After more than a year of research and documentation, the federal government has concluded: “The U.S. foundry industry faces a highly competitive and changing marketplace.” That’s the opening line of the summary by the Commerce Dept.’s International Trade Commission from its recently completed study “Foundry Products: Competitive Conditions in the U.S. Market.” (A copy of the summary release and a link to the full report for downloaded are found at this site.) The report is based on a fact-finding investigation requested by the American Foundry Society in March 2004. AFS was seeking a basis for understanding its future challenges, it recalled in its own recent announcement.
A wise guy — me, in this case — would say, that the ITC’s finding is more recap than forecast, and that it probably shouldn’t have taken a year to arrive at conclusions that are so apparent. But, in fairness, the report works well as a statement of facts. That, I must conclude, was the reason AFS made this request.
After years of arguments and petitions to shape environmental and trade policies, the metalcasting industry wisely moved to establish an official record of what U.S. metalcasting is, what it does, and what its ongoing conditions are. This becomes documentary evidence whenever federal or state governments move in ways that will affect metalcasting and its interests.
Just as important, to much of the world this document will be a working definition of the industry. Researchers and investors will quote from the study, and use it to influence their colleagues and clients. The ITC report examines competition in the domestic industry, with looks at specific product segments (e.g., iron, steel, aluminum, and copper-based castings.) It compares conditions in a number of foreign foundry industries, as well as relevant government policies and regulations here and abroad.
So, now, various anecdotal certainties that many foundries and diecasters know from experience stand as fact: The ITC asserts that the U.S. foundry industry “experienced a highly competitive and changing marketplace during 1999-2003 ...”: it was pressured by overall economic slowdown, materials substitutions (PVC for copper in valves and fittings; aluminum for iron in many automotive parts), and by foreign supplies of high-volume, commodity-type castings. “Concerns about product pricing increased,” the ITC announces; “producers indicated that their customers, particularly large automotive manufacturers, dictated prices and controlled contract terms in part because they could source certain castings at lower cost offshore.”
The report documents how metalcasting production, shipments, employment, and net sales declined from 1999-2003, while raw materials, energy, and labor costs cut into decreased revenues. It details the industry’s consolidation and remaining producers’ efforts to expand customer service, shorten lead times, and shift output to higher-volume products.
The ITC has effectively defined the metalcasting industry by outlining many of its problems. It is not fun reading, nor is it easy, but you should at least browse through all 368 pages to know that what has been all-too-obvious now is official. The trouble with this report is that it does not give metalcasters an informed sense of their own industry, and the broad manufacturing and economic trends that are pulling it apart.
The influence of customers often determines revenues, and defines many internal strategies; some foundries succeed in this way, while others are squeezed. The pace of new technology, and the availability of skills, brands some operations as “innovators” but others as mere “traditionalists.” The cost and scarcity of capital means that some organizations have the resources to plan, to invest, and to risk, while others inch along hoping for a break.
None of these distinctions are new, nor are they specifically worrisome. In some ways they are ongoing themes that have played out in metalcasting and other industries for a century or more. But, for all the fact-finding done by the ITC, these are details that metalcasters should recognize about themselves and the future progress of their industry.