EGELSTON TOWNSHIP – Last year was good for Eagle Alloy Inc., this year has been better and 2008 could be a record-setter. All of the company’s success is being accomplished without an overseas venture or an alliance with a single company in a low-cost country.
It is being done through a team effort by employees who believe in the mantra voiced by Eagle Alloy President Mark Fazakerly and Vice President John Workman - to be the "last foundry standing" on U.S. soil. And they are going to do that with no help from China.
Just say "No" to China
There was a time when the possibility of a Third World partnership for Eagle Alloy was explored. Workman and Fazakerly took a trip to China to find supplier-partners because of pressure from their customers. But they returned convinced that partnerships with Third World suppliers would only be bad for their customers and bad for Eagle Alloy.
"We discovered that the quality of suppliers there is not up to our standards," Workman told MiBiz.
Fazakerly said they were also bothered by the prospect of sharing technology and knowledge with the suppliers they encountered in China.
"We felt there was a fair amount of deceit. We felt they were constantly misrepresenting their capabilities," he said. "We don’t really know if it has helped or hurt us, and we don’t really care. This is just our philosophy."
Customers have been lost, but the Eagle Alloy team must feel a sense of vindication. Some customers who had been gone to competitors in low-cost countries have come back to Eagle Alloy, hat in one hand, inferior products in the other. "People are just getting tired of the 20-week lead time, inconsistent quality and communications issues," Fazakerly told MiBiz. "They have found that going to China was just not worth it. And costs are rising over there, so the price gap has narrowed by about 20 percent."
Know the difference between good and bad business
The Eagle Alloy team is constantly looking for new customers. The Egelston Township-based company’s client list changes year to year. However, Fazakerly and Workman don’t chase a money trail. They concentrate on picking the right customers.
"You have to know when to say ‘no,’" said Fazakerly. "We have chosen to grow at a measured pace, picking and choosing our jobs and our customers, rather than getting swept away by somebody throwing $5 or $10 million at us."
The pair is determined not to violate self-imposed constraints that include the belief that no industry should make up more than 30 percent of Eagle Alloy’s business and no customer should be responsible for more than 20 percent of revenue.
"We always want to keep our flexibility and our leverage," said Workman. "As a result, we can lose 40 percent of our business and still break even. That limits your growth at some point, but it also increases your survivability."
Any number of factors can swing new clients to the Eagle Alloy fold, but something as simple as availability can make all the difference in the world.
"Sometimes it’s not the question of a better price. It can be a question of more consistent delivery. That is so important because our customers don’t carry the inventory that they used to," said Fazakerly.
Pricing is almost a non-factor in Eagle Alloy’s business. Fazakerly said that boiling it down to a simple measure, price per pound, has not changed in the past quarter century.
That means quality, availability and delivery are the top issues on the customers’ minds.
"Today’s market for steel castings is behind the demand," said Workman. "So any steel foundry that can serve on a timely basis has a leg up on the others. And our lead times are the lowest in the industry."
The never ending quest to improve
"We have a continual continuous improvement program," said Workman. "Right now we are looking at expanding our in-house heat treating, automating core making - it goes on and on."
The team is constantly on the search for automation technology that can be used to improve operations. Eagle Alloy operates on a batch manufacturing system that doesn’t always lend itself to complex automation like robotics. However, it has mechanized several processes in an effort to take labor out of the equation, along with the Eagle Alloy engineering department’s efforts to remove labor from the process.
Lean manufacturing on the shop floor is only part of the Eagle Alloy method. The team also strives to be lean at all levels. That includes engineering, office and management.
"When you become lean, you can live through the down times. We can lose a significant portion of our business and still break even," said Workman.
Eagle Alloy has also realized some efficiencies by working in conjunction with the other business units; companies that are separate but under the Eagle Alloy mother ship - Eagle Precision Cast Parts Inc., Eagle CNC Technologies Inc. (which has merged with Westech Corp.) and Eagle Aluminum Cast Products Inc.
Although the stories of workers and management battling over efficiency and the very idea that labor should be taken out of the formula are legendary, that is not the case at Eagle Alloy. Workers have bought into the philosophy, if only because of the company’s profit sharing plan.
"It has been fairly lucrative for everybody," said Workman. "When we work hard and are successful at it, everyone benefits. We have a great team."
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This article appeared in the Monday, July 09, 2007 issue of MiBiz, read by upper management executives in West and Southwest Michigan. Print subscriptions are free to qualified individuals who are employed in West and Southwest Michigan. For further information about MiBiz, visit www.mibiz.com.
