Atlas Casting

Source: Manufacturing Digital

Date :3/18/2008 3:56:52 AM

Duane Britschgi, President of Atlas Castings and Technology, explains how becoming part of Americast Technologies has enabled both companies to achieve exponential growth

Written by Emmet Cole and Produced by Pat Harlow

Kansas-based steel castings giant Americast Technologies can do just about everything – from stainless steel design and castings, though tooling, finish machining, assembly and testing. But in the foundry industry, where long-term partnerships are critical, Americast needed Atlas Castings and Technology to continue its move toward the top of the American steel industry.

Both are large steel foundries that use the same casting and sand molding process and combined they make one of the larger steel foundry groups in North America. It was the lack of overlap that made the merger attractive to both parties. Americast had greater market share in the construction and mining industries. Atlas worked primarily in oil and gas, nuclear power and naval defense. Together the two companies share best-practice engineering techniques, maintenance and forklift costs, and have been able to develop purchasing and energy cost-savings synergies. The companies have also begun developing lean manufacturing techniques together.

“We complement each other in that it’s additive,” says Duane Britschgi, President of Atlas. “It’s not a simple case of one competitor buying another competitor.”

The two companies completed their merger in 2007, and, as a newly created Americast subsidiary, Atlas is playing a integral role as Americast prepares for a challenging future in an increasingly complex steel industry.

Atlas Assets

Based in Tacoma, Wash., Atlas initially gained fame in 1978 by becoming the first foundry to use the Argon Oxygen Decarburization process - a secondary refining process that improves metal cleanliness and mechanical properties - that is now used by about 90 percent of American steel makers.

More recently, it was Atlas’ strong foothold in the energy industry that attracted Americast. Between 60-70 percent of Atlas’ work comes from the energy industry, constructing things like pump valves, turbines and compressor castings. These products find their way onto offshore platforms, land-based drilling operations, pipelines and refineries.

The company has invested more than $25 million on recent facility improvements, and works out of four locations. Atlas has a current order for a pipeline coming from oil-sand hotbed Fort McMurray, Alberta into Illinois, featuring 51 pumps. Last year, Atlas contributed 19-inch thick duplex stainless steel to the retrofitting of four Trident submarines with cruise missiles.

“It’s probably the heaviest anyone has cast,” Britschgi says.

Around 2002-2003, the steel industry underwent considerable consolidation, when about ten percent of the steel foundries in the United States closed down due to oversupply and poor demand. But for large steel castings (those weighing more than 10,000 pounds), the situation has reversed. With the booming energy industry plus proprietary research and development on high temperature alloys, Atlas’ profits have exploded.

In fact, Atlas has doubled in size in the past four years to 640 employees (plus another 2000 for Americast). By reaching out to both second tier companies and well-known names in the industry, revenues increased 24 percent from 2006 to 2007 to $104 million. The acquisition will push Americast over the $300 million mark.

“What makes us unique is the size and complexity of the castings that we get involved with - typically more difficult, complex, mission-critical engineered components that are pressure retaining type castings,” Britschgi says.

The company’s metallurgy capabilities also set it apart from its competitors.

“We typically take on the more difficult alloys to produce. We’re on the leading edge of what’s next for the latest alloys, whether stainless steel or high chrome alloy steel or regular steel or even super duplex stainless steel,” says Britschgi.

Growing pains

Due to its rapid growth, Atlas faces certain human resources challenges. “A lot of companies, not just ours, are struggling with employee retention these days,” Britschgi says. “Our number one challenge is still entry-level labor. Skilled labor is not a problem.”

But certain aspects of the steel industry make attracting and retaining talent difficult. “The foundry business is unique. Other than maintenance, there’s not a lot of skill trades that are interchangeable with other industries,” Britschgi explains. “You can’t hire off the street. You have to train from within. So, people you bring in through the front and put into your apprenticeship programs are what builds the workforce.”

Britschgi says the work is labor-intensive, with almost 40 percent of the company’s costs going to wages. Because the work tends to be complex, mission-critical type castings, there’s little repeatability among the orders, and the right kind of multi-talented employee is hard to find. To make matters worse, Britschgi believes in a generational problem hindering productivity.

“It sounds bad to say, but the current ‘Y Generation’ doesn’t have the kind of work ethic where they really want to work hard and come to work every day,” he says. “They haven’t had a lot of discipline in life, and I can go on and on but it’s a real issue.”

To combat the problem, Atlas and Americast have teamed up to compare Human Relations techniques, launched initiatives like loyalty programs, buddy incentive programs and increased benefits in certain areas with the goal of keeping employees more engaged in the retention program.

Big growth, big future

The big growth presents another challenge as Atlas and Americast move together into the future. “We’re seeing lot of interest by large original equipment manufacturers - OEMs like General Electric, Caterpillar, General Dynamics - looking to secure capacity for large castings in this country, and trying to encourage Americast to expand their operations to give them more capacity,” Britschgi says.

In response, the company is actually moving some commodity-type processes offshore to the city of Xuzhou, China, in order to both better meet the demands of the growing Chinese energy infrastructure and to free up capacity for heavy domestic orders at home in the States. As opposed to the iron industry, which is in a constant fight with Chinese competition, Atlas has formed a healthy two-way relationship in Asia.

Currently, Atlas generates about five percent of its total revenues in China, but Britschgi expects that number to increase to ten to 15 percent within the next few years.

“Our goal is to be able to pour castings here or procure them in China,” he says. “Then finish them up and certify them that they have Chinese content, to be used in helping China develop their infrastructure as well as Asia and Malaysia.”

Whether it’s for the energy industry, naval defense, or nation states like China, together, Atlas and Americast can do just about anything.

Click here to view the corporate brochure on Atlas Casting