Metalcasters have an almost mystical understanding of the work they do, the ancient origins of their processes, the generational legacies of many operations, and the traditions that shape their profession. They’re also insightful to their role in the industrial supply chain and the global economy. Metalcasters are alert, aware, influential, and sensitive to the issues that affect their customers – which inevitably will influence them too.
We admire metalcasters, and we revere their grasp of the past, present, and future of the industry, and the world in which we all live and work. But around here we deal in facts: we want to explore the ideas and insights metalcasters have to evaluate the industry at this moment. The Foundry Management & Technology 2024 Metalcasting Business Outlook is our effort to do that.
Each year, FM&T surveys our metalcasting readers to gain some perspective – if not consensus – on the state of affairs in North America’s foundry and diecasting operations. We’re proud of the audience we have developed and maintain, and we rely on their insights about the work they do. We collect facts, but we discern knowledge from the concerns they express, and the expectations or concerns raised, by men and women working in foundries and diecasting plants.
It’s an effort to go beyond the facts, to understand not only the present circumstances of these operations, but also the underlying conditions shaping those businesses. We also seek to understand how these facts are received and understood by metalcasting decision-makers. We want their assessments of current conditions and we want to record the issues that give them confidence or concern, in their own businesses, in their supply chains and markets, and in the economy. We want to learn what decisions they face in the business cycle just ahead, and to understand better their expectations for the future of their enterprises.
Setting the stage
The FM&T Metalcasting Business Outlook survey is conducted each year at the start of the fourth quarter – in time for respondents to make an honest evaluation of their current-year performance, and to assess their prospects for the year ahead. In October 2023 we surveyed readers by email over a period of four weeks, drawing dozens of responses, enough to make us confident that our report is a reliable capsule of the metalcasting industry.
Whatever else may be learned from year to year, the annual survey reconfirms the variety of metalcasting operations– foundries and die casters, who in their variety cover the breadth of manufacturing sectors, from aerospace and automotive to surgical implants, water pipes and wind turbines.
Among the 2024 Outlook survey’s respondents, 24.4% are primarily involved in casting ductile iron; 21.1% are casting aluminum alloys; and 18.9% are casting mainly steel alloys. The survey also includes respondents whose castings are mainly gray iron (8.9%), copper alloys (6.7%), or various other metals (19.9%.)
The survey respondents also range in the scale of their operations: 24.7% represent operations with 250 or more employees; 16.8% have 100-249 employees; 24.7% are with businesses in the 50-99 employee range; 10.1% have 20-49% workers; and 23.6% are at business with fewer than 20 employees.
Conflicting realities
With that understanding of our respondents, let’s look at how they view the current performance of their metalcasting business versus the results of the past and expectations of the future. The results are uncertain. Asked “How will you 2023 casting shipments (tonnage) compare with 2022 shipments?” – a plurality (43.8%) indicate that there will be an increase. But the majority of respondents (56.2%) split their evaluations between “Stay the same (with 2022)” and “Decrease.”
Metalcasters’ conflicting views about their own businesses seem to parallel the lack of clear direction in domestic economics: Are conditions improving because of long-term spending on high-tech and infrastructure projects? Or is economic growth hampered by inflation, the availability or labor, supply-chain inconsistencies, and the weakness of consumer spending?
The volume of activity that foundries and die casters managed during the past year should a matter of some concern for the industry, as survey respondents reveal that 42.35% of all operations have been operating/performing at 75% or less of their installed capacity.
“There is almost a 75-80% decrease in orders from existing customers for more than seven months,” one respondent detailed to us, while another anecdotally explained his operation’s “increased share of business due to improved quality performance and a reduction in operating costs.”
Among the 43.8 respondents who reported improved results in shipments for 2023, 44.19% indicated the improvement is in the range of 10% or less compared to last year’s results, and another 37.2% found the improvement to be in the range of 11-25% over 2022. Other fragments found their increases over last year’s shipments, including nearly 7.0% whose annual shipments are riding more than 90.0% higher than the 2022 total.
As for the 28.1% of all respondents who are facing a year of declining overall shipments, the rate of decrease is set to be -10% or less for 41.0%; and -11 to -25% for another 37.5% of the cohort - meaning that the decreased in shipment volumes during 2023 will be -25% or less for nearly one-third of all respondents.
Overall, 2023 does not present a desperate economic picture for the metalcasting business, but keeping in mind that another 28.1% of respondents expect no increase in casting shipment volumes versus the 2022 total, it is certainly a manufacturing sector waiting for the multiple barriers to economic growth to be lifted.
Will 2024 bring that improvement? Asked “How do expect 2024 casting shipments (tonnage) compare with 2022 shipments?”, 55.1% of Outlook survey respondents believe there will be increases. 29.2% expect next year to be comparable to 2023 in this regard, and 15.7% foresee a decrease in shipments next year.
What is the basis for the optimism? “We are in a high-growth mode,” according to one respondent, and “2023 was a slower-than-usual year (but) we have positive movement in our current order projections,” another added. And there are numerous more replies in that vein.
But others are not in the mood: “We anticipate – and already are seeing – softening in bookings, indicating that we are in for some sort of recession,” is one of the most reasonable explanations in this vein.
