S cunningham A market perspective on the foundry industry

Insights from Connecting Foundries to Markets and Buyers

Dr. Shawn Cunningham

Technology and Practice for Increased Competitiveness,

www.mesopartner.com 2

The context of my work

Contracted to the NFTN to work on market development, strategic support and process facilitation– In particular working with customer like the Valve

Manufacturers, Automotive Manufacturers and other industrial customers to develop foundry supply chains

Contracted by the Vaal University of Technology to support regional innovation in Vaal region, includes establishing the Vaal Foundry Initiative and the Vaal Metals Cluster

Post Doctoral Fellowship with Vaal University of Technology on the technological upgrading of industries

Contracted by AFSA to assist with a diagnosis of the automotive foundries in South Africa


Shifting focus, from foundries to clusters and key markets Increasingly, NFTN is developing partnerships with buyers of

castings to develop the resilience and competitiveness of their foundry supply chains

Thus we combine a supply push (upgrading the foundry) with a demand pull (leveraging the unique requirements of customers) to upgrade the foundry value chain

Now working with: – the Valve and Actuator Manufactures Cluster of South Africa

(VAMCOSA) and ESKOM– A yellow goods manufacturer– Transnet (Rail) and Knorr Bremse (Train brake systems)– Automotive foundries and selected customers– Some industrial equipment buyers


Our approach

Working with demanding or sophisticated customers that know what they want is key to upgrading competitiveness of our industry


Some insights from our customer visits

The general perception of buyers towards domestic foundries is not very positive, but there are exceptions

Some buyers are buying from the “wrong” foundries, and do not know where to find specialist foundries with specific competencies

Several manufacturers that want to localize do not know who to form developmental relations with

Foundries are not very good with communication to customers, and do not keep customers informed of production updates– When asked how often he speaks to his customers, a foundry

man replied “I melt metals, I don’t speak to people” Very few foundries have the engineering capacity to assist

customers to improve their products and design for manufacturability

Many patterns are old and castings are heavy


What customers say they want

When buyers are asked to pick two from: – price, – quality and – reliable delivery,

they tend to prioritize quality and price, commenting that late deliveries nullifies good price and quality

Yet, when they choose suppliers, they look for:

1. Foundries that reach out

2. Foundries that stand out

3. Foundries that are good and getting better


1. Customers want: Foundries that reach out

Many manufacturers comment that they have not recently been approached by foundries promoting their capacity or competence (again, there are exceptions)

Many customers that want to shift their orders back from abroad are searching for foundries that can do-develop products with them.

They need advice ranging from: – improving patterns, – best metal types – design improvements and – design for manufacturability


2. Customers want: Foundries that stand out

Many manufacturers can choose casting suppliers from a range of sources and competencies globally that harness regional comparative advantages

For domestic foundries to win orders, they must have the basics in place:– ISO and other industry requirements– Production management and internal controls– Quality control not only at the end of the process, but

throughout (front to end) Many manufacturers are increasingly asking about:

– Front end engineering capacity, design advice, manufacturing process advice, material selection

– Supply chain integration, IT platforms and global partners


3. Customers want: Foundries that are good and getting better

Want foundries that have good internal measurement and control

Expect company wide continuous improvement Require ongoing investment in the foundry Many foundries can compete with European foundries on price

and complexity, but cannot compete with Asian foundries on price and delivery speeds

Manufacturers increasingly realize that they cannot be competitive if their supply chain does not give them an advantage. Thus they want flexibility and responsiveness, yet good prices so that they can enter new markets

It cannot be denied, price matters, especially to enter new markets or retake lost markets


The valve cluster in South Africa

BLUE: FoundryRED: Valve Manufacturer (VAMCOSA)YELLOW: Valve Importer


Where to start?

• Improve information and knowledge flows between foundries and the rest of the value chain

• Identify foundries with unique skills and competitive advantages and link them with customers

• Improve patterns and casting processes• Strengthen casting supply chain resilience• Improve product design for manufacturability• Manufacturers, like foundries, also have to work on their

internal controls, production management and continuous improvement


Going forward

We are looking for foundries that are keen to expand their markets, invest in their processes and that are willing work with customers

We see huge opportunity for manufacturers and foundries to work together on developing new products, new processes, better systems and new markets

We are prioritizing buyers of castings that have an interest to develop unique local competencies that gives our industry an unique competitive advantage


Thank you

Dr. Shawn Cunningham

[email protected]

+27 82 902 4200

mailto:[email protected]

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S cunningham A market perspective on the foundry industry