After three years of spectacular growth, powder metal (P/M) is pausing to take a breather. It may need a brief respite. If new exhaust-system applications take off, P/M use could soon soar to unparalleled levels. That is, if rising costs or a nasty automotive strike don't get in the way.

P/M industry sources say domestic shipments were down about 10% in first quarter this year because of the strike at General Motors Corp., and they will anxiously watch this year's UAW contract negotiations.

As with so many other materials, automotive use dominates the P/M industry and continues to control even more capacity. In 1995 automotive parts accounted for 66.5% of the total market, up from 63.7% in 1994.

P/M proponents say the material's continuing popularity with automakers is due to powder metallurgy's ability to form strong, complex shapes with a minimum of expensive and time-consuming machining operations.

New applications in engines, transmissions, antilock brake systems and air bags continue to fuel the popularity of conventional P/M parts, but after nearly doubling from an average of only 15 lbs. (7 kg) per car in 1978 to an estimated 29.5 lbs. (13.4 kg) in 1996, it is getting more difficult to consistently produce double-digit growth.

"The P/M parts market has calmed down after three straight years of double-digit growth figures," says Donald G. White, executive director of the Metal Powder Industries Federation. "1992, 1993 and 1994 witnessed an average of 18.6% growth per year. Despite a more-than-bullish future outlook, the industry probably will not see, nor could it probably sustain, the same level of continuous hyper-growth," he says, explaining why overall North American shipments grew by only about 2% in 1995.

Most industry insiders expect similar modest gains in 1996. But lurking just around the corner is potentially explosive growth.

After trying out powder stainless steel flanges in the exhaust systems of the '97 V-6-equipped Contour/Mystique, Ford Motor Co. is expected to approve more applications over the next several years. GM, Chrysler Corp. and Toyota Motor Corp. also reportedly are considering using stainless P/M flanges on future exhaust systems.

That's because increasingly stringent emissions regulations are expected to require future exhaust systems to be more durable and leakproof. So far, stainless steel flanges made from PM are considered a more efficient and cost-effective means of improving durability and preventing corrosion than current wrought or cast stainless parts -- or plain steel.

Although these flanges are small and weigh only about a pound, they are some of the biggest car parts ever made from stainless steel powder. Furthermore, Ford is using two flanges per vehicle and may add many more as it expands their use throughout the exhaust system. Ultimately, it could amount to 8 to 10 lbs. (3.6-4.5 kg) of stainless P/M per vehicle, and represent a 30% increase in the total amount of P/M used per car, Mr. White says.

Already, P/M suppliers such as Hoeganaes Corp. are expanding capacity. Company officials say the expansion -- scheduled to be completed late this year -- will allow it to produce more stainless steel powder than currently is supplied to the entire North American P/M industry.

However, Mr. White warns that the rising cost of nickel -- a key ingredient of stainless steel -- could significantly affect prospects among cost-conscious automakers.