North America


for development programs. This near instantaneous growth was the result of the 2015 US Debt Ceiling Extension, and was led by the procurement of 57 F35 Joint Strike Fighters and 16 P-8 aircraft. Other significant spends included the Army Helicopter modernization program, the KC-46 tanker and the Long Range Strike Bomber development program. Though this level of defense procurement is not expected to continue through 2017, the establishment of a new administration holds promise of strong future procurement levels, but experts caution that the levels reached in 2016 cannot be effectively maintained. On review of the proposed FY17 DoD Budget by Mission, key areas to note include a 7% decline in Aircraft, a 3% decline in Missile Defense and a 17% increase in Missiles and Munitions. Combining North


American


produced investment castings serving the global commercial aerospace and defense sectors together, results in an overall 2016 growth rate of 9% to $3.7 billion.


Industrial Gas Turbine Last year saw the first measurable signs of growth in the Industrial Gas Turbine sector.


Foundries


reported


growth rates ranging from 3% to 7%, with OEMs reporting a 7% increase in orders. In consideration of the foundries contacted, their relative size and the growth levels reported, the ICI estimates that 2016 North American IGT sales grew at an overall rate of 5% to marginally surpass the $1 billion mark.


Automotive The North American Automotive industry has seen strong growth since 2009, and appears to be nearing its peak with 2016 sales of light vehicles at or slightly greater than 2015 levels. Like last year, lower fuel costs, the availability of low-cost or free financing and


dealer incentives have been


instrumental in ensuring another strong year for the industry.


US production of light vehicles surpassed 17.5 million units in 2016 and is expected to peak at 17.8 million


®


in 2017, with a decline in passenger car automobiles being offset by slowing growth in light truck and SUV sales. Expecting a moderate contraction in 2018, analysts are concerned over the prospects of rising interest rates and increasing fuel prices. North American foundries have indicated that production is strong and steady, with growth of less than 1% over last year’s record levels. The outlook for 2017 supports analyst projections with foundries indicating that they expect the market to be flat or slightly up. The


ICI estimates 2016 North


American production of castings for light vehicles to be $0.04 billion.


General Industrial Last year was very challenging for foundries participating in the General Industry segment.


This was largely


due to the performance of the Oil and Gas sector and its collateral effect on supporting and parallel industries. Though being a boost to commercial aerospace and automotive by way of offering low fuel prices, the affect that oil production declines have had on Pump & Valve, Heavy Equipment and Construction & Mining industries is significant. Over production is the culprit, as OPEC and Russia have continued to produce at high levels. compounded by


This, the high North


American production rates enjoyed in 2013 and 2014, has resulted in a


surplus in oil reserves which has driven fuel prices down.


first deal since 2001 to jointly reduce output to try to tackle global oversupply by cutting production by 1.2 million barrels per day (bpd) for six months from January 1.


hope in sight. Last November, OPEC and some of its


However, there is rivals reached their


Top OPEC exporter,


Saudi Arabia will be cutting around 486,000 bpd to curb the supply glut that has dogged markets for two years. Additionally, producers from outside of OPEC, led by Russia, agreed to reduce output by 558,000 bpd. The US Oil & Gas business segment continues to show signs of contraction since 2015’s record setting production levels hit 9,610 thousand bpd in May of that year.


Production


hit a post-peak low of 8,428 thousand bpd last July, and has shown minor signs of improvement since that time. Additionally, exploration is significantly off. In 2016, oil producers invested $40 billion in oil exploration, compared with 2014’s peak spend of $95 billion. Industry analysts indicate that at best, 2017 investment will match the 2016 level.


North American foundries serving


the Oil & Gas sector have reported casting sales declines of 40% to 70% from 2015 production levels.


Since


its 2014 peak, casting producers have seen upwards of an 80% decline in the market.


Although investment casting sales serving this sector are hopeful that


January 2017 ❘ 15


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