Aurora Industries' strategic approach to business building.
There is always something special that sets successful businesses apart-from each other and from those that are less than successful. During its 92-year involvement with the foundry business, the Aurora Metals Division of Aurora Industries has kept its formula for success simple: adopt or develop innovative technology and use it to meet customer needs.
Probably best known for its development and use of vacuum casting, as well as for permanent molding for producing copper-base castings, the foundry, located 35 miles west of Chicago in Montgomery, Illinois, has now moved into pouring iron and nickel-base alloys in nobake sand molds. True to form, the move to sand-casting last year was prompted by the foundry's desire to meet current customer needs. At the same time, Aurora Metals determined that augmenting its materials and processing capabilities would allow it to expand into other markets as well.
And while all of this is taking place, Aurora Metals isn't content to sit back, recently announcing a program to produce aluminum composite parts with its vacuum casting technology.
The Right Decisions
As important as making the right decision on the technologies to use and markets to pursue, may be the decision on what technologies and markets to avoid. Aurora Metals seems to have been fortunate throughout its history in making the right choices. In its early years, the foundry developed and manufactured alloys for piston rod packings used in low-temperature steam locomotives. As the demand for steam locomotives ebbed, Aurora moved on to develop new alloys for new applications as well as new technologies like vacuum casting, which it developed and patented in 1927.
Through the next three decades and with the addition of permanent molding, Aurora moved on to new markets. Like so many foundries during these times, the enormous growth of the automotive industry and its seemingly insatiable need for castings attracted Aurora Metals. By the late 1950s and early 60s, between 80 and 85% of the foundry's copper-base casting production went into automotive products. But under pressure from a variety of factors, including cost, material substitutions and automotive safety, Aurora elected to slowly get off the automotive roller coaster and broaden its market base. The move out of that market alone resulted in the loss of millions of castings annually for the Aurora foundry. By the early 1970s, the company was almost totally out of the Detroit market.
Again, with its ability to find and develop new markets, a willingness to take advantage of its copper-base expertise and unique casting technologies, Aurora not only survived but prospered. Largely on the strength of its move into the pump and impeller business, still its mainstay today, the foundry nearly quadrupled its business between 1972 and the early '80s. During the same period, the company began adding machining facilities to further compliment its casting business.
When it comes to how Aurora Metals does business today, perhaps the decision to get away from casting leaded copper-base alloys eight years ago was most fortunate. With OSHA regulations regarding lead use becoming increasingly strict, Aurora literally took the lead out," says Jim Pearson, Aurora Industries president and CEO. Instead, the company made the decision to build their business on the higher value aluminum-bronze and silicon-brasses. By getting away from the leaded alloys, we eliminated a lot of headaches and another hurdle we would need to get over to do the things we really wanted to accomplish. I think the foundries that are fighting the fact that environmental regulations are with us to stay will be the losers," Pearson adds.
Aurora's move to add sandcasting to their vacuum casting and permanent mold operations resulted from the company asking itself a simple question that every farsighted businessman would ponder. How can we grow this business?"
By the late 1980s, from 50-60% of Aurora's business base was dependent upon producing pump impellers, almost exclusively in copper alloys. Another 25% of the company business came from the electrical market and the balance from a variety of other markets, including agricultural components and strapping tools.
According to Pearson, 'Our sales manager, Peter Kruppe, who spends a majority of his time in the field, had been after us to look at producing other pump and impeller castings that required other metals. By calling on customers, he knew that they bought other parts in other metals that we didn't have the capability to produce. We followed up by Metals Association [now the Management Division of AFS] to conduct a marketing study. Their work verified and reinforced several things for us.
First, it told us that we had a solid reputation among our customers for delivering quality castings, and our experienced engineering staff was considered a real positive. Second, it verified Peter's position that there was more business out there in other metals and processes,' Pearson explains. 'Our customers had needs for not only copper impellers but stainless steel and iron impellers as well. The study also told us that we may be too dependent on vacuum casting and recommended that we expand both our process and metallurgical capabilities. The market research also showed that not only would the expanded capabilities enhance service to our pump customers but it would allow us to pursue a variety of other markets like valves, agricultural and food equipment."
As sales manager for the foundry, Kruppe recognized some trends developing during his customer visits that made him push for the expansion. "I was finding it increasingly difficult to expand in the copper-base area," he says. We were seeing that there was only so much business out there, and we had already penetrated most of the pump market, and many of the potential customers had their own foundries.
What we were also hearing from customers was that they wanted to buy their castings from one foundry and that they were willing to pay a little more for the parts so they could save on shipping patterns and hopefully get better service and delivery," says Kruppe. "Unfortunately, the other parts they wanted were in other alloys."
In addition, Kruppe explains, he was also hearing from more and more customers who wanted 'single source" responsibility. They were looking for foundries that could engineer, cast and machine their parts and take total responsibility for the finished part. We could do this in copper-base because we have an excellent engineering staff and a complete machine tool facility, but we couldn't do it in the alloys they were looking for. Mostly they were asking for stainless steel and iron.
He also adds that the push for higher quality is real. "We're in the interim period now where price, for some customers, is still the main criteria. But more and more we are seeing a growing number of customers who are realizing the value of a high-quality product."
