By Tom Stundza — Users of metal parts went into a buying funk last summer when the manufacturing recession bloomed. Purchasing activity fell further this spring when the domestic auto industry imploded. What’s ahead? Buyers say they plan no immediate pickup in bookings. Only 20% of metallics buyers plan to boost purchasing in the near future. So, less than 9% of the buyers of castings, forgings and other parts see price increases anytime soon.

The Institute of Supply Management now expects a 22.7% plunge in capital investment for U.S. factories this year, more than three times worse than its previous projection issued in December of a 6.7% decline. And, since they have severely downgraded their projections for economic activity and investment during 2009, metal parts industry executives are adjusting operations and employment to keep their heads above water and also now are discussing a “leaner supply base” when the pickup in demand finally occurs.

Durable goods manufacturing should see the brunt of the contraction this year, with a drop of 16.8%, forecasts economists Tom Runiewicz at the IHS Global Insights offices in Eddystone, Pa. So, early forecasts suggest an 18% decline in cast metal parts at 10.2 million tons in 2009. When powder metal parts and forgings are added to the mix, the 12.89 million-ton market will be 31% below the cyclical peak year of 2007 when sales were 18.59 million tons.

The lack of capital goods manufacturing growth in the later months of 2008 and this year has stunted the purchasing of key metal parts. In terms of dollars, purchasing in the engineered-components marketplace jumped by about 16% to $50 billion, mostly because the steel price spike that inflated the cost of forgings and some ferrous castings. This year, the dollar volume could fall by as much as 11% to $45 billion—partly because of reduced tonnage and partly because of deflated costs of metallics.

Note that after two straight years of an average of 10 weeks for deliveries, leadtimes slipped to an average 9.4 weeks in 2008 and are sliding toward 7 weeks so far this year. A series of buyer surveys finds that none of these products are delivery hot buttons so far this year. Ken Kirgin of market researcher Stratecasts Inc. in Ft. Myers, Fla., isn’t surprised, noting that most end-use sectors “are experiencing losses in demand” for iron, steel and nonferrous metals castings, noting that poor sales have gone beyond automotive and housing starts.

And looking forward, economists now believe the metal casting, forging and sintering industry won’t match 2007–2008 tonnage and sales volume for two or three years. And that may end up shrinking the supply base, a probable shakeout among the makers of cast, forged and metal sintered components. “We probably will lose around 100 of the nation’s 2,130 metalcasting shops, and 300,000 to 400,000 annual tons of the industry’s current 14.6 million tons of annual capacity,” says Alfred Spada, director of marketing at the American Foundry Society in Schaumburg, Ill.

Just last month, Elmira Pattern & Foundry in Elmira Heights, N.Y., an 80-year-old specialist in aluminum castings, halted production and is going out of business, a victim to the economic slowdown. Die caster Quad City Die Casting of Moline, Ill., will close permanently three plants on July 12. Quad City’s main plant (aluminum and magnesium castings) is in Moline and it also has plants in Red Oak, Iowa (aluminum and magnesium) and Davenport, Iowa (zinc die castings). These parts range from 5–20 lbs.

In an interview, Spada says he isn’t surprised at these events, noting that “the typical metalcasting firm saw business start to slide last autumn with activity bottoming out in the February-March timeframe of this year.” That’s because almost a third of the supply base ships into automotive, which has been a disaster, with big purchasing declines also evident from manufacturers of heavy trucks, railroad cars, agricultural equipment and various off-road vehicles and machines.

Note that a major player in the production of aerospace and industrial forgings, castings and fasteners, Precision Castparts Corp. of Portland, Ore., says it “faced strong headwinds” in its fiscal fourth quarter ended March 29 where its net income fell 6.7% to $260.3 million from $279 million a year earlier on sales that slid 9.2% to $1.6 billion from $1.77 billion. CEO Mark Donegan says operating earnings by its forged products business were down 12.1 % to $162.2 million on a 16.3% decline in sales to $678 million, while operating earnings by its investment cast products business slipped 1.1% to $143.4 million on a 6.7% drop in sales to $540.1 million.

