Cutting the pipeline

November 7, 2007
By: Vicki Bell

This week two metal tube and pipe companies announced plant closings.

Wolverine Tube Inc. announced Nov. 6 that it will discontinue its U.S. plumbing tube business and will close manufacturing facilities located in Decatur, Ala., and Booneville, Miss. The same day, U.S. Pipe & Foundry announced that it is cutting almost all of its work force at its Burlington City, N.J., facility. The reasons behind these actions?

Harold M. Karp, Wolverine president and COO said, "The Decatur and Booneville operations primarily serve the U.S. copper plumbing tube and smooth industrial tube markets. Demand for copper plumbing tube has significantly declined over the last several years as a result of the substitution of plastic tube in residential construction. This trend is reinforced by high copper prices. Additionally, the smooth industrial tube market is rapidly transitioning to a commodity market and the Decatur/Booneville cost structure is not competitive in either the plumbing or smooth tube markets. Wolverine's smooth tube requirements will be satisfied by a combination of production from other Wolverine locations and outsourcing."

U.S. Pipe & Foundry, which celebrated its centennial in 1999, plans to cut 180 jobs and cease manufacturing iron pipe at its Pearl Street plant in Burlington City, leaving only about 15 workers to run a distribution center. The jobs will be phased out by January or February. The company is a division of Atlanta-based Mueller Water Products. Three other U.S. Pipe operations, in North Birmingham and Bessemer in Alabama and in Union City, Calif., will continue operating, and Burlington workers will be given preferential consideration for job openings at those sites. The company is building a mini-mill in Alabama, adjacent to an existing plant.

Ray Torek, U.S. Pipe president said, "The decision to close this facility was exceptionally difficult because of the efforts our Burlington employees have made to keep the plant a viable part of our manufacturing operations. Yet, we know we have to be the low-cost producer of ductile iron pipe if we are to maintain a leadership position in our market and also continue to build the strong base necessary for future growth."

These actions point to two factors that long have loomed large over the U.S. metals industry: the possibility of plastic and composites replacing metal and global competition. In his presentation at the Outside Processors Council (OPC) dinner held in conjunction with the organization's golf outing to raise money for scholarships, David Jeanes, senior vice president, market development of the American Iron and Steel Institute (AISI), spoke about the fight against replacing steel with plastic and other materials in automobiles. AISI has partnered with automotive companies to demonstrate weight and cost savings using today's advanced steel products.

According to AISI, the average light vehicle weighs approximately 4,000 lbs. and contains nearly 2,600 lbs. of steel, representing 62 percent of the mass. A study conducted by Drucker Research demonstrates that high-strength steels now make up an average of 415 lbs. per vehicle, representing a 44.6 percent increase in the past 10 years.

AISI also is partnering with the construction industry to promote steel use in commercial and residential construction. Michael Meyers, director of industry marketing, U.S. Steel Corp., said "The diversity and complexity of the collective construction market segments continue to demand an AISIfocused steel strategy in order to define opportunity and achieve overall market growth."

Regarding global competition, AISI's annual report stated that the North American steel industry is at the table with its NAFTA partners working to ensure that global competition is played on a level playing field. It presents an analogy to explain leveling the playing field: "Anti-competitive violations of the rules of free trade are as important to American manufacturers as steroid use is to the International Olympic Committee. The logic is simple: Any athletes who use steroids (and are caught) get their medal taken away—because it gives unequal advantage to other athletes. Likewise, egregious, unfair advantages on the global steel playing field harm those who are playing by the rules and need to be addressed."

Looks like we"ll be using fewer U.S.-produced copper pipes to water that playing field.

Vicki Bell

Vicki Bell

FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-227-8209