For as long as there has been heat treating there have been heat treat “reports” floating around. You know the ones that purport to give you the exact size of the global commercial heat treat market, the number of vacuum furnaces in the world, the ones that promise to provide you with 1,000’s of legit heat treat e-mails-for whatever market you are looking at there is a report, for a price of course.
The team at “The Monty” tends to have a low opinion of these reports although logic tells us there must be some that are worth the money (we just haven’t seen them yet).
Generally, we just ignore these “reports” and hope that not too many people waste their money on them, however one floated across our desks the other day that was so bad it was almost laughable.
The report which you can see here purports to report on the leading builders of Vacuum Carburizing/Low Pressure Carburizing systems in the world from largest to smallest we believe although we could be wrong on that point. The only problem with this report is that almost half of the companies on the list have never built such systems and generally have no plans to.
“Tenova” as an example builds systems for steel mills, “AFC-Holfcroft” focuses on atmosphere furnaces, “Aichelin” to the best of our knowledge has never built such technology-these are but a few examples. On the other side of the coin furnace builder “IHI” which has built quite a number of VC systems are not even mentioned.
When we approached the writers of the report with our concerns they did not disagree with our thoughts, rather they thanked us for the input, said they were using a different “methodology” and promised they would keep our points in mind.
Well our point is be very, very careful before you invest in one of these probably “AI” generated reports.
The expansion of this industry reflects another growing trend in the heat treatment industry, namely the growing demand for vacuum heat treat furnaces. Another industry leader “ECM Technologies” also spotlights this trend in this recent post by the company;
“Momentum is building at ECM Technologies – Industrial Furnaces for the rare earth magnet industry! Our Grenoble, France factory is full of ECM USA FLEX furnace cells as we ramp up production to supply several manufacturers at this pivotal stage of industry expansion. The future of rare earth magnet production is accelerating & we’re proud to drive it forward with FLEX #vacuumfurnace technology.”
“My career in the heat treat industry really did start with my father. I grew up around the industry and got my first opportunity at just 16 years old, working in a commercial heat treating plant. At that age, I certainly wasn’t thinking, “This is what I want to do for the next 30 years!” But apparently the heat treat industry had other plans for me.
I spent much of my career on the heat treating side of the business, which gave me firsthand experience with the challenges our customers deal with every day: keeping equipment running, meeting production schedules, maintaining quality, controlling costs, and dealing with all of the unexpected problems that seem to show up at the worst possible time.
Over the years, I eventually found myself on the other side of the business, working in the industrial capital equipment sector and specifically with vacuum furnace technology. And I have to admit, I like this side better! We still have plenty of problems to solve, but now I get to help our customers solve theirs instead of being the guy standing next to a furnace at 2:00 in the morning wondering why it isn’t running.
Most recently, I was promoted to General Manager of Furnacare, where I’m responsible for guiding our North American business. It’s been quite a journey from a 16-year-old kid working in a heat treat plant to helping lead a company that supplies and supports the equipment heat treaters depend on every day.
I think those years on the customer side have given me a perspective that is extremely valuable today. I understand the pressure our customers are under because I’ve been there. And after more than 30 years in this industry, I’ve also learned one other thing: there is always another problem to solve!”
2. I believe your title is “Director of Sales, Furnacare”, but the name “Furnacare” is not as well known as that of your parent company “TAV”. Could you please explain why the two names and provide us with some details about “TAV”; when was the company started, size of the firm, products offered etc.
“First, a small update since we started putting this interview together: I was recently promoted to General Manager of Furnacare, so I now have responsibility for guiding our North American business.
And you’re right, the TAV name is much better known in the industry than Furnacare. I actually have a funny story about that. When I originally interviewed for the job, I thought I was interviewing to work for TAV. Somewhere along the way I discovered I was actually going to work for a company called Furnacare. At that point, I just rolled with it! Fortunately, it all worked out pretty well.
The easiest way to explain it is that Furnacare is the North American business within the TAV family of companies. TAV has several companies focused on different areas of vacuum furnace technology, manufacturing, service, and support. Furnacare gives us the local presence here in North America to support our customers throughout the life of their equipment.
TAV itself was founded in Italy in 1984 and has grown into a globally recognized manufacturer of vacuum furnace systems. Today, TAV equipment is operating in more than 45 countries, with more than 900 furnaces built worldwide.
The product range is quite broad. We manufacture horizontal and vertical vacuum furnaces for applications including heat treatment, brazing, sintering, additive manufacturing, and low-pressure carburizing, serving industries such as aerospace, automotive, energy, medical, commercial heat treating, and general industrial markets.
