To loosely paraphrase an old saying, one man’s “divestiture” is another man’s treasure.
That’s about the way it turned out for FormTech Industries LLC, a producer of steel forgings headquartered in Royal Oak, Mich. But even though it is a newly formed company, FormTech is no fledgling to the forging industry or to the automotive, heavy truck and industrial markets it serves.
Before it became FormTech, the business operated as a division of Metaldyne Corporation. In October 2005, Metaldyne announced its intention to divest of its North American forging operation – identifying it as non-core. During the decade of the ‘90s Metaldyne’s predecessor, MascoTech, had spent roughly $500 million in outfitting its “Forming Technologies” forging division with the very latest processing equipment from Europe and Japan. In 2000, Metaldyne spent $600 million to purchase the business from MascoTech.
The division generated net sales in excess of $350 million in calendar 2005 and had, as noted, significant assets. Those assets caught the eye of 30-year forging veteran Dr. Richard McDermott, the managing partner of GR Investment Group.
McDermott is the former owner of MSP Industries, which he ran from the early 1980s until he sold it in 1999 to American Axle & Manufacturing. In 2000, he acquired a 50% stake in UK-based Stokes Forgings Group Ltd., which he sold in 2004 to India’s Mahindra and Mahindra Ltd. With all this experience, it is no surprise that McDermott knew a good deal when he saw one.
And so FormTech came into existence. The privately held company was formed in March 2006 when, in a deal valued at $128 million, GR Investment Group Ltd. became part owner of the former Metaldyne operation. The New York City-based private equity firm Jacobson Partners is the majority owner. With that acquisition, FormTech became one of North America’s largest independent producers of automotive forgings.
In his current capacity as FormTech’s CEO, one of McDermott’s goals is to diversify the markets (such as adding oilfield goods to its product portfolio) in which his new company participates, reversing the previous owner’s strategy of focusing strictly on the automotive market.
FormTech’s senior management team includes Rick Larkin, CFO, and Chris Jones, vice president of technology. Both Larkin and Jones were formerly executives with McDermott’s previously owned MSP Industries. Jones is also a former operating manager of MascoTech.
FormTech’s management team has emphasized that the company’s operational strength will be directed toward its core competencies – the production of forgings and machined forgings. They believe that, with its team of managers and employees, FormTech can supply its customers with superior-quality parts and unsurpassed performance. The company’s breakthrough technologies in high-volume-production forging processes, its research and development expertise, broad range of product offerings and world-class manufacturing capabilities make it a leader in today’s forging marketplace.
MORE THAN 1 MILLION SQUARE FEETFormTech employs more than 1,000 associates in seven locations in three states – Michigan, Indiana and Ohio. All told, these plants offer a combined 1.1 million square feet of manufacturing space.
The seven plants, their floor space and principle products/services are summarized as follows:
- Royal Oak, Mich. (headquarters) – 300,000 ft.2 - wheel hubs, spindles, rolled rings, transmission and differential gears
- Minerva, Ohio – 260,000 ft.2 – pinion gears, shafts and spindles
- Detroit, Mich. – 225,000 ft.2 – net differential gears, front-wheel-drive components, piston pins, steering sockets, suspension sockets, combustion plates and end caps
- Fraser, Mich. – 200,000 ft.2 – forged shafts, differential side and pinion gears
- Canal Fulton, Ohio – 58,000 ft.2 – turning, milling, drilling, tapping, induction heat treating, broaching, shaping, hobbing, OD grinding and balancing
- Fort Wayne, Ind. – 55,000 ft.2 – differential gears, combustion plates and inner races
- Troy, Mich. – 45,000 ft.2 – internal spline shafts, surface blast treatment, heat treatment and coating of automotive parts
Hot ForgingsFormTech is a leading supplier of steel hot forgings. Depending on the equipment, part weights range from 100 grams to 18 kg. The company operates eight closed-die automatic Hatebur hot formers with an annual capacity of more than 60 million forgings. This concentration of Hateburs is the largest in North America and one of the largest concentrations in the world among independent forging producers. They forge the full range of carbon and alloy steels into near finished shapes at a rate of more than 100 parts per minute. Other attributes include precise size control combined with machine speed to amass a number of hot parts that cool slowly and make normalizing heat treatment virtually unnecessary. These capabilities translate into a cost-effective supply of high-volume parts.
Using preforms from the company’s Hatebur operations, FormTech’s hot ring expansion and disk mill form steel rings up to 10 kg in weight and 250 mm in diameter. Two fully automated production cells and a prototype line integrate radial rolling to thin the ring wall and increase the workpiece diameter, followed by axial rolling by disk mill to shape the end faces of the ring. This operation has an in-line controlled cooling that often can eliminate the cost of thermal treatments required for machineability. This flashless process generates uniform grain flow, which reduces final-product distortion to a predictable amount when heat treated.
