(1) Global economic downturn, slow recovery
The global economic situation is grim and complex. The weak demand in the international market has led to a large downward pressure on the domestic economy. The foreign trade industry has been greatly affected, and the export of traditional manufacturing industry is in a severe winter. Although the U.S. economy has a short-term recovery, but there is no long-term growth momentum. The global economy is still in a depressed state. In 2016, the world economic growth rate was the lowest in nearly six years, and the traditional domestic manufacturing industry is facing a more difficult situation.
(2) Competition of foreign foundries in China
Sino foreign joint ventures or wholly foreign-owned foundries began to enter China. Taking banbu precision in Dalian as an example, the company is a Sino Japanese joint venture. Drawing on the technology and production management methods of Japanese precision foundry, the company unifies the quality standards of Chinese and Japanese castings, uses Chinese labor and materials, completes the orders of the parent company, and can also seize the domestic market share, although the price is much higher than that of domestic foundries, But its foreign propaganda is “casting quality in Japan, casting price in China”. For domestic customers who want to purchase high-quality castings, it is time-saving and labor-saving. For Japanese customers, its price is far lower than that of local foundry in Japan, but they enjoy the same quality. This shows the competitive advantage of foreign foundry.
(3) Backward equipment of domestic Foundry Enterprises
Foreign foundry equipment is highly automated, many factories are equipped with automatic sand shower, automatic drying line, automatic mechanical casting arm, etc., while domestic small and medium-sized foundry basically rely on manpower, especially the later detection equipment of many enterprises are not equipped, many factories even the most basic direct reading spectrum analyzer are not equipped. The backwardness and lack of equipment will inevitably result in the process of each process is not rigorous, which directly affects the quality of castings. This is also the reason why there are many foundries in China, but they cannot become a powerful foundry country. The quality of castings generally fails to meet the international standards. Even if the process meets the requirements of customers and there is no later data support, the quality of castings will not be recognized by customers.
(4) Comprehensively carry out the green transformation of traditional manufacturing industry
In recent years, the serious deterioration of the environment has forced the traditional manufacturing industry to incorporate green production into the primary task of environmental protection. The foundry industry with high pollution and energy consumption is the goal of the Ministry of environmental protection of the people’s Republic of China. In particular, the discharge of waste water and exhaust gas must meet the discharge standards or it will face the risk of closing the door. The more deadly threat to foundry enterprises is the implementation of the implementation plan of the 2016 special action for green manufacturing, the full implementation of the green manufacturing project, the construction of the green manufacturing system, and the demonstration of the coordinated development of the comprehensive utilization of resources in Beijing, Tianjin, Hebei and surrounding areas. Therefore, foundry enterprises will face the most stringent environmental protection monitoring action in history.
(5) Increased labor costs
The foundry industry is characterized by high work intensity and poor working environment. Young people can hardly choose this industry, and the entry threshold is low, and the mobility of workers is great. 90% of PC’s workers are from remote areas. To keep them, they have to increase their income. Even after the Spring Festival, nearly 10% of PC’s workers choose to leave. For business operators, the human cost is higher and higher, the number of experienced and capable foundry workers is less and less, and the risk of business operation is increasing.
(6) Price fluctuation of raw materials is unstable
Casting raw materials fluctuate greatly under the influence of international market, so it is impossible to predict the market accurately. Taking stainless steel and nickel plate as an example, they rose sharply at the beginning of 2019 and began to decline sharply again in 2020.