Nonferrous foundries vie for continued growth.

The level of future growth for nonferrous foundries represents a dichotomy of potential as competitive pressures grow.

It was the classic scene from the 1967 movie The Graduate. Having just graduated from college, Benjamin's very successful parents throw him a posh graduation party at their Beverly Hills estate. None of his friends are invited though, just his parent's equally well-heeled friends.

Having little or nothing in common with this pretentious group of socialites, Benjamin is more than a little bored. But at one point, one of his father's friends puts his arm around the new graduate and whispers a single word of advice: "Plastics." With that he walks away, leaving Ben to ponder his future.

If Ben's father's friend was at all familiar with the foundry industry, chances are that bit of advice would have been "Aluminum." On the other hand, had he been able to look ahead some 25 years into the 1990s, he may still have said plastics.

Sustained Growth

Since at least the 1950s, cast nonferrous metals have experienced continuous sustained growth. During the period between 1950-59, shipments of the four major metals comprising this segment of the foundry industry-aluminum, copper-base, zinc and magnesium-averaged slightly over 1.1 million tons per year. During the next 10-year period, that average jumped more than 35% to an annual level in excess of 1.5 million tons.

The average annual growth rate of nonferrous casting shipments during the 1970s slowed to about 7% when compared with the previous 10-year period. The turmoil of the 1980s again hampered growth as an average of nearly 1.7 million were shipped yearly, compared with 1.62 million tons during the 1970s-an increase of more than 3.5%.

The first seven years of the 1990s demonstrated that the nonferrous sector had once again been revitalized, as average shipments rose by some 9%. Shipments of all nonferrous castings between 1990-97 averaged more than 1.8 million tons per year. Some 2.5 million tons of these metal castings made their way to end users in 1994 alone, the highest level of shipments since 1943, the first year that the U.S. Department of Commerce began recording foundry statistics.

Despite their 40-year history of significant growth, at least three of the four metals that make up the major portion of the nonferrous foundry sector are feeling the nip of "plastics" at their heels.

The Strength of Aluminum

For the most part, the stability and growth of the nonferrous casting market during at least the past three decades is directly attributable to increased use of aluminum castings.

Forty years ago, shipments of cast aluminum averaged about 335,000 tons a year. This nearly doubled during the 1960s to more than 650,000 tons annually. Through the first seven years of the current decade, shipments of aluminum castings have topped the 1.4 million ton mark on an average annual basis, more than quadrupling in four decades.

As pointed out in Part I of this series (see modern casting August 1996, p. 35-37), gray iron's loss in its automotive markets has been aluminum's gain. With the automakers' efforts to achieve government-mandated Corporate Average Fuel Economy (CAFE) regulations, in many cases (and despite some cost penalties) they turned to an aluminum substitute for gray iron and other ferrous materials to lighten their vehicles and reach gas mileage goals. The reason was easy to understand.

The typical substitution ratio demonstrates that 1 lb of aluminum can replace 2.25-2.5 lb of cast iron. For example, on a typical V-8 engine block, a reduction of as much as 150-190 lb per vehicle can be realized using aluminum versus cast iron. But what is gained in weight savings is usually lost in cost, as aluminum can run as much as 3-5 times more on a pound-for-pound basis.

Nonetheless automakers,faced with the CAFE mandate of achieving 27.5 mpg, took the road to lighter weight. In 1988, domestically produced vehicles averaged about 105 lb of aluminum. By 1995 this had risen to 150 lb, and some projections call for 180 lb within the next 10 years. In addition to standard cast aluminum alloys, more recent developments, such as cast metal matrix composites (cast components reinforced with fibers like silicon carbide), are also said to be making inroads in replacing other traditional cast iron components, like brake disks.

On the other hand, as plans continue to substitute a variety of cast aluminum for ferrous parts, automotive intake manifolds have evolved even further. In 1995, for example, 75% of all intake manifolds for domestically produced vehicles were made of aluminum. By 2004, it is suggested that this level could drop to 60%. Why? Because some automakers already have plans on the board to substitute (what else?) plastics for these aluminum components.

Other traditionally strong markets--internal combustion engines (for lawn and garden equipment! and diesel engines), office machines and computers, and instruments-do promise aluminum the potential for long-term, though less dramatic, growth.

While during the last five years, cast aluminum components for aircraft and aerospace applications have seen shipments drop from 90,000 tons per year to about 50,000 tons in 1995, this area also could provide long-term, sustained growth. When this industry gets back on its feet, and if U.S. foundries can respond to the requirements of aircraft manufacturers for high-strength structural castings as they are now produced in Europe, this market could again be a significant customer for cast aluminum.

Process Oriented 

Probably more than any of the other major cast metals, aluminum remains a process-oriented market. For the last two decades or more, diecasting represented more than 60% of the total cast aluminum tonnage shipped. For example, in 1991 and 1992, 62% of all aluminum castings shipped in the U.S. were made as die castings.

Those same years, 21% were produced as permanent mold parts, and the remaining 19% came from sand foundries. By 1995, diecasting production of cast aluminum slipped somewhat to 59% as permanent molding rose to 25% and sand casting dipped to about 16%. In the long term, diecasting is forecast to grow at about 1.6% per year. At the same time, as more and more engine blocks and cylinder heads are converted to aluminum, sand and permanent mold cast parts are expected to grow by more than 4% annually.

