"I have seen a drop, but I cannot tell for sure what the reason is. There was definitely a drop in the amount of tool steel I have heat treated over the last few years. Some of this I can easily attribute to a customer deciding to send their work to another heat treat shop. Other changes have occurred through business changes such as mergers and acquisitions. Over the last, maybe, 3 months I have seen a surge in materials such as A2, D2 and M4 from my customers who are in the stamping industry. However, I seem to rarely get little punches of M2, Vanadis 23 or T15 anymore. I suppose some of this could be going to China, but my understanding is that the United States practices "protectionism" and I have heard my customers say that their tooling is now being made in the USA or that a specific product they were making has been transferred to their American parent company.

Costs continue to be the driving factor. When someone wants a quote for a tool, they are looking at pricing only. No one asks for tenders based on the most durable and perfect quality tool that can be built. On the other hand, if you are making your own tooling, this might interest you. However, top-of-the-line materials and heat treating will always be much more expensive than cheaper alternatives. It often comes down to who is making the decisions. If it is a Purchasing Agent, price may be the only issue. If it is an engineering manager, productivity may me more important. Bohler-Uddeholm has done a very good job, in my opinion, over the years stressing proper heat treating. I am a strong advocate of that as well. There is no point in buying CPM 10V for $30 a pound and then having its properties short-changed by improper heat treating.

This message is getting around, I think, which has led to better tooling that runs longer. However, with the myriad of specialty materials around, it necessitates that heat treaters have small vacuum furnaces available for these custom cycles and not just colossal giants. At the risk of offending some of your other heat treating friends, I have seen lost customers come back to me after having experienced "cheaper" heat treating elsewhere.

I do not believe that work is ever lost forever, on average. I have seen customers come and go. I continue to see Japanese interest in setting up auto assembly or fabrication plants in Ontario and I am quite sure they are not getting their parts from China as I believe that violates export rules for their cars to the USA. Fused Metals, however, has never been a shop where everyone sends their A2 and D2 to. Therefore, I may not be seeing the drop as much as some other strictly tool and die shops such as Allied Heat Treat in Mississauga."

Grant Robinson of Fused Metals in Georgetown, Ontario, Canada

Terry Bachmeier of Rubig Engineering Canada. Terry has been involved in Tool & Die Heat Treating in Canada for almost 40 years with companies such as Thyssen Krupp, Ipsen International and Rubig Engineering (Austria, new Vacuum furnaces and Ion Nitriding systems). When you combine these thoughts with others from the industry such as Bill Jones of Solar Atmospheres and Grant Robinson of Fused Metals the conclusion is obvious. Tool & Die Heat Treating has been in decline, is in decline and will continue to decline in North America. Sad but true.

"There is no question that the volume of tool steel heat treating is declining in Canada. Business in the Tool and Die manufacturing sector is migrating to the Pacific Rim countries, China in particular, and to countries in Europe, India and the USA as well.

There are many factors responsible for this global shift some of which have already been mentioned in two previous articles by Bill Jones and by Grant Robinson. Another factor is that certain sectors of die manufacturing have become mature. As a result tool steel heat treat providers find that they are competing for tools that have now become a commodity. One example is aluminum and magnesium die-cast dies for automotive and hardware components. The contributions made by the tool steel heat treaters in this equation have been greatly devalued. The old saying, “We have Price, Quality and Delivery and you can have any two” has changed. Price, quality and delivery are now a given just to stay in the game. To the heat treat provider quality is king; to most customers price is king. In some cases the number of heat treatment cycles have changed or eliminated due to some specialty steels such as precipitation and pre-hardened grades resulting in less revenue. It could be argued that there are still too many commercial heat treat companies competing for a smaller piece of the remaining tool steel pie.

One has to wonder why 40 years ago a commercial heat treat shop got approximately $1.20 per pound for tool steel heat treatment and today the average commercial heat treat provider is considered fortunate to receive $1.20 per pound. Everything else has gone up except for what the market will bear. It appears that the customer will pay for the PROCESS ONLY, so it is up to the heat treat industry to reduce the costs of operations and increase productivity. To be profitable under the current conditions Commercial Heat Treat shops must always be changing. They must distinguish themselves from the competition and learn what the customer will pay for and at what price. The Captives or In House Heat Treats are not immune either to the economies of global sourcing."

WHAT TO DO

I have the utmost respect for heat treat providers who have been time tested. They have weathered many cycles, and have developed survival instincts. After 39 years in custom tool steel heat treatment I have observed something of what works and a lot of what does not. No one has a crystal ball and I can only offer a few thoughts and observations. “During hard times ones shortcomings play a bigger role”. It is no longer reasonable to try and compete with old inefficient equipment. Systems that do not provide an opportunity to reduce the cost of treating a pound of material must be targeted for replacement or at the very least upgraded.

