July 2003
Expanded vs. Perforated
Manufacturing Slump Crimps Sales of 'Metal With Holes'

Makers of perforated metals have stolen market share from expanded metal companies in the past decade, but with the help of a revitalized trade association, the forces of expanded metals plan to fight back.

BY MYRA PINKHAM,
CONTRIBUTIN EDITOR

In response to weak end-use demand and competitive challenges from makers of perforated metals, expanded metals manufacturers have stepped up the marketing of their products to win back market share they have lost over the past 10 years.

In simple terms, expanded and perforated metals both have holes to allow the flow of air, fluid or light and are natural rivals for such applications as enclosures, racks, shelving and architectural elements. Although the two materials have applications in common, their producers argue that each product is unique, possessing very different strengths and weaknesses.

Perforated metal is produced by punching holes in flat-rolled steel, aluminum, copper and other substrates. Expanded metal is made by slitting and stretching the sheets, thus adding structural strength while producing no waste.

Although 90 to 95 percent of expanded metal is sold through service centers, only 20 to 30 percent of perforated metals is sold through distribution, mainly specialty houses.

Gene McNichols, chairman, president and chief executive officer of McNichols Co., Tampa, Fla., a service center chain that specializes in “metals with holes,” says that expanded metal, perforated metals and wire cloth have all sold better than general line products over the past few years because of their specialized applications. “Both perforated and expanded have been running neck and neck. Both have been flat to down a little, but not as far down as other metal products.”

While it depends on the specific market niche, expanded and perforated metal manufacturers also report flat demand overall for the last several years. “Things are very difficult with the soft manufacturing market,” says Brian Rutter, vice president of sales and marketing for Fisher & Ludlow, Burlington, Ontario.
Nathan Braly, sales manager for Central Expanded Metal Inc., Chandler, Okla., conjectures that any recent pickup may be attributed to increased use in the defense market. Kenneth Mull, sales manager for Dexmet Inc., Naugatuck, Conn., which concentrates on lighter gauge products, says his company is not seeing any new orders yet “and we probably won’t until fall at the earliest.”

“Realistically, the market won’t be up until the middle of next year with that recovery being led by security and fencing applications,” says William E. Phillips Jr., president of Niles Expanded Metals, Niles, Ohio. He considers fencing an untapped application for expanded metals. “Metal fences are primarily made of chain link, although there are other forms of cast metal and bar-type fencing. Fencing is a very large market we need to focus on more. It isn’t the answer to all of our problems, but it is an area in which we can compete.”

Another possible growth sector for expanded products, he says, is architectural patterns, such as facades for buildings and inflow patterns. These applications are dominated by perforated metals, “but expanded would be a much more economical choice,” he contends.

Though just about any metal—including stainless steel, copper and brass, aluminum, titanium, zinc, silver and even plastic—can be expanded, most expanded products are made from carbon steel. Thus the Section 201 tariffs, which contributed to the rise in steel prices, have added pressure on margins for both expanded metal manufacturers and their customers, Phillips says.

While a lower percentage of perforated is made from carbon steel, Section 201 has affected that product, too.

Though tariffs have been placed on raw steel, no tariffs have been placed on finished goods, including goods that contain expanded metal, explains Mark Haworth, general manager of Central Expanded Metal. “This gives foreign companies an edge in manufacturing finished goods and bringing them into this country cheaper than we can buy raw materials. Our market has shrunk drastically in the past two years. Certain products have literally disappeared from the United States, such as some sporting goods and outdoor products (including barbecue grills). Unless some steps are taken to reduce the influx of foreign product, I don’t see this changing,” he says.

“We need for the manufacturing economy to turn around. We need for people to be more confident in the economy,” Phillips says. “That isn’t happening now, but with the weakened U.S. dollar, we hope to see some improvement.”

Perforated makes gains
Phillips is critical of his expanded metal industry for doing little to grow the market in the past decade, estimated at $100 million today, while losing market share to perforated products. In fact, he says, certain producers are struggling to survive.

“Perforated manufacturers have done a better job of marketing their product than we have,” he says. “There needs to be demand for our product, and the only way [to create] demand is to show people what the product can and cannot do.”

Phillips also worries that expanded metals producers are slow to embrace new technology, while perforated producers have made technological gains. “Expanded metal manufacturers have to first update their technology to do things they haven’t done in the past,” Phillips says. For example, Niles recently installed equipment that increased its productivity and allows the company to develop more decorative products.

Perforated metal manufacturers argue that perforated and expanded have very different attributes. “What differentiates perforated from expanded is that perforated can be used for more engineered parts. There are just some things that perforated can do that expanded can’t,” says Robert B. Cruden, national sales and marketing manager for Harrington & King Perforating Co. Inc., Chicago. “While it is true that expanded is less costly upfront, perforated makes the job of fabrication, welding, forming and assembling easier both from a safety standpoint and a cost standpoint.”

H&K and other perforated producers have the tooling to replicate expanded in appearance, “putting us into competitive areas with expanded. When perforated is used for longer run, higher volume jobs, it is more competitive,” Cruden states.

Since manufacturing perforated products means punching out shapes rather than slitting metal sheet or plate and expanding it, customers have more varied patterns to choose from, including many that can’t be made with expanded metals, he adds.

Lee Plank, executive vice president and chief operating officer for Diamond Manufacturing Co., Wyoming, Pa., says many customers want a solid border around their piece of metal, which is not possible to achieve through the expanded process, but is easy with perforated. Perforated is easier to paint, too, he says, because expanded metal products have sharp corners that are difficult to coat.

Expanded metal makers see it quite differently. “I agree that perforated has a place in the world, but the bulk of perforated is used for applications that expanded can be used for as well. In many applications, expanded is a better choice,” Niles’ Phillips says. “You can save money while getting similar results. Any perforated metal application is an opportunity for us to gain back a portion of their market share,” he adds.

James Quinn, industrial products manager for Alabama Metal Industries Co., Birmingham, Ala., admits perforated metals have made considerable inroads into traditional expanded metal markets—market share expanded metals must win back. “We hope to re-educate the market about expanded metals. There are a number of young designers who are not aware of expanded metal. We have to let them know about the cost savings and efficiencies of the product,” he says.

The resurrection of the industry’s trade association—the Expanded Metal Manufacturers Association—should help companies with education and outreach. The trade group was disbanded in 1985, then reborn in 1996 as part of the National Association of Architectural Manufacturers, and has been growing ever since.

EMMA is working to gather better data and report industry statistics such as domestic and import shipments, as well as help members cultivate new markets for expanded metal. Their message is a compelling one: Expanded metal allows for higher material usage with virtually no scrap. Stretching the metal, rather than punching holes, can yield material cost savings of 30 to 50 percent. Expanding the metal allows a manufacturer to make a stronger product using less steel, they say.

Expanded metal applications include machinery guards and security panels of all types, light diffusers, filters, enclosures, racks, grilles, ramps, fencing, display shelving, cooking grills, window sun shades, auto airbags, speaker covers, screen door guards, backing for signage, billboard walkways, plant catwalks, stair treads, flooring, lockers, partitions and outdoor furniture, among many others. New markets might include more high-tech applications in battery shielding, power cells or fuel cells.

Expanded metal makers can’t just sit back and rely on their trade association to do all the work, Phillips emphasized. “Companies need to make some moves themselves and find their own niches.”

He concedes that many companies today don’t have the money for new equipment and marketing campaigns, “but if there was ever a time to talk about market promotion, it is now.”

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