Mitigating Risk in Manufacturing: Keys to maintaining a stable business state
In Dynacast’s over 80 years of die casting experience, we’ve developed more than cutting-edge manufacturing technology. We’ve also built a reputation for stability.
Through the years, Dynacast has mastered a few key methods of maintaining a stable state of business. We use these methods to help our customers to mitigate risk when it comes to their supply chain.
Join our panel of speakers for a roundtable discussion where we’ll cover topics ranging from:
· Talent attrition and development
· Keeping up with advancements in automation and manufacturing
· Supply chain stability
· Cyber vulnerability
During this webinar, you’ll hear from several members of our organization with experience in general plant management, operations, global sales, product management, customer service and supply chain management. There will also be a live Q&A at the conclusion of the webinar.
Fill out the form below to download the free webinar recording.
Transcript: Mitigating Risk in Manufacturing: Keys to maintaining a stable business state
Taylor Topper, Group Marketing Manager
Hello, everyone, and welcome to today’s Metal Solutions webinar presented by Form Technologies. Our topic today is Mitigating Risk in Manufacturing: Keys to Maintaining a Stable Business State. I’m Taylor Topper, Group Marketing Manager at Form Technologies and your hostess for today’s presentation. If you have joined one of our webinars in the past, you know that the vast amount of technical knowledge we can pack into an hour is usually a lot to take in, but today’s webinar is a little bit different.
While our engineering expertise is something we value highly, we take a lot of pride in our operational excellence and have years of experience helping our customers find their own business solutions. So we gladly take webinar topic recommendations either during webinars or after, and this just happens to be one of those. So thank you all for joining. Before we get started, I’d like to go over a few housekeeping items so that you can better participate in today’s event.
There is no dial-in for this webcast, so all of your audio should be coming through your computer speakers. All widgets are moveable and resizable, so feel free to Organise your console in a way that works for you, and also I hope that you utilize our resource widget to view additional resources and company brochures. Here you can get a free copy of our Bulletproof Supply white paper to gain insight on making better decisions to reduce risk and outsource manufacturing, and most importantly, you can submit questions via the Q&A widget. We’ll be hosting a live Q&A session at the end of the webinar, so I encourage you to submit your questions throughout today’s presentation.
We try to answer them in the order that they come in, so be sure to get those in early. If you have any technical issues, no sound or your slides aren’t advancing or if you have a webinar topic recommendation, you can submit a comment via the Q&A widget for those there, and as usual, the webcast is being recorded. So if you’d like to rewatch the presentation or if you missed anything, you can view the recording from the link you used to enter the webinar in just a few short hours.
So, with that, the webinar today is presented by Form Technologies, a global group of precision component manufactures, including three major brands, Dynacast for die casting, Signicast for investment casting, and Optimim for metal injection Moulding. With our world-class technology and processes, we can serve any industry at any level of ambition with superior precision components and outstanding part-to-part consistency.
Form Technologies works with over 2,200 customers globally from a variety of different industries, so no one customer makes up more than 5% of our total revenue. However, for many of our customers, we are the sole supplier for most of their products. Form Technologies works, like I said, with over 2,200 customers globally, and we think that there is no substitute for expertise in your industry to help you make manufacturing decisions that will give you a competitive advantage.
No matter what unique dynamics you face, we Organise our teams around their expertise in industries we serve. Form Technologies’ customers include companies from sectors such as automotive, consumer electronics, healthcare, medical, hardware, recreational vehicles, firearms, power and hand tools, mining and oil field, and Defence, operating 29 design and production facilities in 19 countries. Together, our entire business is focused on delivering highest levels of quality at scale.
On this map here, you’ll see all of Form Technologies’ locations, including those of Dynacast, which is our focus for today. So, with that, I’m going to introduce to you our presenters. So our presenters today not only have extensive industry experience, but each has served in various different roles, I think giving them all unique expertise when it comes to manufacturing and risk mitigation.
We have Matt Hanks. He is the general manager of our Dynacast Peterborough location. He’s been with Dynacast for about 12 years now, and prior to Dynacast, he worked in global operations at GE and United Technologies. Matt’s expertise is in global supply chain and program management.
We also have Hugh Smith. He has over 28 years in the die casting industry, and for the past six years, he’s been with us here at Dynacast as a business development manager. Prior to that, he worked as a quality engineer, a project engineer, and engineering manager, among other cross-functional positions.
We have Mike Procissi, as well. He brings over 20 years of manufacturing experience to his role as VP of North America sales for Dynacast. Throughout his career, he has served the automotive, medical, Defence, agricultural, and consumer electrics industries through engineering, program management, and business development, and last, but certainly not least, is my colleague from Form Technologies, our chief sales officer Tom Kerscher.
