INSIGHT ON: Economic Development – Forging a better future

Posted on Oct 1, 2014 :: Economic Development , Insight On
Sean P. Johnson
Posted by , Insight on Business Staff Writer
WaupacaFoundry

Sparks fly as slag is removed from an automatic iron pouring ladle at Waupaca Foundry. Photo courtesy Waupaca Foundry. Photographed by Michael Leschisin, Image Studios

It’s said that building good relationships requires a generous cycle of give and take.

That would indicate there are good things coming from the newly- minted relationship between Waupaca Foundry and its new owner, Hitachi Metals Ltd., of Japan.

Waupaca Foundry has plenty to give, particularly the expertise it has honed as the largest iron foundry in the world and North America’s leading supplier of iron castings to the automotive, agriculture, construction and manufacturing industries. As for opportunities to take, Hitachi Metals has existing relationships around the world in areas the foundry has identified as opportunities for future growth.

A “win-win situation” may be an overused business cliché, but in this case it fits, says Gary Gigante, president and CEO of Waupaca Foundry.

“It’s just a really great fit and something we have worked very hard to make happen,” Gigante says. “They want to grow in North America and we want to grow globally.”

The sale — for a reported $1.3 billion — of the foundry from KPS Capital Partners to Hitachi Metals was announced in mid-August and is expected to close during the fourth quarter of 2014. KPS acquired the foundry from the Germany-based ThyssenKrupp in 2012.

Growth attracts buyers

During its ownership, KPS supported the foundry management’s plans for capital upgrades and operational improvements that resulted in a 40 percent boost in profits over that two-year period and more than 200 jobs across the company’s operations.

Waupaca Foundry posted sales of more than $1.74 billion in its most recent fiscal year.

The improvements and growth of the past two years made the foundry an attractive acquisition for Hitachi, which had been looking for an opportunity to grow its business into the North American market.

“We fit the checklist — we’re in North America, we do iron and we are a foundry,” Gigante says. “From our perspective, they are a strong company that understands foundries.”
That should lead to long-term stability for the foundry, its customers and its employees. Indeed, most employees won’t notice any difference unless they happened to run into one of the Hitachi representatives that visited Waupaca in late August.

Gigante says the current management team will remain in place, and headquarters for the operation will remain in Waupaca.

While employees may not experience any major changes in the way Waupaca Foundry operates, they could one day notice the company has expanded product lines and new technologies for producing them. Hitachi Metals boasts a wide array of casting components and materials Waupaca Foundry can now access for future growth.

“Some things they do include suspension components and turbo chargers, and they have developed materials specifically for those markets,” Gigante says. “Long term, those could be opportunities.”

For the immediate future, though, Waupaca Foundry continues its leading role in the industry segments its serves. Inside the Waupaca production facilities, employees remain focused on turning out the castings that will become brake drums and rotors for most U.S. automobiles or the transmission components of large equipment such as harvesters and combines.

Quest for large quantities of sand

A more pressing issue for the foundry’s current processes is securing the necessary sand used to make the molds the molten metal is poured into to make the components. The molds are made from sand that can also be used in the hydraulic fracturing process to tap oil and gas deposits that previously could not be extracted.

The oil and gas boom in the Bakken fields of North Dakota and other locations has dramatically increased the demand for sand, particularly the silica sand found in Wisconsin. That has put pressure on Waupaca Foundry to secure a reliable source of sand as close to their operations as possible.

“Sand is a critical component to making the molds and making our castings,” says John Wiesbrock, vice president for supply chain management. “Our supply was at risk because of demands in other industries.”

AF Gelhar Company, a mining company based in Markesan, applied for permits to open a new mine in Waupaca County, a move that seemed to address the foundry’s immediate concerns, particularly since Gelhar stated it was opening the mine to help meet the needs of Waupaca Foundry.

However, residents in the county’s Town of Union raised objections to the noise and dust that would be created by the mining operation, as well as to locating the mine adjacent to Tellock’s Hill Woods State Natural Area. Environmental groups objected to the mine as a potential source of sand for fracking.

After an extended debate that lasted nearly two years, town board and county supervisors approved the new mine earlier this year, though court challenges are expected. For Wiesbrock, it was a public process that had to go through all the necessary steps.

But he is clearly relieved the matter has been resolved and the new mining operation will supply sand from a site inside the county.

“It gives us a reliable supply of sand for several decades,” he says. “For us, this is a strategic move.”

Whether it’s basic materials such as sand, or new ownership interested in growing the company on a global scale, the strategy has produced positive results for Waupaca Foundry.

“I’m not sure we understand all of the synergies yet and I’m sure there are some that will reshape the company as we grow,” Gigante says. “But we know that Hitachi sees the foundry as core to their business going forward. This really is a win-win.”

ABOUT

Headquartered in Waupaca, Waupaca Foundry operates six facilities in North America, including operations in Waupaca, Marinette, Tell City, Ind., and Etowah, Tenn. The foundry employs more than 3,900 workers. www.waupacafoundry.com  Hitachi Metals, Ltd., is headquartered in Tokyo, Japan and employs approximately 27,000 people worldwide. It is part of the Hitachi Group of companies.www.hitachi-metals.co.jp/e

 

Emergency room improvements coming to New London

ThedaCare Foundation-New London launched a $560,000 fundraising campaign to expand and renovate the emergency room at ThedaCare Medical Center-New London to better meet the needs of patients.

The results of the “TogethER … Commitment to the Future” campaign will improve workflow for hospital staff members so they can provide better care to the more than 9,000 people who use the department annually, says Heather Stern, executive director of ThedaCare Foundation-New London.

“The foundation has always supported the hospital and its mission of providing the best possible health care close to home. This project will help patients feel more comfortable in a stressful situation and also help our staff members as they do their jobs,” she says.

The project includes adding three registration and triage rooms where patients can receive immediate care in a private setting when they arrive at the hospital; remodeling the current waiting area to make it more comfortable, including the addition of public restrooms; reconfiguring current space to create a family counseling area so staff members and family members can meet in a private setting to discuss sensitive matters; and other changes to improve employee workflow.

To donate: contact ThedaCare Foundation-New London at (920) 531-2066.