EDITORIAL An Onshoring Philosophy? W


hen it comes to global sourcing, maybe the tide is turning back to North America—at least a little. In this issue of MODERN CASTING, we look at several different firms that


buy castings, and how their philosophies toward sourcing have adjusted the last few years. First, we examine Peerless Industries (p. 24), an audio-visual mount maker in Aurora, Ill. This firm has made a 180-degree turn in its sourcing strategy, going from outsouring all its diecast components to China in 2006 to producing all those components in-house in the U.S. in 2010. “China is inexpensive but the


logistics add cost,” said Peerless Executive Vice President John Potts. “Everything has to be managed logistically. Then there are the quality issues. When an issue arises here, you oversee the entire process.” Peerless Industries said after


is realizing global sourcing does have risks, from a currency standpoint, going through customs, a lot of issues that present themselves, but you still need to be competitive.” Taking this repositioning a step further, Jerry


several years of dealing with suppliers in China, the company has come to appreciate the total landed cost of the products it was buying, rather than the individual piece price. That cost includes third party inspections, defect rework, duties, barriers to international shipping, freight, and additional office personnel to manage the outsourced inventory, purchase orders and ac- counting. These issues are the ones component suppliers have been talking to their customers about for the last decade, but as often is the case, firms must experience the difficulties themselves before they believe them to be true. In our feature “The Customer Comment Box”


on p. 45, several buyers from a variety of end-use industries detail what their firms need from their casting suppliers. While cost is always on the mind of buyers, it appears that even some of the global firms have taken a step back and realized lowest piece price does not mean lowest total cost. According to Wayne Rygel, purchasing director,


Navistar Inc., Warrenville, Ill., “You (casting suppli- ers) need to be competitive on a cost level. Do you need to be the absolute lowest cost? No. Navistar


MODERN CASTING / February 2011


“Peerless Industries said after several years of dealing with suppliers in China, the company has come to appreciate the total landed cost of the products it was buying, rather than the individual piece price. “


Jackson, president of Apex Precision Technolo- gies, a manufacturer of precision machine parts in Camby, Ind., doesn’t even talk about lowest component price when discussing what his firm requires from suppliers. He is looking at qual- ity (less than 36 ppm), lean initiatives with on-time deliv- ery and creative cost-reduction through efficient manufacturing. “The thing I need most from a metalcasting facility is a partner,” he said. “That means keeping each other out of trouble and keeping people apprised of the technology so they don’t have unrealistic expectations.” As a casting manufacturer,


whether the tide has turned or not, you must approach your


business the same way—produce quality castings that sell at a globally competitive price and provide your firm a reasonable profit margin. This approach allows you to control what you can—your opera- tion—and make it the best it can be.


Alfred T. Spada, Publisher/Editor-in-Chief


If you have any comments about this editorial or any other item that appears in MODERN CASTING, email me at aspada@afsinc.org.


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