Last week the American Foundry Society made an announcement that seemed to settle the whole declining-currency-rising-manufacturing-revenues conundrum. The question, to be brief, is this: can U.S. manufacturers succeed when the U.S. dollar falls in value?

I finally made up my mind about this a few weeks ago, but the news release helps illustrate why it’s such a tempting prospect.

The AFS announcement summarized the latest Metalcasting Forecast & Trends report, an annual presentation of industry economic statistics prepared for the society by Stratacasts Inc. (You can, and should, order it here.)

The news is good, according to the survey. The rate of U.S. metalcasting imports is declining (from 7% of sales in 2007 to a forecast 5%, or 3.68 million tons in 2008), and productivity indicators are improving, the results indicate. The domestic market’s resort to imported castings is declining for several reasons, the survey finds, including rising offshore production costs and domestic demand in large-volume producer countries (i.e., China and India.)

“U.S. sales of metal castings are expected to increase 5.4% to $34 billion in 2008 from $32.4 billion in 2007, with output rising 3.7% to 13.8 million tons in 2008,” the news release tells us. It goes on to detect “a continuing shift in the types of cast materials (being sold), with gains forecast for ductile iron, magnesium, and aluminum, while steel and gray iron shipments will decline.

Now, I won’t disparage good news of any sort, and if these forecast figures come true they will be good news indeed for U.S. metalcasters — higher domestic market share, stronger revenues, a better competitive standing versus their foreign competition. In short, U.S.-produced castings are more attractive because foreign-sourced castings cost more.

That’s fine, if the edge in affordability is the result of lower production costs, but that’s not the indication. More to the point, it’s impossible to see these figures apart from the larger economy from which they are emerging.

Let me put it this way: for metalcasters to do well, their customers must do well, in order that they will buy castings. So, cars and trucks have to be sold; homes and buildings have to be built, and furnished; infrastructure projects have to started; and so on. Unfortunately, most other indicators tell us this is not happening. Auto sales are in a rut and construction is off pace, just to begin to list our domestic problems.

Consumer spending isn’t driving economic activity, and a principal reason for this is that fuel and food costs are rising at unanticipated rates, making people feel poorer — so they don’t spend as much as they (or, the forecasters who speak to them) might have predicted.

And why are fuel and food costs rising? To a large extend it’s because of the declining value of the U.S. currency. It takes more dollars to buy oil (or anything else from overseas) than it did a year ago. It’s the same trend that is increasing market share for domestic metalcasters.

Most of this success is still speculative, and even if it occurs it’s likely only to be short-lived. Consumers who are devoting more of their income to fuel and food are going to devote less of it to products that require castings. Buyers of castings will buy fewer of them, and the declining U.S. currency will have caught the metalcasting industry. It will have caught all of us, in fact.

This doesn’t mean there won’t be external factors favoring metalcasting, and the AFS research finds some of those, too: “ … rising wages, productivity problems, labor-intensive cleaning operations, and a slower conversion to technology are affecting Chinese exports,” the release details. That seems plausible, but doesn’t it really work to remind us again that we function in a global economy? All these details are interrelated, and holding out one, or some, doesn’t mean there won’t be countereffects.

 “In the long run, a currency reflects economic fundamentals,” according to one of the Web’s few comprehensibe economics writers. It’s as simple as that.