Reaching New Heights at Richmond Casting.

Profit sharing and horizontal management practices have been critical in driving this foundry to achieve unparalleled casting production and sales for a firm its size.

"Treat your workers how you would want to be treated."

For Joseph E. "Mickey" Garrity, president and CEO of Richmond Casting Co., Inc., Richmond Indiana, these words ring true on a daily basis at his foundry. While others may talk the talk, says Garrity, "Richmond Casting walks the walk." From profit-sharing to entrusting floor supervisors with purchasing decisions, Richmond Casting has decided to place its future in the hands of its employees on the shop floor.

The first question that probably comes to mind is: Why?

The answer: Because the employees produce.

From 1990-97, Richmond Casting's sales doubled. In the same time, its profits as a percentage of sales doubled. Both of these occurred without any added equipment or capacity. These increases occurred because of increased employee and operation efficiency.

This article takes a look at the roots of Richmond Casting as it pulled the former Trucast Foundry out of bankruptcy in 1980. It also focuses on how this foundry and the employees that run it have pushed its production capabilities to the limit, creating the opportunity to start up a new greenfield facility earlier this year.

Focusing on Profits

Built in 1975, Trucast was founded to supply machined cast gray iron water pumps for OEM and aftermarket sales. After 3 tumultuous years, the plant went bankrupt in 1978 and sat idle until late 1980 when Dayton Casting Co., Dayton, Ohio, and Garrity came knocking.

This group, which owned two others foundries--The Dayton Casting Co. (now closed) and Advance Foundry (now under new owners)--located in Dayton, saw an opportunity to diversify into the under 50-lb iron casting market. The two foundries Dayton Casting Co. owned were focused on providing large components for automotive stamping dies. Knowing that this market was losing casting jobs to plastics, Dayton Casting Co. jumped on the opportunity to enter the water pump market and develop a casting proficiency with gray iron components under 50 lb. In addition, the foundry group was able to begin producing ductile iron components under 50 lb.

"In the late '70s and early '80s we could see the end for both of our large iron casting foundries as the stamping die market was going to shrink for us," said Garrity. "We needed to diversify and Trucast provided us an immediate low-risk opportunity."

Dayton Casting Co. took over Trucast and its equipment in September 1980 for the debt the plant had accumulated ($1 million) and started production again in January 1981 as Richmond Casting Co. Upon its re-startup, Richmond Casting had 15 employees and two customers.

During its first year of operation, Richmond Casting grossed only $30,000/ month in sales. For the first 2 years of operation, Richmond Casting lost money every month.

"We had no customer base," said Garrity. "We were building from the ground up to establish a customer base outside of water pumps and increase production. In addition, there was a depression era in the foundry industry."

In November 1982, the plant began to turn the corner and was in the black for the first time. Richmond Casting had begun to build a solid customer base from among the heavy and light truck, railroad, and construction markets. In addition, Garrity had started to "open the books" of the foundry and bring all employees into the management chair. The idea was to teach employees about foundry accounting and how the customers' orders broke down from an expense and profit perspective.

Although there was still capacity available at Richmond Casting, Garrity knew that the most his foundry could pour with its present equipment was 40 tons/day. As a result, the foundry had to become more efficient. Garrity believed that if the employees understood the finances of running a foundry, they would be more cognizant of how their actions affected profits down the road.

"We couldn't raise casting prices because we wanted to keep customers and we couldn't raise wages to improve performance because that would ultimately raise casting prices," said Garrity.

In 1985, Garrity took a dramatic step and solidified the foundry's relationship with its employees--Richmond Casting introduced profit sharing to its 36 employees. On a monthly basis, 10% of the foundry's pre-tax profits would be distributed to its employees on an equal basis. The goal, according to Garrity, was to motivate the employees so their future was tied to production and costs just as much as his was. By the end of 1985, the firm's sales had increased to $2 million/yr.

"Profit was what mattered then and it's what matters now," said Garrity. "You can talk about man-hours per ton and tons shipped if you want but it means nothing to me. I want our people looking at the entire operation, including the equipment and consumables being used. Our plant may produce a high amount of quality castings, but if we don't do it efficiently from a cost standpoint, we won't turn a profit."

