Purchasing of Metal parts will drop by 7.5% this year to 17.2 million tons as increased production in aerospace and power generation markets is more than offset by reduced assembly of motor vehicles, appliances and certain types of heavy machinery.

Demand for metal parts edged ahead by 2.5% in 2006 to 18.6 million tons, according to market calculations by Purchasing, but analysts remain uncertain about metalworking's 2008 need for castings, forgings and powder metal parts with forecasts ranging from no growth to a moderate recovery.

Typically the demand for metal parts follows the pace of manufacturing in the U.S. "Our industry closely mirrors the general economy, and economists agree the U.S. economy and manufacturing growth will slow in 2007," says Daniel Twarog, president of the North American Die Casting Association (NADCA).

And "as long as the general economic expansion continues, conditions in manufacturing will improve next year, but by how much is unclear," says Daniel Meckstroth, chief economist at business research group Manufacturers Alliance/MAPI in Arlington, Va. "Although manufacturing is impacted by the housing market woes and competition from low-cost country consumer goods, factories have cleared up excessive inventories and there is strong growth ahead in high-tech, aerospace and other durable goods industries."

The latest quarterly industrial outlook from Manufacturers Alliance/MAPI still maintains that manufacturing will grow in 2007 at a reduced 2.5% rate compared to 4.7% in 2006 and 3.1% in 2008. Still, this forecast doesn't support more than a moderate outlook for metal parts this year and next. A January report by the NADCA suggested that "the dynamics of global competition contributed to slight decreases in domestic in 2006 die casting shipments and forecasts are for further declines in 2007."

Shipments of aluminum and zinc die castings—the biggest-volume products—decreased in 2006. And lately, a 1.5% decrease in aluminum and zinc die-cast shipments forecast earlier for 2007 has been expanded to a 4% decline due to reduced demand and high aluminum and zinc prices. And just last month, Leggett & Platt confirmed end-market softness for its nonautomotive aluminum die castings; CEO David Haffner says the Carthage, Mo., diversified manufacturer is seeing "continued market weakness for the remainder of 2007."

Leadtimes for Forgings, castings and stamped metal parts have come down to an average 9.2 weeks in July, bringing the seven-month delivery average to 9.8 weeks—as compared with 9.2 weeks for all of 2006. According to market analysts, the slight lengthening on leadtime is due more to reduced supply than increased demand. For example, a recent Freedonia Group report says that more than 2,500 U.S. establishments produce industrial castings, though the number has declined in recent years because of closings and consolidations.

"Foundries faced many difficulties in 2001–2006," the Cleveland-based Freedonia Group says. "Those that were able to emerge from the 2001 recession were then faced with declining production in the U.S. automotive industry, their biggest customer base, as well as rising raw material costs."

Sales of cast-metal intake manifolds, cylinder heads, water pump housings, complex aluminum parts and cast-iron exhaust manifolds into the car and light truck sector are down almost 9%, according to Purchasing calculations.

The forward-and-reverse actuator assembly for golf cart transmissions made by Team Industries of Bagley, Minn., is supplied by powder metal parts maker FMS Corp. of Minneapolis.

And all that has cut down the need for metal parts. In fact, the Freedonia Group report suggests the brightest prospects for sales of castings will be in some of the smaller castings markets, including aerospace applications, and electrical and electronic equipment. Advances in aerospace equipment applications will be spurred by robust growth in spending on military aircraft and missiles, as well as on commercial aircraft. Ongoing technological advances in computers and wireless devices will support castings demand in medical electronics, mobile telephones, video games, medical instruments and electronic packaging.

Ferrous castings are expected to continue to lose share to nonferrous, both in value and tonnage. For example, in automotive applications, most types of ferrous castings are being replaced by nonferrous castings as manufacturers seek to reduce vehicle weight and increase fuel efficiency. Aluminum and magnesium have become increasingly common in the production of automotive components due to their lightweight qualities.

Looking ahead, analysts suggest magnesium-based castings are expected to see faster growth than aluminum, zinc-aluminum and copper die-cast parts since the magnesium die castings have the lightest weight with the highest strength-to-weight ratio. The North American Die Casting Association has forecast a 3% gain for magnesium in 2007 with another 4% gain in 2008.

Consistently weak orders for metalworked products this year have reduced buys of stamped, pressed, forged and cast metal parts.

Also, a recent report by analyst Kenneth Kremar at research firm Global Insight says "parts-using companies focused on the automotive market definitely are not holding their own." And it is the automotive market that absorbs 82% of the powder metal parts used annually in North America. So, powder metals parts demand overall this year could collapse by as much as 4% because of the decline in assembly by U.S. automakers—due to their loss of market share to transplants—and the overall shift away from sports utility vehicles and light trucks to passenger cars and crossover vehicles.

Edul Daver, president of the Metal Powder Industries Federation, doesn't think the decline in powder metal parts use will be as severe as some economists have forecast. However, he acknowledges that demand is down for steel and iron powder metal parts from makers of motor vehicles and auto parts. He also points out that shipments of copper and copper-based powder metal parts are continuing to decline this year because of lost sales to domestic bearings to manufacturers in Southeast Asia, and the very high price of copper.