Production down in the second quarter for Italian foundries
In the second quarter of 2023, the production activity of Italian foundries recorded a contraction, mainly the result of a decrease in orders and orders from most of the foundries' main customer sectors. This is highlighted by the economic survey carried out by the Assofond Study Center on data relating to the period April-June 2023.
Production of Italian foundries and turnover
In the second quarter the cyclical change in production (in tonnes) stood at -2.7% compared to the first quarter. The economic downturn contributes to determining a negative figure also at a trend level: the decline compared to the same period of 2022 is equal to -3.8%.
41.7% of responding companies indicated a decline in production levels; for 31.3% of cases production remained stable compared to the previous quarter, while in 27.1% of cases it increased. Even from the point of view of turnover we are witnessing similar dynamics, with an economic decline of -3.9% compared to the previous quarter, which is reduced to -2.6% if we compare the revenues of the April-June period with those of the same quarter last year.
Turnover is decreasing cyclically for the absolute majority of companies that responded to the survey (54.2%), while the remaining part of the companies interviewed is divided between those who indicated a stable turnover compared to the previous quarter (18.8% ) and those who, however, reported growth (27.1%).
Main reasons for the economic variations in the performance of the foundry sector
Among the companies that communicated a decrease in production, 69.6% of the responses indicated the decline in orders and orders as the main reason, followed by the reduction in days worked (13%) and "other reasons" (13%), response which includes both reference to normal cyclical trends and to extraordinary reasons for plant downtime.
Among the foundries that, on the other hand, increased production, the main reasons identified were a greater number of days worked compared to the first quarter and the increase in market demand, in terms of greater orders or orders received.
The negative cyclical change in turnover is motivated by the absolute majority of responses (58.8%) with the reduction in quantities shipped. Next, 32.4% of the responses indicate a reduction in sales prices. From the point of view of turnover, the absolute majority of those who increased it (73.3%) did so due to an increase in the quantities shipped, while 26.7% increased sales prices.
Sectoral dynamics in Italian foundry production in the second quarter of 2023
The negative sign in the production dynamics unites two groupings into which the foundry sector is traditionally divided: that of ferrous metals, i.e. cast iron and steel, and that of non-ferrous metals, i.e. aluminium, zinc, copper and other alloys.
Ferrous metal foundries recorded a decline of -2.1% compared to the previous quarter and -2.4% compared to the same period last year. For non-ferrous metal foundries, however, the decline was respectively -4.2% (cyclical) and -8% (trend). Also with regards to turnover, the least positive performance was that of the non-ferrous metal foundries (-6.1% cyclical and -15% trend), while those of ferrous metals limited the damage, with a contraction of -2, 9% economic situation which fails to bring the trend trend into negative territory (+2.8%).
What reduced the losses of this group compared to that of non-ferrous metals was almost exclusively the good quarter of the steel foundries, which recorded results that went against the trend: production remained more or less stable compared to the previous quarter (+0, 4%) and in clear recovery compared to the same period of 2022 (+15.7%), while the turnover was lower by -1.2% on the January-March period and up by +25.1% on the second quarter of last year.
Climate of trust in the production activity of foundries
The short-term expectations of entrepreneurs reached the lowest figure of 2023 in June: the SIX index (which summarizes the responses on companies' prospects for the six months following the survey) is compressed to 43.3 points, a figure lower than the 50 points which represents the threshold for transition between positive and negative sentiment, and is confirmed to be decreasing compared to previous months. The majority of foundries no longer believe in a stationary situation (33.3%) but expect it to worsen slightly (36.7%). The most optimistic companies also decreased and, in the last month, amounted to 23.3% of the sample.
Labor market in the foundry sector
The survey conducted by the Assofond Study Center also maps the trend of the job market in the sector on a six-monthly basis. The analysis relating to the first half of 2023 shows that the vast majority of foundries (85.4%) were looking for new staff.
The most sought after profiles are specialized workers, indicated in 34.4% of the responses, followed by unskilled workers (28.9%). Despite the numerous positions sought, however, only 9.8% of the sample expressed full satisfaction with the search carried out, with the consequent hiring of the sought-after workers: the majority of companies (75.6%) only partially achieved their objectives.
President Zanardi's comment: «Slowdown expected, but I remain confident. We are essential for the ecological transition"
«We expected a slowdown, given the signals coming from the world economy and from all the main client sectors – underlines the president of Assofond Fabio Zanardi. For a few weeks now, our associates have been underlining a contraction in orders, which we partly attribute to stock disposal dynamics along the supply chain, but which now clearly also represent a deeper sign of a decline in demand in the sectors downstream of the foundries. The prospects therefore remain uncertain for the next few months too, with all the main economies slowing down, starting with Germany which represents the largest foreign outlet market for Italian foundries. Despite a certainly not rosy economic situation, I remain moderately optimistic for the future: foundries are and will be a fundamental link in the ecological transition path that will characterize the coming years, and in Italy we have already demonstrated that we know how to make quality castings capable of be decisive for decarbonising many downstream industrial sectors, such as the automotive and means of transport in general, energy production, industrial and agricultural machinery. Without foundries, Europe's ambitious environmental objectives would not be achievable."
Source: In Fonderia – ll magazine dell’industria fusoria italiana