by MODERN CASTING Staff
Parthiv Amin talks like he’s in the greatest industry in the world. He cracked jokes at a recent metalcasting conference as he animatedly described his company’s growth. And it’s not just his company that’s doing well; his business is only a small part of a larger industry that is exploding across the globe.
Amin is president of wind energy firm Winergy Drive Systems Corp., Elgin, Ill., and his business’s success is tied closely to the metalcasting industry. Like so many others, he receives the components he needs from metalcasters around the world in order to continue to produce the equipment that his customers demand.
On the following pages, Amin and representatives of three other casting buyers provide information about their markets and what they expect out of their suppliers. After all, if they’re going to continue to talk like they’re in the greatest industry in the world, they’re going to need the greatest suppliers in the world.
Fluid Control
Jim King, casting purchaser for the fluid control business of FMC Technologies, Houston, which supplies oil and gas exploration and production equipment, is not an astronomer, but he deals with his own black hole, as he calls it. “The mystery in the metalcasting industry is always the time between when the part is poured and when it will be delivered,” he said. “I’ll call up the metalcasting facilty to check on the status of a part, and they will be able to tell me when it was poured, but not where it is on the floor or what stage of secondary operations it is undergoing.”
The lack of a tracking system is one of King’s main grievances with his metal casting suppliers, although he said he has seen some companies investing the money to implement a workable solution.
FMC’s Flowline brand is the largest supplier of products to the oilfield industry, with customers that include Halliburton, BJ Services and Schumberger. FMC, which has 1,000 locations worldwide, feels pressure from its customers to meet deadlines. At least one stipulates that 95% of the equipment be delivered on time. FMC requires the same timeliness from its casting suppliers. Removing the communication black hole at the casting facility would help King keep his timelines up to date.
“Consistency in quality and delivery is the main thing we need out of our casting suppliers,” King said. “Lead times are important. From last year to this year, I’ve seen great improvement, but they still aren’t where I want them yet.”
King said inconsistent quality can devastate his timeline, and scrap castings can lead to lost sales orders. “When I order a part to meet a customer’s order, it has to be quality,” King said. “If I machine it and it’s bad, that puts us behind.”
The opportunities for FMC are ripe as the oil industry grows, which means opportunities for casting suppliers, too. King is comfortable with the group of casting suppliers he has, but tightening of capacity at many iron casting facilities has kept him looking for other sources. During a metalcasting visit, he said he looks at the knowledge and experience of the research and management teams, and if it is a family-owned operation, he investigates the succession planning. Safety procedures are indicators of supplier suitability, as well.
One of the main turn-offs King runs into is a disorganized, cluttered office and receiving area.
“I get that metalcasting facilities are dirty, but that doesn’t have to mean it’s dirty everywhere,” he said. “Sometimes the mentality seems to be, ‘this is a foundry, what do you expect?’ But that’s not the attitude I’m looking for.”
As a global company, FMC also sources castings to international facilities. King said 30% of its Flowline business, including castings and forgings, are sourced off-shore, the majority in China. While he admitted FMC has seen a significant change in pricing from China and India, the company has no current plants to reduce the work being sourced there.
“If it comes to the point where it is no longer competitive, we may take the parts back to domestic suppliers,” he said. “But the long-term plan is to keep a domestic supply and source no more than 50% to off-shore suppliers.”
Wind Energy
Amin assures those that will listen that his business projections are real numbers, not “pie in the sky” predictions.
“Currently we are growing at approximately 40% a year for the past couple years and expect between 30-45% growth over the next couple of years,” Amin said.
While it doesn’t maintain manufacturing plants of its own, Winergy sources, assembles, sells, services, tests, and performs research and development on drive trains for wind turbines. The company supplies one out of every two turbine gear boxes globally and two out of every three in North America. It has been doing business on the west side of the Atlantic for several years but sees that portion of its business growing in the near future due to increases in renewable energy production in this country.
So, like many wind turbine producers who are finally moving to North America, Winergy needs more U.S.-based casting suppliers to keep up with its rapid growth. Amin projects that his company will buy 9,000 tons of castings this year in the U.S. alone. He sources six to seven times that many abroad.
But Amin finds that domestic suppliers typically are lagging behind their European counterparts, particularly in the production of ductile iron castings. Because Europe has been on the forefront of wind energy development, metalcasters there have been producing the parts Winergy needs for years. So even though the ductile iron specification the company expects is nothing U.S. metalcasters haven’t seen, Amin said he does not see the consistency that he does with his foreign suppliers. In some cases, it’s a matter of translation.
“The market is metric,” Amin said. “Some of the people we work with use imperial standards, and that has
to change.”
Amin expects his parts to be of equal or greater quality to aerospace parts. While his castings don’t support passengers in the sky, they are situated several hundred feet above the ground, so replacing them is an expensive proposition. He expects the iron castings that go in his gearboxes to last approximately 20 years before requiring service.
