Feature Article


Growth Forecast for 2017 and Beyond: Establishing Strong Customer Relationships


by Julie Markee, Key Process Innovations T


he past few years have been challenging for the investment casting industry due to the collapse of oil and gas industry, uncertainty around the presidential election, and volatility of raw materials.


As a result,


the 2016 IBISWorld Industry Report on Ferrous Metal Investment Casting projects a decrease in industry revenue of 1.5% in 2016.


have left the industry.


As a consequence, some foundries Other foundries


have expanded their product offerings and customer base through mergers and acquisitions. This has resulted in a reduction of the number of foundries in the industry by 1.5% over the past five years. This trend is expected to continue for the next five years, although at a slightly slower pace. The good news is that the forecast


looks much stronger in the upcoming years.


Industrial production in mining, manufacturing and energy are expected to increase. In addition, the automotive industry is projected to remain strong which benefits both ferrous and nonferrous foundries.


An increase in


automotive sales also increases the demand for castings. However, the demand for steel castings used in motor vehicles will decrease as some of these parts are replaced with lighter weight castings including aluminum. As a result of these factors, industry revenue is projected to increase at an annualized rate of 1.6% for ferrous products and 2.1% for nonferrous products through 2021.1,2 The reduction in industry revenue


and slow projected growth rate have resulted in competition from both internal and external forces including foundries, products made from substitute materials including lighter weight alloys and imports. In order to maximize profits, many casters have moved into product lines that are less vulnerable to competition, such as higher precision


®


castings with increased difficulty, greater core complexities, tighter tolerances and innovative alloys. Another way a foundry can protect itself from competition is by collaborating with their customers as they develop new parts and products. This can result in a more cast-able design, lower manufacturing cost, shorter delivery times and stronger customer relationships. While this trend creates a strong possibility of success, it also puts pressure on foundries to have the personnel to handle the technical requirements along with the equipment and process to efficiently manufacture these castings.


According to the Deloitte 2016 Global Manufacturing Competitiveness Index study, the number one driver for manufacturing competitiveness is talent. Throughout the manufacturing segment, there is a shortage of trained employees. Skilled works and engineers are the top two categories that employers find difficult to hire, both in manufacturing and investment casting.


There are


several reasons for this talent gap including manufacturing not being portrayed as an attractive industry, a pay gap between manufacturing and other industries or the perceived decline of American manufacturing.


Addressing the talent gap is


effective when tackled at the local level. Some successful approaches include partnering with local schools to share the investment casting process, participating in Manufacturing Day or working with high schools or community colleges to develop curriculum that would prepare students to be contributing members of a manufacturing company upon graduation.


These approaches also


allow the manufacturer to develop relationships with potential employees before they enter the labor market. Another successful approach is to further develop current employees.


January 2017 ❘ 29


These employees have the benefit of understanding the process and with some development of interpersonal and technical skills, they could increase the value of your existing team. Remaining competitive in this industry requires a strong relationship with your customers and embracing new technology. However, ultimately, success is dependent on having personnel who are engaged and equipped to effectively work with your customers to provide high quality castings. Now is the time to take the steps to ensure your personnel are empowered to successfully navigate these challenges.


About Julie Markee: Julie Markee is a highly conscientious, detail-oriented consultant working directly with manufacturing companies as a part-time Process Efficiency engineer or a full- time Interim Operations Manager. She utilizes tools from Lean Manufacturing and 6 Sigma, along with her extensive process experience to reduce complex challenges into manageable steps resulting in stream-lined processes, enhanced employee involvement and increased profitability. Learn more at www.keyprocessinnovations.com.


1 IBISWorld Industry Report on Fer- rous Metal Investment Casting, June


2016 2


Nonferrous Metal Foundry Prod- ucts Manufacturing in the US, June 2016


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