Precision Contract Manufacturers-Why Do People Buy From You?

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Unless they are family, or are under encouragement from someone on the Sopranos, people have three reasons to buy from you.
The lowest price.
The best quality.
The best delivery.
Which do you think it is?

I'll hum the Jeopardy theme while you think.

Time’s up.
When I was the newly minted quality manager at a little steel operation in Medina, Ohio, I was confident that the reason people bought from us was because of our quality (that’s the second answer shown above). I’m betting that many of you believe that too- your brochures and websites always have a big section and color photo about your quality.
My vice president at the time was convinced that customers bought solely on price. “The Sales Department is always coming in here trying to get me to lower my price.”
And that was true- it was always the outside salesmen who were trying to wheedle down the price another fifty cents or a buck, it seemed. So my VP was convinced that it was the very first answer given above.
The Wisdom of Inside Sales.
It took a veteran inside salesperson to straighten this out for me.
“It’s not your Quality,” he said to me, saying quality with a capital “Q”.
“If your Quality isn’t adequate, he’ll never call back again. You won’t get any orders. Quality is a given.”
That took the new quality manager down a peg or two…
“And it’s not price. The material will sell for the market price- what the market says its worth.”
He let me stand there and think for a moment.
“Hmm, I’m wrong, the VP is wrong, and the outside sales guys are wrong?” I asked.
“I take orders from customers all day long. That’s what I do. None call me and say, ‘I’d like some of your quality XYZ today.’ Every customer that calls me asks me this question: “Do you have any XYZ in stock?”
“Do you have it in stock?”
“That’s why people buy from us! ‘If it’s in stock, we have it.’ It better meet the standard for quality, or they won’t call again. They won’t pay one penny more than what it would cost if they could get it someplace else- if someplace else has it in stock.”
“People buy from us because of our delivery.”
For those of you keeping track, that is the third answer.

The best delivery.

And that’s my final answer.
What is your final answer? How does the answer in your head match up with your company’s sales materials? Web site? Inventory policy?

3 Actions To Minimize Cracks In Our Shops

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Paying attention to draft, chemistry, and steel melt source processes can help you minimize the potential for cracks at your customer after cold work operations.
After a crimping, staking or swaging operation, cracks can develop. This is because the cold work needed to swage, stake, crimp, etc. was greater than the material’s available elasticity. This is the case in the part photographed here.

Cracks can develop after cold work is performed on machined parts.

In order to minimize cracking during or after crimping, or thread rolling, or other substantial cold work, take the following steps:

Specify non-renitrogenized material;
Inform your supplier of your cold work application. They can consider reducing cold draft, or changing suppliers of the hot roll to get basic oxygen process, low residual, low nitrogen steel;
Ask the customer to consider changing the grade. Resulfurized steels are capable of being somewhat cold worked, but their high volume fraction and weight percent of nonmetallic inclusions (What makes them cut so well!) is also what works against successful cold work.

To minimize the occurrence of cracks that are not a result of cold work, try this:

Assure that adequate stock removal is taken in machining;
Buying from reputable sources whose quality systems employ rototesting and eddy current testing;

When cracks are discovered in your shop, what actions do you take?

China Privatization Toll- Plant Manager Killed In China By Rioting Workers

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Transitioning to private enterprise isn’t exactly the easiest thing to accomplish. Rioting workers killed the designated plant manager at Tonghua Iron and Steel in Jilin province, and left 100’s injured according to press reports from London, NY, and Beijing .
This gives all of us a new point to use when calibrating what is going on in our businesses, industry, and market. Our sympathies go out to the family of the manager killed while trying to do his job.
This affects us because it is a setback to the Chinese government’s efforts to consolidate the Chinese steel industry. Most of the industry remains under the control of local governments. Consolidation will help the national government rein in overproduction, eliminating overcapacity, and creating larger, globally competitive enterprises out of the companies that survive.

Jilin City, Jilin Province, Peoples republic Of China — Jilin City, Jilin Province, Peoples Republic Of China

Jilin is the self -proclaimed ‘Cradle of the Chinese Automobile Industry’ as well as a major petrochemical, pharmaceutical, and high technology manufacturing center.
The elimination of surplus capacity is essential if there are to be orderly markets in steel across the globe, because China produces fully one half of all global steel tonnage. But this event shows that global thinking has local consequences.
The lesson that I get from this incident is that when you don’t have lawful and effective means for redressing grievances, the law is created on the spot by the aggrieved. And if there is one thing that can trump ‘the wisdom of crowds’ it is the “passion of the fearful.”

