SIC 3322
MALLEABLE IRON FOUNDRIES



This industry is made up of establishments primarily engaged in the manufacturing of malleable iron castings.

NAICS Code(s)

331511 (Iron Foundries)

Industry Snapshot

Casting molten metal is one of the most efficient and economical ways of shaping metal products. Malleable iron foundries are typically large plants in which workers make metal products called castings by pouring molten metal into molds that then are left to harden. Malleable iron is made from white cast iron by annealing it at temperatures from 1500 to 1850 degrees Fahrenheit over several days. When annealed, the iron carbide breaks up, producing rosettes of graphite. The iron is known for its shock resistance, strength, machinability, and ductility. Products such as engine blocks, iron ornaments, and valves can be made from malleable iron castings. The automotive, railroad, construction, agricultural implement, and hardware industries have wide uses for malleable iron castings.

According to the U.S. Census Bureau, total iron foundry industry employment reached 80,899 workers, receiving a payroll of almost $3.3 billion, in 2000. Within this workforce, 67,985 of these employees worked in production, putting in roughly 143 million hours to earn wages of almost $2.7 billion. Overall shipments for the industry were valued at $12.46 billion in 2000.

Organization and Structure

Castings are used in 90 percent of all durable goods. In 1999, there were 2,950 metal foundries in the United States with a capacity to ship 17.7 million tons of castings annually. Actual shipments amounted to an estimated 14.7 million tons in 1998, up from 1997 shipments of 14.2 million tons valued at $25.7 billion. Iron castings (including gray iron, ductile iron, and compacted iron graphite, in addition to malleable iron) accounted for 73 percent of the overall metal tonnage shipped and sold, but only 35 percent of the overall value.

In 1995, there were more than 3,100 U.S. metal foundries making over 100,000 distinct products. Malleable iron casting production represented approximately 1.7 percent of the total U.S. casting output. Capacity utilization in 1990 for malleable iron foundries was 78 percent, just slightly better than the 75 percent average for the entire foundry industry. This reflected the high rate of disinvestment in plants and equipment that occurred during the 1980s.

As an indication of the decline of this industry, government statisticians classify malleable iron foundries as job shops. These foundries generally operate on a job or order basis by manufacturing castings for sale to others, or for interplant transfer. In the 1970s, half of all malleable iron foundry castings came from in-house or captive plants. But in the 1980s, a major shift occurred when large independent manufacturers of railroad cars, oildrilling equipment, heavy machinery, automobile, trucks, and major appliances sold off, shut down, or consolidated their captive operations. Near the end of the century, upwards of 75 percent of all malleable iron castings came from independent or custom casters.

These foundries produce two types of malleable iron: standard malleable iron and pearlitic malleable iron. In the early 1990s, the value of shipments for each of these two product classes of malleable iron castings were 145,800 metric tons (mt) for standard malleable iron (62.1 percent of total) and 89,100 mt for pearlitic malleable iron (37.9 percent of total).

Most of the malleable iron foundries are found in the nation's midwestern and northeastern states. The largest malleable iron-producing states, in descending order of shipments, are Wisconsin, Pennsylvania, Michigan, Connecticut, New York, Ohio, and Illinois.

Background and Development

Cast iron was first made by the Chinese around the eighth century B.C. It was not until the invention of the blast furnace by the Europeans in the fourteenth century, however, that large quantities of cast iron were produced. North America's first operational foundry was built in 1642 along the Saugus River, near Boston. About eight tons per week of gray iron castings were produced at the site.

Malleable iron, also called American blackheart iron, replaced grey iron as the standard cast-metal around 1820, when the commercialization of secondary heat treating of the metal was first used. In 1966 malleable iron castings production in the United States accounted for 50 percent of the total malleable iron cast in the world. The year 1967, however, saw ductile iron castings production surpass malleable iron castings production in the United States. U.S. malleable iron castings production accounted for roughly 12 percent of the world's total production in 1995.

During the 1960s, average yearly production of malleable iron castings reached its peak at around 983,300 mt. Production during the decade of the 1970s remained at respectable average yearly production levels of 854,900 mt. The 1980s, however, reflected the difficult economic times for the industry, with average yearly production levels shrinking to 346,100 mt.

