CPT International 04/2016

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K MARKETS ability. “Advanced Sustainable Foundry1” was the theme for the 71st World Foundry Congress held May, 2014 in Bilbao. At the Congress, Dana Cooper gave a compelling speech indicating that Sustainability is now the key driver of innovation. Dana stated that foundry companies have moved past the fear that “sustainable” and “environmentally-friendly” equates with being less competitive in the marketplace and that it adds cost, and reduces profit. In fact, we are seeing design constraints being imposed on many product offerings – binders, coatings and other consumables – by regulations that are moving us to conserve resources, save energy and reduce emissions. It is clear, both in the EU and the United States that emissions standards are and will continue to be the key driver behind product and process innova-tions. General metalcasting comparisons There has been a worldwide increase in foundry capacity over the last ten years. From the latest published data [2], global metalcasting is on track to reach at least 110 million tons by 2015 (Table 1). In 2013, global production increased to more than 103 million metric tons, an increase of over 3% when compared to the previous year, according to Modern Casting. The top 10 nations produced 88 % of the world’s castings, a figure that remains unchanged from 2012 as does the relative positions of the top 10 producing countries (Table 2). In the EU, production was mostly down in 2013. France, Germany reported 3 % to 5 % decreases. An exception was Poland. Meanwhile, the United States, the world’s second largest producer, saw its tonnage increase by nearly 4 % to 12.25 million metric tons. Also, from the published article, the U.S. saw a 4.4 % increase in its productivity per site, with its 2,001 metalcasting facilities averaging 6,122 metric tons. Germany, the world leader in per plant production at 8,659 metric tons per plant, remains the world’s leader in productivity per plant. China increased its total production by two million metric tons to a total of 44.5 million. That boost represents a large majority of the overall increase in global production, meaning China continues to increase its share of the global market. It is recognized that the over the past ten to fifteen years, there has been a shift of metalcasting production capacity to Asia, to what Don Huizenga [3], former foundry owner, and a past president of both the American Foundry Society and the World Foundry Organization, called the “Tier 1”; namely, China, India and South Korea. In 2013, China, India & South Korea make up over 55 % of the world’s metalcasting production. The West (including the EU and US) has lost significant capacity over the last 20 years to the East. The U.S. has decreased from a market share of about 20% to about 10%, while China has increased from 15% to over 40% in that timeframe. In the last five years alone, China has shown over 30% growth in market share. The U.S. metalcasting industry has faced the closing of thousands of plants during this capacity migration. This shift of capacity has affected both the EU and the United States. The U.S. metalcasting industry is made up of 1,965 facilities (most recent data), down from 2,170 five years ago. This reduction can be attributed to the 2008-2009 recession, technological advancements, foreign competition and tightening regulations. Industry capacity is 15.5 million tons, with the industry forecast to operate at 81 % of capacity in 2015. Taken as a whole, the EU is the world’s second largest metalcasting producer, producing some 15.2 million tons vs. the U.S. at 12.25 million tons [4]. The EU has almost 2.5 times as many casting plants as the United States, some 4,958 plants vs. the U.S. at roughly 2,001 based on 2013 data. However, if you look at the NAFTA region by adding Canada and Mexico, casting production is 15.1 MM tons, pretty much at parity with the EU, but still the EU has almost twice as many plants. Jahr Quantity in million tons 2004 79.745 2008 93.449 2010 91.673 2012 98.269 2013 103.20 2015 110.00 (Forecast) Table 1: Global foundry production Future forecast: Risks and opportunities Let’s look at the future forecast. For the EU, the forecast is cautiously optimistic. Much depends on GDP and monetary and other political issues. Most view the recent decline in the value of the Euro should be good for growth, as exports make up a huge chunk of Europe’s GDP, more than a quarter [5]. Heiko Lickfett from the German Foundry Association predicted at last year’s IFF in Venice forecasts that Western Europe can hold level with slight increases in iron, steel and aluminum [4]. The CAEF sees Western Europe with increases around 4% from 2015- 2018 in iron and steel, and a more bullish forecast for aluminum over the same three year period of nearly 8%. Eastern Europe is more dynamic with potential for even higher growth rates. There are some concerns. In Germany, electric energy costs have risen over 40 % for the 4 year period 2007 – 2016. For Italy, the 9th largest casting producer and leading non-ferrous producer in the EU, there are real headwinds ahead. Energy costs are 30 % higher compared to its European partners. For the EU, most of the growth coming from exports of castings may be displaced as investments in casting production in regions such as NAFTA and China are mainly based on investments of European OEMs [4]. Germany remains at 5th in overall casting production and is the largest single country in the EU in terms of metalcasting production; therefore, most of the following comparisons will focus on Germany as compared to the United States (Table 3). German foundries: highly productive What drives the high productivity in German foundries? In personal conversations and interviews with a num- 38 Casting Plant & Technology 4/2016
