BDG – German Foundry Association and Challenges for the... · B gi u m D e n m k Po r l y n i a...

Washington, September 14, 2015 - 1 -

Status and Challenges of (German and European) Foundries

Status and Challengesof (German and European) Foundries

SFSA Fall Leadership Meeting, Washington

September 14, 2015

BDG German Foundry Association

- 2 - www.guss.deWashington, September 14, 2015


Agenda

CAEF foundry nations review 2014

Status Germany first half 2015

Driving forces and challenges for European foundries

Material, a matter of image

Conclusion



Quelle: DGV, CAEF

unites 23 national foundry associationsand represents

4,800 foundries(ferrous and non-ferrous)

41 billion Euro turnover

280,000 people employed

a global share of 15%in casting production

Pic

ture

: Sso

lber

gj

The European Foundry Association (CAEF)



CAEF Foundry Nations Review 2014

Picture: GF



0

1.000

2.000

3.000

4.000

5.000

Norw

aySw

itzerl

and

Croa

tiaFin

land

Belgi

umDe

nmark

Portu

gal

Hung

arySlo

venia

Swed

enAu

stria

Czec

h Rep

.

Unite

d King

dom

Polan

dSp

ainTu

rkey

Franc

e

Italy

Germ

any

1.000 t

European Producers of Castings 2014

Source: CAEF

Production volume 15.3 m tons (+5.7%)Turnover 41.4 billion Euro



0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

Norw

ayCr

oatia

Switz

erlan

dFin

land

Belgi

umDe

nmark

Hung

aryPo

rtuga

lSlo

venia

Austr

iaSw

eden

Czec

h Rep

.

Unite

d King

dom

Polan

dSp

ain Italy

Franc

eTu

rkey

Germ

any

1.000 t

European Producers of Ferrous Castings 2014

Source: CAEF (including steel castings)

Production volume 11.5 m tons ( -0.5%)Turnover 21.3 billion Euro

TrendsPositive incoming orders vehicle industryNegative: slowdown in investments (engineering)



0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

Norw

ayCr

oatia

Switz

erlan

dFin

land

Belgi

umDe

nmark

Hung

aryPo

rtuga

lSlo

venia

Austr

iaSw

eden

Czec

h Rep

.

Unite

d King

dom

Polan

dSp

ain Italy

Franc

eTu

rkey

Germ

any

1.000 t

European Producers of Steel Castings 2014

Source: CAEF

Production volume 0.9 m tons ( +0.8%)Turnover 4.4 billion Euro

TrendsPositive: Needs for steel castings in the automotive industryNegative: Low level demand from raw material sector



0

100

200

300

400

500

600

700

800

900

1.000

1.100

1.200

Belgi

umDe

nmark

Norw

ayFin

land

Switz

erlan

dCr

oatia

Portu

gal

Slove

niaSw

eden

Czec

h Rep

.Hu

ngary

Unite

d King

dom

Spain

Austr

iaTu

rkey

Franc

ePo

land

Italy

Germ

any

1.000 t

European Producers of Non-Ferrous Castings 2014

Source: CAEF

Production volume 3.8 m tons (+5.7%)Turnover 20.1 billion Euro

TrendsPositive: need for lightweight material in the automotive sector



Productivity in the European Foundry Industry 2014

Source: estimation by CAEF and BDG, * 2013, ** in percentage of GPO (raw materials and supplies, without energy)

Ferrous castings average performance:63 tons (steel = 31 tons) per employeewith a range up to nearly 100 tons (steel = 87 tons)

Non-ferrous castings average performance:22 tons per employeewith a range up to 34 tons

Average company (as an example*):Gross Production Value (GPO)= 194 100 Euro per employeeAmount of material (43.0% of GPO**) used= 83 500 Euro per employeeGross profit = 75 300 Euro per employee

Picture: Lickfett



0

50

100

150

200

250

300

0 10 20 30 40 50 60 70 80 90 100 110 120

Average Production per Employee (t)

