Strange Engineering. “I think our price is a bit of a premium, but our customers would pay the premium for our products, provided the premium isn’t too dramatic.” With a casting volume range
that varies between 100 and 1,300 castings per year, Strange Engineer- ing finds that it can’t always use the same sourcing or pricing methods as large casting customers. “We can’t spend as much time
and effort as the large volume casting customers in qualifying and visiting prospective suppliers due to the eco- nomics involved.” McGivern said. Strange Engineering looks at the potential supplier’s stability, type of equipment and philosophy of invest- ing back into their businesses, but price is one of its primary concerns. “We want to find somebody in the price range we are looking for so we can maintain our competitive- ness in the marketplace. We try to be involved with the foundry when designing the products to make them easier to cast.” To further reduce cost, McGivern
will sometimes look at quantity price breaks. “We’ll look at significantly more
volume than we need if that will sig- nificantly reduce costs and cover our carrying cost for holding the inventory for a while,” he said.
Fulton Industries Frank Gaba, purchasing director
for Fulton Industries, South Bend, Ind., does not mince words when discussing what he sees as a troubling trend in his domestic casting sources. With significant price increases over the past 20 months, coupled with domestic foundries capacity constraints, Gaba said his machin- ing company is actively investigating further offshore sourcing. “China, 10 years ago, used to be
really questionable as far as mak- ing castings and the quality,” he said. “But it began to modernize its foundry plants and its work force. Degreed engineers, who are as com- petent as their U.S. counterparts, have taken the place of laborers working in the foundries.”
March 2013 MODERN CASTING | 41
To deal with a longer logisti-
cal timeline and its potential risks, Gaba requires his foreign suppliers to provide consignment inventory. Te supplier keeps a warehouse in the U.S. stocked with three months’ supply of approved inventory. Fulton Industries pays for product when it is released from the warehouse.
“China has to keep its price differ-
ence between 20-25% or it’s not worth it [to re-source from a domestic sup- plier],” Gaba said. “But the Chinese are smart, they know what that price difference is, and they wait until after the U.S. price goes up to increase their own price.” Still Gaba said he’d like to purchase
from a domestic source, all things being equal.
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