Will the castings industry grow in 2025? Will tariffs change the playing field?

These are interesting – and challenging – days for the castings industry. Business is good … but it could be better. Tariffs are all the talk. How will the industry respond? Jesse Milks, president of State Line Foundries, offered some answers.

How are talks of tariffs impacting the castings industry?

Tariffs are a hot topic – with a lot of conjecture.

Customers ask about this daily. I tell them to expect some disruptions and uncertainty, but that overall tariffs should be a net positive for the industry and State Line.

We don’t source directly from Mexico or Canada, and we’re not purchasing materials from low-cost countries. The two foundries we run, State Line and Winnebago, buy materials domestically. We use suppliers who could be affected eventually, depending on how impactful tariffs are on the supply and demand for specific products. An increase in the suppliers’ costs will eventually trickle down to us – we’ve seen that happen before – but not for another six months or so.

On the positive front, we expect some OEMs to reshore castings here. That could give the industry and our business a boost.

All in all, we’re six months away from seeing an impact on our business. Still, there is a great deal of concern in some corners. Canadian iron producers that sell to U.S. foundries are frantic.

Do you expect 2025 to be a year of growth?

We anticipate growth but expect it to be conservative.

We knew there would be changes in 2025, with a new administration coming in. We aren’t yet sure what the changes will be and how the market will respond.

A historical perspective might shed some light. There has always been growth coming out of previous slowdowns. For example, there was extreme expansion coming out of COVID-19. The expansion lasted longer than anyone could have expected. Now it has run its course and some industries have suffered. Many segments are recovering, but not all will rebound quickly.

What sectors are performing well – and not so well?

Agriculture has a long climb back. Crop prices are low and interest rates remain elevated so equipment investments are down. With the oil and gas industry, there is never overnight improvement given the red tape involved in that sector.

Construction and infrastructure markets have stayed strong and will continue to. Castings are needed for the projects and also for the OEMs who produce the equipment and machines, such as cranes and excavators. Concrete businesses need equipment and materials, including machines to mine the aggregates and others to mix it.

One quick point about infrastructure: There are many governmental mandates about using U.S.-made products, including castings. I can tell you that the mandates are working. It led one particular customer to stop purchasing outside the U.S. and start working with us. It is a significant piece of business.

I’m a proponent of buying domestically. Our tax dollars are being used to buy more USA made products for improving the infrastructure we use in our daily lives. We should have pride and confidence knowing that USA made products and workmanship are being used to improve our roadways, water systems, schools, etc.

What other markets will grow this year?

Power generation is expanding quickly, in part because the recent growth of AI facilities, which require large generators. Backup power in general has become a bigger industry. There are concerns about the power grid, so many facilities are acquiring generators. A number of natural disasters have also driven power-gen sales.

Mining is performing well and has some growth potential. In many ways, the essence of digging into the earth to extract materials hasn’t changed. What they’re digging for – that has changed, in particular with what goes into batteries. Mining is demanding on equipment. There are lots of abrasives, which cause components to wear out.

The food industry is another decent market. It’s been stable and seems like it will continue to be.

Overall, there are a few markets that are strong – and a few that have not yet rebounded. So will there be progress? Yes, given the strength of those markets. Will it be gradual? Yes, given how slow recovery is in some other segments.

Does a slower economy make it difficult to retain your workforce?

Worker retention has always been our priority. We cross-train employees and work on continuous improvement projects during slow times. This expands their capabilities, capacities, and also keeps employees on the payroll. Then, when business picks up, we have the skilled personnel we need to hit the ground running. There is virtually no ramp-up time here.

We’re not particularly slow right now, but we do have capacity to fill. We are fully staffed, confident and ready for that uptick to happen!

What is the status of interest rates and how are they impacting business?

Borrowing doesn’t directly affect our business as much but it can be important for our customers and their customers, too. If you are considering buying a million-dollar piece of equipment and the interest is 6 percent versus 3 percent – that’s a drawback. Projects get delayed or the scope is less, and the businesses don’t move forward as aggressively as they otherwise would.

The interest rates won’t change drastically any time soon. Still, things are resettling, maybe correcting themselves in some fashion. 

Does this economy create any opportunities for OEMs?

From 2021 through 2023, all foundries were really busy. But many were underperforming.

During those booms, we had new prospects come and ask State Line to help. Many of these businesses were panicked. Orders had fallen way behind at the factory. There were also issues with communication and quality.

But many of these prospects got cold feet when it was time to make the switch. They were already behind and feared a switch would make matters worse. They stayed where they were and simply tolerated the delays and quality issues.

Now that things are bit slower, that foundry might be able to keep up with orders. Therefore many OEMs feel they don’t need to move – that all is going relatively well.

In reality, when things pick up, the OEM is going to be in the same spot as they were in 2022. There will be the same issues – and likely with a price increase.

History repeats itself. Now is the time to make a change.

Are smaller businesses among these prospects?

A business of any size could make the move. If you’re the “little guy,” that foundry will likely shove you aside to keep the big OEM customers happy when things get busy again. That’s worth keeping in mind.

In terms of bigger OEMs … I tell them they might underestimate what a “small” foundry can bring.

Yes, State Line and Winnebago do offer lower volumes, but we’re not that small. The bottom line is we turn out products as good as any foundry in this country, whether our customer is a small business or a large OEM.