Since 1959 commercial heat treater Allied Heat Treat in Mississauga, Ontario, Canada has been offering a wide variety of services including carburizing, gas nitriding, vacuum hardening and carbonitriding. Alas the end of the road was just 2 days ago when the firm ran their last load of parts. August 18th of this year all of the equipment will be going to auction, this includes numerous vacuum furnaces built by Abar Ipsen and Vac Aero and ranging from 1 bar to 5 bar. This is part of some rather substantial changes in the Canadian heat treatment market which is seeing two commercial shops closing down, 2 others merging, one new start up and two brand new captive heat treat departments starting up.
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Compensation Analysis for the Heat Treat Industry
From Mr. Josh Hale of International Search Partners, the larges recruiting firm in the North American heat treating industry we have this very interesting article about compensation within the industry.
“This is the third of a three-part series addressing salary and compensation trends for the heat treat industry. The previous two articles act as salary guides for commercial heat treaters and furnace/oven OEMs. The objective here is to take a closer look at overall compensation beyond base salary and answer some common reader questions.
The most common question is who are the highest earners within the heat treating industry?
With rising costs of doing business (materials, taxes, marketing, etc.), one can correctly assume that it’s not always owners who are taking home the most money. In many instances, it’s also not senior level management. For a commercial heat treat, the highest grossing W-2 often belongs to someone working in the maintenance department. The two key reasons for this are overtime and supply and demand.
Overtime makes up a large percentage of overall income for a lot of industrial hourly workers, but this is especially true maintenance professionals who are often on-call and might work 7 days a week. A typical maintenance worker earning $30/hr would have an equivalent annual salary of $62k/yr. However, if he averaged just 65 hrs per week, he would nearly double his base salary with overtime pay, and it would not be unheard of for someone working closer to 80 hrs per week easily eclipsing the total annual income of an experienced plant manager or GM.”
Another reason for high earnings potential in the field of maintenance is simple supply and demand. Hands-on maintenance skills are rare, and companies will do whatever they can to attract and retain top talent in the field. The same holds true for field service engineers, who are often the highest earners for a heat treat equipment manufacturer, and who have seen a significant uptick in base hourly wages and per diems over the past few years.
A shortage of quality candidates for hire is now starting to affect other facets of an organization as well and many companies are struggling to hire and retain experienced heat treat professionals at all levels. Some companies have begun to offer retention bonuses to those who stay employed and in good standing for 6 months or 1 year and others offer referral bonuses of anywhere from $250-1k+ for successful hires that may come from an existing employee’s introduction.
Another recent trend is for employers to offer more flexible schedules and/or work-from-home options where appropriate. While this has been expedited by the COVID-19 pandemic, it is a shift that has been coming on gradually for several years and is a proven and effective tool for enticing new recruits. Of course, not every role can be based remote, but OEMs are finding that designers and drafters can be just as effective from a home computer as from the office, and for many high-travel positions such as sales and field service, being based elsewhere from company HQ doesn’t pose an issue.
Most companies also offer additional benefits to their employees outside of monetary compensation. Health insurance and 401K retirement plans with matching are common but haven’t changed much over the past few years and tend to be similar from company to company. However, there has been an increase in paid time off offered. It used to be that an employee might have to wait for his 3rd or 5th year anniversary to be eligible for more than 2 weeks of vacation, but now it is commonplace to start a new hire at 2-3 weeks or more. Another benefit that has become more widely used is to offer some sort of profit sharing as a tool for engaging workers and aligning their incentives with that of the company.
There is a lot more to compensation than just salary and while this article peels back the layers on some common practices and trends, there are many variables to consider in this ever-changing space. For any specific questions, please feel free to reach out to Josh Hale at [email protected] or call 619-828-1040. Josh has been in the recruiting field since the early 2000’s and has specialized in the heat treat niche since joining International Search Partners in 2015 where he has made over 100 placements across all functions within the industry.