In this environment, “castings prices have come down dramatically this year,” says a buyer in Springfield, Ill. That’s also true for other metal parts since their prices are dependent upon the market prices for the metal mill products, which has come off the mid-2008 spike to cyclical lows in early 2009.

“Indeed, these are challenging times that are forcing die casters to make tough business and financial decisions to endure,” says Daniel L. Twarog, president of the North American Die Casting Association (NADCA) in Wheeling, Ill. “While some die casters have seen an increase in business activity due to sourcing returning to the U.S., a larger number still need to weather the demand downturn.”

The current state of U.S. die casters is very precarious, says Twarog in an interview, who agrees that a smaller, more agile supply base will emerge from the recession. That’s because the current downward purchasing trend will continue through 2009 and probably halfway through 2010. This also is the outlook of Richard Pfingstler, president of the Powder Metallurgy Parts Association in Princeton, N.J. “I’d love to say that business will turn around in the fourth quarter of this year but we’ll be lucky to see the bottom at that time.”

Pfingstler, who also is president of Atlas Pressed Metals in DuBois, Pa., adds: “It’s no secret that the biggest user of powder metal parts is the automotive industry, and it’s no secret that its purchasing has been down for months.” Weak sales to General Motors and Chrysler and the prolonged American Axle strike in the first half affected early 2008 sales, followed by the steep decline in overall automotive assembly by all producers in the second half. The latest blows to metal parts suppliers in 2009 have been the nine-week assembly shutdown at half of the North American plants of General Motors and that firm’s decision to phase out the Pontiac brand. Also: The bankruptcy of Chrysler that has shut its plants for at least two months, pending completion of the proposed sale of principal assets to a new company as part of its bankruptcy proceedings.

Metals parts makers also are seeing sales drop this year because of the reduced activity by producers of heavy trucks and off road vehicles and the reduced manufacturing of oil and gas drilling equipment and petrochemicals industry machinery. Kirgin at Stratecasts says other business-depressing factors include the expected drop-off in medium to heavy truck and trailer production to about 190,000 units this year and a 40,000-unit slide for railroad freight cars.

Meanwhile, IHS Global Insight analyst Kenneth Kremar in New York says “traditional manufacturing is having a rough time, as consumers rein in spending, corporate America cuts capital spending, and export markets falter as the global recession deepens.” Upshot: Traditional manufacturing, a key market for metal parts, is slated to contract by 11.7% this year. Looking at the production of industrial machinery, which fell 14.6% in 2008, Kremar says assembly is slated to drop an additional 23.2% this year. Production of construction machinery is now slated to decline 26.2% in 2009.

In this economic environment, steep declines already have been recorded in the early months of 2009 for powder metal parts sales, which dropped by an estimated 8% to 10% in 2008. “The market has been as weak as feared,” a metal powder supplier writes to clients. “Demand for finished products made of our powder was very low.” Moreover, weak demand in late 2008 means that inventories have remain unusually high, cutting into sales of new powders.

Pfingstler says in an interview that 70% of the sales of the 100 or so powder metal parts firms are auto-related. But, if anything, this recession has proven that non-automotive markets aren’t recession-proof, either. He cites reduced shipments to makers of lock hardware, garden tractors, snowmobiles, power tools, appliances, cell phones, sporting arms, oil and gas equipment, aircraft engines and surgical equipment. This matches with a report from Kremar at Global Insight that farm-sector capital spending will drift down over the near term and lawn and garden equipment will not rebound until housing turns the corner. He projects that production of farm and garden equipment is slated to decline 10.2% this year.

“Castings from China are past due,” reports a procurement executive at a Wisconsin firm that manufactures door securements for truck trailers, specialty trailers, and intermodal containers. Twarog of the NADCA believes these kinds of reports will “bring good news on the horizon” for the die-cast parts industry as well.

A survey of his trade group’s membership found 78% reporting business coming back from overseas during the last two quarters. Why? “Three main reasons,” he says in an interview, “concerns about part quality, fewer late deliveries because of the close proximity of customers and regional suppliers, and the cost disadvantage of overseas logistics.”

