-------
Table 31
SALES STRUCTURE FOR MALLEABLE IRON FOUNDRIES--1976
Percent of Tonnage for Sale
100% 50-99% 1-49% Zero Total
Total number of foundries 32 11 9 4 56
With more than 50 employees 30 10 9 3 52
With less than 50 employees 21014
Percent of foundries with
less than 50 employees 6 9 0 25 7
Manufacturing Processes
Tables 32 and 33 show that most small malleable iron foundries depend
on sand casting, although they use a variety of coremaking processes. More
concentration is evident for all malleable iron foundries, however; while
they rely on sand casting, they also emphasize oil sand and shell core
techniques for coremaking. Additionally, Table 18 showed that cupola, air
furnace, and core!ess induction furnaces are all frequently used by
malleable iron foundries. Moreover, because malleable castings are
generally relatively small and weigh less than 200 pounds (which enables
them to cool reasonably quickly to the white-iron stage), they tend to be
appropriate for high-speed automatic mold-making processes. Small malleable
foundries have a melt rate of 8 to 10 tons per hour, and they typically
operate one shift on a 5-day basis about 48 weeks a year.
11-42
-------
Table 32
MALLEABLE IRON COREMAKING TECHNIQUES BY FREQUENCY OF USE AND SIZE - 1976
Casting Method
Number of
Foundries Using
this Method
Sand casting
Die casting
Permanent mold
Shell mold
Centrifugal
Plaster mold
Investment
CO2 mold
Other
No -bake
55
0
2
7
1
0
1
2
1
4
Percent of Total
Malleable
Iron Foundries
Using this Method*
98.2
0
3.6
12.5
2.8
0
1.8
3.6
1.8
7.1
Percent of Malleable
Iron Foundries
With Under 50 Employees
Using this Method*
75.0
0
25.0
0
0
0
25.0
0
25.0
*Because foundries often use more than one casting method, the percentages do not
add to 100%.
Source: Penton Publications
11-43
-------
Table 33
MALLEABLE IRON COREMAKING TECHNIQUES BY FREQUENCY OF USE AND SIZE - 1976
Coremaki ng
Technique
Number of
Foundries Using
this Technique
Percent of Total
Malleable Iron
Foundries Using
this Technique*
Percent of Malleable
Iron Foundries with
Under 50 Employees
Using this Technique*
Oil sand
CO2 process
Shell cores
Hot box process
Cold box process
No-bake process
Air setting cores
Other self-curing
Other
47
17
50
19
6
5
4
1
1
84.0
30.4
89.3
34.0
10.8
9.0
7.2
1.8
1.8
0
25.0
25.0
0
0
25.0
0
0
25.0
*Because foundries often use more than one corernaking technique, the percentages
do not add to 100%.
Source: Penton Publications
11-44
-------
Raw Material Usage
Scrap, coke, silica, sand, phenolic resin, and carbon additives
represent the most important raw materials used by malleable foundries.
Prices for most of those raw materials have trended upward in recent years.
Markets Served
As indicated previously, the malleable iron segment has depended
primarily on the automotive market for many years, and business generated
from other markets has been of rather minor importance. The situation
confronting malleable iron foundries is that they apparently have been
unable to cultivate new market demand, largely because ductile iron castings
have enjoyed increasing market acceptance. Furthermore, malleable foundries
did not often choose to produce ductile iron as a second product line. In
contrast, many gray iron foundries adopted ductile iron as a companion
product line, a development that has also taken market share away from
malleable foundries. Therefore, ductile iron as a casting type has propered
far more than malleable iron in competing for markets that could have used
castings of either metal type. As a consequence, some malleable iron
foundries have closed because efforts to compete with ductile iron through
price competition have adversely affected profitability. In the future, as
competition continues to intensify, and as energy costs rise, malleable
iron, which is comparatively energy intensive, may experience further
difficulty in maintaining market share.
Pricing Mechanism
Price data were not accessed for malleable iron castings. However, it
is believed that the mechanisms for establishing selling prices are similar
to those described previously for gray and ductile iron.
11-45
-------
Balance of Trade
Foreign trade has apparently not been of concern to malleable iron
foundries. Import tonnage has been extremely small in recent years, and
exports have not been of much more significance.
Financial Characteristics
Table 34 shows financial and operating data for the typical foundry in
each malleable iron segment for which profiles were developed. Ranges v/ere
not determined for the middle-ranking 5Q% of the foundries in the segments,
however.
The comparatively limited number of malleable foundries with less than
50 employees complicated development of financial profiles for typical small
foundries. The available data suggest, however, that malleable foundries
employing fewer than 10 workers earn very low net profit margins and net
worth returns, 2.5» and 11.5%, respectively. Profitability of foundries in
the 50 to 249 and 250 or more employment-size segments was comparatively
more favorable. Net profit margins v/ere 3.6& and 4.7%, respectively, and
the returns on net worth were about 15%.
Net plant, expressed as a percentage of annual sales, was lower for the
smaller foundries than for the larger ones, reflecting older, more
depreciated facilities at the small foundries. Long-term and short-tern
debt was relatively lower for the foundries in the 50 to 249 segment than
for those in the 250 or more segment (Q% of annual sales compared with
10%). Additionally, net worth as a percentage of annual sales was lower in
the 50 to 249 segment than in the 250 or more segment. This is reflected in
approximately the same debt-to-equity ratio (1 to 3) for both larger
segments.
11-46
-------
TABLE 34
FINANCIAL PROFILE FOR JOBBER MALLEABLE SEGMENTS *
Eaoloymenc-Size Segments
total number of foundries
Ions per foundry per 7ear
Total tonnage per year (thousands)
Typical foundry
Number of employees
Sales per employee (dollars)
Dollar sales
Net income
Net plant
Total debt
Net worth
Net profit margin (percent)
Net worth return (percent)
Net plant as percent of sales
Total debt as percent of sales
Net worth as percent of sales
Ranges
Net income (dollars)
Net plant
Total debt
Net worth
Net profit margin (percent)
Net worth return (percent)
Net plant as percent of sales
Total debt as percent of sales
Net worth as percent of sales
Under 10
3
180
1
6
44
264
7
34
16
61
2.5
11.5
13
6
23
a. a.
n.a.
n.a.
n.a.
n.a.
n.a.
a. a.
n.a.
n.a.
10-249
1
-
**
«•
•»
-
-
-
-
n.a.
a. a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
a. a.
n.a.
n.a.
50-249
26
4,300
112
135
35
4,725
170
709
378
1,087
3.6
15.6
15
3
23
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
a. a.
n.a.
n.a.
250 Plus
26
10,200
263
320
43
13,760
647
2,390
1,376
4,403
4.7
14.7
21
10
32
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
*3ollar and total tonnage estimates for 1977 in thousands.
11-47
-------
Growth Rate Expectations
Malleable iron is expected to continue to be a one-market product,
mostly dependent on automotive production. Also, some further substitution
of ductile for malleable iron was anticipated. Optimistically, those
expectations translated into a forecast 2% average annual increase through
1980, and a 1% average annual increase from 1980 through 1985. To some
extent, those minimal growth anticipations depended on success in developing
demand for castings to be used as differential cases and brake spiders in
heavy-duty trucks and as air couplings and bearing endcaps in railroad
applications. Production has actually trended downward since 1977, however,
reflecting the demand trends of the important automotive market. Future
growth, therefore, continues to be tied closely to developments for its key
market.
Steel Foundries
Capsule Description
Steel castings rank third in tonnage among cast metals. More than 95%
of cast steel output is carbon and low alloy steel. The remaining output is
highly alloyed. The major consumers of steel castings are railroad
equipment and heavy capital goods producers. Because of high melting
temperatures and shrinkage problems, steel is more difficult to cast and
more subject to defects than other ferrous metals. Conversely, it is
readily weldable, strong, ductile, and highly resistant to impact.
Consequently, industrial designers prefer cast steel for many applications.
11-48
-------
Production History
Figure 4 shows the historical output for steel castings. Consumption
has fluctuated widely over the past 20 years, with twin peaks of more than 2
million tons being reached in 1966 and 1974. In general, steel castings
demand is based on consumption requirements of the railroad and capital
goods industries. When both railroad car manufacturer and capital goods
purchases rise, so does steel castings output. Similarly, if both
activities fall simultaneously, an exaggerated decline in steel castings
shipments results. When those two areas oppose one another, a rather flat
steel castings production pattern occurs. In 1977, 1.7 million tons of
steel castings were shipped, an amount equivalent to 9% of total foundry
industry shipments.
11-49
-------
Q
o
e
at
§ §
> — S1N1 KM IMS
11-50
-------
Reference back to Table 14 shows that steel is the major metal cast in
over 75% of the foundries that cast it. Steel foundries have had major
operational and financial difficulties during the last decade. Because they
serve capital-intensive industries that are highly cyclical, steel foundries
have experienced periods of extremely tight demand, as well as sizable
over-capacity. This cyclicality, compounded by occasional periods of
over-capacity, has caused the steel castings industry to be very cautious.
As a result, additions to capacity and modernization of older facilities
took place at a very slow rate through 1977. In addition, steel casting
operations are not highly automated, because they are labor-intensive and
not usually involved in high-volume production runs. The net result has
been a generally stagnant industry.
Operational Structure
The cyclical markets served and the widespread reliance on older
facilities that are labor-intensive and not highly automated delineates the
operational structure of the steel castings industry. The number of steel
foundries declined steadily for decades, and there were only 414 plants that
cast steel as their major metal in 1976. Additionally, another 131
foundries also cast steel as a secondary metal in 1976. Table 35 shows the
size distribution of the 414 foundries that emphasized steel as their cast
metal.
11-51
-------
Table 35
SIZE DISTRIBUTION OF STEEL FOUNDRIES - 1976
Number of Employees Number of Foundries Percent Distribution
Under 10
10-49
50-249
Over 250
27
122
185
80
7
29
45
19
Total
414
100
Steel foundries are also concentrated geographically. As can be seer.
by referring back to Table 11, approximately one-half of all foundries, as
well as the smaller units employing less than 50 workers, were situated in
either the Great Lakes or Mid-Atlantic regions. Moreover, the jobbing
orientation of steel foundries, particularly smaller-sized operations with
less than 50 workers, was pronounced, as can be seen in Table 36.
Table 36
SALES STRUCTURE FOR STEEL FOUNDRIES - 1976
Total number of foundries
With more than 50 employees
With less than 50 employees
Percent of foundries with less
than 50 employees
Percent of Tonnage for Sale
100$ 50-99% 1-49% Zero Total
276
169
107
65
50
15
36
19
17
37
27
10
414
265
149
38
23
47
27
36
11-52
-------
The steel foundry industry has an apparent trend toward more
independent and fewer captive foundries. The periodic wide fluctuations in
steel foundries output has been traditionally reflected in low steel
castings prices; hence, many companies formerly operating their own captive
steel foundries have invested in other aspects of their businesses, and have
phased out their captive steel activities, because they could buy steel
castings from the jobber foundries on a more cost-effective basis. That
trend has contributed to the decline in the number and relative importance
of captive foundries.
Manufacturing Processes
Sand casting is the most frequent casting method used by all steel
foundries; however, small steel foundries make equal use of two methods:
investment casting and sand casting (see Table 37). In contrast, coremaking
techniques are distributed between oil sand, shell cores, and the CO-
process for steel foundries, regardless of size (see Table 38). The most
frequently used furnace for small steel foundries is core!ess induction,
followed by the arc furnace. Those two furnace types are also of the most
importance to steel foundries considered collectively, but the ranking order
was reversed from that noted for small foundries (refer back to Table 18).
11-53
-------
Table 37
STEEL CASTING METHODS BY FREQUENCY OF USE AND SIZE - 1976
Casting Method
Number of
Foundries Using
this Method
Percent of Total
Steel Foundries
Using this Method*
Percent of Small
Steel Foundries
With Under 50 Employees
Using this Method*
270
8
23
102
34
8
115
83
10
125
65.2
1.9
5.6
24.6
8.2
1.9
27.8
20.0
2.4
30.2
42.3
3.4
6.7
19.5
10.1
2.7
42.3
16.8
4.0
17.4
*Because foundries often use more than one casting method, the percentages do not
add to 1001.
Source: Penton Publications
11-54
-------
Table 38
STEEL COREMAKING TECHNIQUES BY FREQUENCY OF USE AND SIZE - 1976
Coremaking
Technique
Oil sand
CO2 process
Shell cores
Hot box process
Cold box process
No-bake process
Air setting cores
Other self-curing
Other
Number of
Foundries Using
this Technique
219
166
171
16
17
160
90
32
77
Percent of Total
Steel
Foundries Using
this Technique*
52.9
40.1
41.3
3.9
4.1
38,7
21.8
7.8
18.6
Percent of Steel
Foundries with
Under 50 Employees
Using this Technique*
30.2
27.5
24.8
2.0
2.7
22.1
13.4
8.1
28.9
*Because foundries often use more than one coremaking technique, the percentages
do not add to 100%.
Source: Penton Publications
11-55
-------
Raw Material Usage
Virgin scrap and other steel scrap represent particularly important raw
materials used by steel foundries. No special problems were determined
about the availability, quality, or price of those or other raw materials.
Major Markets Served
The major markets for small steel foundries include the automotive,
mining, cement, oil and petrochemical, computer, and marine industries.
Those markets, it is to be noted, differ from the capital goods markets,
such as the railroad, construction, mining machinery, material-handling
equipment, and metal-working equipment industries that, historically, have
been the leading tonnage consumers of steel castings.
Most small steel foundries are located in the same geographic region as
their customers, with about 75% of the customers being located within 100
miles of the foundry. Although small foundries may have between 30 and 150
customers, the top five accounts usually provide about 75" of total sales,
and the largest single customer often accounts for one-third of total volume.
Pricing Mechanism
Sales price per ton of steel castings range from $3,500 to $6,000 for
"a standard job," according to published comments by managers of small
foundries. Prices are generally determined by using standard job cost
accounting methods. Of significance to pricing considerations is an
indication that small steel foundries believe that a 1% increase in
operating costs would not affect volume at all, a 5% increase would have
only a limited volume effect, but that a 10% increase would meet significant
market resistance.
11-56
-------
Balance of Trade
Foundry managements indicated that foreign imports have had only a
minor effect on the steel foundry industry. In genera?, the resultant
decreases in domestic shipments attributed to imports were indicated as
ranging downward from 2%. Much more concern was expressed about the
competition being provided by ductile iron, forging, and weldments for some
types of steel foundry products. Additionally, redesign activities aimed at
reducing cost by using less steel was cited as a prevalent trend that was
causing concern to small foundries.
Financial Characteristics
Table 39 shows the financial and operating data for the typical steel
foundry in the employment-size segments, and it also shows the ranges for
the middle-ranking 50% of the foundries in the segments.
The difference in net profit margins between the foundry segments with
10 to 49 employees and 50 to 249 employees is extremely wide, 2.5% compared
with 5.0%, respectively. Similarly, the return on net worth of the smaller
foundries was only half that for the larger foundries, 9% versus 18%. In
passing, note that those ratios refer only to foundries in the 10 to 49 and
50 to 249 employment-size segments. That constraint reflects the fact that
meaningful financial data could not be obtained for more than a few
foundries in the segments with less than 10, or with more than 250 employees.
Met plant, expressed as a percentage of annual sales, amounted to 17%
for the foundries in the 10 to 49 employment-size segment. Total debt and
net worth, similarly expressed, were 8% and 28%, respectively. Moreover,
corresponding ratios for the 50 to 249 employees segment were at practically
identical levels of 18%, 9%, and 28%, respectively.