Tom provides globally focused, strategic oversight for all things sales and marketing, and he has been...for the last 23 years that he’s been with Dynacast, been heavily involved in key account management to a lot of our top global customers. He has worked with Dynacast and Signicast, and now, most recently, his position with Form Technologies. So thank you all so much for being with us today, and I’ll let you kick that off just to give us a little background on Dynacast.
Precision Die Casting with Dynacast
Hugh Smith:
Hi, everyone. Hugh Smith here. Thanks for joining today. We really appreciate it. Just a very high-level overview of who Dynacast is, what we do. We’re a global provider of highly engineered Aluminium, zinc, and magnesium die-castings. We have 21 facilities in 16 countries that allow us to offer a global reach with local support. Most of our facilities are IATF certified.
We launch thousands of programs a year to over 1,900 customers, which represent a very broad overview of manufacturing processes. From a die-casting standpoint, again, as I said, we’re die casting zinc, Aluminium, magnesium, using hot and cold chamber processes. We have 800 machines globally with 4 to 500-ton, both with conventional and multi-select technology. So that’s a broad overview of Dynacast, just to add some perspective.
Risk Mitigation Strategy
Mike Procissi, VP of North America Sales:
Thanks, Hugh. You have Mike Procissi here. Good afternoon, everyone, and thanks for taking some time out of your day to join us. As Taylor said, you know, we do several of these webinars throughout the year, and you know, we started talking a few months ago about doing one in the early summer / late spring. Obviously, the pandemic has turned a lot of industries upside down.
And while we typically like to engage with our customers on a technical level, you know, to provide some value-add, some engineering expertise, we felt that this topic was as appropriate as any to speak about today. So, as a global leader in die casting for many decades...we started in 1979 in Asia, so we’re no stranger to adversity in different regions as things have flared up across the globe over the last four decades.
You know, we’ve had to deal with it, put a business plan and a structure together, and help mitigate the risk. I think the key is you can’t eliminate risk. You have to be able to mitigate it. You have to have a system and a plan in place. It helps you in any time of need. So we’ll go through that in our presentation, but we really want to make this an informative and engaging process, and if there’s any questions that you guys have at the end, you know, we can cover, but outside of that, if you want, you can contact any of us, as well.
So the first topic that we’re going to talk about is succession planning. One of the biggest issues, not just in one of the industries. We obviously are in eight industries, automotive, medical, consumer electronics. Common throughout all of them is skilled trade. Lot of toolmakers, manufacturing. In the next 5 to 10 years, you know, a lot of companies are looking at about 50% retirement in those key areas. So how’s your company dealing with it? How are you focusing on it?
So Matt Hanks will take you though that, and then, next, we’ll talk about the pace of change. Industries change as economic conditions change. You know, how is your company putting in place systems and processes to deal with that? We’ll give you an example of some of the things we’ve done here in North America and around the world. The next one, cyber vulnerability, it’s one of those where you don’t really know it’s out there until it happens to you, and then it’s too late.
You know, it’s something that we’ve had on our radar for a couple years, and we’ve been working diligently to the day-to-day battle that that truly is. So we’ll speak briefly to examples of that and what we’re doing as a company to mitigate that risk, and then, finally, we’ll end with supplier stability, really speaking to what we do to ensure supply chain to our customers to make sure that there’s mitigated risk, that we have a plan B, that we’re never really disrupting the supply base.
And that really takes a business acumen and a methodical approach to it from cradle to grave, and then, finally, we’ll wrap up with a Q&A session, and don’t be afraid to ask any questions, and we’ll do our best to tackle them. So, with that, I will hand it over to Matt Hanks.
Minimizing Risk with Succession Planning and Talent Retention
Matt Hanks, General Manager of Dynacast Peterborough:
Thanks a lot, Mike. Hey, this is Matt Hanks. I’m in Peterborough, Ontario, Canada today, but I’m a member of the Dynacast and Form Technologies global team. We’re very happy to be speaking with you today and highlighting some of the things that we think are relevant for risk management, and the starting topic here is succession planning. So when we think of succession planning at Form Technologies and Dynacast globally, we really think in terms of two key elements.
First, our business is precision manufacturing in a number of technical customer verticals, and so the risks are often complex in nature, but conversely, we find that large global organizations that deal in highly engineered environments tend to silo personnel into functional disciplines to try to sort of spread the risk out, and this siloing can represent a risk in and of itself.
So what Form Technologies and Dynacast have done, and this has been really a multi-year effort over the years, is to use succession planning to, you know, positively impact risk. So we develop leaders and key staff who are able to look across the functional verticals of our enterprise and really act on risks which are complex in nature and may not be easily apparent to our teams in these functional siloes.
So this is really the principal objective of our succession planning model, and we’ve got a lot of years of experience in administering it. From a pipeline management standpoint, you know, we recruit our leaders and key technical staff from the world’s best universities. We also have an ongoing and active recruiting program for our technical talent in our tooling Centres which, believe it or not, we’ve even been successful at recruiting at the high school level.
