Forecast


North American Investment Casting Production Up 5-8% in 2010; Modest Growth Predicted for 2011


by Michael Perry Executive Director Investment Casting Institute


This was a much better year for


North American investment casters and their suppliers, as the market appears to have partially recovered from the 2008/2009 economic recession. Investment casting production is up


in nearly every market segment and most foundries are busier this year compared to 2009.


However, bringing back laid-off em-


ployees is slow, thus far, as companies are trying to accommodate production increases (and an unknown future sched- ule) with a reduced workforce. The use of multiple shifts, overtime and tempo- rary employees are on the rise. A consensus estimate on the over-


all 2010 investment casting business in North America indicates an approximate 5-8% increase over 2009. We should expect 2011 to increase


a similar amount as the economy contin- ues to strengthen at a modest rate. Fore- casting though will be challenging until there is better visibility and confidence in market demand. As always, the degree of activity can


vary significantly by market segment and the specific programs and customers that investment casters are focused on.


Commercial Aerospace The overall level of activity in aero-


space investment castings is up and bet- ter than expected. Worldwide passenger ridership


(RPMs) has increased by approximately 6% this year in spite of a weak economy. The airlines had reduced fleet capacity via discontinued flights and parked air- craft. However, a reversing trend is start- ing to appear.


Large commercial passenger trans-


port builds are still very stron,g working off a record backlog of unfilled orders at both Boeing and Airbus. Aircraft shipments are dominated by


the narrow-body 737 and A320 series, which account for about half of all com- mercial aircraft production. And Boeing is projected to increase the 737 build rate in the near term. Boeing and Airbus are considering a new engine retrofit pro- gram for both aircraft models. The strength of this market segment


is driven by some airline fleet growth as well as high fuel prices that increase the demand for more efficient replacement aircraft. In addition to a strong level of new


aircraft builds, the demand for spare parts is increasing. On the downside, the Boeing 787


continues to experience start-up problems and production delays. The industry has a lot riding on this aircraft, which is almost three years late in being introduced. The regional jet business is down,


except for the 70 plus passenger models. The business jet market has all but dis- appeared and isn’t expected to recover much before 2013.


IGT The industrial gas turbine market is


still depressed after a substantial build schedule reduction in the last quarter of 2008.


This includes the large power gen-


erating frames and aero-derivative tur- bines.


New orders are being severely im-


pacted by the soft economy and tight credit markets. The overall demand for industrial


gas turbines is down and the near-term outlook flat for sales and new builds; but spare parts are increasing. This is reflec- tive of a growing increase in overall busi-


10


ness activity and the large installed base of gas turbines.


Notwithstanding the current market,


longer term, the use of natural gas power- ing gas turbines is still expected to grow significantly worldwide.


Defense Advanced defense program require-


ments are declining as the Iraq war ap- pears to be winding down for the U.S. Some other military programs are being pushed out and new development has de- creased significantly. Programs such as the C17 and the F22 have been cut as the Department of Defense is rationalizing future needs with budget constraints. It is generally believed that additional DOD budget cuts are imminent. The F35 (JSF) continues to have


cost overrun problems and one version of the F35 is potentially at risk. However, this program is still expected to produce more than 2,000 aircraft over the next 20 years.


Another large program, that is still


pending, is the new Air Force tanker. This contract was awarded, then rescinded for another round of bidding. One bright area might be foreign


military sales or FMS, which is expected to increase from a low dollar exchange rate. Military helicopter programs remain very active in engine spare parts.


General Industrial This market segment generally mir- rors the U.S. economy. Business has increased in pumps,


industrial valves and food processing equipment. This increase is due to inventories


that are starting to be replenished, cou- pled with a modest increase in industrial production. The Marine industry is also up due to increased overseas business.


January 2011


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