aluminum (including sheet ingot, casting ingot, and extrusion billet) to the production of semifabricated and fabricated products downstream, including sheet, plate, and foil offerings. Alcoa, formerly the Aluminum Company of America, has dominated the industry; its scheduled May 2000 merger with other industry leader Reynolds Metals, coupled with the restructuring of the former Tenneco, Inc., will give it a huge presence in the industry. Canadian manufacturer Alcan, however, has launched something of a challenge with planned mergers of its own.
The aluminum industry is relatively young. The first major application, cast cooking utensils, did not appear until the 1890s. Following the turn of the century, however, prices fell, production rose, and applications grew. World War I greatly expanded use of the metal, as armies searched for lightweight, durable materials for military equipment. In the 1920s, high-strength alloys were developed that were used in the development of the commercial airline industry in the 1930s. During World War II aluminum output increased, primarily due to demand from warplane production and soldiers' rations packaging. While consumption dropped briefly right after the war, consumer demand soon picked up the slack. In the early 1950s the Korean War produced another surge in aluminum shipments. As consumer demand grew during the postwar prosperity, the range of applications increased accordingly. Use of aluminum building products in commercial and residential construction expanded, and aluminum foil became a staple of the American kitchen.
The advent of a strong environmental movement gave new prominence to the industry, since aluminum was particularly suited to recycling. To produce aluminum from recycled scrap requires only 5 percent of the energy that it takes to make it from scratch. Since the economics of recycling make so much sense, industry participants have supported the efforts of environmentalists in this area. Moreover, as governments pressure automakers to increase gas mileage of their vehicles and thus save energy, lightweight aluminum is gaining favor among manufacturers in a variety of applications.
Aluminum is a notoriously cyclical business, and after a very strong performance at the end of the 1980s, a few lean years might have been expected. The extent of the downturn, however, was an alarming one for industry participants and well beyond expectations. In the early 1990s the aluminum industry became one of the unintended victims of the Cold War's aftermath. Russia no longer needed much aluminum for its defense sector, but it did hunger for export earnings. Before the fall of the Berlin Wall in 1989, Russia sent about 250,000 metric tons of aluminum overseas each year; by 1993 they were shipping aluminum at an annual rate of 1.2 million metric tons. As Clifford Gaddy, a Brookings Institution economist, told the Wall Street Journal, "We were used to a world in which one of the biggest commodity producers was the most stable and...
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