In addition to the Hatebur and ring rolling operations, FormTech’s hot forging capabilities include a 3,000-ton Kurimoto press, a 2,500-ton Erie press and hot-wedge rolling capability.
Warm ForgingFor parts requiring extensive metal flow with a higher degree of precision than hot forging, FormTech offers complete warm-forging capability. The results are near-net-shape to net-shape components produced without structure change in the raw material.
FormTech uses seven automated mechanical presses up to 2,500 tons with automated induction billet heaters to warm forge products. The parts produced have complex shapes that will have desirable grain flow, good surface finish, and tighter dimensional controls than if hot forged. Warm forging also often eliminates the need for heat-treat normalizing.
Cold ForgingThe cold-forging process produces parts with near-net and net tolerances that require little or no machining, refined surface finish, desirable grain flow and enhanced physical properties. The company is a leader in cold-forging technology with a number of fully automated presses that provide quick die-change capability. In total, the company can produce well over 100 million precision cold-forged parts annually using low carbon through medium carbon and alloy steels.
The company produces over 10 million extruded shafts annually with products ranging from large Class-8 truck countershafts to a broad variety of transmission, drivetrain and suspension components. These parts range from 350 grams to 23 kg in weight and up to 1 meter in length. FormTech’s diverse extruded-shaft capability is made possible by an extensive array of processing equipment, including mechanical and hydraulic presses ranging from 150 tons to 2,500 tons. Many of these are multistation presses that can provide automated progressive extrusion and upsetting in the same machine for shafts up to 1 meter at 15 parts per minute. The process yields close tolerances and produces consistently smooth, round surfaces, which improve machineability, tool life and throughput.
FormTech also possesses capability for high volume cold-headed applications such as piston pins and various steel fasteners.
MachiningThough focused on its core competence in forgings, FormTech has responded to the requirements of certain customers by providing more complete value-added products. The company’s machining operations are part of this full-service capability that provide semifinished and finished characteristics on gear blanks, transmission shafts and other components including rough and finish turning, end facing and centering of shafts, and broaching.
EMPHASIS ON DESIGN AND DEVELOPMENTIn keeping with the strategy of becoming a full-service supplier, FormTech is striving to offer more engineering capabilities to its customers. Many of these customers, having been challenged by the marketplace to focus on their own core competencies, have lost the expertise they once had in forging design. As a result, they are increasingly reliant on FormTech to provide the part design and process-development expertise required to produce quality parts in the volumes required.
In the design process, for example, the company is able to support its customers’ needs with in-house CAD and computerized forging process-simulation capabilities. FormTech’s customers also benefit from its materials engineering and metallurgical expertise. The company works closely with its steel suppliers to identify optimum alloys for given applications and with its customers to determine appropriate metallurgical properties and heat treatments to produce parts of sufficient strength and durability.
OPERATIONS AND MANAGEMENTThe principle of continuous improvement is a cornerstone of how FormTech runs its operations. From the steel mills that supply it to the customer’s end-use of their product, the entire value stream is scrutinized to find ways of improving. Anywhere that processes can be improved, they are. This often leads to reduced costs and increased capacity without needing to invest additional capital.
Applying a combined approach of lean manufacturing and technology-driven advancements to optimize the value stream, FormTech seeks to develop a value-stream map. From this map a more optimum version can be derived, then the company can formulate steps to achieve the optimum. This applies both to in-house and processes that are outsourced. The company plans to continue to focus on its forging core competencies.
A lean management process is also important to the company’s success. For this reason, company executives decided to select Plexus Systems to implement Plexus Online, a comprehensive business and manufacturing solution, across the whole company. As a partner to FormTech, Plexus Systems offers a superior manufacturing performance system while also handling management information needs and supplying internal information technology services. The system ties together all plant operations, including engineering, quality, customer/supplier communication and other functions, into one streamlined system. When fully implemented, Plexus Online will enable Form-Tech managers to closely track critical manufacturing information – at any time and from anywhere – using a simple web browser.
THE FUTUREFormTech’s management believes its investment in state-of-the-art forging technology is part of what sets the company apart from its major competitors. The company’s skilled and experienced personnel work with customers to leverage FormTech’s world-class facilities to meet demands for lower weight, reduced cost and manufacturing flexibility.
The company’s forward-looking strategy is to continue to serve its existing automotive base, expand on that base and broaden its product portfolio by reopening certain industrial markets that it once served. Since March, the company has written $100 million in new business from companies such as Aisin, Borg-Warner, DaimlerChrysler, Dana, Jatco, Linamar and Magna. Other client companies include Eaton, Ford, GM, Getrag, Hendrickson, Honda, Koyo, NTN and Toyota.