In one of my earlier columns, I described many of the cost drivers that are under the control of the OEM. When it comes to reviewing the cost of a casting and understanding the elements that play into that effort, it’s vital that the casting buyer understands and can identify the cost factors owned by the foundry. 

To avoid any confusion, let’s take a look at the major cost drivers that are under the foundry’s control. 

Foundry efficiency. The level of production efficiency in a foundry is most often typified by the type of molding process the foundry uses to produce your castings. What type of molding equipment do they use, and is it in line with the sizes and annual volumes of the castings they produce? 

Generally, you can assume that the more automated the molding process is, the better the efficiency, as more manual equipment is generally slower to run. However, if a foundry is producing short run types of castings, or if the size, weight, or complexity is significant, then the use of more manual processes may be completely acceptable for efficiency.

Productivity. Closely associated with efficiency, productivity in the foundry industry is often measured in man hours per ton of castings produced. The man hours per ton measurement varies widely based on the metals poured, the average size of castings produced, and the process flow. 

Back in my early foundry days working in a foundry producing small malleable iron castings with an average casting weight of around 2 lbs., 40 man hours per ton tended to be an acceptable number. However, the foundry also operated a high volume gray iron facility with automated DISA molding lines, and the man hours per ton usually ran less than 1. 

Rigging and mold yield. The gating system, comprised of risers, runner bars, and down sprues are generalized as rigging. The amount of rigging a casting requires can be a cost driver that is often shared between the foundry and the OEM. 

Mold yield is the weight of good, cleaned castings divided by the total metal weight poured into the mold. The resulting percentage is the yield. On the foundry side, the casting engineering team will work on optimizing the sizes of all the rigging components so the best yield number can be achieved while still producing a conforming casting. 

Yield numbers vary greatly based on casting design and type of metal cast. For instance, steel castings will have a much lower yield than gray iron castings because of the metallurgical characteristics of steel.

Materials. This is a large group of items and is comprised of all the materials consumed by the foundry, such as sand, scrap, alloys, riser sleeves, filters, and electrodes. Over the course of my career, I’ve encountered casting soundness problems that were caused by merely changing the scrap metal source. Foundries tend to develop close relationships with their local scrap yards in an effort to keep their scrap costs low and ensure a consistent supply of metal. 

Energy costs also factor into the material cost area. To lower melting costs, many foundries perform their melting on off-peak hours (third shift) to avoid being charged premium energy costs.

Internal scrap and rework rates. Being one of the basic foundry measurements, internal scrap rates are monitored on a daily basis. Almost all of the quality improvement projects undertaken by the foundry team revolve around lowering internal (and external) rejection rates. 

Internal rework, such as extra grinding required to remove a parting flash or welding to repair surface defects in steel and some nonferrous castings, are common examples. As an OEM, anything you can do to help the foundry improve their rejection rates on your castings are great ways to improve and strengthen your business relationship with them.

You’ll notice I’ve left off some items such as labor costs, overhead, taxes, and debt. These are highly important items, but I’ve tried to stay focused on the more technical and production-based items to help you understand the unique industry in which you work. 

By recognizing the technical and operational factors that influence foundry costs, casting buyers are better equipped to support cost-reduction efforts and drive mutual success in the supply chain.