The confounding aspect of manufacturing activity during 2023 has been the vagueness: What is the reason business conditions are just ok, not too bad, not yet a recession? Inflation and energy costs hit some sectors much harder than others, likewise for supply-chain inefficiencies and labor shortages. For metalcasters, as in the broad economy, growth - where it can be recognized - is slow and uneven. Consumer demand is not fueling industrial spending, and moderating inflation is not encouraging capital spending beyond those sectors targeted with incentives.
Because metalcastings are supplied to so many different manufacturing sectors, foundries and diecasters feel the strain on their own account, and that strain may be aggravated in proportion to their customers’ predicaments. Some metalcasters are more sensitive to consumer activity than others – automotive foundries, for example.
“2023 business has been good,” reported Matt Nichols of Quality Castings Co., Orrville, OH, while allowing that conditions have not been as strong as in 2022. “Our customers order too far out, based on lead times. This resulted in high inventory levels at the customer and reduced orders at the foundry.” Nichols told us he foresees 2024 as bringing more of the same qualified success. “It will not be as good as 2022,” he said, “but OK.”
Similarly, foundries that supply castings for heavy equipment, or cast pipe or municipal castings may absorb higher energy costs and other difficulties while enjoying the benefits brought on by federal infrastructure spending programs. Others are disproportionately rewarded when energy prices spike: “We are in Texas, and oil/gas activity has been strong – which helps a lot in this area,” explained Brad Desplinter, v.p./general manager of Texas Precision Metalcraft.
“Also, we have been able to keep lead times well below average that attracted new customers,” he continued, telling FM&T that “2023 has been a very good year with about 10% increased sales from 2022, and an above average number of new customers.”
The TPM exec has confidence that the business can maintain its direction in 2024, despite some adverse conditions. “We are forecasting 10% growth again, mostly in the second half,” he advised.
In an industry with ties to so many variables, improvement may depend on individuals and/or organizations that recognize opportunities and work to profit from them. And in such an uneven market, a successful year may be interpreted more as progress than profits.
Sarah Jordan is CEO of Skuld LLC, a start-up business developing a new, hybrid additive/casting process based on joining 3D printing with lost foam. “We had three major R&D projects to aid in the process development (during 2023),” she told us. “We also got into the DOE’s lab-embedded entrepreneur program - Innovation Crossroads - at Oak Ridge National Lab.
“Plus we are doing a range of commercial work some involving our new technology and some involving conventional casting processes,” she added. Skuld installed its initial aluminum melting capacity during 2023, and there has been additional “hard work” in networking, marketing, and business planning, she noted. “It is not easy starting a new foundry or a hard tech start-up,” but she advised that the business plans to quadruple its melting capacity and continue to develop its AMEC technology during 2024. They also intend to launch Lightning Metal a “nanofoundry” additive manufacturing system for non-metalcasting businesses.
Technical skill and entrepreneurship are great advantages, but the bigger economic picture still influences a business’s prospects. “Interest rates are a concern,” according to Jordan, “as they impact the cost of investing as well as impact probability/duration of a recession.”
There is one thing that unites metalcasters, and seemingly all manufacturers, in their economic assessments: “Lack of labor has been a big issue,” Desplinter explained. “Pay rates are very high,” and this will continue to be a “major issue” next year.
Sarah Jordan is blunter about the challenge for 2024. “Finding people,” she said.
If anything unites metalcasters’ perspectives on the present economy and its prospects, this is it. “Manpower shortages prevent growth,” one respondent told us, anonymously. Others detailed how labor shortage prevents foundries from taking on new business, or from filling orders on time. “People are difficult to find,” another said. “It has impacted our ability to produce what we want.”
It’s not simply a lack of manpower, but a lack of skilled metalcasting workers. “It has affected our ability to get our products out to our customers in a timely fashion,” one respondent detailed. “The lack of skilled labor has had a negative impact on our costs, especially meeting quality requirements. Rework is up.”
It’s a persistent and prevailing problem for metalcasters – but one they’re apparently willing to manage if the demand for castings remains and the opportunities to grow continue.