Bank of Canada Declares Recession Over

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How do they know?
In comments to reporters accompanying the issuance of July 23’s Monetary Policy Report Bank Governor Mark Carney declared the recession over in Canada.

“We believe the economy will grow this quarter. The rate of growth will pick up to the end of the year and into 2010.”
The bank is forecasting economic growth of about 1.3% in the current quarter through September. Three percent (3%) through next year.
Ford’s $2.8 billion earnings surprise just might be evidence to that effect, and a sign to our industry that better days are, to use Bank Governor Carney’s terminology, ‘nascent.’
PMPA’s June Business Trends Report- available to members here – showed sales up a mere three points to 68 from May’s 65. However, of the 102 shops reporting, 42 % reported double digit sales increases in June compared to May. The average increase of those shops was 32.9%.
This is one time that we certainly won’t mind if this Canadian Economic Weather makes it down to us South of the border.

China Steel Production-First Half 2009

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By our reckoning, China has produced over 11 times more steel in June 2009 than the US. Apparently their stimulus is working. We question whether their environmental laws are as effective.
GD*3153294
China produced 266.6 million tonnes of crude steel in the first six months of 2009, this is 48.6% of total world production of 549 million tons, according to a report by the World Steel Association.

According to that association, for the month of June 2009, the US produced 4.4 million tonnes, down 46.9% from June 2008. China produced 49.4 million tonnes for June 2009, up 6% from June 2008’s 46.6 million tonnes. The Chinese crude steel production figure is 11.23 times the US Crude steel production reported by WSA.
Globally, the total steel production in the 66 countries tracked by WSA decreased 21.3% for the first six months of 2009 compared to same period 2008.
What does not seem to be working is any kind of environmental restraint: see the two page fact sheet on China Steel Industry Environmental Record here:
Or get the full report.

Steel and Aluminum Shipments Down 43% 2009 YTD

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The current service center destocking will mean shortages and delays when manufacturing recovers. This makes raw material price increases inevitable. MSCI Report
Steel: US and Canadian first-half steel shipments totaled 14.8 million tons, down 43.9% year-over-year. US steel inventories at the end of the month were reported to be 5.98 million tons; down 44.4% from last year. Canadian steel inventories at the end of June totaled about 1.05 million tons, 33% below last year.
Aluminum: First-half shipments of 524,600 tons of aluminum were down 43.2% year-over-year for US Service Centers. US inventories at the end of June totaled 269,800 tons, a reduction of 44.1% from a year ago.
According to The Metal Service Center Institute-In Canada, first-half aluminum shipments totaled 65,100 tons, a decline of 26.4%. Month-end inventories totaled 31,700 tons, a decline of 15.7% from a year ago.
Sensemaking: Beware the “at current shipping rates, months of shipments fallacy” in the MSCI press release. This is simple arithmetic, not critical thinking. When demand recovers, “today’s current shipping rates ” are not going to be relevant at all.
The fact is these inventories are lowest since the early 1980’s, and when business resumes just a little bit, there will be nothing in the cupboard. And weeks and weeks of lead time to refill the pipeline.
The current service center destocking will mean shortages. Shortages will mean delays and raw material price increases. Delays and raw material price increases will mean higher prices for precision machined parts for finished products. You can bet dollars to donuts that the spotlight will be on you and your shop as you try to recover these increases- You’ll be called “Greedy business men fueling inflation! ”
So much for sensemaking.
Have a nice day!

Steel Surcharges for August

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We expect to see steel surcharges and prices on the climb as manufacturing economic activity starts to recover. The current 2.8 times increase for the scrap surcharge compared to June does not bode well for moderation in increases going forward.

Steel bars pointed in preparation for precision machining. miles — Steel bars pointed in preparation for precision machining

The scrap surcharge for August 2009 was announced to be $7.00 by Republic Engineered Products. The scrap surcharge for carbon and alloy steel cold finshed bars was $2.50 per hundred weight (cwt) when we prepared the June Materials Impact Report.
US raw steel production is up slightly at ~3% over prior week according to AISI. Exports to Turkey and lack of manufacturing activity in North America to generate new scrap are possible factors.
Chinese steel production has been on a tear- up 10% in June according to various press reports.

5 Tips to Prevent Tool Failures From Overheating

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When machining carbon and alloy steels, Crater Wear is the normal tool failure mode. Overheating is an unpredictable failure mode. It can be one of two failure modes, Thermal Checking ( or Cracking- my first boss called it “Crazing” ) or Deformation. Usually, when an irate customer ran into overheating issues, the tool they sent back to me had deformed to the point that it looked like it had been made out of lava.

