1990s provide stability for ferrous foundries.
There could be worse times to report on U.S. iron and steel foundries. It all depends on your point of reference.
If you were working in this business during the 1950s, '60s or '70s, chances are you would probably agree that the 1990s don't seem so great. On the other hand, if your point of reference lies in the 1980s, then the current period seems pretty good. In fact, iron and steel foundries are enjoying their best three-year period in more than a decade and a half. But in terms of sheer volume of castings shipped, maybe the best way to put it is "what a difference a decade (or two) makes."
If American iron and steel foundries had a "heyday," it was one that lasted for 30 years or more. During the 1950s, casting shipments from ferrous foundries averaged more than 15.6 million tons annually. In the decade that followed, shipments averaged 16.5 million tons. This level of shipments were again surpassed during the 1970s when iron and steel foundries, on average, shipped slightly more than 17.5 million tons shipped a year.
The following decade provided a stark realization that foundry life, as most metalcasters had come to know it, had changed - inextricably and dramatically - forever. Between 1980-89, casting shipments dropped to an average of 11 million tons annually, fully one-third less than foundries were geared up to produce just a decade earlier. Through the first half of the 1990s, that trend has continued.
In the 1960s, it is estimated that nearly 5700 foundries were operating in the U.S., 2300 of which produced iron and steel parts. The lowest level of castings shipped during the entire decade came in 1961 when only 13.8 million tons went out the foundries' back doors. By 1965, ferrous metalcasters were recording the largest shipments figures since the U.S. Dept. of Commerce began keeping records, as some 19 million tons were shipped in each of three years during the '60s decade - 1965, 1966 and 1969. These record-setting years would be topped only once after that - in 1973 - when slightly more than 20 million tons of iron and steel castings were produced and delivered.
A decade later, foundries began to feel the beginnings of the long-term changes that they continue to live with today. By 1982 some 1800 iron and steel foundries shipped only 9.8 million tons. This was subsequently followed by shipments of 9.4 million tons in '84, 8.7 million in '85 and 9.6 million in '86. Ferrous casting shipments didn't rise above the 12 million ton mark until 1994, when foundries shipped 12.2 million tons of iron and steel castings.
Many metalcasters found the dramatic shift to lower casting demand - combined with increasing governmental regulation (particularly OSHA and EPA) - difficult to reconcile. The nearly 4200 operating foundries in the early 1980s had become about 3000 by 1992.
Gray Iron: Changing Times
If any one cast metal symbolizes the changing times that are reshaping the foundry industry, gray iron would be that symbol, though some malleable iron producers may argue the point. Almost since the use of castings for industrial applications, gray iron has been the "king" of ferrous castings.
One of the most castable of all metals, gray iron possesses the physical and mechanical properties that helped fire the Industrial Revolution. Its forgiving nature in process also led to its widespread use during the past two centuries or more. But increasing pressures from other materials, processes and government regulation during the past two decades have combined to reduce the overall application of gray cast iron.
With the onset and widespread use of the automobile in the late 1800s and early 20th century, gray iron casting production skyrocketed. In 1943, the first year that official records were kept on casting use, gray iron shipments amounted to 9.2 million tons. During the same year, malleable iron and steel casting shipments reached 845,000 tons and 1.9 million tons, respectively. The benchmark for gray iron shipments came in 1965 when slightly more than 15 million tons were shipped. And while hundreds of other applications followed and remain strong markets for gray iron, automotive applications still dominate.
Governmental regulations are perhaps the single most instrumental cause for the declining fortunes of gray iron castings. Technology shifts, too, have been instrumental and reducing gray iron's role in some of it key markets.
It was the adoption of the corporate average fuel economy (CAFE) standards following the oil embargo of 1974 that mandated that automobile manufacturers to produce a 27.5 mile per gallon fleet average by 1985. This led to a significant shift away from traditional iron castings to lighter weight components, most notably aluminum.
In 1981, domestically-produced automobiles averaged nearly 650 lb of iron castings. By 1995, this average had dropped to 350 lb of gray iron per vehicle and is expected to drop further to 215 lb by 2005. The mathematics of this situation are fairly simple when the number of cars and light trucks (between 11-12 million combined) produced in 1995 are added to the equation. What was the bane for automotive gray iron casting producers became the boom for makers of aluminum castings.
Technology shifts, too, have played a leading role in diminished markets for gray iron. Ingot molds, used for rolling steel, have traditionally been one of the largest markets for gray iron castings in terms of tonnage. On average, in 1979, 50 lb of ingot molds were consumed for every ton of raw steel produced (136 million tons of steel were produced in the U.S. in that year).
The onset of continuous casting technology for producing steel has largely replaced steel rolling and, with it, the need for ingot molds. It is estimated today that nearly 90% of all raw steel is produced through continuous casting. Use of ingot molds has dropped to about 5 lb per ton of steel produced. This has reduced the use of ingot molds to about 200,000 tons a year, down from more than 4 million tons per year in the 1970s. This trend is continuing.
Today, automotive applications, with their use of 2 million tons per year, remain the major end-use market for gray iron. Municipal castings and components for internal combustion engines rank as the second and third most important gray iron markets, using 500,000 tons or more per year.