The Ibw profit margins for the foundries in the 10 to 49
employment-size segment are further accentuated by the fact that one-quarter
of those foundries had net profit margins below 1%, and that three-quarters
of them had net profit margins below 3%. The relatively low profitability
of the foundries in the 10 to 49 employees segment is further indicated by
the finding that returns on net worth were below 4% for one-quarter of them.
11-57
-------
TABLE 39
FINANCIAL PROFILE FOR JOBBER STEEL SEGMENTS*
Total number of foundries
Tons per foundry per year
Total tonnage per year
(thousands)
Typical foundry
Uumber of employees
Sales per employee
(dollars)
Dollar sales
Net income
Net plant
Total debt
Net worth
Net profit margin
(percent)
Net worth return
(percent)
Net plant as percent
of sales
Total debt as percent
of sales
Net worth as percent
of sales
Ranges
Net income (dollars)
Net plant
Total debt
Net worth
Net profit margin
(percent)
Net worth return
(percent)
Net plant as percent
of sales
Total debt as percent
of sales
Net worth as percent
of sales
Under 10
27
200
5
6
56
336
n.a.
81
57
71
n.a.
n.a.
24
17
21
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10-49
122
900
110
30
45
1,350
34
230
108
378
2.5
9.0
17
8
28
14-41
149-500
95-203
189-392
1-3
4-21
11-37
7-15
14-29
50-249
185
4,000
740
135
45
6,075
304
1,094
5*7
1,701
5.0
17.9
18
9
28
243-436
547-1,519
0-547
1,215-2,430
4-8
12-24
9-25
0-9
20-40
250 Plus
80
9,250
740
320
44
14,080
n.a.
3,520
1,408
4,787
n.a.
n.a.
25
10
34
n.a.
2, 957-4 ,.646
0-1,549
4,224-6,195
n.a.
a. a.
21-33
0-11
30-44
^Dollars and total tonnage estimates for 1977 in thousands.
11-58
-------
Growth Rate Expectations
Steel casting demand is expected to continue to be primarily dependent
on the cyclical railroad and capital goods markets. Based upon an
expectation that long-term growth of those cyclical activities will be
relatively slow, steel castings production would grow at similarly low
rates. Consequently, through 1980, steel castings growth is forecast at a
3% annual rate, to be followed by an even smaller 1.5% compound annual
growth rate through 1985.
Aluminum Foundries
Capsu 1 e De scri_p_t_j_gn
Tonnage of aluminum cast is the largest for any nonferrous metal, and
more foundries cast aluminum than any other ferrous or nonferrous metal.
Because of aluminum's light weight, aluminum castings are widely used in
transportation markets, such as motor vehicles and aerospace. The metal
readily lends itself to economical and efficient high-speed casting
processes, and that capability has enabled aluminum to capture some
traditional ferrous casting markets. Thermal and electric conductivity
properties of aluminum are good, and the metal is also easily cast and
machinable.
Production History
Table 40 shows the historical trend of shipments of aluminum castings,
in total and fay method of casting, since 1956; the data in the table are in
millions of pounds. When converted to a tonnage basis, total shipments of
slightly more than 1.0 million tons in 1977 almost duplicated the record
volume shipped in 1973, and those shipments were equivalent to about 5% of
foundry industry production. Tonnage output has expanded at a 6% compound
average annual rate over the last 15 years, with the growth rate for
castings produced by die casting amounting to 8%. Die casting shipments now
account for 65& of total aluminum castings production; the remainder is
distributed between permanent mold casting (20%) and sand casting (15%).
11-59
-------
TABLE 40
ALDMESDM CAS7IHG OUTPUT. 1956-1977*
Year
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
Sand
171,781
143,991
125,487
141,987
129,304
124,623
207,125
202,387
230,324
268,651
291,773
250,619
220,419
220,342
199,625
192,369
229,641
259,650
267,323
197,331
223,020
226,746
Permanent
Mold
245,421
232,326
224,092
274,355
258,042
261,866
327,940
332,687
324,300
330,828
404,701
382,563
439,797
434,045
350,097
343,542
419,776
440,199
377,087 :
237,395
376,204
439,267
Die
376,230
373,586
290,275
368,101
385,617
375,396
620,967
665,305
687,279
803,517
926,025
976,949
383,226
1,027,596
941.928
1.026,224
1,192.171
1,304,568
1,088,457
366,289
1,199,349
1,304,533
Total1"
794,581
751,313
641,700
786,399
774,548
761,321
1,165,790
1,207,184
1,253,663
1,408,959
1,639,947
1,534,713
1,568,290
1,698,081
1,306,474
1.577,153
1,355,672
2,026,053
1,739,417
1,375,452
1.343,603
2,008,953
*Saip«ents in thousand* of pound*.
f Total includes null amounts of other ess tings in
addition to land, penaanent acid, and di« eastings.
Source: Bureau of Cansus; SSI International.
11-60
-------
Operational Structure
The markets supplied with aluminum castings, and the characteristics
associated with production of aluminum castings, shapes the operational
structure of the aluminum foundry industry. Altogether, 2,385 foundries
were making aluminum castings in 1976, and 1,386 of those foundries were
casting aluminum as their major metal (refer back to Table 14). The
predominance of small foundries among the 1,386 plants specializing in
aluminum castings is illustrated in Table 41 ; 80% of those foundries have
less than 50 employees.
Table 41
SIZE DISTRIBUTION OF ALUMINUM FOUNDRIES - 1976
Number of Employees Number of Foundries Percent Distribution
Under 10 535 39
10-49 568 41
50-249 237 17
Over 250 46 3
Total 1,386 100
Aluminum foundries are widely dispersed throughout the United States.
About one-third of the 1,386 foundries were sited in the Great Lakes region
and another 17% of the plants were located in the Pacific region.
Additionally, there are three other regions with more than 100 aluminum
foundries, as can be seen by referring back to Table 11.
11-61
-------
Tonnage shipments of aluminum castings were distributed about equally
between jobber and captive sales. Most aluminum foundries, however, are
heavily commercial and jobbing in orientation, as can be seen in Table 42,
which details the sales structure for the 1,386 aluminum foundries in terms
of tonnage proportions sold on a jobber basis.
Table 42
SALES STRUCTURE FOR ALUMINUM FOUNDRIES - 1976
Percent of Tonnage for Sale
100% 50-99% 1-49% Zero Total
Total number of foundries 953 117 82 117 1,386
Percent distribution of foundries 68 13 6 13 100
Manufacturing Processes
Although the die casting process dominates the tonnage output of
aluminum castings (refer back to Table 40), considerable use is also made of
two other casting methods: sand casting and permanent mold. In fact, sand
casting represents by far the most frequently used casting method, as can be
seen in Table 43. No conflict exists between those two data computations;
rather, the conclusion is that, although many aluminum foundries produce
small tonnage through sand casting, a lesser number of larger foundries
produce much larger tonnage by die casting. In the coremaking area,
aluminum foundries use the oil sand, COg process, and shell core
techniques with similar frequency, as is shown in Table 44. As to furnace
usage, Table 18 showed that aluminum foundries depend heavily on crucibles,
with that furnace type representing 63% of all furnaces in use. Foundries
usually operate one shift on a 5-day, 50-week-per-year basis. In addition,
they tend to have a 5-ton-per-hour melt, and they use a charge ranging in
weight between 75 and 800 pounds.
11-62
-------
Table 43
ALUMINUM CASTING METHODS BY FREQUENCY OF USE - 1976
Casting Method
Number of Foundries
Using this Method*
Percent of Total
Aluminum Foundries
Using this Method*
Sand casti ng
Die casting
Permanent mold
Shell mold
Centrifugal
PI aster mold
Investment
£02 mold
Other
No bake
896
357
383
110
34
119
48
257
20
126
64.6
25.8
27.6
7.9
2.5
8.6
3.5
18.5
1.4
9.1
*Percents do not add to 100% because foundries use more
than one method.
Source: Penton Publications.
II-63
-------
Table 44
ALUMINUM COREMAKING TECHNIQUES BY FREQUENCY OF USE, 1976
Co remaking
Technique
Oil sand
C02 process
Shell cores
Hot box process
Cold box process
No-bake process
Air setting cores
Other self curing
Other
Number of Foundries
Using this Technique
492
537
539
56
40
144
118
34
295
Percent of Total
Aluminum Foundries
Using this Technique*
35.5
38.8
38.9
4.1
2-9
10.4
8.6
2.5
21.3
*Percents do not add to 100% because foundries use more than
one technique.
Source: Penton Publications.
Raw Material Usage
Virgin ingot, sand, and scrap (both purchased and internally-
generated), represent the primary raw material s. Raw material costs,
especially energy costs, have been increasing in recent years.
11-64
-------
Major Markets Served
The motor vehicle market consumes three-fourths of all aluminum
castings. Other major markets are appliances, engines, and
motors/generators. As a consequence, aluminum castings output fluctuates
closely with automotive production; however, the growth of aluminum castings
has out-performed that of motor vehicles because of substitutions for
ferrous materials. Castings are used extensively in automobiles, and it is
estimated that more than half of the 100 pounds of aluminum being used in
the average 1977 car model consisted of castings.
Future growth of aluminum castings usage by the automotive industry
will be dependent on the continuation of the following trends:
. The broad acceptance of aluminum intake manifolds. They will be
produced with die casting and electron beam welding techniques.
. More aluminum cylinder heads.
. Aluminum transmissions and transaxials because of the increasing
demand for small cars with front wheel drive.
Small aluminum foundries usually produce products for the
transportation, musical instrument, airconditioning, industrial cleaning,
aerospace, and defense industries.
Between 75& and 9SH, of smaller aluminum foundries indicate that most
customers were located within 100 miles of the foundry. The customer base
ranged from as few as six to as many as 300. The largest customer usually
accounts for about one-third of total sales, and the top five generally
account for about 70£ total volume.
11-65
-------
Pricing Mechanism
Aluminum foundries tend to use a standard costing system that includes
the cost of the metal, molds, labor, overhead, and tooling.
Balance of Trade
Small aluminum foundry operators indicated that they had not been
particularly affected by imports. Typically, exported tonnages amount to
less than 1* of foundry sales. Germany has represented an export market for
aluminum castings.
Financial Characteristics
Selected financial and operating data for the typical aluminum
foundries in each employment-size segment, and the ranges for the
middle-ranking 50% of the foundries in each segment, are presented in Table
45.
11-66
-------
TABLE 45
FINANCIAL PROFILE FOR JOBBER ALUMINUM SEGMENTS*
Employment-Size Segments
Total number of foundries
Tons per foundry per year
Total tonnage per year
(thousands)
Typical foundry
Number of employees
Sales per employee
(dollars)
Dollar sales
Net income
Net plant
Total debt
Het worth
Net profit margin
(percent)
Nee worth recurs
(percent)
Net plant as percent
of sales
Total debt as percent
of sales
Net worth as percent
of sales
Ranges
Net income (dollars)
Net plant
Total debt
Net worth
Net profit margin
(percent)
Net worth return
(percent)
Net plant as percent
of sales
Total debt as percent
of sales
Net worth as perc-at
of sales
Under 10
535
50
27
6
42
252
18
33
15
66
7.0
27.3
13
6
26
10-60
13-53
0-L5
50-129
4-24
15-35
5-21
0-6
20-51
10-49
563
250
142
30
38
1,140
43
137
30
274
3.3
15.7
12
7
24
46-63
103-194
0-80
205-490
4-6
9-18
9-17
'0-7
18-43
50-249
137
1,530
356
135
43
5,805
319
929
581
1,567
5.5
20.4
16
10
27
(53)-343
343-929
0-1,683
1,161-2,488
(D-6
(4)-19
6-16
0-29
20-42
250 Plus
46
3,500
161
320
45
14,400
475
2,448
1,584
3,388
3',3
12.2
17
U
27
0-576
1,440-2,498
0-1,584
2,736-4,752
0-4
0-12
10-17
0-11
19-33
Dollar and total tonnage estimates for 1977 in thousands.
11-67
-------
Net profit margins for typical foundries in the four employment-size
segments differ substantially. The range was from 7.0% for the foundry
segments with under 10 employees to 3.3% for the segment with 250 or more
employees. However, it cannot be generalized that all smaller foundries
have higher profit margins than all larger ones. For example, the typical
foundry in the 10 to 49 employee segment had a net profit margin of 3.8%,
whereas the ratio was 5.5% for the typical plant in the 50 to 249 employee
segment. Similarly, returns on net worth differed widely from segment to
segment, with a high of 27% for the segment with under 10 employees and as
low as 12% for the foundries with 250 or more employees.
Net plant, expressed as a percentage of annual sales, was somewhat
lower for the segment with less than 50 employees than for those with 50 or
more workers (about 12% compared with 16%). Likely reasons for this
difference are the lower dependence on mechanized equipment and the older,
more depreciated facilities at the small foundries.
Long-term and short-term debt, expressed as a percentage of annual
sales, is smaller for the typical foundry with less than 50 employees than
it is for the typical larger foundries (about 7% compared with 11%). This
difference reflects difficulties that smaller foundries have in obtaining
external capital at reasonable cost. Net worth, as related to annual sales,
is slightly lower for the typical foundry with less than 50 employees than
for the typical larger foundry (about 25% compared with 27%).
The ranges of net profit margins and returns on net worth for the four
employment-size segments indicate that those with less than 50 employees
have higher profitability than the larger ones. For example, one-quarter of
the smaller foundries had net profit margins below 4%, whereas one-quarter
of the larger foundries had no profits at all. Additionally, some smaller
foundries have low returns on net worth; one-quarter of the foundries in the
10 to 49 segment had net worth returns below 9%.
11-68
-------
One-quarter of the foundries in the two segments in the below-50
category had net worth amounting to less than 19% of annual sales, and only
one-quarter had debt amounting to more than 6% of annual sales. This
indicates a relatively strong balance sheet for some small aluminum
foundries.
Growth Rate Expectations
Industry observers expected aluminum casting growth of about 5% per
year through 1985. It was anticipated that energy and weight-saving design
goals would promote future material substitutions, particularly from ferrous
castings to aluminum castings (except where mechanical and physical
properties prohibit its use). Additionally, it seemed likely that market
dependence would gradually shift away from automotive to other markets as
new applications are developed. However, demand growth through 1980 did not
meet expectations, reflecting lower than anticipated demand for castings by
the domestic automobile industry.
Copper-Base Foundries
Capsule Description
Copper-base castings, including brass and bronze, are the third ranking
nonferrous cast metal in terms of tonnage and shipments value. They have
long been tied to water-handling and plumbing markets. Copper alloys are
prized for their workability, corrosion resistance, and conductivity of heat
and electricity. Copper castings production traditionally fluctuates with
domestic housing activity. However, plastics, aluminum, and steel
substitutes have made inroads into copper castings markets, partly because
of highly volatile copper prices. Most foundries making copper-base
castings are small, but the bulk of total production is accounted for by a
relatively limited number of larger plants, some of which are captives.
11-69
-------
Production History
Table 46 shows the marked decline in the pounds of copper-base castings
shipped over the last 20 years. A severe production drop occurred from 1973
through 1975, reflecting the general economic recession and a drastic
depression in housing construction. Although moderate production gains have
been recorded subsequently, the 1977 output of 295,000 tons was not only 40%
below the historical peak reached in 1966, but it also accounted for less
than 2% of total foundry shipments.
Operational Structure
The reliance of copper-base foundries on water-handling and plumbing
markets has shaped the operational structure of the industry. Altogether,
1,556 foundries were producing copper-base castings in 1976; however, less
than half of those foundries (749 in number) specialized in those metal type
castings (refer back to Table 14). Of the 749 copper-base foundries, nearly
85% employ fewer than 50 workers, as Table 47 shows.
