INDUSTRY STUDY 2024_METALCASTING_FINAL by MIRDC Tips

Local Metal Casting Industry Thriving Despite Challenges

A 2024 Industry Study

Local Metal Casting Industry

Thriving Despite Challenges

A 2024 Industry Study

ISBN 978-621-96857-1-9 (PDF Downloadable)

Published by the Metals Industry Research and Development Center Department of Science and Technology Bicutan, Taguig City 1631 Republic of the Philippines

No part of the book may be reproduced in any form without the written permission of the publisher.

About the cover:

Metalcasting images from the Metals Industry Research and Development Center's foundry shop.

Acknowledgment

We extend our sincere gratitude to the individuals and companies who contributed significantly to the 2024 industry study entitled "Local Metal Casting Industry Thriving Despite Challenges":

Special thanks to Mr. Napoleon J. Tanganco, Engr. Jeremy T. Aguinea, and Mr. Jerry Hui for their valuable contributions during the one-on-one interviews, where their insights and perspectives greatly enriched the study. We are particularly grateful to Mr. Tanganco for his significant contributions as an adviser, providing expert guidance throughout the process, alongside Mr. Lemuel N. Apusaga, Senior Science Research Specialist, Materials Process Research Division, DOST-MIRDC, who also offered his expertise. Their combined efforts were instrumental in ensuring the depth and quality of the research.

We would also like to acknowledge the following participating companies:

y Metals Engineering Resources Corporation Foundry and Machine Shop (METERCOR)

y Citizen Machinery Philippines, Inc.

y RAS Golden Machinery Corporation

y RU Foundry

y Negros Metal Corporation

y First AsianMetals Corporation

y Metallic Pisces Engineering Works

y Pert Foundry and Fabrication Inc.

y Cuadro Metal Casting Corp.

y United Castings Foundry Inc.

y Cebu Iron Foundry Corp.

y Jiswell Casting Corporation Foundry

y Regal Metal Craft Corporation

y Relucio Progress Foundry Industries

y Fabricast Industries Inc.

y Karuhatan Metal Casting & Machine Works Corporation

y Malanday Machinery & MFG. Corp.

y Ichivan Metal Corporation

y Acetech Metal Industries Corporation

y Tiger Machinery and Industrial Corp.

y Philippine Aluminum Wheels Inc.

y Maysan Casting Corporation

y Grand Engineering and Foundry Corporation

y Baesa Foundry Corp.

y Supercast Foundry

We hope this industry study serves as a valuable tool for the local foundries to continue to thrive despite the challenges and deliver relevant services to the manufacturing industries.

The Industry Study Team:

Zalda R. Gayahan

Anthony Greg F. Alonzo

Kathlyn Kai H. Negado

Jim Patrick S. Erispe

Genevieve M. Barsales

Mitchel R. Hernandez

James Bernard S. Herrera

List of Figures

Figure 1 Percent share to the GDP of various industries that drive the Philippine economy in 2023 5

Figure 2 The number of foundries in the Philippines from 1995-2024. 7

Figure 3 Factors contributing to the decline of the local metal casting industry......... 8

Figure 4 Percentage distribution of the market served by the metal casting companies interviewed for the 2024 survey. 9

Figure 5 Comparison of foundry operations in 2017 and 2024. .................................................. 9

Figure 6 Industries served by the local metal casting companies 10

Figure 7 Imported common cast products in the last five years (2019-2023) in total gross weight (kg). 12

Figure 8 Some of the most common cast products imported by volume (qty.) in 2023 13

Figure 9 Upgrading initiatives of local metal casting companies that entail investments ................................................................................................................................................................. 13

Figure 10 External funding source for innovation activities of local metal casting companies 13

Figure 11 Molding systems used by local metal casting companies .................................... 14

Figure 12 Countries where survey respondents import their raw materials 14

Figure 13 Imported foundry coke by volume (kg.) 2019-2023 14

Figure 14 Imported silica sand by volume (kg.) 2019-2023 14

Figure 15 Most common furnaces utilized by the metal casting companies in the 2024 survey. 15

Figure 16 Percent distribution of skilled overseas Filipino workers (OFW) 16

List of Tables

Table 1 Common metal cast parts produced locally. ....................................................................... 10

Table 2 Samples of imported common cast products based on total gross weight (kg.) 12

Table 3 Price comparisons of local metal cast products and imports of the same products from China. 12

Table 4 Price comparison between scrap metal sourced locally and the average import price 15

Executive Summary

The Philippine metal casting industry is facing numerous challenges that threaten its competitiveness and sustainability. These challenges, rooted in financial constraints, material dependencies, technological gaps, and human resource shortages, require a comprehensive and collaborative approach focused primarily on the local metal casting businesses, with support from government agencies and policymakers.

Key findings reveal that the industry has shifted from mass production to jobbing operations, driven by a shrinking client base and escalating operational costs. The influx of inexpensive imported cast products has further diminished demand for domestic alternatives, weakening the industry's foothold.

Material-related challenges are significant. Reliance on imported raw materials, such as silica sand, compounded by environmental restrictions on local mining, escalates costs. Furthermore, the absence of regulatory oversight on scrap metal pricing creates price volatility, affecting production efficiency and competitiveness.

Technological and operational constraints also undermine the industry's potential. While some foundries have modernized through induction furnaces, high energy costs and the absence of government subsidies hinder their competitiveness. Additionally, environmental compliance pressure heightens operational challenges, limiting progress.

The human resource crisis further exacerbates the industry's difficulties. A persistent "brain drain" depletes skilled workers, while younger generations show limited interest in pursuing foundry careers due to negative perceptions and the dwindling availability of relevant academic programs.

Despite these alarming weaknesses that contribute to the continuous decline in the number of companies that specialize in metal casting, the study brings to the surface some potential strengths that need immediate attention so that they put the industry in a more advantageous position.

