By Alfred T. Spada

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Is the glass half full or half empty?

Right now, it is tough for any metalcaster to look at the economy and see anything other than an empty glass (forget about half empty). Heck, just look at our Industry News pages this month, and you can see that stories about plant closings and layoffs far outweigh the positive news.

But there is positive news for those metalcasters who are prepared to weather the ups and downs of the marketplace. The positive news is the upturn in the economy that is sure to follow our present situation. Metalcasters must focus on this upturn during the downturn.

The typical reaction by metalcasters to an economic downturn is to cut everything. This reaction is natural, and I am not completely arguing against it. The difficulty is that we need to keep our eyes up and look beyond production to the opportunities.

When this downturn is over, the North American marketplace is sure to have reduced casting capacity as several more metalcasters go out of business. As a result, many customers will be left holding patterns. This will be coupled with the increasing cost of “low-cost” global suppliers due to foreign currency adjustments, quality decreases and overall production cost increases. We already have seen a shift back to North America by many buyers and we expect this trend to continue.

The end-result of these two factors is the same—buyers will need more North American supplied castings than we may be able to supply during an upturn. Is your facility planning on how it will handle those needs?

I just returned from a trip visiting several casting facilities, during which the focus of discussion was how to handle an economic downturn. One facility said: “We are preparing to succeed.” While this plant is not going to perform any major capital projects, they are leaning production flow and increasing capacity.  Instead of shutting down during downtime (currently the plant is running five days a week, but management expects to reduce it to four at some point), the plant will use its people as consultants to take waste from the system and increase capacity.

One representative from the plant hypothesized they might adjust conveyors in the cleaning room to provide better individual part flow to the proper cleaning station. Another idea was to switch inoculation methods for ductile iron to reduce redundancy. A last initiative was to analyze the core production planning process to reduce core storage and breakage. The representative estimated these three measures could open up an additional 1% of capacity for the facility for less than $10,000 of extra investment. For this company, that could equate to more than $200,000 a year in sales.

Sure, these improvements will require labor and wages that could be saved with a shutdown. But this firm remembers how well positioned it was with streamlined operations and new capacity after the previous downturn. This plant remembers the greater than 10% average annual sales growth it experienced from 2003 through 2008. The firm credits its approach to the previous downturn as a main contributor to this growth.

What is your facility’s approach to this downturn? Are you barricading the doors just hoping to survive, or are you in search of opportunities? I know casting buyers will be looking.  Hopefully, you can show them something.