Northwestern Foundries' 'Survival Tips' for the 21st Century.
Success for any foundry in the 21st century will revolve around its ability to adapt to change. Whether the industry is confronted by overseas competition, regulations or labor shortages, foundries will need to assess their surroundings and develop solutions to provide their operations with an opportunity to make quality castings at competitive prices.
In hopes of gaining insight into how the foundries in the Northwest region are working to ensure growth and survival, modern casting held a roundable discussion at the AFS Northwest Regional Conference in Tacoma, Washington. Participating in the roundtable were: Brad Vanderlinde, operations manager, Pacific MAKO (Pacific Bronze Ltd.), Langley, British Columbia, Canada; Cameron D. Girton, molding and melting manager, Spokane Steel Foundry (Spokane Industries), Spokane, Washington; Ron DeFrancisco, maintenance manager, Columbia Steel Casting Co., Portland, Oregon; and Stephen Morel, general manager, Ballard Pattern & Brass Foundry, Seattle.
The Northwest region of the industry is set apart from the rest of North America by its plants' size and customer base. Although 80% of U.S foundries employ fewer than 100 workers according to the Casting Source Directory, 90% of the foundries in the Northwest employ less than 100 workers. Coupling this with the fact that this region has few ties to the automotive industry, northwestern foundries generally produce at low volumes and are highly jobbing-oriented.
This roundtable discussion centered around two issues--overseas competition and government regulations--as the biggest obstacles this region must overcome in the coming years. Following are the roundtable participants' thoughts on these issues.
According to DeFrancisco, the foreign competition for northwestern foundries is China. "Unfortunately, we are on the Pacific Rim so China is at our back door," he said. "We feel a lot more pressure from China than from Mexico or South America. What compounds the problem is that we aren't getting any help from our government in terms of the overseas casting shipments dumped on our soil. With the casting prices the Chinese foundries can offer, the competition for jobs is fierce. Their prices make up for their lack of quality."
According to Vanderlinde, northwestern foundries won't have the quality advantage to hang their baton much longer. "The problem for us is that the quality issue is just a short-term advantage," he said. "Chinese foundries will improve their processes and production. Then, U.S. and Canadian foundries will have to find a new way to set themselves apart."
To set themselves apart, said the roundtable participants, the domestic foundries are going to have to improve their operations and services. Girton compared the current competition situation to the recession in the 80s.
"All of us have survived in our own ways," said Girton. "In the 80s, we were lucky not to be cut in half because of the downsize of the oil market and rail car production. Our advantage was that we aggressively pursued job-cost accounting despite people saying it wasn't important. Many foundries priced their castings on a per-pound basis, a commodity, as opposed to what the added value of the part is. By focusing on the added value, we knew what was a loser and what was a winner, and we could adjust our prices accordingly. Although we lost some jobs, we knew that we weren't going to break the plant up or wear it out at a loss. It was part of our survival technique that still exists today."
Girton also stressed that Spokane Steel is focused on lead times and meeting its customers' expectations. "We are trying to get the castings to our customers assembly lines faster," he said. "If you look at most manufacturing, other than high production such as automobile manufacturing, small companies are betting on their ability to beat the competition to market. We feel we can fall into that and establish a better bond with the end-user of the casting. As a result, we will fit in the customer's overall plan to be successful and ward off competition--foreign or domestic."
Success for Pacific MAKO, according to Vanderlinde, has been the ability to provide a value-added product, "We have added a CNC machine shop, three machining centers and a turning center to our plant," he said. "If you want to attract a customer, you need to try to sell him as much as you can. We can machine, paint, inspect and subassemble in-house and will send parts out for powder coating if needed. Whatever it takes to keep the customer. There aren't too many out here, so once you have one, you want to do all you can to keep them."
One example was a security system casting. "It was sourced overseas to China (after Pacific MAKO had been making it) because of a lower price," Vanderlinde said. "However, it was returned to us a year later because their quality wasn't high enough. We are offering a total package of casting, grinding, machining, powder coating and packaging. In addition, we are closer and able to better service the customer."
Furthering the idea of customer service was a solution offered by DeFrancisco and the work being performed by the engineers of Columbia Steel. According to DeFrancisco, the biggest advantage foundries have over overseas competition is proximity to customers. As a result, his foundry performs a great deal of hand-holding. "We send our men to the field to address customer problems and engineer our product around that problem," he said. "For the mining and aggregate industry, it is providing castings that will last longer and provide more hours on the job."
The bottom line to success against foreign competition, said Vanderlinde, is taking care of your own business. "You have to produce a perfect, grade A product. If you aren't producing a top-notch product and making a profit on it, then you better shut the door now and get out while you can. We built a new foundry to improve production, quality and ergonomics. You can't stop outsiders from becoming players--you have to take care of your own shop."