To revitalize the industry, metal casting firms need to proactively seek government programs such as the DOST’s Small Enterprises Technology Upgrading Program (SETUP), Collaborative Research and Development to Leverage Philippine Economy (CRADLE), and Business Innovation through Science and Technology (BIST), to name a few, to address requirements for funding support and the enhancement of capabilities for research and development.

Local metal casting firms have the capability to mass produce products that serve the agriculture, construction, and defense sectors. Existing laws such as the Agricultural and Fisheries Mechanization Law (AFMECH) and Self-Reliant Defense Posture (SRDP) Revitalization Act set frameworks to bolster the manufacture of cast products and serve the requirements of the domestic market.

Challenges brought about by the high cost of energy and compliance with environmental regulations may be addressed through the modernization and acquisition of appropriate complementary metal casting technologies, as exemplified by upgraded metal casting processes practiced by foundries in neighboring countries such as Thailand, Indonesia, and Vietnam.

Alongside these potential strengths are evident weaknesses such as the lack of skilled human resources and lack of academic institutions that offer foundry-related courses. This long-standing issue has been in the government’s list of priority areas.

DOST-MIRDC, for instance, provides training programs related to foundry operations.

The results of this study are envisioned to provide valuable insights for metal casting companies, as well as for government agencies and policymakers to work hand-in-hand to address the issue of a continuously decreasing

Background/Rationale

The metal casting industry is vital in bolstering a nation's economy. It produces and supplies essential tools and components to key industries such as manufacturing, agriculture, construction, and mining, which contribute significantly to a country's prosperity [1]. Figure 1 presents various industries and their contribution to the Philippine GDP in 2023. Products and services of metal casting firms cut across all these industries. Metal casting companies also form components for machines

number of players in the metal casting industry. For a crucial industry such as metal casting, a robust business environment can be achieved with a shared vision - one that requires the full attention, hard work, and involvement of all stakeholders.

required to make many of the essential consumer products we depend on; 90% of all manufactured goods rely on metal cast products [2].

Given the high demand for products and services across these diverse sectors, foundries have the potential to generate substantial employment opportunities for both skilled and unskilled workers. More available jobs and more opportunities for capability building will naturally translate into rigid manufacturing activities to

serve the demands of the market. Such a scenario, if sustained, can lead to a notable increase in the GDP of a country that fully leverages its local metal casting industry through export potential, tax revenues, and job creation [4].

However, this is not the case for our local metal casting companies and the economy. Over the past decades, local foundries have faced numerous challenges, resulting in a negative chain reaction that has led to the shutdown of many companies across the country. Today, the number of active Philippine metal casting industry players continues to decline.

This study looks into the decline of the metal casting industry in the Philippines, a critical industry that historically contributed significantly to the nation's economy. The findings from this study may provide essential insights into the underlying factors causing this decline.

Fig 1 Percent share to the GDP of various industries that drive the Philippine economy in 2023 [3] Source: statista

Significance

This study seeks to address the pressing challenges faced by the local metal casting industry by guiding policymakers, government agencies, and industry stakeholders in crafting targeted strategies to revitalize this industry. By doing so, it aims to directly support local foundries, ensuring their sustainability, fostering growth, and preventing further declines in their numbers.

The study underscores the urgency of reducing reliance on imported metal casting

Objectives

Describe the local foundries’ capabilities and competitiveness.

Identify the key challenges hindering the growth and modernization of the local metal casting industry. Explore opportunities for innovation and technological upgrades in the local metal casting industry, and

Methodology

As early as December 2023, the Center identified the metal casting industry as the subject of the 2024 Industry Study, as it aligns with the Center’s Metal Casting R&D Program, which aims to establish a metal casting innovation center to spearhead the initiative.

Initially, the team identified metal casting companies affiliated with the Philippine Metalcasting Association, Inc. (PMAI) as the primary survey respondents. The initial list of companies was sourced from PMAI’s most recent directory, published in 2014. However, at the time of the study, PMAI was inactive, and several companies listed in the directory were no longer operational. To address this, the study team enlisted the assistance of Mr. Jerry Hui and Mr. Napoleon Tanganco to compile an expanded list of metal casting

products and restoring the industry’s pivotal role as a driver of economic growth, job creation, and technological innovation. Furthermore, its findings may strengthen the Philippine metal casting industry’s competitive edge, enabling it to tap into growth opportunities in both national and global markets. By solidifying the industry’s sustainability, this study ultimately contributes to securing its long-term viability and importance within the country’s economy.

Formulate recommendations to improve, modify, or create policies or regulations for the metal casting industry to become more productive, competitive, and sustainable.

companies, including those outside of PMAI membership, as survey respondents.

This study adopted triangulation techniques, involving engagements with advisers, surveys, interviews, and focus group discussions (FGD).

The team conducted interactions with Mr. Jeremy T. Aguinea of Metallic Pisces Engineering Works, Mr. Jerry Hui of Supercast Foundry, and Mr. Napoleon J. Tanganco, separately. The survey questionnaire was developed and presented for their feedback. They also proposed that the team survey each company independently, as this strategy would allow the respondents to talk more freely with the group and provide more data and in-depth information.

After collecting initial data and preparing the first draft of the industry study report, the team convened an FGD to present and discuss the study's findings and recommendations with industry players and stakeholders. The FGD was held on September 23, 2024, to

Scope and Limitations

This study describes the profiles of the local metal casting companies in terms of their capabilities and the challenges they are currently facing.

Out of 68 local foundries, 25 completed the survey questionnaire. The respondents for this study are the metal casting companies whose businesses are registered solely as

Results

As reported in the previous DOST-MIRDC industry studies on the local metal casting industry, the number of metal casting enterprises in the Philippines has continuously declined, as shown in Fig� 2,

confirm the study outcomes. The respondents provided new and additional insights that helped to clarify the study's findings. The key points discussed were incorporated into the study, resulting in supported conclusions and informed recommendations.

such and are located in regions with a high concentration of existing foundries: the NCR, Regions IVA, VI, VII, and X.

