Sanmar’s Metals business is a brand new world. It is a well-consolidated segment, packaged together - a whole new world of Metals with iron and steel foundries, strategically operating from India, Germany, US and Mexico.
The foundry services of the Group worked alongside the Engineering businesses adding value on a consistent basis. Gradually it reinvented itself to become a core segment ensuring that the integrity of our castings reflected the quality of our engineered products. The end of 2008 saw the transformation culminate in the recognition and formation of Sanmar Metals Corporation. 2007-08 was also the year when Eisenwerk Erla in Germany (Dec 2006) and Matrix Metals in the US and Mexico (April 2008) came into the Sanmar fold through acquisitions. The modernisation of Sanmar Foundries was completed and a new and expanded plant commissioned. The new Greenfield iron foundry, Sanmar Ferrotech in India was also commissioned.
Sanmar Metals is a standing example of a case of integration with advantage - strategically, operationally, and culturally. While, Eisenwerk Erla (the Iron foundry) has completed two years and Matrix Metals (the Steel foundry) has completed one year under the Sanmar umbrella, both are being slowly but surely absorbed in to the Group’s management practices. Matrix Metals and Eisenwerk Erla have been functioning as independent satellite units of the Group with a predominantly regional management team – being local when required and yet being international whilst following Sanmar’s global management practices. The orientation of the companies into the Group’s way of management in terms of processes, financial models, HR practices, etc., is a continuous process rather than a sudden change programme. Sanmar’s practices, highly professional and based on strong principles of integrity, are cementing local traditions. The Group’s long term focus and financial prudence has ensured its good health in all times. The Group has infused these values within the local management set-up of these new businesses.
The people at these locations talk about the integration process and the way forward.
Men of Steel
The Group’s steel foundry unit, Sanmar Foundries (SFL) had increased its capacities almost three-fold and modernised its facilities. SFL was looking for a marketing base in the US and NEPCO’s (the marketing arm of Matrix metals) sourcing relations with SFL provided the right window of opportunity. Sanmar looking out to partner with NEPCO, ended up acquiring NEPCO and the three steel foundries of Matrix Metals. For the first time in the history of Matrix Metals, the ownership was transferred to someone who was committed to the business and had a long term focus.
Matrix Metals, a cluster of foundry businesses, became part of a stable, global organisation with JV relationships in North America sustaining for over thirty years. Sanmar hopped on to the bus with Matrix Metals’ foundries that had a ready cluster of customers and niche products. Typically, in high-end foundry services, with specially engineered products, the lead time for customer acquisition could prove anywhere between two to three years or even more. With the acquisition, Sanmar’s solid business commitments helped Matrix Metals’ marketing relationships to flower and grow.
Matrix Metals’ evolutionary path is that of a unified global steel foundry group, diverse in its operations, focused in its management and enjoying a strong pedigree. The change idea for each of its foundries is to think big and think beyond.Each of Sanmar’s steel foundries has a unique value proposition for its customers. There is a low cost option for high end castings, there are niche, speciality products with quick turnaround times, there is the advantage of market proximity and all these are available for customers with uniform standards and highest of quality.
Left to right: Shrirang Kulkarni (CTO), Vinod Krishnan, Jason Silva, Charlene Miller, Andrew Bohac, Debra Buzek, Alton Meyen, La Shonda Donahue, Robert Bridges, B Natraj
Most importantly, trust and strong relationships have been established with customers, whether it was sourced from India or delivered from the US.
B Natraj
CEO, Matrix Metals
Natraj is an old stalwart at Sanmar. He was part of the Group’s initiatives during the professionalisation and consolidation of the Group in its nascent group consolidation years, especially when the Group’s people, management and ethical philosophies were documented and implemented. After completing the Erla and Matrix acquisitions, he relocated to the US and works out of the Richmond office of Matrix Metals LLC.
“My mandate is to build a strong management team here taking holistic decisions with respect to all the foundries of Matrix Metals; bring the divisions up to speed to work in a globalised setup and put in place Sanmar’s HR policies and systems. With a focused
management team, we will address soft issues and get all the three regional businesses on one road. Hopefully by 2010, Matrix Metals will be well on its success path and wouldn’t need hand-holding from Sanmar. “We enjoyed a huge order backlog and were extremely busy with business. But we can’t really say we are well insulated. Many of our customers are cutting back due to the global economic crisis. We are re-engineering our business so that we provide our customers with cost efficiencies arising out of our geographic diversity. We continue to innovate with new product lines to widen our product portfolio. These measures would help us remain profitable.
“We have a new leadership team in place and have spelt out a clear vision for Matrix Metals - to ensure that Matrix Metals becomes the most profitable and customer focused steel foundry group in the US. We will be among (the top 100 of the) best places to work in the market in 3 to 5 years.”
