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Growing Demand Sets Positive Tone for European Investment Casting Federation International Congress

The lake at Lugano in Switzerland provided a beautiful backdrop for the 28th EICF International Congress held during June and this, combined with a full programme of presentations, attracted well over 320 delegates to the event from 26 countries. With 40+ technical papers being presented over two days, alongside a specialist turbocharger market meeting, an exhibition, works visits and social programme, the investment casting industry showed itself to be in fine form. 

The event began with a range of market reports from experts representing the main market sectors for the industry including aerospace, power generation, automotive and medical during plenary sessions, and all sectors reported the same positive trends. For the civil aerospace sector, the growth in air traffic (measured in revenue passenger kilometres, RPK), continues and increases of up to 5 per cent per annum are reported by both engine manufacturers and airframers. Predictions are that air travel will double in the next 20 years. This in turn is fuelling growth in demand for investment cast turbine components. Airline profit margins are affected by the cost of fuel, Steve Irwin of Rolls-Royce noted, and this - together with increasing environmental pressures to reduce CO2 emissions - is driving manufacturers to continually increase engine efficiencies and reduce weight. Rolls-Royce is currently working on two new engine designs for entry into service readiness in 2020 and 2025 respectively; both engine designs result in significant efficiency gains. The latter design, currently being developed under the working name of UltraFan™, uses an enhanced intermediate pressure, IP, turbine which drives the fan via a powered gearbox, allowing the elimination of the low pressure, LP, turbine. Both Advance & UltraFan™ engines have a two-stage high pressure, HP, turbine module (instead of a single stage HP turbine) so will require two stages of complex HP turbine blades. This, combined with the current new engine and engine upgrade programmes, is leading to significant new part introduction and tooling loads.

An Upsurge In Demand
Steve Leyland, outgoing EICF president, reported some positive growth figures from the auto and medical sectors. The turbocharger market is seeing 4 per cent annual growth, with 82m parts being produced in 2013 and 106m parts being the forecast annual requirement by 2020, 67 per cent of which are set to be produced in Mexico. Asia and the BRIC countries are driving this growth and this market will require 75m investment castings annually.

The same picture is seen in the medical sector, where ageing populations and increasing private medical insurance is leading to significant increases in the use of joint replacements, with sales growing by 5 per cent per annum, and related increasing demand for tooling.

Ron Williams of Blayson Olefines reported industry statistics, drawn from a range of available sources that his company collects and collates, that confirmed the investment casting industry is growing presently by 6.1 per cent annually.

Birendra Nath, GDF Suez Energy, spoke about the international energy markets, and how the increased use of shale gas, particularly in the USA, is resulting in the US now having the lowest global energy prices (at $3-6 US per Mbtu compared with $14-16 in Asia and $8-12 in Europe).
The potential for shale gas internationally is high, although the locations are somewhat limited he reported. Demand for energy globally is mainly from non OECD nations, as more developed markets are reducing their energy demand, and in Europe there have been significant increases in renewable energy resources. In the longer term - in places such as Africa - solar energy sources are likely to be the cheapest. The market for the high efficiency new gas turbines is actually struggling to compete as countries are still choosing to burn low cost coals.

Additive Manufacture
Additive Manufacture (AM) featured in more than one presentation, with the general view being presented by Nick Green, FICME, Doncasters Group Technical Centre. Despite increasing levels of investment in AM technology by companies such as Rolls Royce and GE, (the UK government alone has invested £92m to date), significant increases in the number of 3D printing machines worldwide (from 355 in 2008 to 23,000 in 2013, source: statista.com) and with the value of products produced by AM set to increase to $10bn by 2021 (from $2.2bn in 2012), his view was that this technology did not present a real threat to investment casting. He said investment casting could continue to offer significant opportunities over AM. He noted several areas where AM is presently constrained, such as the cost and availability of powders, quality assurance and consistency of powders, issues of non-destructive evaluation of components, surface finish issues as well as the tendency for OEMs and equipment manufacturers to retain intellectual property rights for reasons of commercial advantage, which could slow overall process developments. 

AM is a sector where there is presently a relatively low level of regulation, and minimum component mechanical properties are not yet established and proven and this led Green to take a confident view of the investment casting sector, noting that the sector should be able to capitalise on the design-led revolution that is being instigated by AM and rapid prototyping.

The New Normal
Stephane Garelli, professor at IMD, and professor at the University of Lausanne, was the keynote speaker opening the conference. His talk was entitled ‘Is better good enough?”
He noted the world economy is getting better, but that the consequences of the recent crisis are still unclear. 

