Selecting an Iron Foundry: The 3 most important things you must know



Making the right selection for the Iron Foundry that fits your needs is critical to delivering your customers with the best experience


Selecting an Iron Foundry: The 3 most important things you must know


There are many advantages to using an iron casting over other manufacturing methods.  Some of these benefits are explained here .  Molding processes are very different between many foundries and tooling is set up to be specific to these processes, therefore having to switch to another foundry can cost a significant amount of money in tooling changes. 


Since 2000, we have seen a decrease in Metal Casting Plants from 2,900 to 1,978.  This is the first time that the number of plants has dropped to less than 2,000 in the history of the World Census of Casting Production.  That means that in the last 15 years one third of Metal Casting Plants in the U.S. have closed their doors.  As a casting consumer this heightens the risk of not getting parts to continue production to meet demands along with the time and money spent on selecting and modifying tooling to fit another foundry.  That is why it is very important to understand what to look for in making sure you select the right foundry to rely on getting high quality parts.


1.Understand Key Foundry Performance and Reliability Metrics


As a consumer of Iron Castings the most important thing is the reliability of quality and delivery to meet your product needs.  Here are a few of the Key Metrics you should learn and understand before deciding on a foundry to produce your product.


Lead Time


Lead times vary greatly by foundries and the lead time is driven primarily by the order backlog and efficiencies in the operation processes.  Higher lead times mean you will have less flexibility in your own planning and needs fulfillment.  It also means that you will have to carry higher inventory cost in your operation to work with longer lead time foundries, this is also the case when using international suppliers. 

Typical lead times in Iron Foundries are 6-10 weeks for production part delivery.  If the lead time is longer than this, it would be a good idea to investigate the reasons behind it and determine if it is worth the higher inventory costs and also lack of flexibility to support your needs. 


Delivery and Operations Up-Time


On time delivery is critical for you to meet your own customer demands.  Working with a foundry with a low On-Time delivery record increases your risk of not having parts for production or to meet your customer expectations.  This results in very high costs and lost opportunity in the long term.  Any foundry with On-Time delivery less than 90% would mean you are taking additional risks in that situation.


Operations Up-Time is another factor that you should know to gauge the reliability of getting your product.  Due to the nature of the foundry processes there is a risk of key equipment going down due to unforeseen issues, typically as a result of lack of maintenance.  Since almost every piece of equipment in a foundry is critical to the operations process, any time a piece goes down, it can shut down the entire operation.  Understanding Operations Up-Time percentage will give you an understanding of the risks in delivery performance.  The other factor that affects Up-Time performance is labor availability, safety incidents, or Union labor strikes.  In many cases, strikes or safety incidents can unexpectedly shut down the operations of the foundry greatly impacting performance in delivery to customers.  The Up-Time performance of any foundry should be greater than 95%, meaning that if they work 5 days a week the actual production days should be no less than 247 days out of an available 260. 


Quality Performance


Foundry quality performance is critical to your company and maintaining a high level of customer experience. 


There are two measures of quality in a foundry operation:


Internal Scrap – this is the amount of scrap or non-conforming parts that are identified internally not getting to the customer.  This metric shows the internal process controls in the operations.  Typically this number should be in the range of 2-4% of revenue. A higher number means that improvements in process controls could be made in the operations.


External Scrap or Credits – this is the amount of non-conforming parts that actually reach the customer and are rejected by the customer.  This is the critical metric for the casting consumer and you should know this measure by every supplier you have, a good foundry operation should not exceed 2% of revenue.  So a $10 million foundry should not have more than $200,000 in customer credit memos per year. 


2.Re-Investment in Equipment and Facilities


One of the major reasons that foundries end up closing down is due to a lack of maintenance and upgrading of equipment to maintain a safe and reliable work environment.  When maintenance on equipment lacks or there is a lack of new equipment added into the process, this can build a huge liability in a foundries operations.  Since most of the processes in a foundry are very abrasive dealing with sand and hot castings this wears down equipment and if there is not a constant re-investment back into that equipment, it will eventually fail. 


Not keeping up with equipment can lead to a breakdown in critical processes which can costs millions of dollars to get going again.  At that point many foundries decide to close due to the fact that the cost of operating again is more than they can afford or want to invest again.  The same risk is when it comes to keeping up with environmental and safety regulations.  These regulations are getting stricter every year and this requires a continuous improvement in processes and facilities to comply.  OSHA and EPA fines have led to many foundries closing their doors due to a lack of upkeep with regulations.


3.Age of ownership and workforce


One of the greatest challenges that all foundries have, is attracting and retaining a younger workforce due to the strong physical requirements and hard work ethic required to meet the working conditions.  Developing and maintaining the next generation of work force is critical to the long term sustainability of the foundry’s operations and this is critical to look for when selecting a foundry to work with.  If there is a lack of younger workforce visible in the plant, it is more than likely a short term operation. 


The other important factor to watch is the age of ownership and the plan for succession.  Many foundries that have closed over the last 15 years were due to not having ongoing succession of ownership and no outside interest in acquiring the business.  Let’s be honest, owning a foundry isn’t the first thing on most young people’s dream list now days.  Therefore they are liquidated on an asset sale and the operations are closed.  Be sure to ask about the succession plan for ownership to ensure long term sustainability of the business before you select a foundry to work with. 


Making the right selection for the Iron Foundry that fits your needs is critical to delivering your customers with the best experience possible and keeping your total acquisition cost of product as low as possible.  Remember, cheapest price isn’t always the lowest cost in the long run, make sure you understand all of the above facts about the perspective foundry before making any commitments.