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It is with great regret that we mention the passing of Jeff Smith in the early morning hours of August 8, 2021. Without a shadow of exaggeration we can say that Jeff was a pioneer and a leader in the global heat treatment industry. In 1974 Jeff founded the SBS Corporation in Michigan, USA to manufacturer air cooled quench oil coolers, an idea which at the time was almost unheard of in the world of heat treatment. It proved to be so successful that in 2021 we doubt that any new furnaces do not come with an air cooled heat exchanger.
Jeff was a good man who we knew for many years and his presence in the industry will be missed. SBS will continue under the direction of Jeff’s son George Smith. “It is with a heavy heart that we announce the passing of my father, Jeff Smith after a 2 year battle with cancer. He was surrounded by loved ones until the end. We appreciate the outpouring of love and support from the industry that he loved and had such a large impact upon. As a testament to his legacy, SBS will continue to serve the Heat Treat Industry with the same commitment, dedication and passion that he has instilled in our entire team. I feel honored to have had Jeff as a loving father and so very lucky to have worked by his side for the last 9 years. I, and everyone at SBS, will miss him immensely. George Smith”
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The August 2021 issue of “The Monty Heat Treat News” is now available at https://fliphtml5.com/gvbzt/mrom As the largest heat treatment news magazine in the world you will find the most up to date news and trends in the global heat treatment industry.
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As “The Monty Heat Treat News” has been reporting the ongoing “chip” shortage which has effected auto makers and their suppliers around the world has caused substantial slowdowns at both captive and commercial heat treaters.
One of the largest auto parts suppliers in the world, Magna International has cut its sales forecast for the year because of the ongoing shortage, this has in turn caused a slowdown in their heat treatment department at Magna Powertrain in Ramos Arizpe, Mexico. This facility started production in 2016 and the heat treatment department which “The Monty Team” have visited consists of a number of multirow pusher furnaces, the bulk of which came from the Magna Powertrain facility in Syracuse, NY, USA, a location which is now a distant memory.
Until this issue is resolved we expect the volume of heat treating around the world to “languish”.
“Magna International Inc, whose bid for Swedish rival Veoneer was trumped by chipmaker Qualcomm, cut its full-year sales forecast on Friday, citing a slowdown in automobile production as a semiconductor shortage plagues the sector.
Chip scarcity has hampered automobile production around the world, bringing some assembly lines to a halt, with automakers warning the chip shortage could extend, even as vehicle demand booms in markets including the United States.
“The second quarter of 2021 included the production disruptions due to the ongoing global semiconductor chip shortage,” Magna said in a statement. The global semiconductor chip shortage will cost automakers $110 billion in revenue this year, according to consulting firm AlixPartners.
Auto parts supplier Aptiv Plc said the previous day it expects higher costs due to pandemic-related supply chain problems to spill into the next year.
Chipmaker Qualcomm Inc said on Thursday it had offered to buy Veoneer Inc for $4.6 billion, an 18.4% premium to a bid in July by Canada’s Magna International Inc that was accepted by Veoneer’s board. Veoneer has said its board would evaluate the proposal from Qualcomm and the terms of the Magna merger agreement.
Magna’s revenue for the year is now expected to be between $38 billion and $39.5 billion, compared with a previous forecast of $40.2 billion to $41.8 billion.
Magna reported net income attributable of $424 million, or $1.40 per share, in the quarter ended June 30, compared to a loss of $647 million, or $2.17 per share, a year earlier. Total sales more than doubled to $9.03 billion, but missed estimates of $9.29 billion.”
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In New Britain, CT, USA commercial heat treater Metallurgical Processing Inc., has recently achieved their 2 year merit status with PRI/Nadcap. Metallurgical under the very competent direction of Elena Ritoli has made a number of investments over the course of the past year which is quite impressive in these rather turbulent times.