The study does not include companies whose foundries are a support facility for their main businesses' operations.

indicating a downward trend for almost three decades. The number of foundries dropped from 202 in 1995, 195 in 2002, and 85 in 2017 to just 68 in 2024.

From flourishing to declining—the local metal casting industry’s journey.

The country’s vast natural resources, particularly metals, were used as leverage in a drive to ignite industrialization in the Philippines. This initiative was led by the late President Carlos P. Garcia at the dawn of the post-World War II era [5]. This drive led to the establishment of prominent foundries and steel processing companies across the country, such as Marcelo Steel, Philippine Blooming Mills, and Puyat Steel. The government also founded the National Shipyard and Steel Corporation (NASSCO), which later became the National Steel Corporation [5].

Fig� 2� The number of foundries in the Philippines from 1995-2024.

Source: DOST-MIRDC industry studies on metal casting

During this period, it was reported that approximately 500-650 companies were engaged in manufacturing basic metals and cast products. However, the depreciation of the local currency and economic decline in the 1970s led to the closure of many foundries. By the 1970s, only 221 foundries were identified in the Philippines. The situation worsened due to a lack of government support and the high cost of capital required for foundry modernization, leading to further closures. By 1987, only 153 companies remained [6]. What used to be competencies in manufacturing slowly turned into importation activities that started to limit the industry’s innovative and profitable business engagements.

The 1987 Metal Casting Industry Study by the DOST-MIRDC highlighted these issues, noting the gradual decline of foundries in the Philippines. The economic downturn and reluctance to modernize due to high capital costs resulted in inadequate facilities and low production rates. The 1987 Metal Casting Industry Study reiterated these concerns, emphasizing that many local foundries used outdated equipment [7].

However, from the data extracted from the 1996 Metal Casting Industry Study, there was a rise in the number of local foundries, which increased to 202 active companies. Based on the industry study, this increase can be attributed to the boom of passenger vehicle sales within the time period of 1990 to 1995, as companies such as Honda Cars invested in putting up their facilities in the country in 1994.

Despite this rise, the industry study identified that there was a continuous decrease in production rates by 1996, which was due to the locally owned foundries' inability to adapt to modern technology because of financial constraints. Foundries that were considered advanced during that time were using already phased-out machinery [8]. These issues led to the bankruptcy of the majority of micro and small metal casting enterprises.

The majority of challenges faced by the local metal casting companies are summarized in the Ishikawa diagram (Fig� 3).

Fig� 3� Factors contributing to the decline of the local metal casting industry.

Money

Most of the industry’s income results from serving the domestic market, very little comes from exports.

Despite the declining number of metal casting companies in the country, they still serve the demands of their market. Based on the survey, 80.8% of the respondents serve the domestic market (Fig 4), and less than 25% answered that they serve both domestic and international markets. These companies export their metal cast products

to various countries in Asia, such as Singapore, Malaysia, Indonesia, and Japan, while some export to the U.S.A., E.U., Australia, and South Africa.

Income mostly comes from jobbing, not from mass production.

There has also been a significant drop in mass production in local metal casting operations since 2017. Data from the 2017 DOSTMIRDC study on the metal

casting industry showed that 56% of the respondents are doing mass production, 11% are doing jobbing, and 33% are doing a combination of both. As reflected in the 2024 survey, our local foundries heavily depend on intermittent manufacturing or a “by order” basis versus continuous manufacturing or mass production, with 60% of our foundries doing jobbing operations and only 6% in mass production, the rest a combination of both. The comparison of foundry operations in 2017 and 2024 is presented in Fig 5

Fig 4

Percentage distribution of the market served by the metal casting companies interviewed for the 2024 survey.

Fig 5

Comparison of foundry operations in 2017 and 2024.

Most of our local foundries produce components for their customers whose end products are used in industries such as construction, manufacturing, mining, and more (Fig 6).

Local foundries involved in mass production (or 6% of the survey respondents) cater to producers of construction materials, industrial machinery, household tools and accessories, and firearm components. Table 1 shows sample cast products manufactured by our local metal casting companies.

Fig 6 Industries served by the local metal casting companies Locally Metal Cast

Table 1 Common metal cast parts produced locally.

Locally Metal Cast Parts Industry Served Mass Production or Jobbing

Household tools and accessories

Mass Production

Transportation

Jobbing

Agriculture

Household tools and accessories

Jobbing

Agriculture

Jobbing

Income of metal casting companies face a serious threat from the entry of foreign cast products.

While efforts to serve the demands of the local market are consistent, the importation of metal cast products continues to pose a significant challenge to our local metal casting industry. Data from the Philippine Statistics Authority (PSA) [9] show that the volume of imported common metal cast products has consistently exceeded hundreds of millions of kilograms over the past five years (Fig 7).

Selected samples of imported common cast products, which are among the top imports for 2023 in terms of total gross weight, are presented in Table 2

The reason why the local market prefers to buy imported metal castings, according to survey respondents, is because they are cheaper than locally made metal cast products; beow are price comparisons of local metal cast products and imports of the same products from China (Table 3).

Figure 8 presents some of the most common metal cast products imported in 2023: clutches and shaft couplings, AC/DC motors, and DC motors/DC generators. Although local foundries can cater to the demand and provide quality products to serve the local market’s needs, foreign foundries are still at a big advantage because they benefit from their respective government

Fig� 7� Imported common cast products in the last five years (2019-2023) in total gross weight (kg).

Source: Philippine Statistics Authority [9]

Table 2� Samples of imported common cast products based on total gross weight (kg.)

Source: Philippine Statistics Authority, 2023 [10]

Common Cast Products Industry Served

Action elevators and conveyors for goods or materials used for agriculture

Fans: table, floor, wall, window, ceiling, or roof fans with a selfcontained electric motor that produces an output of no more than 125W.