About one-half of all copper-base foundries were located either in the
Great Lakes or Mid-Atlantic regions. The other copper-base foundries were
widely distributed throughout the United States. Larger foundries, some of
which are captives owned by valve and plumbing fixture manufacturers, pour
about 60% of total production of copper-base castings. However, more than
three-quarters of all copper-base foundries were relatively small, and they
sell most of their output as jobbers, as can be seen in Table 48.
11-70
-------
TABLE 46
COPPES-BASE CASTdG OUTPUT, 1956-1977*
Tear
1956
1957
1953
1959
1960
1961
1962
1963
1964
1965
1966
1967
1963
1969
1970
1971
1972
1973
1974
1975
1976
1977
Sand Meld
866,545
789,014
697,360
765,246
667,375
639,031
721,360
767,547
798,656
793,414
356,431
817,793
827,354
710,786
619*568
596,664
653,328
666,757
565,053
476,499
491,397
524,247
Permanent Mold
57,522
44,789
31,354
52,456
45,391
39,246
39,979
40,144
42,251
44,313
45,996
36,675
27,125
56,399
49,200
45,872
39,186
32,715
24,327
17.833
16,367
19,859
Total1"
966,306
874,627
762,434
871,032
759,658
730,094
805,979
852,371
391,079
889,143
1,0*06,254
966,447
969,111
352,633
750,701
704,928
762, 723
779,952
665,066
514,157
543,557
579,531
*Shipments in. thousands of pounds.
*Tocal ineludts small amounts of other eastings.
Sourc*: Bureau of Census
11-71
-------
Table 47
SIZE DISTRIBUTION OF COPPER-BASE FOUNDRIES - 1976
Number of Employees Number of Foundries Percent Distribution
Under 10
10-49
50-249
250 or More
257
373
112
7
34
50
15
1
Total
749
100
Table 48
SALES STRUCTURE FOR COPPER-BASE FOUNDRIES - 1976
Percent of Tonnage for Sale
100$ 50-99% 1-49% Zero Total
Total number of foundries 480 86
Percent distribution of foundries 64 12
61
8
122
16
749
100
11-72
-------
The copper-base casting industry not only competes externally with
other metals, but it also has intense internal competition. Business has
been lost both to forgings and to castings made of other metals, including
aluminum, iron, and steel. Also, development of new prototype copper-base
castings that gain favorable market reception are sometimes given by
customers to die casters to make permanent molds for long production runs.
Additionally, more alloys are being used to reduce the high cost of
copper-base castings, and size reductions initiated through engineering
analyses are frequent occurrences that adversely affect output.
Manufacturing Processes
Table 49 indicates that sand casting is the dominant casting method
used by copper-base foundries. Table 50 shows that the oil sand, C02
process, and shell core techniques are each widely used by copper-base
foundries for coremaking. Table 14 showed the crucible to be the primary
furnace choice of copper-base foundries, with that furnace type accounting
for about two-thirds of all furnaces used.
11-73
-------
Table 49
COPPER-BASE CASTING METHODS BY FREQUENCY OF USE - 1976
Casting Method
Number of Foundries
Using this Method*
Percent of Total
Copper-Base Foundries
Using this Method*
Sand casting
Die casting
Permanent mol d
Shell mold
Centrifugal
Plaster mold
Investment
CO2 mold
Other
No-bake
554
27
97
107
82
34
79
166
20
108
7.3
3.6
3.0
4.3
0.9
4.5
0.5
2.2
2.7
4.4
*Because foundries often use more than one technique,
percents do not add to 100%.
Source: Penton Publications.
11-74
-------
Table 50
COPPER-BASE COREMAKING TECHNIQUES BY FREQUENCY OF USE - 1976
Coremaki ng
Technique
Oil sand
CQ2 process
Shell cores
Hot box process
Cold box process
No-bake process
Air setting cores
Other self curing
Other
Number of Foundries
Using this Technique
418
334
357
61
26
110
85
28
64
Percent of Total
Copper-Base Foundries
Using this Technique*
55.8
44.6
47.7
8.2
3.5
14.7
11.4
3.8
8.6
*Because foundries often use more than one technique,
percents do not add to 100%.
Source: Penton Publications.
11-75
-------
Raw Material Usage
Virgin ingot, sand, and scrap (both purchased and internally-
generated), represent the primary raw materials. Raw material costs,
especially energy costs, have been increasing in recent years.
Raw Material Usage
Foundry managers indicate that virgin copper ingot is the raw material
of primary consequence to copper-base foundries. Scrap, both purchased and
internally generated, represented another important raw material.
Major Markets Served^
In order of importance, the major markets served by copper-based
foundries are as follows: valves and fittings, plumbing fixtures, and
pumps. Additional end markets that small copper-base foundries supply
include electrical switching and transformer equipment, heavy construction
and air conditioning equipment, power tools, x-ray tubes, and musical
instruments.
As for foundries making the other types of metals, copper-base
foundries usually operate within a small geographical area. About 75% of
the customers are usually located within 100 miles of a foundry, and the
customer base ranges from as few as 25 to as many as 300. The largest
single customer often represents up to 40% of total sales, when the customer
base is small, and about 10% of total sales for foundries having a broader
customer base.
Pricing Mechanism
No specific information about pricing mechanisms used by copper-base
foundries was determined.
11-76
-------
Balance of Trade
Competition for copper-base foundries resulting from imports of
foreign-made copper-base castings is insignificant. However, some castings
from India have been imported in recent years.
Financial Characteristics
Table 51 shows financial and operating data for the typical copper-base
foundry in each employment-size segment, and the range for the
middle-ranking 50% of the foundries in the segments.
Net profit margins for copper-base foundries have generally been
slightly higher than for other nonferrous metal type segments. Foundries
within the four employment-size, copper-base segments displayed net profit
margins that ranged from a low of 4.3% for the 50 to 249 segment to a high
of 6.5% for the foundries with less than 10 employees. The typical foundry
in the 10 to 49 segment had a profit margin of 4.7%, while the ratio for the
250-or-fliore segment was 5.3%. In terms of the profit margin measure,
medium-sized copper-base foundries ranked as relatively low.
Returns on net worth have been higher for small copper-base foundries
than for larger ones. This variation reflects differences in relative net
worth among the four segments, with the proportion of net worth to annual
sales increasing with the size of the foundry. Whereas the foundry with
less than 10 employees had a return of 28%, comparable returns for foundries
in the 10 to 49 segment and for segments with 50 or more employees were 19%
and 15%, respectively.
Net plant, expressed as a percentage of annual sales, was 12% for
foundries in segments with less than 50 employees and 14% or more for
foundries with 50 employees or more. This situation parallels the findings
for the other metal-type segments and reflects use of older, more
depreciated facilities, along with the smaller foundries' lower degree of
mechanization equipment.
11-77
-------
Long-term and short-term debt, expressed as a percentage of annual
sales, differed little among the four employment-size segments. Net worth,
in contrast, increased from relatively low ratios for the small foundry (23%
of annual sales for the "under 10" foundry), to much higher ratios as the
foundry size increased; the ratio was 34% for the typical foundry in the
250-or-more employee segment.
Differences in financial performance within each segment are
substantial, but they tend to decrease as the size increases. For example,
one-quarter of the foundries in the under 10 segment had net profit margins
of no better than 1%, whereas corresponding figures for the 10 to 49 and 50
to 240 segments were 3% and 5%, respectively. Similarly, one-quarter of the
foundries in the under 10 segment had a return on net worth of no more than
3%, and the corresponding returns for the 10 to 49 and 50 to 249 segments
were 10% and 15%, respectively.
One-quarter of the foundries in each of the three employment-size
segments for which sufficient data were available had net plant that
amounted to no more than 6% of annual sales. Three-quarters of the
foundries in the under 10 segment had debt that equalled more than 10% of
annual sales, whereas the corresponding ratio for the 10 to 49 segment was
6% of annual sales. One-quarter of the foundries with less than 10
employees had net worth that amounted to less than 22% of annual sales. In
the 10 to 49 segment, one-quarter of the foundries had net worth that
amounted to less than 13% of annual sales.
11-78
-------
TABLE 51
FINANCIAL PROFILE FOR JOBBER COPPER-BASE SEGMENTS*
Total number of foundries
Tons per foundry per year
local tonnage per year
(thousands)
Typical foundry
Number of employees
Sales per employee
(dollars)
Dollar sales
Net Income
Nee plant
Total debt
Net worth
Net profit margin
(percent)
Net worth return
(percent)
Nee plant as percent
of sales
Total debt as percent
of sales
Net worth as percent
of sales
Ranges
Net income (dollars)
Net plant
Total debt
Net worth
Net profit margin
(percent)
Net worth return
(percent)
Net plant as percent
of sales
Total debt as percent
of sales
Net worth as percent
of sales
Under 10
257
no
28
6
44
264
17
32
21
61
6.5
27.9
12
8
23
3-42
16-50
0-26
58-119
1-16
3-29
6-19
0-10
32-45
10-49
373
550
205
30
48
1,440
68
173
36
360
4.7
18.9
12
6
25
43-101
72-173
0-36
187-475
3-7
10-23
5-12
0-6
13-33
50-249
112
2,400
269
135
49
6,615
284
926
463
1.918
4.3
14.8
14
7
29
331-529
331-2.983
0-794
1,521-3,903
5-8
15-23
5-33
0-12
23-59
250 Plus
7
5,320
41
320
46
14,720
780
3,091
1,619
5,005
5.3
15,6
21
11
34
a. a.
a. a.
a. a.
a. a. '
n.a.
a. a.
n.a.
n.a.
a. a.
^Dollar and total tonnage estimates for 1977 in thousands of dollars.
11-79
-------
Growth Rate Expectations
Although shipments of copper-base castings recovered by 1977 from the
recession low of 1975, and even though the price of copper has become more
competitive with other metals, no trend towards major recovery of lost
markets is discernible. Demand from industrial valve and pump markets
optimistically could grow about 5% per year, and demand for plumbing
fixtures has been projected as increasing at the household formulative rate
of *\% to 2% annually. Therefore, growth in demand from all markets for
copper-base castings could expand at a future annual rate of about 3%.
However, significant advantages in pricing and in availability of
competitive materials could combine with reduced demand for construction
markets to disrupt even the modest forecast growth for copper-base
castings. As a favorable offsetting potential, perfection of an economic
die casting process for copper-base castings is the subject of important
current research. A breakthrough of this nature could make copper-base
casting much more competitive and result in an accelerated future rate of
overall growth.
Zinc Foundries
Capsule Description
Among nonferrous metals, zinc ranks second to aluminum in tonnage and
value of shipments. Zinc has many desirable characteristics; it is easy to
cast, has good dimensional stability, and possesses corrosion resistance,
platability, and strength. Historically, most demand for zinc castings has
been derived from the automotive industry, but significant volume has been
lost in recent years to molded plastics and aluminum, because of price and
weight considerations. New thin-wall die casting processes are helping zinc
recover lost castings markets to some extent. Most zinc foundries are small
facilities selling castings to jobber markets.
11-80
-------
Production History
Figure 5 shows that the trend of zinc castings production has been
almost steadily downward since the mid-1960s; shipments of 435,000 tons in
1977 were about one-third of those a decade earlier in 1965, when peak
historical volume was recorded. Despite the relative prominence of zinc
castings among nonferrous metals, the tonnage shipped in 1977 represented
less than 2% of total foundry industry volume.
Operational Structure
The importance of the automotive industry to zinc casters has strongly
influenced the operational structure of the zinc foundry industry. In
total, 721 foundries were casting zinc in 1976; however, only 341 of those
foundn'es considered zinc as their major metal type (refer back to Table
14). Of the 341 foundries specializing in zinc castings, more than 70% have
fewer than 50 employees, as can be seen in Table 52.
Table 52
SIZE DISTRIBUTION OF ZINC FOUNDRIES - 1976
Number of Employees Number of Foundries Percent Distribution
Under 10 104 30
10-49 139 41
50-249 78 23
Over 250 20 6
Total 341 100
11-81
-------
* 5
e
I
u
1
i
11-82
-------
TABLE 29
FINANCIAL PROFILE FOR JOBBER DUCTILE SEGMENTS *
local number of foundries
tons per foundry per year
local tonnage per year
( thousands)
Typical foundry
Dumber of employees
Sales per employee (dollars)
Dollar sales
Nee income
Set plant
local debt
Set worth
Sec profic aarg±a (percent)
Net worth recurn (percent)
Nee plane as percent of sales
Total debt as percent of sales a.a
Set worth as percent of sales
Ranges
Set income (dollars)
Set plant
local debt
Sec worth
Set profic margin (percent)
Set worth recurn (percent)
Set plane as percent of sales
Total debt as percent of sales n.a
Sec worth as percent of sales
Under 10
4
200
1
6
39
234
n.a.
n.a.
n.a.
n.a.
a. a.
n.a.
n.a.
,s a. a.
n.a.
n.a.
a. a.
n.a.
n.a.
n.a.
n.a.
n.a.
s n.a.
n.a.
10-49
27
1,000
27
30
42
1,200
47
265
202
227
3.7
20.7
21
16
18
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
50-249
35
5,250
184
135
50
6,750
290
1,688
1,143
2,160
4.3
13.4
25
17
32
135-338
1,283-2,295
0-1,148
2,160-4,388
2-5
7-19
19-34
0-17
32-65 -
250 Plus
15
14,000
210
320
53
16,960
a.a.
n.a.
a.a.
a.a.
a.a.
a.a.
a.a.
a.a.
a.a.
a.a.
a.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
*Dollar and total tonnage estimates for 1977 in thousands.
13
11-38
-------
Table 54
ZINC CASTING METHODS BY FREQUENCY OF USE - 1976
Casting Method
Sand casting
Die casting
Permanent mold
Shell mold
Centrifugal
PI aster mold
Investment
r-n
mold
Other
No -bake
Number of Foundries
Using this Method*
33
290
43
2
7
20
6
5
4
7
Percent of Total
Zinc Foundries
Using this Method*
9.7
85.0
12.6
0.6
2.1
5.9
1.8
1.5
1.2
2.1
*Because foundries often use more than one technique,
percents do not add to 100%.
Source: Penton Publications.
11-84
-------
Table 55
ZINC COREMAKING TECHNIQUES BY FREQUENCY OF USE - 1976
Coremaki ng
Technique
Number of Foundries
Using this Technique
Percent of Total
Zinc Foundries
Using this Technique*
Oil sand
CO2 process
Shell cores
Hot box process
Cold box process
No-bake process
Air setting cores
Other self curing
Other
8
8
5
4
3
6
5
5
164
2.4
2.4
1.5
1.2
0.9
1.8
1.5
0.9
48.1
*Because foundries often use more than one technique,
percents do not add to 100%.
Source: Penton Publications.
11-85
-------
Major Markets Served
Zinc casters supply the appliance and plumbing fixture industries in
addition to the automotive industry, which, as noted previously, represents
the dominant market. There is no basis for concluding that small zinc
foundries serve clienteles different from the overall markets served by all
zinc foundries.
Pricing Mechanicms
No specific information was developed.
Balance of Trade
No specific information was developed.
Financial Characteristics
Table 56 shows the financial and operating data for the typical zinc
foundry in each employment-range segment, and the ranges for the
middle-ranking 50% of the foundries in those segments.
Net profit margins differ only slightly for foundries in the four
employment-size segments. The typical foundry with less than 10 employees
and the one with 250 or more employees both had net profit margins of 4.0%.
