Slight '95 downturn expected, but noncaptives could gain.

Overall casting demand will dip slightly in 1995, but with possible gains in some sectors, according to metalcasting consumers interviewed for our soon-to-b published annual forecast.

Despite lower demand in some market sectors, noncaptive and jobbing foundries could benefit from the combination of increased exports, lower imports, and the closing and shrinking of captive casting operations. When using the formula Shipments = Demand + Exports - Imports - Captive Production for all market sectors, it's evident that lower "demand" forecasts can be offset by other factors that will actually mean gains in "shipments."

Export/import conditions continue to improve, based on the continued weak dolla and the improvement in world economies forecasted in 1995. The recovery in Europe is showing signs of beginning in most market sectors, with an overall forecast for a 2.5% growth in gross domestic product for the 13 European Community countries.

The continued strength of the deutschmark and other European currencies, combined with improved productivity from U.S. manufacturers, has meant an increase in exports to these countries and decreases in imports from them.

Meanwhile, the superior productivity of U.S. foundries has offset the low labor rates and competitive advantage of Third World countries.

The closing of captive foundries in the U.S. and Canada is creating rising participation by noncaptive foundries. For example, the closing of GM's St. Catharines (Ontario) foundry, John Deere's Silvis plant and the sale of Case's Oklahoma facility has made more than 400,000 tons of iron castings available to noncaptive foundries.

The scheduled closing of GM's Danville (Illinois) foundry in early 1996 and proposed shrinking of captive operations at other major captive works also are expected to open further markets to efficient noncaptive foundries.

The table lists the forecasted casting demand, shipments, imports, exports, captive production and the tonnage available for sale by noncaptive foundries t selected markets in the U.S. The total Demand and For Sale tonnage in these selected markets in 1994 is expected to reach 7.61 million and 5.1 million, respectively. The 1995 forecast calls for 7.47 million Demand tons and 5.4 million For Sale tons.

Based on this preliminary analysis, the Demand for castings is 147,000 tons les in 1995, while the For Sale tonnage available to noncaptive foundries is 300,00 more than 1994. From this sample, it can be estimated that the Demand for metal castings is to decrease by 3-4% in 1995, while castings For Sale by noncaptive operations could increase 4-5% over 1994. This analysis will continue and be reported in our annual forecast.

Projected 1995 Demand for Metal Castings (000 tons)

Market           Met   Demand    Shpts   Imports   Exports   Captive   For Sale
                                                                         (**)

Valves            GI     261      256       50        45        91        215
                  DI     196      192       29        25       100        121
                  MI      53       46       15         8        40         21
                  St      91       88       13        10        13         88
                  Br     103       99       12         8        55         56

Engines           GI     475      475       38        38       260        253
(*)               DI      87       85        9         7         0         94
                  AI      92       90       12         9        41         60

Farm              GI     273      270       27        24       170        127
Equipment         DI      99       97       12        10         0        109

Const/            GI     271      274       27        26       108        189
Mining/Oil        DI     191      193       20        21        13        200
                  St     261      258       23        20        16        265

Machine           GI     118      118        6         6        20        104
Tool

Special           GI     206      206       10        10        30        186
Mach              DI      95       95        6         6        15         86

Pumps/            GI     227      225       18        16        40        203
Comprs            DI      81       80        7         6        14         73
                  St      29       29        3         3         6         26

Car/Lt Trck       GI    2015     2055      161       201       940       1276
                  DI    1037     1058       83       104       360        781
                  AI     911      911      137       137       300        748

Med/Hvy           GI      91       90        7         8        40         59
Truck             DI     146      143       13        16        60        102
                  St      57       56        5         4        30         31

(*) Includes nonauto diesel and small gasoline engines only.

(**) Calculated as Demand + Exports Captive as available for sale. Imports are
included as available for sale.