So it’s really an all-hands approach to recruiting, and then, finally, at the Labour level, we really enculturate our people from the first day to be professional manufacturing associates, and so we think we’ve got a wing-to-wing approach on risk management when it comes to succession planning. The next topic that I think is relevant here as we talk about the people side of the business is our cross-functional training, okay, and this is really the core of how we mitigate risk through our organization.
We’re a modern, engineering-driven company, and we like to think of our cross-functional training as having the risk mitigating effect of expertise overlap. So we have an intensive degree of cross-functional requirements for our leaders and our key staff. Every one of our site leaders has led key functional disciplines within the business. I can think of examples where we have PhDs in operational roles and we have finance people in growth roles.
So you’ll see this as a common theme across the Form Technologies and Dynacast leadership. We found that the foundation of a strong organization and one that correctly appreciates and acts on risk is learning. Not just individual learning, but organizational learning. So we never stop doing it, and we never stop mandating it as the requirement for our developing talent. So cross training and the expertise overlap it creates is the one key way that we mitigate risk.
Taylor Topper:
Thanks, Matt. I think one thing that’s really important to mention is as we’re developing this new talent and seeing this younger generation dive into the manufacturing industry, we’re seeing faster innovations and more automation and also advancements in robotics, and all at a very rapid pace. So, at the same time, we’re seeing unforeseen disruptions that get thrown into the mix, like geopolitical events, free trade agreements, tariffs, natural disasters, and unfortunately, even more recently, COVID-19. So how do these disruptions impose risk to your business and the supply chain? Hugh, are you there? Can you hear us okay?
Minimizing Supply Chain Disruptions
Hugh Smith, Dynacast Business Development Manager:
I apologize. I had myself on mute. I apologize. Thanks, Taylor. The pace of change can change inherently as a dynamic thing. It’s not static. So the issues of today, like tariffs or USMCA, all those things will change over time, but issues you have today are not going to be issues that you’re dealing with tomorrow. COVID-19 obviously has been a huge disruption to global supply chains in 2020.
There has been some encouraging news relative to treatment protocols and vaccines, but for the foreseeable future, it looks like it’s going to be with us for the next year, 18 months, who knows? But some key things your supply base should have to help mitigate risk, and the pandemic is a great example, is a diverse customer base, really. I mean, if you have suppliers that are really concentrated in one market, that poses a lot of risk because as economic downturns occur, those markets will go offline.
Another thing is a global footprint. Dynacast, of course, has multiple factories in different regions. As hotspots arise with COVID-19, which will probably keep happening over the next year or so, it’s important to have the ability to transfer projects. So as one region shuts down, if you have the ability to transfer tools, projects, it mitigates risk. So, in addition to not only transferring the tools, it’s important to be able to transfer the knowledge base.
So instead of, you know, let’s say a die cast tool showing up on somebody’s dock, Asia to Europe, Europe to the States, instead of just the tool showing up, you have the tool and the knowledge, the process knowledge, that went behind that program getting it approved. So those are two important things relative to stability. Diverse customer base and a global footprint.
Reducing Lead Times to Mitigate Supply Chain Risk
Matt Hanks:
Hey, Hugh. Those are great points. I think I’d like to add some Colour below the localized supply chain. So, at Form Technologies, we’re really a great indicator of global enterprise because we cross-section so many market verticals and regions. From our view, the pressure for global industry to reduce lead-time has never been higher.
We see this from our customers every day across industries, whether it’s medical or consumer products or military or automotive, but our customers also tell us that cash flow expectations have never been higher. So that creates a risk. That creates a tangible supply chain risk that we’re in the business of mitigating. So how do we do that? Look, the fact is that we’ve maintained an investment in 21 manufacturing facilities strategically positioned across 16 countries so that we can be coupled not only with our customers but with our key regional suppliers.
The result for our business is shorter lead-times without cash tie-up and an enormous amount of agility so that our customers can capitalize on opportunities, and we think of that as mitigating upside risk, right? You can have the upside opportunity, but unless you can capitalize on it, it really is a business risk, and part of our business is helping our customers mitigate that.
Tom Kerscher, Chief Sales Officer:
Yeah, Matt, that’s a good point. This is Tom. Thanks for sharing that. This reminds me of an issue we had with our own supply chain about five years ago. So one of our largest customers makes a consumer product that gets bought and sold around the world, and they have a regionalization strategy. So, basically, we supply them in Europe for their European customers. We supply them in Mexico for their North American customers and in China for their Asian customers.
And about five years ago, one of our own suppliers in North America faced a bankruptcy. They happened to be a plater of ours, and we were sole sourced with them in North America, but because of our footprint and because of our redundant supply around the world, we were able to quickly cross-ship in to North America both from Europe and Asia to make sure that our customer had appropriate amount of supply.