Stroh Die Casting in Milwaukee, recently has been seeing interest from original equipment manufacturers (OEMs) wanting to bring some components back because of offshore quality issues. “One company has talked to us about bringing some parts back — particularly plated or painted parts,” says Andy Stroh, sales manager. Also, “poor packaging results in parts getting damaged during shipment.”

Stroh Die Casting has been tooling up an aluminum die-cast part that previously was made in China for a customer in Green Bay, Wis., “The customer had quality issues with the part and difficulties relaying part changes effectively,” says the sales manager. “That’s why we got the work—because of our proximity to the customer, understanding of their needs and our willingness to build the new tool quickly.”

Chicago White Metal Casting in Bensenville, Ill., won back some business because of both offshore quality issues and proximity to their customer, says its president, Eric Treiber. “We have, within the last year, produced castings that were previously sourced offshore,” he says. “It is our understanding that two magnesium castings we produce, which were previously sourced offshore, were brought back to the U.S. for reasons of quality and proximity of the supply base.”

Twarog says in a press release that manufacturing logistical issues with offshore sourcing have become more prevalent. “The simple fact is that the distance between OEMs and their offshore suppliers makes it too costly and time-consuming for them,” he explains. “Also, heightened shipping costs and longer cycle times reduce, and in some instances negate, the cost savings of sourcing offshore.”

In a NADCA white paper, member Burl Finkelstein says his company, Kason Industries in Newman, Ga., recently brought back about 500,000 zinc castings that were made in China. “This occurred for several reasons,” he says. “Metal costs fluctuated in China, and suppliers would not take orders at prices that had previously made them competitive. Adding increased transportation costs, you can see how the trend changed. At our plant, we remained tooled and had machine capacity at our U.S. plant to be able to absorb the work without any capital outlay.”

In the white paper, Mel Hand, general manager of Los Angeles Die Casting in Commerce, Calif., says his high pressure aluminum die castings house has taken some engineering and fabricating initiatives to become a supplier of choice to its regional customer base. “As issues arise, we are better positioned and better equipped to offer engineering support,” he says. “Not only can we turnaround a part quicker, but we can produce a better quality part.”

As it turns out, the deconstruction of General Motors’s extended web of suppliers has been underway for months. With a bankruptcy filing, it’s likely to accelerate, costing thousands of workers their jobs and likely destroying dozens of firms.

Chris Norch, president of Denison Industries, employs 125 employees in a metal casting business founded in 1991. It supplies aluminum castings for the automotive, defense, aerospace, and commercial industries. He’s also president of the American Foundry Society, which represents about 3,000 metal casting firms, the majority of which are family owned and employ an average of 100 people or fewer.

He told the House Small Business Committee recently that GM and Chrysler, which already has filed for bankruptcy, owe their large and small suppliers about $10 billion for parts that have been delivered. GM has held off paying them for weeks. In bankruptcy, GM may not have to pay them at all.

In the past six months, 15 metal casting companies have closed down, and the trade association estimates that another 30 could close their doors over the next six to nine months.

Ron Overton, chief executive of Overton Industries, a company his father founded in 1968, has seen similar fallout among so-called second-tier suppliers. In his case, they make machine tools for companies that make auto parts. “In my 30 years in this industry, these times are by far the most dire for the automotive sector and particularly the thousands of small middle-market suppliers around the country,” he told the committee during a recent hearing.

His company is holding several million dollars in receivables from direct suppliers to GM and Chrysler and he’s worried about getting paid. Although the Obama administration has insured GM and Chrysler receivables to direct suppliers, companies like Overton have little recourse in the event of a GM bankruptcy.

“In the current environment, these accounts receivables remain open for a longer period of time than ever before,” he said. Some companies in the administration’s Supplier Support Program funded under the Troubled Assets Relief Program (TARP) are withholding payments for up to 180 days, even though they are receiving payments from GM and Chrysler in less than 60 days.

Because of the impact on cash flow, small middle-market auto suppliers say the doors are being slammed shut on credit. “The moment a lender or receivables insurance broker sees we are involved in the automotive industry, they immediately move us to a high-risk category, will not extend credit, or they will transfer us to a third-party lender,” said Overton. “Simply put, they believe we are not ‘bankable’ due to our auto industry work.”

