’09 Editorials

Synchro32 - UK Office
Synchro32 - Brazilian Office
Synchro32 - North American Office

Each office offers a snapshot opinion…

Snapshot: Impact of recession in the metallurgical and casting sector.

We have been in business since 1975, our entire business concentrates on providing specific production systems to the cast metal industry; as such we have a magnified view and privileged understanding of this sector.

UK
In general, recession is viewed with extreme negativity it is a matter of survival of the fittest. This is nothing new for the foundry and cast metal industry. I suggest these tough conditions are not too dissimilar to those we have worked with for the last decade and a half. In the last twenty years both political parties deliberately chose to let the casting industry 'sink or swim' and survive on their own merit. With totally inadequate government support and meager incentives, the industry learnt the hard way, no bail out or soft place to fall…

Casting manufacturers have worked under tough trading conditions for years…I am not convinced that the sector is feeling the harsh trading conditions as severely as many other sectors; quite frankly, it has been significantly tough many years.

As a result the UK sector is significantly smaller, stronger and leaner. The hundreds of companies we work with use Synchro32 the highest ranked specific system in the world. This provides extensive advantages over the competition not least the continual vigorous pursuance of quality standards; tight shop floor management, lean inventories, managed costs and production schedules, the list goes on but suffice to say…in the harsh reality of business today the core principles do not change, maintaining advantage over your competitor is critical.

…The back bone of the industry remains strong, and resilience pervades throughout the casting industry, replete with committed hard working professionals …how proud we are to nurture and support them.

Barbara Nolan - Collins Marketing Director

Brazil

The turbulence in the financial sector has provoked a significant turndown in operations in the Brazilian market for metallurgical products. The indication is that in the longer term further cuts will have to be made. To put some numbers to this statement, the principal suppliers of pig iron to the industry have mothballed 80% of smelter capacity (pig iron is the main raw material in the production of steel and foundry cast iron products). At the beginning of 2008 pig iron prices were $700 per tonne FOB port Brazil, now we are seeing prices of $400 per tonne being offered and even less. This feeds all the way down the supply chain where foundries are seeing a dramatic cut in the level of enquiries received and a corresponding 25-30% cut in their order books.

In difficult times the foundries need to become more efficient, leaner in there operation and look at ways to increase productivity without spending huge capital sums. During the good times many foundries took the opportunity to modernize equipment, increase tonnage output and increase there productivity as a result.

Now, when the order books are low, we need to look at other ways of keeping customers happy and maintaining those all important profit margins.

One way of doing this is to implement a production control system that will provide efficiencies in work methods, process operations and services to the customer. The Synchro32 Production Control System is the way forward. It is a low cost solution that provides many benefits to the foundry and cast metal manufacturer and will undoubtedly provide you with a strong competitive edge through this recession.

Kevin Lenton - head of Brazilian Operations

North America -

The underlying economies of North America are fundamentally strong. Notice, I said "underlying economies". What is transpiring right now in the financial and automotive markets has been primarily caused by conditions that are not a part of the makeup of the underlying economies. These conditions include market manipulations, the price of petroleum, and other questionable activities. Once the corrections that are being instituted by the governments have taken root, there is absolutely no reason why the North American economy will not see strong indications of recover by the end of calendar year 2009 and I personally predict by the end of the 2nd quarter that the rebound will be in full swing.

In talking with the North American customers of Synchro32, I take an informal poll, comprised simply of negative, zero, or positive. I call this the Synchro32 Index. The Synchro32 index currently remains at neutral with many customers prospering during this recession.

I encourage metal casters to make full use of the recession by improving and streamlining their operations. Recessions are an ideal time for metal casters to install specific production control, ERP/MRP software systems. Synchro32 is not a capital expenditure! During a recession, the output of the manufacturing facility has slowed down to meet demand. Use this slow down to your advantage by being able to improve efficiencies in readiness for the upward swing from neutral to positive There is only one reason not make improvements during a recession and that is when you don't plan on surviving the slump. Is it a coincidence that Synchro32 customers are weathering the economic roller coaster better than many others? Systems are an essential component for survival.

Shane Allen - head of USA Operations

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