Winter 2006 OCMA News

Winter 2006 OCMA NEWS - MEETING UPDATE

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I. CALL TO ORDER

President John Vaught called the business meeting to order at 12:30 P.M.

II. SPEAKERS

Tom Schroeder, SinterCast Inc., provided a description of the compacted graphite iron (CGI) casting process and its developing market. The key points of his presentation are outlined below:

1.Compacted graphite iron (CGI) has physical and mechanical properties that merit its consideration for iron casting applications that call for enhanced tensile strength and thermal conductivity. Examples of CGI applications include: cylinder blocks and cylinder heads, cylinder liners, exhaust manifolds, clutch plates, bedplates, pump housings, and ingot moulds.

2.Tony Stewart’s “Home Depot” NASCAR racing cars are powered by CGI engines. Practical experience with the CGI engine has shown significant weight reduction, a higher power-to-weight ratio, durability, and dimensional stability. When compared to grey iron, the CGI engine offers as much as 30% weight reduction.

3.The Toyota racing pickup in the NASCAR Craftsmen Series has been powered since 1994 with a CGI engine. The 5.8 liter engine produces 650 horsepower. The engine block has a minimum wall depth of 3.0 mm and is cast with 28 sand cores. The strength of the CGI engine also results in much less vibration and much quieter operation.

4.Since racing car and truck engines are not a high volume operation, the long-term market development for CGI engines calls for expanded use of the diesel engine in both Europe and the U.S. In Europe, diesel engines are found in approximately 50% of autos on the road. The comparable number in the U.S. is about 3%. There is reason to believe that the high gasoline prices will ultimately encourage more Americans to explore the use of diesel engines. In October 2006 the U.S. will be converting refineries to produce a diesel fuel more similar to the diesel fuel used in Europe.

5.Increased use of diesel automobiles is expected in the U. S. because diesel engines offer significant fuel economy increases, up to 30%, without sacrificing performance. Moreover, the typical premium for an upscale U.S. diesel automobile is approximately $1000 compared to approximately $3500 premium for a hybrid. International Navistar projects that by 2010, 20% of U.S. vehicles will be diesels. USEPA predicts that by 2020, that number will increase to as much as 40% of light duty vehicles.

6.Other applications of CGI are for huge locomotive engines. General Electric produces a V-12 CGI engine called GEVO that produces as much horsepower as its 16 cylinder predecessor and produces 40% fewer emissions than current diesel locomotives. Rolls Royce is using CGI to cast engine frames and heads.

7.Presently, more than 65 foundries globally have experience with SinterCast’s CGI process. Fifty-five of those foundries create castings for car, truck, and engine manufacturers. There are also sixty-eight (68) industry suppliers and research institutes in the industry. In 2005, the Ford Motor Company, Cleveland Casting Plant (CCP) began exploring the use of CGI in their diesel engine blocks.

8.The need for CGI has been established. The foundry technology is ready and the manufacturing technology is ready. Successful high volume operations are forthcoming.

 

Tom’s PowerPoint presentation is available from the OCMA office.


Tom Schroeder, SinterCast, Inc. enjoys a comment from the audience during his presentation on compacted graphite iron (CGI)	Dr. Doru Stefanescu, OSU, makes a point during his presentation about the OSU metal casting program.

 

Dr. Doru M. Stefanescu, FEF Professor, Department of Mechanical Science & Engineering, The Ohio State University (OSU), discussed his goal of revitalizing the casting program at OSU. Key points of his presentation are presented below:

1.Doru began by outlining some very important facts:

