CAEF. The European Foundry Association. CAEF General Engineering Section Meeting. Düsseldorf. 22 March CAEF,

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1 CAEF The European Foundry Association CAEF General Engineering Section Meeting Düsseldorf 22 March CAEF,

2 Verhalten im Brandfall / bei Unfällen Ruhe bewahren! Menschen retten, gefährdete Personen warnen Erste Hilfe leisten, Unfallstelle absichern Hilfe herbeiholen Ersthelfer Tel. 555 Feuer / Unfall melden Wer meldet? 2 Wo brennt es / ist der Unfall geschehen? 3 Was brennt / ist geschehen? 4 Wie viele Verletzte, Art der Verletzung? 5 Warten auf Rückfragen! Feuer bekämpfen, Feuerlöscher einsetzen OHNE sich oder Andere zu gefährden In Sicherheit bringen, Türen und Fenster schließen, Fluchtwegen folgen, keine Aufzüge benutzen Sammelplatz: Wiese neben Hofeinfahrt aufsuchen Informieren Sie sich über die Flucht- und Rettungswege und die Feuerlöscher! Verbandskasten: Sanitätsraum (neben Haupteingang) Defibrillator: Flur neben Empfang CAEF,

3 Smoking Area is located at the back of the Building Please follow the Signs: CAEF,

4 Purpose of our meeting Information exchange Discussion of economic situation Raw materials Energy Technical issues Etc. Non-topics for our meetings: Prices Quotas Concrete customer relationships Any measures with indirect effect on the topics mentioned above Statistics have to respect these issues Almost no problem: Purchasing subjects Raw materials statistics Anonymous benchmark surveys Please take note of the CAEF antitrust compliance guideline CAEF,

5 Current market situation (General aspects) General statements on e.g. the following topics: Production volumes / Orders in stock Cancellation of orders Raw materials availability Status and development of energy price Planned investments Mid-term perspectives of production The statements may not be linked to a concrete product or customer O:\BDG\CAEF\Competition law slides.pptx CAEF,

6 Agenda 1. Welcome 2. Industry 4.0 Kurtz Eisenguss Smart foundry presentation by Matthias Hofmann, Kurtz Ersa 3. General economic situation - Statement by Heiko Lickfett 4. Any other business 5. Date and venue of the next meeting CAEF,

7 Agenda 1. Welcome 2. Industry 4.0 Kurtz Eisenguss Smart foundry presentation by Matthias Hofmann, Kurtz Ersa 3. General economic situation - Statement by Heiko Lickfett 4. Any other business 5. Date and venue of the next meeting CAEF,

8 Future Trend: Smart Foundry Smart Production needs Smart Castings Black Magic vs Smart Foundry Equipment interactive connected Data mining Improvement and stabilisation of all processes Leads to maximized efficiency Energy and Material Flexibility, Speed etc. That s all? CAEF,

9 Agenda 1. Welcome 2. Industry 4.0 Kurtz Eisenguss Smart foundry presentation by Matthias Hofmann, Kurtz Ersa 3. General economic situation - Statement by Heiko Lickfett 4. Any other business 5. Date and venue of the next meeting CAEF,

10 Economy and Key Indicators Background for Foundry Business Bild: Fotolia CAEF,

5,0 World Economic Outlook 2016-2018 Change in % yoy Euro: Germany/ France/ Italy: underrated for Germany/ overrated for South of Europe Pre Election Status Spain: Less Dynamic 4,0 3,2 3,0 2,0 1,7

11 5,0 World Economic Outlook Change in % yoy Euro: Germany/ France/ Italy: underrated for Germany/ overrated for South of Europe Pre Election Status Spain: Less Dynamic 4,0 3,2 3,0 2,0 1,7 1,6 1,6 1,9 1,5 1,6 1,3 1,3 1,6 2,3 2,1 1,0 0,9 0,7 0,8 0, Euro Area Germany France Italy Spain Source: IMF, uary 2017, Stat BA CAEF,

