Defense cutbacks immerse firm into market crucible

CASTING FOR NEW BUSINESS

March 20, 1995|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Clad in silver-colored aprons and helmets reminiscent of police riot gear, three men slowly pour the super-heated liquid bronze from a glowing crucible into a hole on top of a sand mold until the orange molten metal rises in another hole on top. The men then gingerly move the crucible on the hand-operated crane to another sand mold.

Once it is cool, the sand, laced with epoxy and clay, will be chipped away to reveal a bronze ring, ready for the next step of the process.

Metal casting, which uses methods that date back to ancient Babylon, is the core business of Danko Arlington Inc., one of the handful of remaining Baltimore foundries and pattern makers that serve the area's shrinking manufacturing base.

Located in an isolated part of Wabash Avenue in a Northwest Baltimore neighborhood off Reisterstown Road, the 30-person operation prospered as it turned out aluminum and bronze parts for such defense contractors as Raytheon, Grumman Aerospace, General Electric and Martin Marietta -- now Lockheed Martin.

But now approaching its 75th birthday on April 1, the company is continuing to expand its commercial work in the face of shrinking military business.

It is also looking to buy other operations that would diversify it beyond the business of making customized parts for other companies.

"We just go out and ring doorbells," said Joseph O. Danko Jr., the company's 68-year-old chairman.

Started in 1920 by Mr. Danko's father, Joseph O. Danko Sr., an immigrant from the old Austria-Hungary empire, the business was initially in pattern making -- the crafting of wooden models of machine parts that are used by foundries to made sand moldings. Aluminum and bronze casting was added to the business in the 1940s, along with a machine tooling operation.

Now about 20 percent of Danko's $2 million annual sales are from patterns while the rest comes from casting and machine tool work.

Danko is part of a declining industry. Thirty years ago, more than a dozen foundries made parts for area factories.

But as those manufacturers closed or moved operations overseas, the number of foundries dwindled to their present five or six. Even Danko has seen its work force shrink from 100 people in the early 1960s to only one-third of that today.

The number of foundries nationwide has dropped from 4,360 in 1982 to 3,260 in 1992, according to the American Foundrymen's Society Inc., a trade group for foundries.

This trend was hastened by automobile manufacturers using less metal in cars. "The demand for iron casting declined because of that," said Robert E. Eppich, vice president of technology for the society.

Likewise, pattern makers have also suffered.

"It's dying rapidly," said Manfred E. Gersbach, the owner of an eight-person pattern shop on Fort Avenue called Patterns Unlimited. All his business goes to foundries outside Maryland.

L "There's none here that I could make a living off," he said.

Danko has relied on military contracts, which accounted for 60 percent of its revenues as recently as five years ago. But now that is down to 30 percent, Mr. Danko said.

It was on the strength of military work and "a good mix" of other jobs that the company enjoyed record sales in 1990 -- though Mr. Danko declined to say how high those were. But the good times were followed by bad, with small losses in 1992 and 1993, Mr. Danko said. "They declined, but they are coming back again," he said about the company's sales.

Wooing commercial business has meant adjusting to different priorities. Defense contractors put a premium on the quality of the product, with price a secondary consideration, Mr. Danko said. But for commercial customers price is paramount, he said.

This has meant paring profit margins to get business in the door. "We get it in and figure out a way to do it faster," Mr. Danko said. "We have survived a lot of changes like that."

And in an industry that has seen many casualties, Danko's debt-free balance sheet is also an attraction to companies looking for a partner that will be around tomorrow. Many of these manufacturers are establishing single-source arrangements with foundries as a way to better control inventories.

"There's not a lot of new work, but there is work that is being consolidated into one supplier," said John D. Danko, the company's president and son of the chairman. "They want better partnerships," he said.

While the family was considering selling the company five years ago to an unnamed buyer, it decide to turn down the deal. "We began to see some potential in the business," John Danko said.

Now the company is looking for acquisitions of its own, though it has not set its sights on any particular target. The ideal target would be a solid family company where the next generation does not want to continue.

While the Dankos want a manufacturing company, they do not want to acquire another foundry. "We have to diversify," said the younger Mr. Danko.

One idea the company is toying with is to make computer software, marketing a program that John Danko developed to track the costs of making different items to produce more accurate bids. "We've got a proven product," the younger Mr. Danko said.

But regardless of its future purchases, the molten metal will continue to flow at Danko, John Danko said. "The foundry will always be here."

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