»	Metal casting is the most important manufacturing process based on the material sciences paradigm processing-microstructure-property;
»	Metal casting is a material science discipline that deals with a wide range of materials including ferrous and nonferrous alloys, composites, ceramics, glasses, and polymers;
»	There are 2760 foundries in the U.S. employing more than 210,000 people;
»	According to 2003 statistics, by weight of castings shipped, Ohio ranks first amongst the states (15%) followed by Alabama (12.5%), Wisconsin (11.5%), and Indiana (11.5%);
»	The state of Ohio has five (5) AFS chapters, whose leadership includes employees of companies such as Ashland Chemical Company, Ford Motor Company, GM, Hickman & Williams Company, Columbus Steel Castings, Fairmount Minerals Ltd., EMSCO, Inc. Foseco, Inc. and Inductotherm;
»	Foundry Educational Foundation (FEF) provides scholarships for undergraduate interested in metal casting. In 2002-2003, the metal casting industry hired 91 FEF scholarship recipients (four (4) from OSU out of 30 OSU BS graduates) while Missouri-Rolle had thirteen (13) students on the list.

2.Rationale for Solidification/Casting Education at Ohio State University:

»	Ohio is #1 in metal casting in USA;
»	The Casting Industry provides numerous jobs for Ohioans;
»	To remain competitive and preserve jobs, the Ohio Casting Industry needs a continuous influx of bright, well-educated engineers;
»	OSU – The state’s university – must produce these engineers

3.A successful university program is defined as one of academic excellence. To achieve this excellence, the faculty must have a national and international reputation. This reputation is a result of referred journal publications, invited talks, authoring textbooks, and receiving rewards and patents. The awards and patents are a result of a successful research program. Such a program has a first-class research facility, attracts the best and brightest students, and generates mega-dollars for research.

4.To rebuild a viable program at OSU, a young, full-time professor must be recruited. Dr. Stefanescu has made a commitment of five (5) years to the university. Secondly, the OSU program needs a continuous influx of young talent. To recruit this talent, the program must have high intellectual content research and “high tech” laboratories.

5.Existing resources of the OSU Casting/Solidification Program include solidification and metal casting laboratories that must have significant upgrades. Human capital is much more world-class:

Activity	September 2005	January 2006
FEF	6	10
AFS Student Chapter	0	13
Graduate Students	0	1
Senior Projects	0	2

6.Financial resources have increased since Dr. Stefanescu’s arrival, but remain too little to establish a successful program. The goal is to raise $ 1,000,000,

Source	Goal	Amount
FEF	Student Scholarships	$17,000
Ashland Chemical	Discretionary Funds	$5,000
MSE-OSU	Travel Support	$10,000
Central Ohio AFS	Equipment Fund	$10,000
Private Donor	Equipment Fund	$1,000
Total		Million $$ 0.043

7.Research funds are another source of funding. Dr. Stefanescu was able to bring some research with him from University of Alabama and additional funds have been dedicated:

Source	Goal	Amount
AFS	Effect of the casting skin on tensile properties of light weight ductile iron castings	$36,000
NASA	Peritectic organic metal analogues	$31,000
NASA	Liquid metal delivery and storage in the Lunar environment	$51,000
Ashland Chemicals	Graduate student support	$47,000
Total		Million $$ 0.165

8.Dr. Stefanescu’s strategy for success is outlined below:


»	Build a first-class teaching and research facility;
»	Develop a successful research program;
»	Insure program viability by hiring a young faculty by 2008
»	Build a first-class metal casting laboratory;
»	Build a first-class solidification science and virtual casting laboratory.

9.The Solidification Science and Virtual Casting Laboratory:

Research directions:


»	Casting design – virtual casting: laser digitalizer=CAD=solidification modeling;
»	Rapid solidification – bulk metallic glasses;
»	Rapid solidification – bulk metallic glasses;
»	Semi-solid casting.

Research program implementation:


»	Center/Consortium – name and scope to be determined by sponsors;
»	Individual proposals;
»	Funding sources, AFS, NASA, DOE, & DOD

10.Thought for the day: The difficult we will do today, the impossible will have to wait a little longer. Dr. Stefanescu completed his presentation with the following question: Is the Ohio Metal Casting Industry ready to commit to the OSU program?

