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Is the tune of tooling changing? Two of north America's largest tooling companies weigh in on the partnership among casting source, end-user and tooling supplier.

John McIntyre, president of tooling company Anderson Global, Muskegon Heights, Mich., watched as the automotive OEMs reduced their on-staff casting engineers over time, leaving little casting knowledge in their design departments. Now, McIntyre is positioning his company to fill that knowledge gap, serving as a design and casting process consultant and sometimes a go-between for OEMs and casting suppliers.

"When I came to Anderson Global in 1980, we were basically a replacement tooling manufacturing plant for the big automotive OEMs," McIntyre said. "Now, the engine and foundry engineers at the OEMs are fewer and fewer, while 40% of our direct labor force works in engineering."

McIntyre's vision is to establish alliances in which the tooling supplier serves as a process consultant to the OEM, streamlining tooling and casting design for production at the metalcasting facility. The strategy is not altogether dissimilar from that of automotive tool shop Tooling Equipment International (TEI), Livonia, Mich.

"It's a perfect scenario when you can get the end-user, Tier 1 foundry and tooling guys together in all phases of a project," said Oliver Johnson, TEI's business development director.

TEI uses its in-house casting facility to bridge the gap between casting supplier and OEM. The company can prove out tooling or produce low volume, prototype castings as its automotive customers test designs with the potential for full, high-volume production.

According to the International Trade Administration (ITA) of the U.S. Department of Commerce, the U.S. machine tool industry comprises about 550 manufacturers, predominately made up of small and medium-sized enterprises. While ITA reports a significant portion of tooling is exported, only a handful of shops compete for high volume automotive work, according to Johnson.

MODERN CASTING recently sat down with two of North America's largest tooling suppliers to discuss how the relationship among tooling supplier, OEM and casting source has changed and the challenges of meeting the needs of global customers and low-to medium-volume metalcasters.

Oliver Johnson, Business Development Director, TEI

MC: What are some of the issues facing the metalcasting tooling industry? What changes do you see on the horizon or that the industry is currently undergoing?

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OJ: Traditionally; the foundry tooling industry has been made up of a large number of small businesses supplying customers geographically close by. I think that is changing. There is a need for larger organizations that can support OEMs that are launching products that use identical powertrains across different countries. It's advantageous if they can deal with one source that either produces everything or coordinates it so they are using identical tooling. It takes a slightly different organization than the traditional, small, 50-man pattern shop. In many cases, however, the customer still needs local support for tooling changes or repair or updates.

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The industry also demands a strong financial business in terms of being able to support the financing of tooling. We often don't get paid until a year after we start the tooling, which is challenging. The ability to finance tooling often demands larger organizations.

MC: Who are your customers--end-users or metalcasters or both?

OJ: We deal with both OEMs and foundries. We are involved with a lot of prototypes where we deal with the OEMs. For prototypes, we are approached by an OEM with a new product still in a design stage. We try to involve the metalcasting facility at the earliest possible stages to discuss how they will cast the part in production. If we don't get input on how it will be cast, we might go down the wrong route. With the metalcaster's input, processes can be developed closer to how the parts actually will be cast.

MC: How does prototype tooling differ from production tooling?

OJ: It depends on the product and how it will be made. For example, a cylinder head is made in a steel semipermanent mold, but the prototype will be made with sand casting. The sand mold tooling will be developed, and then we'll develop the steel mold with sand cores. But some cylinder blocks are made in low pressure sand, in which case the prototype approach is the same. We try to make the prototype tooling the same way it will be tooled in production, with the same parting lines and other conditions.

MC: Why did TEI bring a metalcasting operation into its facility?

OJ: Initially, it was to test tooling, and it developed from there. TEI bought an existing foundry and recreated it here in Livonia and immediately started making prototype castings and supplying the major automotive companies.

Our customers are interested in the foundry for two things. One, to make prototypes, such as low pressure thin wall cylinder heads. Two, it's useful for testing tooling. Typically, we will test a first set of tooling (often there are multiple sets). It is particularly useful when you have a tight time-scale program. It's much quicker and more efficient to do it here where the tool was made. Often, the customers are here with us when we do it.

Plus, there's an awful lot of knowledge gained from making castings that helps when you're making tooling. If you have struggled to cast lightweight cylinder heads with zero internal defects, you learn an awful lot about how to feed the casting and make it solidify. You benefit from this when you make the next tool. We've gained an in-depth casting knowledge.

MC: Let's talk about your global reach. TEI exports 50% of products outside of the U.S. Who are your foreign customers?

OJ: Mainly we are exporting to Mexico and China. We export a little bit to Europe, but they are fairly well covered by the European suppliers that support their local industry

MC: Do you see the balance of domestic tooling vs. exports changing?

OJ: It all depends on what happens to the indigenous foundries in the U.S. and if more foundries appear or come back. Then our balance may shift exports back to being less than 50%. But if growth continues to occur outside the country, then that's where our tooling will be.

In the case of Mexico, we have the market well covered and are the largest tooling supplier, although there is still competition from the many smaller local companies. In the case of China, many new suppliers will develop but the market is so massive that it will consume their capacity I expect there will always be opportunities to export there.

John McIntyre, President, Anderson Global Betsy McIntyer, President and CEO, Anderson Express

MC: Who are your customers? What markets are they in?