The typical foundry in the 10 to 49 segment had a margin of 4.3%, and the
margin was 5.0% for the 50 to 249 segment. In contrast, returns on net
worth showed a different pattern, reflecting varying equity positions among
the four foundry types. Typical foundries with under 10 or with 50 to 240
employees each had returns of about 21%, whereas those with 10 to 49 or 250
or more employees had returns of 15% on net worth.
11-86
-------
Like aluminum foundries, zinc foundries that have less than 50
employees tend to have a lower net plant, expressed as a percentage of
annual sales, than have larger foundries. Similarly, the long-term and
short-term debt at foundries with less than 50 employees is lower than those
for the larger plants (about 6% compared with 11%). Net worth, as a
percentage of sales, differed among the four segments. Interestingly, both
the lowest figure (19% for the under 10 segment) and the highest figure (28£
for the 10 to 49 segment) occurred for foundries with less than 50 employees.
The ranges of financial ratios within each segment indicate that
one-quarter of the foundries with less than 10 employees had net profit
margins below 4£, and one-quarter of the foundries in the 10 to 49 segment
had margins below 2%. With regard to return on net worth, one-quarter of
the foundries in each of the two segments (under 10 and 10 to 49) had
returns of less than 7%.
Net plant at some of the smaller foundries was very small. For
example, one-quarter of the foundries with 10 to 49 employees had net plant
that amounted to less than 8% of annual sales. Three-quarters of the
foundries with less than 50 employees had debt that equalled no ore than 6%
of annual sales. One-quarter of the foundries in the under 10 and 10 to 49
segments had net worth that amounted to less than 19% and 24%, respectively,
of annual sales.
11-87
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TABLE 56
FINANCIAL PROFILE FOR JOBBER ZINC SEGMENTS*
Under 10 10-49 50-249 250 ?lus
Total number of foundries 104 139 78 20
Tons per foundry per year 50 200 1,200 2,400
.Total counage per year
(thousands) 5 28 94 48
Typical foundries
Number of employees 6 20 135 320
Sales per employee 40 52 52 40
Dollar sales 240 1,560 7,020 12,800
Net income 10 67 351 512
Net plant 29 172 983 2,304
Total debt 12 94 632 1,408
Net worth 46 437 1,685 3,456
Net profit margin (percent) 4.0 4.3 5.0 4.0
Net worth return (percent) 21.7 15.3 20.3 14.3
Net plane as percent
of sales 12 11 14 18
Total debt as percent
of sales 56 9 11
Net worth as percent
of sales 19 28 24 27
Ranges
Net income (dollars) 10-19 31-94 140-132 n.a.
Net plant 7-48 125-172 702-923 a.a.
Total debt 0-12 0-94 0-632 a.a.
Net worth 46-79 374-780 842-2,176 n.a.
Net profit margin (percent) 4-3 2-6 2-9 n.a. .
Net worth return (percent) 7-24 7-20 16-38 a.a.
Net plant as percent of sales 3-20 8-11 10-14 u.a.
Total debt as percent of sales 0-5 0-6 0-9 n.a.
Net worth as percent of sales 19-33 24-50 12-31
*Bollar and total tonnage estimates for 1977 in thousands
11-88
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Growth Expectations
The future outlook for zinc castings is not optimistic. Domestic
automobile production was expected to decrease, and automotive manufacturers
were making strong efforts to reduce the weight per vehicle. These weight
reduction programs, coupled with the trend toward smaller, more efficient
vehicles, would directly affect demand for zinc die castings. Very little
growth can be projected, even if zinc castings retain automotive markets
over the longer term. Increased installation of thin-wall die casters would
provide a promising potential for zinc, because thickness of automotive
molding walls could be reduced from 0.060 to 0.040 inches, and still retain
superior dent-resistance and finishing characteristics.
Magnesium Foundries
Capsule Description
Magnesium is the smallest of the 8 major metal-type foundry
industries. Magnesium is a speciality metal, high priced compared to
competitive alternatives and has limited availability from relatively few
suppliers. The price premium results partly from the energy intensity for
winning Mg (50% greater than for aluminum). Magnesium is prized for its
ultral ight weight and has numerous applications in transportation and
hand-carried equipment. Working the metal is somewhat hazardous (magnesium
dust or fine chips can explode easily), and that characteristic has
discouraged market acceptance to some degree. At the same time, magnesium's
sacrificial nature has resulted in demand for cast anodes used to protect
steel from corrosion.
11-89
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Production History
Table 57 shows the long-term shipments history for magnesium castings.
Prior to the 1975 recession, magnesium casting production had been
increasing 10% annually, but in 1975, output declined about 35% from the
prior year's level. Production subsequently expanded sharply to a new
historical high in 1977, when nearly 50 million pounds of magnesium castings
were produced.
Operational Structure
Only 18 foundries cite magnesium as their major metal cast, even though
125 foundries were actually pouring the metal. The size distribution of the
18 foundries specializing in magnesium castings is presented in Table 58.
11-90
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TASLE 57
MACTESHJM CASTING OtrmiT, 1956-1977
(Shipments la Thousand Pound*)
T«ar
1936
1957
195$
1959
1960
1961
1962
1963
1964
1965
1966
1967
1966
1969
1970
1971
1972
1973
1974
1975
1976
1977
Scare*: Bureau of C«n*u*
11-91
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Table 58
SIZE DISTRIBUTION OF MAGNESIUM FOUNDRIES - 1976
Number of Employees Number of Foundries
Under 10
10-49
50-249
Over 250
2
7
9
0
Percent Distribution
11
39
50
0
Total
18
100
The magnesium foundries were mostly located around the Great Lakes and
in the Pacific region. About three-fourths of the magnesium foundries were
selling 50% or more of their output into the jobber markets, as can be seen
in Table 59.
Table 59
SALES STRUCTURE FOR MAGNESIUM FOUNDRIES - 1976
Percent of Tonnage for Sale
10O& 50-99% 1-49% Zero Total
Number of foundries 12
Percent distribution of foundries 67
11
3
17
18
100
11-92
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Manufac t u rl ng Proce sses
Table 60 shows that the 18 foundries that pour magnesium as their major
metal are primarily sand casting oriented. Regarding coremaking by
magnesium foundries, Table 61 attributes the greatest frequency to CCL and
shell cores. As to furnace usage, crucibles dominated with 16 of the 20
total units that were operated in 1976.
Table 60
MAGNESIUM CASTING METHODS BY FREQUENCY OF USE - 1976
Casting Method
Number of Foundries
Using this Method*
Percent of Total
Magnesium Foundries
Using this Method*
Sand casting
Die casting
Permanent mold
Shell mold
Centrifugal
Plaster mold
Investment
£02 mold
Other
No-bake
14
5
7
6
1
1
0
4
2
1
77.8
27.8
38.9
33.3
5.6
5.6
0
22.2
16.1
5.6
*Because foundries often use more than one technique,
percents do not add to 100%.
Source: Penton Publications.
11-93
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Table 61
MAGNESIUM COREMAKING TECHNIQUES BY FREQUENCY OF USE - 1976
Coremaki ng
Technique
Oil sand
C02 process
Shell cores
Hot box process
Cold box process
No-bake process
Air setting cores
Other self curing
Other
Number of Foundries
Using this Technique
8
12
12
1
0
4
4
1
3
Percent of Total
Magnesium Foundries
Using this Technique*
44.5
66.7
66.7
5.6
0
22.3
22.3
5.6
16.7
*Because foundries often use more than one technique,
percents do not add to 1002.
Source: Penton Publications.
Major Markets Served
Magnesium casting markets include automotive (mainly foreign cars),
aerospace, outdoor power equipment (especially chainsaws), luggage, and
sporting goods.
Pricing Mechanism
No specific information about pricing mechanisms used by magnesium
foundries was determined.
11-94
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Balance of Trade
No specific information was developed.
Financial Characteristics
Table 62 shows financial and operating data for the typical foundry in
the employment-size segments for whom data were developed. No ranges of
data for the middle-ranking 50%, of the foundries in any segment are shown,
however.
No magnesium foundry has more than 250 employees, and only two others
have fewer than 10 employees; financial profiles were not developed for
those segments. Financial data were also scarce for the middle-sized
segments with 10-49 and 50-249 employees; however, partial financial
profiles were developed for these segments on the basis of the fragmentary
information.
Profitability of the typical foundry in the 10-49 employee segment was
higher than in the 50-249 employee segment. Net profit margins were 4.5%
and 3.0%, respectively, and returns on net worth were 19.5% and 9.7%,
respectively.
Net plant, expressed as a percentage of annual sales, was 9% for the
10-49 employee segment and 15% for the 50-249 employee segment. Total debt
as percents of sales (at about 7%) was relatively similar for the two
segments. However, the net worth/sales ratio was moderately lower (at 25%)
for the typical foundry in the 10-49 employee segment, as compared with 31%
for the 50-249 employee segment.
In summary, magnesium foundries appear to achieve similar levels of
profitability with the other nonferrous foundries. Also, their balance
sheets evidence comparable financial positions and strength.
11-95
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TABLE 62
FINANCIAL PROFILE FOR JOBBER MAGNESIUM SEQffiNTS
Employment-Size Segments
Total number of foundries
Tons per foundry per year
Total tonnage per year
(thousands)
Typical Foundry
Number of employees
Sales per employee (dollars)
Dollar sales
Net income
Net plant
Total debt
Net worth
Net profit margin (percent)
Net worth return (percent)
Net plant as percent of sales
Total debt as percent of sales
Net worth as percent of sales
Ranges
Net income (dollars)
Net plant
Total debt
Net worth
Net profit margin (percent)
Net worth return (percent)
Net plant as percent of sales
Total debt as percent of sales
Net worth as percent of sales
Under 10 10-49
2 7
20 200
— 1
6 30
— 52
— 1,560
— 70
— 140
— 94
— 359
— 4.5
— 19.5
_j_^ a
"~ 6
23
— N/A
— N/A
— N/A
— N/A
— N/A
— N/A
— N/A
— N/A
— N/A
50-249 250 or More
9 0
1.100
10
135
52
7,020
211
1,053
562
2,176
3.0
9.7
15
8
31
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Dollar and total tonnage estimates for 1977 in thousands
11-96
-------
Growth Expectations
Magnesium castings output was expected to grow at a rate considerably
faster than that for most metal-type castings over the coming decade.
Energy savings achievable through use of lightweight castings, such as those
made of magnesium, for transportation products were expected to represent a
strong driving force for growth. Across time, two technical trends (hot
chamber die casting machines and fluxless melting in an inert atmosphere)
may gradually make magnesium castings more price competitive with aluminum
castings. Growth did not, however, materialize as anticipated from 1977
through 1980, although the potential may well continue to exist for future
years ahead.
11-97
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METHODOLOGY
Segmentation Format
The analysis of economic impacts of proposed effluent-limitation
regulations on the U.S. foundry industry utilized a format whereby each
foundry was assigned to a specific segment, based on the major metal that it
casts, on its number of employees, and on the markets which buy or use the
castings that it produces. The metal casting assignment was into one of 9
dominant metal-type foundry industries that collectively have accounted for
99.9% of all castings produced by U.S. foundries in recent years. The 9
dominant foundry industries are listed below under two broad metal groupings
— ferrous and non-ferrous:
Ferrous Non-ferrous
1. Gray Iron 5. Aluminum
2. Ductile Iron 6. Copper-base
3. Malleable Iron 7. Zinc
4. Steel 8. Magnesium
9. Lead
To measure economic differences between foundries of different size in
the 9 dominant industries, each foundry was also assigned into one of the 4
following employment-size categories:
Under 10 employees
10 to 49 employees
50 to 249 employees
250 or more employees
III-l
-------
The analysis of the lead foundry industry was confined to a single
foundry that has more than 250 employees. Disregarding that single plant,
the U.S. foundry industry conceptually encompasses 32 metal-type,
employment-size segments in the 8 other industries. However, available
information indicates that no foundries have been operating in a few of the
32 potential segments in recent years. For example, a 1977 directory of all
U.S. foundries prepared by Pen ton Publications shov/ed that there v/ere no
foundries in one of the potential segments — the magnesium segment with 250
or more employees. One year later in 1978, EPA determined by refining the
Penton directory that there were no foundries in 3 of the potential
segments. Those segments were:
Malleable iron, under 10 employees
Malleable iron, 10 to 49 employees
Magnesium, 250 or more employees
The analysis accepted the EPA determination about the existence or
non-existence of foundries in the respective segments. It also accepted
EPA's determinations about the number of foundries in the 29 remaining
segments as having more validity than those indicated in Penton1s directory
for the same segments. Table 63 compares the EPA and Penton foundry
population in total, and as distributed among the 8 dominant metal-type
industries. Differences between the two populations resulted from deletion
by EPA of listings in the Penton directory that had no foundry, had ceased
operations, or were duplications of businesses listed under other names.
III-2
-------
Table 63
DISTRIBUTION OF FOUNDRY POPULATION BY METAL-TYPE INDUSTRIES
Gray Iron
Ductile Iron
Malleable Iron
Steel
Al umi nun
Copper-base
Zinc
Magnesium
EPA
1,083
61
69
344
988
715
382
12
Penton
1,166
81
56
414
1,286
749
341
18
TOTALS 3,654 4,211
To further measure economic differences between the foundries
determined by EPA, the 3,654 foundries in the 29 segments were separated
into jobber and captive components on the basis of proportions of customer
sales by the foundries that were operating in 1978. Foundries that sold
or more of their production to customers outside the corporate entity (or to
outside open-markets) were regarded as jobber foundries. Conversely,
foundries that sold 50% or more of their products internally (i.e., to other
divisions or subsidiaries of the company that owns the foundry) were
regarded as captive foundries. The jobber/captive separation was based on
data contained in the Penton directory, because such information pertaining
to the EPA population distributions was not available. To accomplish the
segment separations, Penton's proportion of jobber and captive foundries for
each segment were applied to the EPA numbers of foundries (or population) in
the same segments. Table 64 shows the separations for the ferrous segments,
while Table 65 presents comparable information for the non-ferrous segments.
