Past Performance Does Not Predict Future Successes.

Ranging from HR management to a never-before-seen application of technology this year's Hoyt Lecture offers a short-list of challenges that must be met for industry survival and success.

As recently as 10 years ago, economists, bankers and businessmen concerned with future growth of the economy made their investments in Germany, Japan, South Korea, Thailand and Malaysia -- the rising star nations with the greatest growth. At the same time, disappointment reared its ugly head in Great Britain, Australia, Brazil and Poland with no new investment opportunities. The U.S., meanwhile, had the largest set of problems--grossly unbalanced budgets, record foreign debt and high unemployment and inflation. Generally, the masses thought that the next generation's standard of living would be reduced.

Everywhere we turned, we were being beaten by those who could deliver better quality at a lower cost, and this was especially true in manufacturing. We were moving toward a "hamburger-flipping" service economy--ironically, in a nation where the TV, the transistor, the printed circuit, the computer and the VCR were invented.

In fact, we were inventing very little and were being beaten by our own manufacturing techniques. Manufacturers abroad listened to the likes of Edwards Deming and his colleagues and were told to try something new and "just do it" differently. And that's what they did.

Meanwhile, the U.S. management and business style didn't vary, while our industrial world--including metalcasting--was crumbling. We were unable to stem the Asian and European flow of higher quality products and lower prices. In fact, our valued auto industry was at risk while its suppliers, including those in metalcasting, were equally in trouble.

Turning the Corner

Fortunately, the strength and fortitude of the U.S. manufacturers and their people were greatly underestimated. It was the manufacturing people who played the strongest role in turning America around over the last 10 years. These workers implemented changes such as resizing foundry capacity to more efficiently meet demand. This was especially true of those foundries using older technology and manufacturing obsolete products.

Our metalcasting industry, along with the American manufacturing economy, began to look up. We attacked waste in every form. Words such as "lean," "synchronous manufacturing," "qualitysystems," "one-piece flow," "reduced lead time" and "customer focus strategy" became the normal languages of a manufacturing industry that truly had reinvented itself. The results were improved quality and rework, increased throughput, reduced operating costs, reduced work-in-progress and, more importantly, the safety of our employees.

While we achieved these things and we reduced the price to our customers as we improved productivity, other industries did far better than the casting industry during this important period of growth. Why then, did the casting industry not move as far forward as others?

Is it because we are normally second- and third-tier suppliers? Interestingly, microprocessor manufacturer Intel finds itself in the same state and still moves onward with Moore's Law of doubling output every 18 months. Is it because we have to compete globally? Similarly, every successful industry is now a worldwide player.

The casting industry has a never-ending dedication to continuous improvement, making significant strides in productivity gain and cost reduction in the recent past, but at a slower pace. But, it will not be enough for the future.

As managers and leaders of the industry, we must be more aggressive in the five areas outlined below. Each of us will approach these differently--there is no single answer to this complex question. But, without action on each front, success will not happen and the past will predict an uncertain future.

ATTRACT, MOTIVATE AND RETAIN TALENT

This may be the most difficult of all tasks. At the same time that we face difficulty encouraging young students to emphasize math and science, we require and expect a more highly educated workforce than ever before. Therefore, we must be active in the education process at all levels--students, schools and universities. Success here is not the result of luck--it is hard work. A recent study indicated that 68% of freshmen entering engineering schools in the U.S. last year required remedial math studies just to bring them up to an adequate performance level.

It is also a fact that even trained engineers don't look to the metalcasting industry for a career. Further, the digital economy detracts young people's attention away from metalcasting and manufacturing.

Each of our casting operations competes for valued production labor--sometimes against the likes of Wal-Mart and others that offer the flexibility we can't. What must we do? For starters, we must establish a new benchmark of internal and external housekeeping--a clean house provides a more competitive, effective, safer and higher quality operation. It is essential to have benefit/wage structures that encourage employees to be long-term assets to a company. As leaders, we must also demonstrate the passions for our industry by our actions, integrity, ethics and citizenship. We must build relationships with those who influence us the greatest: government, customers, suppliers and, most importantly, educators.

And, as a group, we should understand and communicate what the effects would be of an economy totally devoted to service, one in which a strong export and wealth-creating sector such as manufacturing would be absent. Such an economy, over the long-term, will find its position in the world diminished.

EMPOWER EMPLOYEES

Going after the best talent is one thing; what to do with it after we have it is quite another. Past management styles are not good enough. The business is becoming too complex to manage with a "command-and-control" technique.

Every company in today's business world desires a creative workforce. An important element in establishing an environment in which creativity will flourish is to adhere to sound corporate values. Clashes between values and action can permanently taint relationships. Once burned, it is nearly impossible to repair an organization's creative atmosphere.

Be careful of detailed bureaucratic work rules and standard procedures--a high degree of formality will stifle creativity. Professional standards that are internalized must be self-managed in an atmosphere of trust, while peer respect and professional recognition should be the strongest drivers. Without the entire workforce empowered to take responsibility for improvements and "making things happen," a company will be relegated to an "also-ran" status.