So even in the worst of times, and we’ve felt this ourselves, we know what it feels like to have a supplier go out of business or cease production for any number of reasons. Having multiple plant locations and certainly, in this case, multiple regions helped us mitigate risk, and that’s a great example of everything that you and Hugh are talking about.
Taylor Topper:
Moving onto automation I think is another great topic for pace of change. We’ve seen so many advancements, you know, in the last couple of years. How does automation increase or even help mitigate risk?
How Does Automation Mitigate Risk?
Hugh Smith:
Matt, I believe you’re going to talk to the benefits of automation, but I want to briefly touch base on some of the pitfalls if the automation isn’t implemented properly. One of the things that you really need to commit to when employing automation is, from a financial standpoint, of course, we need to be able to purchase the equipment. That’s a given, but more importantly, you need to be able to have the resources to debug the controls, because if the automation wasn’t employed properly, you end up with a great deal of machine downtime and part-to-part variation, which can cause some downstream issues with the customer. Just wanted to get that out there, Matt, before you started talking about some of the benefits.
Matt Hanks:
Yeah, absolutely. Thanks, Hugh. So, look, automation is a topic that’s top of mind with our customers, and we thought we’d speak to it today, as it bears on risk. Look, I mean, the fact is the automation can be an upside and a downside risk. We like to think globally at Form Technologies that the way we do automation, not just automating a part extraction from our machines or the pick and place or the degating.
But actually automating and incorporating value-add downstream operations for our customers is a way that we help our customers mitigate risk, and specifically, when we automate at Form Technologies, it’s all about process capability, and we never automate a process without demonstrated process capability and an FMEA to go along with it.
I guess one thing I’d like to say about an example that I think is really indicative of how we approach automation and why it’s a risk mitigant for our business is a recent customer that came to us with what they thought was an appropriate approach to risk mitigation in the global market. They had multiple suppliers. They are a critical supplier of a public safety items globally. They’re actually the sole source for this to governments, military, local municipalities, and they have this complex, long, global supply chain that engaged multiple suppliers, and they came to us with the problem.
And what we were able to demonstrate to them was not only are we able to take downstream operations and incorporate them into an in-cycle automation approach, but our process capability was so high, that I’m pleased to say that their risk mitigation strategy now is sole sourcing with Dynacast. So this is really a differentiator in terms of how we approach automation. There’s a lot of ways to get it wrong. We just happen to have the experience to get it right.
Taylor Topper:
Thanks Matt, and I think that’s kind of a nice transition into our next topic. Because we have all of these innovations and advancements in automation, it kind of goes hand in hand with added risk when it comes to cyber security and IT infrastructure. So, you know, back to you, Matt, if you don’t mind. How do we manufacturers, you know, Form Technologies, or for everybody on the call, protect against cyber vulnerability, or what are some examples of how this impacts supply chain? You know, something so simple as just email being down, I don’t think we truly realize what can happen, or past email and IT, what else have you seen, and how can we protect ourselves against that?
Cyber Vulnerability and Risk Mitigation
Matt Hanks:
Yeah, I mean, I don’t think that we’ve ever lived in an era where cyber vulnerability is a more significant risk than it is today. I mean, we hear this across industries and from our customers all the time. In fact, you know, we’ve had our own experience with some difficulties in this area as a business, and it really opened our eyes. I think what we can say about cyber vulnerability is that when you do business with Form Technologies and Dynacast, you’re doing business with a company that has the global scale and reach and infrastructure to be able to mitigate risks in this area so you don’t have to.
We’ve never impacted a customer with a late shipment or dropped details as a result of anything that we’ve seen go on in our, you know, global IT environment. I think a key takeaway here in terms of our risk mitigation in cyber is that we do a full-on IT audit, down to every IT asset at every single site in the world, and we think that our customer security demands it.
Taylor Topper:
Thank you, Matt, very much. I know that those vulnerabilities we all face come at a risk and a cost, and I think an underlying theme we see here is that there is a lot of investment in risk mitigation that does come from the supplier standpoint, but what sort of costs are imposed onto the customer when suppliers aren’t able to implement risk mitigation strategies?
Cost and Benefit of Risk Mitigation Strategies
Hugh Smith:
Good question, Taylor. I’m going to talk about some de-risking activities, DFM, DSA, etc., but before I do that, relative to total cost, I want to talk about the failure of the supplier I had some firsthand knowledge of a couple years ago. I’ll keep it brief. Essentially, it was a supplier creating die-castings for the automotive industry. It had been troubled for a while. Ultimately, it gave their customers base a 30-day notice they were shutting their doors.
So, relative to total cost, their customers had to deploy multiple teams, essentially camp out at that manufacturer for a couple weeks to try to figure out a transition plan, and some of those customers, those automotive customers, had high-volume automotive single-source product at this manufacturer. So the possibility of lying down at the customer’s customer was very real.
