The major wheel end component manufacturer saw value in investing in its casting supply businesses to support the corporation’s goal to grow globally.

Shannon Wetzel, Senior Editor

(Click here to see the story as it appears in the March/April issue of Metal Casting Design & Purchasing.)

When Accuride Corp.’s board of directors brought in Rick Dauch to lead the wheel end component manufacturer as its new president and CEO in 2011, the objective was to turn the business, which had recently gone through bankruptcy, into an international company. Six months later, after touring the various machining, assembly and metalcasting plants, Dauch approached the board with a hard truth: The company was not in shape to go global.

“I said, let’s put that talk on hold, because our current operations were substandard, especially at Brillion Iron Works and Gunite,” he said. “The board’s reaction was silence. Some of the members at the time were creditors from the bankruptcy and had not done a deep dive into the organization or operations.”
Dauch, who came to Accuride with 16 years’ experience in automotive supplier companies, had taken the closer look, and he was dismayed with the shape of the company, particularly the plants in Brillion, Wis. (Brillion Iron Works), and Rockford, Ill. (Gunite), that supplied iron components for the wheel end business, as well as for outside customers.

“Brillion had tired equipment, an ineffective layout and a challenged operation,” Dauch said. “Both Brillion and Gunite were losing money.”

Headquartered in Evansville, Ind., Accuride Corp. was formed in 1986 as a primarily steel wheel business. In 2005, it acquired Transportation Technologies Industries, which added several business units, including Bostrom Seating, Brillion Iron Works, Fabco Automotive Corp., Gunite Corp. and Imperial Group. In 2009, it entered into Chapter 11 bankruptcy and emerged in 2010 with a new capital structure and new initiative to recover from the recession. It was shortly after this new structure that Dauch was brought on board to grow the company.

Before the company went global, however, Dauch and Accuride launched a “Fix & Grow” strategy to make the corporation profitable and competitive in the marketplace.

Part of this new strategy has been to sell off its noncore assets. Accuride had sold Bostrom (a truck seating manufacturer) the day before Dauch arrived. Within 18 months, Imperial (a stamping business) and Fabco (axle manufacturing) also were sold so Accuride could reinvest the proceeds in fixing its core business. This left Accuride Wheels, which consists of several plants and locations, Brillion Iron Works and Gunite.

Accuride Wheels, which manufactures steel and aluminum wheels, was the backbone of the organization with more than half of its total revenues. Were the metalcasting facilities also core to Accuride?

Staying Vertical

Dauch’s first visit to the Gunite facility, which included iron casting, machining and assembly operations that produce finished components such as drums, hubs, rotors and slack adjusters, occurred before he took the job, and it was an eye-opener. The roof needed major repair. Production layout was disorganized. Machinery was old and inefficient.

“It was the single worst factory I had visited in the world,” Dauch said. “The workforce was depressed.”

It would need considerable investment to turn it into the quality manufacturing facility necessary to help Accuride grow into a global company. But Dauch and the board of directors determined it was necessary to have an in-house casting and machining facility because these were core components of the company’s wheel end system strategy. Gunite was an established name in the wheel end market with a reputation for quality parts, despite the run-down facilities in Rockford.

In the wheel and brake drum business, quality and weight savings are key factors in being competitive. The casting process, casting design and machining setup are integral to achieving both factors. Accuride saw value in having casting, machining and assembly all at one site in Rockford to facilitate collaboration. Significant testing, research and development goes into improving products, and it was an advantage in the market to have all operations in one place to streamline the process.

“Keeping the foundries and machining is meaningful and a value to our customers because we are vertically integrated,” said Scott Hazlet, senior vice president, operations. “We believe it is core to Accuride, and if we do it, we need to do it world-class.”

Dauch remembers standing on the roof of Gunite, contemplating if it was right to invest $61 million into that facility. “We had to choose to sell, close, fix and grow the current Gunite operations or fix and grow the Gunite business at a different location,” he said.  

Accuride wanted to stay vertically integrated, so the board ultimately approved the major investments in both Gunite (producing 100% Accuride product) and Brillion Iron Works (producing parts both for Accuride and non-Accuride customers).

Part of the new strategy was to consolidate machining operations. Machining operations from Elkhart, Ind., and Brillion were relocated in 2012 to Rockford, where Accuride initiated a more than $35 million investment program to install modern, competitive machining lines.