Every foundry region of the U.S. and Canada is confronted with regulations. Whether they focus on air quality, emissions or ergonomics, foundries are forced to comply, pay fines or shut down. During the roundtable, the participants added a different slant to the regulations and how they are being affected. Their belief was that foundries must approach government regulations the same way they do current and potential customers--through education. The consensus was that the legislators do not understand how their rules affect the foundry industry.
"On the local level, foundries need to be a voice to their legislators," said Morel. "Right now, it is the minority (a few large foundries) with the voice in Washington. That needs to change. It must be the majority making the decisions."
"The goal for foundries on the local level needs to be to inform their congressmen what effect their broad-reaching laws-environment, trade or otherwise-have on the businesses in their district," said Girton. "What happens is that general laws are passed by Congress, and OSHA and EPA are left to interpret those laws and put their teeth in them for application. We must feed back to Congress how stringent some of these laws are being enacted when the original intent of the law wasn't supposed to be strict. It gets down to jobs, votes and local economics. The goal isn't a handout, but a fair shake."
Another angle, presented by Girton, was educating the future leaders of our nation about the benefits of metalcasting. "Spokane Steel performs local PR" said Girton. "We have been giving tours to elementary, junior and high schools in Spokane to help our image. We bring them through and show them how clean our sand is. We take them to the scrap pile and talk about the foundry industry being the oldest recycler. We take them to shipping to show the beautiful castings that emerge from a pile of scrap. The goal is to demonstrate how these students lives wouldn't be the same without castings."
While regulations won't go away, the problem is that the cost of compliance can put the small foundries out of business. "For a small foundry to upgrade its environment and automate, it takes a lot of capital when compared to sales" said Morel. "This can be tough. However, it takes commitment because then you are here for tomorrow, not today."
Taking the U.S. and Canadian foundries' argument a step further, the discussion suggested that the better environmental regulations are one of the biggest potential remedies to overcoming overseas competition.
"The regulations make it even more difficult for us to compete on price," said Girton. "As a result, even more emphasis is placed on providing extra services to the customer like machining and painting."
Girton continued, "Coupling the cost competition with China with the government regulation situation presented by EPA, OSHA and WISHA (the state of Washington's OSHA), U.S. foundry owners are going to be forced to open foundries in Mexico or import from China to meet demand."
The result from such a shift would be lost jobs for the U.S. and Canada. According to the roundtable participants, foundries need to wake up in a hurry. "Be proactive, not reactive, and be prepared for the regulations," DeFrancisco said. "We know the government regulations are going to be in the game forever. We just have to stay one step ahead of them. We survived the recession in the 80s and are still running. We know that there will be another recession and another after that. We must be prepared."
Although much of the roundtable discussion focused on obstacles foundries need to overcome and ideas to address them, the participants all stressed that their foundries are on the right track. The belief is that as long as they heed their own advice, each operation can prosper despite the overseas competition and customer and government demands.
"Innovation is the bottom line for small to medium foundry survival. Invest in yourself and adapt to the customer's needs," said Vanderlinde. "We have retrofitted an automatic matchplate molding machine to be able to perform pattern changeovers in the same time as it takes on a jolt-squeeze. We will perform 5-piece or 500-piece runs on the same machine. It drives me nuts when people say 'That is how we always have done things.' What if you are doing it wrong?"
According to Girton, success for foundries is based on being open and flexible: "If we are still doing what we were doing 5 years ago, then somebody is probably doing it better. We can't crawl in a hole and hope to survive. We must be willing to change because change is inevitable. We must acknowledge the overseas competition, the environment and our labor issues and make strides to success everyday. It can't all be done overnight but we can't wait for 'the best time' to change."
Cameron D. Girton, molding and melting manager, Spokane Steel Foundry (Spokane Industries), Spokane, Washington.
Molding: Nobake, green sand and investment.
Metals Poured: Low-carbon, stainless and high and low-alloy steel and wear-resistant and high-allow iron.
Industries served: Industrial, oil field, military and wear parts.
Ron DeFrancisco, maintenance manager, Columbia Steel Casting Co., Portland, Oregon.
Molding: Nobake, and green sand.
Metals poured; Carbon, high-and low-alloy, stainless and manganese steel.
Industries served: Mining and aggregate.
Brad Vanderlinde, operations manager, Pacific MAKO (Pacific Bronze Ltd.), Langley, British Columbia, Canada.
Molding: Nobake, green sand, permanent mold and shell.
Metals poured: Various aluminum and copper-base alloys.
Industries served: jobbing.
Steve Morel, general manager, Ballard pattern & Brass Foundry, Seattle
Molding: Green sand, nobake and permanent mold.
Metals Poured: Gray iron and various aluminum and copper-base alloys.
Industries served: Marine, lumber and electronics.
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|Comment:||Northwestern Foundries' 'Survival Tips' for the 21st Century.|
|Author:||Spada, Alfred T.|
|Article Type:||Brief Article|
|Date:||Jun 1, 2000|
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