Mechanical shovels, excavators, and shovel loaders; front -end shovel loaders

Compressors other than those of subheading used for automotive air conditioners | Open type

Explosion-proof air fans, of a kind used in underground mining

Injection-moulding machines; For moulding rubber

Metal Cast Product Local Price (PhP)

Industrial stand fan (20” 3-leaf aluminum fan blade)

Wall fan (18” 3-leaf aluminum fan blade)

Ceiling Fan (42” 3-leaf metal propeller fan blade)

Roof fan (stainless steel, 400mm) 6, 590 - 6,985 (Asahi PH)

Clutch shaft coupler (42x50)

Ships and boats’ propeller blades (1.5” x 3.5” x 24” bronze propeller)

3,040 - 3,185

2,245 - 2,459

2,950 - 3,550 (Manzan PH)

Agriculture

Household Tools and Accessories

Construction

Automotive

Mining

Manufacturing

and

Price of Imports from China (PhP)

1,846.05 - 2,013.88 (Foshan Kingja Ventilation Equipment Co., Ltd.)

643.32 - 699.26 (Foshan Nanhai Feipeng Electrical Tech. Co., Ltd.)

1,120.89 - 1,681.34 (Zhongshan Guangmei Electrical Co., Ltd.)

559.41 - 1118.82 Hangzou Ocean Industry Co., Ltd.

3,968.50 - 5,896.13 (RS Philippines) 2,237.64 - 2,797 (Changzhou Suma Precision Machinery Co., Ltd.)

19,000 - 20,000 (Dynamic Castings Philippines) 11,181 - 13,976.50 (Chongqing Jiofa Indust. Equipment Sales Co., Ltd.)

Table

Price comparisons of local metal cast products

imports of the same products from China.

services and incentives, such as Thailand's Eastern Economic Corridor, which offers tax holidays, import duty exemptions, and R&D support [11], as well as Vietnam's advantageous tax rates for industrial zones. Indonesia offers tax breaks and holidays to priority industries [12], making mass production more affordable and convenient in their country, thus lowering their selling price.

Despite the financial challenges, local metal casting companies proactively invest in upgrading initiatives.

Although the local metal casting industry faces major issues that translate to financial restrictions, survey respondents shared that they opt to take risks and invest a part of their income in making upgrades, such as in acquiring equipment, providing training for their employees, and embarking on research and development, to name a few (Fig� 9).

The companies themselves mostly bear the investments required for the abovementioned upgrading initiatives. A few seek financial assistance from funding institutions such as national government agencies and local government units (Fig� 10).

Fig 8 Some of the most common cast products imported by volume (qty.) in 2023

Source: Philippine Statistics Authority [10]

Fig� 9� Upgrading initiatives of local metal casting companies that entail investments

Fig 10 External funding source for innovation activities of local metal casting companies

Material

Local metal casting companies heavily rely on imported raw materials.

Local metal casting companies rely on imported silica sand for use in green sand and no-bake molding systems. The survey shows that 52.6% of respondents use green sand, while 36.8% use a no-bake molding system, resulting in 89.4% of metal casting companies requiring silica sand as raw material (Fig� 11).

The majority of the raw materials, such as silica and chromite sand, used by local foundries are imported from various countries, the majority of which is from China (Fig 12).

While silica sand can be mined locally, its extraction is heavily regulated by the

Philippine government under R.A. No. 7942, or the Philippine Mining Act of 1995. In addition to restrictions on the quantity that can be extracted, local foundries face competition for silica sand from industries such as cement, glass, paints and coatings, and water filtration, all of which also depend on this resource. Along with silica sand, foundry coke was also identified by our survey respondents as one of the top raw materials they import. A valuable material for foundries’ production process, this is utilized for melting iron and other metals in cupola furnaces.

As a result, local foundries depend heavily on imports. Below is the import data for foundry coke (Fig� 13) and silica sand (Fig� 14) from 2019 to 2023.

Fig 11 Molding systems used by local metal casting companies

Fig 12 Countries where survey respondents import their raw materials

Fig 13 Imported foundry coke by volume (kg.) 2019-2023

Fig 14 Imported silica sand by volume (kg.) 2019-2023

Source: PSA [9]

Unregulated scrap metal prices are also a challenge.

Local foundries rely on locally available scrap metals as their primary raw material. However, they face notable challenges when purchasing scrap metal, including price fluctuations and the inconsistent reliability of sale rates from local suppliers. For purposes of comparison, Table 4 shows the average import price of scrap metal and the price range of scrap metals being sold domestically.

Source: WITS [14]

Machine and Method

Metal casting companies face challenges regarding high power costs, emissions, and waste generation due to outdated machinery

Local metal casting companies’ production capabilities rely heavily on the melting equipment that they use, which are mostly induction and cupola furnaces, as shown in Fig 15

Both induction and cupola furnaces are staples in any foundry in the Philippines, the difference being their operability and ecofriendliness. The induction furnace is used by foundries that opt for efficiency in terms of energy use and is the more eco-friendly option compared to the cupola, as it runs on electricity and requires less maintenance. On the other hand, the cupola furnace burns coal or oil to heat or melt metal, which inherently produces more pollution. It can generate heat levels surpassing those of the induction furnace, which is better for melting iron. Cupola furnaces are being utilized by

Survey respondents attribute the inconsistent domestic scrap metal sale rates to local suppliers setting their prices based on the purchasing rates of steel companies. Additionally, the most recent readily available information on the prices of recyclables, including scrap metals like copper wires, aluminum cans, steel, and tin, dates back to 2016 [13]. No other official documentation on scrap metal prices has been found, and no government agency currently regulates these prices.

local metal casting companies as a backup in the event that their induction furnace is inoperable or as needed additional equipment when high-volume production is required.

