Approach with caution: Olson Aluminum's conservative approach to business allows it to balance the juggling act of producing prototypes and running a job shop.

Business doesn't have to be a risk if it's approached in the right way.

Over the years, Olson Aluminum Castings, Rockford, Ill., has bought into that line of thinking that Ray Olson, vice president of production, brought to the firm and believes in wholeheartedly.

"Ray has always said, 'Business doesn't have to be a risk if you approach it correctly.' And he's right," said Tad Olson, Olson Aluminum president and Ray's son. "That doesn't mean you have to always be on the trailing edge of technology. But as things become available, you can take advantage of them if you see a way they fit and a way they can make money. We are going to continue to evolve and continue to change as everyone has to."

Since its beginning as a pattern shop in 1945, the Olson family's business has constantly evolved. Roy Olson, Ray's father, started the pattern shop and then expanded it to include a metalcasting facility. In the 1980s, the firm moved away from pattern making and more toward a full-service metalcasting facility. The company is now an aluminum metalcasting facility that has found a balance between running a job shop while taking on prototype jobs. The firm achieved this harmony by following its philosophy of caution and taking only calculated risks.

Speed is the Key

In 1990, there was a meeting at Olson Aluminum to determine what the keys to the upcoming decade would be and how the company would use them to remain competitive. The determination was that speed would be vital to success in the 90s. Knowing that leadtimes would need to be quicker as the decade wore on, Olson Aluminum started searching for a way to pick up the pace.

The firm found its solution with a venture into the world of prototypes. But it didn't happen quickly.

Following the business strategy, the firm knew it had to walk before it could run.

"The question that the managers here asked was, 'How will we do that successfully without falling on our face or fouling up the production to the point where we are making one customer happy but five others unhappy?'" said Mike Stahl, sales manager. "We weren't quite sure what all of the answers were. We tried to feel our way around and determine what some of the problems and issues were before we stumbled."

As it turns out, many of the answers were not hard to find. Some of the customers Olson Aluminum had a long-term relationship with were already asking Olson to run prototype jobs of between 5-50 components, and the firm was able to handle it with little trouble.

"We could see that the shift was there," Tad Olson said. "People were shifting into lower production quantities, and there was a market for doing it here that we could fill."

Step 1 was identifying the possible solution. Step 2 was a little more difficult--getting the company to buy into it.

"It was a tougher sell internally than it was on the outside," Stahl admitted. "But that was a good thing. The conservative thinking here is to make sure you don't step on yourself. So we took on a few of these projects one at a time and felt our way around. But there were a number of issues to overcome."

Topping those issues was that the company didn't want to be known as a prototype house. Olson Aluminum was not ready to trade in 55 years of running a family owned production shop for the very different world of prototypes.

"Management's concerns centered on the amount of high-quality supervision time typically required for prototype work," Stahl said. "If our primary focus changed to prototype work, a greater share of supervision time would be diverted from our production casting base. Simply adding equipment does not produce quality castings. Our employees' skills are what enable us to produce high-quality castings. Quite possibly the most significant contribution to these skills comes from the demanding nature of prototype work itself."

The company also was concerned about certain aspects of prototyping that it was unfamiliar with--namely, pricing and producing a component once without a chance to go back and make improvements during later production runs. Working closely with pattern facilities it had developed relationships with, Olson Aluminum was able to educate itself rather quickly in the area of project-specific estimating and quoting.

"Obviously, the life expectancy of a prototype program is much shorter than a production program," Stahl said. "This has taken some refining on our part in that we must plan for a finite process. Our quotes, for example, must reflect that the likelihood of numerous additional orders will be slim. Additionally, our tooling proposals and layouts must reflect a conservative approach in design to assure our leadtime goals can be met or improved because the customer will be expecting the first castings to be useable representations of their design."

Many of the answers presented themselves in the way Olson Aluminum already was doing business.

"We go to great lengths to make sure we coach people its to what their problems might be," Stahl said. "I think the belief at the time was that if we took those same skills and carried them over to a prototype scenario, there is no reason why we should not be successful."

After some discussion, the idea to venture into prototypes got the green light--actually, it was more of a yellow light.

"When we got into this, the thinking was that we are going to go out and try a couple of these things and they would be watched real close," Stahl said. "If we fell flat on our face in the first two or three times, the project would be put to bed for a long time."

That fall never came. There were a few stumbles along the way, but for the most part, Olson Aluminum found out most of the requirements to run a prototype house were already present in the production shop.

"We are lean enough out there on the production side," Stahl said. "And that allows us the flexibility needed to do this. If we were struggling to get our production out on a regular basis, there would be no way we could step into this thing."

Production vs. Prototype

Approximately 85% of Olson Aluminum's business comes from the production side of the casting operation. The other 15% is prototype work with typical run sizes of 5-50. The way in which the firm's building was designed was a perfect fit for this juggling act. Like everything else Olson Aluminum has done, a lot of front-end thinking went into the new facility in 1980. It was designed to be a one-shift metalcasting facility, meaning it was built with extra capacity in mind. Additional machines in each area of the operation were tucked away in spaces that were not being used, making them easily accessible when they were needed.

The flow of the building also lent itself to handling additional jobs. The castings progress through a "pull system," starting in the core room in the back of the building. From there, the molding floor is steps away. Molten metal is brought in through the side with portable furnaces to the molding lines, and completed castings flow straight through to the grinding area that is only a few more steps away.

"When you look at it from up above, it seems like a flow chart of sorts," Stahl said.

Then, all that was needed was a way to keep everything straight. By updating the process cards and work orders, many headaches were eliminated. The process cards now include a picture of each component with instructions detailing all requirements for a given job. Barcodes also were added so the facility could easily keep tabs on all of the components it produces. In doing all of this, Olson Aluminum stumbled into an unforeseen benefit--all areas of its operation were strengthened.

