PURCHASING REPORT
MATERIALS AFFECT YOUR BOTTOM LINE?
WILL CASTING
With raw materials prices escalating and shortages reported by a few suppliers, metalcasters are in a purchasing pinch that could affect casting end-users.
I SHEA GIBBS, MANAGING EDITOR
t’s an inalienable fact of manufacturing: some costs (particularly for materials that fluctuate widely in price) are passed on to customers. Metalcasters are no different than any other manufacturer in this re-
spect. Because the industry’s raw materials supply picture can hinge on many external factors, metalcasters can be hamstrung by rising prices. “In the scheme of things, the foundries are a very small component,” said Robert Peaslee, president and co-owner of Manitowoc Grey Iron Foundry, Manitowoc, Wis. “We have zero influence on the pricing of [most] commodities. Tey are driven by other industries that use far
more, and we just have to sit here and grin and bear it.” Beyond grinning and bearing, metalcasters typically build a surcharge into their cost estimating model that is based on the cost of the raw materials the metalcaster buys. According to the American Foundry Society, Schaumburg, Ill., a basic sur-
charge will incorporate only the cost of scrap metal. However, some metalcast- ers use a surcharge model that includes all metallic inputs (melt additives like magnesium ferrosilicon), molding ma- terials like sand and binders, and energy costs. In the latter case, about 90% of the surcharge will be driven by primary melt materials (see Table 1 for a sample surcharge formula). According to Richard Henning,
president of nonferrous alloy supplier Belmont Metals Inc., Brooklyn, N.Y.,
20 | METAL CASTING DESIGN & PURCHASING | Sept/Oct 2011
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