“In its most recent audit Metallurgical Processing Inc. New Britain, Conn. has achieved 2 year merit status with PRI/Nadcap. With 10 checklists ranging from Aluminum, Ion Nitride, Vacuum Furnace Brazing and Carburize among others, the company’s diversity of processes is quite unique in the industry. Having this level of diversity is a challenge for quality, management and shop supervision. This was possible largely due to the tenure and experience of management and their expertise in thermal processing and the stringent requirements of the Nadcap audit. Congratulations are in order for this family owned business.”
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The continuing shortage of computer “chips” continues to drag down captive and commercial heat treating in North America. As explained in our previous posts (below) the shortage of computer chips has caused a drastic reduction in North American automotive manufacturing (note that while North America is perhaps the most effected, this is a global issue) which has in turn lead to dramatic slowdowns at part suppliers and commercial heat treaters. While earlier reports suggested that the chip shortage would be resolved by July, this is not the case and there appears to be no definite end date to this issue.
As automotive heat treatment is the largest segment of heat treating in the world we expect heat treatment overall to remain stagnant until this issue is resolved. The photo below shows part of the 50,000 Ford F-150 Pickup trucks being stored in Kentucky until the issue is resolved.
June 2021 Posting; Slowdown In North American Heat Treating-This is Why; We have spoken in the past about how automotive heat treating in North America has slowed dramatically in the past 3 months- our posts on the subject can be seen below. As the largest segment of the heat treating industry in North America is automotive related it is easy to see why the entire heat treatment industry has been rather sluggish of late. It is one thing to talk about it, quite another to see a visual representation. This photo shows some of the 200,000 partly completed Ford F-150 Pick Up trucks which are sitting unsold at the Kentucky Freeway in the USA, unsold until they get “chips”. Not much point in building more vehicles when you have this sort of inventory, however when the issue is resolved we predict that automotive heat treating will set new records.
Automotive Heat Treating To Come Roaring Back July 2021
May 2021 we had a news item about how heat treating of automotive components has seen a dramatic decrease worldwide over the past 2 months due to assembly slowdowns caused by a global “chip” shortage (the original news item is below). As automotive heat treating is the largest segment of the heat treatment industry the effects have rippled through the industry effecting both captive and commercial heat treaters as well as industry suppliers.
However it would appear that the pain will be short lived and that by July of this year automotive heat treating will be in a very healthy position. Let’s correct that statement, automotive heat treatment will actually be in an extremely healthy position.
Several automotive parts suppliers with large in house heat treatment departments, companies such as ZF Industries, Dana, Eaton Corporation, Borg Warner and Linamar have told us that they have been advised by their customers to be prepared for a return to full production by late June or early July at the latest. To elaborate on this a little further all have been advised to limit maintenance shutdowns and summer holidays because pent up demand for new vehicles will require full production. This comes after many industry suppliers have just come off either plant slowdowns or full shutdowns.
“Automotive Heat Treating Slows Due to “Chip” Shortage
Why is the largest heat treating segment in the world, that of automotive heat treating seeing a substantial drop these days?
In early 2020 when COIVD-19 was hitting the world automakers cut back computer chip orders as auto sales slumped which lead to temporary plant closures. Electronics manufacturers, which have enjoyed very strong sales during the pandemic quickly scooped up the excess supply. However since that time car and truck sales have rebounded far sooner than anybody anticipated and automakers have been scrambling ever since to obtain new “chip” supplies in a very tight market. The result has been that all automakers have been forced to close assembly plants in North America, Asia and Europe.
As an example GM recently announced it would shut production at two US plants – in Spring Hill, Tennessee, and Lansing Delta Township, Michigan, in the coming weeks. GM also extended shutdowns at the Fairfax Assembly plant in Kansas City, Kansas, and the CAMI plant in Ingersoll, Ontario, which have both been idled since February 8. And it will continue the shutdown at the Lansing Grand River assembly plant, which has been down since March 15. In addition, GM is halting Chevrolet Blazer production at the Ramos Assembly plant in Ramos, Mexico, during the week of April 19, although that plant will continue to build the Chevy Equinox.
