.

If you are a casting buyer who is viewing our website for the first time, you are probably asking yourself "why should I buy from Lethbridge Iron Works?" Listed below is our "Top Ten" list of reasons you should be a customer of Lethbridge Iron Works.

1. more than 100 years of quality and service as a leader in the foundry industry in North America
2. ISO 9001:2000 registration ensures world class castings of the highest quality available each and every time you place an order
3. modern, automated, high production equipment in all departments allow us to handle volumes of any size
4. on-time deliveries are a reality at Lethbridge Iron Works ... not just a promise
5. the foundry normally operates on one shift and easily ramps up to two shifts when business volume requires it, providing customers with the spare capacity they demand when their own business picks up dramatically
6. our customers are leaders in their industry, and they choose to deal with Lethbridge Iron Works because we never let them down
7. lead times are a source of frustration for many casting buyers, but at Lethbridge Iron Works our lead times are often much shorter than our competitors due to our modern equipment and spare capacity
8. the company is a third generation family business which prides itself in its longevity and its satisfied customers
9. long term employees, both in management and on the shop floor, have the knowledge and experience to produce castings that consistently exceed customer specifications
10. competitive prices provided to experienced casting buyers have allowed us to forge relationships with customers who no longer seek competitive bids ... perhaps the greatest compliment a customer can pay us

Copyright 2002 Engineered Casting Solutions

Winter 2002

Some lessons, I admit, are most effectively learned through loud voices. In the household I grew up in, much of my father's "advice" was accompanied by his signature parting words, "Use your head for more that a hat-rack."

Most of what I learned from my father, however, was communicated more cordially. Take the piece of wisdom I received upon joining the family business just out of college. During a pretty lean spell, I suggested we strong-arm a vendor into further slashing his price. After all, he desperately needed our business.

My dad's response was quite clear.

First, that wasn't how he did business. Whatever small part he could do to keep a healthy supply base he would, since it would be of more value to our future, he said. Second, he told me that there were plenty of more meaningful ways to improve the bottom line (namely eliminating waste), and to go and do something about it. I must have muttered a few words under my breath back then, but knowing what I know now, I've got to give it to the old man. He knew his stuff.

The reason I bring it up now is that the overall casting supply base (which has shrunk by one-third over the past 20 years) really struggled last year. If you buy metal components, you've already seen a number of your suppliers file for bankruptcy or even close their doors. The final months of 2001 brought a flurry of this sort of thing. While last year's shipment contraction was long forecast, what is distressing is the number of casting operations in trouble, so soon after high demand years. In fact, many foundries tell us 2001 was as bad for their companies as the early 1980s, when capacity utilization was at its lowest point ever.

While metalcasting has seen all the cycles before, there's something different about this downturn. In addition to the ever-increasing cost of compliance, much of the industry was so squeezed on margins during the last several years that many mortgaged away their ability to sustain themselves in slower times.

The convergence of foreign foundries trying for a piece of the rich U.S. market for castings, the onslaught of Internet reverse auctions and hungry domestic facilities have created a situation that some OEMs have gladly chosen to capitalize on. As a result, foundries are cannibalizing each other as threats are made to move work off this continent. Whether or not such threats are real, you may force yourself into them. For many of you, the eventual "price" paid to save a few pennies per part might turn your stomach.

"If a company can't make any money at something, it's going to quit." That was how an executive at a small manufacturing firm put it in a recent Industry Week article. He added that the 3%-plus price reductions demanded for him both this year and next will need to be found from the margin, which barely exceeds that percentage. "There's not much money in it now," he said.

Every now and then, though, you hear about those who've seen the light. I recently read about a supply management executive at a major U.S. company who pointed out the downside (beyond the deterioration of relationships) of the reverse-auction approach. He noted that one of its aluminum foundries rashly entered an online bid clearly below what it needed to spend to make the parts. "We immediately dispatched a couple of supplier development engineers over there for several months," he said. "We worked with them to get as low as we could and still have them make margins because we weren't about to do that to our supplier."

In the auto industry, a 2001 research study by Planning Perspectives noted that the Big Three emphasize price 2-3 times more than they do quality, while "Toyota and Honda are more interested in having a viable supply base, so they tend to protect their suppliers' margins." Might the fact that the Big Three continues to lose market share as Japanese manufacturers grow have anything to do with this?

We certainly don't need to convince you of the importance of domestic manufacturing. But there are a few things you might consider as to why your company needs a strong, vibrant base of U.S. metalcasters, and why you should do what you can to protect these "assets." U.S. metalcasters have proven to be the most innovative. The most reliable. The most similar to your own views about environmental control and worker safety/health. The most accessible to new technology and the most knowledgeable of how to implement it. The most trusted with your own proprietary interests. Not to mention the fact that no one wants our military relying on developing nations for the production of critical defense components.

Forecasts (see p. 25) call for high demand for cast products over the next 10 years. If things go the way the experts think they could, you're going to need your casting suppliers - and healthy ones - to take you where you want to be. Respect your suppliers' need to make a buck, too, and you'll find them ready and willing to give you everything they're capable of.