But whether these respondents are relying on indicators, or playing hunches, how firm are their commitments to their 2024 forecasts? Among the optimists, 42.6% expect a 10% or less rise in shipments over 2023; 31.5% expect a rise of 11-25%; and 16.7% are calling for a 26.7% increase.
The pessimism is apportioned in a similar way: 47.1% expect a decline in shipments of -10.0% or less, compared with this year; 35.3% anticipate that decrease will be in the 11-25% range; and 11.8% expect a decline of 26-50% versus the 2023 totals.
Putting up the money
Estimates and instincts are fine, but by the fourth quarter of any year any businessperson has made some calculations about the future – and we survey metalcasters to learn about their investment plans for the coming year. Among all respondents to the Outlook survey, 42.2% plan to increase their 2024 capital expenditures compared to 2023, and 44.4% plan to keep CapEx at current-year levels. 13.3% will reduce capital spending next year, though it must be noted that cohort will include metalcasters who have completed major updates or expansions during 2023.
And what will metalcasters be building or installing in 2024? 60.0% of all respondents will be installing new production, processing, or handling equipment next year, and a further 30.0% will undertake expansions to their plants, and 6.7% will building new plants in 2024. Noting that this survey question allows multiple responses (“Check all that apply.”), and that 23.3% of all respondents are planning no capital investment in 2024, it’s possible to observe that 76.7% of all metalcasters will be expanding or updating their operations next year.
Perhaps that figure is not overly surprising, but knowing the value of metalcasters’ planned investments is revelatory. Among that 76.7% of all respondents, 4.7% will be investing more than $5 million in 2024; 22.35 will invest $1 million to $5 million; 12.94% plan to stake $501,000 to $1 million; 20.0% will invest $251,000 to $500,000; 17.65% will invest $101,000 to $250,000; and 22.35% will invest $100,000 or less in capital projects next year.
What are metalcasters borrowing plans for 2024? 10.34% of respondents will increase debt levels to accomplish their planned project, and 12.64% will be retiring debt next year. 36.78% expect their debt levels will be mainly unchanged over the course of 2024. 35.63% report their business is not carrying any debt now – and 4.6% of respondents indicate they will be seeking new equity investments in the year to come.
Where does the money go?
How money will be invested in 2024 is probably a more pragmatic way to view the future of metalcasting next year. We asked respondents to identify what types of new equipment they have invested in or acquired during 2023, allowing them to take a multiple choice approach to gain a fuller view of their needs or aspirations.
The most popular investment among respondents during this year has been for new laboratory systems (41.5%), followed by new grinding equipment (35.37%), air compressors (34.15%), cranes/hoists (30.5%), and lift trucks/loaders (30.5%.)
Concerning the high-profile processes distinctive to metalcasting operations, 23.7% of respondents acquired new melting equipment; 18.3% invested in new shakeout systems; 14.6% acquired new coremaking equipment; and 11.0% acquired new molding machinery.
Other important investments during the past year have been made for new machine tools (26.8%), robots/manipulators (21.95%), and pollution controls (20.7%.)
Of course, we also asked respondents to identify what types of new equipment they plan to invest in or acquire next year, allowing them to take the same multiple choice approach. Tabulating their multiple-choice options, it’s clear that in 2024 the most popular selection among metalcasting buyers will be new grinding equipment (36.62%), followed by lift trucks/loaders and machine tools (tied, 29.6%), pollution controls and robots/manipulators (tied, 23.9%), laboratory systems and melting equipment (tied, 21.3%), and coremaking machinery (19.7%.)
As for those more distinctive metalcasting process areas, 9.9% of all respondents plan to invest in new molding machinery, sand preparation systems, and casting simulation software.
Problems aplenty
A specific advantage of the annual Metalcasting Business Outlook survey is the opportunity to identify the process and management problems that are particular to this industrial sector – as well as the pressing concerns of the people working in it.
We asked survey respondents to indicate the types of problems that have beset them and their metalcasting operations during 2023, offering them a multiple-choice approach. Overwhelmingly, 60.9% of respondents identified “labor shortages” as a problem – making it the top-most concern of the past year. Similar problems – “human resources” (47.1%), “skills shortage” (41.4%), and “training” (17.2%) – accentuate how prevalent these issues are for metalcasters and in the minds of their operators.
Another significant problem area for metalcasters is “energy costs”, which is a point of concern for 37.9% of respondents. “Raw materials costs” concerns 35.6% of respondents, and “on-time delivery of castings” is an issue for 26.4%.
Asking survey participants to project the problems and/or concerns they anticipate during 2024, we note that the same subjects – “labor shortages” (52.4%) and “labor costs” (43.9%), “skills shortages” (42.9%) and “human resources” (34.15%) – continue to lead their selections. “Energy costs” (34.15%),“raw materials costs” (20.7%), and “on-time delivery of castings” (14.6%) also recur.
More to say
We surveyed readers on various other subjects pertaining to the metalcasting industry and its present and future conditions, including casting imports, the reshoring trend, professional development, and emerging market opportunities. The responses are pertinent to the direction of industry, in light of the choices that will be made by metalcasters that will shape future conditions.
While the survey reveals much about the problems that metalcasters must address, it also shows an industry that is alive with new insights to the factors shaping manufacturing today and in the year ahead.