Time for Action
With the market study verifying their gut feelings, Aurora quickly moved to put their plans into action. Their first step was to build a 23,000 sq ft facility to house their new ferrous foundry. The plant was designed to use airset nobake molding and electric melting. Since the older foundry already was equipped with complete metallurgical and testing laboratories, a new spectrometer was all that needed to be added to handle the ferrous alloys.
Constructing the building and installing the equipment was the easy part.
Starting in June 1989 when construction started until production began in March 1990, Aurora began to slowly cultivate its customer base and get the word out about its new capabilities. But the main challenge confronting the foundry was people. That job fell to Bill Jens, vice president and general manager.
What we've had to do " says Jens, 'is build up a new work force. Some came from our original operation. We didn't need core-makers because we've been making intricate cores for our impellers for decades. What we needed were people capable of building assembling nobake molds. So, we took those who were ca able and pretty much trained them ourselves in those skills. it's been a difficult challenge,"Jens adds understatedly.
Another development also surprised the Aurora management team. 'Interestingly enough, when we brought the new operation on line, we were not aware of the number of metallurgies we would be asked to pour," explains Pearson. Right now we are pouring everything from Monel to chrome- and nickel-irons, just about any type of stainless to carbon steel. It's amazing. It's not something we forecast in our original planning and, frankly, it's become a real advantage for us.'
Explaining how this trend developed, Pearson says, "What is happening is that customers are interested in putting as much of their work as possible in one foundry. So, it looks like our timing is good because more and more people are trying to do this. It gets back to what Petersaid earlier about total responsibility. But we moved very cautiously. We made sure that we had the people in place and could get the orders out before we pushed hard for sales. "
Pearson credits the foundry's metallurgist and others for making the new facility work so well so quickly. "I really think the whole process has created a lot of excitement for all the people in the company because they can all see areas of growth. Our metallurgist has more work, but it's more challenging work, and he's been given more equipment to work with. Our sales department has a whole new horizon in looking for sales leads. Manufacturing and engineering has a few more headaches, but I think they like the challenge too."
While about 90% of Aurora's business today is in producing copper-base parts, they would like to see the ratio of copper to the other alloys reach about 70:30. They expect to do about $5 million in sales in the next two to three years in their new facility, but Aurora's management says it has the potential of doing between $10-12 million. The People Factor
Another important part of Aurora's long-term planning involves its 135 person work force, 100 of whom work in production, with the remaining in engineering, sales and administration.
One of the best things we've ever done," says Pearson, 'is to put in the Jackson Plan of gainsharing for our people. We put it in three years ago, and it's done wonders in terms of morale for our employees, profits for the company, and shipments for the customer."
The CEO explains the plan this way: Based on historic labor, fringes and other related costs, we establish a bogey below those costs. Then to the extent that they can beat that bogey, less costs, the employees share in the savings 100%. Over the time that the plan has been in effect I would say that our employees have earned an average of 10-15% on top of their base earnings, and they get a check every four weeks.
We've also integrated the office staff into the plan because, in order for the shop to succeed, purchasing must obtain materials, engineering has to coordinate with sales, and manufacturing and production control needs to schedule properly. Everyone participates. And we've seen a lot of side benefits too," adds Pearson. "Our workers compensation has dropped, and absenteeism is way down. Our communication has improved dramatically because we now have meetings weekly to discuss performance and talk about other things happening in the business."
In addition to all of this, Pearson says that customers like the fact that we've adopted the plan. When they ask us how we're increasing our efficiency, we tell them about our technology, equipment and people concepts."
An Ongoing Process
Despite Aurora's investment in sandcasting, the foundry has no intention of ignoring its unique vacuum casting technologies. In fact, even before the first pour was made at the new sand foundry, plans were already underway to develop new and advanced applications for vacuum casting.
Working with the Illinois Institute of Technology's Research Institute (IITRI), Aurora is developing the technology for producing aluminum metal matrix composites with vacuum casting. The work is being helped along by a grant of $250,000 from the state of illinois' Technology Challenge Grant Program, with Aurora and IITRI matching that amount.
According to Pearson, 'We were working with IITRI on a project, and at the same time they were working on the squeeze molding of composites. When they saw our vacuum casting operation, they proposed we work together. It was a perfect fit. IITRI has the knowledge of composites, and we have the vacuum casting expertise. It's been a tremendous partnership. if we can demonstrate to the state the potential of the process and material combination, we will be able to get other monies to further refine the process.
The project currently involves working with aluminum-based composites like F3S.20S-T6 degrees reinforced with silicon carbide. The foundry has already named the unique technology "VACOM" and are producing prototype parts ranging from gear blanks and complicated pump impellers to disc brake rotors.
Aurora is well aware of the potential markets for the lightweight composite materials that they hope to develop as they were alert for the potential customer needs for the ferrous metals they are now pouring in their new sand foundry. It reflects the company's ongoing philosophy of developing or adopting innovative technology and using it to meet customer needs.
Pearson sums it up this way: Traditionally, the foundry industry has been a manufacturing-oriented industry. But what we've tried to do here at Aurora is focus on the larger concept of manufacturing-marketing. We continually ask ourselves, What does the customer need? What will it take to satisfy their needs?' These are the questions that drive Aurora Industries, and we understand that to the degree that we can satisfy customers better than the others is what will keep us successful. As a result, we've become a much more customer-driven company during the last several years. I hope the foundry industry in total will do the same."
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|Author:||Thomas, Susan P.|
|Date:||Sep 1, 1991|
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