12 Industrial Production Change in % yoy Euro Area Business Climate Indicator February 2017 Different signals! Snapshot February: In February 2017, the Business Climate increased slightly. Managers' views 4 on both their overall and export order books improved strongly. Meanwhile, managers' assessments of their stocks of finished products and their production expectations worsened. 93 Economic cycle Economic cycle Investment boom Recovery 10 Recession No (!) cycle and now? Business Climate Industrial Production Business Climate Source: Eurostat, Industrial Production December CAEF,

10,0 9,0 8,0 7,0 6,0 5,0 4,0 World Economic Outlook 2016-2018 Change in % yoy 6,7 6,5 6,0 6,6 7,2 Investmenbt Impulses in the USA = Capital Drain in Emerging Countries? OPECAgreement stable?

13 10,0 9,0 8,0 7,0 6,0 5,0 4,0 World Economic Outlook Change in % yoy 6,7 6,5 6,0 6,6 7,2 Investmenbt Impulses in the USA = Capital Drain in Emerging Countries? OPECAgreement stable? Impact of US Protectionism? Official Brexit Declaration 7,7 3,0 2,0 1,0 0,0 2,0 1,5 1,4 1,6 2,3 2,5 1,1 1,2 0,2 1,5-1,0-0,6-2, UK USA China India Russia Brazil Source: IMF, uary CAEF,

14 58 Selected Countries Manufacturing Purchasing Manager Index (PMI) October 2016 uary 2017 Index 56, ,0 55,2 55,0 55,6 54,4 54, ,5 51,2 51,0 53,5 51,8 53,6 50,9 53,0 53,3 49,9 48,8 50,4 52, , , USA China Euro Area Germany France Italy Spain Turkey India Russia Brazil Index above 50 points = increasing economy (dominated by industrial production and service) Source: Markit, CAEF,

15 Euphoric Mood on the one Hand CAEF,

16 USA Purchasing Manager Index (PMI) uary 2017 Trump-Impact! Difference to other PMI because of the higher share of private consumption: Index above 43 points = expansion of the overall economy Comments from the panel: New Orders Strong! Production is increasing and we are adding capacity. (Plastics & Rubber Products) Business looks stronger moving into the first quarter of (Primary Metals) Sales bookings are exceeding expectations. We are starting to see supply shortages in hot rolled steel due to the curtailment of imports. (Machinery) Business conditions are good, demand is generally increasing. (Miscellaneous Manufacturing) Conditions and outlook remain positive. Asset utilization remains high. (Petroleum & Coal Products) Steady demand from automotive. (Fabricated Metal Products) Quelle: Institute for Supply Management (ISM), USA PMI works with a corresponding level of ca. 43 %! CAEF,

17 USA Purchasing Manager Index (PMI) February 2017 Trump-Impact no fleeting star? Difference to other PMI because of the higher share of private consumption: Index above 43 points = expansion of the overall economy Comments from the panel: Business is improving (Chemical Products) Product demand continues to be solid. (Plastics & Rubber Products) Bookings are heavy early in the season. Expect robust first half of the year. (Primary Metals) Sales and business continue to be strong and increasing. (Machinery) Business holding steady in Q1. (Transportation Equipment) New Orders Quelle: Institute for Supply Management (ISM), USA PMI works with a corresponding level of ca. 43 %! CAEF,

60 Selected Countries Manufacturing Purchasing Manager Index (PMI) uary 2017 February 2017 Index 58 56 56,0 57,7 55,2 55,4 56,4 56,8 55,0 55,6 54,8 54,7 54 52 50 51,0 51,7 53,6 52,2 53,0 48,8 49,7

18 60 Selected Countries Manufacturing Purchasing Manager Index (PMI) uary 2017 February 2017 Index ,0 57,7 55,2 55,4 56,4 56,8 55,0 55,6 54,8 54, ,0 51,7 53,6 52,2 53,0 48,8 49,7 50,4 50,7 52, , , USA China Euro Area Germany France Italy Spain Turkey India Russia Brazil Index above 50 points = increasing economy (dominated by industrial production and service) Source: Markit, CAEF,

