Why the Same Casting Costs 30% More in One Country Than Another

One of the most common situations I encounter with procurement teams is this: they have the same part quoted by a foundry in Germany and a foundry in Turkey, and the gap is 25–35%. The instinct is to attribute it to labour cost differences and move on. That instinct is wrong - or at least, it is very incomplete.

Labour typically accounts for 10–15% of total casting cost in a modern, efficient foundry. Even if Turkish labour is 60% cheaper than German labour, that saves you 6–9% on the total part cost - not 30%. So where does the rest of the gap come from?

1. Scrap prices move differently in each market

The largest cost component in iron sand casting is material - typically 55–70% of total cost. And the largest material input is scrap steel and cast iron. Scrap markets are regional. The scrap price in Germany is set by different supply and demand dynamics than the scrap price in Turkey, which is one of the world's largest scrap importers.

In periods of global scrap tightness (which have become more frequent since 2020), Turkish foundries can actually face higher raw material costs than their German counterparts, because Turkey imports most of its scrap and pays global shipping rates on top of international prices. This completely inverts the naive assumption that sourcing from Turkey is always cheaper on material.

2. Energy tariffs are not comparable across borders

Melting iron requires roughly 600–750 kWh of electricity per tonne of metal poured. At €0.08/kWh (a mid-tier industrial rate), that is €48–60/tonne on energy alone - before any other overhead. At €0.18/kWh (which many Central European foundries faced during 2022–2023), it is €108–135/tonne.

The difference in industrial electricity pricing between markets like France (where nuclear power keeps rates relatively stable), Germany (where the Energiewende has made electricity expensive), Poland (heavily coal-dependent), and Turkey (volatile, often subsidised) can be 2× or more. For a part requiring significant melt volume, this alone can represent 8–12% of total cost difference between markets.

3. Moulding line investment levels differ dramatically

A modern, high-output automatic moulding line - the kind that produces consistent, accurate castings for automotive and hydraulics applications - costs €5–15M to install. Its depreciation and maintenance is spread across the parts it produces. A foundry running a 120-mould/hour DISA line and a foundry running a 40-mould/hour manual line have completely different cost structures, even if their labour rates are identical.

Western European foundries have generally invested more heavily in automation because labour costs forced them to. Many Eastern European and Asian foundries have invested less - which means lower overhead per part on simple geometries, but slower cycle times and higher scrap rates on complex ones. The right comparison depends entirely on your part.

4. Overhead allocation methods are not standardised

This is the one that surprises people most. Foundries allocate overhead (management, quality, energy, maintenance, depreciation) to parts in different ways. Some allocate per kilogram poured. Some allocate per mould. Some have variable rates tied to complexity grades. A foundry with high overhead and a €/mould allocation model will quote a heavy, simple part much cheaper than a light, complex one - even if the total factory cost is identical.

When you receive two quotes that look similar on the surface but come from foundries with different overhead allocation methods, you are not comparing equivalent things. You are comparing two different accounting choices.

5. Yield affects transformation cost, not material cost directly

Yield - the ratio of finished casting weight to total metal poured - is where cross-country comparisons most often go wrong. A foundry with 60% yield is pouring 1.67 kg of metal for every 1 kg of finished casting. A foundry with 75% yield is pouring 1.33 kg.

An important nuance: the metal that goes into feeders and gating systems is not lost. It is returned to the furnace and remelted in the next heat. What low yield actually drives is the energy cost of remelting returns, the burn-off of alloying elements during remelting cycles, and additional furnace time tied up processing returns rather than producing new heats. These costs flow into energy and transformation cost - not raw material cost directly.

Yield differences between foundries in the same country can be 10-15 percentage points. Between countries, where moulding technology and process maturity differ, 20-point gaps are not unusual. This is invisible in a standard quote.

What this means for procurement

When you compare casting quotes across countries, you need to decompose the price into its real components and compare each one separately. The structure that reflects how foundries actually build their costs:

• Base materials - iron, pig iron, steel scrap, alloy additions (magnesium, silicon, manganese)
• Auxiliary materials - sand, binders, coatings, cores, consumables, filters, packaging
• Energy - melting, plant overhead energy, heat treatment where specified
• Transformation cost - labour, equipment amortisation, factory overhead
• Other costs and profit - quality, administration, margin

Only by separating these can you tell whether a cheaper quote is genuinely more efficient, or cheap on one line and expensive on two others you cannot see.

One further point worth noting: in some markets - particularly Eastern Turkey and parts of Southern and Eastern Europe - quality testing (spectrometry, tensile testing, dimensional reports) is included in the base price as standard. In many Western European foundries, the same tests are charged separately. This can add 1-3% to the apparent cost of a Western quote that is actually equivalent on a fully loaded basis.

The other thing you need to do is add the full landed cost: freight, import duties (EU casting duties on non-EU sourcing are typically 2.7-3.7%), quality inspection costs, minimum order quantities and their carrying cost, and the cost of longer lead times on your safety stock. A Turkish casting that looks 20% cheaper ex-works often lands at 8-10% cheaper - and sometimes more expensive - once all of these are included.

Indicative ranges based on market data as of May 2025. Actual values depend on part weight, volume, geography, and current conditions.

The table above gives rough indicative ranges - actual values depend on part weight, volume, geography, and current market conditions. The point is that comparing quotes without this decomposition is comparing apples to unknowns.

CastCalc covers 22 markets with monthly-updated price data precisely because this decomposition needs to be done on current numbers, not on annual indices. A comparison you ran in January may give a different conclusion in October, if scrap prices have moved in Turkey but not in Germany.