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From ART to SMART

A global review of the metal casting industry

There are many topics that need to be considered in a global review of an industry – far too many to consider here so the following is a flavour of what the international foundry industry is experiencing at this time. The review has been compiled using data from the World Foundry Organization as reported in its WFO Industry Report 2017. On this occasion, much of the report focusses on the automotive sector as it is experiencing tremendous change which will impact metal casters and the rest of the supply chain throughout the world.

DRIVING our future

The continued move towards electric vehicles is also ‘driving’ the automotive industry to make some dramatic changes. The most recent announcement by Jaguar Land Rover to commit to offering an electric version of each of its models by 2030 is just the latest in a long line of revelations from auto manufacturers that the future driving model looks very different.

This will have an increased impact on the foundry industry as we move towards the demise of some cast components such as turbochargers and other IC engine parts and the need to replace them with alternatives – as with much development, the move poses both a threat and an opportunity. Clearly the share of the market for electric and hybrid vehicles will remain relatively small for the near future but in the longer term there is a need to satisfy a growing demand from the automotive sector to enter this new phase of revolutionising the way we travel for a sustainable future.

Clearly the issue of weight reduction is of continuing importance in the automotive sector. Leading the charge, the German foundry industry is witnessing an ongoing trend in the move to substitute non-cast parts to lightweight castings, especially in terms of complex structural parts. One such example is a weight reduction of over 14kg for an aluminium cast doorframe that was previously produced in sheet steel. Diecast passenger car bodies are also now being produced with growing frequency.

Meanwhile in France, the growth and emergence from more difficult times continues with statistics from 2016 offering more hope for the future, especially during the last quarter of the year. Global tonnage decreased from the 2015 figures but turnover remained stable. Some foundries ceased trading but the latest indications from www.forgefonderie.org suggest that productivity per plant is improving. As with many other European nations and indeed Asian countries and the Americas, aluminium castings are increasingly in demand. In France aluminium castings represent around 41 per cent of foundry turnover with an increase in volume to around 320,000t. Engineering castings in grey and ductile iron represent more than half of the foundry tonnage (approx. 800,000t) but only around 38 per cent of the turnover.

2016 marked the third consecutive growth year for the Italian automotive industry with domestic (8.7 per cent) and export (6.8 per cent) demand supporting the production of cars in Italy. There are differing fortunes for various sectors with ferrous casting production in Italy increasing by 1.9 per cent and non-ferrous casting production increasing by 3.8 per cent. The growth rate in non-ferrous production is underpinned by an intensive demand for aluminium castings; 84 per cent of total non-ferrous castings. Although there was also an increase in magnesium, zinc, brass, bronze and copper output. In 2016, 57 per cent of the total non-ferrous output in Italy was destined for the automotive sector.

It is a different picture in Poland – the fifth producer of castings in Europe, and the 16th in the world. Here, aluminium casting production decreased slightly in 2015. Again, the automotive industry accounts for a large proportion of aluminium production (65 per cent). In Finland, the total volume of casting production in 2016 decreased by 30 per cent, with iron casting increasing slightly but steel casting production dropping by a third.

Automotive foundries in Hungary, Romania, Spain, Sweden, Turkey and the UK all witnessed increases in demand.

For the first time in many years there is “cautious” optimism in Spain, where cast iron production has also increased, reports the Tabira Foundry Institute. As the country recovers from the crisis initiated in 2007, they say “greater stability for our industry” is forecast for the coming years. Indeed, this optimism is reported in many countries including France, Germany, Italy, the UK and the US.

In the UK foundries have continued to invest in new equipment and increased capabilities to improve efficiency and competitiveness. As with other countries the automotive demand has boosted the positivity, however, offshore oil and gas projects have continued to suffer.

In terms of volumes, the mass production of cast iron and steel castings in the Czech Republic continues to decline, because of a reduction in weight of structural castings – the actual number of castings remains stable and in some instances, has increased. The demand for aluminium diecastings for the automotive sector is growing but there are limitations in terms of manufacturing capacities and workforce.

Beyond Europe

The American Foundry Society reports that US metal casting sales are expected to reach $32.3bn in 2019. Almost all metals are forecast to grow by between one and four per cent up to this date.