This philosophy led to Garrity slowly pushing down the decision-making to the plant workers most responsible for it. For example, the foundry doesn't have a purchasing department. Instead, the foremen in each area of the plant are responsible for ordering the necessary supplies for melting, molding, cleaning and finishing, etc. This responsibility ties right back to profit.

"Those making the purchasing decisions are going to think that much harder because it affects them directly," said Garrity.

"By having the person who uses the material in the cleaning room, melting or molding make the purchasing decision, we are able to develop a just-in-time delivery mindset with raw materials and consumables," said Gill McBride, plant manager. The net effect is that the money earns interest (and goes to work for the employees) rather than going to supplies sitting on the plant floor.

Initially, the plan was slow to take shape as the foundry only made a profit about every other month. But, in 1989, that situation changed as a new management team took control of the plant, including McBride, Joyce Fuller, sales and scheduling manager, Bob Pittman, controller, and Gary England, quality control manager. Garrity had been searching for a team to drive the profit-sharing plan and found it. The team now has 11 years together.

Although casting production remained the same throughout the '90s at its 40 tons/day poured and 96 molds/hr, the gains in efficiency was what mattered. Since 1990, the plant has seen sales increase from $3.7 million to $7.2 million in 1997 and $6.9 today. Profits, as a percentage of sales, have jumped from more than 5% in 1990 to more than 11% the last 3 years.

"The profit-sharing program has made every employee feel as if he or she is an owner of Richmond Casting," said McBride. "For example, when there is a scrap problem, employees know they have to fix it or it is money out of their pocket. In terms of production, when a job comes in, the employees know that if they run it as quoted, it is money in their pocket."

This success opened the door for Richmond to build its new $5.8 million greenfield facility that started production this past March.

The Greenfield Next Door

The 20,000-sq-ft greenfield foundry was designed by Richmond's employees and built on land behind the old plant. (The old foundry still serves as the coremaking and cleaning and finishing operation, and is currently undergoing a remodeling to improve the working conditions and streamline flow.) The new facility, which was designed to optimize its molding line and mold indexing system, currently houses one molding line but was built with an expansion to a second molding line in mind.

"There was no way we could have survived without increasing production with the new facility," said Garrity. "We were running two shifts, 6 days/week. In 5 or 6 years we would have seen all our jobs go elsewhere because we didn't have more capacity. We could not take on new customers and were at the point of not taking care of our present customers."

In addition, said Garrity, the old foundry didn't have any of the environmental controls necessary to meet the future Clean Air Act standards. One of the goals of the new foundry is to capture all emissions and create the cleanest environment possible for its employees.

A tour of the new greenfield facility begins with a look up because the molding line, mold indexing system, furnaces and sand delivery system all were elevated off the ground when installed (Fig. 1). The goal for Richmond was to eliminate pits and make every piece of equipment easily accessible for maintenance and cleaning functions.

The foundry pours gray and ductile iron at a ratio of 66/34%, respectively. Richmond's major market still is gray iron water pumps for the light and heavy truck markets (42% of production). Historically, water pumps are a high scrap part due to their thin walls, tight metal control, 3 cores per component and leakfree requirement. However, Richmond has been able to excel in the shorter job runs in this market and maintain an extremely low scrap rate.

For ductile iron, the foundry's focus is in producing castings for the railroad, heavy truck and chemical processing industries. However, Richmond, like all U.S. iron foundries, sees the importance of converting and finding more jobs for ductile. According to Garrity, Richmond's water pump jobs are slowly being changed to lighter materials, so the plant's focus has returned to finding new jobs to fill up Richmond's new capacity.

"Our customer is always the first priority," said Garrity. "We must be flexible enough to handle any request at a moments notice."

