strike,


immediately


followed by


the


pandemic. Unlike Aerospace and IGT, Automotive is directly impacted by consumer spending and employment rates.


Looking at unemployment rates and their correlation to the sale of passenger vehicles and light trucks in the current recession in comparison to the same data for the Great Recession of 2007-2009, a key difference is highlighted. Unemployment rates grew at a gradual pace during the 19 month recession starting December 2007, and its corresponding impact to automotive sales reflected a gradual decline. In the current recessionary period, unemployment spiked in mid-March to early-April and has since been gradually tapering off. Automotive sales were hard hit at the start of the current recession, and have since been in gradual recovery. The current recession had its


dramatic and instantaneous effect on this sector because its catalyst was the ensuing pandemic, a situation for which modern businesses were completely unprepared having not experienced a comparable event in over a century. In March 2020, with the vast majority of businesses being ill prepared to address employee and customer safety considerations, a virtual shutdown of numerous operations occurred, resulting in mass layoffs and furloughs.


As the


pandemic progressed, these businesses, and our society in general, adopted to


the “new norm”, incorporating


safe practices, such as the use of PPE, installation of Plexiglas shielding in point of sale businesses and the redesign of work flow to accommodate social distancing.


As a result, furloughed


employees have gradually been returning to work. Now, in the midst of the second


wave of the pandemic, we continue to see a gradual decline in unemployment rates as furloughed employees return to full time employment status. Assuming that safe business practices are maintained or enhanced, it is reasonable to assume that employment levels will continue to normalize.


Taking this ®


into consideration with other factors influencing automotive sales, such as low interest rates, low cost of fuel and dealer incentives, automotive buying trends should continue to be favorable. There is another significant factor


to consider when addressing investment casting sales to the industry that has longer range impact. That is vehicle propulsion trends. With the growing acceptance of electric and hybrid electric vehicles, reliance on the internal combustion engine (ICE) as a means of automotive propulsion is experiencing decline. ICE components account for a majority of automotive investment casting sales in this sector.


In 2020, passenger vehicles and


light trucks utilizing ICE and ICE Start/ Stop systems accounted for 91% of the vehicles produced in North America. In Europe and China they accounted for 81% and 89% respectively. By 2025, North American ICE based propulsion systems are expected to be incorporated into 73% of the vehicles produced. The decline will be more dramatically felt in Europe and China where ICE based platforms will comprise only 25% and 47%. This trend poses a long term threat to investment casting sales in this sector. It is clearly necessary to work with


Continued on pg 14 January 2021 ❘ 13


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