China continues to dominate global production with an increase of 3.51 per cent in 2016 to 47.2mt. Although the growth rate has slowed, there are marked increases in specific areas, notably aluminium and magnesium casting production, which grew by 800,000t – a 13.11 per cent increase on the 2015 figures. Again, the automotive sector led the way with an increase in demand of 12.8 per cent, followed by pipes and fittings (up 9.35 per cent) and mining and heavy machinery (up 8.33 per cent). However, there was a significant decline in demand for rail transportation and ship building (dropping by 16.67 per cent and 11.11 per cent respectively). The automotive sector accounts for nearly 30 per cent of the total castings production in China.

India is set to become the fastest growing economy, year on year. However, the growth in the foundry sector in the country has been stagnant for the last three to four years, partly attributed to a slowdown in the rate of development of China. For 2016-2017, a growth of six to seven and a half per cent is estimated by the Institute of Indian Foundrymen. There are increasing ambitions in India to further develop the industry, especially in light of the level of the ongoing investment in infrastructure that is taking place. The auto components and capital goods industries have plans to grow three-fold in the next ten years which would have a significantly positive impact on the demand for metal castings.

The automotive industry in India grew at an average rate of 5.4 per cent in 2016-2017 compared to 2015-2016. Both production of and sales of passenger vehicles is growing as is the commercial vehicles market.

Meanwhile in South Africa foundries are struggling to compete because of insufficient volume. The SA market is comprised of smaller volume items and its geographical position makes it difficult to achieve competitive economies of scale. Consequently, when OEMs move out of the country, so does the demand for locally produced castings. The South African Institute of Foundrymen reports that to be globally competitive “change is inevitable” in terms of the way in which foundries do business and in embracing process and technology changes.

As with many other countries, the South African foundry industry is also witnessing concerns in accessing capital for investment purposes. In South Africa, it is the iron foundries that are most vulnerable to foreign price competition and iron is the most commonly cast metal in the country. Iron foundries are thus highly integrated into the supply chain for a wide range of downstream products, particularly in the automotive, machinery, equipment and valve industries.

Both India and South Africa benefit from government initiatives to support the foundry industry and facilitate growth in domestic and international markets.

In Japan, there was a slight increase in non-ferrous castings and diecastings in 2016 compared to 2015 but a decline in ferrous casting production. Meanwhile neighbour Korea has suffered because of a decline in the shipbuilding industry.

Political and economic issues

Turkey has witnessed a particularly strenuous political and economic situation in the past twelve months, with unrest in the country following a number of highly publicised incidents resulting in a reduction in foreign investment in the country of 30 per cent in 2016 on the previous year. This had a knock-on effect on the local currency which depreciated against the US Dollar and the Euro.

However, Turkey remains an important metal casting nation, with a great deal of recent investment in new facilities, plant and equipment. Total foundry production in 2016 increased by 2.6 per cent compared to 2015. There are two new aluminium high pressure diecasting foundries to help satisfy the growing demand from the automotive sector and a new greenfield steel foundry is imminent.

Political turmoil has certainly taken its toll in Serbia, where there has been little investment in technology and equipment for some years and a loss of personnel and relationships with research bodies. Metal casting production is now fully dependent upon imports of raw materials, equipment and technology.

Production, sales and employment levels all increased in the foundry sector in Austria in 2016 and investment is currently good, however, the Association of the Austrian Foundry Industry reports that in general there is “a lack of predictability whereas price pressure continues to increase massively.”

In Norway, the weak Norwegian krone has proved favourable for competitiveness. Likewise, the decline in strength of UK sterling, following the outcome of the referendum on the UK’s membership of the EU, has resulted in an increase in competitiveness of UK products, including cast components.

Slovenia has witnessed accelerated economic growth in 2016, strengthening its export position and investments.

For Switzerland, the “tense situation in the foundry industry” as reported by Giesserei-Verband Der Schweiz (the Swiss Foundry Association) is a consequence they say of the de-industrialisation of the country, with only the copper sector showing any increase in tonnages (up 4.3 per cent on 2015). They report: “In every user sector, there was demand first and foremost for innovative development solutions and the production of more and more complex, ready-to-install cast parts in small batch sizes.”