Employee education and training must be ongoing and yearly goals for every employee must be established and measured. Continued communications on the "state of the business" must be conducted for all employees. While this activity might start in such areas as environmental and safety programs, they should cover other performance measurement areas such as quality, on-time delivery, inventory, productivity, use of technology and new part startups.

Charles Fick, manager of General Motors' Advanced Material Development Lab, taught me the term "social-technical." It refers to the impact of the current technology being applied at the plant and how it affects the employees. What changes can be expected in terms of work habits, education and training? How can you unite all of these attributes? Often, our employees fear technology as a method of replacement and not a means of assuring future employment along with the success of the company.

The employees who are in support of the company's objectives are the catalysts for creating value and success. The uninformed employee will fight you every step of the way. Today's workforce is bright. If employees see the same facts you do, they will most likely arrive at the same conclusions and road map to affect positive change.

LEARN TO OPERATE ON A GLOBAL BASIS

Few countries are protecting their industries, so trade markets are opening up as we move to a one-world economy. If you haven't done it yet, now is the time to learn how to buy from, sell to, or deal with a foreign company.

There are many opportunities for metalcasters to partner overseas. This lower-risk technique may open many future relationships. Dealing with our global metalcasting supplier base gives us a valued window into new technology. Some of the most creative equipment manufacturers operate in Germany, Spain, Italy, Japan and Denmark. Ignoring technology from abroad may cut deeply into the future of the U.S. metalcasting industry.

CHANGE THE MEASUREMENT SYSTEM

We all respond to that upon which we are measured. The measurement and reward system drives behavior, both poor and exemplary.

I have seen many examples of the human competitive nature being driven to extremes in which internal measurements pitted employees within the same plant or other organization to work against each other, forgetting the needs of the customer. The vision must be refocused on the customer requirements first, employees second and then stockholders--in that order. Measurements should support those priorities.

On-time deliveries, operating costs and quality are much more important than labor efficiency, departmental downtime and even equipment utilization. Unfortunately, it is easy to suboptimize by segmented measurements such that the entire system becomes ineffective. Metric processes must be simple, understandable and used to reward achievements of goals.

Consider a 3-7% bonus to a workforce that achieves its goals. Employees in departments, various product groups and shifts should not compete internally. Leaders should review many of the books written on manufacturing metrics and general accounting practices to ascertain if current measurements are driving unwanted behaviors.

APPLY TECHNOLOGY AT EVERY TURN

This area, I believe, is most important. Unfortunately, it is poorly practiced in the metalcasting industry. Having said that, however, the opportunities for improvement are many.

As an engineer working in manufacturing, I was always scared of new technologies. These new ways seldom worked as promised, cost more than predicted and didn't start up without extreme costs. On the other hand, as a director of a casting technology group, I thought the new technology would be welcomed by the plant workers, save the operation money and be fun to start up. In most cases, all of this was true. Actually, there are occasions when the new technologies were thrown out of the plant as failures but were deemed successes by those who worked on them.

The greatest item I learned about a new technology is that applying it makes the old methods improve, if only to resist being replaced. In fact, I have seen double-digit improvements in existing methods and technology when the threat of new technological applications was made. While new technology never gets credit for improving the old methods, this seems to be the greatest reason to try to apply new technology at every turn.

A second lesson is that the game-changing technologists are generally at the fringes--people not normally involved in day-to-day casting operations. For instance the development of GMBond was the result of an assignment I gave to Richard Schreck, principal research investigator at General Motors, asking him to develop a biotechnology to break down the resins in core butt piles behind our casting plants. Schreck and his team at the GM Tech Center were working on numerous projects that were a long way from metalcasting and foundries. This additional assignment involving the breakdown of resins became a real challenge to Schreck and his colleague, John Siak. By the way, at that time, those two men had only recently stepped into a foundry.

Their technical work led to the development of a protein-based foundry sand binder that proved to create an entirely new class of sand core binders. While its primary benefits were shakeout from aluminum and magnesium castings, it was its environmental advantages in the coremaking and sand reclaimability that were most important. In fact, the unburned binder can be recovered from both scrap and used cores and can be reworked again. All this was developed by two men who never worked in a foundry.

Other new technologies have been developed in a similar manner, and we'll look at two such examples.

Titanium-Aluminide

The first example is a technique used to melt and pour a highly reactive metal, titanium-aluminide (TiAl). TiAl is 40% less dense than steel of the same strength and maintains its strength nearly to its melting point, actually getting stronger and tougher at higher temperatures.

The big problem is that the metal reacts with every known refractory, stealing the oxygen that destroys the mechanical and physical properties. Therefore, current production melting of TiAl is done in skull melting furnaces under a vacuum. Because this process is expensive and requires special equipment, it is only practiced by a few foundries. As a result, TiAl is not a well-known material, and its applications are limited by production costs rather than its material costs.

Under the support of MCT, the General Motors/Hitchiner joint venture, a new countergravity investment casting technique was developed that utilizes an alumina crucible and an induction furnace. The process is fast, safe and inexpensive vs. skull melting.

