Arrowcast mobilizes itself for next millenium.

This 21-year-old job shop flexed its muscles in a big way by installation the nation's largest noncaptive molding line to enter the large, heavy-duty iron castings market.

There's a rustling being heard from the quiet Wisconsin northwoods community of Shawano (35 miles northwest of Green Bay). It is not from the failing of the region's towering pines, bass or walleyes breaking the surface of its waters, or of the farm machinery working the surrounding fields. What is making the foundry and industrial world take notice of the 8000-population Shawano is the buzz of activity emanating from Aarrowcast, a 21-year-old iron foundry that in 1997 boldly took on a $20 million capital expansion and doubled sales and employee levels within 18 months.

Visitors readily see clues that this small operation - which dared to dream up much higher goals for itself and went after them despite the risks - differs from a lot of foundries its size. The foundry and its surrounding 70-acre site has what might be called an idyllic curb appeal; the 40-person front office (containing the president's desk) is wall-free; and the culture and management approach is often described as one that is committed to Christian ideals. And a walk through the shop and onsite training facilities affirm management's talk about the importance of its human assets and creating a better working environment for them.

In addition to the dynamic 39-year-old President Michael Jensen, Aarrowcast's leadership team is entirely under the age of 44, something that has likely contributed to the fact that the foundry's aggressiveness is not held back by the industry's paradigms of the 1980s-era shakeout.

Further, Aarrowcast's ability to tap into government funding - dating back to its founding - also has propelled the operation to its 400% sales growth over 4 years. In fact, Aarrowcast was named a national Small Business Administration Innovator of the Year for its innovative use of financing to achieve business goals and create jobs for the community.

A Tenuous Start

Jensen's father, William (previously vice president/general manager of Conval-Ohio's valve operations, which included several valve foundries), built the original 45,000-sq-ft foundry in 1978 to produce gray, ductile and nickel-alloy iron castings for the valve, pump, automotive, farm equipment and machine tool industry. The original foundry's two mold lines remain today: a 16 x 16-in. B&P RotoMatchblowmatic (capable of producing 35-lb molds at a rate of 200 per hr) and a BMM 36 x 40-in. flask cope and drag line (producing up to 400 lb/molds at a rate of 30/hr).

While good demand years had been expected, 1978 probably couldn't have been a worse time for a foundry to open its doors - the industry was about to embark on the worst string of poor demand years and plant closings ever known. In debt for $5 million, the foundry saw the demand for iron castings suddenly slashed in half just 4 years after making its first shipment.

When other companies faced a prime lending rate of 19% in the early 1980s, Jensen said only the long-term fixed interest rate loan gave the foundry any chance for survival, and it plowed through to survive the roughest chapter in U.S. foundry history.

After graduation from college in 1983, Michael joined the foundry and assumed the president's role two years later, setting forth a series of improvements that included: a new 13,000-sq-ft coreroom that increased its core machines to 18 ('85), a third furnace ('93) and a new 15,000-sq-ft receiving warehouse ('95). The plant also has an in-house pattern and tooling shop, including two CNC machining centers.

These improvements and advancements prepared the foundry for 1997: a defining era in its short history that tripled its manufacturing space and added 45,000 tons of annual melt capacity, not to mention becoming only the fourth gray and ductile foundry in the nation to earn QS 9000 certification.

A Foundry Reinvention

By '94, Aarrowcast's lines were filled to their annual 28,000 shipped tons capacity. "A foundry of our size had to grow and become more automated to be competitive in the world market," Jensen said. "Further, advancement in technology provides opportunities for people to grow. Growth doesn't necessarily make a foundry better, but it does give you a position of strength." While growth was never in question, positioning decisions were.

Aarrowcast initially explored entering the vertically parted molding arena. "With high-production, vertically-parted molding, it comes down to who can melt the iron at the lowest cost, and we didn't want to compete in that arena," he said.

In its market evaluation, Aarrowcast recognized a lack of capacity and competition for the production of iron castings for larger, heavy-duty vehicles and other industrial products. A survey of its current customers revealed enough volume existed to justify penetrating the market. So, after recognizing that the jump to large cope and drag molding made sense, the foundry presented one of its major customers with a plant design concept. Aarrowcast was urged, however, to install an even larger flask size to accommodate larger size castings, and the foundry redrew its plans and began evaluating machines on the open market.