Richmond believes the greatest advantage it possesses as a foundry is its ability to push its matchplate molding line to the utmost of the technology's ability. In the old facility, Richmond was able to make 120 molds/hr maximum on its automatic matchplate line, while it typically averaged 96/hr. (The previous ownership at Richmond only was able to average 50 molds/hr on the same molding equipment.) On the new molding line, Richmond produces 180 molds/hr (cored and uncored) with a carousel handling unit that has the capacity for 120 molds at any one time (depending upon cooling time). This production volume is 90% capacity for the molding equipment (based on the manufacturer's figures) with only running uncored jobs. These mold volumes are what has pushed Richmond's sales to $7.2 million (in 1997) on one automatic matchplate molding line at the old foundry and a sales benchmark of $11 million at the new plant.

Richmond credits its molding success to three areas: overall foundry optimization, cross-training and maintenance plans. According to Richmond, molding is only "one piece of the puzzle" in casting as the molding line is fed by melting, coremaking and the sand system. Richmond Casting's ability to synchronize these interdependent areas through properscheduling of casting jobs and never leave the molding machine idle results in the high capacity. "Unused capacity on the molding line is 'lost profits,"' said McBride

In terms of cross training and maintenance, Richmond Casting has two full-time maintenance workers in the plant, but most of the maintenace is performed by the machine operators. According to McBride. "They understand how the machine runs, including its intricacies. When there is a maintenance issue, they know what to look for and how to solve the problem."

Another factor, said McBride, is that since the foundry only has one molding line, every employee has a keen interest in it running at top performance. It is critical that the line is always running.

The melt department consists of two 4-ton medium-frequency induction furnaces with a combined melt capacity of 4.5 tons/hr and 72 tons/day when running two shifts. The furnaces utilize a melt processor that calculates the amount of energy required to melt the iron from solid to molten at a preset temperature.

The melting area also is an example of the $960,000 in environmental controls integrated in this new plant. Both furnaces are equipped with full capture hoods that route the fumes and dust from charging and melting to the dust collection systems.

The sand system feeding the molding lines is housed in a 90-ft tower and delivers 100 tons of sand/hr. The foundry utilizes four shell core machines for coremaking, but purchases about 90% of its cores from an outside vendor. According to Garrity, it is critical to control inventory and know your costs when it comes to coremaking. "A scrapped core here and spill sand there really add up in a shell coreroom, he said. Richmond has reduced its coremaking costs by reducing its coreroom labor from 26 employees to three and utilizing the outside vendor.

After the castings are shaken out in a rotary media drum, they are transported back to the old foundry facility next door and processed though cleaning and finishing. The old facility currently is being remodeled to improve its environment and enhance its efficiency to handle the increased casting load when the second molding line is added to the new foundry.

Projections for the current single molding line facility are that it will reach production figures of 60 tons poured/day and $11 million in sales/yr. When the second line is added, these sales figures could grow to $22 million/yr within 5 years. The second expansion (which will cost $3 million) is projected to be completed within the next 5 years.

A Foundry of the People

For Garrity and Richmond Casting, the focus on the employees doesn't end with profit-sharing and a flat organization in terms of decision-making. The foundry also has instituted a 401K program in 1992, which it contributes 5% of salary/yr for retirement regardless of employee matching. Richmond Casting also holds weekly meetings with all employees to open the books so all employees can see the financials of the operation and see any new customers coming on board.

For Garrity, the success Richmond has had is attributed to the programs that have involved employees in the financials of operating a foundry.

"They are aware of production, costs, customers and waste, and they can manage them on the plant floor," said Garrity.

He continued, "The foundry business is a difficult business to manage and work in. But my belief is that as long as long as you take care of the customers and the employees, the profits will be there."

Richmond Casting Co., Inc.

Richmond, Indiana 

Casting Data: Gray and ductile iron.

Molding: Green sand automatic matchplate.

Melting: Coreless induction.

Coremaking: Sheel (10% of requirements produced in-house).

Year Founded: 1975 (purchased by current ownership in 1980).

Size: 36,000 sq ft.

Capacity: 1500 tons.

1999 Sales: $6.9 million.

Key Markets: Automotive, light and heavy truck, construction, chemical processing, railroad, machine tools and U.S. military

Employees: 48.

Staff Officials: Joseph "Mickey" Garrity, president and CEO; Gill McBride, plant manager; Bob Pittman, controller; Joyce Fuller, sales and scheduling manager; and Gary England, quality control manager.