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backAMERItalk March, 2009
Die Casters Report Sourcing Returning to the U.S.
There is little doubt that the die casting industry is facing its share of challenges during these economic times. Die casters have had to take every measure possible to maintain a profit and stay afloat. However, good news seems to be on the horizon.
In a recent survey of U.S. die casters, 78% reported that they have seen die casting parts come back from overseas during the last two quarters. According to these reports, die cast components are returning to the U.S. for three main reasons: concerns about part quality, customer-supplier proximity and overseas logistics.
Andy Stroh said his company has recently been seeing interest from OEMs wanting to bring some components back because of offshore quality issues. “One company has talked to us about bringing some parts back — particularly plated or painted parts,” he said. “Poor packaging results in parts getting damaged during shipment.”
Another prominent reason components are returning to the U.S. is because OEMs want closer proximity to their supply base. “We are tooling up an aluminum die cast part for a company in Green Bay, WI that was previously made in China,” said Stroh. “The customer had quality issues with the part and difficulties relaying part changes effectively. That’s why we got the work – because of our proximity to the customer, understanding of their needs and our willingness to build the new tool quickly.”
Eric Treiber’s company won some business because of both offshore quality issues and proximity to their customer.
“We have, within the last year, produced castings that were previously sourced offshore,” he said. “It is our understanding that two magnesium castings we produce, which were previously sourced offshore, were brought back to the U.S. for reasons of quality and proximity of the supply base.”
In part, manufacturing logistical issues with offshore sourcing have become more prevalent, according to some industry experts. The simple fact is that the distance between OEMS and their offshore suppliers makes it too costly and time-consuming for them. Heightened shipping costs and longer cycle times reduce, and in some instances, negate the cost savings of sourcing offshore.
Burl Finkelstein said that his company recently brought back about 500,000 zinc castings that were made in China. “This occurred for several reasons,” he said. “Metal costs fluctuated in China, and suppliers would not take orders at prices that had previously made them competitive. Adding increased transportation costs, you can see how the trend changed. At our plant, we remained tooled and had machine capacity at our U.S. plant to be able to absorb the work without any capital outlay.”
Leonard Cordaro reported that his operations have seen two different customers bring back parts to North America for similar reasons Finkelstein had experienced.
Now that parts seem to be returning to the U.S., one way that a die caster can take advantage of this is by adapting to the change and becoming a dual source supplier. Mel Hand discussed how his company has taken some initiative to set themselves up as a supplier of choice. “The best way for us to acquire opportunities with customers that are producing offshore has been as a dual source casting provider. A one-stop shop,” said Hand. He continued, “It’s just easier doing business domestically, locally. As issues arise, we are better positioned and better equipped to offer engineering support. Not only can we turnaround a part quicker, but we can produce a better quality part.”
The North American Die Casting Association (NADCA) in its independent study surveyed its member base and found that die cast components are coming back to the United States, a trend that seems to be continuing, at least in the immediate future.
Source: North American Die Casting Association - GAI
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