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Omaha Steel Castings: diversifying for future growth.

Up until the early 1980s, there was little that set the Omaha Steel Castings Co. apart from many other old-line steel foundries operating in the U.S. Servicing a narrow range of customers who needed low-alloy and carbon steel castings, the foundry had pretty much managed to keep busy, make some money and grow throughout its more than 60-year history.

The early 1970s provided the first major shock that rudely shook Omaha Steel's management out of its comfort zone. Threatened with bankruptcy and almost-certain closing, survival became the foundry's only goal. Having withstood that, the decade of the '80s provided a whole new set of challenges. But through new ownership, a re-evaluation of its operations and markets, a recommitment to quality and service along with significant investment in technology, Omaha Steel is now poised for the future.

Change and Diversity

The company was founded by John W. Towle and Fred K. Smith as Omaha Steel Works in 1906 on what was then the outskirts of Omaha, Nebraska. But like so many other American foundries originally situated near or just outside of town, Omaha Steel today finds itself literally in mid-town on one of the city's major streets.

Its neighbors include the University of Nebraska at Omaha medical center and the studios of local television station KPTM Channel 42 which occupies the building once owned by and formerly serving as Omaha Steel's headquarters. Just up the street is the headquarters of Marlin Perkins' old employer, Mutual of Omaha.

The foundry's history was one marked by change and diversity.

The company was started as a steel fabricator producing structures for bridgework, truck bodies and trailers. By the 1920s, it moved into pouring proprietary castings, and the 1930s saw the company shift toward producing castings for steam locomotives and other railroad parts. The late 1940s saw the beginning of the company's relationship with the Caterpillar Tractor Co., still its largest customer, as well as other construction equipment builders.

In addition to fabricating and casting steel, during the next two decades the company moved into a variety of business ventures, employing as many as 600 people. Several factors led the firm to ultimately file for Chapter 11 bankruptcy in early 1973. The restructing that followed saw the company shed all operations except for the steel foundry. These moves led to what is now the Omaha Steel Castings Co. Within two years after that trauma, the foundry was on its feet and heading for the future with 200 people making it work.

Staying with the


The next big move for Omaha Steel Castings came in 1980. With the naming of Ron Howlett as its president, the foundry embarked on a plan for diversifying its business within the foundry market rather than outside the industry. Up until that time, the company's customer base consisted of basically 12 companies, with Caterpillar being easily the largest user of the foundry's carbon and low-alloy steel castings.

The major thrust of the diversification program revolved around enlarging their markets by offering a wider variety of steel-base alloys and additional casting processes. This thinking led Omaha Steel to develop its Specialty Division to complement its traditional carbon and low-alloy steel operations. The move turned out to be a blessing in both the short and long terms.

Caterpillar, which in the early 1980s accounted for as much as 70-80% of the foundry's business, went on strike in 1982, causing Omaha Steel to close its main foundry for the duration of the work stoppage. But the firm's Specialty Division remained in operation and profitable, giving Omaha Steel much-needed breathing room to ride out the Caterpillar strike.

Today, the Specialty Division remains an integral and the fastest growing part of Omaha Steel's business. And while its carbon and low-alloy steel operations remain the core of the foundry's activities, the diversity offered by the Specialty Division provides Omaha Steel with the solid, long-term program it needs to continue being a viable player in the U.S. steel casting industry.

Today, the foundry boasts of 200 active customers compared with the dozen or so it relied on for its well being in the early 1980s, allowing it to survive the tumultuous business conditions of that decade. In addition to the construction equipment industry, Omaha Steel counts the materials, handling, mining, transportation, petroleum, and pump and valve industries among the largest markets for its castings.

Investing in the Future

The outright purchase of the foundry by Howlett, president and CEO, and James Wand, chairman and treasurer, in 1987 marked another significant milestone in the nine-decade history of Omaha Steel. To assure that the foundry remained competitive well into the 1990s, the new owners committed some $2.5 million to upgrade their foundry operations. Their goal was a simple one says Howlett: "To improve efficiency and customer responsiveness."

Included in the major purchases made during the past four years at Omaha Steel are a state-of-the-art spectrometer capable of analyzing a variety of steel alloys at a rate of 45 seconds per sample. According to the spectrometer operator, the speed of the new instrument allows for frequent sampling of all heats prior to pouring, including at mid-heat and from the ladle.

In addition, Omaha Steel has doubled the size of its pattern shop in the last two years alone to provide faster turnaround and maintenance of foundry tooling. Attached to the newly enlarged pattern shop is a machine shop which, says Terry Howlett, pattern and machine shop superintendent, was added to meet customer requests for either finished or premachined castings. Tied in with these operations is a computerized production control system that is networked throughout the plant and offices. This system has been set up to provide computerized quotations, control mold scheduling and procedures as well as bar coding and creating advanced shipping notices.

Omaha Steel's $2.5M investment is sowing the seeds for future progress as well as meeting current commitments. For example, the foundry has begun studying some of the new clean steel technologies available and has been working with calcium-wire injection. The company also has begun moving into computer-aided design.

In terms of current commitments, the foundry has invested in up-to-date pollution control equipment. An attrition-type sand reclamation system has been installed for the nobake operations and a pneumatic system for green sand. "We feel we're well poised technically to continue our diversification program as well as to meet current customer needs," says CEO Howlett.

Beyond Survival

The culmination of Omaha Steel's efforts and investment came on June 13, 1991, when the foundry was officially recognized by Caterpillar as "Certified Supplier" to the construction equipment giant. And while it was important that they were able to achieve this level of quality and delivery to continue working with Caterpillar, Howlett contends that it also sends a positive message that Omaha Steel is up to the demanding task of supplying quality steel castings to all of its customers.

Even with the level of success the foundry has achieved during the past several years, it is difficult for Howlett to look forward the future without offering his observations of the past. "We survived the 1980s when it wasn't easy for a steel foundry to survive. I don't expect the 1990s to be any easier. That's why we've made the type of commitments we have during the past four years. And we aren't done yet. There's no doubt in our minds that Omaha Steel will be a survivor."

One look at the progress that Omaha Steel has made over the past decade and its plans for the future seem to clearly indicate that this is one foundry that won't be satisfied to merely survive.
COPYRIGHT 1991 American Foundry Society, Inc.
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Omaha Steel Castings Co.
Author:Kanicki, David P.
Publication:Modern Casting
Article Type:Company Profile
Date:Nov 1, 1991
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