Quality is only part of the issue. The initial screening criteria Amin uses when he determines a casting supplier’s viability are logistical. Can the supplier produce the part sizes he needs? Can the supplier make enough of the parts he needs? And will the supplier be in business long enough to continue to supply his company in the future?
“Is the management committed to add capacity, which is 20-30% per year for what we need?” Amin said.
Answering those questions in the affirmative can be difficult in the U.S. Amin often finds domestic metalcasters over-commit to quality and quantity numbers they cannot maintain. With so many domestic metalcasters focusing on being the best job shop they can be, they don’t have the time or the inclination to produce his long runs of large gray and ductile iron metal castings. If a metalcaster wants to tap into the growing wind market, it’s going to need to install or set aside the necessary capacity.
Aside from your company’s existing customer base, “there are other industries that you can go out and attack,” Amin said. “You may have to learn some new processes, but if you are willing to do all that and invest time and money, you can be successful.”
Construction
Ed O’Neil knows his company isn’t the best customer all the time, but he says it is willing to try to improve. And that’s what he expects from his metalcasters.
“It’s important for us to recognize the way our customers perceive us,” said O’Neil, who manages the castings segment of Caterpillar Inc.’s global purchasing division. “Who we are defines the partners that we want to buy castings from today and tomorrow. I need casting suppliers that help support [our] image.”
That image is of strength and durability, O’Neil said. Caterpillar is a market leader in the manufacture of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. It has shown considerable growth in the past several years and projects more growth for the future, which is going to require quite a few castings.
For its range of products, Caterpillar buys castings from 1-22,000 lbs. Each of the company’s 797s, its largest piece of equipment, contains 75 tons of castings, which equates to 2,000-9,000 tons purchased per year for that machine only, depending on sales. If metalcasters want to win that kind of business, they have to do more than offer Caterpillar the lowest price.
“I’m not chasing the dollar,” O’Neil said. “I’m looking for long-term strategic solutions."
To find those solutions, Caterpillar sources metal castings in three ways—locally, globally and from single points. For some of the company’s parts, it seeks local suppliers to relieve the burden of shipping costs. For others, it matches itself with a casting supplier that maintains a global footprint comparable to its own. For the final group, it sources a world’s worth of components from one central location. Regardless of the sourcing strategy, O’Neil said in each case the company is looking for a metalcaster that is willing to work with Caterpillar to improve both the parts it produces and its company as a whole, not just the company that offers the lowest price.
“I can’t emphasize enough the collaborative part of this,” he said. “That’s the key. How do I get better value? [Casting suppliers should] always look at a print with an open mind. Can you make it in another way to add value?”
Collaborating doesn’t simply mean putting the engineering heads of your company together with Caterpillar’s. It means integrating your company with others up and down the supply chain to provide Caterpillar with a completed part on delivery, rather than just a raw casting.
“In my experience looking at [metalcasters] around the world, one of the things I’ve found is that outside the U.S., there is more vertical integration,” O’Neil said. “They maintain collaboration with the machine shop and the [metalcasting facility] at the same time. They have more value-added elements.”
Machine Tool
Haas Automation Inc., Oxnard, Calif., one of the largest CNC machine tool builders in the world, is about to get bigger. Its total machine sales have grown from 4,683 in 2003 to 13,560 in 2007. Its main manufacturing facility has more than 1 million sq. ft. of space, out of which is produced 66 vertical machining center models and 22 horizontal models. With the goal of becoming a $2 billion company by 2015, the firm will be keeping its production at a steady flow, which is good news for casting suppliers.
“We use a lot of castings,” said Bob Whaley, casting purchaser for Haas. “Haas wants and needs castings to survive.”
The machine builder uses 400 different aluminum, ductile iron, gray iron and steel cast components, weighing from 3 lbs. to 25,000 lbs., although most fall within the 800-5,000-lb. range. More than half of Haas’ sales are for machines that have been introduced since 2000. In 2007, the company delivered its seventy five thousandth machine. As the business has grown, Whaley said he has added seven new casting suppliers for the next two years but still needs six more in the coming year to meet growing customer demand, particularly in the European and Asian markets. A large portion of the machines are still manufactured in the U.S., and about 20% of the castings are purchased off-shore.
Whaley’s criteria for a casting supplier includes financial stability, willingness to invest in the future, continued investment in technology, a lean environment, understanding of the global market, automation and process control. One of the U.S. metalcasting industry’s weaknesses, he said, was the lack of ability of individual firms to prove to a customer why they are a prime sourcing candidate.
“In dealing with casting suppliers, I don’t see a whole lot of marketing,” he said. “I see a whole lot of sales. A metalcaster will call and say they have capacity yet offer no information on his company or the types of castings he produces.”
Whaley said Haas’ manufacturing facilities are sophisticated, lean operations, and the company expects its suppliers to fall into that operational philosophy. Metalcasters who showcase their engineering strengths and prove they can meet deadlines are given higher regard than those who simply ask for a price range to hit.
