We were contacted by the senior management of an Upper Midwestern state iron foundry. They had read several of our articles, and were interested in reducing internal scrap and customer returns in order to boost their bottom line. The foundry was unionized and labor/management relations were good.The foundry produced gray, ductile, and Nihard castings for a variety of customers, many of whom were valve manufacturers. The foundry shipped the rough castings to customers without performing any value-adding secondary work, like machining. Castings ranged from 8 to 60 pounds each, and averaged about 20 pounds.
Quotes were made to potential customers on a price-per-pound basis. Obviously, Nihard castings were the most expensive. In the years illustrated by the chart, over-capacity in the gray and ductile iron casting industry grew, giving customers the ability to play one foundry off against another in the bidding process for new work. Hence, this foundry’s goal was to increase productivity, the amount of castings poured per hour worked, while simultaneously reducing the amount of internal scrap and customer returns. Metallurgical analysis suggested that poor quality cores led to castings with internal voids, and cold pours caused porosity problems. Employee attention to quality at each step in the production process would pay off with lower per-unit costs, less internal scrap, and fewer customer returns.
We created a joint labor/management committee to help engineer a Gainsharing plan. Its primary goal was better quality and its secondary goal was higher productivity. Union leadership served on the committee, and encouraged its members to cooperate. The chart shows the results.