An induction furnace consumes electricity to generate heat through electromagnetic induction, which melts metals. The electricity usage of an induction furnace depends on factors like furnace size, material type, and

Table 4 Price comparison between scrap metal sourced locally and the average import price

Fig 15 Most common furnaces utilized by the metal casting companies in the 2024 survey

efficiency. Typically, it ranges between 500 and 700 kWh per ton of steel, but advanced models can lower this consumption. Power factors, load variations, and operational practices influence the total electricity demand of metal casting operations, making energy management crucial for cost control in industrial applications.

Aside from the energy-intensive processes for foundry operations, the metal casting industry also generates significant amounts of waste. Their emissions such as fine dust, fly ash, oxides of nitrogen, sulfur, and metals [15], also contribute to air and water pollution, as well as the depletion of natural resources.

Man

Skills needed by metal casting companies prefer to work abroad.

Local metal casting companies are still experiencing challenges in obtaining a pool of workforce in terms of the availability of experts and skilled workers in their operations. Notably, local foundries tend to hire applicants

Balancing operational needs and environmental considerations presents significant challenges for foundries, including managing energy consumption, minimizing waste generation, and reducing emissions, all while maintaining production capacity and efficiency. During the FGD, respondents stated that the operational costs of the furnaces are a constant and predictable aspect of their businesses. Their primary interest now lies in exploring process improvements, particularly through acquiring complementary equipment or technologies to enhance foundry operations. .

with no prior experience in foundry operations, offering training to develop their skills. However, once these workers gain basic proficiency, they frequently seek higherpaying opportunities either abroad or with other companies (Fig� 16).

Fig 16 Percent distribution of skilled overseas Filipino workers (OFW) Source: Philippine Statistics Authority [16]

Very few universities offer foundry-related courses.

One of the main issues in the lack of a pool of workers is the scarcity of academic institutions offering foundry-related courses. As of the time of this writing, only the following institutions in the Philippines are offering foundry-related studies to prospective individuals

Technological University of the Philippines

- Foundry Engineering Technology major in Mechanical Engineering Technology option in Foundry Technology

Technical Education and Skills Development Authority

- Foundry Molding NC II

Conclusion

This study examines the situations contributing to the decrease in local metal casting companies. The decline in the number of businesses engaged in metal casting, which began almost three decades ago, is alarming as metal casting is a critical part of manufacturing. While metal casting industries from our neighboring countries are growing and continuing to become profitable, local metal casting enterprises are consistently showing signs of inability to cope with the competition.

Engagements with industry experts, various metal casting companies, and metal casting industry stakeholders allowed the Center a closer look into the industry. Influencing factors are categorized into money, materials, machine and method, and man.

Local metal casting companies have experienced a significant shift in the local market due to dwindling client bases and rising operational costs, compelling many

Bataan Peninsula State University once offered courses like Machine Shop Technology, Pattern-Making Technology, and Foundry Technology, while the Cebu Technological University offered courses aimed at supporting foundry operations. However, these programs have since been discontinued by these universities due to the lack in the number of enrollees required for semesters to push through.

Survey respondents indicated that Filipino workers prefer employment opportunities abroad or with foreign-owned foundries in the Philippines due to significant wage disparities. In addition, many younger workers are increasingly reluctant to work in foundries, viewing it as a "dirty job." According to foundry managers, younger employees often resign to pursue more comfortable roles, such as wait staff, receptionists, or clerks.

foundries to pivot from mass production to jobbing operations. The influx of inexpensive imported cast products has further eroded demand for local metal castings, despite the availability of domestic alternatives. These factors contributed to the closure of local metal casting companies, further reducing their number.

A closer look at the money issues of the metal casting firms brings our attention to four challenges: (1) metal casting businesses are mostly serving the local market. Export capabilities are still very minimal; (2) most of the metal casting firms no longer take on mass production but rather serve the market through jobbing; (3) imported cast products dominate the local market despite the evident capability of the local industry to address local demand, and (4) some metal casting firms that invest in upgrading technology and human resource skills receive minimal or no financial support from public or private funding institutions.

Although the world has become smaller because trade knows no boundaries during these times, the industry’s metal casting firms mostly gain income from serving the domestic market. It has tapped or penetrated a very small portion of the export market.

Aside from the market base of industry being limited to the domestic market only, metal casting firms are making income from mostly jobbing contracts, not mass production the way the industry earned income in the past. There are still products that metal casting companies can mass produce. Some examples of products that local metal casting firms have capabilities of mass producing are mag wheels for automotive, firearm components for defense, cast iron gratings, and manhole covers for construction. These capabilities need to be exploited.

Behind the apparent effort of the metal casting companies to build manufacturing capabilities, imported cast products are taking away a large chunk of the market share. The country resorts to importation because imported cast products are cheaper.

Still part of the money issues of the industry is the local enterprises’ investment in upgrading efforts. They invest in the acquisition of equipment, computer hardware and software, training of human resources, and research and development. For a major investment such as these, the companies are left to fend for themselves, most of the time with hardly any assistance from the government or private institutions.

Material-related challenges also weigh heavily on the industry. One major issue is the reliance of local foundries on imported raw materials, such as silica sand and foundry coke, both critical components in various industrial processes. The availability of silica sand is constrained by strict local mining regulations implemented to protect the environment. While these regulations are necessary for sustainability, they limit domestic supply and compel companies to import, significantly

increasing procurement costs and impacting profitability.

Another critical challenge is the lack of a dedicated regulatory framework or overseeing regulatory body to manage the pricing of scrap metal, also a key raw material for the industry. In the absence of oversight, scrap metal prices are subject to market fluctuations, often driven by external factors such as global demand, supply shortages, and speculative trading. This volatility not only increases production costs unpredictably but also hampers the industry's ability to offer stable and competitive pricing for its products. Together, these material-related challenges place a substantial burden on the industry, affecting its efficiency, competitiveness, and overall sustainability.

