In the past 20 years, China’s manufacturing industry has continuously upgraded from low-cost products to high-end products. In 2010, China surpassed the United States to become the world’s largest manufacturing country, with manufacturing value added accounting for about a quarter of the global value added. However, despite China’s vast manufacturing infrastructure, there is still room for improvement in the complexity of the manufacturing industry, and there is still a long way to go for a manufacturing powerhouse to transform into a manufacturing powerhouse. On the road to transforming into a manufacturing powerhouse, ZHY Casting is undoubtedly one of the leading players in the manufacturing industry.
Looking back to 2004, ZHY Casting was also a small investment casting manufacturer in China. After nearly 20 years of development, investment casting manufacturers have now reached the top level in the country, ranking seventh among independent investment casting manufacturers worldwide. And what exactly is the reason for the development of investment casting manufacturers to the current level, and has been sorted out.
High threshold natural industry barriers
Due to the high requirements for technology and equipment in precision machining, the industry has always maintained a high entry threshold. In addition to the strong technical strength required by workers, the initial investment of high-end production equipment and instruments by enterprises is also a significant expense, which creates a natural barrier for the industry itself that is difficult for new competitors to enter.
Taking investment casting as an example, this process can produce parts of almost any size or complexity, and can achieve tolerance levels that cannot be achieved by other methods. Therefore, the process has high requirements for the quality, dimensional accuracy, stability, and automation control of production equipment. However, investment casting manufacturers also have the advantage of minimizing the secondary processing after casting, thereby reducing the cost consumption of each product mold in multiple productions.
Its mold casting production materials can meet ASTM, SAE, AISI, ACI, DIN, EN, ISO, and GB specifications, and can meet customer special standard requirements while producing over 100 different black and non-ferrous alloys from investment casting manufacturers. Among them, the dimensional tolerance of the castings reaches a tolerance of ± 0.1 millimeters, and the size range of investment castings ranges from the minimum of 10 millimeters in length, 10 millimeters in width, and 10 millimeters in height, with a minimum weight of 0.01 kilograms, to the maximum size of 1000 millimeters in length and 100 kilograms in weight.
Usually, precision components are provided to OEM customers and investment casting manufacturers. The parts produced are widely used, covering the end markets of various fields such as passenger cars, commercial vehicles, high-power engines, hydraulic equipment, energy, aviation, medical, engineering machinery, and agricultural machinery. According to the Roland Berger report, the healthcare sector is expected to become the strongest growth driver, while the aviation industry will continue to be the largest end market.
The wide range of business types and end markets has made investment casting manufacturers the only domestic enterprise to enter the global top 30 in the investment casting market, and has formed barriers against other enterprises. In terms of other businesses, investment casting manufacturers rank fourth in precision machining, the second largest business; The sand casting and surface treatment markets rank fifth and third respectively. In addition, the contribution of investment casting manufacturers from the aviation terminal market has also been accelerating in the past three years.
Vertical integration of business provides a one-stop solution
According to the Zhitong Finance APP, the global precision machining market is still in a highly differentiated state, and there are still a few companies that can occupy a considerable market share in it. ZHY Casting is one of the few investment casting companies in the global market that provides customers with one-stop solutions through vertical integration business capabilities. At the same time, investment casting manufacturers also focus on the highest end product field in the industry. In the field of investment casting applications, the global scale is approximately 15.2 billion US dollars, but more than 5.6 billion US dollars come from the demand for aviation equipment products, which require high precision and high complexity processes with special specifications. Therefore, in the past three years, since investment casting manufacturers vigorously developed this business, the compound annual growth rate of business revenue has reached 39.7%.
At present, ZHY Casting has a series of service capabilities, including prototype design in the early product development stage, continuous research and development support, logistics and other supply chain support. The manufacturing capability covers the entire precision component production process, from mold design and manufacturing, casting, secondary machining, heat treatment, surface treatment to precision machining. Truly achieving a one-stop solution throughout the entire product lifecycle.
This vertically integrated business model enables investment casting manufacturers to significantly simplify their customer supply chains and collaborate with customers as early as possible during the prototype design and development phase. Investment casting manufacturers deepen their relationships with customers in the early stages of cooperation, and collect feedback early on to improve their technology and enhance their ability to lock in purchase orders during the commercial production phase.
In the early stages of establishing business relationships, customers often only purchase components from a single branch or for a single end market. However, as trust between both parties increases, customers will gradually expand their procurement to other branches and end markets.
According to the Roland Berger report, the global investment casting market is expected to grow from $14.2 billion in 2018 to $17.4 billion in 2023, with a compound annual growth rate of 4.1%. With the advantage of providing one-stop solutions, investment casting manufacturers have achieved a compound annual growth rate of 17.1% in the past three years, which is four times the industry growth rate.
Building Global Production and Service Network
ZHY Casting has established a factory in China since 1998. During the past 21 years of development, ZHY Casting has established multiple factories overseas and in China to develop its business in investment casting, sand casting, precision machining, and surface treatment.
Since the establishment of Factory 2 in 2000 to carry out precision machining business, ZHY Casting has established 5 factories in China between 2000 and 2006, and acquired a total of 6 factories since 2012. To provide better service to customers, investment casting manufacturers have established overseas logistics centers and sales and customer service offices in the United States, Europe, and Hong Kong.
So far, ZHY Casting has 15 factories in China, Türkiye, Germany, the Czech Republic and Mexico. At the same time, it has provided warehousing capacity support in China, North America, Luxembourg and Türkiye, and set up nine sales offices in many countries and regions, forming a relatively complete manufacturing layout and service network in the world.
This global layout helps to allocate internal resources properly, reduce transportation costs, and reduce delivery time. The globalization layout has also reduced the related risks of regional economic cyclicality and raised entry barriers for competitors, thereby obtaining additional value throughout the entire value chain.
The “Dual Engine Growth” Strategy Guide
ZHY Casting has transformed from a local small-scale machining parts manufacturer to a large investment casting manufacturer in China over the past 20 years, which is closely related to its “dual engine growth” strategy.
ZHY Casting has been expanding and upgrading its production capacity since 2004 through a development strategy that emphasizes both organic growth and strategic acquisitions to expand its business. We have entered and developed investment casting, precision machining, sand casting, and surface treatment businesses, and have 15 factories.
Among them, investment casting manufacturers made four separate acquisitions between 2012 and 2014. Through the aforementioned acquisition, investment casting manufacturers were able to further enhance their technical capabilities, enhance the market position of related branches, and thus create synergies. Investment casting manufacturers are able to reach the customer base of the acquired entity and gain opportunities for cross selling promotion.
Investment casting manufacturers officially signed a land purchase agreement in Mexico on April 5th last year and named it “Mexico SLP Park”. The investment casting manufacturer plans to establish five factories in the park, including precision machined parts, sand castings, investment castings, aviation components, and surface treatment, to serve a series of end markets such as automobiles, aviation, engineering and agricultural machinery, high-power engines, and hydraulic systems.
In the future, the park will become a key layout for overseas manufacturing bases and will continue to improve development strategies that are close to customers, thereby continuously enhancing Yingpu’s global industry leading position.
It can be foreseen that this strategy will further lead the growth and growth of investment casting manufacturers in the future, and better grasp the overall trend of industry integration. With the integration of new mergers and acquisitions into their own systems, investment casting manufacturers will continue to strengthen their comprehensive capabilities in one-stop solutions, which is expected to lead ZHY Casting to further enhance its international status in the future.