U.S. Die Casting Companies - Evolve or Dissolve?
May 1, 2008 - Casting & Design Solutions Magazine
Consistent with many other industries, the die casting sector continues to face pressures to improve productivity, lower costs and maintain close relationships with their key customers. However, many of these customers are Original Equipment Manufactures (OEMs) who have moved a good portion of production overseas because of immense pricing pressures that persist in a global market.
You don't need an MBA to understand the dynamics at play - the outcomes of which can be found within news reports as plants close and workforces are reduced. In fact, U.S. manufacturing lost 2.7 million jobs during the first five years of the new millennium and the trend is expected to continue - 292,000 of these jobs were in the fabricated metals segment. however, the news isn't all bad.
The North American Die casting Association (NADCA) reports:
- The demand remains strong for die casting produced in North America
- The Trend of offshore sourcing has recently lessened due to:
- Cost leveling worldwide for material and energy resources
- Growth in some domestic markets
- The need for more complex, structurally demanding components
- The lower value of the dollar
Interestingly, many companies that have moved production offshore are experiencing the downsides which often translate to lost income and missed opportunity costs, plus:
- Intellectual property infringement
- Long lead times
- Negative environmental impact regarding transportation
Daniel L. Twarog, NADCA's President commented on an extensive industry report titled "Die Casting in the U.S. - 2007" in which nearly 100 U.S. OEMs and a multitude of other sources were interviewed, "The statistical analysis indicates that many of the cost advantages enjoyed by offshore suppliers will greatly diminish in the next five to 10 years."
Is the pendulum swinging back in favor of U.S. die casting and production? For those die casting and manufacturing companies that are willing to evolve and perhaps "retool" their business models to capitalize on the global marketplace, the answer is yes.
Versevo Inc., a manufacturing, tooling and molded products company in the Midwest, is an example of one such company experiencing growth and maintaining long-term partnerships with top tier global manufactures such as Bombardier Recreational Corp., Briggs & Stratton Corp. and Allied Die Casting Corp.
Terry R. Moon, Versevo's President & CEO commented on the company's evolution, "We've always had a manufacturing component of our business, but our main areas of focus are on speed to market and value engineering for our domestic and global customers."
One-third of Versevo's employees are engineers. "Under on roof we execute all aspects of design, engineering, machining, tool making and castings. In fact, we've completed entire project in less time than some shipments spend in customs," said Moon. He noted that the outcome of his company's design is leaner manufacturing, stronger products and competitive advantages for its customers.
Moon realizes his company must continue to evolve. Versevo's most recent ventures include low pressure, environmentally friendly, "net shape" castings which reduce post processing.
"I'm committed to finding profitable methods that enable U.S. manufacturers to maintain domestic production." Moon added, "We must continue to eliminate the barriers that work against those discussions."