Local foundries face numerous challenges related to their machinery, methods, and operational technology, further complicating their efforts to remain competitive. While some have modernized by incorporating induction furnaces alongside traditional cupolas, high energy costs—compounded by the absence of government subsidies— significantly limit their ability to compete with regional counterparts.

Finally, the industry faces a shortage of human resources. The ongoing "brain drain" sees skilled workers leaving for better opportunities abroad, while younger generations are less inclined to pursue foundry-related careers, perceiving the work as undesirable. The decline of academic programs focused on foundry-related skills further restricts the talent pool of skilled foundry workers.

All these are factors that contribute to the decline of metal casting companies. Addressing these multifaceted challenges requires a coordinated approach that involves policy reforms, investment in local resources, and initiatives to attract and retain skilled talent. Only through such comprehensive efforts can the metal casting industry regain its footing and achieve sustainable growth.

Recommendations

Action plans, corrective actions, remediations, resetting of targets, and realigning strategies – however they are called – still point to a clear message that action must be taken to address the continuous decline in the number of businesses that play a critical role in the economy.

For the industry:

These actions for recommendation are for the consideration of the metal casting companies themselves, and for better guidance and support, for government agencies and policymakers as well.

Observation Classification Recommendation

Metal casting firms have mass production capabilities for agriculturerelated products.

Potential strength

Expand mass production capabilities by manufacturing the following:

• Engine parts for agricultural machines (e.g., tractors, harvesters)

• Parts for irrigation systems

• Casting for fishery equipment (e.g., boats, nets, harvesting tools)

• Replacement parts for damaged or worn-out components in mechanized equipment

Consider partnering with PhilMech, the focal agency for the AFMech’sA Research, Development, and Extension (RDE) for programs and projects related to manufacturing and equipment development to localize the manufacture of agricultural equipment and take advantage of the provisions of R.A. 10601, or the Agricultural and Fisheries Mechanization (AFMech) Law. Article III Section 7 of the AFMech Law provides that the DA shall integrate and unify all agricultural and fisheries mechanization RDE programs and projects and shall be geared towards development of machinery and equipment, job generation, address market and industry demands and help accelerate agricultural and fisheries modernization in the countryside.

Metal casting companies can also partner with Local government units (LGUs) to supply machinery and components for regional mechanization initiatives. Article IV, Section 15 of the AFMech Law states that “Production of locally made engines and other machinery for agricultural and fisheries purposes shall be promoted and encouraged by the DA in partnership with the private sector and through joint venture agreements.”

Metal casting firms have mass production capabilities for defense-related products.

Potential strength

Metal casting companies can manufacture the following in support of the SRDPB:

• Chassis components for vehicles (e.g., brackets, basic mounts).

• Naval applications like anchors, propellers, shafts, and hull reinforcements.

• Shell casings and barrel housings for artillery and small firearms.

• Gun mounts and supports machine guns and mounted weapons. Take a proactive support role in the implementation of R.A. 12024 or the Self-Reliant Defense Posture (SRDP) Revitalization Act by partnering with manufacturers of defense equipment. The SRDP states that the national defense industry shall rely on and give preference to local companies for production.

Metal casting firms have mass production capabilities for constructionrelated products.

Metal casting firms have mass production capabilities for shipbuilding and ship repairrelated products.

Funding support is not readily available and accessible

Potential strength

Metal casting companies can partner with government agencies like the Department of National Defense (DND) and the Armed Forces of the Philippines (AFP) to identify opportunities in defense manufacturing.

Metal casting companies can strategically partner with construction firms to leverage the provisions of the Philippine Republic Act 7718, also known as the "Build -Operate-Transfer (BOT)C Law," in several ways:

• Supply high quality cast components for infrastructure projects.

• Work with construction firms to design and produce tailored metal components that meet specific project needs, improving efficiency and reducing costs.

• Extend partnership by offering casting and machining services for maintenance, ensuring the longevity of critical infrastructure and generating recurring revenue streams.

By fostering collaboration and innovation, metal casting companies and construction firms can effectively utilize the provisions of RA 7718 to contribute to national development while driving mutual growth.

Collaborate with local shipyards and ship repair companies to secure long-term contracts for supplying cast parts and providing casting and machining services. These offerings may be integrated into ship repair packages, positioning the foundries strategically ahead of the proposed SBSR Act of 2025.

Weakness

Metal casting companies can:

• Collaborate with agricultural cooperatives, associations, and other stakeholders to meet specific needs for farm equipment and infrastructure.

• Avail ACEF funding to develop customized solutions for the agricultural sector, such as cast components for innovative tools, packaging systems, or farm infrastructure.

Section 16 of the law states that “Ventures in local manufacture, fabrication, and assembly of agri -fisheries machinery and equipment shall be eligible for loans under the Agricultural Competitiveness Enhancement Fund (ACEF)D under the program of the DA. These businesses shall be granted incentives as long as they are considered registered enterprises engaged in a preferred area of investment pursuant to Article 39 of Executive Order No. 226, as amended.”

Acquire upgraded equipment through availing of government agencies’ assistance for MSMEs or existing businesses to upgrade their equipment, such as DOST’s SETUPE. Metal casting companies can use the SETUP to:

• Access to advanced equipment and technologies that improve the precision and efficiency of casting processes, such as improved furnaces, mold-making equipment, and machining tools.

Acquire technologies, payable under flexible terms, enabling companies to invest in upgrades without the burden of highinterest loans.

Avail of the Venture Financing Program (VFP) F of the DOSTTechnology Application and Promotion Institute (TAPI) that provides necessary funding support to MSMEs. Metal casting companies can use the VFP to:

• Invest in operational improvements such as automation and optimization technologies.

• Modernize their operations, upgrade machinery, or scale production, helping them remain competitive in both domestic and international markets.

• Invest in R&D to improve their casting processes, create more efficient or environmentally friendly methods, and develop new products.

upgrade their equipment, such as DOST’s SETUPE. Metal casting companies can use the SETUP to:

• Access to advanced equipment and technologies that improve the precision and efficiency of casting processes, such as improved furnaces, mold-making equipment, and machining tools.