Country Casting production in Number of foundries million tons China 44.5 30 000 U.S. 12.25 2001 India 9.81 4600 Japan 5.54 2085 Germany 5.18 599 Russia 4.1 1200 Brazil 3.07 1352 Korea 2.56 910 Table 2: Top 10 countries in casting production (Source: 48th Census of World Casting Production) Germany USA Position among the top ten 5 2 Produktivity very high high Labour market Need for more specialists Need for more specialists Energy costs high low Capacity utilization fully occupied capacity utilization of 75-80 % Table 3: Germany and the USA in comparison ber of individuals familiar with both markets, all stated that innovation is what drives productivity in Germany. Their view, shared by many, is German foundries employ more advanced use of technology and automation; German foundries tend to be more modern, better capitalized, well-maintained and well-managed. Their senior management and leadership staffs have more engineering backgrounds versus the predominant production & financial backgrounds found in U.S. foundries. Additional qualitative differences include more focus on process and metallurgical control during manufacturing and less on inspection and quality control after casting. The low energy costs of the United States should not be ignored. It is a key advantage U.S. foundries have over their EU counterparts. In fact, according to author Peter Zeihan, the United States is looking at decades of low natural gas prices, primarily due to the shale gas boom, horizontal drilling and hydraulic fracturing techniques [7]. He goes on to state that since 2008, U.S. average electricity prices are now the cheapest in the world. Quite an advantage for an energy intensive industry such as metalcasting. Molding material differences Let’s take a closer look at differences between the EU and U.S. in molding materials usage and choices and how regulations drive those material choices. We will examine differences in several areas: » Differences between EU and U.S. foundries from a product technology perspective » Differences between product development strategies of major suppliers » Differences between EU and U.S. foundries from environmental regulations Figure 1 compares foundry binder usage [8] in the EU and the US. There are two key differences. First, is the greater use of the Furan No-Bake (FNB) process (shown here as Acid Cured binders, which includes a small amount of Phenolic No-Bake) in the EU, especially in Germany. Over twice as much FNB is used in the EU (44 %) as in the US (19 %). On the other hand, the use of Phenolic Urethane No-Bake predominates in the United States (nearly 25 % in the US vs. only 3 % in EU— over 8 times as much!). In fact, there is virtually no PUNB used in Germany. Why the difference? One reason is historical. Furan No-Bake binders were developed in the late 1950s ten years earlier than Phenolic Urethane binders. FNBs depend upon a key raw material, furfuryl alcohol that is derived from agricultural by-products such as corn cobs and sugar cane bagasse. Periodic shortages of these materials due to fluctuations in crop harvests can reduce supply and drive up prices. In response to these unpredictable variations, phenolic urethanes were developed in the United States by the Foundry Division of Ashland Chemical in the late 1960s and introduced to the foundry market in the U.S. in the early 1970s (in the case of Phenolic Urethane Cold-Box as a response to high natural gas prices due to the first oil embargo). U.S. foundries had the initial access to this technology earlier than those in the EU, and converted to the new technology. The conclusion is material choices tend to be regional versus a single global market driver. Today, there is overwhelming use of Furan No-Bake binders (FNB) as the system of choice for EU steel foundries. This contrasts quite differently from the U.S. where Phenolic Urethane No- Bake binders (PUNB) are the predominant choice for steel foundries [9]. Product solutions tend to be more company specific than regional. That is, one company’s solution to continuous product improvement and to meet environmental regulations may not be the same as the next. For example, for nearly fifteen years, Hüttenes-Albertus, Düsseldorf, Germany, has used tetraethyl silicate (TEOS) a hybrid inorganic/organic material, to reduce emissions, smoke & odor in urethane cold-box (PUCB) systems. For the past three years, HA International has used this same technology in urethane no-bake (PUNB). Other suppliers have chosen a different route using conventional aromatic solvents with improved environmental characteristics to achieve similar results. While beyond the scope of this document to analyze which approach is Casting Plant & Technology 4/2016 39
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