Didion: See How One brass foundry reclaimed $321,867 in three months.

Modern Casting

Watch the Pendulum Swing

The Annual Modern Casting Census of World Casting Production is one of our favorite projects each year.  Published in December, this feature (p. 21) provides a snapshot of the state of metalcasting globally. It is a one-of-a-kind feature that is much-relied upon throughout the industry.

This year, while reviewing the data, I was struck by the different perspective with which the North American metalcasting industry approaches the global market compared to five years ago.  A significant shift has occurred that few, if any, saw coming. This has brought a renewed energy to North American metalcasting.

“Manufacturing cost competitiveness around the world has changed dramatically over the past decade…so dramatically that many old perceptions of low-cost and high-cost nations no longer hold…Mexico now has lower average manufacturing costs than China…China’s manufacturing-cost advantage over the U.S. has shrunk to less than 5%. Costs in Eastern European nations are at parity or above costs in the U.S.”

This quote is from the report, Global Manufacturing Cost Competiveness Index, released by the Boston Consulting Group in April of this year. While it is about general manufacturing, these ideas resonate within our niche of casting manufacturing.

GE announced in November plans to invest $60 million into its recently acquired Lufkin, Texas, casting facility to expand and modernize the ductile and gray iron plant to create a simplified production flow, improve employee working conditions and provide customers with improved quality and delivery.  The plan is to add 72,000 sq. ft. of new casting space while refurbishing the remaining plant space. According to GE, “The goal is to make the facility as efficient as possible and help strengthen the competitive position of our business around the world.”

In the last 30 years, GE has been one of the leaders of the global sourcing movement, shipping many of its castings to suppliers across the globe. The shift across many of the GE manufacturing divisions to re-invest in North American manufacturing says that the pendulum has swung back to some extent.

The reasons cited in the report for the shift include:

  • Energy costs.
  • Currency value.
  • Productivity.
  • Wage rates.

While this information is positive as you look to the future, the success of your casting facility still depends as much on the decisions you and your management team make as on macroeconomic factors. Your casting facility must focus on what it can control—marketing, HR, production efficiencies, environmental and worker safety initiatives, to name a few—to be successful, because if those departments function at a world-class level, your casting facility can as well.

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