Cyclical Fluctuations in Foundry Activity

Abstract

THE extreme sensitivity of foundry operations to business change has been apparent for many years [7]. Only recently, however, has sufficient information been available to permit an analysis of the cyclical movements of foundry output as a whole. An adequate accumulation of data in a number of the Facts for Industry Series of the Bureau of the Census, some of it collected for the first time during World War II, now makes possible the construction of a seasonally adjusted index of foundry activity covering a period of business fluctuations. In general, foundries produce metal parts or castings to the custom specification of local firms in durable goods industries; consequently foundry activity is influenced by cyclical fluctuations in a wide range of geographic and industrial areas. Five general characteristics of the industry affect its sensitiveness to change: (1) The production of foundries is dominated by changes in the demand for a variety of products commonly classified as durable consumers' goods, investment goods, and war materials: castings are employed as bases for pumps, lathes, and presses; as frames for pianos, lawnmowers, and locomotives; as wheels for railroad cars, airplanes, and machines; and as component parts for lamps, engines, and motors. (2) Castings are made by several thousand establishments operating in many geographically separated markets; under these atomistic conditions, foundry production describes the activities of a wide range of firms and tends to minimize the influence of one or a few firms on production totals. (3) The production of castings made from different metals is dominated by various technical requirements: use of aluminum castings is regulated by the level of output of such objects as airplanes and portable tools, where lightness of weight is a major consideration; the quantity of castings made from brass and bronze, malleable iron, steel, and gray iron reflects, respectively, the rate of manufacture of corrosion-resistant fittings needed on ships and in chemical plants, shock-withstanding parts for railroads, armor plates for tanks, and general components for producers' and consumers' goods. (4) Since inventories of rough castings tend to be small, the production of castings is closely related to current demand. Foundrymen usually make parts to the specification of the individual consumer and so find it difficult to accumulate castings