sustainability of the business. Met- alcasting facilities run by financial investors are looking first at maxi- mization of returns at all cost. Such manufacturing booms


will come again, but in different markets. Now there is a growing bubble in the market for some steel components. Preferably, the share of sales for one


market segment will not exceed 25%. One customer must not represent more than 10% of total sales; other- wise the dependency on this customer can be too strong. Some metalcasters’ strategy has become to lean the cus- tomer base and reduce the number of customers to 10-20 companies, using lower sales cost as an argument. Tis might work well for large automotive foundries, but it is not a good strategy for midsize and small jobbing found- ries. It is relatively easy to get rid of a customer, but it is difficult to acquire a new one. Some successful jobbing metalcasters in Europe have more than 200 customers, some of which are small and buy only several parts per year. Interestingly, even in the deep- est recession, they still buy this small amount of parts, whereas big custom- ers drastically reduce order volumes. A metalcasting CEO must possess


an iron discipline not to be seduced by fast money in new markets. Growth and expansion, yes, but in a careful, well thought after way.


readily take new challenges and are willing to take new products into their manufacturing program, despite the high risk of scrap with new parts. As a result, such companies learn to produce more complicated parts and improve their market position. In many cases, metalcasters decline


2


to take new, complicated parts into their manufacturing program, even if such parts would fit their capabilities perfectly. It is a risk to try something new, and where a spirit of entrepreneur- ship is lacking, I’ve been told, “You know, we don´t want to manufacture this part. We want to have fun with our


Produce well-balanced product mix and never lose contact to market reality.


Successful metalcasters


Successful metalcasters serve different markets and have a wide range of customers.


castings.” Next time, this vendor will not even get an inquiry for a new prod- uct and a long-term buyer will end the business relationship with the vendor. Te reason is simple: a strategic supplier must be able to support its customer in the development of new products. If a supplier does not want to do so, then it is not the right partner. Another problem in many met-


alcasting companies is overestimating the complexity of parts being cast. Tis is often nourished by middle manage- ment on the shop floor. Tey might think technical problems overcome in development cannot be defeated in other facilities. Tis conceit misleads management, and sales also starts thinking the facility is a single source for this type of product. Tis is a big mistake. Good casting buyers will never allow for a long-term dependency on a single-source supplier. He or she will investigate the market and finally find a second source. Even if in the first year a new supplier cannot deliver 50% of the needed volume, it will be able to deliver more with every month of production, in many cases at a lower cost than the main supplier. Whereas the first met- alcaster relaxed and did not improve its manufacturing process, the second learned to do it at lower cost and more efficiently, right from the start. Concentration only on complex


parts and neglecting parts without any special requirements also is a mis- take. A good mix in tonnage is about 60% complex castings with big share of labor (for example, NDT testing, machining, etc.) and 40% simple parts without any special requirements.


average one often is knowledge of the exact production costs of individual components. Regular comparison of quotes from different facilities shows


3 Know your


production costs. Te difference between a


good casting supplier and an


that many have a vague idea about their production costs. In facilities that are managed


in a professional way, every new product undergoes a recalculation based on real production hours and cost after manufacturing one


or two batches. Many metalcasters don’t do this extremely important step, which is vital to accurate cost estimates in the future. A good control department


is vital. An experienced control- ler pinpoints the main production problems and shows potential for productivity improvements.


success of a jobbing facility: delivery performance, quality and price. Te majority of metalcasting job shops in Western Europe and the U.S. cannot compete on price, so they must be good in terms of quality and delivery performance. Higher price can be accepted only if parts are delivered on time with the right quality. Poor delivery performance results from poorly managed processes and a lack of production discipline in the shop. Today, a machine building com-


4


pany in Europe can secure an order from a customer only when it can offer better delivery times than its competitors. For the buyer, it means castings must be delivered precisely at a confirmed delivery date. If the metalcaster doesn’t realize how late delivery of castings impacts its cus- tomer, it incurs penalty costs. For example, a machine builder needed three different heavy bearing casings for one compressor manu- factured from steel alloys by a hand molding process. Te buyer ordered 30 bearing casings for 10 compressors, and the metalcaster delivered 27 just in time and the remainder two weeks later. Its on-time delivery performance was 90%, but the customer delivered three compressors two weeks late. As a result, its on-time delivery perfor- mance to the end-user was only 70%. Such a situation can become costly for the casting buyer’s company. Te


July 2014 MODERN CASTING | 35


Permanently optimize processes in the shop.


It is simple. Tere are three main factors responsible for the


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