Acquire technologies, payable under flexible terms, enabling companies to invest in upgrades without the burden of highinterest loans.

• Invest in operational improvements such as automation and optimization technologies.

• Modernize their operations, upgrade machinery, or scale production, helping them remain competitive in both domestic and international markets.

• Invest in R&D to improve their casting processes, create more efficient or environmentally friendly methods, and develop new products.

R&D is not a priority among metal casting companies

Weakness

High energy cost, waste generation and emissions may be addressed.

Potential strength

Utilize the DOST-MIRDC facilities and expertise for local foundries who are interested in utilizing additive manufacturing to create mold patterns through AMCen, MEICs for metal casting companies interested in holding joint R&D with SUCs in their respective regions

Acquire assistance through DOST’s Business Innovation through Science and Technology (BIST) G initiative, which provides financial support to private Filipino companies for the acquisition of strategic and pertinent technologies for research and development. Metal casting companies can use the BIST to:

• Integrate technologies such as 3D printing for molds, advanced CNC machines, or automated casting systems.

• Adopt energy-efficient equipment and processes, reducing energy costs and the environmental impact of metal casting operations.

• Innovate recycling scrap metal, improve material usage, and reduce waste.

● Access low-interest loans to finance the purchase of new equipment or the development of new products.

Develop R&D activities through the Collaborative Research and Development to Leverage Philippine Economy (CRADLE)H Program. Metal casting companies can use the CRADLE to:

• co-develop new materials, refine casting techniques, and optimize manufacturing processes to increase efficiency, reduce costs, and improve product quality.

• share the costs with government-funded research institutions to invest in R&D without taking on significant financial risks.

● secure financial assistance and other resources that support innovation and R&D initiatives.

Explore alternative approaches such as acquiring complementary equipment and technology, as observed from metal casting companies across ASEAN that have already been upgrading and modernizing their machinery to enhance production efficiency, product qualit y, and environmental compliance.

In Indonesia, the metal casting industry has adopted advanced equipment and processes to meet global standards, particularly in sectors like automotive and infrastructure. Key technologies and equipment include:

• Continuous Mixer Molding Machines

• Roll-Over Stripping Machines

• 3D Printing and Digital Solutions

• PEP SET Binder System

These advancements underscore Indonesia’s commitment to integrating modern foundry technologies, particularly as the country’s infrastructure and automotive industries continue to grow.

For Thailand, key technologies being adopted include automation systems, high-pressure die-casting (HPDC) machinery, 3D printing, and advanced testing and quality control equipment.

High energy cost, waste generation and emissions may be addressed.

• co-develop new materials, refine casting techniques, and optimize manufacturing processes to increase efficiency, reduce costs, and improve product quality.

• share the costs with government-funded research institutions to invest in R&D without taking on significant financial risks.

● secure financial assistance and other resources that support innovation and R&D initiatives.

Foundries are hiring zeroknowledge workers

Potential strength

Weakness

• Continuous Mixer Molding Machines

• Roll-Over Stripping Machines

• 3D Printing and Digital Solutions

• PEP SET Binder System

These advancements underscore Indonesia’s commitment to integrating modern foundry technologies, particularly as the country’s infrastructure and automotive industries continue to grow.

For Thailand, key technologies being adopted include automation systems, high-pressure die-casting (HPDC) machinery, 3D printing, and advanced testing and quality control equipment.

• Automation and Robotics

• High-Pressure Die Casting (HPDC)

• 3D Printing and Rapid Prototyping

• Environmental and energy-efficient Technology

• Quality Control and Testing Systems.

Vietnam’s foundry industry has increasingly integrated advanced equipment and technologies to meet international standards in metal casting and processing. Key technologies include:

• high-pressure and vacuum die casting methods

• low-pressure die casting and investment casting

• Automation in casting is also advancing

• modern robotics and IT solutions enhancing productivity and quality control in manufacturing

• CNC machining systems

• 3D printing capabilities to support rapid prototyping and tooling

• heat treatment and surface treatment technologies

Foundries in Vietnam often use green sand, lost foam, and furan sand casting methods, which are environmentally friendly and efficient. These methods are complemented by spectrometers and ultrasonic testing for quality assurance, helping detect defects in cast products early in the production process

Foundries may avail of MIRDC’s training offerings I that are specifically for metal casting:

• Foundry Casting Defects and Remedies

• Foundry Casting Design

• Foundry Melting Practices

• Foundry Patternmaking

• Foundry Practices

• Foundry Quality Control

• Investment Casting

● Metal Casting Cost Estimation

Establish apprenticeship and internship programs with DOSTMIRDC and other academic institutions to ensure a steady pipeline of skilled labor.

Comply with environmental regulations such as the Philippine Clean Air Act of 1999J, which aims to reduce air pollution, protect public health, and create a healthier environment while maintaining competitiveness by investing in green technologies and processes.

Foundries produce a significant amount of environmental waste.

The majority of foundries only rely on word-ofmouth marketing.

Only a few foundries export the products they manufacture.

Weakness

• Foundry Casting Defects and Remedies

• Foundry Casting Design

• Foundry Melting Practices

• Foundry Patternmaking

• Foundry Practices

• Foundry Quality Control

• Investment Casting

● Metal Casting Cost Estimation

Establish apprenticeship and internship programs with DOSTMIRDC and other academic institutions to ensure a steady pipeline of skilled labor.

Develop marketing strategies that emphasize the superior quality and reliability of locally manufactured cast products.

Weakness

Potential strength

Avail of DOST-MIRDC’s training on ISO 9001:2015 awareness seminar, internal quality audit for ISO 19011:2018 standard, awareness on risk management based on ISO 31000:2018 I , among others. To ensure alignment with international standards, enhance operational efficiency, credibility, and competitiveness in both local and global markets.