Dr. Stefanescu’s PowerPoint presentation is available from the OCMA office. Just call or e-mail.

Alfred Spada, AFS, outlines the projections for the U.S. metal casting industry from 2006-2011

Alfred Spada, American Foundry Society, provided a U.S. metal casting industry profile, a macro-level forecast, and an examination of how foreign competition was affecting the U.S. metal casting industry. Key points of his presentation are outlined below:

1.In January 2006, there are 2336 operating casting facilities:

»	More than 800 of them are ferrous foundries;
»	More than 1500 nonferrous foundries;
»	The industry employs more than 220,000 people;
»	Eighty (80) per cent of the foundries are small businesses with less than 100 employees;
»	The U.S. is a global leader in casting application and number 2 in production (China leads.)

2.U.S. Casting Industry Profile:

»	In 2005, there were approximately $32.9 billion in shipments;
»	In 2005, more than 14 million tons of castings were shipped;
»	Projections are that more than 14.3 million tons will be shipped in 2006;
»	The expected operation level will be 84% of capacity in 2006.


3.2006 Capacity & Utilization:

Metal	Tons	Capacity
Iron	11,330,000	85%
Steel	1,450,000	87%
Aluminum	2,920,000	80%
Copper Base	390,000	84%
Magnesium	150,000	87%
Zinc/Lead	390,000	87%
Other Nonferrous	80,000	76%
Investment	220,000	86%
TOTAL	16,390,000	84%

4.The Shipment Mix: Tons

»	Gray Iron – 33%
»	Ductile Iron – 33%
»	Aluminum – 16%
»	Steel – 9%
»	Copper - 2%
»	Zinc – 2%
»	Magnesium – 1%
»	Other –4%


5.The Shipment Mix: Sales

»	Iron – 35%
»	Aluminum – 32%
»	Steel – 11%
»	Cu-Alloy – 4%
»	Zinc – 2%
»	Magnesium – 3%
»	Other –13%

6.Casting End Use Markets:

»	Cars & Light Trucks – 31%
»	Pipe & Fittings – 15%
»	Construction, Mining, & Oil Fields – 6%
»	Internal Combustion Engine – 5%
»	Valves – 5%
»	Railroad – 6%
»	Farm Machinery –4%
»	Special Industry – 3%
»	Municipal – 3%
»	Pumps & Compressors – 3%
»	Other – 19%

7.Forecast: Casting demand is strong in most markets for most metals.

»	Projected shipments – 14.7 million tons of shipments in 2008;
»	This is a lower tonnage forecast than projected earlier due to increased use of aluminum in auto and heavy trucks;
»	$38 billion in sales is projected in 2008, 2009, with 14% growth in sales to 2008;
»	Growth of 10% in shipments from 2003-2008.

8.The driver for this growth is very simple. Baby boomers are entering their peak earning and spending years from 2004-2009. Casting shipment forecasts are based on increased forecasts for GDP, housing starts, auto, railcar, and truck production, & construction activity.

9.According to projections, casting demand will peak in 2008 and suffer significant reduction from 2008 to 2011 falling more than 2 million tons in shipments. What causes this decline?

»	Cyclical economic recession is expected every ten (10) years affecting auto, railcar, heavy truck, and construction etc.
»	These declines occurred in 2001, 1991, 1981, 1971, and they are expected in 2011.
»	Sales are expected to fall from 2009 high of $37.7 billion to 34.5 billion in 2001,a decline of nearly 9.5 %.

10.The expanding demand for metal casting in the U.S. may lead to supply shortages in 2007-2008. (This is defined by greater than .88 demand/supply ratio) For example, vertically parted gray iron casting demand is expected to be 1.730 million tons in 2007, and the supply in 2005 is only 1.742 or nearly a demand/sales ration of .99. For ductile iron, horizontally parted matchplate demand in 2007 is projected at 1.52 million tons and 2005 supply is only 1.65 million tons.

