The PM Industry: A Historical Perspective and Future Challenges

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The PM Industry A Historical Perspective and
Future Challenges

• Chickery J. Kasouf
• Metal Processing Institute
• Worcester Polytechnic Institute

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Overview

• What is PM?
• Demographics
• Evolution
• Challenges

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Value in the PM Part Production Process
Other suppliers (Tooling, gas, etc.)
Higher tier supplier
Final B2B Customer (OEM)
PM Part Producer
Powder Suppliers
Equipment Suppliers
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North American Iron Powder Shipments 1976-2006
Source MPIF
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Iron Powder Shipments for PM MPIF, EPMA, JPMA
Source MPIF
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PM Pounds per U.S. Passenger Vehicle
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Dollar Sales per Pound Shipped
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The U.S. Remains the Worldwide Leader in PM but .
. .

• There are now 50 more PM fabricators in China
  than in 2000
• China passed Germany this year as the largest
  exporter of auto parts to the U.S.
• There is significant growth in Asian auto
  production

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Passenger Vehicle Production by Region (1997-2005)
Source International Association of Motor
Vehicle Manufacturers
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U.S. Automotive Part Exports
Source U.S. Bureau of the Census
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2004 End Use Breakdown of Chinese PM Parts
Shipments (Williams 2006)
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Why did PM Grow in North America?
Firm Strategy, Structure, and Rivalry
Factor Conditions
Demand Conditions
Related and Supporting Industries
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But Why Did it Remain Fragmented?
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Sales of North American PM Companies
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North American PM Expectations for the Future
(Census)
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North American PM Expectations for the Future
(Sales)
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North American PM Expectations for the Future
(Sales)
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Employment and Hours
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Relative Importance of Key Issues in the PM
Industry
Figure 1. Relative Importance of Industry
Challenges
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Sales Concentration Among Largest Customers
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Percentage of Sales from Products Less Than One
Year Old
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North American Sales by Application
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Summary

• PM enjoyed a long period of growth because of the
  growth in auto applications
• Downsides
• A lack of seller power
• Migration of automotive growth
• The industry is segmented
• Auto dependent
• Industrial applications
• Global growth is a reality but many North
  American firms are slow to move

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Summary

• Industry consolidation had yielded mixed results
• Targeted North American growth
• GKN closed four plants in the last 18 months
  while growing in other regions
• Low barriers to entry remain in the industry