Autoweek Magazine summed us the situation this way; “The chip shortage itself is rooted in the early weeks of the pandemic last spring when the automakers largely shut down, and when suppliers producing microchips for automakers had turned their capacities in the direction of computer and gaming console makers. When the auto industry experienced a sudden bounce-back in most major markets last fall, suppliers were not able to shift away from contracts with these electronics companies, who had experienced rapid growth in consumer demand during lockdowns around the world.
Different automakers have weathered this storm differently so far-some have even stockpiled weeks worth of chips-but the shutdowns at US plants and continued production disruption is expected to continue for months due to these shortages. Some chip makers are already working on expanding their manufacturing footprints, but given the time needed to get new assembly facilities up and running, this is unlikely to have a measurable positive effect for quite some time.
In the meantime, automakers are expected to scramble for chips and endure shortages as the car buying season picks up steam and heads into the summer, just as vaccination campaigns in the US and elsewhere reach a point where demand for new vehicles could seriously ramp up. Just how long these shortages could last is a matter of some debate, but even aside from it, the growth of increasingly complex infotainment systems in cars points to another pressing issue: The semiconductor industry will have to adjust not only to the current shortage, but also prepare for emerging trends in auto manufacturing as a whole, as multiple automakers turn increasingly to tech-heavy electric cars.”
The end result has been that auto parts makers with in house heat treating departments and commercial heat treaters concentrating on the auto industry have in many cases have seen a drastic slowdown in production. One very large auto parts maker and captive heat treater in the US recently told us that in March of this year the company set records for the amount of heat treating they did in house, April in turn is looking to set records for the number of furnaces shut down. This leads to the conclusion that when the chip shortage is corrected the pent up demand for new vehicles will lead to record amounts of auto production and with it a corresponding amount of heat treating.”
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We are very pleased to be able to offer you an interview with Mr. Ben Gasbarre, President of one of the larger furnace manufacturers in North America Gasbarre Industrial Furnace Systems.
Ben we have known each other for a number of years, I have to say I have been looking forward to asking you a few in depth questions about your background, the history of Gasbarre and your thoughts about the heat treatment industry and where it is going.
Thank you, Gord. Appreciate the opportunity to speak with you.
Since Gasbarre is a family owned business I certainly don’t have to ask how you got involved in the heat treatment industry but I would like to ask about your earliest memories about working at Gasbarre. What was your first position at the company?
My memories of Gasbarre go back to when I was young, visiting my Dad, and walking around the manufacturing floor. In the summers I worked in shipping and receiving and in customer service roles at our Press Division in DuBois, PA. I didn’t get my first taste of the furnace division until I graduated from college, at which point I started overseeing manufacturing and scheduling at our furnace facility in St. Marys, PA. Over time, I took on more responsibility in purchasing, inventory control, and project management. I learned a lot in my first few years about our manufacturing processes, but most importantly, I learned how the furnaces worked inside and out, and how they were used by our customers. Today, I spend most of my time focused on growing our business through customer relationships, ensuring that we are providing the best customer service and driving technology changes across all furnace lines.
Tell us a bit about the company, specifically as it relates to supplying thermal processing systems. For our readers that are not that familiar with Gasbarre we should briefly mention that Gasbarre also provides other solutions for manufacturing, generally related to the powdered metal industry.
Gasbarre was started in 1973 by my grandfather, George Gasbarre Sr., we started as a compaction press manufacturer for the powdered metal industry, which we still supply today on a larger scale. Since that time we’ve acquired eight different companies, and have started up an additional two. Today we design and manufacture compaction presses for powdered metal, ceramics, and hard metal applications. We design and manufacture precision tooling for compaction presses. We also design industrial automation solutions, and supply contract machining and fabrications for a wide range of industries such as oil & gas, glass, rail car, and mining.