Although still global, the economy is more desynchronised and increasingly fragmented. After six years of crisis, he asked what defines the so-called “new normal”? And what will it mean for countries, companies, business models and people, certainly a need to be more flexible and adaptive?
In advanced economies, the economic situation is improving but for how long? Could the ‘new normal’ be one of slow economic growth, interrupted by short bursts of intense activity (instead of rapid growth interrupted by recessions)? Government debt ($36,000bn in the OECD region) will not disappear overnight: 11 governments in Europe are currently spending more than 50 per cent of their GDP and are dependent upon national debt. Sub-sovereign debt - that is, liabilities at the regional or local level - exists almost everywhere and presents a serious threat to fiscal discipline and stability. Deflation is a growing concern and induces central banks to support the economy through quantitative easing and low interest rates. Surfing on cheap capital, global companies continue to accumulate vast amounts of cash ($4,500bn in the US and Europe). There has also been an explosion in youth unemployment - 15.5 per cent in the US and 53 per cent in Spain which has the potential to lead to a lost generation. Also 40-45 per cent of young graduates are unemployed in the USA and EU.

In emerging economies, diversity prevails. The BRIC (Brazil, Russia, India, China) and MINT (Mexico, Indonesia, Nigeria, Turkey) zones have little in common except size. Countries with large foreign currency reserves continue to diversify their assets by buying foreign companies and financing the globalisation of their own local champions. The high cash reserves of these economies is leading to an increase in mergers and acquisitions. The appearance of new global brands will thus accelerate. Some 1,000 companies from the emerging economies with revenues in excess of £1bn can now be considered global. Inflation and a possible exchange rate rise in the dollar or an increase in interest rates could potentially destabilise the weaker ones. Shadow banking - a £67,000bn market - is a time bomb everywhere. This cash is not coming to small enterprises as cheap money, which is needed for these companies, and the wider economy, to bounce back.

For companies, the reform of taxation - financial transaction tax in Europe, offshore money, taxation of global companies etc. - is high on national and international agendas.

The over-regulation of the national and international system increases the cost of compliance, reduces the speed of doing business, and increases the risk of liabilities. Complexity is everywhere and blurs the relationship with stakeholders and employees. Meanwhile, SMEs still do not get the full benefits of cheap and accessible money, and thus cannot play their full role in the recovery.

Consumer behaviour evolves as prosperity increases - from a ‘first buy economy’ in emerging markets to a ‘replacement economy’ in advanced markets. An attitude of “I want it” is quickly replacing one of “I need it”. As a consequence, consumer demand becomes more subjective and less intense, especially in periods of economic uncertainty. He also noted that there is likely to be an increase in the ‘slightly less poor’ - these are people who are on more than a dollar a day, but cannot yet be classed as middle class. There will be increased demand for low cost items; low cost water purifiers available from TATA that can cost less than $16, cheap modular homes that can be constructed for less than $1,500 etc.

Mega Trends
Prof Garelli reported that “three mega trends shape the world in the background”. First, energy demand will continue to grow (+38 per cent in 2030) but 75 per cent will still be “classical” energy and only 25 per cent renewable. With its energy “renaissance”, the US should produce as much gas as Russia in 2015 and as much oil as Saudi Arabia in 2020. As a consequence, the price of energy for enterprises in the US will be half that of European companies. Secondly, urbanisation will imply that 60 per cent of the world population will live in cities in 2030. 40 mega-regions (agglomeration of cities) already account for two thirds of world GDP. Finally, age and wellness opens new business opportunities. As life expectancy increases by five hours per day, people want not only a longer but also a better and healthier life.

To succeed, businesses must accept uncertainty, manage their image, change before the crisis and show excellence in implementation - as he noted “the person who says it cannot be done, should not interrupt the person who is doing it”.
World competitiveness is also a question of mindset he stated. The management of efficiency, of change and complexity remain top priorities. However, to ensure long-term success, a mindset of imagination (why not?), of energy (why not now?) and of commitment (why not me?) will also be decisive.

Art In Action
Delegates were also able to take advantage of a number of interesting and informative visits. The Perseo Art Foundry, which was established in 1952, is the leading art foundry in Switzerland, producing striking bronze sculptures up to 7m in height. 

Georg Fischer Machining Solutions is a specialist in high speed machining (HSM) and electrical discharge machining (EDM), and delegates were able to see first-hand how the latter can be used to machine conductive materials of any hardness (for example steel or titanium) to an accuracy of up to one-thousandth of a millimetre with no mechanical action - a key technology in modern tool making.
The Agusta Westland plant in Cassina Costa (Italy) and the world-famous Maserati factory at Modena were also popular with delegates and rounded off a very well organised and interesting few days in Switzerland.

The Congress was supported by principal sponsors Precicast SA and 3M Company.