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JM: The automotive/heavy truck market accounts for 80% of sales. Our goal is diversification in and out of the automotive field. You can diversify into different segments that the auto industry needs. One good example is what we are doing for General Motors. We, along with our Alliance partners, are developing the process of making castings for them. So we are not just making the tool. We are developing the production process and handing it to GM, so they can buy the equipment and bring in the process recipe of how to make the casting and go from there. We are basically selling knowledge and not just tooling.

MC: Are your customers generally OEMs or metalcasters? Where is the entrance point?

JM: It's a balancing act. To earn the trust to develop casting processes for OEMs, we are dealing with high level people. But at their own foundries or vendors' foundries, we need to show we are a partner with the metalcaster. The auto industry has been controlled by lowest price purchasing practices for decades, and casting suppliers have been reduced to commodity makers and don't always have the profits to reinvest to improve. We are trying to convince our customers that it is better to be strategic partners.

MC: What do you mean by partnership?

JM: Mutual trust and respect are the linchpins of a partnership. And openness and honesty are other keys. If a customer comes to us and tells us, "Okay, this is what we have been paying, and we have to get it down to a certain amount," we can study it and maybe propose that we provide 80% of their annual tooling and therefore have the scale to automate the process. And we might tell them, "by the way your tooling standards are wasteful, you have homemade hardware that costs you a lot of money and adds no value, and tooling materials that are overspecified in these areas and underspecified in these areas. We can make tooling that lasts longer and costs less, but you need to work with us to revise your tooling standards." In many cases what makes the most sense is to develop an almost standard price model. With one customer, we have developed a price matrix. We don t quote them. Once a year we sit down and talk about prices and what they want for added features and come up with a price.

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MC: Talk about the GM partnership. Why have they been a good partner for you? What makes them unique?

JM: I believe the strategic partnership began with a GM need. They decided they needed to stay in the casting business. They discovered they didn't have all the talent and facilities needed to do it. They determined we and our Alliance partners could help them. They gave us an opportunity to prove what we could do for them, and we proved we could do what they wanted in the way they wanted it. The engineering team at GM has worked in unison with our own manufacturing teams. We are growing together and developing process understanding. The other key ingredient to our relationship with GM is its purchasing group has grown to understand the mutual benefit to working together to help keep the casting arm of their business healthy and growing. They've allowed us to be something besides a commodity.

MC: You launched a new business, Anderson Express, in early 2011 to serve small to medium-size metalcasting facilities. Why?

BM: When I came on board three years ago, one of my initiatives was to drive sales and marketing and evaluate new metalcasting facilities we can bring into Anderson Global. We found we couldn't compete for smaller volumes of tooling and with smaller casting manufacturers at AG, but there was a demand from those growing businesses for a more sophisticated service with CAD engineering, for example. Anderson Global could not do that and be price competitive. We evaluated where our growth and strengths were and realized we needed a separate entity to grow the marketplace.

MC: What are the needs of that market segment?

JM: They need competitively priced tooling in a hurry. Sometimes they need CAD and foundry processing help they can't get from a typical smaller sized tool maker. What we are trying to do is balance the advantages and costs of the latest technology. So it's a situation where many times, since we have new equipment and the latest CAD systems, we will be able to produce a set of tooling in maybe half the amount of direct labor hours as a smaller shop without CAD. Our cost per direct labor hours might be higher, but the number of hours is lower.

MC: How do you decide whether Anderson Global or Express will quote a project?

BM: Our sales and marketing team works for both Anderson Global and Anderson Express, and whenever we are evaluating a new project or customer, we discuss where it will fit. Because we have both businesses, there is some cross-pollination on a few jobs. And sometimes due to demand, a job might graduate from Anderson Express to Anderson Global.

JM: It depends on the size of the project and what size machines it will fit on. We have larger capacity machines at Anderson Global. At Anderson Express, we are focused on quick turnaround, so we try not to get a project that will be on a machine longer than a week.

Tooling and Equipment International (TEI), Livonia, Mich.

Services: Tooling, in-house casting development center prototype castings, machining, CAD engineering.

Size: 83,000 sq. ft.

Industries: Automotive, military, racing vehicles.

Exports: 50% of sales.

Affiliations: Pattern Equipment & Prototype International Corp., Ontario, Canada; sister tooling provider Ditemsa, Saltillo, Mexico.

Anderson Global, Muskegon Heights, Mich.

Services: Tooling, casting and process design, prototype castings, machining, CAD engineering.

Size: 65,000 sq.ft.

Industries: Aerospace, agricultural equipment, automotive, marine, military and defense, racing vehicles, trucks.

Exports: 60% of sales.

Affiliations: Anderson Express, Muskegon, Mich., --A tool shop for small and medium projects; Kushan Product Mold. Kushan, China--a wholly-owned corporation; and Harbin Dongan Mold and Design Harbin, China, an allied facility.

SHANNON WETZEL, SENIOR EDITOR
COPYRIGHT 2012 American Foundry Society, Inc.
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Comment:Is the tune of tooling changing? Two of north America's largest tooling companies weigh in on the partnership among casting source, end-user and tooling supplier.
Publication:Modern Casting
Article Type:Interview
Geographic Code:1U3MI
Date:Feb 1, 2012
Words:2127
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