The foundry industry still ranks within the top ten manufacturing segments in the United States. Still, it has been battered by technological and competitive forces throughout the last two decades. The high inflation rates, high interest rates, high value of the dollar, and deep recession during the early 1980s hurt this industry tremendously. The largest customers of malleable iron castings, the domestic heavy equipment manufacturers, realized that these economic conditions favored offshore sources of malleable iron castings. Foreign competitors not only had lower prices when compared to American malleable iron sources, but they also had high quality manufacturing capabilities. Consequently, the value of castings shipments in the United States dropped 55 percent from the 1977 level of $721.9 million to $323.2 million in 1982.

The high interest rates also raised the industry's cost of capital, which is the price to finance and replace existing operations. This in effect halted any new capital expenditures on plant and equipment in the United States. Capital reinvestment dropped 85 percent between the years 1978 and 1983. Again, the high dollar, high interest rates, and high cost of capital made it very expensive to reinvest in the business of producing malleable iron castings. The lower rates of reinvestment by American malleable iron casters at a time when foreign competitors were raising their levels of casting quality put U.S. foundries at a technological disadvantage. In 1986, the Reagan Administration's decision to not sanction import restrictions further hurt the industry.

To illustrate the damaging effects of adverse economic conditions and increased foreign competition, total shipments of 1.17 million mt of malleable iron castings in 1969 fell to production levels of 284,000 mt in 1982. A small recovery in the industry occurred in 1984 when production increased to 380,000 mt., but production soon slid back to 299,000 mt in 1989 and hit the all-time low of 207,000 mt in 1991. Production then increased to 260,000 mt in 1994 before slipping yet again to 249,000 mt in 1995 and even further down to an estimated 226,000 mt in 1996. The number of establishments producing malleable iron castings also decreased during this period, from 73 in 1972 to 26 in the late 1990s.

The industry was in severe decline, with no expectations of returning to its glory days of the 1960s. More than a third of the malleable foundries in the United States have been closed since the early 1980s, with further consolidation likely to continue. The factors that have contributed to this decline are strong foreign competition, the substitution of other metals and materials for malleable iron, rapid changes in technology, and unfavorable domestic economic conditions.

Current Conditions

Malleable iron foundries faced an ironic dilemma in late 1999, as demand from the booming auto industry surpassed expectations, pushing foundry capacity to the limit. Auto sales of 17 million units far exceeded predictions of 15 million, leaving foundries flat-footed in the race to keep up with auto-part needs. A production line operation running 24 hours a day took its toll: machinery had no down-time for maintenance; workers burnt out on overtime; and companies had to payroll this overtime, as well as paying premium rates for just-in-time shipments. Instead of profiting from this increased demand, foundries lost money.

Other current challenges facing the malleable iron foundry industry include:

Demand for Cheaper, Lighter, and Stronger Components. Many U.S. end use manufacturers are substituting plastics, ceramics, composites, lighter alloys, and nonferrous castings for malleable iron in appliances, aerospace equipment, builder's hardware, and automotive components to help them compete in a global economy and to meet government regulations. Cast iron usage per passenger car and lightweight truck was approximately 600 pounds in 1980. By 1999, the usage had dropped to 325 pounds and industrial analysts estimated that usage could drop to 230 pounds per vehicle by the year 2006. Similarly, only 25 percent of the intake manifolds produced for domestic vehicles in 1995 were made of iron. Many components that were once castings may now be weldments, forgings, or mechanical assemblies.

Changing Markets. The forecast for a continued expansion of the economy to the end of the century leads to an optimistic outlook for the casting industry. Steady demand for American-made cars, trucks, farm equipment, machine tools, freight cars, and oil field machinery should maintain the need for malleable iron castings. On the down side, however, proposed changes in plumbing fittings and electrical standards could further erode an already dwindling demand.