So when it comes to total cost, it’s kind of an extreme example, but some of the things you can do with any supplier, any supplier you’re working with, to be active up front to the extent that you’re design responsible or even if you’re build to print. Early DfM work can really help to _____ 00:29:08 out any quality issues. _____ 00:29:09 part geometry, could extend tool life, proper substrate selection.
So those activities really help drive total cost because those activities result in high quality, better delivery time, which, of course, affects piece price. So those activities should be engaged with any supplier, and any supplier who is reluctant to participate in those activities, that should be a red flag. Matt, you want to talk about operational excellence?
Matt Hanks:
Yeah. Thanks, Hugh. Look, I think we’ve had a reputation in this area that I don’t think we need to drum unnecessarily on this call, but I’d just like to highlight four things that we do in operational excellence that we think bear directly on our ability to mitigate risk for our customers. We have an outstanding wing manufacturing program and expertise in every factory. That includes the form operating system, which is a global quality system that all of our plants comply with. We have best-in-industry process control. We have world-class information systems, and we have globally recognized quality systems. So we really marry up well to your risk scenario in your market vertical and add value. Mike?
Mike Procissi:
Awesome. Thanks, Matt, and finally, you know, just to finish up this slide, we really want to look at what is supplier stability? I think maybe, before I came to Form and Dynacast, I really looked at it with a very narrow vision. It was are they financially stable? Can they get me my parts? But kind of the DNA of Form and Dynacast is, you know, it’s more than that.
It’s a holistic approach to every aspect of our business, from the customer makeup that we have in the pie chart that Taylor explained. Being so diverse, a lot of that’s in North America specifically to be opened in all locations throughout the entire pandemic because of the nature of each of the customers at each of our locations. Italy was the same way, and we have that story around the globe. So, with that diverse customer base, we’re able to make it through good times and bad times because different industries ebb and flow.
Tom had a great example of, you know, I think in our supply chain, that because we are a true global supplier, we can mitigate that risk by going to a different region within Dynacast. I will say that Dynacast in one location is like Dynacast in another. You’re not missing a beat. They all have a Matt Hanks and a Hugh and a wonderful engineering team.
So, you know, it’s that approach where Matt talked about the succession planning to the different automation that we have in place. You really need to look at it from, you know, the entry of the material and to the end customer. How are we going to secure everything? So, with that, hopefully you found a lot of points in here that kind of got you thinking and the hamster wheels are moving and we can hand it over to Taylor in the Q&A.
Risk Mitigation Q&A
Taylor Topper:
Yeah, thanks, guys, and just to let everybody know, our Q&A session here at the end, we try to leave as much time as possible for your questions. So the webinar will go on as long as we still have questions coming in. We do have a few in the queue, but just to remind you that Q&A which you see on your screen, you can type your questions into there, and I’ll ask them to our presenters, and we’ll start with the first one, guys. What strategies do you have in place to maintain delivery of components more specifically around...this is around coronavirus. So is there anything specific that Dynacast did or any strategies so they we were able to keep up with on-time delivery during these unforeseen circumstances?
Tom Kerscher, Chief Sales Officer:
I can take that one, Taylor. This is Tom. Yeah, I mean, fortunately, I’d love to call this a brilliant strategy, but the fact is, early on in the crisis, we realized quickly that nearly every one of our factories was kept open because they were critical component suppliers to the med device industry. In many cases, we’re actually creating or producing parts for ventilators, which everybody knows was in high demand and really still are.
But what we started to realize very quickly was that a lot of the industries that we touch are also essential industries, and it was things that we hadn’t considered, to be honest with you. We started getting letters from our customers explaining why they are essential industries, and local governments around the world acknowledge that. In many of the countries that we operate in, including the US, metalworking, in and of itself, is deemed an essential business. So we really never had a supply gap.
We had instances of 1 or 2 plants being down for a week or two at a time, but generally, if those plants were closed, the nearby customers were also closed. So we have not had any supply issues at all during COVID, and as I look forward, I really don’t see that to be an issue long term, either, even if there is a dramatic snapback in the fall, as some people are predicting. Hopefully, that doesn't happen, touch wood, but we’ve been really almost unfazed in our ability to meet customer demand during COVID.
Taylor Topper:
Thanks, Tom. Moving right onto the next question. This person was on our website, and they said that the plant closest to them does not have multi-slide zinc, which is what they were hoping for. Could we transfer the machine to the plant, or how can we minimize delivery costs, or do we have a similar situation like that or a story maybe we could...an example would be great, but what do we do in that instance?
Tom Kerscher:
Yeah, fortunately, just about every one of our plants in the Dynacast world has multi-slide technology embedded in it. A few do not. Malaysia is one. Peterborough is another, but Peterborough has its own version of miniature high precision zinc die-casting, but generally speaking, for every technology that we have, we offer it at each region. We don’t always offer it in each plant, but it’s kind of important to understand that every Dynacast unit or every Dynacast plant over the years kind of develops capabilities that are very, very appropriate for their local markets.
