Fritz Hall: Steering Benton's Future via Customer Selection, Technology.

Turning away customers would be perceived by some of the foundry industry as "suicide" in today's age of increased offshore competition and shrinking profit margins. By the same token, installing an unproven new molding technology with forecasts calling for a 12 year contraction in casting demand would appear to most as an ill-advised use of capital.

For Benton Foundry, Benton, Pennsylvania, and its president Alfred B. "Fritz" Hall, perceptions and appearances are irrelevant. Due to Benton's casting ability and on-time performance, Hall is able to pick and choose customers for his foundry. Hall has decided to install new molding technology now because Benton's increasing yearly per-part profit margins and sound business planning have prepared it for any slowdown that may occur.

This article takes a look at Hall and some of his philosophy in steering Benton for more than 25 years as it has grown 10 times in size and increased sales more than 17 times.

Hall and Benton's Beginnings

Hall, 59, grew up in and around a foundry. His father, Alfred J. Hall, was cofounder (1929) and president of Hallstead Foundry, a gray iron, green sand jobbing shop in Hallstead, Pennsylvania. Fritz began his career sweeping floors in this plant and eventually learned every casting-related position in the foundry. In 1958, the elder Hall and his partner bought a second operation, the 30-employee Harrington Foundry, Benton, Pennsylvania, also a gray iron, green sand jobbing operation, and changed its name to Benton Foundry, Inc. By 1974, Hall had become vice president of sales at Hallstead. In that same year, the elder Hall passed away and the Hallstead (which closed in 1987) and Benton foundries were split up with the Hall family retaining ownership of Benton. After the split up, a family legal battle ensued over ownership of Benton in which Hall prevailed, taking ownership and presidency of the foundry in 1975.

At that time, Benton had only seven customers (all located in Pennsylvania and New York), 65 employees and $2 million in sales. Today, Benton has customers in 23 states, exports castings across the globe, 250 employees and a projected $35 million in sales this year.

Profit, Not Tonnage 

Hall believes Benton's success over the last quarter of a century is due, in part, to its philosophy that "not all customers are good customers."

"We are not in this business to make castings, we are in this business to make a profit," said Hall. "When I consider a job for Benton, I look at the individual job-- how it is designed and what the customer expects--and how it fits into our production mix. If we decide to bid, we quote a realistic price based on total cost. We are not about tonnage, we are about profit. We understand that Benton Foundry cannot and will not be all things to all casting buyers."

Hall said he has seen too many jobs quoted at low prices by foundries because they want to add production tonnage. According to Hall, "The foundry will provide good upfront costs on tooling and then nickel-and-dime the customer to death on things such as scrap surcharges to increase revenue." The result is a lose-lose situation for the foundry and the industry as the customer feels cheated.

According to Hall, the practice of price wars in job bidding also conjures up the false idea that castings can be judged strictly on price and all foundries can produce all castings.

"As an industry, we must move away from the tonnage mentality and focus on margins and technical capabilities," said Hall. "It is a learning process for our customers. If a customer is price-buying, the importance of quality, service and on-time delivery must be stressed. Also, foundries must fight against the misinformation that often exists in the job-bidding process."

Hall has seen Benton's jobs up for bid in Internet auctions with misinformation listed, such as a reduced number of cores required or no quality standards. According to Hall, other foundries can't help but underbid for the job because they don't know the true story. In most cases, the foundry that wins the job will be forced to raise its price when it receives the tooling and understands the entire makeup of the casting, angering the customer, he said.

"To many purchasers at large firms a casting is a commodity and patterns and coreboxes are things they don't understand," said Hall. "They would rather be commodity buyers--it looks better on a resume than a casting buyer."

The key, says Hall, is for a foundry to find that niche of production that can differentiate itself (in the case of Benton, value-added, highly cored castings in prototype, short and medium runs) and fight to remove the commodity-producer label. At that point, it is a matter of meeting delivery schedules, providing good service and staying within costs.

For Benton, the proof that this approach works is in the results. The foundry has been profitable since the day Hall took over in 1975. Benton's average delivery time is 3.5 weeks, and it has a 95% on-time delivery rate, according to its customers' requested delivery date. In addition, the foundry has never laid off an employee. Also, the same seven customers Benton started with in 1975 are still with the foundry today.

