Germany’s Casting Giant at a Standstill

More and more foundries are filing for insolvency. Are the big players clearing the field?

Eric Müller: Absolutely. Beyond rising energy and material costs, pressure die casting faces the challenge of being an extremely capital-intensive industry. Whether it’s new orders driven by the shift to electrification or traditional component production – both require significant upfront investment. With EBITDA margins averaging just five to seven per cent in Germany, it’s becoming increasingly difficult for foundries to fund such investments and remain economically viable in the long term.

Maintaining flexibility and managing volatility while still operating efficiently is just as difficult. Many of the problems we face are structural rather than technical – and they’re accelerating a market consolidation that began back in 2021.

On top of that, the industry is burdened by significant overcapacity. Much of this capacity can’t be fully utilised and will inevitably disappear – whether through plant closures, insolvencies or deliberate downsizing. To minimise financial exposure and manage ramp-ups more effectively, companies should expand capacity gradually and with maximum flexibility.

Gigacasting is seen as a possible game-changer – but how realistic is it for SMEs?

Müller: In my view, small and mid-sized foundries are simply not in a position to follow this trend. Even putting financial constraints aside, most face serious infrastructure challenges: ceiling heights, floor space and crane capacity are often insufficient – and difficult, if not impossible, to upgrade in legacy facilities.

For many, relocation and new construction become unavoidable – which is often an even bigger hurdle than the machine investment itself. If the new site is not close to a customer plant, transport costs can quickly make the entire business case unfeasible. And even if these issues are resolved, you still have to attract or relocate skilled labour – which increases HR costs, delays ramp-up and weakens existing operations.

At the end of the day, not every trend is worth chasing. There are other, often more practical opportunities to win customers over with smart, targeted solutions.

Let’s be blunt: Is gigacasting really the magic bullet for the industry?

Müller: Gigacasting certainly increases the share of aluminium die cast components in vehicles by replacing other materials. It can make sense for large structural parts – particularly in hybrid vehicles. But I don’t believe it’s the ultimate solution. It’s an important part of a broader transformation, not the answer to everything.

Large components can be produced without gigacasting. By investing in tooling and process innovation, we were able to produce parts designed for 4,400-tonne machines using just a 2,800-tonne die casting press. That’s why SMEs must make the most of their technical expertise, fully understand the limits of their existing machinery and invest strategically.

Government agencies often suggest a pragmatic approach: apply for funding, form partnerships, take small steps. Can it really be that simple for SMEs?

Müller: From a business perspective, strategic partnerships – particularly with strong tooling suppliers – are essential. But this is no quick fix. Such partnerships require mutual trust, clear rules and time. It doesn’t happen overnight. As for public funding: it’s absolutely crucial, but it needs to be faster and far less bureaucratic. Otherwise, the support arrives too late to have real impact.

How important is industrial policy in shaping the future of the sector?

Müller: It’s hugely important. In Germany, the challenge isn’t technological – it’s structural. Pressure die casting remains one of the industrial strengths of the country, but we’re unable to fully leverage that due to location-based disadvantages. Without clear and rapid political support, we’ll see more and more companies disappear or move abroad.

Europe has strict environmental regulations, while countries like China and the US operate with more relaxed standards. Is this such a disadvantage – or could it drive innovation? And is sustainability even a buying factor for customers?

Müller: I can’t speak for our customers directly, but in general: buyers expect suppliers to meet specific technical, commercial and ethical standards, in line with the rules of the producing country. And of course, the parts have to function exactly as defined in the technical drawings.

As long as those conditions are met, most customers are satisfied. But the tougher the local regulations, the harder it becomes for suppliers to meet all requirements profitably – and to build a truly sustainable business.

Scandinavian countries like Sweden and Norway are already turning to green aluminium produced with hydropower. Could Germany follow that path?

Müller: Sweden’s energy mix – about 40 per cent hydropower, 30 per cent nuclear and 20 per cent wind – shows just how far ahead they are. They benefit from real structural advantages. I don’t want to start an energy policy debate right now, but I want to say this: In Germany, we currently lack the infrastructure to follow suit.