11.The import of metal castings continues to increase. More than 3.2 million tons of castings are projected to be imported to the U.S. in 2005. It is estimated that in 2006, approximately 20.4% of U.S. demand will be met by casting imports. This is up significantly from 7.0% in 1998. The anticipated capacity strain does not bode will for the import situation. Additionally, the import impact is now being felt across the board with all types of castings. It is no longer the simple to produce volume parts that are being imported.

12.Forecast of Casting Imports: 2006

»	Gray Iron: 1,582,000 tons (27.7% of total demand)
»	Ductile Iron: 570,000 tons (12% of total demand)
»	Carbon and Low Alloy Steel: 244,000 tons (20.6% of total demand)
»	Aluminum Die Castings 337,000 tons (22.6 % of total demand)
»	Aluminum Permanent Mold/Sand: 244,000 tons (21.8% of total demand)
»	Copper Base: 66,000 tons (18.9% of total demand)

13.2006 Imports of Castings (raw, partially machined, and completed) into the U.S:

»	China -- 23.9%
»	Other Asian -- 17.1%
»	Canada -- 10.9%
»	Mexico -- 9.9%
»	Brazil -- 9.3%
»	India -- 8.4%
»	Europe -- 7.8%
»	Other -- 12.8%


14.Nearly 50% of the projected imported castings will come from China, India, Brazil, and Mexico. In these countries, the wage/benefit comparisons with the U.S. show that China pays its workers approximately 4% of the pay in the U.S. and Brazil and Mexico are higher but still no more than 20% of U.S. wage and benefit amounts.

15.While most of the focus in our industry is upon the casting imports from China, India, and Brazil and Mexico, U.S. exports continue to grow. The amount of exports fluctuates based on the value of the dollar, but opportunities for growth of exports abound.

»	Gray Iron Exports in 2005: 585,000 tons;
»	Ductile Iron Exports in 2005: 315,000 tons;
»	Carbon Low Alloy Steel Exports in 2005: 125, 000 tons;
»	Aluminum Die Casting Exports in 2005: 186,000 tons.

16.The concern about imported castings is very important, but it also important to realize that despite the growth in imports throughout the world, in 2007, it is projected that 63% of the shipments made in the world will be from the U.S., Western Europe, and China.

Al Spada’s PowerPoint presentation is available from the OCMA office. Just call or e-mail.

OCMA President John Vaught presents the OCMA Speakers Award to Secretary of State Ken Blackwell.

Ohio Secretary of State and gubernatorial candidate Ken Blackwell outlined his perspective on the major issues confronting the State of Ohio. Key points from his presentation are presented below:

1.The State of Ohio is at a crossroads. Population growth has stagnated at one-half of one per cent for the past decade. The greatest loss has been in population group age 25-39 years old. Ohio’s youth are leaving Ohio at a rate greater than which youth are leaving surrounding states. They are leaving Ohio for greater access to opportunity elsewhere.

2.There has been a record pace of loss of high net worth individuals. Elderly high net worth individuals are leaving Ohio at breakneck speed. The recipient state for this migration is Florida. In the past thirty-three (33) months over any 24-hour period, Ohio was losing 250 citizens to Florida.

3.A primary reason for this exodus is the tax climate in Ohio: it is anti-capital formation and anti-business and anti-job creation. Ohio is one of seven states where the capital gains rate of tax is higher than 8%. It is also one of a few states with a stand-alone estate tax system. The overall tax environment is negative.

4.The Commercial Activity Tax or CAT is a big mistake. If you want more of something such as commercial activity the last thing the government should do is to tax that activity. Ohio needs to flatten its sharply progressive income tax to a flat rate of 3.25 %. The stand-alone estate tax should be junked, it takes more money to administer the tax than we take in from taxes. The estate tax has managed to atrophy financial, cultural, and charitable philanthropy. Finally, the capital gains tax rate should be reduced by 60%.