III-3
-------
52
428
466
137
78%
83
78
61
22%
17
22
39
41
344
262
84
11
73
103
53
Table 64
SEPARATION OF FERROUS EMPLOYMENT-SIZE SEGMENTS BETWEEN
JOBBER AND CAPTIVE FOUNDRIES
No. of
Employment-Size Total Proportions No. of Foundries
Segment Foundries Jobber Capti ve Jobber Capti ve
Gray Iron
Under 10
10-49
50-249
250 or More
TOTAL 1.083 78% 22% 843 240
Ductile Iron
Under 10
10-49
50-249
250 or More _
TOTAL 6T_ _77% _23% 46 ]_5
Malleable Iron
Under 10
10-49
50-249
250 or More
69 77% 23% 53 16
3
20
17
21
50%
63
89
80
50%
37
n
20
2
12
15
17
1
8
2
4
0
0
46
23
67%
100
77
77
33%
0
23
23
0
0
35
18
0
0
11
5
Under 10
10-49
50-249
250 or More
TOTAL 354 82% 18% 293 61
12
80
161
101
63%
86
84
80
37%
14
16
20
8
69
135
81
4
11
26
20
III-4
-------
Table 65
SEPARATION OF NON-FERROUS EMPLOYMENT-SIZE SEGMENTS BETWEEN
JOBBER AND CAPTIVE FOUNDRIES
No. of
Employment-Size Total Proportions No. of Foundries
Segment Foundries Jobber Capti ve Jobber Captive
Aluminum
Under 10
10-49
50-249
250 or More
TOTAL ^88 82% ]8%_ 808 180
Copper-Base
Under 10
10-49
50-249
250 or More
111 Z6! I4! i35 18°
Under 10
10-49
50-249
250 or More
TOTAL
Magnesium
Under 10
10-49
50-249
250 or More
325
483
241
39
80%
83
84
74
20%
17
16
26
260
401
118
29
65
82
23
10
226
266
107
16
80%
79
56
29
20%
21
44
71
181
289
60
5
45
77
47
11
83
160
118
21
382
52%
77
83
60
70%
48%
23
17
40
30%
43
123
98
13
277
40
37
20
-1
105
2
4
6
0
0%
71
100
—
100%
29
0
—
0
3
6
0
2
1
0
0
TOTAL j2. 78% 22%
III-5
-------
Through the jobber/captive separation, the U.S. foundry industry
conceptually is composed of 64 metal-type, employment-size segments, divided
into 32 jobber and 32 captive segments. From Tables 65 and 65 it can be
seen, however, that there are no foundries in 8 of the 64 segments. Those
segments are:
Magnesium Malleable Iron
Under 10 employees, jobber Under 10 employees, jobber
50 to 249 employees, captive Under 10 employees, captive
250 or more employees, jobber 10 to 49 employees, jobber
250 or more employees, captive 10 to 49 employees, captive
Population Projections
The previously-mentioned foundry population data pertain to the U.S.
foundry industry as it existed in 1978. However, the proposed
effluent-limitation regulations are expected to be promulgated in 1983, and
the impact analysis had to be related to a projection of the number of
foundries that would be expected to be operating in 1984. Moreover, EPA in
1981 developed new foundry industry data, of which part has relevance to
derivation of projected foundry populations for 1984. The following EPA
data pertaining to wet foundries in each metal-type, employment-size segment
is relevant:
The numbers of wet foundries in each segment that had either
shutdown or changed operations between 1978 and 1981. For this
analysis, such actions are regarded as baseline closures that
occurred during the 1979-81 years.
The numbers of wet foundries in each segment that continued to be
operational in 1981, and the numerical distributions of those wet
foundries by discharging process and discharge mode.
III-6
-------
It is important to recognize that the new EPA data pertain only to wet
foundries and that no data about dry foundries was included. Moreover, the
new EPA data did not distinguish betv/een jobber and captive foundries, nor
did it include information conducive to developing projected foundry
populations for 1984.
Reflecting those circumstances, a feasible procedure for integrating
the 1978 benchmark segment populations with the partial population data for
1981, and in turn for developing comprehensive 1984 segment population
projections had to be devised. Critical to the procedure was the need to
incorporate the reality that the segment populations change across time
because of two factors -- baseline closures and new plant openings. The
populations decrease when baseline closures exceed new plant openings, and
conversely they increase when openings are greater than baseline closings.
Any difference between the two factors is regarded as the net change in the
segment populations.
Aside from the new EPA data about wet foundry baseline closures in
1978-81, historical data about foundry baseline closures and new plant
openings, or about net changes in foundry populations, are either available
too infrequently or are insufficiently detailed to provide more than a
background for the analysis. For example, recent Census foundry population
data relate only to 1972 and 1977, basically describe entire metal-type
foundry industries, and include no information about baseline closures or
new plant openings.
Similarly, all Penton population data series are based on surveys
undertaken at several-year intervals; recent surveys were made in 1975, 1978
and 1980. Moreover, the Penton population data series pertain separately to
foundries of differing employment sizes, to foundries casting the various
metals, and to foundries that are jobbers and captives; no coordination of
the separate data series is provided. Penton's Foundry Management and
Technology magazine has also occasionally included articles providing
generalizations about baseline closures over lengthy periods of time.
III-7
-------
The analysis, however, required quantification of baseline closures,
new plant openings, and net changes in segment populations between 1978 and
1984 so that the impacts could be measured against the population of
foundries expected to be operating in 1984. Estimates of the projected
populations were determined through the following analytical process:
As the starting point, annual net change rates for the metal-type
populations based on the Census data were determined by relating
cumulative changes fron 1972 to 1977 in the number of foundries
to the foundry populations in the 1972 base year. Additionally,
the several Penton population data series covering the 1975-80
years were inter-related to derive annual net change rates
applicable to the jobber and captive segments, and which when
collectively considered yielded net population changes comparable
to those derived from the Census data.
Next, an annual baseline closure rate for the foundries in each
jobber and captive segment was developed on the basis of the
numbers of foundry disappearances that occurred between 1977 and
1981. The disappearances were determined through a name-by-name
comparison of samples of foundries listed in Penton directories
covering those two years.
The annual rate of new plant openings determined for the segments
simply represent differentials between the net change and opening
rates. That simplistic technique was used because reliable
information from trade or government sources providing specific
new plant openings rates was not available.
III-8
-------
Major differences between the segments in the rates of changes
affecting foundry populations are indicated. For example, the ductile iron
and steel segments have positive net change rates, while all other segments
have negative net change rates. Also, the baseline closure rates tend to be
higher for the smaller employment-size segments within a metal-type industry
than for the larger segments in the same industry. Moreover, as between the
jobber and captive segments of both ferrous and non-ferrous segments, the
baseline closure rates tend to be higher for the captives. Tables 66 and 67
show all net change, baseline closure, and opening rates for the segments.
III-9
-------
Table 66
ANNUAL RATES OF POPULATION CHANGE - FERROUS EMPLOYMENT-SIZE SEGMENTS
Employment-Size
Segment
Gray Iron
Under 10
10-49
50-249
250 or More
TOTAL
Ductile Iron
Under 10
10-49
50-249
250 or More
TOTAL
Malleable Iron
Under 10
10-49
50-249
250 or More
Jobber
Captive
TOTAL
Steel
Under 10
10-49
50-249
250 or More
TOTAL
Net Change
Rate
(1.6)%
2.0
2.0
2.0
2._0_
2.0%
(1.8)%
(2.3)
(2.0)%
Closure
Rate
(6.6)%
(8.2)%
(8.2)
(8.2)
(8.2)
1.4%
(4.5)%
(4.5)
(4.5)%
(6.3)%
(6.7)
(3.2)
(2.1)
(4.2)%
Openi ng
Rate
8.1%
5.8
5.5
0.3
5.0%
10.2%
10.2
10.2
10.2
(8.2)% 10.2%
2.7%
2.2
2.5%
7.7%
8.1
4.6
3.5
5.6%
Net Change
Rate
(1.6)%
2.0
2.0
2.0
2.0
2.0%
(1.8)%
(2.3)
(2.0)%
1.4%
1.4
1.4
1.4
1.4%
Closure
Rate
(12.9)%
(10.4)
( 4.9)
( 6.9)
( 7.6)%
(10.4)%
(10.4)
(10.4)
(10.4)
( 4.5)%
( 4.5)
( 4.5)%
0%
(4.2)
(5.6)
(4.2)
(4.2)%
Openi ng
Rate
6.0%
12.4%
12.4
12.4
12.4
(10.4)% 12.4%
2 7%
2.2
2.5%
5. 6 a
111-10
-------
Table 67
ANNUAL RATES OF POPULATION CHANGE - NON-FERROUS
EMPLOYMENT-SIZE SEGMENTS
Employnent-Size
Segment
A1 urn' num
Under 10
10-49
50-249
250 or More
TOTAL
Copper-base
Under 10
10-49
50-249
250 or More
Jobber
Capti ve
TOTAL
Zinc
Under 10
10-49
50-249
250 or More
TOTAL
Magnesiun
Under 10
10-49
50-249
250 or More
TOTAL
Net Change
Rate
(1.4)%
(1.0)
(0.9)
(1.2)
(1.4)%
(1.4)%
(1.1)
(1.0)
(1.5)
(1.5)%
(1.4)%
(1.0)
(0.9)%
(0.5)
(1.4)%
(2.3)1
(2.2)
(2.2)',
Cl osure
Rate
(6.8)%
(3.8)
(2.3)
(1.2)
(4.6)%
(4.9)%
(4.9)
(4.9)
(4.9)
(4.9)%
(6.8)%
(6.8)
(6.8)
(6.8)
(6.8)%
(5.0)%
(5.0)
(5.0)%
Opening
Rate
5.4%
2.8
1.4
0
3.2%
3.5%
3.8
3.9
3.4
3.4%
5.4%
5.8
5.9
5.3
5.4%
2.7%
2.8
Net Change
Rate
(1.4)%
(1.0)
(0.9)
(1.5)
(1.4)%
(1.4)%
(1.1)
(1.0)
(1.5)
(1.5)%
(1.4)%
(2.7)%
(2.3)
[2.5)%
Closure
Rate
(10.1)%
( 5.5)
( 5.9)
( 4.2)
( 7.4)
( 4.9)%
( 4.9)
( 4.9)
( 4.9)
( 4.9)%
( 6.8)%
( 6.8)
( 6.8)%
( 6.8)
( 6.8)%
( 5.0)%
( 5.0)
( 5.0)%
Opening
Rate
6.0%
3.4%
5.4%
5.8
5.9
5.3
5.4%
2.3%
2.7
2.5%
ni-n
-------
Compliance Costs
The wet foundry populations of the segments in 1981 considered in the
prior section were summations of detailed EPA data about the numbers of
foundries having various production processes involving waste water
discharge. The detailed data were presented under 3 discharge mode
groupings — direct dischargers (foundries who discharge process waste water
directly to a water supply or land body), indirect dischargers (foundries
who discharge process waste water to publicly-owned water treatment
facilities — i.e., POTW's), and zero dischargers (foundries who recycle for
each production process or combination of production processes). The EPA
data included the following information:
The total number of foundries.
Total investment and annual expenditures for equipment in-pi ace
already collectively installed by the total number of foundries.
These expenditures pertain to treatment in place, and as such are
not considered in the analysis.
Total investment and annual expenditures for required equipment
that the total number of foundries still need to make or absorb
in order to comply with the proposed regulations in 1984.
These investment, and annual compliance expenditures are expressed
in terms of 1978 dollars (i.e., they represent the dollars that
would have been involved if they had been incurred in 1978).
Expenditure amounts are shown for the BPT (Best Practical
Technology), and as appropriate on an incremental basis for the
BAT alternatives (Best Available Technologies) applicable to
treatment levels for direct dischargers. Similar dollar
distributions are shown for comparable treatment levels
for indirect dischargers.
111-12
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Insofar as this analysis is concerned, only those expenditures
required for compliance in 1984 by direct dischargers and in 1985 by
indirect dischargers are considered. Expenditures for equipment in-place
are not considered in the analysis, because expenditures up to those points
in time will have been incurred for operational purposes motivated by
economic considerations. In the analysis, the "investment" costs are termed
capital costs, while the "annual" costs are described as operating costs.
The capital costs represent one-tine fixed asset (plant) outlays, while the
operating costs (labor, energy, etc.), are incremental amounts absorbable on
a continuing annual basis.
The analysis is designed to identify those discharging foundries that
may close because they do not have the capability of either financing the
capital costs in 1984, or of absorbing the operating costs in 1984 without
overly adverse effects upon profitability or competitiveness. To facilitate
the identification of those closures, both types of required compliance
costs have been put on an average per foundry basis. The averaging was
accomplished by dividing the total costs for a process or process
combination by the number of foundries subject to those costs. For
illustrative purposes, Tables 68 and 69 show the derivation of the
respective average per foundry costs at each treatment level for the direct
and indirect dischargers in the aluminum, 10 to 49 employee, jobber and
captive segments.
The illustrative tables also show the relative weights (or percentage
distributions) of the numbers of foundries that are subsequently analyzed.
For example, of the 10 direct jobber dischargers shown in Table 68, eight
discharge waste water from the investment casting production process, and 2
from the casting quench process. The relative weights for those 10
dischargers are 80% and 20%, respectively. Similarly, both of the 2 direct
captive dischargers shown in Table 68 discharge v/aste water from the
investment casting process. The relative weight for those 2 dischargers is
100%.
111-13
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Table 68
AVERAGE PER FOUNDRY COSTS - DIRECT DISCHARGERS - ALUMINUM
10-49 EMPLOYMENT-SIZE SEGMENT
(Dollars in Thousands)
Process
And Process
Conbi nations
Level 1
Investment
Casting
Casting
Quench
TOTAL
Level 2
Investment
Casting
Ca sti ng
Quench
TOTAL
Level 3
Investment
Casting
Casting
Quench
TOTAL
Level 4
Investment
Casting
Casting
Quench
Total
Capital
$1,423.0
52.0
$1,475.0
$1,753.0
52.0
$1,805.0
$2,923.0
52.0
$2,975.0
Costs No. of Dischargers
Operating Total Jobber Captive
$256.0 10 8 2
9.6 220
$265.6 12 10 2
$315.0
9.6
$324.6
$525.0
9.6
$534.6
Same as
Level 3
Relative Average
Weight Foundry Costs*
Jobber Captive Capital Operating
80% 100% $142.3 $25.6
20 0 26.0 4.8
1 00% 1 00%
$175.3 $31.5
26.0 4.8
$292.3 $52.5
26.0 4.8
TOTAL
111-14
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Table 69
AVERAGE PER FOUNDRY COSTS - INDIRECT DISCHARGERS - ALUMINUM
10-49 EMPLOYMENT-SIZE SEGMENT
(Dollars in Thousands)
Process
And Process
Combinations
Level 1
Casting
Quench/
Die
Casting
Investment
Casting
Casting
Quench
TOTAL
Total
Capital
$ 466.0
820.0
26.0
$1,312.0
Costs
Operating
84.0
148.1
4.8
$236.9
No.
Total
2
10
1
13
of Dischargers
Jobber Captive
2 0
8 2
1 0
11 2
Relative
Weight
Jobber Captive
1 Q% 0%
73 100
9 0
1 00% 1 00%
Average
Foundry Costs
Capi
$233.0
82.0
26.0
tal Operating
42.0
14.8
4.8
Level 2
Casting
Quench/
Die
Casting $ 466.0 $ 84.0
Investment
Casting 1,150.0
Casting
Quench
26.0
207.0
4.8
TOTAL $1,642.0 $295.8
Level 3
Casting
Quench/
Die
Casting
$ 466.0
Investment
Casting 2,320.0
Casting
Quench 26.0
$233.0
115.0
26.0
$42.0
20.7
4.8
$ 84.0
417.0
4.8
$233.0 $42.0
232.0 41.7
26.0 4.8
TOTAL $2,812.0 $505.8
111-15
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Most segments only have 1, 2, or 3 process and/or process
combinations, and each associated compliance cost is specifically considered in the
analysis. A few segments, however, have more than 3 process and/or process
combinations. In those instances, the multiple compliance costs were combined into
3 groups of relatively similar dollar magnitudes, with averages for the 3 groups
then being used in the analysis. Average compliance costs were used for the 6
following segments:
GRAY IRON
50 to 249 employees, jobber
50 to 249 employees, captive
250 or more employees, jobber
250 or more employees, captive
DUCTILE IRON
250 or more employees, jobber
ALUMINUM
50 to 249 employees, jobber
Financial Profiles
The identification of foundries potentially incapable of complying with the
proposed regulations was accomplished by relating the average per foundry
compliance costs described above to various financial statement items drawn from
financial profiles for the segments. The derivation, content, and usage of the
segment financial profiles in the analysis is outlined in this section.
111-16
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Underlying development of the segment financial profiles was the
premise that jobber foundries are more likely to be impacted by costs
associated with compliance than captive foundries. That premise is based on
the reasoning that sale of castings to open-market customers at competively
determined prices has more vulnerability than product sales to other
divisions or subsidiaries of the company that owns the foundry, and which
uses the castings as a component of another product, of which the cost of
the castings may account for only a small part of the total product cost.
