10 MPR July/August 200910 MPR July/August 2009 0026-0657/09 ©2009 Elsevier Ltd. All rights reserved.

special feature

Whatever happens in Las Vegas, stays in Las Vegas,” goes the hackneyed say-ing. But the Metal Powder Industries Federation (MPIF), organisers of the

PowderMet 2009 conference and exhibi-tion, were hoping attendees would not keep secret all that they learned and expe-rienced during the three-day conference and exhibition in late June.

“What happens here doesn’t have to stay here,” said Jim Trombino, execu-tive director of the MPIF, in his open-ing remarks to PowderMet 2009 attend-ees. “Take what you learn here, bring it back to your businesses and share the information – which will help you

make informed decisions as we move toward a recovery.”

Indeed, education was in ample sup-ply at the show. From literally dozens of specialised technical sessions to the timely and topical general economic and manufacturing sessions, PowderMet 2009 offered virtually something for everyone in attendance.

Following are some highlights from the show:

Dr Sean McAlinden, executive vice president for research and chief economist at the Center for Automotive Research in Ann Arbor, Michigan, kicked off the pro-gramme with a sobering keynote speech focused on a critical powder metallurgy end-use sector: automotive. In his presen-tation, titled “Tough Driving Ahead: The Future of the US Automotive Market in the Next Decade,” McAlinden provided a well-rounded assessment of the current economic environment and the state of competition, delving deeply into both the harsh realities of the present predicament and touching on the future prospects for a market recovery.

First the bad news: Both light truck and passenger car sales are down more than 36 per cent year over year through May. The automotive industry went from a high of 17.4 million sales in 2000 to a projected 11.5 million this year – a 34 per cent decline. Even worse, McAlinden said, suppliers’ revenues are down 50 – 60 per cent year to date. Dealer inventories

are way down, too, and not just for GM, Ford and Chrysler dealer partners but also Toyota and Honda. More importantly, the trio formerly known as the “Big Three” has collectively shut down 56 plants since 2003. Similarly, Delphi – which supplies parts for several companies – has shut-tered roughly 21 production facilities, by McAlinden’s count. All told, more than 193 000 jobs have been impacted.

“Take a deep breath,” McAlinden told attendees. “This is not going to be a quick turnaround.” For one, he doesn’t anticipate the US economy will recover until 2011. And even when it does, he said, we’re not likely to see another nine-year run where the automotive industry

PowderMet 2009: optimism amidthe challenges Trying to focus minds on the opportunities that may be on offer in economic recovery rather than the realities of recession, the MPIF provided a varied menu for those attending PowderMet 2009 in Las Vegas, says Reginald Tucker…

Jim Trombino, MPIF executive director, addresses attendees on opening day.

Dr Sean McAlinden of the Center for Automotive Research delivered an informative keynote presentation on the state of the US automotive industry.

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consistently sold more than 16 million units.

Second, when the industry does emerge, the competitive picture will be starkly dif-ferent than what we’ve seen in the past.

“By 2012, we think Ford will have the most market share (16 per cent) vs 14 per cent for GM and 7 per cent for Chrysler,” McAlinden projected. Based on those estimates, that would put the companies’ combined share at less than 40 per cent of the market – a trend that McAlinden believes more closely resembles the European market. Other developments that stand to impact the North American automotive landscape: A new Volkswagen plant is slated for Tennessee, and Fiat – by virtue of its ownership stake in Chrysler – also has designs on domestic production facilities.

McAlinden cited another significant change on the automotive horizon – one that might not be so bad. In the face of significant plant closures and the erosion of the parts supply channel, he expects to see diminished production capacity. The upside, he said, is the loss of excess capac-ity should translate into improved profit-ability across the supply chain.

“Does this represent an opportu-nity for the powder metallurgy indus-try?” McAlinden asked rhetorically. “The answer is unequivocally ‘Yes.’ ” To bolster his case, he cited the feder-ally mandated 42 mpg target US automo-tive manufacturers must meet by 2016. In order to achieve this aggressive goal, there would need to be massive weight reductions in many automotive parts, including powertrain components. This is precisely where powder metallurgy inno-vations have an advantage, he noted. U.S. manufacturers—taking a page out of the European playbook—would need to develop advanced materials and alterna-tive drivetrain components, and employ innovations (not simply reductions) on the shop floor, he said.

More importantly, manufacturers will need to work fast. McAlinden believes the weight-reduction initiative will need to begin in earnest in 2011 if suppliers are going to meet the deadline. “Saving both weight and cost will be the key to competi-tiveness,” he said. Ironically, McAlinden noted, the end result will be lighter vehi-cles that will probably cost more money due to the materials and engineering of new parts.

Team Hoeganaes (from left): Tim Hale, John Blauser, and Sunil Patel.

Hans-Georg Seimetz, executive technical director for Komage, manufacturer of powder compacting systems.

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Erowa’s Chris Norman (left), vice president, engineering and tech support, and Martin Wilhelm, key account manager, powder metallurgy.

Activity was brisk at the Ametek booth, where Dr. Colin McCracken, development manager, powder products for Reading Alloys, an Ametek Company, fields questions from attendees.

Of course, success will be contingent on other mitigating economic factors. For instance, home prices – which correlate directly to vehicle purchases – will need to not only stabilise, but increase for there to be positive and sustained movement in consumer confidence.

Second, since 2007 Americans have lost $11 trillion in household wealth (read: stock market), McAlinden notes, which means they’re likely replace cars at a much slower rate than in the past.

