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editorial E


Listen to Your Peers


W hat a difference


a year makes. Just 12 months


ago, the metalcasters I visited were not


in a happy place. Workforces were trimmed to the bone. Forecasts were bleak. Basically, almost any casting job you brought to a metalcaster was greeted with open arms and sent right to the mold line. Visit these same metalcasters today, and their mood has changed. Mold lines are humming. Workers are being hired. Forecasts are strong. And many metalcasters are turning away potential casting jobs if they aren’t a perfect fi t. Metalcasters went from operating at less than 60%


capacity utilization in some niches to more than 90% of capacity in what seemed like the blink of an eye. T is phenomenon, while critical to the process of healing from the recent recession, has created a new dynamic between buyers and their casting suppliers. In the last few months, I have had the


opportunity to hear from buyers in various markets on the diffi culties they have had in sourcing their castings, from capacity to pricing to quality. Following is a sampling of their comments: • “Most industries at 90% of capacity would be capitalizing like crazy.”


• “As business has increased, customer service and casting quality have taken a big hit across most suppliers.”


• “Some metalcasters want to start surcharging for sand. You can’t surcharge everything that is variable. If you do, what’s the point of a base price?”


• “Most domestic sources have no appetite for taking control of the whole supply chain.”


• “We are being forced to source castings outside North America.”


Do some of these sound familiar? My guess is


some of you have uttered similar words. When I presented these comments to a


metalcasting veteran, his fi rst response was: “T ey are complaining because the tables have turned.” I have to agree to a certain extent. Some of these buyers are the same ones that pushed for continuous price reductions from their suppliers during the past four years. As a result, the supplier’s profi t margins were reduced to the low single digits, forcing them into a position where the focus was on survival. Capital re-investment or new


business initiatives couldn’t even be considered. T en the metalcasting veteran off ered the


following, which I agree with 100%. “T is really is an opportunity to educate our


customers, as many buyers are naïve about our industry, what it takes to recapitalize and what it costs to make a casting,” he said. “If we can bring customers to our facility and help them understand why capacity is scarce and costs are increasing, we may be able to work through price increases, quality issues and elongated lead times.” T e key is to meet face-to-face to develop


that relationship. Interestingly, the January/February MCDP website


poll asked: “How often do you visit your casting supplier?” Fifty-two percent of respondents said never. Now consider the following quotes from two


buyers that probably aren’t among that 52%: • “T ere isn’t a capacity problem if relationships exist.”


• “T e only way we can ensure we secure the castings we need is if we have relationships already in place.”


T ese buyers aren’t having any supply problems


even though the niches they buy from are at more than 90% capacity utilization. T ey took the time to develop the buyer-supplier relationship. Hopefully, more will follow their lead.


Alfred Spada, Publisher/Editor-in-Chief


If you have any comments about this editorial or any other item that appears in Metal Casting Design & Purchasing, email me at aspada@afsinc.org.


Mar/Apr 2012 | METAL CASTING DESIGN & PURCHASING | 7


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