"It has honed our skills in a number of areas we wouldn't have gone," Stahl said. "By shoving yourself into certain areas, it forces you to get good at it. If you take some of that same skill level and apply it to other things you are doing, it is a way to keep the skill levels of your people high that might not otherwise be the case.

"Our staff is continually being challenged to develop more innovative and efficient processes to deal with complex requirements inherent in prototype projects," Stahl continued. "These widely varied challenges encountered by producing prototype programs continue to immeasurably enhance our casting skill levels not only in prototyping but even more importantly as they relate to production."

Reducing leadtimes is where that is most evident at Olson Aluminum. Stahl said typical leadtimes on components are four weeks. Whether the firm is slow or busy, customers can generally expect their shipment in four weeks or better.

"The leaner we got with our leadtime, the more flexibility we had," Stahl said. "There was a time a few years ago when you would come in here and you would see a lot of work in progress and see a lot of components in carts waiting. We finally decided we were going to get to the point where the order is pulled and it is ready to go. We have this pretty well refined now. It is pretty rare to see something standing still out there for any length of time."

Finding a Niche

After fine-tuning its juggling act, Olson Aluminum was left to concentrate on its niche for the production side of the operation. The firm has settled into three specialties--pressure-tight, leak-free castings; components that require excellent surface finish; and those that require excellent machinability.

Olson Aluminum is able to compete in these arenas partially because of its attention to detail.

The most refined alloy possible is used following a thorough rotary degassing process customized for the facility. The degassing system was designed process-specific by Olson Aluminum's engineering staff to be utilized on all the alloys poured.

Temperature control is vital so the shop is designed to have the molten metal brought from the melt room onto the mold floor by a portable furnace that is Ray Olson's own design.

"We feel temperature control is critical," Tad Olson said. "I know how much heat that portable furnace is going to let loose from the minute I take it off the electricity, pour it and bring it back. When I want to pour at 1,350F, I know that 80% of that is going to be poured at [+ or -] 10 degrees of 1,350F."

The Petro bond sand used by the firm also helps give the castings an excellent surface finish. Olson Aluminum's entire operation has been set up for the petroleum-based sand binder and has been since the start. Many metalcasting facilities have gone away from it, but Olson believes the consistency in mold compactability helps achieve consistently superior surface finish results. Petro bond does have its drawbacks though, mainly a shakeout time that is about 50% longer than with other sands. Olson Aluminum has compensated for this by installing longer cooling lines. The company feels a longer shakeout time is a small price to pay for the surface finish and dimensional accuracy that can be achieved.

"We find that it molds very nicely," Tad Olson said. "We find that the surface finish is superior. It is a forgiving sand. It doesn't dry out as quickly."

Heat treating is another area the firm has gained more control over. Thanks to a modification by Ray Olson, the firm has been able to tighten the reigns on its heat treating process. In addition to the proportional integral derivative (PID) controllers, the heat treat furnaces are now fitted with timers that were purchased off-the-shelf and tweaked slightly. If the process is off by only a few degrees, the entire system defaults to shut down.

Know Your Market

The tight process controls and attention to detail have helped Olson Aluminum clearly define its niche. Then all that was left to do was attract potential customers. But like almost everything else the firm does, marketing was done cautiously.

"I have told people flat out, there are a lot of metalcasting facilities out them," Stahl said. "If you need a basic shape, if you need a manhole cover or a gumball machine base, there are a lot of places that can make those shapes and do it very well and do it very cost-effectively. But if you need these types of high-end items that can't leak, have to be free of voids and have to be able to machine extremely well, that's where we belong. It comes down to the fact that we are at our best and our strongest when we are in the market niches that we have carved out and stayed very competitive in."

Knowing that, Olson Aluminum does not venture too far away from its niche very often.

"We are pretty careful with a potential customer," Stahl said. "If someone came in and said, 'I need a 250-lb. casting and I need a lot of them,' we are going to be cautious about what we tell that individual. It is routine for me to tell people, 'Right now, our reputation with you is good. We don't want to wreck that.' The way you save that reputation is to make sure you are up-front and square with people. If you can do it fine, if you can't, you need to tell them that."

To attract new customers, the idea is simple--put quality above all else.

"You could bring a casting to the customer in a short amount of time," Stahl said. "That's great, but it's even better if it is right. That's what we expect. We have a firm belief that we cannot sell something to someone that they in turn cannot sell to their customer. There are so many people out there willing to cut corners for the sake of price. That is short-sighted thinking."

Looking at the big picture is what has kept Olson Aluminum in business for 60 years. Careful consideration has gone into everything the firm has done--from the layout of the building to how the firm will attract new customers. All of it comes back to a conservative approach to business. The company has taken calculated risks in order to change with the times, but it has not rushed into anything. By staying conservative, but willing to try new things, the company has been able to operate in two very different areas of metalcasting.

"In the future we are going to continue to change as the industry changes," Tad Olson said. "As the economy moves, we are willing to move and embrace those changes as they occur. Are we going to go out there and build a 100,000-sq.-ft. building behind us? No. Are we going to try different things? Yes.

Olson Aluminum Castings, Rockford, Illinois 

Metals Cast: 356, 319 and 535 a aluminum alloys.

Casting Process: Green sand casting.

Molding Process: Cope and drag, matchplate.

Size: 40,000 sq. ft.

Primary Markets

Served: Prototypes, hydraulics, pneumatics, fluid control and handling, motors, gear boxes, actuators, power transmission, machine tool, packaging, medical and laboratory.

Employees: 40.

Annual Shipment: More than 1 million pounds.