Table of Contents
This month’s Casteel Commentary speculates on the issues we need to deal with for our uncertain times and future success. We will need to ensure reliable supplies, automate to supplement a limited workforce and re-invest to modernize and extend our technical capabilities. To be successful, we will need to be selective in our markets and customers to have the products and financial performance we need to create the next generation steel foundry industry.
Section thickness and how a part is manufactured may affect secondary phase characteristics such as porosity, segregation, inclusions, etc. The size and distribution of these play a role in the properties of a test specimen. However, the size and distribution of second phases in a standard tensile specimen taken from a thick section is unlikely to be representative of the size and distribution throughout the section. Texas A&M is developing a more representative method of quality/property assessment, particularly for thick sections.
Texas A&M has built a parametric database of finite element models for voids in a tensile specimen, which uses a porous metal plasticity material model in order to consider the effects of features at smaller length scales on the presence of larger voids. This modeling provides the inputs for statistical analysis method development towards understanding the appropriate specimen size/test protocol to characterize the material capability of a cast thick section better than a traditional tensile test.
75th Technical & Operating Conference
The in-person 2021 T&O will be on December 8-11. The conference is the world’s only event on steel casting technical and operating papers, mostly by fellow SFSA members. To commemorate the T&O’s diamond jubilee, we will feature seven “diamond” presentations by SFSA alumni – chrome iron, Project 80, Fundamentals of Steelmaking, Project A-54, HSLA, engineered investment shells, and GD&T. Sessions will include topics on Next Gen Manufacturing, molding, melting, foundry engineering, finishing quality, EHS, management, technical and featured research such as clean steel and cast preforms. The workshop will include a presentation on wash – the problems it can create instead of solve, along with Next Gen Manufacturing R&D from ISU on automation of foundry processes and development of improved NDT, and UNI on the Sensor Collective initiative. The draft program and registration link will be made available by mid-October (tentatively, the event will be held in Chicago at the Loews Hotel).
SFSA Artisan Program’s Newest Master Founder
SFSA’s Artisan Program recognizes members’ highly skilled workers as Master Artisans. The highest level is a Master Founder; distinguished by a range of foundry and leadership skills, and who contributes in an extraordinary way to the success of the organization. Other specialized Masters demonstrate highly developed skills in one area of a steel foundry, such as melting, molding, and finishing. Artisan nominees are reviewed by the Guild of Master Founders. Recognizing these Masters raises the value and status of these individuals, and creates good publicity for the company in the industry. SFSA is pleased to recognize Brian Maloney, Vice President of Operations at Midwest Metal Products (MMP), as a Master Founder and the newest member of the SFSA Guild.
Brian was nominated by MMP President Joe Plunger and received several letters of support from various colleagues. Brian was recognized as having a broad skillset and background in most facets of the foundry including the manufacturing floor, foundry engineering, plant maintenance, purchasing, metallurgical, and technical knowledge. Brian is known for his strong abilities in understanding client’s needs, financial decision making, vendor collaboration, and creative problem solving. Above all, he is a strong mentor and always willing to share his knowledge and expertise.
The SFSA trends for July shows a softening in bookings and shipments though still positive year over year. The backlog for steel castings dropped to 8.25 weeks from its 9.25 weeks high in June while the backlog for stainless edged up slightly to 10.5 weeks from 10 weeks the month prior. The ITR leading indicator along with US industrial production and machinery new orders are all trending positive and indicating continued growth in the months to come. However, most steel foundries aren’t yet seeing that growth as labor shortages and supply chain issues continue to restrict demand. To see what may lie ahead for next year, the SFSA 2022 Market Forecast, presented this month at the SFSA Fall Leadership Meeting, is now available online here.
Apple TV has developed a series presenting Foundation, the Asimov novel series. This series of novels centers around the capability of mathematics and science to predict the future of civilization in a specialty termed, psychohistory. The premise is that the combination of psychology, sociology, history with statistics (computer models in our time) would allow certain predictions of the future based on the large number of individuals involved. While the choices of any individual are uncertain, the behavior and choices of the population would be certain based on psychohistorical analysis. Embedded in this fiction is the notion that is common in our secular culture that the future is determined by the past. What appears to be the progress of technology and the achievements of cultures are just the outcomes of forces that are determinate.
The COVID pandemic revealed that our culture believes that we have the technology and the control over our world so that any harm is preventable and attributable to some responsible agency. This echoes the premise of our ability to know the future’s dangers and risks and identify current actions that prevent harm. Harm then is a failure of public policy. Our response to the pandemic is not a rational response to the danger to minimize the harm, but a cultural response to eliminate the risk of harm with masks and isolation. The economic consequences of our COVID response, as the culmination of decades of policy decisions to disadvantage capital intensive industries like ours, will prove to make the future difficult. How do we who are unable to know the future, plan to operate our plants? While we cannot know with certainty the future direction, our current production environment and history suggests that we face four challenges at least:
- Limited supplies including consumables and spare parts extending to services like transportation,
- Automation to supplement and improve the workforce needed,
- Re-investment to modernize and improve our technical capability, and
- Serving customers in markets that will support the investment needed and are positioned for an evolving future.
