Alamo Iron Works' Texas-style resiliency.

Although it has withstood fierce battles in its 120-year history, among its toughest is breaking 120 years of habits to gear for the future

Down here in San Antonio, you can't help but feel the power of the famed yet crumbling adobe/limestone mission and the resolution displayed by 183 rebels who, after a 13-day siege, met their death in 1836 rather than surrendering to Mexican Gen. Santa Anna's army.

And spend some time at the foundry that bears its name, Alamo Iron Works (AIW), and you'll also be impressed how this mid-sized casting company, established just 40 years after the heroic act described above, has staved off some serious problems in its 121-year history.

But make no mistake about it, says Brian Baker, the firm's new vice president of manufacturing, the fight isn't over yet. You might say that AIW is in the process of stabilizing the fort - from the inside out.

Baker brings a unique perspective to AIW. Previously the vice president of manufacturing and engineering for Energy Industries, Corpus Christi, Texas, he supervised the purchasing of the firm's castings - which included those purchased from AIW. He knows - from the customer's point of view - what the foundry must do to survive.

"This company has realized it won't make it another 120 years unless it sheds the paradigms that led to years of unsatisfactory financial performance," he said. AIW hired Baker as the agent for such change, not only for the foundry, but the company as a whole.

History

AIW holds a prominent place in San Antonio history as one of its first manufacturers, with its startup in 1876 as a small, frontier blacksmith shop. It is far more than a foundry; it distributes a wide range industrial supplies to manufacturing plants. The foundry/machine shop, as well as its fabricated steel, fall under AIW's manufacturing arm. It also has its own line of products and machinery, many which contain AIW castings.

Just eight years into its existence came an event that would prove to be prophetic. In 1884, city citizens demanded that the noisy machine shop and iron works move from its location to a site well out of town. It moved to a 1-acre plot, about one-half mile east of the Alamo "out in the mesquite brush." The new plant consisted of a small foundry, machine shop and pattern shop. Operation began in April 1885, and would remain at that site for another 105 years.

Weathering the Storm

AIW looks at its history the same way a solider might examine his old battle wounds. It outlasted a number of traumatic events that many of its peers couldn't endure. It found a way through the Great Depression, when its production lines stood still in 1933. It survived foreign competition's entry into the fabricated steel market by consolidating production, warehousing and inventory. It countered spiraling taxes, shortages and rising inflation of the 1960s and 70s with increased income.

In more recent times, two major events molded AIW into what it is today, said Baker. The first was the collapse of the oil industry in the late 1970s, when the foundry's casting orders were concentrated in the oil/gas industries. "That was when you could bank money in the foundry business," said 25-year veteran Steve Smith, vice president-factory div. "Customers were interested in tonnage delivered and little else."

When the crash came, months of backlog vanished overnight. The foundry, which cut back to a four-day week, began scrambling for new customers and had to cut its workforce. As a result, it made it a point to diversify the markets it served. Today, it produces ferrous and nonferrous castings from 0.25-5000 lb.

The second major event was in 1990, when the foundry was forced once again to move its doors. The foundry sat on a valuable piece of property near downtown San Antonio, which city leaders eyed for the new AlamoDome (multipurpose athletic' facility where tile NBA Spurs now plays). After years of holding out for a better real estate agreement, company officials one day found themselves faced with the city's right of eminent domain, and the threat of condemnation of the 105-year-old facility. So, AIW sold its land under less than attractive circumstances and frantically moved operations into the dormant Consolidated Foundry site, five miles away. AIW's new facility would be only one-third the size of its previous plant.

In addition to the fact that AIW had to move, it had to do so under an "emergency exodus," as the city forced stringent groundbreaking schedules for the AlamoDome. Noting that AIW is proud that it successfully moved over a weekend, Baker said circumstances left little time to plan or modify its new home. Smith recalled the headaches in redesigning operations and relocating equipment into a much smaller foundry, and meeting a new set of fire and environmental codes, among other things.

