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Since the fourth quarter of 2018, the aluminum casting industry has changed significantly. After years of continuous growth (about 8 million tons of cast aluminum worldwide in 2000 → about 18 million tons in 2017), the output data for the fourth quarter of 2018 fell for the first time in 50 years (except for the 1994/95 and 2008/09 crises).

At this point, the ever-increasing discussion of global climate change has had a major impact. The automotive industry with classic internal combustion engines is usually quickly identified as the main reason. Electric cars suddenly appeared on everyone's lips. Affected by this, the output data of bread and butter components (powertrain) in the aluminum casting industry has fallen sharply.

Favored by climate change discussions, American car company Tesla has increasingly become the focus of global attention. The political and social pressure to reduce carbon dioxide emissions is increasing. The resulting economic success (stock price, company performance) and some of the existing technological advantages (battery, software and hardware technology) are the main pillars of the success of the new Tesla.

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With Tesla's success, the processes and technologies used there have attracted new attention. Over the years, a well-known development in the automotive and foundry industries has been through the "brave" Tesla strategy towards larger structural components and larger casting machines. Gigacasting was born and quickly accepted and "copied" by the entire automotive industry as a guarantee of success.

Even though the improvement in sales and profitability started during this period has eased the situation of the foundry, the environment and challenges have not changed. The current "calm" does not protect the foundry from the effects of climate change, corona, and Tesla's development.

Johannes Messer, an expert at Johannes Messer-Consulting GmbH. (Source: Johannes Messer-Consulting GmbH)

Your statements about climate change, corona, Tesla, and the consequences for the foundry industry, on the one hand, arouse hope, but also clearly indicate the risks facing the foundry. The change process has not yet been completed. In your opinion, what is the current mid-term conclusion?

JMC: In my opinion, the tentative conclusion is as follows:

These statements aroused interest in detailed study. In your opinion, what is the current economic situation of German aluminum foundries?

JMC: Of course, this question cannot be answered in general terms, because of course individual differences are great. However, we can basically see that, on the one hand, our productivity advantage is permanently weakening, but at the same time, the overall framework conditions in Germany, especially the overall framework conditions for small and medium-sized enterprises are deteriorating. Under current conditions, it has become increasingly difficult to economically operate a die-casting foundry in Germany. Therefore, nowadays German foundries mainly invest abroad. The frequently mentioned proximity to the market is not always the reason for this development. The real reason is that in most cases, only foreign locations can "save" German foundry locations.

If we want to reverse this trend, everyone must do their homework. Politicians, unions, associations and foundries. Increasing productivity must be a top priority.

You complained that the foundry lacked but necessary technical and economic development during the pandemic. What do you mean?

JMC: I often feel that many foundries still believe that an unchanging future is possible. Changes in the automotive industry are coming. The latest survey shows that it came sooner than most of us expected. The bread and butter part of our previous power system is a thing of the past. Our product portfolio will change, and with it will be many previous guarantees of economic and technological success throughout the foundry value chain. As an example, I would like to mention mechanical processing. In the past, I believe that many foundries have accumulated complex processing technologies. As a result, foundries can supply (partial) finished castings (such as engine and gearbox parts) to original equipment manufacturers. Therefore, the total added value of castings has increased significantly, mainly due to price and quality.

This ability of the previous form will no longer be needed in the future. "New" castings (chassis and structural parts) require different capabilities. In the casting process, themes such as micro-spraying, rheological casting or vacuum are required. In the subsequent processing, processes such as heat treatment or joining technology are required. Here, I see that many foundries urgently need to take action.

If the trend of lightweight construction continues to grow, where do you see the main opportunity for foundries?

JMC: We need to further reduce the difference in global benchmark prices. In the future, competitive prices will continue to be an important criterion for awards. The foundry has received some support in awarding new orders under the theme of sustainable supply chain (reduction of carbon dioxide emissions).

