The production of Italian foundries is again decreasing, according to the quarterly report by Assofond, which notes the difficulties of the entire European segment
by Roberto Guccione
The production of Italian foundries is decreasing again: -5.6% during the second quarter compared to the same period in 2018. This is the snapshot of the industry which results from regular reports by Assofond, Confindustria’s association which represents the Italian foundry industry.
Published by Assofond’s Study Centre, the report is based on data provided by member companies (which account for 31% of national production) and provides a quarterly snapshot of the trend of the main indicators in the foundry sector. Data analysis in the second quarter of 2019 urged Assofond’s president Roberto Ariotti to turn to the new Government to ask for more energy in tackling the industrial issue: “Recovering the relationship with Europe, which represents the fundamental market for the Italian industry, and placing jobs and the industrial issue at the centre of the Government’s actions”, president Ariotti underlined. “These are our priorities, this is what we require strongly from the new Government, hoping it will be able to mark an important discontinuity with respect to the previous Government as regards industrial policies and relationships with European allies”.
Foundries: at the heart of manufacturing
The foundry segment represents the backbone of Italy’s manufacturing industry: over 1,000 companies which employ almost 30,000 operators and create high added value products for such industries as automotive, mechanics, agricultural machinery, shipyards and nautical industry, air and rail transportation, electrical energy production. An excellence which produces 2.3 million tons (second in Europe right behind Germany) and almost 7 billion euro in revenues, which for the past several months has however been bearing the brunt of a deceleration of all its main client segments, just like foundries of all main countries in Europe: in Germany during the second quarter industrial production fell by 5.9% with respect to the same period in 2018. “Even during the second quarter we slowed down”, Ariotti remarked, “even though there were different dynamics between one segment and another: cast iron foundries, after a first quarter above the average levels of 2018, report a significant downturn in the second quarter; non-ferrous metal ones do not show any signs of an upswing after several quarters of decrease, and only steelworks bounce back to a position which might prelude to a positive recovery sign”.
Industrial production: another drop in the second quarter
The index of industrial production in Italian foundries, seasonally adjusted and with base 100 referred to the quarterly average for 2018, drops to 96 points, with a drop of 1.5% with respect to the first quarter. The graphic evidence returns a recessive picture: the current values is the lowest since the first quarter of 2017 and shows a forecast loss, with respect to the second term of 2018, of -5.6%. Besides, this is already a quarter with decreasing results, within a continuously negative trend, which began in 2018 and which led, from the third quarter of last year, to a reduction of production level to below 100. Considering the sum of changes from the beginning of the year, that is, the deviation between the first half of 2019 ad the corresponding period of 2018, the downturn adds up to -5.1%.
Back to the industry’s details, the production index for cast iron decreases by 5.2% during the first quarter and settles down at 95.7 points compared to the 2018 average; steel, the only segment in countertrend, grows by +27.6%, recovering the decreases in production reported during the last quarter of 2018 and the first quarter of 2019, reaching the 100 mark and ending up at 106.3 points. However, the recovery of previous levels is still far from being attained: the trend is still negative and evens the growth from the beginning of the year, if compared to the first quarter of 2018 is still markedly negative.
The segment of non-ferrous metal foundries, to conclude, records a new low, equal to 94.9, and loses another -2.8% compared to the previous term.
Non-ferrous metals: the negative trend
continues, but confidence is increasing
Production levels of non-ferrous foundries continue their negative trend and at the same time forecast values, which have been negative for three quarters already, get even worse. European companies in the same segment fare no better: the French context is the one experiencing the greatest difficulties.
Confidence of entrepreneurs who took part in the Assofond survey is increasing, but, all things considered, it is still low, with the index measuring its intensity still below the 45 mark, which would show a greater optimism.
In the second term of 2019, the index of industrial production for non-ferrous foundries goes down to 94.9 points, with a further decrease of -2.8% compared to the first quarter of this year. The value reached is the lowest in the historical series shown and along with the below average performance reached in the first quarter of 2019, it makes the overall downturn worse, bringing the loss of production levels in the first quarter compared to the corresponding period of 2018 down to -5.5%. The trend is continuously negative, even considering the first quarter of the year, which witnessed a slight recovery. In actual fact, the segment of non-ferrous metal foundries has been technically going through a recession since the second quarter of last year, when forecast values began to show negative signs with respect to the corresponding quarters of 2017 (-0.5%, in the third quarter, and -.0% in the fourth). -7.4% in the second quarter of 2019 not only confirms a downward trend, but it represents the worst loss of the last six quarters. Even the contingent datum (-2.8% compared to the first term) denoted a persistent difficulty similar to the downturns recorded in the second part of 2018.
The use of production capacity decreases, on average, to 73.5% after three quarters of continuous growth. It is, however, a good result: 76.9% of non-ferrous foundries consider their level of production capacity, achieved in the second quarter, satisfactory, and only 7.7% considers it insufficient with respect to the overall capacity. Order visibility remains scarce, but stable at 2.4 moths, just as in the previous two quarters.
The sample which took part in the second quarter 2019 survey represents 11% of the estimated Italian production of non-ferrous castings in 2018, on the decrease with respect to Assofond’s previous survey.