With the help of a long-term fixed interest rate package (see sidebar on p. 32), the firm purchased the 60 x 85-in. Georg Fischer Impact molding line that had been sitting idle in John Deere's East Moline, Illinois plant since its closing in 1991. Following the 2-month-long caravan of 135 semi-loads transporting the line through Illinois and Wisconsin, and the installation in 1997, Aarrowcast became the proud home of the U.S.' largest jobbing automated molding line. Among the largest lines ever installed worldwide, it consumes 150,000 sq ft.

With Aarrowcast's line (built in 1984), the upset/flask/pattern assembly is lifted and held against the gas impact head, which produces a pressure gradient on top of the sand, causing the sand grains to densify and provide the greatest hardness near the parting line. The reduced density further away from the parting line allows the easier release of mold gases.

Primarily to get the machine installed and running, Aarrowcast (with the CAD and elevation work done by Don Baird at Tech Cast) engineered the new foundry almost entirely by itself at a fraction of the cost typical of such projects. Eleven months after ground was broken, it poured its first mold in March 1997.

With the capability of producing castings up to 4000 lb, the molding line took the foundry into casting applications such as road construction, forklift trucks, agriculture, heavy truck, large pumps, compressors, energy equipment, valve bodies, etc. The road to startup, however, was not necessarily an easy one. There were surprises in handling with the large and heavy cores and castings, as the firm had grown accustomed to manual handling with its smaller mix. Also, something had to be done to improve upon the machine's productivity, which had never been optimized as the plant was being phased out, said Jensen. in fact, he recalled the shock of a supervisor who, upon examining Deere's production records, wondered exactly what the foundry had gotten itself into.

But by running the cope and drag parallel to core setting, incorporating automatic mold closing and automatic pressure pouring, and updating the line's limit switches, production has been improved to about 18 molds/hr - nearly a 6-fold improvement over when it was last run 9 years ago. Further, it has dramatically improved upon labor requirements with only a five-man operation-one to operate the machine, two to spray the molds and set cores, one to add the in-mold magnesium treatment alloy and one to control the automatic pouring.

"Taking on a debt that matched our annual sales was a real stretch, and we had the same struggles any significant expansion sees," said Jensen. "The last 3 years have been trying at times, but we've managed to reduce our debt every year and always maintained positive cash flow."

Production Support

The rest of the new expansion also features what Aarrowcast feels is state-of-the-art technology and production flow.

Sand Control - The heart of the control system is a Hartley controller that runs on a 350-ton/hr continuous muller. Aarrowcast has integrated its reporting system so that each batch is collected and recorded for temperature, conductivity, desired compactibility, measured compactibility, water, weight, motor amperage, moisture, green strength, working bond and available bond. The real-time system alarms operators of outliers.

Coremaking - Core production consists of a Laempe L120 (360-lb maximum core) and a L150 (900-lb maximum core). With its 40 x 80-in. blowhead capable of 900 lb core/blow, the L150 machine was the largest of its kind in the U.S. when installed in 1997. Aarrowcast is planning on installing a robot to pick up the cores, dip them and automatically place them on the pallet line for drying, further removing labor requirements from the coremaking operation.

Melting/Handling - With the addition of three furnaces in 1997, melting now consists of six ABB 10-ton coreless induction furnaces. Molten metal is transferred to the pouring line via an overhead transporting system.

Automatic Pouring - Pouring is handled via an ABB pressure-pour system that utilizes a 500-kW coreless inductor in the holding furnace, the first such arrangement in the U.S. The 10-ton capacity system is unique in that it allows Aarrowcast to empty the furnace (instead of maintaining a heel) for fast gray-ductile iron changeovers between shifts. Joystick-controlled pouring is handled by an operator 15 ft away. The pour nozzle can be moved within a 1 x 2-meter area for flexibility. According to Aarrowcast, the design allows increased flexibility in changing grades and has afforded additional advantages in productivity, yield, scrap and working conditions.

Cleaning/Finishing - After the Action air-operated hammer removes gates and risers right on the shakeout, the castings are loaded onto hangers to proceed into two-station continuous shotblast units. Plans are in place so that the parts will be conveyed automatically to the cleaning/finishing area, in which an assembly-type grinding operation has been initiated. "Getting rid of workers swinging sledgehammers has reduced injury rates," said Dean Kaczorowski, operations manager. "This has contributed to our injury rate being 16% below the industry norm, resulting in a more favorable workers' compensation rate."