The lack of predictability of failure by overheating creates issues for the shop beyond the obvious. Parts produced immediately prior to failure are suspect and must be validated prior to release, to avoid sending rejectable product to customers. Overheating can thus be a “delivery problem” in your customer’s eyes.
Here are 5 tips to get out of Overheating Tool Failure Mode and back to normal predictable Crater Wear Tool Failure Mode when machining steel:

Improve lubrication coolant delivery or formulation. Sometimes adding an extra coolant line to the position will eliminate the problem. Confirming your coolant is up to spec should be done before electing to buy a new “super duper formulation.” First things first!
Use a harder grade of carbide with more Ti (Titanium)
Increase the Feed Rate (IPR) inches per rev
Reduce the Speed (SFM)
Consider Ceramic or Cermet Tooling. Note- these are not really appropriate for low carbon (less than 0.20% C) steels. Low carbon steels become gummy and stringy at speeds typically used for ceramic tools.

These tips will address your overheating problem by reducing the friction, surface adhesion, and improving removal of heat, (improved coolant, delivery); improving the tool’s ability to withstand cutting conditions, and reducing the heat inputs by decreasing speed and increasing feed.
For more great information on this subject look at this lesson from Fox Valley Technical College.

3 Things You Can Do Today To Improve Safety In Your Shop

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Safety- What You Can Do Today To Make Your Company The Most Money?
No one can afford the wasted money and lost time that result from accidents and injuries at work.
No one wants the increased scrutiny by officials that is sure to follow a serious accident.
No one wants to see anyone senselessly hurt.
3 Things You Can Do Today:

Hold your people accountable to work safely. Starting with you. Wear your Personal Protective Equipment (PPE) when you are out in the shop. Why be a hypocrite? Don’t turn a blind eye when you notice them without their PPE. Let them know that their safety is important to you.
Train your people to understand the hazards, know when to get assistance, and why the guards and precautions are needed. Follow up to make sure that they understand. And listen to, and then take action,on their feedback.
Confirm that your procedures are up-to-date and being followed. Lockout/Tagout, Hazard Communications, and Housekeeping are high frequency violations. Would your shop pass an audit of these three areas if I were to visit right now?

Note to operators- nobody wants you to get hurt. Your talent, knowledge, diligence, and professionalism are the foundation of our industry’s success. And why our car’s brakes work. And the landing gear deploys on the airplanes we fly. And why the electricity gets safely to our homes.Your work makes other technologies work. Safely.Work smart, don’t take risks. No shortcut is worth losing a body part. Get training-not hurt.

Safety first when working at home too, guys!

All of us are creatures of habit, doing the things each day that we habitually do. We need to let the power of these habits work for us. Let’s make safety first a habit that keeps our shops and people both safe and productive. Making safety first is ‘What you can do to make your company the most money.’
Today.
Everyday.
Forever.
Safety first!

5 Tips to Improve Surface Finish On Your Precision Machined Parts

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Surface finish issues are especially critical in aerospace and medical applications. Chips recontacting the work and high or unstable Built Up Edge (BUE) are the usual suspects of poor surface finish on machined parts, regardless of material. There can be other factors, such as a poorly maintained machine or exhausted metalworking fluids, but these are seldom the case when “the last job on this machine ran just fine.”

Surface finish is critical on precision machined parts.

Here are our 5 tips that you can address on the machine to make poor surface finish go away:
1) Increase the speed SFM (especially on Carbide!). This will help reduce BUE.
2) Reduce the feed per revolution (IPR- inch per revolution). This will help reduce the flank wear.
3) Increase the top rake angle.
4) Add a chip breaker / chip curler.
5) Increase tool nose radius.
We have seen increasing speed to be especially helpful on aerospace and medical machining jobs on stainless steel. Increasing speed is also important when using carbide- carbide likes speed.
If you can see that the chip is recontacting the workpiece, then address your chip control issues first. Chip control is the first place to start. Adding chip control geometry on the tool is probably the easiest change on non CNC machines. Modifying the cam to break the chip should also be considered. On CNC’s, adding chip breaks into the program is also an easy adjustment. These are especially effective if the workpiece is a gummy material.
Built Up Edge (BUE) is impacted by three primary factors: material chemistry (which you can’t change- you already have the material); surface footage (slower speed means hot chip is in contact with tool longer, creating higher BUE); and tool geometry (the point is to slice or cut, not rub off the material).
Of course, you should make sure that your setup is rigid, your tooling properly seated, your coolant lines are delivering plenty of coolant to the tool/work interface, etc., etc.. But these 5 tips are ‘Tools You Can Use’ to improve the surface finish on your problem jobs, including stainless and other aerospace and medical materials.