Owner, Johannes Messer-Consulting GmbH
Examining the Current Situation of the Aluminium Die Casting Industry in Germany
The German light-metal foundry industry has been in a difficult economic situation for many years. This article provides an insight into the current situation of aluminium die casting in Germany and highlights opportunities and risks for this industrial sector.
Compared to other production processes of metalworking, the average Ebitda achieved in aluminium die casting is lower. This is due to various different reasons, which are — just like the process itself — very complex. The low Ebitda leads for instance to a lack of investments in human resources and machines, and eventually to predictable consequences. German foundries are in danger of losing their leading global position in know-how and innovation in the medium term. The business location Germany, with its high wages and energy costs, has its particular burdens for foundries. The recently negotiated wage settlement in the metal industry will further aggravate the already tense situation in the foundry industry. This exerts an enormous additional burden on the industry.
Analyzing the Conditions
To assess the impact of the very complex framework conditions and changes, detailed analyses have been conducted and evaluated. Over the next few years (forecast period until 2025), aluminium castings will continue its strong growth. However, the focus of the industry’s growth will not be in Germany or Europe, it will rather be in China (8,3 %) and India (7,9 %). Future growth will rely on novel products offering a high degree of clamping force. This will require extensive investments. Previous "bread and butter parts" of the powertrain (engine, transmission) will disappear with the rising importance of e-mobility. The current Ø-Ebitda margins of German foundries reflect obvious competitive disadvantages compared with the international market, leading to disadvantages with regard to investments. Wage rises of currently 4.3 % have grave consequences, especially in the foundry industry where they aggravate an already critical overall situation. (Example: Ø sector Ebitda 8.1 % (Germany); after salary increase Ø Ebitda 6.6 %)
Results and Conclusion
The assessment of the overall situation by German die-casting foundries shows opportunities and risks. When assessing the risks, it becomes clear that quick and sustainable action is urgently required. First of all, the profitability should be dealt with. On an operational level, productivity must be increased in the short term. The only realistic and swift lever is the continuous improvement process. The German aluminium die casting industry is currently at a turning point.
The market currently offers a broad scope of both opportunities and risks. In order to exploit the opportunities, but also to minimize existing risks, the short-term increase of profitability of German foundries is a top priority. The momentum of current changes requires additional fast responses and sustainable action. Relocation and production to locations with more favourable competitive conditions cannot be the only answer. On the operational level, the continuous improvement process (CIP) is the only realistic lever to ensure success in the short-term. Only foundries with sufficient profitability will be able to benefit from the current opportunities in the long-term.