"As you undergo that type of change, you have to relearn a lot of things because almost all your known processes have been changed," said Smith. There were also a lot of hidden problems. As one example, the slight change in elevation between the locations resulted in higher humidity levels at the new plant, which, coupled with other matters, resulted in an intense round of troubleshooting.

In addition to several cradle to grave issues at the old facility, there were increased environmental demands on the new site. Because of the move, the firm lost its Texas Natural Resource Conservation Commission (TRNCC) environmental waivers (grand-lathering clauses) and had to meet the latest standards. "It was something other foundries weren't required to do," said Baker. "We weren't allowed sand piles, sludge ponds, etc., and had to meet the toughest new air quality permitting requirements. We had to put new baghouses on the shakeout, dust collectors at grinding stations and change processes - for instance, we stopped using hot-top because of emissions."

Despite the tough times of the move (one they'll be grateful to never again endure), company officials regard it as an accomplishment. "We've already gone through that whole experience," Baker said. "Now, all foundries must conform to those tougher regulations, and some may have difficulty doing so because of the habits they've developed."

Making it Happen

For years, AIW had been on a path of marginal financial success, at best. Management, however, wasn't searching for the quick fix. It recognized that it needed a culture change, and initiated the journey.

Cautioning that the plant is nowhere close to where it needs to be, Baker said that it has made progress. After all, he said, 121 years of habits can't be changed overnight.

Upon arriving at AIW, Baker viewed the plant as one with a manufacturing philosophy and people management theories stuck in the 1950s, which he said is typical of many foundries he visited as a casting buyer. There are other ways of doing things that bear trying, he said, targeting people management, incentives and equipment.

Noting that he believes in working on "the things that cost the least," and that "20% of items that cause 80% of the problems," Baker identified three areas in need of immediate improvement.

First was the lack of process documentation. "The foundry was relying solely on its production experience," he said. "Without documentation, when someone leaves or retires, you'll have to relearn how to do everything over again. In fact, you might work three months to optimize production of a part, and then when the same order come in again six months later, you'll have to relearn it again."

The firm has initiated several levels of training and is following an ISO 9000-type program (certification may come later). Once a process is "mastered," it is carefully documented with pictures, instructions and schematics. "We needed to eliminate the introduction of variables to expect consistent results," he said. "Before, changes were made without any structure, and often many were made at once. You must be real consistent in your process to get a consistent end result."

Second, Baker found a lack of urgency in meeting deliveries. "It stemmed from serving the oil/gas industry in the days where you'd get orders regardless of your customer service. But with today's just-in-time (JIT) environment, you can't get away with that."

To improve deliveries, he put incentives in place for supervisors and managers that are directly tied to meeting promised delivery dates. The computer systems have been modified to show promised delivery dates so supervisors can make necessary changes on the floor. Ontime deliveries are monitored, tracked and discussed at the firm's weekly production and staff meeting.

Wanting his employees to "feel the heat of the customers' needs," Baker said customers are encouraged to visit AIW and many have held seminars on their products and the role of AIW's castings in those products. Employees and supervisors also regularly visit customers at their plants.

Baker also noted a "warm body" hiring mode had existed. "The quality of the product and systems reflect the quality of the people," he said. Baker tightened hiring practices to minimize turnover and maximize quality of the individual. In fact, he conducts the final interview for each prospective hire.

"By taking a methodical hiring approach, you find whether you truly need to hire that person. It's amazing how well you can survive without some positions. When you need to increase your profit margins, as we do, you only can afford those that you need. So you really must have good people."

Baker immediately made other human resource-type changes to retain people in a region that has a tremendous amount of service industry jobs. He raised wages commensurate with experience, empowered supervisors and devised pilot incentive programs for everyone in the building (none had existed). On the molding rollover machine, line employees had been averaging just 14 molds/hr. Now, as a result of a program that rewards employees immediately, that rate has nearly doubled. On Monday, Baker hands the employees their bonus - in cash - for the week ending on Friday.