Ave

rage

Em

ploy

ee p

er F

ound

ry

Austria

Norw ay

Germany

FranceItaly

Spain

PortugalFinlandBelgium

Turkey

Hungary

Slovenia

Croatia

Denmark

Czech R

Production (1 Mio. t)

Productivity European Ferrous Foundries 2014

Source: CAEF, including steel foundries



0

20

40

60

80

100

120

140

160

180

0 10 20 30 40 50 60 70 80 90 100 110


Ave

rage

Em

ploy

ee p

er F

ound

ry

Norw ay

Germany

France

Italy

SpainFinland

Belgium

Turkey

Slovenia

Portugal

Productivity European Steel Foundries 2014

Source: CAEF

Production (100.000 t)



0

20

40

60

80

100

120

140

160

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70


Ave

rage

Em

ploy

ee p

er F

ound

ry

Austria

Norw ay

Germany

France

Finland

Spain

Belgium

Turkey

Hungary

Portugal

Slovenia

Croatia

Production (100.000 t)

Productivity European Non-Ferrous Foundries 2014

Source: CAEF



Export quota European Foundry Industry 2014

Source: estimation by CAEF

Export quota total, including deliveries inside Euro area36% (steel > 40%)

Export quota Euro area22%

Export quota outside Euro area14%

= castings are produced where castings are needed:>85% delivered directly within the Euro area!

Globalisation:The end use of European castings is all over the world!

Picture: Soschinski



German Foundry Industry Review 2014



German Casting Production 2014 by Material

Source: BDG, Stat. BA

Ferrous complete4,116 m t -0,2%7,3 bn Euro+0,4%

therefore

Iron castings2,357 m t, +0,9%

Ductile castings1,552 m t, -1,3%

Steel castings207 200 t, -3,3%

Non-ferrous complete1, 132 m t +10,4%6,0 bn Euro+9,7%

therefore

Aluminium993 900 t, +12,2%

Magnesium14 900 t, -9,0%,

Copper72 100 t, +5,2%

Zinc51 500 t, -6,6%



German Casting Production 2014 by Customer

Ferrous complete4,116 m t -0,2%7,3 bn Euro+0,4%

therefore

Vehicle industry (56% share)2 ,290 m t, + 1%

Engineering (26% share)1,058 m t, - 3%

Other (19% share)0,769 m t, + 1%

Non-ferrous complete1, 132 m t +10,4%6,0 bn Euro+9,7%

therefore

Vehicle industry (77% share)0,875 m t, + 17%

Other (23% share) *0,258 m t, - 8%

* Engineering (1% share)




German Foundry Industry Status First Half 2015



German Casting Production First Half 2015 by Material


Ferrous complete2.120 m t -2.8%

thereof

Iron castings1,211 m t -2.8%

Ductile castings804 600 t -3.4%

Steel castings104 600 t, +1.6%

Non-ferrous complete607 700 t +4.9%

thereof

Aluminium533 500 t, +5.1%

Magnesium6 800 t, -13.3%,

Copper40 000 t, +6.1%

Zinc27 300 t, +3.6%



50

60

70

80

90

100

110

120

130

140

150

Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16

Vehicle Industry Engineering Industry Foundry Industry

Source: Stat. BA, Index 2010=100, seasonnally adjusted, calculation BDG

Change in %against previousperiod


Germany Casting Orders: Currently no clear Trend!