For example, even in China, if you look at Suzhou, our plant in Suzhou, most of its capabilities are really Centreed around the automotive industry, which is heavy in that part of the country. If you go down south to our Dongguan facility, they have capabilities and plants in place that are very, very appropriate for the consumer electronics markets that they serve, and that happens in every one of our factories around the world.
So, over time, each plant kind of develops some of its unique capabilities, but if I looked at our business on a region-by-region basis, everything that we offer in Asia, for example, is available in North America, and that’s also available in Europe. So while we might not have the technology in the plant that’s right next door to you, minimally, we have it in the region, and generally, we have it within a 500- to 1,000-mile radius of wherever you’re manufacturing.
Taylor Topper:
Awesome, Tom. Thanks. Next question is a good one. How do you see additive manufacturing technology being utilized in manufacturing of dies and parts and operations in the next 10 years? Would you outsource them, or is that something you would bring in house?
Tom Kerscher:
Yeah, I’ll grab that one, again, and Matt, you might have some Colour commentary on this, but it’s hard to be in a metalworking industry without thinking about the impact of additive manufacturing. So we’ve got a lot of people in every one of our divisions, not just Dynacast, but Signicast and Optimim, as well, constantly looking at that technology. My personal view on it, and I think the view of Form Technologies, is that technology is shifting so fast, that if you invest in a particular version of that technology today, it’s likely going to be obsolete 18 months later.
So we’re very, very in tune with it. We’ve got suppliers in each region who supply us with it. Our Signicast division, for example, does a lot of additive manufacturing with their wax systems for investment casting, and now they’re looking at additive ceramic for their investment casting, as well, so a shell system. On the Dynacast side of the business, we’ve looked many, many, many times at using the technology to build die blocks. You can do some very, very clever things with cooling lines that you can’t do if you don’t use additive manufacturing.
But we’re using it today on a very, very limited basis, but I see additive manufacturing as it relates to Dynacast as almost like a prototype or a pre-production volume. Keep in mind that, you know, lots of the projects that we get involved in are tens of thousands or hundreds of thousands or even millions of parts per year, and you just can’t get that kind of scale today out of additive manufacturing, but it is something that we’ve got a very keen eye on, and we’re always evaluating.
Taylor Topper:
Thanks. Next question. How does value engineering de-risk my component or project?
Tom Kerscher:
Well, I’ll grab that one again, and everybody else, fell free to jump in as needed. It’s kind of interesting. You know, when we look at value engineering or when our customers do it, the term value generally equates into price reduction. So a customer is always looking at value engineering as a way to make a better part for less money, right, and then we pass that cost savings onto our customers. The Dynacast approach is a little bit different than that.
So when we’re looking at...or I guess using Hugh’s example earlier, where we’re really doing something more than just value engineering, we’re looking at kind of de-risking the entire project through the life of the program. So we’ll look at things that don’t just cut the cost of the component, but we want things that extend the die life, and if we extend die life, then we don’t have as much generally dimensional shift on a particular part as you would if you had built a die in a less complex or easier way.
Kind of a good example of that is some features on a part, you can make by cutting that feature solid in a tool, which makes the tool price or the die price cheaper, but in the long run, that means more maintenance on the die. So what we’ll elect to do, more often than not, is put an insert in that die. It might be a high-wear feature in the die to create a delicate feature in the part. We would insert that in the tool. That becomes more expensive, but it makes our die maintenance much faster and easier to do a die change over and get the tool back in production.
So we look at things like die life. We look at things like what can we do to minimize secondary operations. A lot of people in the die casting industry are really machining sources that have die-casting equipment. So they know they’re going to be doing a lot of machining anyway. So what they’ll do is they’ll treat the die casting almost as a blank for machining. We approach everything just the opposite.
We try to put as much geometry in the die and rely on fewer secondary operations whenever possible. Every time you add a step to your process, you’re introducing risk. So we try to really work with our customers to get as much geometry in the tool as possible. Sometimes that means the tool costs more or the die costs more, but at the end of the day, you get a much more robust, and therefore, less risky process in manufacturing.
So that’s just part of the DNA. We’ve always been like that, and part of the reason I think we’ve always been way is we really cut our teeth on multi-slide die casting where, because of the nature of the tooling, you can naturally produce very, very complex parts. So, in the 1980s, as we morphed from the zinc die-caster to an Aluminium and magnesium die-caster, we kind of carried those same principles with us, and we’ve been doing it ever since.
Taylor Topper:
Next question. Are there any alloys that are inherently lower risk than others? Assuming if they’re starting a new project, you know, is there anything that they can consider a design aspect? Are there any alloys that would be better suited?