Modernizing for the Future

"The industry must take a step back today and focus on the economy it is going to be working with 5 years from now," said Hall. "Nothing a foundry does today is going to affect how it survives the slowdown period tomorrow. That must have been addressed 5 years ago."

This has been Hall's philosophy for Benton. In 1990, Benton began a two-phase, 20,000-sq-ft, $7 million expansion of its melt shop in which it became one of the first jobbing foundries to install electric induction furnaces (two 4-ton) with advanced computer monitoring and control technology for charging, melting and holding operations. In 1997, the expansion was complete with the addition of two 10-ton induction furnaces and the result was a cutting-edge melting facility with quality-intensive operations.

"We are always on the lookout for new technology, but we have to see if it will fit in the Benton mix," said Hall. "We won't buy a machine and try to find work for it. We must have the work and then pursue the equipment for it,"

This philosophy is exemplified by the December installation of a new horizontally parted flaskless matchplate molding line that is the first of its kind (Fig. 1). A first-ever installation of this molding technology in the world, Hall saw there were certain jobs in Benton's mix for which this equipment would be perfect. As a result, the molding technology will augment (not replace) its existing horizontally flaskless lines.

"It is critical not to fit a square job in a round hole as customers are becoming more and more sensitive to the details of a job such as cosmetic values and finishing," said Hall.

Hall has a difficult time understanding why foundries will purchase 20-30-year-old used equipment instead of buying state-of-the-art technology. "Although a used molding machine may work well, the technology, including speed, control and programming, are out-of-date and, in many cases, no longer viable for today's production requirements," said Hall. "Customers expect their suppliers to stay on the cutting edge of their industry, but some foundries would rather cut corners on equipment and try to make up the difference in manpower."

Hall sees a similar approach from foundries that are buying older plants in financial trouble. "These foundries or foundry groups are looking for market share, but not profits," he said. "They want to be the next GM of the foundry industry, which is fine if you have the margins. The problem is that a premium is paid for these old plants, and a few years down the road the technology is outdated and has to be modernized. Ten years ago it may have been O.K. to purchase a foundry based on melting capacity, but, today, the focus must be on the technical aspects of the plant."

Benton has researched the possibility of purchasing another foundry in the U.S. and modemizing it, said Hall. Benton also was approached two years ago by a customer about setting up a joint plant in Mexico. However, Hall believes these aren't the answers for Benton. "We believe we can upgrade the operation in Benton, Pennsylvania, more efficiently and at a better cost and achieve the same results as taking on an old foundry and modemizing it," said Hall.

Pushing Through a Slowdown

Hall is not worried about Benton surviving the forecast contraction in casting demand but he knows many of his brethren won't.

"Many foundries as well as their customers have not realized that the foundry industry has changed dramatically in the last five years with plant closings and consolidations and supplier consolidations," said Hall. "It isn't the same industry anymore,"

Hall continued to predict, "We will lose at least 33% of the industry in the next 5 years. However, this isn't doom and gloom for those foundries that have planned effectively. As an industry, we will be stronger. The foundries that remain will be survivors who understand their costs."

Hall continued, "I guarantee the purchasers know their costs. They also know the foundries that don't have minimal billing or price breaks and will target those plants."

Hall knows it is up to the foundries themselves to survive the current climate of demand contraction and customer indifference. However, he also knows that Benton will never alter its current business philosophy.

"We approach our business to make a profit," said Hall. "It is important that our jobs, customers and operations are focused that way."

Alfred B. "Fritz" Hall President, Benton Foundry, Inc.

Age: 59.

Immediate Family: Wife-JoAnn; Son-Jeff; Daughter-Kim.

Metalcasting Assns.: AFS, Pennsylvania Foundrymen's Assn., Ductile Iron Society.

Company Information

Founded: 1958.

Metals Cast: Gray and ductile iron.

Mold Capabilities: Automatic horizontally parted green sand molding.

Core Capabilities: Shell (15%) and coldbox (85%).

Melting Capabilities: Coreless induction.

Casting Size: 1-150 lb in quantities from prototype to several thousand pieces per order.

Size: 225,000 sq ft.

Markets: Valves, electric motors, boating, pumps (no single market has more than 10% of production)

2001 Projected Net Sales: $35 million.

Employees: 250.