I think chassis and structural parts will be the main market for aluminum foundries in the future. In this area, all original equipment manufacturers are currently developing. Due to the material and process, the aluminum die casting machine has a good starting position, but it competes with other materials (such as steel) and other production processes (such as aluminum extrusion, aluminum sheet metal forming).

If the foundry manages to take advantage of the existing technological and economic potential, the foundry can provide original equipment manufacturers with groundbreaking solutions. However, I firmly believe that these solutions can only be created through the real cooperation of all the companies involved in the process. Europe has the best foundry network (tool manufacturers, foundries, machine manufacturers and customers) so far, and we should ultimately make more use of this remaining advantage.

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You said that castings, machines and investments are getting bigger and bigger. Did you draw this out of the current hype about gigabit casting triggered by Tesla?

JMC: The trend of larger and larger castings and larger and larger casting machines has existed for many years. Tesla is the catalyst here. What Tesla did was brave, and it came at the right time for the foundry. In the end, it helped aluminum foundries.

However, to build on past successes, more than just copying is needed. Together, we must find the right technical and economic right solutions. If the solution is only reduced to the size of the casting and the casting machine, I think we made a mistake.

OEM and Tier 1 are investing in aluminum die casting. How do you explain this trend?

JMC: This trend is not new. Original equipment manufacturers realized 10 years ago that the long-term demand for chassis and structural parts would increase dramatically. At that time, original equipment manufacturers were worried that customer foundries could not meet the increasing demand. For this reason, German original equipment manufacturers such as Daimler, Volkswagen, Audi and BMW responded a few years ago by investing again in their own foundries or building new factories. Technically speaking, in-house foundries are now in an advantageous position, especially in the areas of important future products such as chassis and structural parts.

When it comes to giga-casting, as we currently define, OEMs have no choice but to integrate casting into the assembly process. There is no real substitute for the size of the part. In order to achieve economic and technological optimization, in my opinion, OEMs should work together with benchmark companies in the entire value chain to find shop-in-shop solutions.

Most importantly, foundries, tool manufacturers and machine manufacturers urgently need to position themselves on this point. Strategically speaking, it is now necessary to chart a course for the future.

Your provisional conclusion ends with a question: "Speed ​​and flexibility beat tradition. Asia beats Europe?" What do you mean?​​

JMC: For some time, I have been observing how the important guarantee factors for success change and change with the corresponding attention. Therefore, we can see that technical milestones in the foundry industry are no longer necessarily established in Europe.

As far as the automotive industry is concerned, it should be pointed out that manufacturing cars in the future will be much simpler than in the past. The power system used to be in the form of a beacon of capability, so the barriers to entry for new suppliers will disappear.

OEM manufacturers will face new competitors in the future. Tesla is just an example. In this "new" market, success will be defined as a new one, and will be stronger in the future than in the past.

In this constantly changing environment, I think the foundry industry is particularly vulnerable. Speed ​​and flexibility have never been the strengths of the foundry industry. Unfortunately, this has not changed, as current trends show. The first Giga-Casting machine was partly manufactured in Europe, but unfortunately it was mainly sold in Asia. Even if I don't believe that the future will be completely "GIGA", but in terms of speed, this is aimed at Asia.

Looking to the future, what advice do you have for foundries in Germany/Europe?

JMC: I continue to view the extraordinary foundry network as an important advantage for Europe. If we make use of this network and work together to deal with the opportunities that are present, we will be able to provide the most technologically and economically attractive solutions in the competition of chassis and structural parts. In my opinion, success in Germany/Europe will depend on the ability to work together in the foundry network.

Estimated demand for aluminum castings in Germany from 2020 to 2025

100% lightweight car design = 100% cast aluminum

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Gemeinfrei; http://promove.ch/de/content/fondarex-sa; GF Casting Solutions AG; Godfrey and Win; Salzburg Aluminum Corporation; AED Automation Ltd.; Company; Johannes Messer Consulting Co., Ltd.; GF; Creaform; Bühler; Fraunhofer IGCV / Andreas Heddergott; Materialization; FIMRO Co., Ltd.