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Casting the Present and the Future

Foundry Trade Journal editor Lynn Postle offers an outlook of the current situation in the global cast metals industry

It is of course always a crystal ball exercise to offer an insight into the future opportunities of the global metal casting sector. However, this year has raised more questions than answers - the consequences of Europe’s ongoing debate over the future of the European Union in a post-Brexit world are unknown, the anticipation of a new president across the pond and the instability in many parts of the globe are all playing their part in determining how the markets will cope and trade will be affected.
It is however our job to offer some guidance and thoughts on the matters being debated on shopfloors and in boardrooms in foundries and supply companies around the world and this we will attempt to do. The information presented here is based on data from companies and individuals from foundries, supply companies, professional societies, research organisations and educational establishments in all sectors of the cast metals industry in various parts of the world. There are some notable absentees such as Russia where information was unknown at the time of writing. 

Powerhouses
Still dominating in terms of global casting output, China is now learning how to cope with the demands often associated with rapid growth rates - a more demanding workforce, skills development and increasing legislative pressures. The overall objective of the foundry industry in China is to master advanced casting technologies with clear targets imposed whereby 50 per cent of foundries are required to reach the industrialised level of developed countries by 2020 to increase the nation’s global market share to 20 per cent, whilst achieving a 10 per cent reduction in energy consumption and a 15 per cent reduction in industrial waste.
With 2.6 million foundries, the country has excess manufacturing capacity and at least 10 per cent of Chinese foundries are not able to meet the advanced technical and environmental demands now required to increase the country’s stronghold on the market. Inevitably labour costs have increased and the need for high-end research and development into technically advanced innovative solutions is putting the industry under pressure in terms of developing equipment to cope with the advanced requirements, consequently foundries are reliant on importing equipment from trusted global suppliers.
Never one to “stand still”, the country is currently outlining the latest five-year technology plan with a casting technology roadmap - to be compiled by the Foundry Institution of Chinese Mechanical Engineering Society - looking to the next 15 years, highlighting predicted trends and the manner in which the country’s foundry industry will respond.
With casting output having grown steadily in recent years, a slowdown of growth then followed before 2015 marked the first decrease (1.3 per cent) to a “mere” 45.6m tons. Notably aluminium remained on an upward trend growing by 250,000 tons with steel witnessing a decrease of 7.27 per cent. In terms of market sectors engineering machinery and rail had the largest decline of around 12.5 per cent per sector, shipping dropped by 10 per cent and mining, heavy machinery and machine tools also witnessed declines.
Despite political uncertainty, the news from across the pond shows that US metal casting sales are expected to reach $30.6bn in 2018 - a healthy recovery from the dark days of $21.6bn in the recession gloom of 2009.
In ten years the number of foundries has declined from 2,380 (2005) to 1,961 - which the American Foundry Society attributes to the recession, technological developments, foreign competition and tightening regulations.
US foundry industry capacity is 15.3m tons, with predictions of the industry operating at 73 per cent of capacity in 2015.
Notably grey iron production is growing at three per cent, which is greater than that of SG iron and similar to the increases in aluminium. 

Europe
As for much of the world, the automotive industry is still the “driving force” in Europe and particularly Germany where 80 per cent of the non-ferrous sector supplies automotive along with 57 per cent of the ferrous sector. Despite its stronghold as fifth largest casting producer in the world and a benchmark for many to aspire to, the German foundry industry is suffering from uncertainty due to low orders from the general engineering sector, extremely volatile orders in the steel sector, and large investment plans in foundries to remain at the forefront of technology. An overcapacity in Europe and stiff price competition are of course threats in many countries throughout the region including Germany. However, automotive sector developments such as cast substitutions, lightweight components and further development of complex structural parts, along with growing new vehicle sales remain as opportunities for the industry.
Another significant trend in the European foundry industry is the growth of additive manufacturing and the ongoing developments in 3D printing where an increasing number of parts are now being targeted for this technology. New applications are being developed regularly and forward-thinking foundries are adapting to suit the route the wider engineering industry is taking.
Industry 4.0 is also no longer just terminology. Now more and more foundries are connecting equipment in an interactive manner and using data in a significant way to be more efficient and more pro-active. The desire to develop this further so that all in the supply chain, including customers, are also involved will result in a more streamlined production process and the ability to predict supply requirements and anticipate process requirements.
In terms of casting production Germany, Hungary, Italy, Poland, Romania, Spain and the UK are currently reporting growth rates, especially in the non-ferrous sector with most of the growth in Romania emanating from aluminium castings. Meanwhile it is less positive in Austria, the Czech Republic and France, where production volumes are down. Indeed the steel casting industry in the Czech Republic has declined by 50 per cent in the past six years.
Things had looked bright in France with 2014 and the first half of 2015 showing positive signs but the second part of 2015 and the first quarter of 2016 tell a different story where production decreased in most sectors apart from automotive. Such has been the slowdown that many equipment investment plans have been shelved for the immediate future.
Following on from the recovery started in 2013, a moderate increase in annual production in tons of castings is expected in Spain until 2018, up to the levels prior to the crisis of 2007.
Spanish cast iron production grew during 2015, specifically in some sectors such as automotive. Others, such as wind power, have suffered from the fall in the domestic market for delayed or cancelled projects.
In terms of casting production, with 1,850,000 tons in 2015, Turkey has risen to third spot in Europe behind Germany and Italy and was in tenth position globally in 2014. However, foreign investment in the sector is below the anticipated level and the recent geopolitical turmoil could well have an impact on the country’s foundry industry. With a 95 per cent growth rate in eleven years, the country is certainly well on the radar and has increased capacity and invested in new greenfield foundries to be competitive. Turkey’s strategic geographical position means it can supply both the East and the West within relatively short travel distances and primary raw materials can be imported from the EU, Russia and the Gulf region. Perhaps one of the greatest challenges in the current climate is a proposed wage increase of around 20 to 30 per cent, which will be prohibitive.