Tom Kerscher:
Yeah, when you think of the three alloys that we cast, zinc, Aluminium, and magnesium...and those are the three castable alloys for die-casting. Zinc, we think of it as the lowest risk and for a couple of reasons. Number one, when it’s in its molten state, it’s very, very fluid, so you can cast very, very thick-walled geometry. You can get a lot of intricacy in the die without a lot of die wear.
So zinc is a low-temperature alloy that does not stress tooling, and so you might get, typically, 500 thousand, a million, a million plus shots out of a zinc die, whereas the same geometry in Aluminium, it’s not uncommon to get between 50 thousand and 100 thousand shots before the die wears out, and what’s happening with Aluminium, Aluminium has a natural affinity towards steal when Aluminium is in its molten state. So with every shock that we’re injecting into the steel tool, it’s literally trying to subtract steel from that die.
So that puts a tremendous amount of stress and wear on the tool in a very short period of time. Additionally, to cool a part in Aluminium, once we’ve injected it, you have to take about 500 degrees Fahrenheit out of that tool steel every 20 to 30 seconds to get the part cool enough to eject or push out of the die using ejector pins. So there’s a lot of wear and tear on a tool that’s casting Aluminium because of the thermal shock of the cooling cycle and the nature of the molten material itself.
So, whenever possible, all things being equal...and again, keep in mind that Dynacast is typically casting parts that fit in the palm of your hand. So what I’m about to say has a different economic value as part geometry goes, but in general, for a small part, like the parts that we cast, zinc will be the most economical approach every time, hands down. As your part geometry grows and zinc starts turning into pounds, then the natural weight advantage of Aluminium becomes more important.
So, you know, if you compare a Dynacast part, which generally fits in the palm of your hand, and you try to apply that same economics to, say, a transmission housing on a vehicle, you would never do that in zinc because zinc weights two and a half times more, and Aluminium has better physical properties for that type of application. So it really comes down to the properties that you need, but the general statement is if it just has to be metal, do it in zinc. Does that help?
Taylor Topper:
I hope it does, and if it doesn't, this person could follow up with more questions or we can also answer more questions offline. It’s always an option, but moving onto the next question here, what advice would you give a manufacture that’s looking to re-shore their project?
Tom Kerscher:
Well, I mean, that gets a little bit tricky. I think the thing that I would look for if I were in a manufacturer’s shoes is what experience the supplier has in both continents, not just the continent that they’re re-shoring to, but the continent that they’re re-shoring from. So, hypothetically, in Dynacast, when we have...you know, some of our customers, for example, over the years, the many years that I’ve been with the company, have migrated from manufacturing in, let’s call it, New England to the southern part of the US and then ultimately to Mexico and in some cases, to China.
You want to be working with a supplier as you’re moving around the world or around a region that has experience in those regions. So when you’re looking to on-shore, for example, let’s use the case of somebody who’s moving production from Asia to North America, you want a company that really understands not just how we would build a die or how we would process a part in Asia, but how our competition would do that.
So, you know, ideally, if you're thinking about transferring a tool from a competitor to a North American die caster, we would have some kind of intellectual understanding of what that tool likely looks like and how we would try to apply that to our process. So I think if you’re going to move from one region to another, you would likely want to have a supplier who understands those regional differences itself, and there’s a lot that goes along with that.
Taylor Topper:
Thanks, Tom. Does Dynacast do secondary operations in house to streamline supply chains?
Tom Kerscher:
Yeah, I mean, without fail, every one of our plants is designed to be as vertically integrated as possible. So, you know, almost anything that could be done to a metal component could be done in our factories. The only exception to that, and we do this very intentionally, is we don’t typically do coatings in house. So when you think of painting, plating, chromates, chem film, anodizing, we generally have a complement of local supplies near each location who do that for us. The reason is, very simply, there are so many variations of that, it’s almost impractical to bring those processes in house.
Some of our factories around the world do have in-house paint lines, and they’ll have in-house plating, but we’re generally doing it specifically for a customer or customers whose volume dictates that we do it inside or allows us to do it inside, but you know, if you think of the fact that we’ve got 2,200 customers worldwide and tens of thousands of active part numbers, it’s not practical for us to replicate coating sources all around the world. So that’s the one thing we outsource, but just about everything else can be done inside.
Taylor Topper:
Thanks, Tom. Next question is how would the footprint respond to changes in cost, prices, and demand? I’m assuming...
Tom Kerscher:
Can you say that one again, Taylor? Say that one more time.
Taylor Topper:
So, based on our global footprint...I think it’s what this is referring to, but how would that footprint respond to changes in cost?
Tom Kerscher:
I think what you might be asking is are there cost differences from region to region in our manufacturing? And if I have that right, I’ll answer that question. So, when I think about...it’s very dependent on part geometry and kind of the requirements of the part, and it doesn't have as much to do with regionalization as an advantage that one of our particular plants has in a very specific capability.