Ductile Iron: On the Way Up
In contrast to gray iron, shipments of ductile cast iron have experienced nearly the opposite effect during the past two decades. Much of ductile iron's growth during the past 40 years has, in fact, come at the expense of its older brothers, gray iron and malleable iron, and, to a lesser extent, at the expense of its cousin, cast steel.
Developed in the 1940s, ductile iron was offered as a tougher, stronger alternative to traditional gray iron and as a more cost-effective option for malleable iron. The first official record of ductile iron production appeared in 1958 when, according to Dept. of Commerce data, some 118,000 tons of ductile were produced and shipped. Ten years later, shipments surpassed 1 million tons annually and just three years after that, in 1971, shipments more than doubled to 2.1 million tons.
Much of the early growth of ductile iron came by the way of replacing gray iron in pressure pipe applications, and this remains as its number one application today at about 1.7 million tons. As expected, use of ductile iron in car and light trucks also experienced significant growth as casting designers and users increasingly demand more and more from cast components in the way of mechanical properties.
Besides replacing other cast metals, at least part of ductile iron's growth can be contributed to replacing steel weldments and forgings in some applications. In addition, the development of austempered ductile iron (ADI) has opened up additional avenues for the metal's continued growth as it challenges forgings and possibly cast steels in applications requiring additional toughness and strength.
In 1994, ductile iron shipments surpassed the 4 million ton mark for the first time in its less-than 50 year history. If current trends hold, some forecasters have ductile iron surpassing gray iron within the next decade or so.
Malleable Iron: A Tough Road
The first time annual shipments of malleable iron surpassed 1 million tons came in 1951. This was followed by a period of relative stability for nearly the next two decades through 1969, when malleable shipments reached their high water mark of 1.2 million tons. That same year, ductile iron shipments totaled 1.25 million tons. The following decade became a study in contrasts for the two metals.
Following that 1969 high, there was only one year that malleable iron shipments surpassed the 1 million ton level. This came in 1973, when 1.03 million tons of malleable iron were shipped. That same year, 2.25 million tons of ductile iron were delivered to casting users. Since then, malleable iron use has slowly declined to reach an all-time low in 1991 of 207,000 tons. The metal has since rebounded to nearly 260,000 tons in 1994, but the future appears less than promising for the toughest of all cast irons. Cost issues and development of effective replacement metals have spelled the decline of malleable iron use.
Today, the most significant markets for malleable iron include connecting rods for cars and light tracks as well as valves and fittings. There has been talk for some time to begin replacing connecting rods with other materials, perhaps even with powdered metals. If this occurs, more than 100,000 tons of malleable iron's current 250,000 tons could disappear.
In addition, proposed changes in standards for electrical and plumbing fittings that may allow the use of ductile iron in place of malleable iron in these applications could also add to its diminishing use.
Steel: A Picture of Stability
Of all the ferrous cast metals, steel has probably demonstrated the longest history of stability. In 1943, steel casting shipments stood at nearly 2 million tons. Like the other ferrous casting producers, steel casters experienced pretty much the same ups and downs over the 40 years that followed, following the economy's demand for capital goods.
It wasn't until 1983 that steel casting shipments slipped below the 1 million ton level. Actually, it was the year prior that indications of the fall became readily evident. Steel foundries were riding high through the 1960s and '70s, consistently shipping between 1.5 and more than 2 million tons annually. In 1981, some 1.7 millions tons of cast steel was shipped, dominated heavily by railroad freight car production. By 1982, steel foundries watched as shipments dropped slightly over 1 million tons, only to fall to 764,000 tons by '83.
Much of this precipitous falloff can be attributed directly to freight car production. In 1979, some 90,000 cars were built and shipped, slipping only slightly the following year to 86,000 cars. By 1981, a significant slowdown was in the offing as freight car shipments slipped to 52,000. This was nothing compared with what happened the following two years as shipments of railroad cars fell to only 16,000 in '82 and finally to the undreamt-of low of 6000 cars in 1983.
According to some industry analysts, the plunge in freight car production in the early '80s is attributed to the overbuilding of cars in the late 1970s. This overbuilding, some say, was the result of speculation and/or using the investment in railroad cars as a tax shelter. But for whatever the reason, the shocks of the early 1980s sent many steel foundries into a tailspin from which they never recovered.
Since that time, steel foundries again demonstrated their resiliency by topping the 1 million ton mark by 1988. During 1994, steel foundries, again, shipped nearly 1.5 million tons of cast parts.
In the short term, little or no significant changes are expected for most cast steel markets, though some steel casters, like other ferrous foundries, are feeling the competitive sting of ductile iron, particularly in the truck market.
Still Room to Grow
At least in the short term, stability appears to be the watchword for the ferrous side of the foundry industry. As has been traditionally the case, the industry will follow the usual ups and downs of the overall economy and demand for capital goods.
It is estimated that current capacity of U.S. iron and steel foundries is about 14 million tons. With forecasts for 1996 calling for shipments of 11 million tons of iron and steel castings and 11.3 million in 1997, it would appear that there is still some room to grow. Currently, all signs point to very slow but sustained growth in casting demand in the near future. But remember, it is an election year.
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|Author:||Kirgin, Kenneth H.|
|Date:||Aug 1, 1996|
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