Energy and raw materials

Competition is something all nations are battling with, especially in Europe where energy costs are particularly high. Whilst Turkey reports stability in terms of energy prices, Austria reports a decrease and the Belarusian nuclear power plant has plans to reduce electricity tariffs in Belarus from 11.3 cents per kWh to 7.9 cents, other nations are continuing to witness high energy costs. Energy costs have risen considerably in recent years. Tabira Foundry Institute reports that for the periods 2007-2009 and 2010-2014 energy costs in Spain increased from €113/MWh to €140, in Germany from €152/MWh to €188 and in France from €88/MWh to €105 as an average. Additional taxes are also applicable in Spain, resulting in the rate being 22 per cent higher than the European average.

Down under, the majority of foundries in Australia have experienced the doubling of electricity pricing in the last three years with little hope that this will change any time soon.

Also for nations like India, accessing good quality power at competitive rates is problematic. Detailed energy audits have been undertaken in India in the last six months, supported by a special grant programme and energy efficiency programmes are currently being promoted – an upscale in this activity is planned for the coming months.

In addition to concerns over fluctuating energy costs, there remains a squeeze on availability and cost of raw materials in many parts of the world. For example, in Italy pig iron prices are still under pressure, caused by the interruption of imports from Ukraine, where production ceased for several months.

Skills

By far one of the largest concerns for the global foundry industry is the availability of suitably skilled people. Whether an established casting nation or an emerging one, access to skills and a competent workforce is fundamental to success. In Australia, the abolition of foundry trades from the skills shortage problem and the abolition of the 457 Visa immigration policies is causing concern. The Australian Foundry Institute reports: “Many foundries rely on overseas workers to operate and also for the training of apprentices and employees.”

French foundries also continue to experience difficulties in finding appropriate manpower and there is a growing need for updated education programmes to tackle the problem around the world. Hungary cites this as the “biggest problem”. However, following a 15-year absence, the country has resurrected foundry education in secondary schools in four different regions which should generate around 40-45 students a year. In 2015 Miskolc University also launched a dual BSc programme.

The Institute of Indian Foundrymen is launching a new initiative for the training of shopfloor workers, with around 1,000 workers to be trained under this programme in the coming year. The ambition is to train 5,000 in the second year and 10,000 in the third year!

Meanwhile in Korea the image of the foundry industry is one that needs to be altered to attract workers back to the sector. The Korean Foundry Society has developed a Casting Academy and runs education programmes in small groups to assist in this matter.

In South Africa, there are several methods of training in terms of craft, foundry managers and technical/soft skills short courses.

At Jonkoping University in Sweden, a one-year, online Masters programme ‘Product development, specialisation in materials and manufacturing’ has been developed.

At Freiburg Technical University, a classroom taught Masters in Casting Technology has been developed.

Much has already been published in Foundry Trade Journal about the new foundry training school in the UK and the larger number of continuing professional development, short courses run by the Institute of Cast Metals Engineers.

Other countries are also actively involved in programmes to both educate and train existing and future generations of metal casting personnel at all levels.

General Trends

Overcapacity, strong price competition and a continued transition towards lightweight components are issues that currently dominate the international foundry sector. However, by far the most talked about opportunity is the move towards Industry 4.0 and smart production.

Once a future possibility, interactively connecting equipment and data sources is now the ‘norm’ and increasing the level to which this is implemented is the next step for many companies. Tracking and traceability have become common terms throughout foundries and supply companies to improve productivity and maximise efficiency.

Connectivity in all its guises is an important step towards success – whether through connecting devices and capital equipment or connecting people and companies. In terms of what the customer wants the goal is always: better quality, stronger, more flexible, more complex, more economical and a quicker response and delivery rate. In addition, the emerging trend in recent years has been a move towards fully finished cast parts. The customer wants a total solution and that is what all suppliers are striving for – taking the complexity of the supply chain out of the equation and ensuring the customer has a one-stop-shop is becoming increasingly attractive for the client.

Throughout the world investments continue to be made in automation, which is having a positive impact in terms of productivity, efficiency and health and safety matters. Many foundries have also tested 3D printing technology and the investment in the process is ongoing.

The reports from the WFO member countries highlight that whatever is considered as a threat or an opportunity, the foundry industry is an adaptable beast capable of embracing change. Research and development are critical as is the ability to focus on design, function and (importantly) competitive margin. A sustainable world requires a sustainable industry – our history illustrates that we have consistently been able to make the journey from a black art to smart production.

The WFO Industry Report is available from the World Foundry Organization, www.thewfo.com Details on WFO member associations can be accessed from the WFO website. More detailed, statistical information will also be published by the AFS in the AFS World Casting Census in December