Lean, mean and niche is the answer for the future of U.K. metalcasting facilities.

The Industrial Revolution may be a distant memory, but the U.K. is still sitting pretty to take advantage of the current Technological Revolution.

The U.K. has a long-standing tradition in metalcasting's heavy volume iron sector, but efforts are now becoming concentrated on areas of expertise that cannot be easily copied in high-end niche markets, such as Formula 1 racing. Heavy jobbing shops still will exist in the U.K., but they will be leaner and meaner, having invested in more advanced equipment and automation.

In recent years, there has been a marked decline in the industry with a period of consolidation following a number of closures and mergers, including some of the larger metalcasting groups--during the past 12 months, 10 major facilities have ceased trading. About 500 metalcasters now are operating in the U.K.

Despite the difficult periods, the volume of castings output has remained fairly static at an annual output of 1.3 metric tons with fewer, more efficient facilities. But in more recent times there has been a recognizable decline in annual output from the industry (approximately 1,224,000 metric tons for 2004 with an anticipated figure believed to be lower for 2006). In some respects, this is due to the aforementioned closures and merger of a number of facilities, the move away from the large tonnage sector and the emergence of the lighter component.

The U.K. has, in part, suffered because of its increasing number of predominantly offshore-owned enterprises. Within the past decade, a number of the larger North American, European and Asian groups have bought often extremely well-performing U.K. metalcasting facilities. Examples include Cosworth, West Yorkshire operations owned by Norsk Hydro, Bruhl, Grede, Vald Birn and QDF Components.

As with much of the Western world, input costs, such as raw materials and energy, have increased, but the once high U.K. labor costs have become more static and are relatively low compared to many western European countries, such as Germany. A skilled molder's average wage in the U.K. for 2005 was $17.50 (8.85 [pounds sterling]) per hour, and forecasts for 2006 indicate that this will increase to $18 (9.10 [pounds sterling]), slightly more than inflation.

Energy costs in the U.K. castings industry have witnessed a dramatic rise in recent years. Electricity charges have risen by 41.4% over the past year and by 80.5% since 2001. Fortunately, the need to be more energy efficient currently is driving new equipment investment.

U.K. metalcasters still prevail in high value-added castings production and high value specialist castings. Successes in these areas are assisted by the technological expertise in the U.K. and the fact that the effects of material price and energy are less influential for aluminum, copper, brass and high alloy steels, as the material price is often a lower proportion of the eventual selling price.

The investment casting industry in particular has witnessed a buoyant period, with metalcasters that supply the medical industry realizing an increase in demand, driven by the baby boomers reaching an age where knee and hip replacements are prevalent.

Of the 1,224,000 total metric tons produced in 2004, iron castings account for 891,000 tons, nonferrous castings account for 241,000, and 92,000 tons are steel castings. While there are no tonnage figures for the U.K. investment casting market, the sector's 2004 production value of $802.5 million (405 million [pounds sterling], up from 389 million [pounds sterling] in 2003) indicates that this particular sector of the industry remains strong.

Many U.K metalcasting facilities have already developed, or are in the process of developing, more employee-friendly, clean environments. In response to the Kyoto Earth Summit, the U.K. government introduced the Climate Change Levy (widely known as the energy tax) in April 2001. The CCL, applied to the commercial use of electricity, gas, coal and liquid petroleum gas, commits the U.K. to decreasing the 1990 emissions levels of six principal gases responsible for global warming by 12.5% by the year 2010.

A clear indication of the industry's commitment to this policy is evident in the fact that almost 200 U.K. metalcasters (40% of the industry) have entered into negotiated energy agreements with the government. These agreements result in facilities receiving an 80% discount from levy rates in exchange for guaranteed reductions in energy use. Clear two-year incentives are set that build to the overall target by 2010.--Lynn Postle, editor; Foundry Trade Journal

Editor's Note: This article is the first in a series that will survey metalcasting industries ill countries across the globe.