Of course we have the Thermal Processing Systems division, which started with the strategy of diversifying our product line through complimentary products. Our first was the acquisition of Sinterite in 1989 to supply sintering furnaces to the powdered metal industry, then in 2003 we acquired C. I. Hayes, which enabled us to enter the higher temperature market with their atmosphere pusher furnaces and vacuum furnaces. In 2011 we acquired J. L. Becker, which allowed us to enter the broader heat treat market with our line of batch atmosphere equipment. We have made substantial changes both organizationally and in regard to our product technology and services since the acquisitions. In 2018 we rebranded all our product lines under the Gasbarre name you see today. Our focus is not on the name of the equipment, but supplying the proper type of equipment for our customers’ application. Today, thermal processing equipment and related products accounts for about half of our sales. Compaction press and tooling is about 35%, with contract machining and fabrication being about 15%.
What products do you supply to the industry?
I believe we have one of the broadest product offerings in the market. In some cases that can be seen as a “jack of all trades, master of none” situation, but with us that isn’t the case. The way we’ve grown the business has allowed us to maintain technical knowledge and expertise for each of the product lines. Our core products include: continuous mesh belt and pusher furnaces for annealing, brazing, and sintering. Both batch and continuous vacuum furnaces for nearly any process, and can adapt oil and gas quenching, or slow cooling. Batch atmosphere equipment for most heat treat applications including annealing, hardening, nitriding, tempering, etc… We also provide aftermarket parts and service. We have extensive fabrication capabilities for muffles, retorts, fan shrouds, and fixturing. We are also ISO 17025 accredited for control calibrations.
My first impressions of Gasbarre (and these go back quite a while), is that the company is very strong in mesh belt sintering furnaces which is no surprise since Gasbarre was started in the sintering capital of the world, St. Marys, PA. I know you are still very strong in this area but recently I have seen the company expanding into other areas such as nitriding. Why nitriding furnaces and why now?
Yes, as mentioned earlier, we got our start in the powdered metal industry, and still have a large presence in the market today. The sintering furnace product offering equates well to processes such as annealing and brazing, which have helped grow that portion of the business.
Regarding the nitriding, it is no secret that has been a growing process for many years. We saw a hole in the market where most OEMs of that style equipment are based overseas, and there was an opportunity for a domestic provider offering the latest in nitriding and FNC technology. While we have made plenty of equipment for nitriding over the years, Gasbarre wasn’t well known for it. We brought on personnel familiar with selling the process, maintaining the equipment, and who have managed operations and metallurgy based around nitriding and FNC. From there we updated our designs and controls to ensure compliance to AMS standards, have technology for improved cycle times, process control, and repeatability. The horizontal style nitriding units are gaining more traction in the U.S. and we’ve been able to impact the market with our ability to design, manufacture, and service the equipment all from the United States. Again, that is not something most OEMs of these style furnaces can say.
As more and more processes are converted to nitriding and FNC, we look forward to being apart of it, and supporting the domestic industry in its continued growth.
The company has grown over the years through organic growth, but also through acquisitions. CI Hayes and the JL Becker Company are two acquisitions over the years that come to mind. Going forward do you see more acquisitions or are you content with the organic growth you have been seeing?
You can never stop looking for additional opportunities for growth. From my past comments, you can see acquisition is a large part of what we’ve done. At the same time, we know we have a strong product offering, and can continue to advance our products and services to expand our footprint in the market. Currently our focus is organic growth and product/service development, but we are always open and opportunistic if the timing is right and the fit is right for acquisition.
You have one particular product line which has always fascinated me, continuous vacuum furnaces. I say fascinated because it is a very unique concept and one which you don’t see that often. Is this a large portion of your business and do you have any competition?
You are correct, the continuous vacuum furnace is a unique product in the market. The process flow of the equipment fits well into many medium to higher volume manufacturing environments. Our design also takes maintenance into consideration, and allows easy access to the heating chamber and other areas of the equipment. With the heating chamber maintaining vacuum it creates the purest of environments for part quality and repeatability. We’ve had certain captive heat treaters justify a continuous vacuum furnace on part quality alone. We’ve also seen conversion from high temperature atmosphere pusher furnace processing to the continuous vacuum furnace. This allows the same type of part flow through the manufacturing process, while also gaining significant savings in atmosphere and energy consumption using vacuum over atmosphere technology.