Replacement by Ductile Iron Castings. Related to the need for lightweight and high-strength components and parts is the growth in the replacement rate of ductile iron castings for malleable iron castings. Malleable iron competes with ductile and grey iron in the traditional light and heavy industrial manufacturing markets, but ductile iron is lighter than malleable iron. Ductile iron actually doubled its share of the market in the last decade because of its unique compatibility with new casting techniques called"near-net-shapes." This new method of casting allows for thinner-walled castings with intricate and complex shapes and sizes. Secondary finishing like blasting and sanding are virtually eliminated through the use of this process. In the automotive industry, ductile iron engine blocks are increasingly replacing malleable iron engine blocks. In the housing industry, ductile iron valve castings are expected to continue to replace malleable iron valve castings because of their superior resistance to shock and impact. Ductile castings are also replacing malleable castings in the farm equipment, electrical fittings, and plumbing fittings markets.

Industry Leaders

Industry leader Intermet Corp. of Troy, Michigan, with $841 million in 1998 sales, was hard-hit by increased demands from the car industry in late 1999, when third-quarter profits fell 20 percent to $7.4 million in spite of revenues rising by 16 percent to $225 million. Milwaukee-based Grede Foundries Inc. generated 1998 sales of $633 million. McWane Corp. of Birmingham, Alabama garnered 1998 sales of $587 million. CMI International Inc. of Southfield, Michigan followed with almost $574 million in sales for its fiscal year ended June 30, 1998. Rounding out the top five were American Cast Iron Pipe Co. of Birmingham, Alabama, with $500 million in 1998 sales. Other industry leaders included Lufkin Industries Inc. of Lufkin, Texas; Waupaca Foundry Inc. of Waupaca, Wisconsin; and Burnham Corp. of Lancaster, Pennsylvania.

Workforce

By 2000, total employment in iron foundries had fallen to 80,899, compared to 85,429 in 1997. Production workers numbered 67,985. Total payroll compensation in 2000 was $3.38 billion, with hourly wages at $18.58, compared to $11.27 a decade earlier.

America and the World

According to Modern Castings, "30th Census of World Casting Production," the world's production of malleable iron castings was approximately 2.1 million mt in 1995. This was roughly a drop of 38 percent from the record production levels of 3.4 million mt reached in 1973.

In 1995, the United States' share of total world production was roughly 12 percent (down from 50 percent in 1966). The largest producer of malleable iron castings was the Commonwealth of Independent States (CIS) with 40 percent of total world production. China's share of world production totaled 20 percent, Japan tallied 7 percent, and India and Germany contributed 4 percent each to global production of malleable iron castings.

Research and Technology

Many industry observers regard exotic materials and thin-walled castings as the wave of the future. Some of the rapid technological changes occurring around malleable iron casters are new mold designs; new metal casting techniques; new computerized casting, finishing, and monitoring; and new purchasing procedures by domestic consumer and industrial product manufacturers. The industry is under attack by new technology parts-making processes, and it has been slow to change to compete with these more efficient casting processes.

For future survival, American malleable iron foundries must keep up with the technological changes in the industry. New investments in operations to improve melting, alloying, metal flow, die and mold filling temperature control, and lubrication will all help in this regard. Today's global marketplace also demands stronger quality control, price restrictions, and tighter specifications. Casting has moved from an art to a science. The days of testing sand moisture by hand are over, for today computer controls are what create the most exacting tolerances. Partnership arrangements between foundries and their customers and suppliers will help to promote future growth. Pricing, quality assurance, service, and the consolidation of suppliers using just-in-time production practices to keep costs low and response time to customers high will help protect domestic malleable iron casting operations from further market declines.

Further Reading

American Foundrymen's Society. "Facts and Figures about the U.S. Foundry Industry." Available at http://www.afsinc.org/Trends/FactsandFigures.htm .

Infotrac Company Profiles. Available at http://web6.infotrac.galegroup.com (1/25/00).

Malleable Iron Castings. Ann Arbor, MI: Ann Arbor Press, Inc., Malleable Founders Society, 1960.

"Modern Casting Census of World Casting Production." Modern Casting, December 1992.

Sanders, Clyde A. History Cast in Metal. Cast Metals Institute, American Foundrymen's Society, 1960.

United States Census Bureau. 1995 Annual Survey of Manufactures. Washington, D.C.: U.S. Government Printing Office, 1997.

United States Census Bureau. 1997 Economic Census-Manufacturing. Available at http://www.census.gov/prod/ec97/97m3315a.pdf .

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .



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