Foundry industry1-12.14 + 1,5%Foundry industry1-12.14 + 1,5%

Vehicle industry1-12.14 + 6,3%Vehicle industry1-12.14 + 6,3%

Engineering 1-12.14 + 2,3%Engineering 1-12.14 + 2,3%

Foundry industry1-6.2015 - 2,5%Foundry industry1-6.2015 - 2,5%

Vehicle industry1-6.2015 + 5,7%Vehicle industry1-6.2015 + 5,7%




50

60

70

80

90

100

110

120

130

140

150

160

Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16

Iron Castings1-6.2015 - 5.2% Iron Castings1-6.2015 - 5.2%

Germany Steel Casting Orders - Under Pressure

Steel Castings1-6.2015 - 10.2%Steel Castings1-6.2015 - 10.2%

Vehicle industry1-6.2015 + 5.7%Vehicle industry1-6.2015 + 5.7%




Source: Stat. BA, Index 2010=100, seasonally adjusted, calculation BDG



Driving Forces for the Foundry Industry

Picture: Fotolia



Driving Forces: Globalisation

Major part of the demand growth will occur in emerging markets

Especially the automotive industry is increasingly demanding local presence outside of Europe(Castings are produced where castings are needed)

Increases the need for a global footprint

Picture: Fotolia



Driving Forces: Margin Pressure

Growing international competition in the vehicle manufacturing industry (OEMs)

This limits the option of passing on cost increases to end consumers

On the part of OEMs this pressure will partially be passed through to suppliers` industry

Picture: Soschinski, BDG



Driving Forces: Industry Consolidation

Thus the industry consolidation is expected to continue

Main reasons, besides the pressure for globalisation,are increasing investment requirements

Also, many family businesses face succession-related problems

Source: BDG/Soschinski



From Driving Forces to Challenges



Challenges: Technological Leadership e.g. Hubs for Windturbines

Maintaining technological leadership is of great importance for European foundries

Pressure on unit weights will continue(e.g. windturbines)

This changes the material mix and increases the requirements for alloy competence

Picture: BDG, Soschinski



Challenges: Technological Leadership e.g. Requirements for Pumps and Compressors

Corrosion resistance Erosion /abrasion resistance Cavitation resistance Temperature resistance Strength / hardness Coating of castings

Picture: BDG, Bednareck



Challenges: Occupational Safety, Environment andEnergy/Climate Regulations

Review of Best Available Techniques

CO2 Emission Trading Scheme

Renewable Energy

e.g. Respirable Silica Dust

Picture: Fotolia



Challenges: Retain Qualified Personnel

Many qualified foundry workers will retire during the next years

Competition for staff intensifies due to changing age structure

Requires new worker loyalty programs (pension schemes, profit-sharing, flexibility regarding family & job)

It is up to the foundry associationsto implement support programs

Picture: Buderus, BDG



Retain Qualified Personnel: VDG Akademie



Raising Awareness: Powerguss Website



Impulses for Young Talents: Youth Magazine



Reaching Young People: Youtube Channel



Challenges: Investment Requirements

Growing trend towards completely finished cast parts will necessitate respective investments

Complexity of foundry materials will grow and consequently drive investment requirements

Picture: BDG, Technoseum Mannheim



Challenges: Investment in Logistic Processes

Picture: Kurtz



Material, a Matter of Image

Non-ferrous, especially aluminum and magnesiumhave a modern image: light, clean

Ferrous and steelis often combined with attributes like old, dark, heavy

Ferrous and steel is in danger of falling behind despite all advantages of optimised construction, lightweight, multifunctionality, costs for raw material, easy machining etc.

Pic

ture

: Fot

olia



Material, a Matter of Image

The market is asking for lightweight. but lightweight is not only light-metal!

Change of image for ferrous and steelis absolutely necessary!

Knowledge is the keyKnowledge about lightweight competence, environmental advantages, backing of complexity requirements, easy machining quality etc. of ferrous and steel

The customer needs to be instructed!Picture: BDG, Soschinski



Conclusion

The key customer industries will grow during the next years. Therefore foundry industry can make profit

Despite price pressure, foundries have to find ways to invest continuously to hold technological leadership

Customers need to be instructed of advantages of the different materialand the different possibilities to find solutions for given questions

Foundries have to deal with hard competition in material as well as processes

Aging workforce: Foundries are competing for young employees, high potentials and experienced employees



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