To bring back the lessons learned earlier, this game-changing technology will not only have the potential of a new market for TiAl by using scrap titanium from old golf clubs or Russian submarines, but also will cause the current methods of skull melting to improve. Someday, we may drive cars with TiAl valves that improve fuel efficiency all made available by a new development within the old-fashioned technique of skull melting, gravity pouring or perhaps the new reaction melt countergravity technique.

Liquid Hot Isostatic Pressing 

Another technical change developed by that outer fringe is a variation to hot isostatic pressing ([HIP.sub.ping]) that could have a great future impact on the casting industry. The process closes internal shrinkage voids in castings by heating up the part in a pressure container to temperatures at which the pressure acting on the outside of the part exceeds the yield strength of the material at that temperature. By eliminating porosity's effects on mechanical properties such as fatigue strength, the process allows castings to approach the theoretical (textbook) property values of an alloy. Actual experiments have shown that castings undergoing the process can improve safety performance in critical aerospace and automotive parts. Due to its high costs, however, the process is usually restricted to aerospace and military parts. Another major limitation is processing time.

The MCT group attempted to make this entire process better and cheaper. They reviewed cost makeup, but specifically looked at the idea of casting porosity into products and then [HIP.sub.ping] them closed. This was discussed as a new concept--purposely making parts with holes in them. Remember, a [HIP.sub.ped] part has improved fatigue and enhances the safety performance in critical parts. Gating could be reduced yields improved and X-ray inspection eliminated. Perhaps these sand or die castings could be used for aluminum safety parts on automobiles.

No one has a monopoly on original ideas, but one just popped out. If liquids are noncompressible, why couldn't one HIP in a liquid? The pressure could be transmitted isostatically to the material and could be heated more efficiently than gases used in current [HIP.sub.ping] operations. The possibility of heating the work-piece would be quicker, too. The idea of molten low-melting point metals was expressed, as was molten salts. Both could be heated and held at the yield temperature of many casting alloys.

The next puzzle was figuring out how to compress the molten metal or salt. This was resolved by working with a small hydraulic press and container that held the work piece and molten salt. Out of it came the "liq HIP" process. In 15-30 sec, with a total container-to-container cycle time of less than 2 min, castings and other parts could be HIPped. The small unit showed excellent results and, with the help of our partners, Idra Presse and Teksid Casting of Italy, is being upscaled to larger prototype equipment.

This process, combined with the solution portion of the T-6 heat treatment of A-356 alloys, may lead to a new chapter of cast alloys in the transportation industry. A sand- or diecast 356 component would be cast, solution heat-treated either in molten material or in the heat-treat oven and then placed into the salt bath. Next, it would take only a few seconds to be HIPped followed by the quench and the aging time. This inline process has been piloted and found to be valid, and testing has shown near-theoretical property achievement.

Remember, neither GM or Hitchiner set out to invent such a process. The intent was to reduce costs and improve the casting process. Castings that could improve the worldwide automotive industry also could be an opportunity to advance the world's casting companies.

Technical work can never be finished or stopped, in good times or bad. If you work to technically improve your operation, it will require your company to employ the type of people who are able to change, are involved in associations such as AFS or ASM International, are able to gain your customer's respect and, furthermore, can guide your entire workforce. They will not only teach the engineering science they know but will be models for other employees, their children and their future education and careers.

Taking the Offensive

We have challenges as we look forward. To make our future a bright one, all of our leadership will be required on many fronts, including education, customer development, manufacturing leadership, global challenges and, most important, technology.

If the ability to apply the latest manufacturing principles and techniques is our defense against competition and price pressures, then research and development is our offense. It provides the ability to score now and in the future.

Last, your customers will not know just how clever you are in either area unless you show them. Bring customers, as well as people from your community and industry peers, to your plants. Be a foundry showman. It will help eliminate the misunderstanding of the casting industry among the key people who should be supporting it.

The Roman Empire was at its peak ruling the known world in 300 AD. By 400 AD it was nonexistent. What caused the decline and fall of the Roman Empire? Reflecting upon such history lessons and applying them to current business activities, what do you think your company will look like in 100 years, or 50 years or even 20 years?

A metalcasting company with a good defense--a good offense--and good showmanship will have a bright future. These are the performances that will predict future successes.

Executive Vice President-Operations Hitchiner Manufacturing Co.

In addition to delivering the industry's prestigious lecture at the 2000 AFS Casting Congress, Mikkola also was honored with the Society's Gold Medal, the first time in the Society's history that both honors were bestowed on an individual in the same year.

Prior to joining Hitchiner (which incidentally, has the vision statement, "Dissatisfaction with the Status Quo") in 1998, Mlkkola spent 30-plus years with General Motors, most recently as director-advanced manufacturing engineering of GM Powertrain. He holds bachelor's and masters degrees in metallurgical engineering and engineering from Michigon Tech Univ. and the Univ. of Wisconsin, respectively, and also holds an honorary doctorate from Michigan Tech. He is a past president of the Foundry Educational Foundation, is an ASM International Fellow, and is a member of AFS, ASM, the Die Casting Assn. He holds four patents and has published more than 30 technical papers.