Despite threats of inflation, rising interest rates, war, and natural disasters, the results from Foundry Management & Technology’s annual Business Outlook Survey are surprisingly positive. Across the board, our reader-respondents saw improvements during the past year. More important, that trend looks to continue into the new year.

Comparing their reports of 2005 shipments to comparable data from 2004, the numbers indicate this has been a pretty good year. Though down slightly from last year’s 67%, 49% of metalcasters identified an increase in shipments, while only 11% reported a decrease.

This year, ductile iron foundries posted the best numbers, with 78% reporting an increase in shipments. Steel foundries came in a close second (64%), although all the major metal sectors performed well. Gray iron metalcasters saw an increase of 6.8%, followed by bronze/brass foundries (up 5.8%), and aluminum (up 4.3%).

Breaking the responses down according to the size of the operation shows that in 2005 bigger has been a little bit better: 66% of foundries employing more than 250 people reporting an increase in shipments. Foundries with 20-49 employees snuck into second place with 61% reporting an increase in shipments, while those employing 100-249 came in a respectable third at 55%.

Steel foundries lead the field for optimism, as those operators are offering the brightest outlook: 73% of them expect to see a rise in shipments in the coming year. Ductile iron (48%) and aluminum (47%) operations battled it out for second place. Both gray iron and brass/bronze foundries hope to see an increase in shipments of 3.4% and 2% respectively. Size-wise, the big producers have higher expectations with 66% of those employing more than 250 anticipating a jump in shipments of some kind. Overall, the industry expects to see an increase of 4.6%, a little bit less than what they were predicting for 2005, but still positive.

Nothing indicates an optimistic outlook like spending money, and the survey data regarding capital expenditures planned for 2006 shows that the industry as a whole, 65%, expects to spend at about the same rate as 2005.

Grinding equipment tops the list of planned purchases this year, with 22% of plants indicating intention to buy this type of equipment. Next in line will be lift truck and loaders (20%) and machine tools (15%). Slipping into fourth place is melting equipment (15%), the most popular choice in last year’s survey. Finishing out the top five is blast cleaning equipment, which 13% of respondents plan to buy.

So who’s doing the buying? As we saw in the 2004 survey, ductile iron metalcasters expect to be laying out the most cash: 54% of those respondents plan to increase capital expenditures. Brass/bronze foundries jumped from the bottom of last year’s list to second place, as 42% expect to increase capital spending next year. All sectors, however, are predicting an increase in capital expenditures in 2006.

In terms of debt management, metalcasters remain willing to take on some volume of debt, but only 9% plan to take on more debt in the coming year than they currently carry. Most (31%) expect to carry the same amount of debt as they did last year, and 30% predict they will retire some of the debt they are carrying.

Capacity utilization levels were up 74% in 2005, according to our respondents. Ductile iron and gray iron casting producers operated at above the survey’s average for the industry, at 83% and 80%, respectively. The remaining sectors also reported strong numbers: steel reported an capacity utilization rate of 73%, aluminum 69%, and brass/bronze 67%.

In this area, the larger foundries definitely performed better than the rest: Those operations employing more than 250 workers operated at an impressive 91% capacity utilization. Nonetheless, even the smallest of foundries saw their capacity utilization numbers (70%) go up over last year.

In last year’s survey, more than half the metalcasters surveyed (65%) said that imports — mainly from China — were affecting their business at an increasing rate. This year, only 37% reported that imported castings continue to be a problem. Yet, by examining the comments many reader-respondents offered with their survey we know that many of our respondents have foreign competition on their minds. Even so, higher raw-material costs were their greatest concern over 2005, with 69% reporting this as their biggest problem.

The cost of doing business in general certainly seems to be the rise, followed by medical insurance costs, 68%, and workers’ compensation costs worrying 53% of the respondents. And, it doesn’t look like these worries are going to go away anytime soon. The top four problems of 2005 apparently will to continue to cause headaches for these respondents in 2006, as all four top the list of anticipated problems for the coming year.

What are these respondents not so worried about? Just like last year, there are no apparent worries about the quality of U.S. castings as only 5% report it was a problem in 2005 and 4% expect that to be a problem in 2006.

After enjoying two reasonably successful years, metalcasters are hoping these good times will continue. In terms of the overall U.S. economy, only1% of the survey respondents think business conditions will improve dramatically in 2006. In fact, 50% expect things to remain the same, and 26% fear the economy will decline slightly. Part of that fear is likely based on a seemingly permanent sense of unease that has characterized the early years of the new millennium. From terrorist attacks, to war, to tsunamis, and hurricanes, it seems only reasonable to use caution when predicting the future economically, or otherwise.