19 Feelings of Insecurity on the other Hand CAEF,

20 Business Climate Germany Industrial Supplier February 2017 Saldo der positiven und negativen 60 Meldungen 50 Uncertainties about the months to come Foundries Current Status Expectations Source: Ifo München, ArGeZ Arbeitsgemeinschaft Zulieferindustrie Saisonbereinigt, Saldo aus positiven und negativen Bewertungen, CAEF,

21 Main Customer Industries current status Bild: Siemens CAEF,

22 Industrial Production EU December 2016 Industrial Production including Automotive Industrial Production without Automotive Source: Eurostat CAEF,

23 Passenger Cars Sales (not! Production) 2016 Source: VDA USA: China: Europe: Russia: Brazil: Positive (Dynamic Peak reached?) VAT Supportprogram for small cars with max.1.6 l engines Recovery, but limited volume Chance for bottom out? Recession CAEF,

24 Passenger Cars Sales (not! Production) Feb 2017 Source: VDA USA: China: Europe: Russia: Brazil: in the red VAT Supportprogram reduced but active Recovery, but limited volume Chance for bottom out? Recession CAEF,

25 Market Limitations Passenger Cars Production in der EU = 15,1 Mill. Units Quelle: ACEA CAEF,

Global Passenger Cars Sales and Production Forecast 2017 Reduced Dynamic Sales Production Region 2017 2017 World + 2-3% + 2-3% USA ± 0% - 1% China + 5% + 5% W-Europe + 1% ± 0% New EU Countries + 6% ±

26 Global Passenger Cars Sales and Production Forecast 2017 Reduced Dynamic Sales Production Region World + 2-3% + 2-3% USA ± 0% - 1% China + 5% + 5% W-Europe + 1% ± 0% New EU Countries + 6% ± 0% Germany ± 0% - 2% France + 2% + 3% UK - 6% ± 0% Spain + 7% ± 0% Italy + 7% + 2% Russia + 5% + 5% Turkey - 6% + 2% Brazil ± 0% + 2% Japan + 1% ± 0% Source: VDA, February 2017 Picture: Fotolia CAEF,

Incoming Orders (IO) Vehicle Industry Germany uary 2017 150 140 External Orders and Domestic Demand under pressure 130 120 110 100 90 80 70 60 50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

27 Incoming Orders (IO) Vehicle Industry Germany uary External Orders and Domestic Demand under pressure change in % 2018 against period a year before, cumulative AE Inland AE Ausland AE Eurozone AE außerhalb der Eurozone Source: Stat. BA, Index 2010=100, saisonal adjusted, calculation BDG CAEF,

General Engineering Light and Shadow close together 2016

branches roundabout 20 identified as castings intensive

Agricultural Machinery Metallurgical Plants and Rolling

28 General Engineering Light and Shadow close together 2016 Stagnation, Forecast 2017: only plus 1 % picture: MS 40 branches roundabout 20 identified as castings intensive e.g. Machine Tool Industry Hydraulics and Pneumatics Agricultural Machinery Metallurgical Plants and Rolling Mills E.g. Incoming orders for Germany: CAEF,

29 Incoming Orders (IO) General Engineering Germany uary Incoming orders Germany =>1/3 of the EU market More than 4 years in a row nearly a flat line! Prod Maschinenbau AE Maschinenbau Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

Incoming Orders (IO) Tool Machine Industry Germany uary 2017 210 190 170 150 130 110 90 e.g. Italy: 70 national coordination of investment support programs "Agenzia Nazionale die Gestione dei Fondi Strutturali e FAS«e.