Full industrialization in North America was spurred by the dramatic increases in industrial production for WWII and the transition to civilian production from 1940 to 1950. It continued to grow until the capital boom of 1960 to 1975. Then the industrial production index, the value of total industrial goods produced has declined from 1980 to 2020. The shortfall of capacity for basic commodities in the 2004 to 2014 should have given an expected re-capitalization for the North American economy, but the graph shows a continued decline in real dollar terms even though the high index flattened out.
Trade policy supporting globalization led the multi-national corporations to push investment into the growing economy in China when the price of commodities went up so that the increases in industrial production globally did not occur in North America but mainly in China. The strategy of China to gain a dominant role in the supply of the basic materials for production has been largely successful allowing them to dominate global supply chains. At the same time the poor policies in North America have discourage even the maintenance of our industrial capability. The pandemic and China’s assertive political and military posture has exposed the vulnerability of global supply chains with a just-in-time strategy. These global sourcing strategies have hollowed out the world supply chain eliminating capacity and capability in the developed economy while fueling dramatic increases in production in China. For steel products the developed economies saw what looks like a 30% reduction while the U.S. as the world financial center saw more like a 50% reduction in supply, especially of specialty products like steel castings. China grew to make more than half the steel in the world market with no domestic economic advantage.
For our industry, the first challenge that we face will be the availability of supplies. When we saw this in the 1970’s, plants carried larger inventories of materials, consumables and spare parts to insulate them from disruptions. In an inflationary economy, these inventory investments were not a drag on earnings but were an appreciating asset. When demand exceeds production and prices reflect shortages, the inventory that maintains production contributes to profitability. We will likely need to consider the purchasing and inventories of supplies, consumables, raw materials and spare parts as the disruptions in the supply chain become more common. We will also need to become good customers, paying in full and on time to get preferential treatment when supplies are limited.
The shortage of truck drivers and the longshoreman on the West coast have led to shortages throughout the supply chain. These shortages are symptomatic of the upcoming, already present change, in the workforce. We have fewer children, so we have fewer incoming workers, and we are wealthier with fewer children, so they don’t need to work to have money, and we have not told them that they need to contribute to our community by creating value but that the need to find their passion. Now we are surprised that the fewer incoming workers have less interest in working and when they work, less interest in creating value and more interest in time off and the size of their paycheck.
For our industry this means we must automate wherever the opportunity exists, even if the past workforce would be cheaper than automation. Like Japan 30 years ago, automation allows us to continue to produce as our workforce ages and shrinks. Our current business plans need to create enough investment capital to automate, or we will not survive.
This touches on an even more critical issue, investment in expanding capability and re-investment to modernize and improve quality and efficiency. We will need to improve our product consistency, so castings do not have a 1% return from customer machine shops. This may be by our pre-machining, filters or voodoo but this is a step we need to take. We need to be able to make premium products of high-performance steels, so we will need vacuum processing to get the reliability and performance. Our plants have evolved piecemeal, and we need to upgrade our equipment and rationalize our production layouts. These are well known to all of you, but we have been capital short and inadequately profitable to make these reasonable investments. Public policy with near zero interest rates means money has no time value so long-term capital-intensive investments are unattractive. This is one reason our industrial production has continued to fall. Financial institutions do not see manufacturing as attractive and predatory equity firms participate to buy troubled firm to flip them based on market volatility.
I expect the shortages of supply and limits of our capacity and capability exacerbated by the lack of labor to expand will make our industry exceedingly busy. What we do as the market heats up will be critical to our future. We need to consider and plan by identifying the customers that are smart, well positioned, collaborative and willing to cooperate to meet market demands that exceed our capability. As a part of our plans, we need to have business practices and customers that can make our needs for current investment for future demands possible.
We need to estimate the capital needs to make the investments in automation, plant re-investment and expanding capability and include that in our current costs so that we have business practices that create the sustained capital income to finance our future!
|STEEL FOUNDERS’ SOCIETY OF AMERICA|
|SFSA Trend Cards|
(%-12 mos. Ago)
|12 Mo Avg||3 Mo Avg||July||June||May|
|Carbon & Low Alloy|
|Department of Commerce|
Iron & Steel Foundries (million $)
|Nondefense Capital Goods (billion $)|
|Nondefense Capital Goods|
less Aircraft (billion $)
|American Iron and Steel Institute|
|Raw Steel Shipments|
(million net tons)
New US Source for Ferrochrome
MM Metals USA will be the first and only manufacturing facility to produce low carbon ferrochrome in the US in over 40 years. MM Metals has been granted a permit to produce low carbon ferrochrome in Pennsylvania and will offer high purity production by mid-2021. MM Metals pioneered the development of a new and continuous process to make the highest purity low carbon ferrochrome from mined chrome ore. The patented process, developed over 10 years, enables the manufacture of an ultra-high-quality alloy and super alloy on a very small footprint. The process is extremely clean and produces no hazardous emissions to the environment. Located at the Keystone Industrial Port Complex in Morrisville, PA, MM Metals USA brings unique, high-tech, economic activity to a former steel site. MM Metals USA is looking forward to supplying both domestic and international consumers of low carbon ferrochrome.