INVESTMENT CASTING MARKET OVERVIEW NORTH AMERICA

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INVESTMENT CASTINGMARKET OVERVIEWNORTH
AMERICA Scott Hanson President Auburn
Investment Casting
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Investment Casting Trends

• North American Investment Casting Industry
• Across the Board increase in activity
• Foundries Suppliers are busy
• Raw Material Cost/Availability
• Energy Cost
• Offshore Sourcing

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Investment Casting Trends - contd

• Segment summary
• Aerospace commercial record level of new
  orders
• military D.O.D. in transition
• IGT Significant spare part demand
• New Build Growth forecasted for Asia, Mid-East
• Africa
• Automotive - activity in complex applications
• Turbocharger Systems
• General Industry growing with overall economy

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Market Segments

• Aerospace
• Jet Engine
• Blades Vanes (Airfoils)
• Integral Wheels Nozzles
• Hardware and Structures
• Airframe
• Hardware and Structures
• Missile Rocket Components
• Other Military Ordnance

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Market Segments

• Industrial Gas Turbines
• Blades Vanes (Airfoils)
• Hardware and Structures
• Turbine and Combustor Components

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Market Segments

• Automotive
• Valves
• Turbocharger Components
• Complex Powertrain Parts
• Chassis Applications - Passenger Car and
  Motorcycle

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Market Segments

• General Industry
• Medical Implants, Instruments Testing Equipment
• Industrial Valves / Pumps
• Petrochemical
• Food Processing
• Off-Road Equipment
• Firearms
• Construction Equipment
• Hand Power Tools
• Recreational Sporting

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North American IC Industry

• United States, Canada Mexico
• Approx. 46 of worldwide investment casting
  production
• 130 companies
• 170 foundries (not including dental, art or
  jewelry)
• 30,000 direct workers
• All market segments
• All castable alloys
• All size capability

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North American Investment Casting2005 Sales (
Million - USD)
Aerospace 1,600 IGT 800 Automotive
250 General Industry
550
TOTAL 3,200
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North American Investment Casting Market by
Alloy Type
Aluminum Copper 7 Titanium
9 Steel 33 Superalloy
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2005 Casting Dollars 3.200M
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Worldwide Investment Casting ( Million - USD)
2005 North America 3,200
Europe 1,700 Asia 2,000
Other 100
TOTAL 7,000
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Aerospace - Commercial

• Large Transports
• World traffic up 6
• Load factors New Orders at Record Level
• 2005-2009 build forecast avg. 970 / year
• Asian Market Growing Rapidly
• New Programs
• A380 / 747-8
• A350 / 787
• China Regional

New Aircraft Builds gt 50 Passenger
ROM Associates 2- 06
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Aerospace Commercial contd

• Concerns / Issues
• Airline losses continue
• High Fuel Prices
• Several US Airlines in Chapter 11
• Airlines adopting the Low Cost Business Model

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Aerospace Commercial contd

• Business Jets
• New orders up significantly
• Delivery of new aircraft 30 higher
• Corporate ownership/leasing Fractional Shares
• Increased demand for used aircraft
• Airframe Engine Manufacturers very busy
• Private Jets
• New Market starting to develop
• Low cost replacement for some General Aviation
  models

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Aerospace - Military

• Increase proposed for D.O.D Budget
• Demand for engine spare parts for Fighter,
  Helicopter Transport aircraft
• Some Advanced Aircraft Programs being pushed out
• Future Combat Systems
• - Smart Munitions
• - Lightweight Armament
• - Battle Field Ship Board Applications

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Industrial Gas Turbines

• High Spare Parts Demand
• Increase in Aero derivatives
• Growing After Market Business
• Large Frame Growth in Asia, Mid-East Africa
• Limiting/Competing factors
• Infrastructure for NG
• Price / Availability of NG
• Future Technology
• Wind Power
• Coal Gasification

New Land-based Turbine Builds 50MW
2-06 Consensus Industry Forecast
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Automotive

• New Investment Casting Applications
• Design Activity in Commercial Trucks, Passenger
  Cars High
  Performance Vehicles
• Driven by new emission standards and fuel
  efficiency
• Turbocharger Demand straining capacity
• Titanium Alloy components growing

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General Industry

• Dispersed among many casting suppliers
• Wide range of size alloys
• Applications across all industries
• Many Niche opportunities
• High volume applications susceptible to offshore
  sourcing
• Overall, should continue to increase with growth
  in economy

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North American Investment Casting2006 Estimated
Sales ( Million - USD)
Change
Aerospace 1,725 8 IGT
850 6 Automotive 265
6 General Industry 570 3.5
TOTAL 3,410 6.5
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Opportunities for Consideration
- Machined Parts - Finished / Ready to Assemble
- Low Volume Custom Parts - Military Munitions
Support Equipment - Military Spares - After
Market for Aerospace IGT - Medical Instruments
Testing Equipment - Conversions from other
processes - Combining Multiple Parts into
Integral Casting - Higher Value Alloys - Larger
Castings - International Customers - Die Casting
Prototyping
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2006 Forecast Comparison
Change
ICI 6.5 GDP 3.5 Ind.
Production 3.8
DeWolf - Commercial 4 SFSA
10 BICTA 8

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Summary

• Overall North American IC growth will continue
• All Market Sectors will benefit
• Off-Shore Sourcing effect on N. American
  foundries?
• Some concern with Raw Materials Energy
• Opportunities for New Casting Applications
• Need to focus on market Niches Supplying Value
  Added Features / Services

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Acknowledgement

• The Investment Casting Institute wishes to
  acknowledge the following companies for their
  contribution to this report.
• - Alcoa Howmet
• - Blayson Olefines, LTD.
• - Doncasters Inc.
• ESCO Turbine Group
• - Hitchiner Mfg. Co.
• ROM Associates