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Olson Aluminum Castings

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Illinois Foundry Says Focus on Larger Castings Protects them from Offshoring

Olson Aluminum Castings

Rebecca Carnes
Design-2-Part Magazine

A new air set molding line for larger castings at Olson Aluminum Castings in Rockford, Ill., will not only open up new business opportunities for the company, but will also safeguard against some offshore competition.

"These will generally be higher ticket items and the kind of things that really don't make any economic sense for companies to source them offshore," said Olson sales manager Mike Stahl. "Offshore seems to like high volume, smaller items or something with a lot of repetition."

Losing business to offshoring has always been a concern with the smaller-sized castings, Stahl said. He added that, unfortunately, OEMs frequently look at price points and think they're valid numbers, but neglect to weigh in total costs.

"First and foremost, they are overlooking delivery. It's going to be a logistical challenge at a time when everyone is preaching lower inventories and the JIT concept," Stahl said. "Because of that lead time, you find companies having to warehouse and inventory safety stock. So it makes much less nimble the ability for a user of castings to be able to adjust their volumes upwards and downwards more rapidly. Another aspect is it becomes very difficult to achieve engineering changes or design changes from that type of distance. You're working through time zones, through cultural differences, through language barriers, and it's difficult to thoroughly understand what it is you're trying to accomplish. It just flat out lengthens the time when you have to sit and translate and describe in much more detail than you would if someone's right next door to you or a couple of hours away from your facility."

Customers are wising up to the differences between keeping business in America or moving it offshore, he said. "I think there are some things coming back where people have had some issues or have had some very high opportunity costs where they've actually lost orders or could not fulfill an order because they couldn't react quickly enough. And it's taken a few of those losses for management to realize that the unit price may be significantly less, but unfortunately, not being able to get it when you want it and how you want it in a timely manner has cost them sales. When somebody else can beat them to market, they start thinking. So there's an advantage to having something on the shelf and ready to go and/or be able to handle a very short lead time."

Often, quality comes into play when companies are deciding where to source from. "Quality is becoming more of a factor," Stahl said. "I think people realize getting something at a reduced price isn't the end all/ be all. If it comes in and you have problems that you have to solve or fix or re-engineer around, I'm not sure you've really saved any money. In fact, you may have shot yourself in the foot in terms of reputation."

The new air set line at Olson (www.olsonalum.com) broadens the company's capabilities and range so that instead of only being able to accommodate a 100- to 150-lb. casting, it now can handle a 200- to 300- lb. casting. This opens them up to such markets as energy, oil, gas, rail, and heavy transportation, which they have not yet ventured into. Going into larger castings will somewhat safeguard the company from further offshore competition. "We believe the heavier items that are a bit more demanding and get low volume are not targets of offshore and, if they are, they (offshore companies) generally struggle with competing in that area."

About 16,000 square feet of space was added to the foundry for air set sand, a chemically-bonded sand, as opposed to the green sand foundry that has been at Olson since 1980. Stahl is expecting high demand for the larger castings and has projected sales to grow by about 30 percent. "We think this will be something that will grow over a three- to five-year period as people become more and more aware of the capability here. It's a good size piece of capacity. We didn't expect to fill it overnight, but as these jobs surface and as we begin to target more and more of that type of work, then we will have the capability and the equipment to do it," he said.

This technical information has been contributed by
Olson Aluminum Castings

Click here to find suppliers

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