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Investment casting industry forecasts strong demand.
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By Stratton, R. Russell
Publication: Modern Casting
Date: Wednesday, August 1 1990
Subject: Metal castings industry (Forecasts and trends)
Investment Casting Industry Forecasts Strong Demand
If current levels of operation and two surveys are any indication, the investment casting industry should enjoy an unprecedented and sustained period of strong growth through 1995. Expanding existing markets, the addition of new ones and changing world economic conditions all point to a vigorous expansion of the industry.
Two economic research surveys confirm that the 6-9% annual growth the investment casting industry has experienced since its industrial inception in 1942 will continue unabated. The first survey, the Industrial Roundtable, conducted annually among Investment Casting Institute (ICI) members, assesses previous year's results and forecasts operations for each of the succeeding three years. The second, the International Financial Overview, gages specific financial operating data to test the viability of industry members worldwide.
To understand the market for investment castings one must keep in mind that virtually all investment castings are components of a final product. Most of the internal workings of jet engines, key automotive parts, elements of computers and electronics systems and even the delicate parts that hold rubber bands on teeth braces are investment castings list of products using investment castings encompasses nearly all of the main four dozen Standard Industrial Classification (SIC) numbers, a list that contains most of America's essential industries.
Most investment casting companies are classified as commercial (industrial) sector producers or as aerospace sector producers. Though far fewer in number, the latter sector has traditionally accounted for the majority of sales revenues.
By comparison, the commercial sector outside the U.S. and Canadian markets is expected to double. The growth will be led by the commercial portion of the industry that, until this year, traditionally amounted to less than 50% of the industry sales dollars. This reversal began with the exceptional growth of the commercial sector in 1987. Then, the commercial sector jumped ahead by approximately a third (over the previous year's sales) as aerospace growth rates started to decline.
The market for investment castings in the U.S. and Canada in 1989 was $3.6 billion with the rest of the world's producers adding another $1.8 billion. Forecasts for 1990 place growth at 10% over 1989, an additional 10% for 1991 and an optimistic "over 15%" for 1992, the year the industry celebrates its 50th anniversary. The U.S. and Canada account for only 7% of investment casting plants, but generate 20% of its total sales dollars.
The rapidly changing world political and economic situation will impact heavily and help redefine the investment casting industry starting as soon as 1995.
These changes offer a tremendous market development opportunity for the investment casting industry: an evolving Soviet Union since the adoption of perestroika and glasnost, the advent of the European Economic Community in 1992; the remilitarization of Japan; the re-evolving of many Third World countries as their huge debt burdens are forgiven; the continued expansion of second tier nations who have emerged recently from Third World status; the reopening of China, the world's largest single market; and the new openness of most economies everywhere.
Aerospace Sector Solid
Both surveys indicate that the aerospace sector will remain strong because of committed engine orders, options on additional engines, the growing air transportation business and pressure to replace aging equipment.
Boeing, for instance, reports it has a $35 billion backlog. Engines, which contain large numbers of investment castings, account for much of the current backlog. Due to the design-to-production time lag, engine procurement is virtually frozen, supporting the healthy aerospace investment casting business outlook.
Plans for a new generation of hyperspace and advanced military aircraft now under consideration will mean new business as well. The redefinition of our defense posture (fewer troops overseas) will probably mean cost savings on personnel and bases, but fewer troops will require more sophisticated weapons.
Further, those already established in the investment casting business are relatively isolated from new competition because of the high capital investment required in plant and equipment, accelerating technical costs and the long vendor and product approval process necessary to participate in the aerospace sector.
Commercial Sector Opportunities
The commercial sector is the sleeping giant of the industry. Although it has the greatest number of investment casters worldwide and a 12% annual growth rate for the last several years, plant capacity persistently hovers at 70-75%.
Long suffering from weak marketing, promotion and sales efforts, this sector is beginning to awaken to its potential. It has the flexibility, unlike other metal part making processes, to increase productivity quickly with little additional investment in plant, personnel or equipment.
Aside from the indications of the surveys noted above, technological changes in the investment casting industry are constantly altering the industry's profile. Investment casting continues to enter new markets. With new prototype developments, new waxes, automation and an expanding titanium technology, the evolving envelope containing this dynamic net-cast process can offer design engineers a broad array of opportunities to craft better metal parts.
Unless impacted by the unexpected (rampant inflation, unfavorable exchange rates, rising oil prices) the long-term outlook for investment casting, a relatively small part of the immense metals industry, is strong.
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