Novocast’s Optimistic Outlook

Grede Foundries Inc. was involved in the partnership that originally built ductile iron casting facility Novocast, Nuevo Leon, Mexico, in 2001, but exited the partnership in 2007. In early 2011, Grede Holdings, formed after consolidation with two other U.S.-based metalcasters, reacquired the metalcasting facility. In the ensuing three years, Novocast has operated at nearly full capacity while streamlining operations and, with significant investments in its melting/pouring department, boosting overall capacity by 15%.

Improvements to the pouring system have boosted annual capacity by 10,000 metric tons.

The second time around, for both parent company and metalcaster, appears to be a better match.

Reentering Northern Mexico

Built as a $65 million partnership between Grede Foundries, Milwaukee, and Grupo Proeza, a Mexican manufacturing conglomerate, Novocast’s 230,000-sq.-ft. facility served the Monterrey area’s numerous customers in its key industries of medium/heavy truck, automotive and other industrial applications.

After its initial divestment in the facility, Grede returned to the negotiating table in 2011 after undergoing a significant transformation. Grede Holdings was formed in 2010 with the consolidation of Grede Foundries Inc., Blackhawk Foundry (USA) and Citation Corporation. Looking to reenter the Northern Mexican marketplace, Grede Holdings, based in Southfield, Mich., reached a deal to reacquire Novocast and nearby Teknik, a small iron caster also owned by Grupo Proeza that produced turbo housings, brackets and hubs.

“We share complementary product lines and equipment, which will add to our existing manufacturing capacity in support of our customer growth projections in this expanding economy,” said Doug Grimm, president and CEO, Grede.

Producing cast components from 1 lb. to 200 lbs. including axle carriers, differential cases and turbo housings, Novocast had rebounded from the global recession of 2008-2009 to approach full capacity when it was reacquired by Grede Holdings. In 2013, the facility pursued the installation of a pressure pour system that would boost production by 10,000 metric tons a year to accommodate increased customer demand. The metalcaster’s new ownership was capable of making the $2 million investment, which would only increase its ability to serve local customers.

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