Expand mass production capabilities by manufacturing the following:

• Engine parts for agricultural machines (e.g., tractors, harvesters)

• Parts for irrigation systems

• Casting for fishery equipment (e.g., boats, nets, harvesting tools)

• Replacement parts for damaged or worn-out components in mechanized equipment

Consider partnering with PhilMech, the focal agency for the AFMech’s Research, Development, and Extension (RDE) for programs and projects related to manufacturing and equipment development to localize the manufacture of agricultural equipment and take adva ntage of the provisions of R.A. 10601, or the Agricultural and Fisheries Mechanization (AFMech) Law. Article III Section 7 of the AFMech Law provides that the DA shall integrate and unify all agricultural and fisheries mechanization RDE programs and projects and shall be geared towards development of machineries and equipment, job generation, address market and industry demand and help accelerate agricultural and fisheries modernization in the countryside.

It is not enough for the industry alone to bear the responsibility of improving its status; addressing the identified challenges requires collective action.

To support this effort, the following recommendations are offered for various government agencies’ consideration:

LGUs Partner with local metal casting companies to address the region's requirements for agricultural machinery and parts, and take advantage of the provisions of R.A. 10601, or the Agricultural and Fisheries Mechanization (AFMech) Law.

LGUs Enhance and strictly enforce environmental rules that enable the local foundries to obtain vital minerals like silica sand locally while protecting the environment.

DND and AFP

Explore partnerships with local metal casting companies to serve local defense requirements and identify opportunities in locally manufacturing equipment for defense, as stated in the SRDP.

Recommend amending the Philippine Mining Act (RA 7942)K with stronger rehabilitation criteria and using the Clean Air Act (RA 8749) J to reduce processing emissions.

• Require detailed rehabilitation plans and long -term post closure monitoring.

• Enforce penalties for non-compliance and mandate community recovery programs.

• Conducts risk assessment on water, air, and biodiversity before granting permits.

• Update thresholds for mining pollutants and require real-time emissions monitoring. Impose stricter fines for excess emissions

DENR Strengthen the implementation of the NIPAS Act (RA 7586) L and Executive Order No. 79 which would safeguard biodiversity and encourage local government involvement.

• Conduct workshops to educate local government units (LGUs) on the importance of biodiversity and their role in implementing protected area management strategies.

• Provide tools, resources, and technical expertise to enable LGUs to integrate biodiversity conservation into local development plans.

• Develop rewards or recognition programs for LGUs that demonstrate exemplary biodiversity conservation efforts.

• Simplify permitting and coordination processes to reduce bottlenecks in implementing conservation measures.

• Engage local communities in monitoring activities, offering financial or non-monetary incentives for their participation. Empower local communities through co-management of protected areas, giving them a sense of ownership and accountability.

Ensure that LGUs enforce R.A. 7942 M by:

• Establishing a local monitoring team to oversee compliance with mining permits, environmental regulations, and community development commitments.

• Regularly inspecting mining operations to ensure compliance with safety, health, and environmental standards.

• Facilitating public consultations and hearings to gather input from stakeholders, especially affected communities, during the permitting process.

• Encouraging community involvement in the decision-making and monitoring processes to promote transparency and accountability.

• Conducting awareness campaigns for local officials, community members, and mining companies about the rights and responsibilities under R.A. 7942.

Promoting best practices in responsible mining and environmental conservation

Engage proactively with the Climate Change Commission to align industry practices with sustainability goals.

• Engage Stakeholders to raise awareness and provide training on sustainable practices across the industry.

Collaborate with industry associations to create a unified voice for sustainability initiatives and share best practices.

DTI Provide funding for metal casting companies’ training, consultation, and application for ISO certification.

Launch public awareness campaigns to highlight the economic importance and career opportunities within the metal casting industry.

CHED and TESDA

For policymakers:

Collaborate with educational institutions to reintroduce and expand technical and vocational programs focused on foundry engineering and metal casting.

y Explore leveraging the provisions and incentives offered by neighboring countries to boost the manufacturing landscape where the metal casting industry greatly contributes, such as Thailand's Eastern Economic Corridor offers up to 13 years of tax holidays, import duty exemptions, and R&D funding to attract high-tech industries like robotics and aerospace. Vietnam’s industrial zones feature competitive corporate tax rates, with tax holidays for up to 4 years and reduced rates for 9 more, supported by robust trade agreements and efficient infrastructure. Indonesia provides tax breaks of 50-100% for up to 20 years in priority sectors, along with import duty exemptions for capital goods. Adapting these strategies can help the Philippines attract investment, lower costs, and drive industrial growth.

y Consider creating a regulatory body that will focus on the monitoring and management of scrap metal prices to ensure fair and predictable prices.

y Support the establishment of an R&D hub focused on innovation in materials, processes, and sustainability for the metal casting industry.

y Push for alternative energy resources, particularly nuclear energy as a longterm energy option, by reviving the Bataan Nuclear Power Plant. This is in line with the Department of Energy’s Philippine Energy Plan 2023-2030 wherein the government is actively exploring low-carbon alternatives such as nuclear energy, advocating for energy consumption practices in various sectors without foregoing greater productivity. This will mean a more secure and affordable energy supply for our local foundries.

In addition to these recommendations, the Philippine metal casting industry may choose to strengthen its collective efforts by rebuilding an industry association to unify and give a stronger voice to all players. Such an organization would serve as a centralized platform for advocacy, ensuring that the industry's needs and concerns are effectively communicated to policymakers and stakeholders. By pooling resources, member companies could gain access to shared facilities, training programs, and research initiatives, reducing costs and fostering innovation. Disseminating best practices across the industry would also enhance efficiency, product quality, and environmental

compliance, enabling companies to meet international standards.

An active industry association could further align the efforts of government agencies, businesses, and policymakers by facilitating collaborative projects and coordinated strategies. Through these initiatives, the metal

References

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