In just a year, the Accuride plant in Rockford had fresh coats of paint, a new roof, modern drum and hub machining centers, a brand-new assembly cell to make automatic slack adjustors, a bright and clean product display and testing area, and a lean casting finishing operation. The business currently makes up 24% of Accuride’s revenue. Perhaps most importantly, its process is stabilized and developing world-class levels of operating performance. The operation implemented also lean manufacturing principles to make itself more efficient and drive down internal costs. To support product development, product engineering began collecting component performance data internally and in the field.  

“We take the data from the vehicle in the field and translate it into data we can simulate in the lab,” said Marcello Tedesco, engineering director, Wheel End Solutions. “That allows us to accelerate the whole development process of not only enhancing existing products but also identifying and developing new products the market needs.”

For new projects, a fact-based business case must be made before they are started. Once approved, a project team including machining, casting, quality, and product engineering personnel is selected to work together throughout the development process.

“Our ability to make rapid adjustments is second to none,” said Bill Nestel, Gunite foundry manager. “If we want to make a change or adjustment to the design, within six hours we can cast it, machine it and know the impact of the adjustments we made.”

Today, lead time for drums at Gunite is less than 12 days, compared to six to seven weeks in 2012. This rapid response came into play with Gunite’s Silver 4000 brake drum.

“We heard from our customers that several fleets wanted a lightweight brake drum but didn’t want to pay premium for the existing lightweight drums on the market,” said Jeff Clark, director of product management, Gunite Wheel End Components. “That led us to develop the Gunite Silver lightweight brake drum, the 4000x, which we released in 2013—it’s an in-between weight savings and in-between price point.”

The Silver lightweight full cast brake drum weighs just 99.5 lbs. Gunite was able to achieve the weight savings through engineered design enhancements and advanced metallurgy. It is the lightest standard full-cast drum in the market and is interchangeable with competing standard full-cast drums. The lightweight drum saves 12.5 lbs. per wheel end, 25 lbs. per axle and 100 lbs. per truck/trailer combination. Gunite would be hard pressed to make the same engineered advancements without the in-house casting facility and expertise.

“When we started doing our iterations of the drum, we had product engineering, foundry and tooling, metallurgy, and machining personnel pulled together on the team,” said Ed Bledsoe II, director of operations, Rockford Operations. “We would run one set of samples, do all the testing all the way through, and quickly react to achieve the optimal weight and properties that the customer was looking for.”

Time to Grow

After once again seeing profits at the end of 2013 and a healthy, incremental increase in sales through the first quarter of 2015, Accuride has transitioned into the grow phase of its “Fix & Grow” strategy.

“All the work we have done across Accuride in the last three years has put us in position to be competitive in safety, quality, delivery, lead time and cost,” Dauch said. “We are ready for organic growth, to profitably win market share against our competitors, and our world-class operating performance is already enabling us to achieve that.”

Fourth quarter 2014 net sales from Accuride’s three business units were $178.8 million, compared with $144.7 million in the same period in 2013. It achieved an operating income of $3.7 million for the quarter, compared to an operating loss of $1.7 million in the fourth quarter of 2013. For the full year 2014, net sales were $705.2 million, up 9.7% year-over-year. The company generated positive free cash flow for the first time since 2007.

“We are pleased with the strong fourth-quarter and full-year results Accuride delivered in 2014, and expect 2015 to be an even better year for us,” Dauch said.
Although Gunite’s net sales were down 2.7% in the fourth quarter of 2014 compared to 2013, the adjusted EBIDTA improved to $3.5 million, from $2.7 million. For 2014, Gunite’s adjusted EBIDTA as a percentage of net sales was 12.6%, reaching its highest level since 2006 and exceeding Accuride’s previous expectations. Brillion Iron Works’ fourtadjusted EBITDA was $2.3 million, an increase of $2.8 million from the fourth quarter of 2013. Accuride expects Brillion to achieve 5 to 10% growth in 2015.

Moving forward, Accuride has committed to making continued investments in Brillion and Gunite to grow as a globally competitive wheel end business.  Additional investments are being planned for research and development in wheel end products.

“The management team brought process discipline and standardization of processes across our plants,” said Timothy Weir, Accuride director of public affairs, communications and marketing. “This stems directly from the human beings who drive it and those who support that vision. They are technically strong people, and what they’ve accomplished has been transformational.”

For Clark, who has worked for Gunite for 35 years, the differences the new executive team and investment have made to the business are palpable. “From our CEO Rick Dauch’s level to our team members on the plant floor, I see a real acceptance and pride in producing the product,” he said. “Everyone is taking ownership of everything—no finger pointing. If you are outsourcing castings, you might blame your supplier. But at Gunite, everyone is working together to optimize the product.”