Do our Foundries work like Hairdressers?

Hairdressers wait for their customers to walk in the door and tell them how they want their hair cut, just like foundries wait for their customers to tell them where to invest and where to develop. That is the brilliant comparison Staffan did in the last Goldcasting Podcast.

And I think hairdressers are way better prepared. They already have their scissors ready. Most foundries wouldn’t even buy them before the customer confirms that they want to have the haircut. If a customer wants something beyond just a haircut, like adding colour or extensions, the hairdressers are prepared to do that. However, our foundries then start to contact the suppliers of these products to show them how to do it.

Linear Growth instead of Disruptive Jumps

When we talk about our processes and machines, a foundry has a lot of them, and keeping them running is the priority. And foundry operators are amazing in squeezing out seconds on the cycle time and constantly reducing the scrap rate. These are all the needed steps to reach operational improvement. Spending money on better equipment that leads to a higher output is easily digestible in an Excel table. Invest an amount X and have a benefit after Y months. Controllers love this stuff. But with that mindset, we never get out of the devil’s spiral that the industry is currently in.

The automotive industry is struggling with the transition from ICE cars towards EVs. The EVs are too expensive and don’t sell well. And the cars with petrol engines that trigger emotions during the drive, which would sell well, are being phased out by emission regulations. We in the foundry industry cannot change that. No casting in the world has an impact on that dilemma.

Where is the Business Development?

As a foundry, you need non-automotive business! And as a shock to many, these castings are not on the OEM and Tier 1 portals. You have to find and develop them yourself!

In my opinion, hairdressers know that they are in a commodity business; they know that they have to be visible to attract customers and talent. That is why no hair salon doesn’t have social media campaigns. When we look again at our industry, the digital space is dark. No visibility, no outreach, no business development. How should anybody outside the foundry bubble know about what casting can do? That is the only way to get new applications on our machines.

On the Goldcasting podcast, we just had episodes with Spartan and Handtmann that outline how business development with unique R&D efforts within the industry leads to new applications and business for them.

But putting resources into developing new ideas and industries will never make financial sense in that Excel sheet, as both companies confirm. They put the money in long before there is a calculation because it is their mission and culture. Your controller cannot define the outcome value on that investment, as you don’t know where it leads. The same is true for any digital marketing activity; no way of knowing what the impact is. Is that the reason why it is not done?

I want to know Your Opinion!

So, the conclusion is that the overall foundry industry has similarities with the hair salon’s business model, except that they require the customer to tell them which scissors to use.

So, how will the foundry industry get out of the current crisis? And there is a heavy storm coming, more about that in the next Gold Nugget. What is the plan of the industry? Complaining to politicians and begging for subsidies or cheap power does not solve the problem. I talk to many foundries, and I don’t see a bright future for many of them when they continue on their path. It feels like the decision makers in our industry are trying to keep the ship afloat until their retirement starts. But then it is too late to save something.

This is quite a dark view on our beloved industry. What is your opinion on the current situation? Where is the flaw in my observations? Let’s start the discussion!