The new generation of Vacuum Hardening and Surface Treatment Furnaces are compact, energy efficient, quiet, tamper proof, computer process controlled, they are near maintenance free and are capable of lights out operations. In a modern manufacturing plant it is no longer necessary to have a dedicated heat treat room or department behind a wall tying up valuable real estate. Instead modern vacuum hardening equipment can be integrated into the product flow right on the machine shop floor. “There will always be a need for speed”. Vacuum tool steel treaters who intend to win new work from the competition (including competing systems like salt pot treatments) will need modern and fast furnace systems.

In some cases a commercial heat treat provider might have good equipment that is not being used to capacity. It may make sense in some cases to move this under utilized capital into the customers own plant reducing transportation costs and turn around times. Even competitors in this day and age can cooperate to their mutual benefits. Not on price of course but on services. They may quote a program together to win a contract in their geographical zone. This is similar to what is happening in the machine, tool manufacturing sectors. Bohler/Uddenholm and Thermo-Tech Heat Treat Canada have done this very effectively with a group of approved heat treat companies strategically located in the industrial Mid West.

Captive heat treats may find that to justify expenditures for new equipment they will have to include taking in up to 30% commercial work. Commercial heat treaters can process work for OEM companies who have in house heat treat departments because they can process certain products better and at considerable cost savings to the manufactures. At the end of the day they are all selling furnace time and unfortunately at the lowest price. Commercial heat treaters will have to continue distinguishing themselves by providing additional non heat treat but complimentary services. This is cleverly being done by Schmolz & Bickenbach Canada Inc. a commercial heat treater located in Windsor Ontario. S & B market a package of tool steel, quality heat treatment, machining and transportation all under one purchase order. Patt Technologies located in St-Eustache (Montreal) Quebec have developed proprietary multiple surface coating treatments to compliment their own manufactured products. As a result of their “know how” and specialty equipment they are attracting outside commercial work. Thermetco Inc. in Montreal has remained on the forefront of technology. Their niche is to be full service provider and in some cases fabricate and heat treat sophisticated components. Companies like Exactatherm in Mississauga Ontario, are a manufacture that has both In House and Commercial treatments and is a full service provider who has demonstrated innovation and vision.

It is not my intention to exclude anyone as there are many more fine examples although too many to mention in this writing. Risk management is absolutely essential to the heat treat provider and the customer alike. Improved risk management throughout the thermal processes is now more than ever indispensable. There are still too many frivolous claims and in some cases from companies who can not pay their bills. Heat treatment providers are sitting down with engineers now. Thermal treatments must not be an afterthought. If it is not good business don’t take it in.

I would be remiss if I did not address the labor force in this equation. In Canada we have a very large well educated middle class work force. However the work ethic has changed. The OEM’s can now source their requirements to other countries and for much less. Cheap labor no longer means cheap quality because the heat treat recipes have been well established so the desired results can be reproduced exactly with modern equipment and with very few key supervisory personnel. I firmly believe the Canadian Market for thermal treatment services will survive and be strong due to the Canadian entrepreneurial spirit, diversification, new emerging markets, new and improved technology and a flexible work force that continuously appreciates in value."

Terry Bachmeier, Rubig Engineering Canada 519 967-1300

Bill Jones, CEO of Solar Atmospheres. While Bill's comments are not what we want to hear as head of the largest commercial vacuum shop in North America Bill's comments carry a lot of weight.

"In the greater mid Atlantic region, our shops are outside of Philadelphia, tool and die heat treating has been reducing year over year since the early 1990's. At least six heat treating companies have gone out of business as a result of the turn down in business from manufacturing and machine shops. The hurt on these shops is even more severe as dozens and dozens no longer exist.

Our plant in Hermitage is mid way between Pittsburgh and Erie, and not far from Meadville and the latter a major area for tool and die shops.

Tooling was good business into the late 90's, but a severe business turn down occurred after 2001 from which the manufacturing shops have never recovered, nor has heat treating as a result of this market loss.

Both Solar plants have grown and survived by turning our attention to other markets such as vacuum annealing, brazing, nitriding, carburizing and other special heat treating process as niche business where other heat treating companies do not offer these services. In order to grow in a declining market we have had to also reach across the country North, South, and to the West coast to find this business. Our advantage is multiple large vacuum furnaces capable of handling very heavy work loads in deep vacuum, often at very high, or surprise, low temperature, and operating in hydrogen, sometimes wet, or other special atmospheres, generally not thought of in standard vacuum furnace.

With the relocation of manufacturing to Mexico and off shore, the tool and die heat treating business as we know it is gone forever from North America, except for locale shops with special low run business for repairs, development, and defense business."

William R. Jones, CEO Solar Atmospheres Inc.

October 2007