SIC 2822
SYNTHETIC RUBBER (VULCANIZABLE ELASTOMERS)

This category covers establishments primarily engaged in manufacturing synthetic rubber by polymerization or copolymerization. An elastomer, for the purpose of this classification, is a rubber-like material capable of vulcanization, such as copolymers of butadiene and styrene, or butadiene and acrylonitrile, polybutadienes, chloroprene rubbers, and isobutylene-isoprene copolymers. Butadiene copolymers containing less than 50 percent butadiene are classified in SIC 2821: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers. Natural chlorinated rubbers and cyclized rubbers are considered as semifinished products and are classified in SIC 3069: Fabricated Rubber Products, Not Elsewhere Classified.

NAICS Code(s)

325212 (Synthetic Rubber Manufacturing)

Industry Snapshot

Production of synthetic rubber on a commercial scale began in the United States during the 1930s, though natural rubber has been used since the early 1800s for multiple applications. The United States assumed an early lead in the development and production of vulcanizable elastomers—a position that it maintained throughout the twentieth century. Indeed, the value of shipments increased from $4.7 billion in 1994 to $5.7 billion in 2001.

Rubber manufacturers were holding their own in the early 2000s, although the industry was suffering from the general malaise of a weak economy. A sluggish economy, product maturity, stagnant demand growth, and increasing foreign competition were the dominant factors suppressing industry profitability. Although producers tried to counter this downward momentum with increased productivity and the development of new rubbers, oversupply, increases in raw material prices, and slow demand were working against rubber producers. Ironically, past industry successes contributed to the industry's stagnation. Long-lasting rubbers, for instance, reduced demand in large market segments such as the tire industry. Competitors were looking to new rubbers for growth in the 2000s.

Organization and Structure

The synthetic rubber industry represents about 8 percent of the entire U.S. synthetic materials manufacturing sector. Plastics (SIC 2821: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers ) and manmade fibers (SIC 2824: Manmade Organic Fibers, Except Cellulosic ) are the other synthetics.

The synthetic materials industry is considered part of the overall U.S. chemical industry, of which synthetics account for about 25 percent. Natural rubber, which represents about 20 percent of all rubber consumed in the United States, is derived from rubber trees and other organic sources. Production and processing of natural rubber is not included in this industrial classification.

Synthetic rubber offers important advantages over natural materials. Among its most beneficial characteristics are its great resistance to corrosion caused by fluids and gases, its very poor electrical conductivity, and its ability to flex and then regain its original shape. Because of the endless variety of compounds that can be created, synthetic rubber has increasingly been used as a substitute for more expensive, lower performance natural materials. Besides displacing woods, metals, and ceramics in many traditional applications, rubber has allowed the creation of completely new products.

The synthetic rubber industry shipped $6.06 billion worth of material in 1997, which was equivalent to about one-quarter of the value of sales by U.S. tire and inner tube manufacturers. By 2000, this number was expected to increase to $6.68 billion. Despite its relative economic insignificance, however, the industry supplied billions of pounds of material and has been an integral part of the U.S. and global industrial machine. Rubber serves a vital role in transportation industries but is also an important production material for medical supplies, packaging and sealing devices, construction equipment, and other goods. Furthermore, U.S. producers supply about onequarter of total world rubber consumption.

Competition and Markets. The industry is highly consolidated, with only about 120 firms competing in the late 1990s. Of the 143 U.S. rubber production establishments operating in 1997, only 57 employed a workforce of 20 or more. Geographically, nearly 33 percent of the U.S. industry's 143 establishments—or 47 establishments in all—were located in the five states of Texas, Louisiana, Ohio, Florida, and Indiana. Even more telling, the 47 establishments in those five states employed 6,617 workers in 1997 which was more than half of the total U.S. synthetic rubber workforce of 12,009.

Tire and inner tube manufacturers consumed about 35 percent of industry output in the late 1990s. The remainder of the rubber market, though, is highly fragmented and is represented by a vast array of fabricated rubber products. Paper mills and floor covering producers each use about 5 percent of all rubber absorbed domestically, while about 2 percent of output is required to make hoses and belts. Adhesives, gaskets, sealants, and packing devices also consume about 5 percent of production. Other popular uses of rubber include the manufacture of sporting goods, medical supplies, footwear, paint, printing ink, chemical...

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