Eat or Be Eaten.

Acleverly run conference that I spoke at was fun and interesting because between each of the sessions, the organizers played clips from classic movies to set the stage for the speaker that followed. Prior to my session, a clip from the 1970s movie "Patton" was shown.

In this clip, U.S. Army General George Patton stood in front of a huge American flag and addressed his WWII troops. To paraphrase what he said: "No poor dumb slob ever won a war by dying for his country--he won the war by making sure some other poor dumb slob died for his country." That's a perfect metaphor for today's metalcasting industry, and a perfect prelude to my talk at the conference.

I began with the premise that, in our mature industry, some foundries will grow and others will stagnate and ultimately fail. I then shared some ideas on how the audience might ensure that their companies are among those that survive and grow. As I see it, four key ideas can ensure that other foundry businesses become the "poor dumb slobs" that end up dead in this war for survival in today's metalcasting business.

[1] Cost Reduction is Critical. No matter what your strategic plan says (you do have a strategic plan, right?) or what segment of the industry you compete in, significant cost reductions are essential to profitable survival. Any fool can grow a business by selling castings at breakeven or below-cost pricing, but smart CEOs insist that their companies grow profitably. And, in the face of real price deflation, hungry competitors, a sluggish economy and stubborn customers who refuse price increases, your choices are to cut costs, cut margins or lose business. I suggest that the correct choice is to cut costs and to seek cost reduction at two different levels within your organization.

First, at the "operational level," work with vendors to lower the cost of purchased goods and work internally to reduce inventories and eliminate costly labor by automating where possible. Also, take a hard look at job costs and job profitability to eliminate (either via selective price increases or by saying good-bye to selected customers) those jobs that are money losers. As a wise Pennsylvania foundryman has often said to me (and to anyone else who will listen), "Every job must stand on its own profit-wise or else you need to get it the hell out of the foundry."

Second, CEOs must take cost reduction to the next level--the "organizational level." Departments need to be transformed into streamlined processes, and organization charts need to be flattened. Start in "the office" with quoting or order processing. Consider "stapling yourself' to an order or a quote and experience firsthand how wasteful and time consuming these processes currently are.

Perhaps the greatest opportunity for cost reduction can be found in changing our age-old definition of "efficiency" from measures such as man hours/ton and machine uptime to cycle time. In other words, forget about efficiency in the traditional sense and begin focusing on innovative ways to shorten the time cycle between the moment an RFQ is received and when the completed order reaches your customer's loading dock. If you remove significant time from this cycle, quality and delivery performance will improve, as will your company's overall cost structure. Remember: training is the key to making this happen.

[2] Innovation is Important. Seek innovation in two major areas--cost reduction at the organizational level and in marketing and sales. In the marketing and sales area, look internally and externally to find what your company core strengths are, how they can be translated into something customers want to buy (and pay for), and where those strengths exactly match the real needs of identifiable "target" customers. These matches do exist, the trick (which requires true out-of-the-box thinking) is to find them.

[3] Seek Compatibility. Matching your company's strengths to those real market needs is the essential first step. Next, ensure that the marketing and manufacturing groups within your foundry are on the same page forgrowth. Sales needs to exclusively sell "compatible products" into "compatible markets" and to carefully selected "compatible accounts." Manufacturing, on the other hand, needs to buy into the definition of "compatibility," to have a hand in defining it and thereafter to effectively produce, without complaint, any and all parts for any and all customers that fit that definition.

[4] Manage Sales Differently. Sales organizations need to be shaken out of their traditional "service" mode and must be put into a "growth" mode. New management--new "professional sales management" (and no, this is not an oxymoron)--is key. An entirely new approach to both rep management and account management is required, along with more structure, communication, discipline and rigor than you've likely ever had before.

For CEOs, real growth will not come to you, especially in times like these. Growth must be proactive and systematically sought after, along the lines outlined here. It's up to you to instill the right attitudes and put the right people in place to make it happen and, when it's all said and done, to make sure your company eats and is not eaten.