The financial profiles were developed on the basis of financial data
pertaining exclusively to jobber foundries, because that was the only data
that v/ere available.
To have developed financial profiles on the basis of the financial
information for all 2,864 jobber foundries disclosed in Tables 64 and 65
would have been a monumental assignment. As a feasible alternative,
representative samples of jobber foundries in each employment-size segment
(for whom financial data were sought) were evolved. The process by which
the samples were selected was as follows:
Examination of the 1977 Penton directory listings indicated that
about 20% of all jobber foundries are owned by companies that
have other divisions or subsidiaries which purchase more than 50%
of the foundry's output. However, obtainable financial
information covering such foundries tends to be combined with
that for the other operations; in other words, available
financial data for them is generally disclosed only on a
consolidated basis. Deletion of an estimated 573
divisional/subsidiary foundries indicated that there were 2,291
jobber foundries whose financial statements would pertain
exclusively to "pure" foundry activities.
111-17
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Development of financial profiles even on the basis of 2,291
jobber foundries would have still represented a difficult task.
Moreover, further examination of data presented in the Penton
listings indicated that about 50% of the pure foundries cast more
than one type of metal. On the reasoning that financial
information for the multi-metal casters would probably be
available only in terms of total casting output, a narrowing of
the candidate list to an estimated 1,146 jobber foundries that
are pure and cast only one metal was achieved.
Each of those 1,146 jobber foundries was then screened against
Dun & Bradstreet directories to identify those having credit
report ratings indicating both a probable availability of
reasonably complete financial statement information, and the
operation of foundry facilities at only a single location. Only
383 or 33% of the jobber foundries survived this screening, and
they represented the preliminary sample for developing the
financial profiles.
Dun & Bradstreet company credit reports were then obtained for
those 383 surviving jobber foundries. Most of those reports
presented data for 1978, which represents a "normal year" for the
foundry industry in that it was neither a peak nor depressed
period. The reports for 268 or 70% of those survivors contained
useful financial information, and they constituted the final
sample used for preparing the financial profiles.
Insofar as the illustrated aluminum 10-49 employee jobber segment
is concerned, the following tabulation shows the step-by-step
derivation of the final sample of 24 foundries whose financial
data were ultimately used in preparing the financial profile for
that segment:
111-18
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Total foundries 401
Less: Divisional/subsidiary foundries 342
Pure foundries 59
Multi-metal foundries 0
Foundries probably lacking data 32
Prelim'nary sample foundries 27
Foundries with incomplete data 3
Final sample foundries 24
Financial information contained in the Dun & Bradstreet company credit
reports for the final sample foundries served as the primary source for
developing the segment financial profiles. The following financial
statement items (rounded to the nearest thousand dollars), as well as the
total number of employees, were compiled for each sample foundry:
Dollar sales
Net income (after taxes)
Total debt
Net worth
Total capital (the sum of total debt and net worth)
Additionally, the following financial ratios based on the compiled
data were computed for each sample foundry:
Sales per employee (in thousands of dollars)
Net profit margin (the ratio of net income to sales)
Net worth return (the ratio of net income to net worth)
Debt leverage (the ratio of total debt to total capital)
The financial statement items and financial ratios for the sample
foundries in a segment were then separately arrayed in a low-to-high
ranking, after which a median (or middle-ranking) value was selected for
each statement item and ratio. The median values then served as a basis for
preparing a financial profile for a foundry with employment set at one of
the following mid-points for the 4 employment-size segments.
111-19
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SEGMENT MID-POINT EMPLOYMENT
Under 10 employees 6
10 to 49 employees 30
50 to 249 employees 135
250 or more employees 320
In instances where combinations of median values at the mid-point
employment levels resulted in financial profiles with mutually-inconsistent
data and ratios, supplemental usage was made of composite information for
groups of foundries presented in annual statement studies prepared by Robert
Morris Associates and by Dun & Bradstreet. Where discrepancies still
existed after considering the supplemental studies, judgment was exercised
to achieve internally-consistent financial profiles.
Developing internally-consistent data for the segment financial
profiles was an imperfect activity. That can be deduced from Table 70 which
shows low, median, and high values separately determined for each statement
item and ratio from the Dun & Bradstreet Company credit reports for the
final sample of 24 foundries in the aluminum 10-49 employee jobber segment.
It is to be recognized that a particular sample foundry does not always rank
in the same position; it can be the low for one item or ratio, the high for
another, and at intervening positions for the others. Thus, the spectrum of
values must be regarded as only indicative of a range and contributive to a
centralized median, which subsequently shaped the finalized financial
profiles at the mid-point employment levels. The finalized profiles are
described as "typical" foundries in the segment financial profiles.
111-20
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Table 70
FINANCIAL DATA FOR SAMPLE FOUNDRIES IN THE ALUMINUM,
JOBBER, 10-49 EMPLOYMENT-SIZE SEGMENT
(Dollars in Thousands)
LOW MEDIAN HIGH
Employees 10 20 35
Sales per employee $ 17 $ 26 $ 45
Sales $300 $750 $1,383
Net income $ 10 $ 30 $ 70
Total debt $ 0 $ 40 $ 240
Net worth $150 $225 $ 600
Total Capital $150 $250 $ 700
Net profit margin 2.0% 5.0% 9.0%
Net worth return 8.0% 13.0% 52.0%
Debt leverage 0% 23.0% 44.0%
Because they are structured at median employment levels, the financial
profiles cannot be construed as being representative for foundries having
employment at the boundaries of the employee-size segments. To overcome
that limitation, a continuum of financial profiles covering all 4
employment-size segments in each metal-type foundry industry was prepared.
The continuum for all aluminum segments, including the segment with 10 to 49
employees that is illustrated throughout this analysis is shown in Table
71. The derivation of that table is described below:
111-21
-------
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111-22
-------
Each segment was sub-divided on the table into columns headed by
the number of employees at the boundary (low and high) and median
positions. For the illustrated 10 to 49 employment-size segment,
the columns show 10, 30, and 49 employees, respectively.
Of the data presented in the Table 71 continuum, sales per
employee at the 4 median positions represented the basic
controlling factor. The respective dollar amounts at the median
employee positions (6, 30, 135, and 320) were plotted on graphs
and connected by trendlines from which the dollar amounts at the
low and high positions were ascertained. For the illustrated 10
to 49 employment-size segment, the low and high respective dollar
amoungs of $41.0 and $38.5 (in thousands of dollars) were then
inserted onto Table 71. Those amounts were then multiplied by the
number of employees to obtain the thousands of dollars of sales at
the low and high positions.
Trend!ine values were similarly determined for total capital
turnover rates (sales divided by total capital) and total
debt/total capital ratios at the low and high positions on the
basis of graphic plottings. Those ratios, in turn, were used to
compute the dollar amounts of total capital and of total debt.
shown on Table 71. The difference between the dollars of total
capital and total debt represented the thousands of dollars of net
worth — $107 and $469, respectively at the low and high positions.
Similarly, trendline values for net worth returns (net income
divided by net worth) were graphically determined, and those
values were applied to the net worth amounts to derive the
thousands of dollars of net income at the low and high positions.
111-23
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Additionally, the net profit margin (net income divided by sales)
at the various positions was calculated. Moreover, the thousands
of dollars of pretax profits (taxable income) at the positions
were determined on the basis of the following schedule of Federal
corporate income tax rates that were in effect in 1978:
First $25,000 of taxable income — ZQ%
rate
Next $25,000 of taxable income -- 22%
rate
Excess of taxable income above $50,000 -- B%
rate
Lastly, it is to be pointed out that the continuum tables included
a supplemental distribution of all foundries in the 250 or more
employment-size segment. This distribution, which shows the
numbers of foundries in several size categories, was essential to
preparation of the continuum data at the high boundary of that
segment.
The dollar amounts and ratios at the respective positions across the
continuum provide continuity and consistency, and they prevent potential
major discontinuities in the data at the high boundary for one segment and
the low boundary for the next larger employment-size segment. Moreover, the
resultant data at the boundaries of the segments facilitated the closure
determinations described in the next section.
Closure Determinations
The primary purpose of the analysis was to determine those discharging
foundries for whom compliance with the proposed regulations in 1984 may
result in closure, and then in resultant losses of jobs and other economic
disruptions. Underlying this analysis is the premise that managerial
decisions to close foundries are based on differing circumstances for jobber
foundries than for captive foundries.
111-24
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Management of a jobber foundry required to comply with the proposed
regulations potentially is confronted with dual difficulties ~ the need to
access external funds for financing the capital costs at a reasonable rate;
and the ability to absorb the incremental operating costs without reducing
profitability below a minimum acceptable level. In contrast, it is reasoned
that management of a captive foundry will probably be able to access any
needed funds for financing the capital costs from, or with the assistance
of, its parent or affiliated companies providing that the incremental
operating costs can be recovered through relatively small price increases
that can be passed-through to divisions or subsidiaries of the company that
owns the foundry.
Consistent with the above, differing tests were used for determing
possible closures of jobber and captive foundries in 1984. Descriptions of
the tests and their application to closure determinations follow.
Jobber Closures
Capital Availability Tests
Some discharging jobber foundries may own assets that are not
operationally-required, and that could be converted into cash for financing
compliance capital costs. Similarly, some foundries might be able to
increase their cash resources over a relatively short period of time through
more adroit management of receivables and inventories, or through less
prompt payment of trade payable and other obligations. The analysis did
not, however, attempt to identify the existence or non-existence of such
internal situations for discharging jobber foundries, because such
information would have been meaningful only if it could have been accessed
for the specific foundries that most likely would be dischargers in 1984.
Dual difficulties of pin-pointing those jobber foundries, and predicting
their financial circumstances in 1984, forestalled any such analytical
effort.
111-25
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Instead, availability of capital for financing compliance capital
costs by discharging jobber foundries was analyzed by considering the
accessibility of funds from a single external source, namely the borrowing
of additional capital funds on a longer-tern basis. Consequently, the
analysis did not consider other external sources such as equipment leasing,
public or private sale of newly-issued stock, or grants, subsidies, and low
interest guaranteed loans provided by governmental assistance programs.
To have considered the other external sources would have required
numerous assumptions about their availability, and applicability to jobber
foundries of differing size, age, and profitability. Assumptions about such
other factors as stock price levels and ideal timing for obtaining the funds
would also have been necessary.
The analysis assumed that all borrowing would take the form of loans
provided by commercial banks, rather than by commercial finance companies or
other lenders. Loans from banks for purchasing equipment, such as that
needed for compliance, usually have maturities ranging between 3 and 5
years. Bank interest rates on equipment loans for most borrowers generally
range between 2 and 6 percentage points above the bank prime rate, which is
the rate that basically applies to short-term working capital loans made
primarily to larger companies with high credit ratings. The range of
interest rates reflects differences in interpretations by banks as to the
credit worthiness of borrowers connected with their size, past financial
results, present financial condition, and anticipated future performance.
Banks often loan all funds needed for purchasing equipment, but they
usually insist that borrowers have a net worth base that will be at least
equivalent to the proforma amount of borrowing outstanding after the
equipment loan is made. The net worth base is regarded as underlying
financial support over and above the represented by the value of the
equipment in the event that the borrower defaults on the loan.
111-26
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Additionally, banks generally make equipment loans only when the borrower's
expected future generation of pretax profits, after taking the additional
interest expense into account, is at least twice as large as the interest on
the proforaa debt. This coverage ratio is regarded as protection that the
interest on the debt could be paid even if pretax profits were to decline
substantially because of adverse economic conditions or other factors. Two
capital availability tests addressed to these realities of bank lending
practice are described below.
Test #1. - Debt/Equity Test:
This initial capital availability test related (1) proforna total
debt at the alternate treatment levels for each process and process
combination applying to the direct and indirect discharging foundries in the
jobber segments to (2) net worth (equity) at the low, median, and high
employee positions for the segments. Closures are identified for those
foundries that could not borrow all compliance capital costs without causing
their proforna total debt to exceed their net worth. This test has the
following parameters:
The numbers of total discharging foundries are assumed to be
evenly distributed across each segment's employee specturm.
Expressed differently, they are distributed on an "N/2N/N" basis,
which allocates 25% of them to the low position, 5Q% to the
median position, and 25% to the high position. For the 10 total
direct and 11 total indirect dischargers, N amounts to 2.50 and
2.75, respectively.
Proforna total debt is the sum of (1) the appropriate average per
foundry capital cost at a treatment level, and (2) total debt at
the 3 employee positions, which are subsequently described as
segment components. Net worth for the respective segment
components is also used.
111-27
-------
For any process in a segment component having a proforma total
debt/net worth ratio exceeding 100%, the N value for the
component is multiplied by the relative weight of the process to
determine the number of closures.
The test is illustrated through the 5 following steps that use
data taken from Tables 68 and 71 for the aluminum jobber segment with 10 to
49 employees.
Step 1:
According to the EPA data, there were 56 wet foundries in 1981.
The data also showed that 10 wet foundries closed in 1979-81. Therefore, in
1978 there were 66 wet foundries, which when distributed on the basis of the
83%/17% jobber/captive proportions shown in Table 65 resulted in 55 wet
jobber and 11 wet captive foundries. Deducting those wet foundries from th=
401 total jobber and 82 total captive foundries in 1978 indicated that t,uer3
were 346 dry jobber and 71 dry captive foundries. Applying the (1.0)3 net
change rate for both segments (see Table 67) to the 1978 dry populations
indicated that there were 10 fewer dry jobber and 2 fewer dry captive
foundries in 1981 than in 1978. Therefore, the numbers of dry jobber and
dry captive foundries declined to 336 and 36, respectively, in 1981.
Step 2:
As mentioned previously, it was assumed for the analysis that
there were no openings of new wet foundries in 1979-81. To have assumed any
openings would have necessitated modification of EPA's wet foundry data.
Instead, the 10 total wet closures determined by EPA were divided into 8
jobber and 2 captive closures on the basis of the Table 65 proportions.
Consequently, the respective 1981 populations were 47 wet jobber and 9 v/et
captive foundries. Altogether, the total number of foundries in the segment
dropped from 483 in 1978 to 461 in 1981 (off by 22).
111-28
-------
Step 3:
Discharge mode proportions for the 56 total wet foundries in
1981, based on 31 zero, 12 direct, and 13 indirect dischargers were 55%,
22%, and 23%, respectively. Those proportions were applied to the 47 jobber
and 9 captive wet foundries to obtain the numbers of dischargers by mode in
1981.
Step 4:
Projected foundry populations for 1984 were then determined
separately for the jobber and captive segments by applying the (1.0)% net
change rate to the 336 and 69 dry jobber and captive foundries and 47 and 9
wet jobber and captive foundries. The projected 1984 populations of jobber
foundries was 329 dry and 46 wet, and the 1984 projections for the captives
were 68 dry and 9 wet. In total, the number of foundries in the segment in
1984 was 452 (down 9 from 1981). The wet foundries, in turn, were
distributed among the discharge mode categories on the basis of the
discharge mode proportions mentioned in Step 3. There would be 12 direct
dischargers (10 jobber and 2 captive) and 13 indirect dischargers (11 jobber
and 2 captive) in 1984.
Step 5:
A summarization of the 1978-1984 population changes determined
through the proceeding steps is presented in Table 72. That table also
provides total employment data for the segment in 1984. That employment was
determined by multiplying the numbers of total foundries by the numbers of
employees at the mid-points for the respective employment-size segments.
111-29
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111-30
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The resulting closure deterninations from performing the
debt/equity capital adequacy test follow:
For the 10 total direct dischargers, closures at the alternate
treatment levels are: 2 for Levels 1 and 2, and 6 for Levels 3
and 4.