30 Incoming Orders (IO) Tool Machine Industry Germany uary e.g. Italy: 70 national coordination of investment support programs "Agenzia Nazionale die Gestione dei Fondi Strutturali e FAS«e.g. USA: Impulses from the new tax System? AE Inland AE Ausland AE Eurozone AE außerhalb der Eurozone Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

Incoming Orders Pumps and Compressors Germany uary 2017 150 140 Pumps and Compressors are suffering

120 110 100 90 80 70 60 50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 AE Pumpen und

31 Incoming Orders Pumps and Compressors Germany uary Pumps and Compressors are suffering because 130 of low investment level at the mining industry, base chemicals etc AE Pumpen und Kompressoren Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

32 Incoming Orders Engines/Turbines Germany uary AE Inland AE Ausland AE Eurozone AE außerhalb der Eurozone Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

Incoming Orders Textile Machinery Germany uary 2017 200 180 160 Orders from Southern Europe are very strong! Extra EU: Orders under pressure!

33 Incoming Orders Textile Machinery Germany uary Orders from Southern Europe are very strong! Extra EU: Orders under pressure! AE Inland AE Ausland AE Eurozone AE außerhalb der Eurozone Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

Incoming Orders Mining Equipment and Building Machinery Germany uary 2017 250 200 150 Building Machines with positve forecast (e.g. fork lift trucks are running well) but Mining Equipment and Exploration Components with different signals!

34 Incoming Orders Mining Equipment and Building Machinery Germany uary Building Machines with positve forecast (e.g. fork lift trucks are running well) but Mining Equipment and Exploration Components with different signals! It depends on the development of oil/gas and raw material prices! AE Bergbau-, Baustoff- und Baumaschinen Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

35 Building Machines Stock Exchange Development after the US Elections: Caterpillar plus 26%, Case plus 25%! Building Machines ready to be delivered to support the new wall in the USA Source: Börse Frankfurt, finanzen.net CAEF,

Incoming Order Valves and Fittings Germany uary 2017 130 Big Plant Industry (Power Plants, Chemical Plants) 125 = weak Building 120 Industry = strong 115 110 105 100 95 90 85 80

36 Incoming Order Valves and Fittings Germany uary Big Plant Industry (Power Plants, Chemical Plants) 125 = weak Building 120 Industry = strong AE Armaturen Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

Incoming Orders Plastics- and Rubber Machines Germany uary 2017 140 Engineering Sector with 120 positive Forecast 2017!

37 Incoming Orders Plastics- and Rubber Machines Germany uary Engineering Sector with 120 positive Forecast 2017! AE gesamt Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

38 Incoming Orders Plastics- and Rubber Machines Germany uary Orders from Southern Europe with strong positive trend! AE Inland AE Ausland AE Eurozone AE außerhalb der Eurozone Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

Incoming Orders Agriculture Machinery Germany uary 2017 170 160 150 140 130 Minus 45%! 120 110 100 90 80 Bottom out!

39 Incoming Orders Agriculture Machinery Germany uary Minus 45%! Bottom out! AE Inland AE Eurozone AE außerhalb der Eurozone Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

40 European Agricultural Machinery uary 2017 Business Climate still negative but with bottom out Quelle: CEMA CAEF,

41 European Agricultural Machinery February 2017 Business Climate has passed the zero line Quelle: CEMA CAEF,

42 European Agricultural Machinery March 2017 Business Climate with stable imporvemnet Quelle: CEMA CAEF,

43 Incoming Orders Food Processing and Packaging Germany uary Positive Impulses from the South of Europe but weak demand in Germany AE Inland AE Eurozone AE außerhalb der Eurozone Source: Stat. BA, Index 2010=100, calendar- and seasonally adjusted, calculation BDG CAEF,

44 Scenarios for world steelmaking capacity growth Overcapacities on a global level! Source: OECD CAEF,

45 Scenarios for world steelmaking capacity growth until 2018 Source: OECD CAEF,

46 Short Summary and Open Questions Bild: Fotolia, Nesterov Vasily; CAEF,

47 Open Questions and Uncertainties 2017 USA How quickly protectionism is working? Results of NAFTA renegotiations? Investmentboom with temporary positive impact for European plant manufacturer? Direct tax penalties or modification of the tax system (border adjustment tax)? China Real growth vs. official data Reduction of capacity or delaying tactic and start of new capacities? Intensive penetration of the European markets if the USA close the doors? EU/ Brexit und Co. Impact of Brexit = dumpening effect for investments or impulses driven by relocation processes? CAEF,