“The Sanmar values of integrity and excellence are being translated into hard core actions at Matrix Metals. At the end of the first year, things are moving slowly but surely in the right direction. In three years time, I hope to leave behind a management team that understands and enjoys Sanmar’s values and standards, and which has the trust and confidence of the Head Office.”
Rob Kukowski
Group President, Matrix Metals
Rob recently visited the corporate head office, several of the JV partners and the Sanmar Indian foundries.
Having worked in the past for American, Japanese and Finnish global companies and having developed supply partnerships in both Europe and the China, Rob feels the cultural transition with Sanmar will be easier in several ways. One major positive being the lack of a language barrier
and the second being the high level of professionalism in The Sanmar Group.
“The transition into the organisation is challenging in that we support such a diverse group of industries. We create castings for a tremendous variety of engineered and complex applications providing coverage from “oil patch” applications to off highway construction equipment, mining machinery and transit components to just about anything related to the valve industry. We are active in all of these business sectors and understanding these requirements is very specific, technically challenging and quite specialised.
“The diversity of Matrix Metals’ customers is attractive in that seldom are all industries simultaneously impacted economically. We had a solid backlog of activity to start the new fiscal year. We are cautiously optimistic about 2009 and not many companies can say that in today’s current environment.
“The biggest challenge and opportunity at Matrix is to develop the synergies amongst the various foundries and leveraging our total global capability. We have diverse capability, ample manufacturing capacity, a global footprint, presence in both low and high cost labour markets and can cater to differing delivery requirements. I am excited about presenting our value proposition to the North American customer base.
“Our biggest opportunity is to improve our delivery reliability. We are formally committed to a Sales and Operating Planning (S&OP) system improvement that will drive this reliability. But if we want to be the supplier of choice, we must be able to make and deliver on our commitments. Be it delivery, quality or service - we want our customers to know that “Matrix does what they say they will.” Trust is grounded in making and honouring commitments. I believe we have the people and equipment to be world class in this regard.”
Mike Taylor
Chief Financial Officer, Matrix Metals
Mike has been with the foundry group for 38 years and has been at Keokuk for 17 years.
“I think everyone here is excited as the owners (Sanmar) want to run it as
Taylora foundry and not as an investment proposition. The stability that Sanmar offers is welcome. As for readjustments, to me it is just a question of grouping existing information in the required formats, which wasn’t a big challenge and rather painless. People are
getting along well and comfortable working with each other. One year on, we’ve got our objectives clearly defined for us – the markets we serve and our operating capacities have expanded. We are pleased the way things are. Hopefully, we’ve also lived up to the expectations of the Group.
As for the economic slowdown – we’ve been through many such cycles before and each time we re-engineered and readjusted. I’m confident we’ll see this through as well by not making the mistakes we made earlier and being perseverant. We’re lucky to have a group of people who can do their jobs well and all of us have our entrepreneur hats on. That’s 80 % of the battle won!”
Shrirang Kulkarni
Chief Technology Officer
Shrirang is the man driving the operational integration of the Steel foundries. He has been with Matrix Metals for over 30 years, through its ups and downs. As Chief Technology Officer he has nurtured the 8 to 10 foundries that Matrix Metals had in its early days including Keokuk. After the crisis of the 80s and 90s, the European foundry, the Chicago plant and others were divested.
Matrix Metals foundry divisions are his pet projects that he nurtured and tended. He was the Business Head at Richmond at the time of Sanmar’s acquisition of Matrix Metals. Shrirang was moved into the current role of Chief Technology Officer of the Steel foundry business primarily to help integrate SFL with the Matrix Metals business.
The business objective is to ensure that customers get quality products that are of uniform technology standards across all of Sanmar’s steel foundries. For the past year he has been developing production teams at SFL shuttling between US and India.
“My mission is to ensure that our Steel foundries are world class with uniform technology standards. I am coaching and training people here at Trichy to ensure that customers get world class products no matter which foundry they source from.
Shrirang Kulkarni (right) with George Hoffman (left)
“Our large castings customers are primarily US-based. In order to retain our high value customers, we have to offer them low cost options but at the quality and standards they are used to and I am gearing up SFL for this. We have world class facilities here and the production standards have to match with any US foundry.
“Technology integration process is a long and arduous one; product development takes time in this segment. Developing teams, playing mentor and balancing delivery schedules is challenging. Before the end of the year, SFL’s technology integration should be through.
“In 1999, I visited SFL after it was commissioned. Even before the acquisition, I knew the SFL people. On the other side, I have interacted with Matrix Metals’ customers and was part of the relationship building process for 10-20 years. I would like to ensure that customer requirements are well-adapted and delivered from SFL through seamless technology transfer.”
Vinod Krishnan
Vice President, Strategy & Finance, Matrix Metals
Vinod was with Cummins before he came to Matrix Metals.
