Foundries have a Revenue Problem

For many years, foundries could build their business around a familiar formula: manufacture high-quality cast parts, compete on process know-how, and serve established automotive customers. But this formula is under pressure. The European market is tightening, machine utilization is just around 50%, and more companies are competing for a smaller pool of future orders. In that environment, it is no longer enough to rely on manufacturing excellence alone. Companies have to ask where future value will come from and how they can offer more than they did in the past.

Value has to move beyond the casting

That is why one of the clearest themes is the need to build more around the casting itself. The part still matters, of course, but it is no longer the whole offer. Customers increasingly expect additional value: assembly, earlier engineering involvement, support in development, stronger integration into the production process, and broader technical support. This is a move from simply supplying a product to offering something closer to a solution. In high-cost production environments, which is nearly everywhere in Europe, that broader value proposition becomes essential.

A foundry that gets involved earlier and contributes more knowledge across the process becomes much harder to replace. Customers wanted more than a finished cast part, which led Handtmann to invest in systems technology, assembly, prototyping, and early engineering work. That is an important shift because it changes the company’s role in the value chain. Instead of waiting for a drawing, quoting, and producing, the foundry becomes part of the customer’s broader solution. That is where differentiation starts to grow.

Service and software are part of the same shift

There needs to be a broader move toward services, digitalization, and software-related capabilities. The core message is not that every foundry should become a software company. It is that industrial businesses need to think more broadly about what customers buy from them. Software, digital tools, and service-based offerings can support that shift by extending the relationship beyond the physical component and opening new ways to create value. In that sense, software is not the whole story. It is one visible sign of a larger transition from pure hardware thinking to integrated, solution-led business models.

This is why the term servitization matters so much in this setting. It describes the shift away from selling standalone products toward a combination of products and services. That requires foundries to rethink what business they are really in. Are they just producers of cast parts, or are they industrial partners helping customers solve bigger problems?

The answer increasingly points toward the second option. At the same time, each company will have to find its own route. Some may move further into engineering, others into service, others into new markets or adjacent capabilities. There is no single template, but there is a shared need to evolve.

The challenge is strategic, not only technical

What makes this shift difficult is that it is not only about technology. It is also about mindset, talent and strategic direction. Companies need people who understand markets, customers, digital capability, and business development alongside traditional foundry expertise. They need leadership teams willing to invest in know-how, not just equipment, which has no ROI calculation. And they need the confidence to move before the market forces them to. The conversation is very clear on this point: the foundries that succeed will not simply be the ones that make good parts. They will be the ones that know how to turn manufacturing expertise into broader value.

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