For the 11 total indirect dischargers, closures at the alternate
treatment levels are: 2 for Level 1, 4 for Level 2, and 8 for
Levels 3 and 4.
Test #2 - Fixed Charge Coverage Test:
This second capital availability test relates (1) pretax profits,
adjusted to include interest expense on the proforma total debt deternined
for Test #1, at the treatment levels for the processes of the discharging
jobber foundries, to (2) the interest expense on the proforma total debt for
those dischargers. Closures are indicated when adjusted pretax profits do
not cover the interest expense at least 2.0 times, or by a 200% ratio. A
sliding scale of interest rates that reflects apparent differences in
perceived risk by lenders, scale economies, and other factors was used in
determing the interest expenses. The interest rate scale shown below
involves premiums of 2% to 6% above the 9% prime rate for banks that was
averaged in 1978, which as mentioned previously was regarded as a "normal"
year. The scale would have equivalent applicability in 1984-85, which has
been assumed as also representing a "normal" period with a rate of inflation
matching that experienced in 1978.
111-31
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EMPLOYMENT-SIZE SEGMENT INTEREST RATE
Under 10, all components 15%
10 to 49, all components 15
50 to 249
Low component 15
Median component 14
High component 13
250 or more
Low component 13
Median component 12
High components 11
Parameters for this test, and results obtained by using data from
Tables 68 and 71, for the illustrated segment are as follows:
The M amounts are 2.50 and 2.75, respectively for the 10 total
direct and 11 total indirect dischargers.
Adjusted pretax profits and interest, as described previously,
pertain to the segment components (employee positions).
For a segment component process with a coverage ratio belov/ 200%,
the N value for the component is multiplied by the process
relative weight to determine the number of closures.
For the 10 total direct dischargers, closures at the alternate
treatment levels are: none for Levels 1 and 2, and 6 for Levels
3 and 4.
For the 11 total indirect dischargers, closures at the alternate
treatment levels are: 1 for Levels 1 and 2, and 3 for Levels 3
and 4.
111-32
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Cost Absorption Test
Management of a discharging jobber foundry also needs to
determine whether the foundry has the ability to absorb the incremental
compliance operating costs without reducing profitability to an unacceptable
level. For this test, foundry profitability has been measured in terms of
the return on net worth (net income divided by net worth). That measure,
which reveals the annual rate of bottom-line earnings to the ownership
equity of a company, has been used because of its widespread acceptance in
analyses that are undertaken by company managements, as well as by lenders
to companies and by outside investors in the stocks and bonds of companies.
Managers of companies, while concerned with profitability as
measured by net worth returns, often base their financial decisions on cash
flow analyses that relate annual inflows (or sources) of funds to annual
outflows (or uses) of funds. However, there is a considerable variation in
the inclusiveness of the funds analyses that companies perform. At one
extreme, some companies and most lenders to companies prepare comprehensive
funds analyses detailing all internal and external sources and uses.
Conversely, other companies and most outside investors tend to prepare
abbreviated analyses confined to the inflow of funds generated from
operations, and to the outflow of funds to operational and ownership needs.
To provide an analytical base for undertaking the cost absorption test, an
abbreviated inflow/outflow format that utilizes data and estimates for 3
broad-based composites of industrial companies has been developed. Those 3
industrial composites are:
The Value Line Industrial Composite which provides aggregate
financial data for more than 900 major industrial companies whose
stocks are owned by public investors.
Standard & Poor's 400 Industrials which shows composite financial
data on a per share index basis for 400 prominent industrial
companies whose stock is owned by public investors.
111-33
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The Federal Trade Commission Sample of Manufacturing Corporations
which presents combined data for a stratified sample of about
4,000 manufacturing companies drawn from a universe of
approximately 279,000 sample companies that are both
pri vately-and-publicly owned.
For each industrial composite, 6 financial series providing annual
data and estimates for 1977-81 were compiled. Of those series, 5 provided
information about economic activity that took place during each year from
1977 through 1981. Those annual activity series, and their use as
inflow/outflow items in the cash flow analysis, were:
Activity Series Cash Flow Usage
Net income earned Inflow
Depreciation expensed Inflow
Capital expenditures made Outflow
Working capital added Outflow
Cash dividends paid Outflow
For the industrial composites, each annual activity series was
separately related to the sixth financial series — net worth at the
respective year-ends — to provide a set of cash flow ratios that have a
common denominator, namely "net worth". Table 73 shows the various cash
flow ratios, as well as total inflow and outflow ratios for the composites.
The following conclusions about the 1977-81 internal cash flow situation for
the industrial sector of the economy emerge from consideration of the annual
ratios for the composites:
Average profitability (measured by the return on net worth) was
14.5%.
The average ratio of depreciation expense to net worth was 9.6%.
111-34
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The average total cash inflow/net worth ratio was 24.1%, (14.5%
plus 9.6%).
The capital expenditures/net worth ratio trended upward, and
averaged 22.7%.
In contrast, the working capital additions/net worth ratio
trended downward, and averaged 1.6%.
Of particular relevance to the cost absorption test, as will be
discussed later, the cash dividends/net worth ratio held almost
constant, averaging 5.6%.
The total cash outflow/net worth ratio averaged 29.9%, (22.7%
plus 1.6% plus 5.6%).
111-35
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Table 73
INDUSTRIAL COMPOSITE CASH FLOW RATIOS
(Inflows)
Value! ine S&P FTC
Industrial 400 Manufacturing
Composite Industrials Corporations
Net Worth Return
1977 13.4% 14.0% 14.2%
1978 14.0 14.6 15.0
1979 16.5 16.4 16.4
1980 14.4 14.9 13.9
1981 12.9 14.0 13.7
AVERAGE 14.2% 14.8% 14.6%
Deprec. Exp/Net Worth
1977 8.8% 10.4% 7.4%
1978 9.4 10.8 8.0
1979 9.5 11.0 8.3
1980 9.7 11.4 8.5
1981 10.0 11.1 8.3
AVERAGE 9.5% 11.1% 8.3%
Inflows/Net Worth
1977 22.2% 24.4% 21.6%
1978 23.4 25.4 23.0
1979 26.0 27.4 24.7
1980 24.1 26.3 22.4
1981 22.9 26.0 22.8
AVERAGE 23.7% 25.9% 22.9%
111-36
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Table 73(A)
INDUSTRIAL COMPOSITE CASH FLOW RATIOS
(Outf1ows)
Value! ine
Industrial
Composite
Cap. Expend/Net Worth
1977
1978
1979
1980
1981
AVERAGE
Wkg. Cap. Adds/Net Worth
1977
1978
1979
1980
1981
AVERAGE
Cash Divd./Net Worth
1977
1978
1979
1980
1981
AVERAGE
Outflows/Net Worth
1977
1978
1979
1980
1981
AVERAGE
18.2%
18.9
21.6
22.7
23.9
21.0%
3.5%
2.7
3.9
1.9
0.5
2.5%
5.3%
5.4
5.5
5.4
5.3
5.4%
27.0%
27.0
31.0
30.0
29.7
28.9%
sap
400
Industrials
20.7%
22.1
26.7
27.6
29.4*
25.3%
1.8%
1.8
1.4
(0.2)
(1.7)*
0.6%
0%
0
1
6.1
5.9
6.0%
28.5%
29.9
34.2
33.5
33.6*
31.9%
FTC
Manufacturing
Corporations
18.0%
20,
23.
23.
24.1
21.8%
4.4%
2.0
0.4
1.7%
5.1%
5.3
5.4
5.4
5.4
5.3%
27.5%
27,
29.
29.
29.9
oo
co.
* SRI Estimates
111-37
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Insofar as the foundry industry is concerned, a similar internal cash
flow analysis can be developed for 1978, which was the year for which the
metal-type foundry industry financial profiles were prepared. Those
profiles include the following financial series:
Net worth at year end
Net income earned during the year
Additionally, data was developed for the financial profiles, but not
presented in them for the following economic activity series:
Depreciation expensed
Capital expenditures made
Working capital added
However, as to the fifth activity series for the foundry industry —
cash dividends paid — no data were compiled, because available information
was inadequate. Therefore, preparation of a cash flow analysis for the
foundry industry in 1978, which paralleled that for the composites, would
necessarily be incomplete unless cash dividends were estimated and
included. An estimate was prepared through the following comparative
procedure:
The 4 available activity series for the foundry industry v/ere
related to that industry's net worth to develop appropriate cash
flow ratios. Those cash flow ratios for the foundry industry are
shown alongside those averaged by the 3 composites in 1978 in the
tabulation shown below. Note that the tabulation does not show a
cash dividend/net worth ratio for the foundry industry:
111-38
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Cash Flow Ratios Foundry Industry Composites
Return on Net Worth 18.0% 14.5%
Depreciation/net worth 9.0 9.4
Cash inflow/net worth 27.0% 23.9%
Capital expend/net worth 20.0% 20.4%
Wkg. cap. adds/net worth 6.0 2.1
Cash dividends/net worth 5.6
Cash outflow/net worth 28.1%
It can be observed, however, that the differential between the
cash inflow and cash outflow ratios for the 3 composites was 4.2%
in 1978 (28.1% versus 23.9%). This differential represents the
"net" excess of external inflows over external outflows.
Available data does not permit a breakdown of the composition of
4.5% differentials for either the SAP or FTC composites in 1978.
However, an indication of the probable content of the 4.2%
average differential for the 3 composites is provided by data for
the other composite (Valueline) which had a 3.6% differential in
1978. The respective items that are included in the Yalueline
differential (expressed as ratios versus net worth) were:
External Inflows
New securities financings 7.0%
Property sales gains 1.3
Net worth acquisition poolings 3.1
SUBTOTAL INFLOWS 11.4%
111-39
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External Outflows
Securities retirements 5.0%
Other investments 2.8
SUBTOTAL OUTFLOWS 7.8%
DIFFERENTIAL 3.6%
Based on the previously-mentioned differentials for the
composites, a rounded differential of 4.0% seems realistic for
the foundry industry. If 4.0% is used, the foundry industry's
cash outflow/net worth ratio becomes 31.0% (27.0% plus 4.0%). In
turn, it can be deduced that the foundry industry cash
dividend/net worth ratio in 1978 was 5.0%, which is of similar
magnitude to the 5.6% ratio averaged by the 3 composites.
The 5.0% cash dividend/net worth ratio determined as being appropriate
for stock investors simultaneously has to represent the minimum
profitability measure that would be acceptable to foundry managers, after
compliance operating costs were absorbed. If 5.6% was a suitable overall
rate for investors in all types of industrial enterprises in 1978, then a
cash dividend rate of approximately 5.0% would have been comparably suitable
to investors in foundries in 1978.
That reasoning reflects the premise that investors are essentially
indifferent to the type of business activity in which they invest; rather,
their willingness to invest is primarily dependent on their interpretation
as to whether they are receiving an adequate cash return on their
investment. Furthermore, since the average cash dividend return for the 3
composites in 1980 and in 1981, (5.6% and 5.5%, respectively) nearly matched
the 1978 ratio, then the selected 5.0% return for foundries in 1978 would
have equivalent applicability for them in 1980 and 1981. Therefore, the
best choice of a threshold return barrier — or minimum acceptable
profitability level — for foundries is 5.0%.
111-40
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The amounts of operating costs that could be absorbed, and still
permit the 5.0% threshold net worth return to be earned, were determined
using financial continuum data taken from Table 71 for the illustrated
segment. The amounts that can be absorbed represent differences between the
pre-and post-compliance (or threshold) pretax profits, as can be seen in the
following tabulation.
Selected Financial Information For
Segment Components (Employee Positions)
(Dollars in Thousands)
MEDIAN HIGH
Net Worth $107 $274 $469
Met Worth Return 26.0% 15.7% 16.7%
Net Income $28 $43 $78
Pretax Profits $35 $54 $124
Threshold Return 5.0% 5.0% 5.0%
Threshold Net Income $5 $14 $23
Threshold Pretax Profits $6 $18 $29
Absorbable Operating Costs $29 $36 $95
Specifics about the cost absorption test follow:
The N amounts are 2.50 and 2.75, respectively for the 10 total
direct and 11 total indirect dischargers.
Derivation of the absorbable operating costs is detailed
immediately above.
For a segment component process with absorbable operating
costs/compliance operating cost ratios below 100%, the N value
for the component (or employee position) is multiplied by the
process relative weight to determine the number of closures.
111-41
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For the 10 total direct dischargers, closures at the alternate
treatment levels are: none for Level 1, 2 for Level 2, and 6 for
Levels 3 and 4.
For the 11 total indirect dischargers, closures at the alternate
treatment levels are: 2 for Levels 1 and 2, and 8 for Levels 3
and 4.
Jobber Closure Summary
There are differences in the predicted number of jobber foundry
closures at the alternate treatment levels resulting from the 3 closure
tests. The tabulation appearing below compares those results, and shows the
numbers of closures that occurred on the basis of the criteria that the
largest number of closures identified by the tests would represent the
expected closures.
Foundry
Closures
Due to Failure
of Debt/Equity
Test
Foundry
Closures
Due to Failure
of Fixed Charge
Coverage Test
Foundry
Closures
Due to Failure
of Cost
Absorption Test
Expected
Foundry
Closures*
Direct Dischargers
Level 1
Level 2
Level 3
Level 4
2
2
6
6
0
0
6
6
0
2
6
6
2
2
6
6
* Closures are not additive. Rather, it is believed that foundries
closing from failure of any single test would be included in the
largest number of closures.
111-42
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Indirect Dischargers
Level 1
Level 2
Level 3
Level 4
2
4
8
8
1 2 2
1 2 4
3 88
3 88
Captive Closures
It was concluded earlier that captive foundries are unlikely to
experience difficulties in accessing funds needed for financing compliance
capital costs. Conversely, it was reasoned that closures of captive
foundries could occur if they cannot recover compliance operating costs
through price increases passed-through to divisions or subsidiaries of the
company that owns the foundry. For this analysis, it is assumed that
closures would result for those captive foundries that would have to
increase prices by more than 5% to offset the compliance operating costs.
The test described below measured the price pass-through capability of the
captive foundries in the illustrated segment.
Price Pass-through Test
Closures of discharging captive foundries in the illustrated segment
were determined fay relating 1) the compliance operating costs at the
treatment levels for the processes of the dischargers to 2) the dollar sales
for the segment components as shown in the Table 71 financial continuum.
Specifics pertaining to the price pass-through test and results from
performing that test, follow:
The N amounts are 0.50 for the 2 total direct and 2 total
indirect dischargers.
The dollar sales are $410,000, $1,140,000 and $1,887,000 for the
low, median, and high segment components (employee positions).
111-43
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For a segment component process with a compliance operating
cost/sales ratio exceeding 5.0%, the N value of the component is
multiplied by the process relative weight to determine the number
of closures.
For the 2 total direct dischargers, closures at the alternate
treatment levels are: 1 at Levels 1, 2, 3 and 4.
For the 2 total indirect dischargers, closures at the alternate
treatment levels are: none at Level 1, and 1 at Levels 2, 3 and
4.
111-44
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EFFLUENT CONTROL AND GUIDELINE COSTS
EPA developed compliance cost estimates for foundries within the
framework of the process and process combination format described in the
Methodology chapter. Two types of compliance cost estimates were
developed: (1) those pertaining to equipment in-place that discharging
foundries have already collectively installed; and (2) those applying to
required equipment that discharging foundries still must make or absorb to
comply with BPT and the BAT alternatives. For the analysis, only those
costs still required for compliance by direct and indirect dischargers were
considered, because those already made for equipment in-place were regarded
as having been spent for operational motivations.
