U.S. Large Diameter Pipe Demand (million feet)
Demand for large diameter concrete pipe will increase by 2% each year until 2010, according to “Large Diameter Pipe to 2010,” a recent study by The Freedonia Group Inc. Although this is slightly below the projected rate of all pipe sales in the United States (2.3%), concrete pipe is expected to account for more than half of all linear pipe footage.
Freedonia researchers attribute this growth to expanding and repairing aging infrastructure, specifically concrete pipe storm sewers. The report also identifies storm sewers as the leading large diameter pipe use, due to widespread drainage applications and expanded highway and street construction projects.
The study also analyzes demand for plastic, steel, cast iron, and clay pipes. Plastic pipe is expected to have the most growth, due to production improvements that will increase its use for water distribution, sewers, and other applications. An annual growth rate of 4.3% is projected for plastic pipe until 2010. Demand for large diameter steel and cast iron pipe should grow, but competition from plastic pipe, particularly in water distribution applications, will hurt clay pipe sales.
Freedonia cites historical data, construction forecasts, government data, market environment indicators, industry structure, and “profiles [of] 45 leading industry participants.” But the American Concrete Pipe Association (ACPA) doubts its accuracy.
ACPA is compiling its own report to measure market share of concrete pipe in the public sector. This should be complete by August; results are not expected to be made public.
Nevertheless, the ACPA recognizes some of the same factors affecting the industry, such as a steady increase in storm drainage work. The Freedonia report states, “Best opportunities are anticipated for concrete pipe in the larger diameters due to growing competition from plastic pipe in the smaller segments.”
Builders on tight budgets using plastic pipe in housing and commercial building may be driving this. Matt Childs, ACPA president, agrees that the private market poses the biggest challenge for concrete pipe. But he adds that concrete pipe still dominates public projects.Highway spending
“The biggest influencer now is funding of federal projects because they represent such a large share of our work,” says Childs. The 2005 Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) bill generated most of this work. SAFETEA-LU guarantees $244.1 billion of federal funding for highways, highway safety, and public transportation.
But not all recent developments have been positive. As with other concrete products, the cost of natural gas, steel, oil, and cement have affected the price of concrete pipe. Cement prices increased 11%, and steel products rose 23% between September 2005 and September 2006, according to the Associated General Contractors of America.
Lingering effects of the Atlantic hurricanes of 2005 have also been a factor for some pipe producers. The same companies that struggled through the hurricanes themselves are now dealing with a slow recovery.
In New Orleans, where rebuilding is still in progress, infrastructure projects have taken a back seat to more urgent construction needs. The continued use of concrete pipe in repairing and building levees and dams is one exception.
It all prompts several questions: Will an increase in public projects outweigh competition and the rising cost of materials? Will concrete pipe hold its own in the private sector? It may be up to producers to provide a clearer forecast and to find the right balance: protecting trade secrets while providing with their own association and the public with enough information to keep the industry thriving.