The firm is also taking an open-book management approach. "Detailed financial information had never been shared before," he said. "Now, as we review numbers with staff and supervisors each month, employees are encouraged to attend. It's much easier to affect change if you know why you are doing so. I think people need to know - even if the news isn't good. Plus, I'm not smart enough to solve every problem. We need others working on it - and their input. And before you can get their input, they need to know what the problem is."

Baker admits there was resistance to change, but after that first year, people started to come around.

Modernizing

"When you're part of a big company, you're only one of the hogs in the trough and it's not going to be easy to get many dollars for capital investment. So, we're helping management see what could be, and then we're spending its dollars wisely. We've made more capital investment recently than in a long time."

Among its most recent purchases is solidification modeling software, and it is completing plans to purchase production and scheduling software and hardware. The firm has also taken an innovative approach to accomplishing objectives without asking the corporate office to open its wallet.

Its plans include a new nobake sand mixer that will improve productivity and control of process. Interestingly. AIW financed the mixer through its chemical supplier, and will pay for the equipment through the use of chemicals. It is also looking at replacing some of its nobake and oil sand coremaking with a more productive coldbox process.

Currently, the firm is purchasing reclaimed sand from a nearby foundry in lieu of a portion of new sand purchases. By year's end. AIW will install a mechanical sand reclamation system to reduce its dependency on landfills - but will build it itself, which it does whenever possible. For instance, AIW currently builds its own scrap hoppers and flasks, and makes its owns castings for ladle skimmers, bottom boards, replacement parts and other items. It is also planning to build a scrap preheater inhouse.

Another AIW innovation is outsourcing its labor-intensive casting cleaning operations, which helped sidestep otherwise necessary capital investment. "The cleaning room is always a bottleneck and can be kind of mind-numbing for workers," said Baker. "We already had a distribution truck that services plants in Mexican border towns, and found an operation down there that could clean our castings for a fraction of our labor costs. So we didn't have to spend for an expansion or worry about hiring, and we increased our capacity."

Future of AIW

"Our niche is to service the job shop market in Southern Texas," Baker said. "We aren't destined to be the most automated foundry. We're simply working on our systems to become the most responsive foundry. We want to be quick, dependable, offer good quality and meet requested - not promised - deliveries. And we're working every second to get the costs down.

"It's a good niche because from a global perspective, the large, high-volume casting operations will experience what is going on with the computer companies. Eventually, the Chinese and Koreans will figure out a cheaper, faster way to get castings here, and then the U.S. firms will go head-to-head against them in a vicious dogfight.

"With the niche we've defined and the type of parts that we'll produce, we don't need to be the lowest cost, we just need to be the most efficient in deliveries, quality and competitively priced castings. Adopting the JIT mentality is what will keep us in business."

Alamo Iron Works-Foundry Div.

San Antonio, Texas 

Casting Data: gray and ductile iron, aluminum and bronze.

Annual Sales: $5 million (casting-$3.5 million; machining - $1.5 million.)

Annual Shipments: 2100 tons/year (95% ferrous; 5% non ferrous).

Markets Served: natural gas and oil industry fields, general jobbing markets. A significant portion of the nonferrous business is producing state historical markers and plaques.

Processes: Induction melting (ferrous), gas-fired crucible melting (nonferrous), green sand (automatic, jolt-squeeze and cope and drag) and flaskless nobake molding, and shell, nobake and oil sand coremaking.

Value-Added Capabilities: Machining, Trucking fleet (25 total).

Size: 65,000 sq ft.

Customers: 158, including Weatherford Enterra, Ingersoll-Rand and Walworth. 10% of its volume is captive.

Employees: 91.

Year Founded: 1876.

Staff Officials: Brian Baker, vice president-manufacturing; Steve Smith, vice president-factory div.; Pete Short. molding line superintendent: Brian Tawney, customer service; Pat Nixon, shipping, cleaning and quality control superintendent: and David Delph, foundry sales manager.