The analyzed costs were provided by EPA as total dollar amounts for
specific process and process combinations applicable to those foundries
subject to the process(es). BPT costs were initially provided, with
incremental amounts applying to BAT alternatives being provided whenever
appropriate. Separate cost totals were provided for the direct and indirect
dischargers. Table 2 and Tables 5 through 7, which are included in the
Executive Summary chapter, summarize the total costs for the foundry
industry and its metal-type industries, while tables included in the Impact
Analysis chapter show comparable total costs for the metal-type foundry
industries and their employment-size segments.
There are major differences between the metal-type foundry industries
in the numbers of process and process combinations for which compliance
costs were estimated. Gray iron represented the upper extreme with 20
processes and process combinations, while zinc and magnesium tied for the
lower extreme with only 2. Table 74 shows the numbers of process(es) for
the direct and indirect dischargers in each metal-type industry in 1981.
IV-1
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Table 74
NUMBER OF PROCESS AND PROCESS COMBINATIONS BY INDUSTRY - 1981
Metal-Type Direct Indirect
Industry Dischargers Dischargers
Gray iron 11 9
Ductile iron 7 3
Malleable iron 3 3
Steel 3 4
Al umi num 5 6
Copper-base 3 1
Zinc 2 0
Magnesium _2 _0
TOTAL 36 26
Additionally, the total costs indicated in the tables for the
metal-type foundry industries differed significantly in their content.
Table 75 illustrates the differing content of the industries by showing the
relative importance of total BPT capital costs for direct dischargers that
would be attributable to the single process or process combination involving
the largest capital costs in 1984.
IV-2
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Table 75
IMPORTANCE OF SINGLE MOST IMPORTANT DIRECT DISCHARGER PROCESS
OR PROCESS COMBINATION - 1984
(Dollars in Thousands)
Industry
Gray iron
Ductile iron
Malleable iron
Steel
Alumi nun
Copper-base
Zinc
Magnesium
Total
Capital
Costs
Total
Number of
Dischargers
Most
Important
Process (es)
Most Important
Process as * of
Costs Dischargers
$17,228
2,855
1,122
5,819
4,002
1,212
419
240
133
12
13
48
28
28
12
7
Dust/Melt/Slag
Melt/Mold/Cast
Dust
Dust/Sand/Mold/Cast
Investment Casting
Dust
Cast Ale!t
Dust/Grinding
Costs Discharger!
53%
25
78
47
43
26
92
100
325
8
85
4
43
36
83
86
Treatment in place for the foundry industry varies widely. In 1981,
36% of the 950 foundries who were generating process wastewater had
implemented 100% recycle, but 64% of them were directly or indirectly
discharging. Of the 605 dischargers, 86% had no treatment in place, but 87
of them already had lime and settle treatment equipment in place. For those
87 foundries, options that call for 90% and 50% recycle, and which would
result in reduced compliance costs, have been proposed.
IV-3
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For the 90% recycle option, EPA estimates that per foundry compliance
capital and operating costs would be reduced $5,000 and $860, respectively.
Comparable compliance cost reductions for the 50% recycle option as
estimated by EPA are $24,000 and $5,230, respectively. Tables 8 and 9 in
the Executive Summary chapter show the reduced compliance costs for the
whole foundry industry and its metal-type industries. It was assumed in the
analysis, however, that neither option would be appropriate for the 518
foundries that do not already have lime and settlement treatment equipment
in place. For those foundries, the combined compliance costs for
installing that equipment, and of complying with either option, would be
more than the compliance costs for 100% recycle.
IV-4
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REGULATORY FLEXIBILITY ANALYSIS
The Regulatory Flexibility Act (Public Law 96-354) requires that a
Regulatory Flexibility Analysis (RFA) be performed for EPA regulations
proposed after January 1981, and which could have a significant economic
impact on a substantial number of "small entities" (i.e., small business).
The act governs both the "Best Practicable Technology Currently Available,"
(BPT) and "Best Available Control Technology Economically," (BAT)
regulations proposed by EPA for promulgation in 1984. This chapter provides
an RFA about possible economic consequences resulting from the meeting of
proposed BPT and BAT regulations by small foundries. The RFA consists of
three sections that successively consider criteria for delineating the
maximum size of small foundries, review the analytical framework underlying
determination of economic impacts resulting from compliance by all foundries
with the proposed regulations, and relate the impact analysis to small
foundries as defined, and to all larger foundries.
SMALL FOUNDRY SIZE CRITERIA
Under Section 3 of the Small Business Act (13 CFR Part 121), "small
business" is defined by the number of a firm's employees and by the dollar
volume of a firm's net income. For the foundry industry specifically, the
SBA act also specifies that the maximum employee size for "small" foundries
ranges from 500 for ferrous foundries to 1,000 for nonferrous foundries, and
that the maximum net income size for all "small" foundries is $2 million.
On the basis of the SBA size criteria, most foundries qualify as small
business. Of all 3,664 foundries that were operating in 1978, 96% were
small according to the SBA employee size criteria, and 98% were small
according to the SBA net income criteria.
Y-l
-------
However, the Regulatory Flexibility Act and the Small Business Act both
recognize that basic, narrow definitions may not be applicable to an entire
industry, particularly when it has an extreme diversity of plant sizes. In
such instances, both acts permit the use of alternate criteria that more
realistically delineate the maximum size of "small business".
Insofar as the foundry industry is concerned, there is an extreme
diversity of plant sizes. In 1978, 61% of the 3,664 foundries had less than
50 employees, and those plants shipped only 6% of the industry's tonnage.
In sharp contrast, 29% of the foundries had between 50 and 249 employees,
and they collectively had a 31% shipments share. Another 10% of the
foundries having at least 250 employees accounted for 63% of all tonnage
shipped by the foundry industry.
Foundry managers and trade groups recognize operational differences
between foundries in the three employment-size groups, and they frequently
describe those groups as being of small, medium, and large size,
respectively. Consistent with those size distinctions, this analysis
concludes that 50 employees is a realistic delineator of maximum size for a
small foundry.
IMPACT ANALYSIS FRAMEWORK
The analysis of economic impacts for the foundry industry presented in
this study was confined to foundries that cast one of 9 dominant metal types
as their major metal. The analysis for all but one of the metal types
utilized a format whereby each foundry operating in 1978 was assigned to a
specific employment-size segment based on the major metal cast, the
foundry's number of employees, and the relative importance of castings
shipments to jobber and captive markets. In turn, projections of foundry
segment populations in 1984 were made by applying forecast annual rates of
baseline closures and new plant openings. The projected 1984 segment
populations were then distributed between dry and wet foundries, with the
wet plants being further distributed between (1) zero dischargers, and (2)
Y-2
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direct and indirect dischargers. Additionally, compliance investment costs
(capital costs) and annual costs (operating costs) developed by EPA for
analyzing the impacts for direct and indirect dischargers were assembled
within the framework of the segmentation format.
The single exception to the basic analytical format was that one large
foundry employing more than 250 workers, and which makes castings from the
additional dominant metal—lead—that are used in the production of
batteries. Exclusion of that single large foundry from the overall analysis
had no bearing of any significance on this RFA.
CLOSURES FOR SMALL AND LARGER FOUNDRIES
The most visible and critical portion of the overall impact analysis
pertained to determination of the number of foundries that might close
rather than comply with the proposed regulations. To determine possible
closures of jobber foundries, compliance capital and operating costs were
related to financial profile data by applying 2 capital adequacy tests and
one cost absorption test. Conversely, possible closures of captive
foundries were determined by applying a single financial test which measured
price increases necessary to completely recover compliance operating costs.
The overall analysis indicated that 596 of the 3,484 foundries
projected for 1984 would be directly or indirectly discharging. Compliance
with Level 1 treatment by all of those dischargers would require $67.4
million of capital costs and $16.3 million of operating costs, based on 1978
dollars. Application of the financial tests indicated that 25 foundries of
various sizes might close rather than comply with Level 1.
Consistent with the criteria that small foundries are those with less
than 50 employees, in 1984 there would be 143 small direct and indirect
dischargers employing 4,074 workers among a total of 2,127 small foundries
having 48,066 employees. Compliance with Level 1 treatment by the 143 small
Y-3
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dischargers would, in 1978 dollars, involve $7.5 million of capital costs
and $1.4 million of operating costs, and the financial tests indicated that
19 small foundries with 184 employees might close rather than comply.
The 19 small foundry closures attributable to Level 1 would be
equivalent to 0.9% of all small foundries and to 13.3% of the small direct
and indirect dischargers. The 184 workers that would be disemployed by the
closures would represent 0.4% of the total small foundry workforce, and 4.5%
of the employees for all small foundry dischargers.
Compliance by the 143 small foundry dischargers with Level 4, which is
the most stringent of the alternate treatment levels, would increase the
compliance capital and operating costs to $10.5 million and $1.9 million,
respectively, in 1978 dollars. Applying the financial tests to those costs
indicated that 30 small foundries employing 454 workers might close rather
than comply with Level 4. While those 30 closures would represent only 1.4%
of all small foundries, they would be equivalent to 21% of the small
dischargers. Similarly, while only 0.9% of the total small foundry
workforce would be displaced by the closures, 11.1% of the employees at the
small foundry dischargers would lose their jobs as a result of Level 4.
To provide perspective for this RFA, closure determinations for the
larger foundries, (i.e., those with 50 or more employees) are also
detailed. Of the 1,357 larger foundries projected to be operating in 1984,
453 would be direct or indirect dischargers. For them to comply with Level
1, capital and operating costs of $59.9 million and $14.9 million,
respectively, would be required, based on 1978 dollars. Although those
absolute dollar amounts dwarf those for the small foundries, the financial
tests indicate that only 6 of the larger foundries might close rather than
comply with Level 1.
Y-4
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Furthermore, the 453 larger discharging plants would be employing more
than 73,000 workers in 1984, which is nearly 30% of the 255,000 total
employment by all 1,357 larger foundries. However, only 300 employees would
be displaced by the 6 larger foundry closures resulting from compliance with
Level 1. On a relative basis, the closures and job losses are
insignificant. Only 0.4% of all larger foundries and 1.3% of larger
discharging foundries would close because of Level 1, and only 0.1% and
0.4%, respectfully, of the employees at those foundries would lose their
jobs. Similar computations pertaining to the alternate treatment levels
would show similarly insignificant impacts for the larger foundries.
Clearly, closure consequences for small discharging foundries with less
than 50 employees differ greatly from those for the larger discharging
foundries with more than 50 employees. If all foundries employing fewer
than 50 employees were exempted from the proposed regulations, only 6 larger
foundries would close rather than comply with Level 1 and Level 2, and the
resultant number of job losses would be reduced about 40% to just 300.
Additionally, compliance with Level 3 would result in only 12 closures of
foundries with 500 job losses (down nearly 50%), while compliance with Level
4 would result in only 14 foundry closures with 770 job losses (down 40%).
V-5
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ANALYSIS OF ECONOMIC IMPACTS
Compliance-cost estimates for water pollution treatment systems by
foundries were developed for EPA by a technical contractor. The cost
estimates pertained to the "Best Practicable Technology Currently Available"
(BPT) proposed regulations and to the more restrictive "Best Available
Control Technology Economically Achievable" (BAT) proposed regulations. For
instances where foundries will need to comply with BAT, up to three
alternative cost estimates were developed. Pretreatment technologies (PSES)
for foundries discharging indirectly to POTW's were considered as identical
to the BPT and BAT treatment alternatives for directly discharging
foundries. Additionally, cost estimates were developed for two options
involving 90$ and 50% recycle of process wastewater discharged.
Collectively, the regulations involve six treatment levels. Listed below
are brief descriptions of the various treatment technologies tested. A
complete description of the technologies can be found in Sections VIII
through XIII of the Development Document.
Treatment Technology Levels
Level 1 Treatment
For BPT, covers 14 processes with 100% recycle. Four processes are
allowed to discharge after treatment. They are investment casting, melting
furnace scrubber, and die casting for aluminum foundries, and the melting
furnace scrubber process for zinc foundries. Altogether, 18 BPT processes
are covered by Level 1.
PSES covers 13 processes with 100% recycle. Four indirect discharging
processes have no regulations. They are the dust collection and grinding
scrubber processes for magnesium foundries, and the investment casting and
melting furnace scrubber processes for aluminum foundries. Two indirect
discharging processes have an allowable -discharge. They are the die casting
process for aluminum foundries, and the continuous strip casting process for
lead foundries. Altogether, 19 PSES processes are covered by Level 1.
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Level 2 Treatment
Same as Level 1 with one added direct discharging process. The zinc
melting furnace scrubber process is required to go to TOO* recycle.
Level 3 Treatment
Same as Level 1 with the aluminum investment casting and melting
furnace scrubber processes, both direct and indirect, required to go to 100%
recycle. Also, the aluminum die casting process, both direct and indirect,
is allowed a discharge after treatment with activated carbon. Additionally,
the zinc melting furnace scrubber process, both direct and indirect, is
allowed a discharge after treatment with activated carbon.
Level 4 Treatment
Same as Level 3, except the aluminum die casting process, both direct
and indirect, are required to go to 100% recycle after treatment with
activated carbon. Also, the zinc melting furnace scrubber process is
assumed to go to 100% recycle after treatment with activated carbon.
Level 5 Treatment
Covers 90% recycle for both direct and indirect dischargers included in
Level 1.
Level 6 Treatment
Covers 50% recycle option for both direct and indirect dischargers
included in Level 1.
The analysis of economic impacts for the foundry industry resulting
from compliance with the proposed regulations was structured within a
segmentation format where each foundry was assigned to a specific segment on
the basis of (1) the major metal that it casts, (2) its number of employees,
and (3) the markets which buy or use the castings that it produces. For the
analysis, the compliance cost estimates were related to financial profiles.
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The compliance cost estimates and financial profiles were both
developed within the framework provided by the segmentation format.
The analysis essentially constituted an interpretation of
financial effects of compliance costs on the capital availability
and profitability of foundry segments and their contained
foundries. The financial profiles were directly responsive to
that interpretation.
The analysis resulted in findings about five types of impacts—plant
closures and employment losses, changes in production, community effects,
price increases, and balance of trade effects. Conclusions as to the
specified impacts follow.
Plant Closure and Employment Loss Impacts
The Foundry Industry
In 1981, the U.S. foundry industry was employing 295,764 workers at
3,538 plants. Of those plants, 27% were wet (i.e., their foundry processes
involved wastewater), and 64% of the wet plants were discharging their
process wastewater either directly or indirectly. During the 1982-83 years,
it is projected, however, that 375 of those plants may close for a variety
of economic considerations. The annual rate of those plant disappearances,
which are termed "baseline closures," will exceed S%. The baseline closures
will be partially offset, however, by the projected opening of 321 new
plants, with the result that 3,484 plants employing 293,236 persons may be
operating in 1984. Table 76 shows the derivation of the population of all
foundries over the 1978-84 period, as well as the foundry industry's
projected employment in 1984.
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Of those 3,484 plants, 21% (or 940) will continue to be wet, and 596
(or 63%) of the wet plants will be directly or indirectly discharging
process wastewater. If the proposed Level 1 regulations for foundries are
promulgated in 1984, compliance by all 596 dischargers would (in 1978
dollars) require capital expenditures of $67.4 million and would add $16.3
million to annual operating costs. Compliance with the strictest level of
regulations that have been proposed would increase the capital and cost
outlays (in 1978 dollars) by $8.1 million and $4.3 million, respectively.
Collectively, the 596 discharging foundries would be employing 98,159
workers in 1984, 33% of total foundry employment.
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