The plastic pipe industry is expected to continue its steady growth of about 3 percent for the foreseeable future, but with factors outside of home building - namely infrastructure replacement and increased export activity - as the primary drivers.
The projected growth figures, in line with the plastic pipe segment's growth during the past 15 years, is a good thing, said Peter Mooney, president of Advance, N.C.-based Plastics Custom Research Services, which just released its pipe market findings in its ongoing ``Plastics Processing Report Series.''
``So long as the plastic pipe business grows along with the North American economy, this is a positive development,'' Mooney said in a June 6 telephone interview.
It is purely coincidence that the economies of the United States, Canada and Mexico are growing at nearly identical rates as plastic pipe, about 3.4 percent. That's less than the 5 percent growth anticipated for the overall plastics industry.
Mooney expects the thermoplastic pipe market to grow from $9.7 billion in sales last year to about $13 billion in 2010.
The home-building industry had been growing at a blistering pace before peaking in 2005. That growth is now on a gradual decline, forcing pipe makers to look elsewhere.
Mooney said the Environmental Protection Agency estimates it will take $660 billion during the next 20 years just to bring the nation's water and sewer systems up to modern-day standards. That means about $33 billion will be spent on infrastructure improvement, compared with just $10 billion per year currently spent.
``Infrastructure is so important as a growth driver for the plastic pipe business,'' Mooney said.
The conduit segment is also on the rebound, following the dot-com implosion, according to the PCRS report. Consumers continue to desire and pay for advancements in telecommunications, and that will keep conduit growth on the upswing.
The plastic pipe industry, like U.S. manufacturing in general, is not without problems.
In the early to mid-90s, new plant openings were keeping pace with closings. In about 1998, that stopped, and while nearly 4 percent of U.S. manufacturing plants are shutting down each year, less than half of that number of plants opened, the report said.
But contributing to that, Mooney said, is the growing efficiency of various manufacturers. Plastic pipe makers have proven more efficient, increasing their throughput while reducing extrusion lines and employees.
According to the PCRS report, the average number of extrusion lines per plant declined from 9.7 in 2000 to nine in 2005.
In the near term, there's a window of opportunity to export pipe to China, Mooney said.
``They can't supply their needs for pipe,'' he said. ``They're pretty well fixed with PVC, but not with PVC pipe plants. They don't have the extrusion capacity, particularly for large-diameter.''
Eventually, the Chinese will meet their demand by opening new plants. Further export opportunities should be explored in Mexico and South America, Mooney said.
``Unlike Europe, American manufacturers are just not geared to think of these export opportunities,'' he said. ``We have to become more globally oriented. We talk the talk, but we really haven't executed.
``I don't think they've looked hard enough at the export opportunities just south of us. It's not in their mind-set.'' That has to change, if pipe makers want to grow beyond the 3 percent forecast for the next five years.
``Above-trend growth will only come if the plastic pipe producers aggressively address export markets,'' Mooney said.