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Metal Casting Technologies : March 2005
6 METAL Casting Technologies March 2005 NATIONAL CAST METALS COUNCIL -- CHAIRMAN'S REPORT nother year has "evaporated" and 2005 looks like presenting as many challenges as 2004 for the Cast Metals Industry. Industry surveys are predicting moderate growth in the order of 4% on the domestic front, with a decline in exports due to overseas competition and the strong Australian dollar. The exception being exports in the basic metals sector which, in my view, is more likely to be driven by a combination of significant price increases and demand for iron ore, rather than value added cast metal products. Raw material pricing is now impacting on the building industry. While the "crane index" on the many building sites in all cities is at a high point, increasing anecdotal evidence is emerging that many new projects are being put on hold due to rising input costs. In the event this proves correct, and interest rates rise as predicted, then the second half of 2005 is likely to experience a slowdown in economic activity in building as existing projects are completed. Mining and the agricultural sectors are viewed as positive growth areas. Raw material pricing and its availability remain a huge challenge to the Cast Metals Industry. I was walking past our pig iron bunker recently, filled to overflowing due to the shortage of other preferred feedstock, when an employee kicked a loose single pig ingot back into the pile. I jokingly said, "be careful with that, it probably cost us $5, and shortly afterward I received a phone call to inform me the ingot was weighed and it actually cost $6.70!" Twelve months ago this would have been regarded as ridiculous, whereas now it is considered the 'norm', and I forecast metal feedstock pricing will remain a key issue for our industry for a long way into the future, and it is an industry challenge that exists globally. While we complain of high priced steel scrap here in Australia, Indian foundries are currently paying 17,000 Rupees per tonne, or $515 Aus. World demand has increased dramatically with the growth of emerging nations, and global demand for scrap steel is far exceeding historical scrap generation rates. The only positive emerging is the steady increase in the dreaded "China Price", combined with increasing lead times. Raw material and other increases in input costs are significantly reducing both China's and India's competitiveness. As a result, the USA is now reinvesting in foundries and manufacturing as they experience strong domestic growth, however, it may be a challenge for the industry to skill these new plants. With the Howard government now in control of the Senate, it will be interesting to see the extent of change to emerge in the Industrial Relations area, and change is predicted sooner than later. In relation to skill development, the $289 million Commonwealth investment over 4 years to establish 24 Australian Technical Colleges has great merit. However I feel it could have been more productive for State and Federal bodies to work together to restructure TAFE in the Technical area, and focus this funding on major restructuring, revitalization and refocusing of this existing resource. I guess the unfortunate reality is that this political cooperation is not possible where political agendas override the need for a cooperative total focus on providing well-trained people to ensure Australia's future competitiveness. One thing is for sure, with the "new economy", life is never boring. Keep smiling. Doug Harland Further domestic growth - a prediction for 2005 A Doug Harland CHAIRMAN, National Cast Metals Council of Australia