Economic conditions may mean an uphill climb for steel foundries.

Topics at the SFSA's annual meeting reflected the changing global economy, and a predicted downturn in domestic demand may alter the steel casting landscape.

Making the right business decisions based on market conditions can be equated to climbing a mountain. Your choices can mean the difference between getting caught in the avalanche of falling demand or shifting your footing in your quest to reach your peak potential. When it chose the site for its 1998 annual meeting, the Steel Founders' Society of America (SFSA) picked the perfect place to express this message: the heart of the "Canadian Rockies" in Banff, Alberta, Canada.

Speakers at the event, held September 12-16, alerted the event's almost 110 attendees that "rumblings" may be in store for the steel casting market over the next few years, but steel casters have the time and opportunity to accommodate this shift in the marketplace. Topics ranged from emerging U.S. EPA standards to market forecasts, but the underlying focus to the meeting was the role of the U.S. casting industry in the global economy of today and the future.

Today and Tomorrow

In his study of "Steel Casting Industry Capacity," SFSA Executive Director Raymond W. Monroe reported that capacity, defined in terms of a yearly directory capacity and monthly production, has remained relatively constant since 1992. The 1998 North American directory capacity (based on what foundries report to be possible) for steel castings was 2.03 million tons. This compares to maximum North American production (based on the most a foundry has ever actually made) of 1.416 million tons. based on 1997 figures, U.S. directory capacity is 1.77 million tons, maximum production is 1.29 million tons and actual production is 1.217 million tons.

"The fact that the maximum production number is stable means that methodology must be pretty robust because business levels have changed pretty significantly," Monroe said. "Capacity has been stagnant. The industry has operated relatively close to maximum, people have been busy, with the only real variable being available workforce."

Total steel casting productivity is poor compared to other metals - even though steel castings are worth more money, Monroe said. Productivity was measured as maximum production (tons) divided by total employment (man-hr). The average steel casting productivity was 53.69 man-hr/ton, which covered the railroad (25.93), wear-resistant (26.19), high-alloy (117.65), centrifugal (46.11), and investment (187.35) steel castings segments.

In addition, based on 1996 global steel casting shipments, Monroe said that newly industrialized countries have too little capacity to produce the steel castings that they need [ILLUSTRATION FOR FIGURE 1 OMITTED]. Because it has the capacity to produce more kilograms per capita, Eastern Europe is more of a competitive threat in the global market, he said.

In his "1999 Market Forecast," James F. Cooke, Artcast, Inc., Sodus, Michigan, predicted a 6% drop in tons of steel castings shipped next year because the U.S. market is thought to be close to its saturation point for steel castings. Projections for 1998 call for 1.33 million tons shipped, compared to only 1.25 million tons forecast for 1999. Of the major steel casting segments, the railroad market represents more than 50% of projected demand for steel castings, construction is 11%, mining is 6.5%, the valves market is 6%, trucks represents 5.5%, the oil field market is 1.5%, pumps is 1% and other markets represent 16%.

PM 2.5 Update

In his "Update on PM 2.5 Regulation," Scott L. Holman, Bay Cast, Inc., Bay City, Michigan, discussed how the EPA's ozone and particulate matter (PM) standards could adversely affect the casting industry. In 1997, he testified before the U.S. Senate Committee on Commerce Science and Transportation in an effort to have the standards rescinded.

"Regulating down to 2.5 microns of particulate matter is asking us to measure and capture something that is 25 times smaller than a human hair," human said. "The ozone standards are just as bad, affecting the power generators that provide energy to our industry."

At the time of his testimony, Holman said, the EPA estimated the cost of implementing the standards at less than $8 billion. The agency has since admitted that it underestimated this cost and has revised its estimates to $50 billion/year, he said, adding that industry estimates are higher.

An amendment to the Transportation Equity Act, signed into law in June, eliminates the possibility of citizen suits that would force the EPA into immediate implementation of the regulations. In addition, the amendment, also known as the Inhofe Amendment, guarantees:

* PM 2.5 designations under the Clean Air Act will not occur until at least 2004;

* Ozone designations under the Clean Air Act will not occur until July 2000;

* Regional haze state implementation plans (SIPs) are not due until after designation under PM 2.5. This means SIPs for non-attainment areas will not be due until 2007, and, for regional attainment areas, SIPs will not be due until 2005;

* PM 2.5 SIPs will not be due until at least 2007 (three years after designation as required under the Clean Air Act).

Holman said that Inhofe also requires the EPA to prepare reports on field operations of PM 2.5 monitors to ensure no large particulates ([greater than] 2.5) are captured and measured under the regulation. The EPA will be required to fully fund this monitoring network.

This amendment allows time to examine the scientific basis of the regulation, Holman said, stressing that foundrymen also will have time to prove whether or not the standards are a necessity.

DOE, Metalcasting Partnership

Because the industrial sector is the largest energy consuming sector in the U.S., the U.S. Dept. of Energy (DOE) has partnered with the metalcasting industry to improve resource efficiency. Denise Swink, DOE, gave meeting attendees an update on this "Industries of the Future" partnership.

As part of the Industries of the Future concept, industry is meant to identify and prioritize technology needs, develop an implementation strategy, commit resources, conduct R&D and use the results established to achieve savings and minimize wastes. State and federal government is helping out by coordinating industry participation, leveraging government resources, sharing project costs, providing access to national laboratories and disseminating the results of projects.

Metalcasting energy consumption is 94 trillion Btu annually, Swink said, adding that energy represents 10-30% the cost of industry production. Also, foundries spend about 1.75% of sales on pollution abatement. This compares to approximately 4.3% of sales spent on capital expenditures and 1.2% spent on research and development.

As part of a "vision" for the future, the metalcasting industry is striving to increase productivity 15%, decrease energy use 20% and recycle 100% of spent wastes. Successful research has included work on an air gauging system performed by Matrix Technologies and the Univ. of Alabama-Birmingham. The project aimed to develop a precise method of non-destructive, non-contact dimensional analysis to validate part dimension and certify part quality.

Swink said that the partnership will hold a showcase demonstration on clean steel production at Pelton Casteel, Milwaukee, in April. The next major research goal of the partnership will be a project of the Cast Metals Coalition to reduce greenhouse gases.