We aren't car salesmen, are we?
The response from one purchaser was that, "the industry hasn't come as far as you think. For many of our casting suppliers, this is their primary means of selling."
According to my two end-user sources, U.S. foundries are negotiating and arguing with OEMs by talking about:
* the lack of environmental and worker safety regulations for low-cost, offshore foundries;
* offshore foundries paying "slave" wages to their workers;
* offshore governments subsidizing their metalcasting facilities and assisting in the "dumping" of cast components to gain market share.
Now, neither I nor my two end-user sources are arguing that these statements aren't true. On the contrary, I would say they may be 100% accurate and only the tip of the iceberg when it comes to the unfair practices being employed by some of the foreign casting sources.
What we are saying is that U.S. metalcasters must stop arguing these facts to their customers. The OEMs ate well aware of the situation and, for the most part, it doesn't make a difference. Negative selling is for car salesmen, not the marketers of engineered cast components.
It is not that casting buyers don't care about how much manufacturing is suffering at the hands of imports (don't forget that OEMs are manufacturers too). The problem is that OEMs are in as much of a global price war as U.S. metalcasters, and they also must produce the lowest cost products to satisfy their customers.
Whether their engineered cast components come from China, Italy, Brazil of the U.S. really doesn't matter. As the purchaser said, "The number one concern almost always will be price, but this is followed closely by quality, delivery and customer service." But this price, said the purchaser, isn't necessarily just price per pound, it can be total component cost as well as total acquisition price.
Our industry still seems to be getting used to these last two terms--total component cost and total acquisition cost. These are the "prices" that we should be using to sell.
Total component cost focuses on the "engineered" part of the engineered cast component you will be delivering to your customer. What design benefits can you deliver to the casting to reduce wall thickness and overall component weight, improve manufacturability, eliminate and/or reduce machining, simplify assembly and other value-added services, etc? What design benefits can you deliver to the customer to reduce the total cost of the system and end-product this casting will become part of?
Your castings don't function in a vacuum. They will be surrounded by and interacting with many other components. How can the casting improve the total system performance and cost? This face-to-face interaction during casting development and design is the greatest asset that a U.S. metalcaster can deliver to a U.S. customer. It is time to flaunt it.
Total acquisition cost is another "price" that makes OEMs consider the benefits of working with casting suppliers closer to borne. Outlined for OEM casting buyers in a recent Engineered Casting Solutions article titled, "Foreign Sourcing: Accounting for the 'Hidden' Costs" (Fall 2003), this cost factors in all the intangibles of overseas sourcing, such as direct personnel and travel costs, freight and warehousing, duties and broker margin, metallurgical integrity, initial tooling cost vs. tooling life, tooling lead time, broker-foundry relationship, dimensional consistency, communication difficulties, time-to-market, interruptions in supply and currency valuation.
The idea is for casting buyers to take into account all the intangibles when determining a price and not just the $0.30/lb quote they received up front from ah offshore source. However, U.S. metalcasters won't achieve anything by negative selling your offshore competition's total acquisition cost. Instead, U.S. metalcasters must positively sell their facility's total acquisition cost when providing a quote.
With the economy seemingly on its way back, it is the time to show our customers what our metalcasting facilities can deliver in terms of total component cost and total acquisition cost and not worry about who the competition is. We must focus on ourselves and our operations to ensure the future growth and prosperity for the U.S. metalcasting industry.
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|Title Annotation:||Editorial; metal casting industry|
|Author:||Spada, Alfred T.|
|Date:||Oct 1, 2003|
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