Casting industry struggles despite automotive industry growth

The production volume of aluminium castings has declined by 40% in the past decade, Aluminium Federation of South Africa (Afsa) vice-chairperson Bob Stone tells Engineering News.

This is despite South Africa’s growing automotive industry, which will inevitably develop a need for more metal casting components from foundries, he says, adding that foundries are struggling to secure contracts to supply components to the automotive industry. Many, in fact, have closed shop, with many more struggling to keep up with rising electricity costs.

Major automotive piston manufacturers Federal-Mogul and Kolbenco for instance, had to shut their doors in 2007 and 2008 respectively, leaving South Africa with no local automotive piston manufacturers.

Stone attributes this to the high price of raw materials and local scrap metal, and the subsequent lower price of imports. “Even though the industry was receiving a benefit from the Motor Industry Develop- ment Programme (MIDP) at the time, it was still cheaper to import the components than to buy them locally.”

He tells Engineering News that there is definite potential for growth in the auto- motive business, but emphasises that South African foundries need more reason- ably priced scrap feed-in material to become more competitive. He adds that the Depart- ment of Trade and Industry’s (DTI’s) Auto- motive Production and Development Programme (APDP) is also likely to assist in driving that competitiveness.

The APDP will replace the MIDP, which is being phased out this year. The revised programme has been developed with different incentives to those of the MIDP. It will look at targeting volume production and will provide additional support for the foundry industry as a result of the programme’s focus on the components industry. This is meant to stimulate the increased use of local content in vehicles assembled in South Africa.

Afsa excutive director Mark Krieg says he admires the way the DTI has worked with the APDP, providing additional support that the industry will latch onto. “After all, it’s not only important for the car companies to get funding, but also for the components supply chain. That’s really where the jobs are created. The support programme is going to be excellent.”

Further, the South African Institute of Foundrymen (Saif) will be keeping an eye on how the industry changes once the APDP is implemented, says CEO John Davies. “What we do know is that around 30% of the metal castings sector is focused on producing components for the automo- tive sector, so it makes up a big part of the market.”

Davies adds, however, that, while it does not seem that the automotive sector in Africa will go into a decline, the question is really whether there will be increased local content. “If we don’t see advances in that field, we will see a decline in the foundry part of the automotive sector,” he warns.

Designation and Localisation

National Foundry Technology Network (NFTN) project leader Adrie El Mohamadi agrees that growth in the castings sector is imperative for the state of the foundry industry as a whole.

She says the problem faced by the industry bodies’ drive towards designation and localisation within the foundry sector is that it is not producing a final product. “The important thing we’ve realised is that we need to identify more organised first- and second-tier groups or markets and then target them so that we have initia- tives around their suppliers, which would be some of our foundries.”

The NFTN and its partners – which include Saif and Afsa – are adopting a more holistic approach towards supporting the industry. This is in line with the Competitive Improvement Initiative, an NFTN initiative that ensures the availability of day-to-day technical support for foundries, aimed at enhancing productivity.

“We need growth in the industry,” says El Mohamadi, “and we look forward to seeing whether we can drive more local content into the material manufacturing sector.”