5.Similarly, the regulatory environment in Ohio is confusing, conflicting, and anti-business. The present system discourages companies from locating in our state. Regulations should be predictable. Ohio should pass legislation that states that no Ohio regulation should be more stringent than U.S. regulations.

6.Effective tort reform is needed also. A neurosurgeon in Cleveland pays approximately $238,000 per year for malpractice insurance while a neurosurgeon in Indianapolis pays only $68,000.

7.The combination of runaway lawsuit abuse, high taxes, regulatory confusion, and reducing the payoff for risk taking has strangled entrepreneurial activity in Ohio and as result the economy is stagnating. It is necessary to “pick the lock” and fundamentally change our state tax system to encourage economic growth.

8.Another critical factor is runaway state spending. The State budget should be balanced by cutting spending, not by raising taxes. Eleven years ago the Ohio state budget was $14.4 billion, today the budget is $25.3 billion, a 16% average growth rate. Ohio has led the nation in increased state spending. In 1995, we were ranked number 11th in state spending, ten years later we are ranked number 3! The state motto should be: You send it, We spend it!!

9.State government spending must be restrained. We need fiscal guardrails to slow government spending growth. He is supporting a constitutional amendment that would allow state spending to grow only as fast population growth or 3.5 % whichever is higher.

10.Ohio must recreate an environment where more and more families choose to stay in Ohio to raise their families. We should encourage more entrepreneurship. To create this environment we need more limited government not more government or better government. Great cities, great nations, great states are not a result of great government, but of great people doing great things.

11.Big government leads to big corruption. Big government is inefficient. To stop big government one needs to reduce not reinvent. Enough is enough, stop government growth and its, intrusiveness into private citizen’s lives. Let’s get the economy growing again or we will continue to decline.

OCMA Vice President for Environmental Affairs Dennis Baker, Flowserve Corporation, catches his breath during his environmental affairs update.	Len Stupczy, Sand Products Corporation, listens intently to OCMA Secretary John Kurtz's beneficial update report.




II. OLD BUSINESS

OCMA President John Vaught looks satisfied at the culmination of the day’s event

A. Approval of Past Minutes

A motion was made, seconded, and unanimously approved to accept the minutes from the meeting held on October 18, 2005, at the Columbus Convention Center.

B. Membership and Finance

OCMA Vice President John Vaught, Tri-Cast, Ltd. presented the membership report. There were two new members, Fisher Cast Steel and Quaker City Castings; and one company lost, ABB, Inc. The present membership stands at 85 members.

OCMA Treasurer John Burke presented the financial report. The OCMA budget for 2005-2006 has been bolstered considerably by the golf outing in August. The outing, that brought in more than $17,000 exceeding budget projections by more than $5000, will likely lead to a small surplus in the OCMA budget this year.

C. Environmental Update

Vice President for Environmental Affairs, Dennis Baker, Flowserve Corporation, presented the environmental report. The PowerPoint environmental report is available from the OCMA office, just call or e-mail. Key issues are outlined below:

Generally Available Control Technology

»	USEPA is preparing to introduce the Son of MACT or GACT. GACT will apply to area sources; those with a potential to emit less than 10 tons/yr for a single Hazardous Air Pollutant (HAP) or less than 25 tons/yr for any combination of HAPs. USEPA views area sources as important contributors of HAPs especially in urban areas. The USEPA is operating under Section 112(k)(1) which states that USEPA shall “achieve a substantial reduction in emissions of HAPs from area sources”. Section 112(k)(3) requires USEPA to prepare a national strategy for urban air toxics.
»	The first meeting of the AFS Area Source Task Force was held on January 10, 2006, by teleconference. OCMA was well represented on the teleconference call with OCMA Vice President for Environmental Affairs Dennis Baker and OCMA Trustee Craig Schmeisser on the call. A follow-up planning meeting is to be held at AFS headquarters on Wednesday, February 1, 2006.
»	USEPA is looking for comments from AFS sometime in March. USEPA has set a tentative deadline for drafted language by early Fall 2006.
»	AFS Task Force concerns include the fact the original rule from 1990 only concerned metallic HAPs. In 2002, USEPA expanded the HAPs affected to include organic HAPs without an explanation of the how or why of their action.
»	USEPA offered the metal casting industry the opportunity to put forth a voluntary program of HAP reduction. The AFS Task Force declined to do so because USEPA was offering no input or guidance about how the program should operate. Although this has been USEPA’s approach for other industries, there has yet to be an agreement with any other affected industry. Task Force believed our resources would be better used during the regulatory process.
»	AFS continues to look for volunteers for an Area Source task force committee, especially from small foundry operations.. Although Executive Director Russ Murray and Dennis have volunteered for the task force, very small foundries are not well represented on the committee. This rule is expected to affect most non-MACT foundries so it is important that all affected foundries keep up to date with what is going on and to communicate their concerns to Dennis and/or to the AFS.

Beneficial Reuse

»	Ohio EPA has announced its intent to draft a rule to replace former Ohio EPA policy 400.007. The proposed deadline for the rule is the end of 2006. OCMA Environmental Affairs Subcommittee on Beneficial Reuse has prepared a position paper and submitted a copy to the Ohio EPA this week. A sit-down meeting is then planned. Focus of the subcommittee’s efforts will be to:
»	Broaden the former 400.007 policy.
»	Expand the allowed beneficial uses to include horticultural & agricultural applications.
»	To eliminate or increase significantly the tonnage limitations outlined in the former policy.
»	A copy of the OCMA Beneficial Reuse Position Paper and cover letter is available from the OCMA office. Just call or e-mail.

Ohio Air Pollution Control Act Coalition

»	OCMA is a member of a coalition to encourage the Ohio General Assembly to amend the Ohio Air Pollution Control Act (APC).
»	Goal is to make Ohio’s rule no more stringent than the Federal air program;
»	Members of the coalition have met with top management of Ohio EPA as well as Ohio representatives to try to develop compromise legislation acceptable to all sides.

EMTEC Report

Nick Cannel, EMTEC, provided the report. Highlights are outlined below:

»	EMTEC has received additional funding for the fuel cell project to the tune of $3.5 million.
»	EMTEC will be sponsoring a solidification training program in early spring.
»	Nick helped four companies purchase CAD and solidification modeling software. Companies can purchase this software at a discount if they work through Nick

EIO Report

Larry Boyd, Energy Industries of Ohio (EIO), provided an update on the Ohio DOE/EIO Metal Processing training program. This program funded by the U. S. Department of Energy began in January 2005 and has focused upon developing a “metal processing training program”. A final draft of the proposed curriculum was included in the member’s packet. The proposed curriculum calls for two levels of training: Basic Metal Processing & Advanced Metal Processing.

»	Basic metal processing training would focus upon those areas that one needs to know to work in the metal industry. The program assumes a minimum knowledge of math, chemistry, physics, and manufacturing. This program would by targeted towards displaced workers and new hires.
»	Advanced metal processing program assumes an understanding of algebra and more rigorous study. Completion of the advanced metal processing program would result in one year towards an Associate Degree. Subjects of study would include basic metallurgy, quality, energy efficiency, and industrial health and safety for metal processing.
»	EIO would appreciate immediate feedback on the draft curriculum. Please complete the questionnaire and return to EIO. Once feedback is obtained, EIO will continue to pursue a funding source for the program and prepare the proposal for course development and delivery.
»	EIO will be sponsoring an Energy Best Practices training program in the near future. The program would include best practices for process heating, steam, compressed air, motors, pumps, and fans. Please contact Larry Boyd at boyd@energyinohio.com.

IV. NEW BUSINESS

The next OCMA meeting will be the annual foundry tour to be held in May 2006

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