Blackhawk de Mexico Revitalized

Editor’s Note:  This profile of Blackhawk de Mexico is an update of the “Blackhawk’s Turnaround” profile published in the April 2007 issue of MODERN CASTING.

Turnaround projects are never easy. Dealing with someone else’s mistakes can be like a dog chasing its own tail—no matter how many different angles from which you attack a problem, you may just run around in circles.

For Blackhawk de Mexico, Santa Catarina, Mexico, the turnaround began in 2003 when the gray and ductile iron casting facility was acquired by Grupo Quimmco, Monterrey, Mexico. At that time, the firm was producing gray iron castings for a varied product mix, and turning a profit was a struggle. The new owners decided to clean house and installed a new set of leaders at Blackhawk.

“The amount of volume the [original owners] expected to bring to the company was never there, and the type of work was not adequate for the plant,” said Patricio Gil, current Blackhawk de Mexico chief executive officer.

That is when Quimmco and the metalcasting facility’s new management team developed a new plan of action, one that focused on a ductile iron product mix and a production-mentality geared toward efficiencies.

“We needed to build a team and bring in the right people. We needed to establish a clear market strategy and change the focus from making tons to profits,” Gil said.

In 2003, Blackhawk began its transition. By October 2006, production had more than doubled to 16,000 metric tons, with fewer operators needed on the floor. Ductile iron accounted for 84% of shipments, and the casting facility was turning a profit.  
“Adding ductile iron, we did have a learning curve, and it was a hard one,” Gil said. “We went from a nonautomotive plant producing gray iron and changed that almost 180 degrees to be a plant for the more demanding automotive jobs.”

The success of this turnaround—in both strategy and production—has made Blackhawk de Mexico and its management team one of MODERN CASTING’s 2009 Metalcasters of the Year.

Enhancing Mexico

The new product mix and casting material weren’t the only elements contributing to Blackhawk’s success. Gil pointed to the advantage of being owned by a Mexican consortium, where the culture and logistics of operating a Mexican business are better understood.

“It’s difficult for a U.S. company to come to Mexico and operate a [metalcasting facility] without paying attention to cultural differences,” he said. ]

“I believe the perception of the lowest cost is different than what the actual cost is,” Gil said.

Blackhawk used this knowledge to develop an in-house quotation system that reflects its unique advantages/disadvantages while following industry standards.

The intimate knowledge of the Mexican culture also has allowed Blackhawk to succeed in management principles like lean manufacturing and employee training. Often a struggle for foreign ownership groups operating casting facilities in Mexico, Blackhawk began lean manufacturing in 2007, utilizing kaizen events to help work flow and efficiency.

“We are a small metalcaster that believes in the empowerment of the people,” Gil said. “We have department leaders, but they are one of the operators, as well. If we establish a system for communication, the results will happen. That is why our scrap is below 5%.”

Employee training has been a means to enhance productivity but also to provide the facility with a stable workforce that grows in experience. The average level of experience of floor workers at Blackhawk has increased from 1.5 years in 2005 to 2.6 years in 2008, with the number of 10-year veterans growing by 300% during that period. This provides for consistency and quality critical to success.

“We hire people with more expertise and provide them with the work environment and lean principles to ensure success,” Gil said.

Turning to Ductile

Blackhawk went through a series of steps during its transition into a primarily ductile iron shop. First, it optimized the casting process already in existence. It kept the automatic molding machines already installed but developed a product mix that increased the amount of metal poured per mold, improving the firm’s efficiency. Also, the company hired experts in tooling, quality and maintenance to bring technical depth to the operation.

“Before, Blackhawk was making maybe 800 tons a month in four shifts,” Gil said. “Now, Blackhawk will make 1,300 tons a month in two and a half shifts.”

Once ductile iron was added to the mix, the metalcaster spent some time adjusting the operation to best fit the new material, including bringing in an expert in ductile iron metallurgy and casting. Then, in 2008, the firm made a $1 million equipment expansion, adding a 65-ton holding furnace, CNC automatic grinders and new molding handling equipment. This helped to provide greater flexibility in lot sizes and grades of ductile iron.

“With the addition of the holding furnace, we are more efficient and flexible in melting, as we can now pour three different grades of iron at one time,” Gil said.  In addition, Blackhawk now can pour 125 tons per day compared to 80.

The other automation additions to the facility go against the philosophy that low-cost labor firms use labor whenever possible. “We are looking to reduce man hours per ton to become more efficient,” Gil said. “Based on our mix, one CNC finishing system does the work of nine employees and improves quality.”

With its strength in ductile iron, Blackhawk’s main markets served are the heavy truck (65%) and farm equipment (20%) industries. Products include differential cases and carriers, slip yokes and wheel hubs for heavy truck, and hydraulic components, flywheels, wheel hubs, steering arms and retainers for farm equipment. The firm now ships castings throughout North America, as well as to Europe and South America.

Beyond What is Expected

Gil knows Blackhawk has an advantage with its lower labor costs, but he said competing with North American companies is more than just a price game.

“Sometimes there is a quality perception, where we are given higher requirements because we are a Mexican firm,” Gil said. “That’s not just in casting, but in all Mexican companies.”

Blackhawk is combating that perception, aiming to prove that it is as world-class as its competitors. From 2004 to 2008, the firm has reduced its man hours/metric ton by more than 35%. In addition, the firm has expanded its customer base from 100% Quimmco businesses in 2004 to only 60% today.

“We are trying to develop service as a distinction,” Gil said. “Quality and lead times are a given, but at the end of the day, I believe cost is the main driver.”

According to Gil, this is where a ramp-up of value-added services has been important. The firm currently provides painting services (70% of castings), full machining (15%) and has secured its first assembly project. But these were just the next logical steps for the facility to advance, Gil said.

“We built a team, we built a strategy,” he said. “This is the key.”