“There are at least three priorities at the moment. The first is to manage the business in the economic scenario we are in. We got to get proactive in managing this situation before the downturn impacts the metals business. The next would be to grow the business and focus on developing the
organisation. The third priority will be to manage the expectations of shareholders. If we manage the first two priorities right, the third one should fall in place.
Iron Men
The iron foundry story is equally interesting. Sanmar got into a niche segment of automobile castings with the acquisition of Eisenwerk Erla. The company is the most modern iron foundry in Europe and Sanmar had the benefit of niche technology and an elite customer base in Europe. Eisenwerk Erla is known as a foundry for casting high-value materials, and as a specialist for turbine housings and exhaust manifolds.
Here again, the management of the company was primarily local. Only one Sanmar employee, Ramdas, relocated with his family to Erla.
Complementing the German foundry is Sanmar Ferrotech (SFT), a state-of-the-art new iron foundry in India.
SFT was conceived as a ‘daughter-plant’ for Erla. Erla has the best technology and best customer base across Europe, Germany in particular. The geographical limitation for expansion comes in its position, snuggled in the midst of a mountain (Schwazenberg) and a river. SFT was the answer to Erla’s land-locked constraints and serves as a lower cost option to its customers. This project is the joint effort of the Indian and German team. Both these foundries will synergise and leverage their geographical advantages and provide value to customers.
Dietmar Hahn
Managing Director, Eisenwerk Erla
“During the Christmas of 2006, when the announcement of Sanmar’s acquisition of the company was made to the employees, there was some amount of trepidation. Eisenwerk Erla moved from being part of a small family group to being a part of a large international organisation. For many of us new rules that had to be learnt. The major challenge was the language – English – which all employees had to learn. Ramdas and his family who Menrelocated from India learnt German.
“Eisenwerk Erla has seen good growth and further strengthened its position as a leading supplier of turbine housings and exhaust manifolds. SFT was successfully developed with the collaborative effort of Erla and Sanmar colleagues. After the commencement of commercial production in November 2008, the entire project team, Indian and German, felt proud of the results of their hard work.
“The numerous visits to India for The Sanmar Group Annual Day(s), and in connection with SFT led to many new contacts. While in India, we got an interesting insight into the Indian culture.
“For people in Erla, it’s business as usual. I can say that the integration with The Sanmar Group has been successful. We are clear of the goals to achieve and the Erla team has a positive feeling. We are ready to offer our customers a strong value proposition arising out of the integrated Indian and German iron foundry services.”
Ramdas CFO, Eisenwerk Erla
“Erla is my first overseas experience and my first stint outside Sanmar and it’s a great learning experience for me. I found people here are very organised and disciplined when it comes to work. It is amazing how they plan their day. Yet another aspect is there is no such thing as follow up. When action points are spelt out, it is considered done, unless there are problems
“The support that my colleagues provided to me and my family is something I can’t express in words. They did everything possible to help me settle down here. On the first day of the new year, Dietmar Hahn meets and greets each and every person at Erla. This year, I went along with him and felt extremely good about it. I thought it was a pretty nice gesture.
As for my integration into Erla – In the first few months after the take-over, I was the one point contact, a middle man of sorts for the Erla team and Sanmar in the initial days which I think helped. First of all I had to break the ice with people, which happened in due course and, the fact that my bosses at Sanmar were patient also helped.
“The finance team in Erla (myself included) worked together to establish integrated reporting systems that helped departments take informed decisions. All departments are more synergised today because of the formal information sharing mechanisms.
At the monthly meeting of the department heads, the finance team presents a summary of the results together with the performance of each of the departments. This helps in open discussions and facilitates corrective action. Visits by the leadership team in Sanmar spelling out the business goals and regular reviews have helped to bring about greater clarity on where we are headed, especially in the wake of the global economic crisis.
“It is more than two years since the acquisition and Erla and Sanmar have warmed up to one another. Both teams have been interacting on the commissioning of SFT; we can expect more such interaction in times to come. As for missing home, of course, I do. I miss my parents, my friends and colleagues in Chennai. My family and I are looking forward to our annual holiday to India.”
Front row (left to right) - Enrico Fischer, Björn Dehne, Ms Gundula Fritzsch, and Dietmar Hahn Middle row (left to right) - Ronald Dost, Mirko Wächtler, and Klaus Purrucker Back row (left to right) - Hartmut Fritzsch, Manfred Volkmann, Joachim Roscher and J Ramdas
Erla and SFT are well on the path of integration in terms of soft skills. The Germans are learning English and the Indians at SFT are learning German. With the strategic integration of Erla and SFT, the Sanmar Iron foundry business is a major force in the turbo charger market. Today world leaders in their respective fields like Caterpillar, GE, Alsthom, Siemens, Borg Warner, Honeywell, etc., can take advantage of Sanmar’s global presence in Steel & Iron foundry services since the same technology and quality can be deployed in various regions of the world; especially strategically important countries like the US and Germany and also the developing countries like Mexico and India.