48 Current Perspectives for the Foundries Passenger cars: Dynamic peak passed in USA, saturation point reached in Europe? Weakness in Russia and South America, China with extended support program! General Engineering: 2017 chance for a stable black zero plus something after years of stagnation Positive: automation, robotics and rubber- and plastic machines, building machines wind turbines (volume ok, prices under pressure) Bottom out: mining, agrícultural, paper machines, foundry machines low capacity utilisation in the EU Further Impulses possible from the Building Industry (on the longterm!) Risks Neverending story: Overcapacities hard price competition structural change Trump -Impact and raising key interest rates in the USA will lead to further capital outflow from emerging markets Brexit declaration is dumpening investments CAEF,

49 Agenda 1. Welcome 2. Industry 4.0 Kurtz Eisenguss Smart foundry presentation by Matthias Hofmann, Kurtz Ersa 3. General economic situation - Statement by Heiko Lickfett Roundtable 4. Any other business 5. Date and venue of the next meeting CAEF,

50 Round Table CAEF,

51 Purpose of our meeting Information exchange Discussion of economic situation Raw materials Energy Technical issues Etc. Non-topics for our meetings: Prices Quotas Concrete customer relationships Any measures with indirect effect on the topics mentioned above Statistics have to respect these issues Almost no problem: Purchasing subjects Raw materials statistics Anonymous benchmark surveys Please take note of the CAEF antitrust compliance guideline CAEF,

52 Current market situation (General aspects) General statements on e.g. the following topics: Production volumes / Orders in stock Cancellation of orders Raw materials availability Status and development of energy price Planned investments Mid-term perspectives of production The statements may not be linked to a concrete product or customer O:\BDG\CAEF\Competition law slides.pptx CAEF,

Key Figures German Foundry Industry Production: 5.165 m. t thereof Fe: 3.916 m. t, NF: 1.249 m. t Turnover: ca. 12.559 bn.

53 Key Figures German Foundry Industry Production: m. t thereof Fe: m. t, NF: m. t Turnover: ca bn. * Bild: Soschinski Employees: Mitarbeiter * Fe: ; NF: Source: Stat BA, BDG, preliminary data * (Companies. >50 Empl.) CAEF,

German Foundry Industry 2016 by Material (Production) Ferrous complete 3.916 m. t -5.0 % thereof Iron castings 2.232 m. t, -5.8 % Ductile castings 1.510 m. t, -3.2 % Steel castings 174 200 t, -8.

54 German Foundry Industry 2016 by Material (Production) Ferrous complete m. t -5.0 % thereof Iron castings m. t, -5.8 % Ductile castings m. t, -3.2 % Steel castings t, -8.6 % Non-ferrous complete m. t +2.2 % thereof Aluminium t, +2.3 % Magnesium t, %, Copper t, -1.2 % Zinc t, +2.9 % Source: BDG, Stat. BA CAEF,

Foundry Industry Incoming Orders Germany Pace to recovery! 150 140 130 120 110 Vehicle 100 Industry 01-12.2016 3,4 % 90 Engineering Industry 80 01-12.2016-0,8 % 70 Foundry Industry 01-12.

55 Foundry Industry Incoming Orders Germany Pace to recovery! Vehicle 100 Industry ,4 % 90 Engineering Industry ,8 % 70 Foundry Industry ,6 % Vehicle Industry ,9 % Engineering Industry ,8 % Foundry Industry ,4 % Change in % against previous year Fahrzeugbau Maschinenbau Gießerei-Industrie Quelle: Stat. BA, Index 2010=100, kalender- und saisonbereinigt, Berechnungen BDG CAEF,

Incoming Orders Iron castings: Bottom out! Incoming Orders Steel castings: High volatility on low level! 160 150 140 Vehicle Industry 130 01-12.2016 3,4 % 120 Engineering Industry 01-12.