So, by and large, if you look at the Dynacast factories, it doesn't matter if we’re talking about, you know, the US or Europe or many of the low-cast countries that we operate in. We’re as automated as we need to be. So, generally, the cost of casting a part, there’s very, very little difference between us casting it in Peterborough, Ontario, or Lake Forest, California, or Austria, or Germany, or China. The casting cost is about the same.
So you’re basically buying a raw material. We buy the raw material in _____ 00:51:00 form. We melt it. We inject it, and then what happens after that is generally what determines where the best cost source is. We have low-cost country plants in every one of our regions that we compete in, but we can often be just as successful in a plant like Austria as we can in Dongguan, for example.
So it’s very, very part specific, and there aren’t a lot of parts that have for us...a lot of it has to do with the size of the parts that we produce, but for us, where China, for example, would have a huge competitive advantage. Where, generally, we’ve got the footprint that we have because we believe that we want to support customers locally with a tight supply chain. So very infrequently are we shipping parts, you know, across oceans or even across country borders. We’re generally trying to manufacture where our customers do.
Taylor Topper:
Next question here is I have experience with DSM, but I’ve thought about asking help with de-risking my supply chain. Is that a service that you offer?
Male Speaker:
Yeah, I mean, we’d be happy to. I mean, you know, I’d love to say that Dynacast and Form Technologies is genius at all of this because we’re super smart, but the fact is, over the last 80 years, we probably have made just about every mistake in the book. We happen to have made them 20 years ago. You know, if I think of companies that are moving to Asia, for example, now, we had our first plant in Asia in 1979. We had our first plant in India and Mexico in the 1980s.
So I think we have a little bit different view of the world. So when our customers asked us to put this presentation together, I think we were uniquely qualified, you know, to shed some light on how we view risk, but yeah, anything we can do to help, we’d be happy to. What I would do is whoever the customer is asking that question, I would, you know, match them up with the appropriate business development manager, and then we can bring the right resources in to answer your questions or help solve whatever problems you have.
Taylor Topper:
Next question as it relates to coronavirus and disruptions in supply chain there, but as it relates to die-casting, ramping up and ramping down in response to demand, that’s a great question I think. You know, from the marketing side of things, I work with all of our brands. Signicast and Investment Casting inherently being really great at ramping up and ramping down, but could somebody comment on the die-casting side of that being able to ramp up or down, unfortunately, in response to coronavirus?
Matt Hanks:
Yeah, I mean, I think that we can say that our lead times are generally quite short. Our supply chains are short on the input side, and oftentimes, because, you know, we have good geographic presence where our customers need us to be, the outbound supply chain is typically quite short.
So, look, there’s no hiding the fact that we’ve all been impacted by the COVID operating environment. We’re no different. We’ve seen, you know, pretty sizeable impacts across the board in the last few months. Things do seem to be getting better, but you know, I would say that really what this plays to is just our agility, and you know, we don’t sit on information.
We try to get...if customers have changes in demand schedules, we’ve been really accommodating about that during this COVID environment, and the important philosophy of our operation here is just to get agile about the change and get them implemented and get them confirmed back to the customer. So I think we’ve certainly seen the impact as an enterprise, but it hasn’t held us back from supporting our customers.
Taylor Topper:
Great. Thanks so much, Matt. You know, in the essence of time, I’m going to finish up here, but thank you guys so much for this presentation. This is a little bit different than what we’re typically presenting on. Most of our webinars are rather technical as it relates, you know, to design and metallurgy. So if you have not been on our webinar before or joined us, we do host one once a month.
It is hosted by Form Technologies, and we’re highlighting technical expertise and design from Dynacast, Signicast, and Optimim, and past webinars can actually be downloaded on any of our websites, so Dynacast.com, Signicast.com, and Optimim. You can find our webinars there, from a basic 101 introduction to, you know, designing in zinc. We recently did one for Dynacast, as well, removing cost in the design stage.
So, as I said in the beginning, I really would love if more people wanted to recommend topics. We do this to help customers be able to not only understand our brands a little bit better, but also provide that thought leadership and knowledge that we’ve gained over the years. So if you have a specific question or a topic that you’d like to recommend for a webinar, you can either enter it into the Q&A widget that you see or simply reply to any of your reminder emails that you got for this webinar.
You know, those’ll go to me, and I’ll make sure that they get answered correctly or reach back out of it’s a topic recommendation. This one, you know, Mitigating Risk, was a recommendation we had previously. So I really appreciate everyone’s time today, our presenters and all of our attendees. Thanks so much, and everyone, I hope you have a great afternoon.
Male Speaker:
Thank you, Taylor. Thanks, everyone.
Male Speaker:
Thanks, everyone.
Male Speaker:
Take care. See you next time.