Cu-Base: More Challenges

Copper-base castings remain the senior citizen of the nonferrous foundry industry. In many respects, it is showing its age. While U.S. aluminum casting shipments hit their highest level with 1.65 million tons in 1994, shipments of brass and bronze castings peaked more than 50 years earlier when some 760,000 tons of copper-base parts were produced in 1943. The low point for brass and bronze castings came in 1982 when only 228,000 tons found their way into the marketplace.

For a variety of reasons, brass and bronze metalcasters have watched their markets slowly erode over the past half century. During the 1950s, copper-base foundries shipped an average of 478,000 tons per year. The following decade saw that average slip somewhat to 436,000 tons annually. The 1970s and '80s saw the most dramatic loss in tonnage when the yearly average slipped to 308,000 and 302,000 tons respectively. Through the first seven years of the 1990s, annual shipments are averaging just under 301,000 tons.

The high cost of copper, relative to other metals and materials, has been the main nemesis to long-term growth of brass and bronze castings. This has made them particularly vulnerable to substitution.

Some four decades ago automotive parts like brass battery cables and parts for power seat mechanisms represented significant markets for many copper-base foundries. Today, these markets are nearly extinct, replaced by diecast lead, stampings and other materials and processes.

The major end-use markets for cast brass and bronze components today are industrial valves and fittings, plumbing fixtures and fittings, electrical equipment, power transmission parts and pumps. But many of these markets remain under attack from stainless steels, teflon coated ductile iron valves and--you guessed it--plastics.

Continued market pressures-both domestic and international-combined with legislative hurdles that call for eliminating lead from commonly used brass alloys would seem to point to a dismal future for copper-base foundries. Despite this, the outlook for brass and bronze castings isn't nearly as bleak as it might seem.

While growth during the next decade will probably be less than spectacular at under 1% per year, the market is projected to grow from 303,000 tons shipped in 1995 to more than 320,000 tons early in the next decade. Much of the increase during the next 10 years is expected to come from a reduction in imports of industrial valves and fittings as U.S. producers become more competitive. Currently, as much as 10% of these part are being imported. In addition to this, the development of new unleaded brasses are also expected to help these foundries hold on to some significant copper-base casting markets.

Zinc: Under the Gun

Like their copper-base brethren, zinc castings are facing the challenge of substitution. Unlike those brass and bronze colleagues, the reasons differ somewhat.

The greatest majority of zinc castings are manufactured through the diecasting process, and its markets are dominated by two major end users: motor vehicles and parts, along with hardware, plumbing fixtures and building tools. The same move toward automotive weight savings that is feeding the growth of aluminum is taking its toll on zinc diecastings. In many respects, zinc casters have managed to hold their own here with improved quality and the ability to produce thin-walled parts. But plastics still represent a significant foe as automakers continue their focused effort to get the weight out, stunting significant growth in the future.

Historically, zinc diecastings hit their stride during the 1960s, shipping an average of 417,000 tons per year, up from the annual average of 280,000 tons during the 1950s. The industry has slumped since, dropping to an average of 360,000 tons annually during the 1970s, 336,000 tons in the 1980s to 318,000 tons a year through the first seven year of this decade.

While some expansion is projected in the hardware and building tools markets, along with increases in the electrical apparatus areas, growth in zinc cast parts, in all likelihood, will remain under the gun well into the next decade.

Magnesium: Potential Plus?

Like zinc, a large majority of cast magnesium parts are produced using the diecasting process. But with its excellent strength-to-weight ratio, along with the continued automotive weight savings push, the future for cast magnesium would appear to hold enormous potential for growth.

In terms of total production, magnesium represents a very small slice of the U.S. foundry market. Through the first seven years of the current decade, annual average shipments stood at slightly more than 24,000 tons. This is up from about 20,000 tons per year during the previous two decades. Traditionally, magnesium's cost, propensity to corrode and safety issues connected with its production have limited its potential.

But as automakers confront the possibility of even stiffer CAFE standards (possibly 30 mpg), the traditional barriers to magnesium's growth are being overlooked. One of GM's newest engine designs, for example, contains 15 lb of magnesium diecastings, including valve covers, oil filter adapters and torque converter. If the movement continues, other logical candidates include rocker arm covers and transmission cases.

Other major end uses for magnesium castings include power tools, and sporting goods and toys. These will continue to fuel magnesium's growth at about 3% per year.

The Nonferrous Dichotomy

While they share the same market distinction, the individual members of the nonferrous fraternity seem to represent a dichotomy when it comes to future potential. As the heavyweight brothers ponder a future of sluggish or low growth, the lightweights appear to have all the potential in the world. Even at that, cast aluminum is already looking over its shoulder at other processes and materials.

In the near term, all of the major metals making up the nonferrous foundry industry will at least hold their own. Some can expect dramatic increases.

For the longer term, it is difficult to tell. As Victor Borge once pointed out, "Forecasting is difficult, especially about the future."

[ILLUSTRATION OMITTED]