A Quick Tour Inside a Metal Casting Company. An aluminum Die casting company is one in the metalworking industry that offers specific services to other industries. These services pertain to the fabrication of metal parts– from product design to casting, machining, and metal finishing; up to the assembly and testing of the product. These aluminum Die cast metal parts might be for very different purposes, depending on the company involved. Markets and industries that have a need for a aluminum die casting company are the automobile industries, the aeronautic industries, telecommunications, electronics and electrical markets; even the guns and toys market use aluminum Die cast metals for their parts.

Inside a Aluminum Die Casting Company you will find big machines to handle all kinds of aluminum Die casting jobs. There are actually two kinds of equipment in aluminum Die casting; there is the hot-chamber and then there is the cold-chamber machine. The process involves injecting a non ferrous metal with a low melting point on to a die or mold while the metal is in liquid form, then letting the metal harden to the shape of the mold. In this way, a number of metal parts can be manufactured in a small amount of time and still ensure good detail and quality of the mass produced object. Different kinds of metals can be used in making such parts, and the customer can choose depending on the product he wants to be molded. Brass can be used for knobs and fittings, aluminum for heat generating and electronic equipment, lead and tin alloys for piping needs, small parts equipments for zinc, automotive parts for aluminum and magnesium. Aluminum Die casting company experts will advice customers on the best metal for the job.

The History of Metals and Man in the Die Casting Process. To understand the die casting process is to understand the history of metallurgy and to peruse the history of man. Man has been shaping metal since antiquity. We fashioned our tools, weapons, and implements from the metals we found in the earth. The first metal we used was gold, then copper. Gold exists in its natural state and did not require much processing, but copper had to be smelted. This was the start of a crude metalworking industry.

The manufacturing of die cast parts in modern times is a far cry from those first attempts of civilization. Now it is not an outdoor bonfire that we use, but a high tech die casting machine inside a die casting company to melt and mold our metals. Aside from copper, we have discovered more useful metals like aluminum, zinc, tin, brass, magnesium, and lead.

The parts we manufacture out of metal are not anymore crude knives and arrowheads, but precision parts for modern industries like telecommunications and automobiles, mobile phones, fiber optics, computers and laptops, children’s toys and collectibles such as die cast model cars and airplanes.

The process we use is high pressure injection molding and a four step procedure involving lubricants and shots and ejector pins, or a heated-manifold what they call direct-injection die casting procedure which is a less complicated procedure than the first one, no matter how it sounds.

The metal parts that we manufacture nowadays are various things like mobile phone antennas, electronic connectors, industrial housings and fittings, bicycle pedals, sprockets, gas knobs and valves, handles and lids, door hinges, fasteners, doorknobs and zippers.

What are Metal Casting Parts? If you’re interested with the metalworking industry or are looking into the different kinds of metal materials used and products made in the several metal-related businesses that are around today, you’d surely encounter the term “aluminum die casting parts” most of the time during your search. Also referred to as aluminum die cast parts, such are the products that can be made using the aluminum die casting process, one of the most popular methods in casting these days.

But what is the aluminum die casting process to begin with? The aluminum die casting process is used for the production of custom metal parts. The process, which is considered versatile by many manufacturers, forces molten metal under high pressure into steel molds – which are called dies – that are reusable. These molds can be designed in a number of ways so that simple from complex shapes can be attained while observing a relatively high degree of accuracy, as well as repeatability for bulk orders of some costumers. Thus, aluminum die casting parts are born and sold into the growing market of the metalworking industry.

When it comes to metal casting, aluminum die casting metal parts are really a sight to behold. Both manufacturers and consumers never fail to be awed by the quality of metal parts that can be produced using the famous aluminum die casting process. These metal parts do not only boast of dimensional accuracy and measurement preciseness, they can also be sharply defined using a variety of options for texture. They can be made smooth, rough, or heavily detailed. Moreover, their finishing touches are more attractive and highly serviceable, as opposed to those used by other metal casting methods.