Scandinavia
In Scandinavia 2015 proved a tough year for Finland, Norway and Switzerland where casting production fell - in Norway by 12 per cent and Switzerland by 14.2 per cent, the latter country suffering from the removal of the minimum exchange rate against the Euro causing price pressures in end user markets. Around 80 per cent of casting production in Switzerland is destined for Euro countries so the effects are unavoidable.
Meanwhile it is a different picture in Sweden where production grew by 12 per cent mostly in ductile iron castings for the automotive sector and aluminium high pressure diecastings.


Rest of the World
India continues to be the third largest producer of castings in the world at around 10m tons but the industry is faced with a downturn in growth rate as demand slackens. Growth in the sector has been stagnant for the past three to four years but optimism is in the air thanks to new national projects in infrastructure and defense. The country’s ‘Made in India’ campaign - which predicts India to become the fastest growing economy - will require the foundry industry to grow three-fold in the next ten years to cater for other sectors. The major challenges to achieve this are: lack of skilled manpower, good power supply at competitive rates, sand availability due to mining and environmental issues, and the short-term slowdown in demand which could hinder medium and longer term investment.
Skills development initiatives and energy audit programmes are either planned or in place to combat some of these issues and the Indian foundry sector has a strong culture of meeting together to drive innovation and growth rate.
The Japanese Foundry Society predicts a decline in production in Japan for 2015 of around three per cent mostly attributable to a drop in the ferrous sector but also for diecastings.
The forecast for Korea is a slight increase in production in 2015 to around 2.7m tons.
To increase production and turnover, many Mexican foundries have invested in new equipment and technologies. The installation of new facilities and indeed new automotive plants in the country is encouraging and offers opportunities for the Mexican foundry sector in the coming years - 73 per cent of foundries in the country supply the automotive sector. It was notable at the recent FundiExpo event in Queretaro that around 50 per cent of the delegates at the conference were foundry students, with over one hundred young people being present in the keynote speech sessions.
Interestingly there was also a noticeable number of young people attending the Ankiros/Turkcast exhibition and conference in Istanbul in September. Despite a difficult socio-economic period for the country, the presence of so many younger faces at the event offered a glimpse of optimism. Turkey benefits from a surplus of a young and educated workforce with language and IT skills who appear keen to work in the foundry sector - a stark contrast to many other nations.
However, foundries in South Africa are suffering the effects of very difficult market conditions, which means anticipated growth has not been realised. Weakening exchange rates in developing countries, low domestic market volumes, rapidly rising energy costs, a skills crisis, capacity underutilisation, low productivity, environmental legislation costs, high cost of transport, logistics and indirect taxes and a lack of investment in new technology paint a gloomy picture. However, there is government support for the sector and there are export opportunities in neighbouring African markets to offer glimmers of hope.

Energy
For many countries energy costs remain of great concern. In the case of electricity and for the periods 2007-2009 and 2010-2014, Spain increased from €113/MWh to 140, in Germany, from 152 to 188 and in France, from 88 to 105. In comparison, there are exemptions in Germany that can reach €80/MWh for intensive industries, with final costs lower than Spanish industries. Indeed for Spain extra taxes are also applied.
In Korea the Korean Foundry Society claims that most Korean foundries operate furnaces as high energy consumption and low energy efficiency - this is an area of concern and something that the industry is looking to improve on.

Skills Needs
Whilst many countries are now recognising and promoting engineering, the understanding of the difference between working for a blue-chip automotive manufacturer or jet engine design company and working further down the supply chain is not fully appreciated by the masses. It is simply not good enough to encourage our young people to seek employment in engineering’s equivalent of utopia! In reality we must manage expectations and highlight the relevance of smaller companies that allow the corporate giants to flourish. Our educators (at all levels, including parents) must be shown the life-long benefits of a career in a traditional but adaptable industry that continues to make what was believed to be impossible possible. At both graduate and technician level the foundry industry needs to inspire and reward people.

Future Trends
As many companies in countries throughout the world battle to remain successful there is an ongoing need to add value and be a supplier of choice. To do this it will be important to be innovative and flexible whilst remaining efficient and competitive. Those foundries which can produce components with a high knowledge content and skill base that are difficult to copy will continue to prosper and those which invest in both technology and people will also set themselves apart. It will also be necessary to increase the numbers of highly skilled employees who can drive the company in new directions with greater ability.
Of course, the need to produce more complex, more lightweight castings with a longer life span continues to focus the mind of designers and cast metals engineers in all parts of the world. This will require continued high level of R&D expenditure and improved dialogue between practical foundry personnel, design engineers and OEM representatives at as early an opportunity that is possible in the concept stage.
Traceability and connectivity are also having a greater importance on all industries and the need to truly embrace Industry 4.0 and link all data streams will continue to impact on the foundry sector, such that attitudes and the way we manage our businesses will remain as important as the quality and reliability of the components we produce.
It is no longer acceptable to be a reliable supplier - customers want so much more now and foundries that embrace new ideas and concepts will be the ones that ensure the global foundry industry remains a crucial part of the supply chain with a prosperous future for many decades to come.