Lastly, to ensure the economy is secure-ly out of danger of slipping back into a post-recession “recession,” experts say a sustained growth rate of at least 3 per cent is required. (The 2010 growth forecast is 2.6 per cent.)

To be sure, the order is a tall one. According to the Center of Automotive Research, US consumers are scrapping roughly 12 million vehicles per year, which is offset by a trend that projects the crea-tion of 10 million more households by 2016. To encourage growth and produc-tion, McAlinden notes, we’ll need 20-plus million vehicles by then to replace the number of vehicles scrapped.

In the midst of this dynamic change, McAlinden is recommending somewhat unconventional moves. Specifically, he advocates partnering with Chinese auto-motive manufacturers, whether it’s on their own turf or via stateside “transplant” operations. At present, he estimates there are roughly 24 Chinese companies produc-ing vehicles. Already, he noted, Chinese manufacturers are on course to sell 10.5 million units this year – up from 500 000 units nine years ago. “Whether it’s here or there, you need to get in on the action.”

Exhibitor pulse

With the fortunes of powder metal-lurgy technology specialists and materials suppliers so closely intertwined with the global automotive industry, it’s easy to see how PowderMet exhibitors have been impacted by the sector’s well-documented troubles—and the global recession in gen-eral. That has forced many to adjust their strategies.

Case in point: Hans-Georg Seimetz, executive technical director for Komage Gellner, which manufactures machin-ery, tooling, and handling systems for the metal powder and ceramic industry, is looking outside the company’s core Stefan and Claus Joens of Elnik Systems, a division of PVA MIMtech, LLC.

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market in Germany and pursuing opportunities in China. The firm is also diversifying by exploring applications for its technolo-gies that fall outside the automotive arena. At the show, Seimetz previewed literature detailing a new hydraulic compacting system for delicate dental applications.

Customer-focused marketing strategies were also in play across the hall at TimCal Group, which has also been hard hit by falling automotive products demand. For this firm, whose forte is high-performance graphites, the name of the game moving forward is flexibility and responsiveness. “We’re adjusting production and the number of shifts to fit demand,” said Dennis Anderson, area sales manager, Americas. This is especially critical as the company recently shut down one of its graphite mines in Canada.

TimCal’s overarching strategy, according to Anderson, is main-taining its existing customer base while effectively marketing to new ones. Based on the early feedback from buyers visiting the exhibition, the plan is paying off. “We had a new order, from a brand new cus-tomer, placed here at the show,” said Luigi Alzati, product manager, engineering materials. “This could be very beneficial to us.”

Although overall foot traffic was down – as was anticipated – several exhibitors Metal Powder Report interviewed said they were pleased with the “quality” of the traffic at their booths. “For us it was actually better than expected,” said Dr. Colin McCracken, development manager, powder products for Reading Alloys, an Ametek Company.

For others, the reaction was mixed. Joe Polito, manager, sales and service, powder metal presses for SMS Meer, described traffic as “average” on day one of the show. At the same time, he said he was mindful that PowderMet organisers (MPIF and APMI International) made a conscious effort to get parts manufacturers to come to the show.

Others also attested to the presence of parts makers. “There are a few parts manufacturers here, and that always helps,” TimCal’s Anderson noted.

MPIF management confirmed that overall attendance was down this year (600 registrants vs. approximately 850 at PowderMet 2008), but stressed the importance of focusing on the positives. “As an association we’re doing all we can to remain functional and viable,” said Trombino. “And despite the obsta-cles, we’re moving ahead.”

Mark Paullin, MPIF president, also chimed in, thanking the exhibitors for coming out in support of the show. “Even in the face of challenges, we’re still developing technologies that advance our industry while offering costs savings for our customers.”

Short-term outlookPaullin played the optimist’s card by offering attendees a

balanced outlook on the state of the North American powder metallurgy industry via a special session on the third and final day. While he acknowledged the fact that the industry has been negatively impacted by the global recession – compounded by declining home values, plunging automotive production, and the banking crisis, among other ills – he challenged attendees to find the opportunities in these challenges.

He reminded industry members that the powder metallurgy sector was forged (pardon the pun) during difficult times, as many of the pioneers got their start during the Great Depression. Paullin also reminded attendees that a recovery is imminent,

H C Starck’s Michael Drost (right) listens attentively to a visitor’s inquiries.

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Linde Group’s Akin Malas (left) and Christoph Laumen.

citing independent economic forecasts that show signs of stabilisation, with a minor economic improvement expected next year.

The main questions, he said, are: When will the domestic automotive market rebound, and will there still be parts sup-pliers in the business when it does? The best-case scenario, he noted, is that those suppliers that are left standing will be lean-er, stronger, better financed and better pre-pared to compete in the global marketplace. Paullin cited encouraging developments in the form of new applications in advanced transmissions such as dual-clutch designs and continuously variable transmissions, as well as potential applications in turbo drive systems. And while the automotive market will still be important for the industry, Paullin emphasised the importance that new, “green” energy applications bring.

“The only hope for the powder market is an expected spike in production, begin-ning in September,” Paullin stated. This, he noted, will be driven by a positive change in the automotive and home building markets. “Several PM industry observers anticipate an improvement in the fourth quarter, and we hope they are right.

Pometon personnel (from left): Giuseppe Cappuccio, Sandra Bueno Valien, Paolo Cecchinato, and Josep Vila i Nunez.

TimCal’s Dennis Anderson (left), areas sales manager, Americas, and Luigi Alzati, product manager, engineering materials.

Nic Veloff, general manager of sales and technical support, Ecka Powders.