Computer Technology - Aarrowcast also is proud of its application of computerization and data technology. A B&L information system software package provides the foundry with income and balance sheet information within 3 days on a monthly basis. In addition to advanced systems for quoting/feasibility and analysis that run off the AS400 network, the foundry has an integrated manufacturing process control system that features 50 computers and touchscreen displays throughout the plant floor. "This automation and data collection system allowed us to absorb the growth without adding much overhead," said Kaczorowski. "Each employee must carry his badge and scan it to complete each job - and get paid."

The process sheets, said Kaczorowski, are designed with each new pattern, and digital images are added during sample runs. The process sheets inform the employee of instructions necessary to complete the job, such as raw material levels, machine settings and rates, core weights, etc. The process sheets are equipped with barcodes (combining order and operation numbers) and allow anyone to track an order in progress. Tracing employee efficiencies (and variances from standards) through the data collection system allows Aarrowcast to run daily reports that show profit/loss numbers according to each order shipped.

Production Innovations

According to Greg Chapman, manufacturing manager, there aren't too many independently owned foundries willing to reinvest and go out on a limb to the extent that Aarrowcast has in trying to improve processes through new methods. Chapman noted several other areas in which the foundry has been among the first in the industry to use emerging technology.

Yield Improvement - Aarrowcast was among the earliest of U.S. foundries to redesign risering systems for exothermic sleeve technology. In working with Foseco on its large (2150-lb poured weight on two-on molds) ductile iron axle housings, Chapman said the foundry has achieved a 22% yield improvement while also reducing the scrap rate by almost 16%. Where 8 x 12-in. risers were previously required, Aarrowcast has replaced them with seven 1.5 x 1-in risers (see photo on p. 34), considerably reducing the pour weight.

Core Binders - Chapman said the foundry has worked hard at reducing overall emissions, and after conducting trials earlier this year, the firm will be the first to implement in production Ashland Specialty Chemical's most recent coldbox binder system. According to Chapman, Aarrowcast's trials have indicated higher core strengths, reduced resin levels and the ability to reduce benzene emissions by up to 36%, as well as provide cleaner coreboxes.

Refractory Linings - Working closely with Allied Mineral, the foundry has reported that its automatic pouring furnace has achieved nearly a 2-year working lining life - a significant feat with the thermal cycling the furnace sees from both ductile and gray iron.

Spent Sand/Water Reuse - With the expansion, Aarrowcast relocated its spent sand storage to a site adjacent to a landfill about a mile away from the plant. Not only has the sand been cleared for extensive use in the landfill, but also for a number of state, county and city applications, including a road construction embankment. The runoff water from the pile is transported via an underground pipeline that returns the water to the foundry for new water additions to the muller. In addition to its minimal environmental impact, the foundry also has seen a slight percentage decrease in its new clay requirements due to the bond suspended in the water returning to the plant.

"The key is in how you implement the technology," said Chapman. "We're not afraid to try things that can result in more continuous flow and minimize any indirect labor. And in terms of flow and automation, we have only seven forklifts in this plant, three of which are used in shipping/receiving."

Not Done Yet

While the agricultural equipment market downturn has slowed the utilization of the new line, the heavy truck and construction markets have kept the new line running 10-hr days, 7 days a week. And while there is much capacity remaining, Aarrowcast already is hard at work on its vision for the next chapter of the company.

In the near term, the foundry is expecting to streamline its shakeout system in the older foundry while also exploring the addition of another automatic molding line. Over the longer term, the foundry will install another large-flask (45 x 72-in. flasks) automatic cope and drag line and transfer the work from the original foundry's cope and drag line over to it. Doing so will double its production capacity with an expected 50% reduction in labor requirements.

"Everything we do is set up for growth in mind," Jensen said, noting that the current line is utilizing less than half of the capacity of the 350-ton/hr sand system, which was located where the new expansion will go. "We'll simply add the machine, put up the walls and we'll be ready to go - the infrastructure is already there."

Aarrowcast, Inc.

Shawano, Wisconsin 

Casting Data: Grades 65-45-12, 80-55-06 and 199-70-03 ductile iron; and Class 20, 24, 30, 34, and 40 gray irons.

1998 Shipments: 55,000 tons.

Markets Served: Off-highway equipment, engines, and water and irrigation systems, general industrial.

Processes: Green sand molding (via lines for small automatic matchplate, 36 x 40-in. cope and drag, 60 x 85-in. cope and drag); coldbox, nobake and shell coremaking; coreless induction melting.

Size: 225,000 sq ft.

Customers: Caterpillar, Case, Dana, Viking and Valmont.

Employees: 450.

Founded: 1978 (Aarrow Electric Iron Castings, Inc.).

Staff Officials: Michael Jensen, president/CEO; Dean Kaczorowski, operations manager; Joe Weiland, engineering manager; and Greg Chapman, manufacturing manager.

RELATED ARTICLE: TAPPING INTO 'NONTRADITIONAL' FUNDING

Similar to how the original foundry was funded 21 years ago (at that time with a $2.5-million federal economic development loan), the second chapter of Aarrowcast was funded through nontraditional sources as well. "While we knew we needed financial help to grow, we didn't want to give up equity in the company and needed the security of a fixed interest rate over a long period of time,' said Jensen.

The majority of Aarrowcast's funding came through the State of Wisconsin Investment Board (SWIB), Madison, Wisconsin, complemented by state grants and a loan from the Small Business Administration (SBA). Interestingly, its state community development block grant delivers proceeds from the loan back to the Shawano community.

While U.S. foundries may find that not all state investment boards are identical in their attractiveness for small manufacturers, working with nonbank sources provides several advantages, including a willingness to understand the foundry business and individual financing needs, according to Monica Jaehnig, SWIB assistant portfolio manager-private placement division. "Our main niche is in long-term financing at fixed rates, as we're involved in public pension funds that are intended to go on the books and remain there for a long time. We work primarily with Wisconsin manufacturers and other companies with track records - not venture capital projects - and funding needs of $3 million or greater."

According to Bob Zobel, who recently retired from SWIB and serves on the Aarrowcast board, "the word 'foundry' doesn't exactly instill comfort with most bankers." Non-banking sources, he said, are more likely to find a way to fund foundries that can provide a sound business plan and details on past financial history, strengths in the production, market niches, list of customers, etc. His advice to foundries is simply not to "reject themselves" but rather to call and explore their options. At his new firm, Facilitator Capital Fund (Madison), Zobel has worked with foundries and other firms in providing equity money.

An added benefit, according to Aarrowcast, is the additional management guidance provided through the SWIB, which made suggestions toward improving the foundry's accounting systems and sales structure, establishing a board of directors, strengthening middle management and offering financing/accounting assistance.

According to Jaehnig, the Aarrowcast financing was a model of how to pool resources from a variety of institutions with different interests. In addition to SWIB, it involved the SBA, economic development grants and tax credits from the Wisconsin Commerce Dept., and the local community in handling grants - which helped with electrical substation upgrades and spent sand disposal, to name a few. "Aarrowcast opened a lot of opportunities for themselves," she said, noting its success in convincing the Dept. of Transportation that the foundry could supply spent sand for a new four-lane highway being built in the area.

RELATED ARTICLE: AARROWCAST'S ADVANCEMENTS IN QUALITY

Following a 1990 initial quality audit by one of the foundry's largest customers that turned up "numerous areas for improvement," Aarrowcast began implementing an aerospace level quality system based on statistical process control (SPC) and continuous improvement master plans. "These plans were long-term matrices employed company-wide to improve process consistency and repeatability at a time when internal scrap was averaging 6.1% and our external rate was 1.9%," said Joe Weiland, engineering manager.

In initiating efforts toward a more quality-focused organization, the foundry:

* performed an extensive company-wide failure mode and effects analysis (which also included outside sales personnel) that helped start departmental control plans and assist in prioritization;

* started an extensive plant-wide training program (covering SPC, problem-solving, advanced chart interpretation, etc.) that currently averages 8000 hr annually;

* tested and certified production employees as operators responsible for departmental processes, which allowed the elimination of seven inspectors and provided accountability and ownership at the point of manufacturing;

* sent all supervisory and lead personnel through a yearlong "Principles of Management" course;

* formed a multidisciplined advanced quality planning team that identified a need for additional engineers capable of utilizing computer-aided design and solidification modeling software.

Weiland credits employees' work ethic as the driving force behind a reduction of the internal and external scrap rates to a record low of 3.4% and 0.34%, respectively. Further, he said their efforts are evident from the firm's latest customer satisfaction survey, in which the foundry received an overall score of 4.12 out of 5 - a 43% improvement over the initial 1993 survey.