56 Incoming Orders Iron castings: Bottom out! Incoming Orders Steel castings: High volatility on low level! Vehicle Industry ,4 % 120 Engineering Industry ,8 % Iron castings ,5 % 90 Steel castings ,9 % Vehicle Industry ,9 % Engineering Industry ,8 % Iron castings ,8 % Steel castings ,0 % Change in % against previous year Quelle: Stat. BA, Index 2010=100, kalender- und saisonbereinigt, Berechnungen BDG CAEF,

Incoming Orders Non Ferrous castings: Peak reached? 150 140 130 120 110 Vehicle Industry 01-12.2016 100 3,4 % Engineering Industry 01-12.201690-0,8 % Heavy Metal castings 80 01-12.

57 Incoming Orders Non Ferrous castings: Peak reached? Vehicle Industry ,4 % Engineering Industry ,8 % Heavy Metal castings ,9 % 70 Lightmetal castings ,4 % Vehicle Industry ,9 % Engineering Industry ,8 % Heavy Metal castings ,1 % Lightmetal castings ,1 % Change in % against previous year Quelle: Stat. BA, Index 2010=100, kalender- und saisonbereinigt, Berechnungen BDG CAEF,

58 Agenda 1. Welcome 2. Industry 4.0 Kurtz Eisenguss Smart foundry presentation by Matthias Hofmann, Kurtz Ersa 3. General economic situation - Statement by Heiko Lickfett 4. Any other business 5. Date and venue of the next meeting CAEF,

59 Agenda 1. Welcome 2. Industry 4.0 Kurtz Eisenguss Smart foundry presentation by Matthias Hofmann, Kurtz Ersa 3. General economic situation - Statement by Heiko Lickfett 4. Any other business 5. Date and venue of the next meeting CAEF,

60 European Foundry Industry Expectations Source: Eisenwerk Brühl, Bernd Rosenbaum CAEF,

61 180 FISI European Foundry Industry Sentiment Indicator (ferrous) December Expectations under pressure since autumn 2015: Downward trend on the ferrous side Mai 08 Sep Mai 09 Sep Mai 10 Sep Mai 11 Sep Mai 12 Sep Mai 13 Sep Mai 14 Sep Mai 15 Sep Mai 16 Sep current situation expectations for six months Source CAEF, Index 2010 = 100, recalculation since 2014: country weight based on production 2014 (incl. Croatia) CAEF,

180 FISI European Foundry Industry Sentiment Indicator (non-ferrous) December 2016 170 160 150 140 130 Quite optimistic: Non-ferrous foundries are expecting continuation of the positive trends!

62 180 FISI European Foundry Industry Sentiment Indicator (non-ferrous) December Quite optimistic: Non-ferrous foundries are expecting continuation of the positive trends! Mai 08 Sep Mai 09 Sep Mai 10 Sep Mai 11 Sep Mai 12 Sep Mai 13 Sep Mai 14 Sep Mai 15 Sep Mai 16 Sep current situation expectations for six months Source CAEF, Index 2010 = 100, recalculation since 2014: country weight based on production 2014 (incl. Croatia) CAEF,

63 110 FISI European Foundry Industry Sentiment Indicator (steel castings) December Data collection has started December Current status weak and expectations extremely volatile! Mai 08 Sep Mai 09 Sep Mai 10 Sep Mai 11 Sep Mai 12 Sep Mai 13 Sep Mai 14 Sep Mai 15 Sep Mai 16 Sep current situation expectations for six months Source CAEF, Index Nov 2013 = 100, recalculation since 2014: country weight based on production 2014 (incl. Croatia) CAEF,

Economy and Key Indicators Background for Foundry Business

Economy and Key Indicators Background for Foundry Business Bild: Fotolia - 2 - CAEF, www.caef.eu 5,0 World Economic Outlook 2017-2018 revised up in October 2017(exception UK) Change in % yoy 4,0 3,0 Euro: