Foundries pay freedoms's price, too.

Remember when... as a kid, you'd push away that ugly plate of brussel sprouts and your mother would bark at you to eat-up, on behalf of the thousands of starving children in Asia "who'd love to eat them." Her words and those that followed from your father let you know "just how good you had it."

Touring several European foundries in late January drove home even deeper to me our industry's current good times, and the enviable position we're in. So sometime, when you're having a truly #&@%* $#%$!% day, reread this page.

Over the course of a week and 2000 road-miles, Dave Kanicki and I visited eight foundry officials in Slovakia and western Germany. What we saw and beard about operating a foundry over there would make even the most curmudgeon foundryman feel better about his situation.

While we are feeling the pressures from foundries in Mexico and elsewhere, we've had the luxury of preparing for these forces, unlike the foundries in the former West Germany. When the 12-ft tall Berlin Wall crumbled with surprise in 1990, foundries felt the impact as a new world of previously inaccessible casting sources - albeit not very modern - were suddenly at their customers' disposal. Overcapacity soon exceeded 50%, and one foundryman said 75% of his customers shipped their patterns to the former East Germany (many have since returned). Some foundries tried to deal with the situation by dramatically cutting their prices. As one foundryman put it, "they shipped each casting with deutsche marks all over it." You know the ending - those foundries no longer exist.

Not only did this excess capacity create a buyer's market in the ensuing recession, but West Germany's tax base was called upon to finance the East (who had a GNP one-fifth of the West's), resulting in what one foundryman called the "Eastern pocket transfer." Still in a recession, Germany's foundries must operate with a high tax burden and high wages/benefits (50% higher than here) while customers increasingly test the capabilities of Eastern European foundries. Today, Germany's total shipments are still yet to match that of West Germany alone in 1989, when the political change was about to crash the party. Looking back on the changes, one foundryman said: "Our foundry survived only because others have died."

The foundry situation is even more serious in Slovakia, which became free in 1990 (then as Czechoslovakia) after 22 years under Communist dominance. In 1992, the Czech Republic and Slovakia separated after 74 years together.

In 1989, Czechoslovakia's foundry industry produced 1.5 million tons of castings for 15 million people - "far more than were necessary," said one foundryman. The bulk of Czechoslovakia's defense plants were located in what is now Slovakia, so when defense production ceased, so did much of its economy. As a result, Slovakia has seen production declines, plant closings and increased unemployment. Slovakia's casting output is only 1/7 of that of its former spouse, the Czech Republic.

Industry privatization began in early 1993, and it hasn't been easy. Not only must the entire nation learn to operate in a capitalist society, but its technology is severely lacking. The plants we toured recently installed automatic molding, but they were enormous operations with vast, unused space. In fact, one had an 8000 sq meter building laying empty, with portions of several other buildings producing nothing but cobwebs. Now attempting to produce auto and other components for the first time, it's easy to envision them busy with the government's tank components, manhole covers and railway brakes. Said several Slovakian foundrymen of their 1950-circa technology: "These plants had not seen a single koruna in 30 years." One foundryman said he "should have been paid to assume ownership of the plant," instead of the other way around.

The Slovakians were more marketing-oriented than expected, but now must find a way to execute their plans. Only one of the six Slovakian foundries we visited with could claim profitability. Overall industry capacity for the 38-plant industry is about 60% at 80,000 tons.

Imagine the only customer you ever knew simply vanishing, and then trying to learn casting marketing principles overnight. Or be enjoying a high production year only to suddenly hear enormous excess capacity is available next-door from a nation whose problems become yours. And all the while coping with strict environmental rules, quality certification demands and fierce competition from hungry neighboring nations (as well as Asia) - during a recession. Not to mention how perceived political instability has scared away investors.

We can all be thankful that our price of freedom (with the help of seven foundrymen, of course) was paid 222 years ago. Overseas, they're learning that freedom comes with a hefty price, as well as what you've known for years - that the free-market foundry industry isn't for the faint of heart.