Steel casters discuss industry forecast and capacity.
SFSA's membership is growing, including nearly 80 firms with a total of 108 casting plants. But SFSA president Mike Gwyn, Pelton Casteel, Inc., said, "The general situation is flattening; fewer customers are designing new steel castings. The heavy truck market alone has seen $15 million in parts converted from steel to Al 357."
"So why are our numbers up, and where is the market changing?" Gwyn asked. "Casting use in structural and railroad applications is more aggressive. Computer 3D modeling and other design aids have helped, making steel castings lighter. There are more and more thin-walled investment castings in carbon or low-alloy steel." Some of the recent prosperity in steel may in part be due to the boom in the larger foundry industry. "The ductile iron market was so overwhelmed that some people must have gone back to steel for delivery," Gwyn suggested.
"In general," he said, "there is growth."
Slight Downturn Predicted
In the short term, however, that growth will slow down slightly. On behalf of SFSA's Marketing Committee, Dennis Lauber, Grede Foundries, presented a market forecast for 1996. "Last year, I was able to say that we were near the very best of times," he said. "Unfortunately, I can't say that again." Steel foundries saw a 20% increase in sales in 1995, surpassing all forecasts. In 1996, however, they'll be faced with a 5% drop. Lauber put that drop in perspective: "Even losing that 5%, we'll still have our second best year since 1981."
Foundry industry prosperity, Lauber said, is tied to the American consumer. "Obviously, we don't do well if people stop buying." Some experts are concerned about consumer debt-level, which has risen 26% since last year. "There comes a point," Lauber explained, "where people have to stop buying on credit." When that happens, foundries will feel it.
Addressing various steel casting markets individually, Lauber predicted that the railroad market orders would drop 10-15%, trucks by 10%, and construction equipment would fall 3-5%. Casting demand for military applications, which plummeted 25% in '95, will decrease another 5%. Pumps, he said, would remain at their present level, which is up 5% from 1994. Valves too will remain at their '95 level. Mining equipment applications, which went up 15% in 1995, will increase another 10% in 1996. Gas and oil field applications will rise 3%, and pulp/paper industry casting demands will increase 10%.
Steel Foundry Capacity
"We're not a dying industry," declared Raymond Monroe, SFSA's executive vice president. In his presentation, Monroe focused on current and future capacity in the steel and steel foundry industry. The total production of rolled steel, based on a 20-year average, is 102.7 million tons, while steel foundries produce 1.31 million tons. "So we're a very small percentage of the market," he said.
According to Monroe, there are 282 steel foundries in North America. Of those, 233 are carbon and low-alloy steel sand foundries and 201 are true jobbing shops. These numbers have remained very stable in the last two years. North American steel foundries have an annual total capacity of two million tons, with 1.78 million in the U.S.
Breaking production down by processes, 80% of steel casting tonnage is melted in arc furnaces, while 20% is induction melted. About 50% of steel castings are still molded in green sand. "No bake has made gains, largely because it requires less worker skill and gives a better surface finish," Monroe said.
The steel casting industry is currently running at just over 90% capacity utilization. "Longterm," Monroe said, "we'll continue to grow, and may have the opportunity to surpass our historic growth, just to meet the manufacturing demands of North America. But it will take a lot of work on our part.
"We have to look to future investments. Where do we need to be to position us for the future? We need to invest, recreating a layer of technical people that were let go during the bad times of the 1980s. Using rapid prototyping as the preferred means of design will help us. And we need success stories, like those that helped austempered ductile iron; when a big OEM goes to a new process or material, it gets tremendous exposure."
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|Title Annotation:||Steel Founders' Society of America Annual Meeting|
|Author:||Philbin, Matthew L.|
|Date:||Dec 1, 1995|
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