Over the years we have seen a lot of activity in this product line with aerospace OEMs, tool manufacturers, and even some commercial heat treaters. Of late more interest has come for the benefits of high temperature sintering as it relates to both powdered metal and additive manufacturing applications. We certainly see it as a differentiator in the market, and a product line that has growth opportunity.
COVID-19. How has this effected your sales volumes, sales strategy and the topic of most concern for all manufacturers these days-your ability to find and retain employees?
We are definitely back to more normal levels (and above in some areas) since COVID hit in early 2020. The fall of 2020 is when we saw things start to come back, and since January business has been strong across the board. Between our work on the digital marketing side, and our ability to service and retain existing customers, we’ve been able to grow our backlog to levels we hadn’t seen since 2018. We have been fortunate on the personnel side in that we were able to increase our manufacturing capacity by almost 50% as things picked back up. We are continuing to recruit to keep up with demand, and have upcoming plans for expansion on the furnace side that will be announced soon.
Lets switch gears slightly and look at the global market. Are sales outside of North America significant for the company? The second part of this question would be global competition. Do you often run across Asian or European competitors when quoting in North America?
Throughout our history we’ve seen our international business account for anywhere from 15%-30% of our business. Obviously with the dynamics of COVID that has been reduced over the last couple years. While we have international representation and service, our focus on the furnace side is North America. It is a large market with plenty of opportunity.
With our diverse product offering we run across all different kinds of competition depending on the product or market. For instance the continuous mesh belt market in Mexico sees competition from Europe, Asia, and the U.S. depending on the company’s ownership. As I mentioned earlier many of the players in the nitriding equipment market are European. Then when we get into the vacuum and more conventional heat treat equipment the competition is mostly domestic.
The competition does vary quite a bit, and again, we see our advantage as being a strong player in each of these areas, and can offer an objective approach to providing a solution to our customers. We don’t go into an opportunity pushing a single product. We can objectively look at what the customer wants to do, and offer batch or continuous style processing, or even weigh atmosphere versus vacuum technologies.
Lets look to the future for our next questions, first up would be the upcoming ASM show in St. Louis, MO this fall- the first North American heat treat show in 2 years. Your company will be exhibiting there, what are you expecting attendance to be like? To phrase it another way do you think the average North American heat treater is over their fear of COVID and ready to “mingle”?
I attended the Metal Treating Institute’s spring meeting in May and I have to say attendance was great, and people were eager to have the personal face-to-face interactions. We recently exhibited at the MPIF (Metal Powder Industry Federation) show, and while attendance was down compared to normal years, the activity level and quality of collaboration at the event was high.
I still think we have a mix going into the ASM show in September. People are ready, the market is ready, but companies are still going to take advantage of cost savings as it relates to travel and other aspects of attending a show. Obviously the new COVID variants are a cause of concern. With that said, we are excited about the show, we believe attendance will be good and we expect to generate opportunity from it.
This question is the most interesting in my opinion but also far and away the hardest to answer; What does the future hold for the heat treatment industry? For instance do you see the possible growth of electric cars dramatically changing the amount and type of heat treating? Are greenhouse gas emission concerns going to change the style of furnaces?
You are right, we’ve paid special attention to some of the market conditions you are referencing. While it seems inevitable the market will change with the electrification of vehicles the real question is when. All of our industry organizations have an eye on this and are supporting companies that will need to adapt. We as a company are working on the next phase in finding the opportunity that will be created from electric vehicles, additive manufacturing, and the expected growth in vacuum heat treating. With that said, we have a lot of optimism in the growth of current markets over the next several years, we are proud and confident in the product offering Gasbarre has created, and we look forward to advancing our products into the future!
Ben I very much appreciate the time and looking forward to seeing you in the near future.
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In this weeks edition of “The Heat Treat Podcast” our host Mr. Carlos Torres talks water quenching with one of the most passionate and knowledgeable heat treaters we know, Mr. Joe Powell.
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