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Table 1. Worksheet for Calculating Total Cost of Ownership Cost Factor


ible and credible, promoting the trend via presentations, articles, interviews, TV, and other media, and enabling the trend via the Total Cost of Ownership Estimator and by helping companies and associations to reshore.


MC: Why is it relevant to metalcasters? HM: The foundry industry has lost a lot of production to imports. About 20% of the market is supplied directly by imports of castings. Very roughly, another 25% was lost due to the trade deficit in products that contain castings. So, maybe 40% total loss to imports.


MC: How can metalcasters help achieve the Initiative’s mission? HM: Tere are many ways metalcast- ers can achieve this. Tey can report cases of reshoring to demonstrate that the industry is competitive. Another option is to use the TCO Estimator as a sales tool when competing with im- ports. Metalcasters can also automate, train and achieve the quickest possible delivery times.


MC: What kind of impact could the American Iron and Steel Act have on reshoring? HM: No idea. I would think quite positive. I hear a lot about lack of U.S. capacity for large castings. Te act should make investment in large cast- ing capacity more feasible.


MC: How can reshoring help a metalcaster thrive during a strong economy? HM: Reshoring can help overcome some of the pricing constraints due to imports. Metalcasters should sell based on TCO wherever possible and, when the economy is strong, try to shift their sales mix to customers that are pro- gressive enough to understand TCO.


MC: And how can reshoring help a metalcaster thrive during a weaker economy? HM: Metalcasters would retain more of what would be lost to offshore. It would take share away from imports, and casters would feel confident enough to continue investing and training.


CoGS (Cost of Goods Sold) FOB (Freight on Board) price Packaging Duty


Fees (% of price) Fees (flat)


Routine surface freight, excluding local Routine air freight, excluding local Freight insurance at 0.5% on imported product Total CoGS


Other Hard Costs


Carrying cost for in-transit offshored product Carrying cost for inventory on-site Prototype cost End-of-life inventory Travel (start-up) Travel (audit/maintain) Pick/place into local inventory Purchasing cost, excluding travel Total Other Hard Costs Cumulative Total Risk


Emergency air freight Rework/quality


Product liability non-recovery risk Intellectual property risk


Opportunity cost (lost orders, slow response) Economic stability of the supplier Political stability of the country Total Risk


Cumulative Total Strategic


Impact on innovation of distance from manufacturing to R&D Impact on product differentiation/mass customization


Total Strategic Cumulative Total Green


Production Shipping


Local warehouse Travel


Disposal of obsolete inventory Total Green GRAND TOTAL 5-Year Forecast


July 2017 MODERN CASTING | 23


U.S.


Offshore


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