1. U.S. Metalcasting Forecast & Trends Webinar Alfred Spada Director of Marketing, PR & Communications

2. Outline U.S. Metalcasting Profile U.S. Casting Forecast Global Competition

3. Profile of the U.S. Metalcasting Industry 2170 Casting Facilities –700+ Ferrous; 1400+ Nonferrous –Employs More Than 200,000 –80% Are Small Businesses (less than 100 employees) –2007: $32.3 Billion; 13.4 Million Tons –2008: $33-34 Billion??; 13.4 Million Tons?? – 2 nd in Production

4. What Happened in 2007? Imports for Light Vehicles: Forecasted at 21% of Demand; Reality is 24% of Demand Med. To Heavy Trucks & Trailers: Forecasted 15% reduction (420,000 trucks/260,000 trailers); Reality is 25% reduction (370,000 trucks/229,000 trailers) Housing Starts: Forecasted 3% growth; Reality 8% decline Ductile Iron Pipe: Forecasted 2.3 million tons; Reality 2.07 million tons

5. U.S. Production 1955—6150 Plants 1991—3200 Plants 2008—2170 Plants From ’91-’07, production capacity off only 4% From ’91-’07, Alum growth at 91% (1.1 to 2.1 mil. Tons) From ’91-’07, Mg growth at 331% (29,000 to 125,000 tons) Greater number of castings produced today than in ‘91

6. 2008 Capacity & Utilization MetalCapacity (Tons)Utilization (%) Iron11,250,00084 Steel1,680,00082 Aluminum2,600,00081 Copper Base380,00087 Magnesium170,00074 Zinc/Lead370,00088 Other Nonferrous70,00087 Investment200,00074 TOTAL16,720,00083

7. 2008 Shipment Mix: Tons

8. 2008 Shipment Mix: Sales

9. Casting End-Use Markets

10. Casting Shipments 1990-2007

11. Projected Shipments (all metals) 2009: 13.4 million tons $34.2 Billion in sales 2011: 12.3 million tons; $31.8 Billion in sales 2017: 14.14 million tons $42 billion in sales Forecast based on GDP, housing starts, auto, railcar and truck production, construction activity, end-user and supplier interviews.

12. Shipment Forecast Through 2017

13. Sales Forecast Through 2017

14. What Happens in 2010-13? Cyclical economic recession is expected every 10 years, affecting auto, rail, truck, construction, etc. Happened in 2001, 1991, 1981, 1971, etc. Forecasted by economic experts for 2011 Similar Shipment tonnage as 2001 Sales hit a low of $31.7 billion in 2011 Truck/Trailer: 300,000/190,000 in 2012 Freight Cars: 40,000 in 2012 GDP: -0.2% growth in 2010-11

15. Globalization & Imports

16. Imports 2008 Gray Iron: 1,630,000 tons (29% of demand) Ductile Iron: 576,000 tons (12% of demand) Carbon and Low Alloy Steel: 266,000 tons (21% of demand) Aluminum Die Castings: 334,000 tons (25% of demand) Aluminum Permanent Mold/Sand: 566,000 tons (44% of demand) Copper-Base: 67,000 tons (19% of demand) 3,681,000 tons of castings 23.4% of demand (from 7% in 1998)

17. Imports to U.S. By Market: 2008

18. Imports to U.S. By Country: 2008

19. Metalcasting Across the Globe

20. Global Production (in 000s metric tons) 200420052006 Gray Iron40,43540,78842,539 Ductile Iron18,70619,59121,685 Mall. Iron1,1221,2331,150 Steel6,5949,0029,938 Cu-base1,2391,5111,485 Aluminum10,35711,71812,278 Mag1342391,256 Zinc907936941 TOTAL79,74585,74191,368

21. Global Production 2006 (metric tons) 1.China: 28.1 million—26,000 plants 2.U.S.: 12.5 million—2190 plants 3.Japan: 7.9 million—1701 plants 4.India: 7.2 million—4750 plants 5.Russia: 6.9 million—1900 plants 6.Germany: 5.5 million—619 plants 7.Brazil: 3.1 million—1372 plants 8.Italy: 2.6 million—1171 plants 9.France: 2.4 million—469 plants 10.Korea: 1.9 million—851 plants

22. The Global Pie China 31% Japan 9% Other Asian 6% U.S. 14% Brazil 3% EU 17% Easter Europe 2% Russia 7% Others India 8% 14%

23. Comparison of Casting Labor/Benefit Rates 2008

24. European Markets Germany –Capacity Utilization: 92% for ductile iron, 83% for gray iron, 90% for aluminum; Maybe Higher –Normally a net exporter: 400,000 tons of ferrous casting in 2006 –33% of gray and 30% of ductile iron production for Western Europe –Highest productivity per plant by 30% Russia –Produced 26 million tons in 1991 as Soviet Union; 7 million tons today –Suppliers love the possibilities –Capacity Utilization: 67% for ductile iron, 59% for gray iron, 92% for aluminum

25. Brazil –3.1 million metric tons production –1300 plants –Engineering Skill –Currency problems Mexico –Nemak-largest aluminum caster in world –1.7 million tons –Several large, rest small, no medium –Costs raising to U.S. levels Latin America

26. China –26,000 plants –13.9 million tons gray, 6.8 million ductile, 3.8 million steel, 2.3 million aluminum –15% growth from 2005-06 –Capacity Utilization: 67% gray iron and 75% for ductile iron and aluminum –Export 3.2 million tons in 2006

27. India 4750 Plants 4th in the World: 4.8 million tons gray iron, 0.7 ductile, 0.9 steel, 0.5 aluminum Since 2002, India’s output has doubled Productivity rose 17.5% from 2005-06 160,000 employees

28. Global Productivity Per Plant

29. For Further Information Metalcasting Forecast & Trends 2008 –Data Available By Metal, End-Use Market Demand & Supply Forecast for Metal Castings in the U.S. (Vol 1 & 2) Further Questions for AFS Corporate Members, email aspada@afsinc.org Thank You