One of the things that attracted me to TAV is that we aren’t limited to selling a standard furnace out of a catalog. There is a tremendous amount of engineering knowledge within the group, and we can develop equipment around the customer’s process and application.
On the Furnacare side, our job is to make sure the relationship doesn’t end when the furnace shows up. We provide the North American sales presence along with installation, commissioning, technical service, preventative maintenance, spare parts, upgrades, and long-term support.
So, if I’m explaining it simply: TAV builds some pretty impressive vacuum furnaces in Italy, and Furnacare makes sure our North American customers are taken care of before, during, and long after the sale. And thankfully, I eventually figured out which company I actually worked for!”
3. During a recent conversation you suggested that the “Furnacare” name would become less prominent over time-can you share with our readers what this means?
“Well, I guess it’s time to let the cat out of the bag! We are in the process of rebranding Furnacare as TAV USA. It’s something I’m extremely excited about and, quite frankly, I think it makes a lot of sense.
As we discussed earlier, Furnacare has always been part of the TAV family and serves as our North American operation. As TAV continues to grow its presence in North America, we believe having one clear and consistent identity in the marketplace is important. The TAV name is well established in the vacuum furnace industry globally, so transitioning to TAV USA allows us to build on that recognition while making it very clear who we are and what we represent.
It also means I can finally stop explaining that Furnacare does not, in fact, “care for furniture.” You would be surprised how often I get that question!
But joking aside, this is more than simply changing the name on the building or putting a new logo on our shirts. We are making a significant investment in the North American market. We are growing our team, expanding our service capabilities, increasing our spare parts and aftermarket support, and establishing a much stronger local presence for our customers.
The goal is for TAV USA to provide our North American customers with the best of both worlds: the engineering, technology, and manufacturing capabilities of TAV in Italy combined with a strong local organization here in the United States that can respond quickly and support our customers throughout the entire life of their equipment.
So yes, the Furnacare name will become less prominent, but for a very good reason. TAV USA is the next chapter for us in North America, and I’m incredibly excited about where we’re headed. And personally, I’m looking forward to introducing myself as the General Manager of TAV USA. It requires a lot less explaining!”
4. Jay you shared some very exciting news with me the other day concerning your presence in North America, can you now share it with the entire heat-treating community?
“Nice try, Gord! You almost got me. There is definitely some very exciting news coming regarding our continued investment and expansion in North America. Unfortunately, I’m going to have to keep a few of the details to myself just a little longer.
What I can say is that everything we’ve talked about with the transition to TAV USA is about much more than a name change. We have some ambitious plans for this market, and we are investing in the people, resources, and infrastructure needed to support the continued growth of TAV in North America.
A major focus for us is continuing to strengthen our service and aftermarket capabilities and putting our team in an even better position to support customers quickly and locally.
There is another significant piece of that strategy coming, but I think I’ll save that announcement for early 2027. Maybe that gives us a good excuse for another interview in February, Gord! For now, I’ll just say this: TAV USA is growing, we’re investing in North America, and we’re just getting started.”
5. Does this mean that “TAV” is now putting even more of an emphasis on the North American market?
“I wouldn’t necessarily say that North America is suddenly receiving more emphasis. The U.S. market has always been an important part of TAV’s growth strategy. Quite simply, it’s one of the largest and most attractive heat treatment markets in the world, so it’s a pretty good place to play!
What has changed is how we are approaching it. TAV has tremendous engineering and technical capabilities in Italy, and we have been successfully supplying equipment into North America for many years. But succeeding long term in the U.S. requires more than great equipment. You need a strong local presence, local service and support, an understanding of how American customers do business and, sometimes, you just need to speak a little better “Italish” — that unique combination of Italian and English we’ve all become very fluent in!
That’s really where TAV USA comes into the picture. We’re building the bridge between an extremely talented engineering and manufacturing organization in Italy and the expectations of customers here in North America. We are adding people, strengthening service and aftermarket support, and putting more resources closer to our customers. At the same time, we are working very closely with our colleagues in Italy so that we operate as one team rather than two organizations separated by an ocean.
So the desire to grow in North America isn’t new. What’s different today is that we’re putting the structure, people, and resources in place to really capitalize on the opportunity. And after several years with TAV, I’m happy to report that my Italish is getting pretty good!”
6. I gather this is not the only news you have for us today, rumor has it that “TAV” in Italy is also expanding and included in this expansion are acquisitions in your supply chain-you certainly have my attention.
“The rumors are true, Gord. Apparently, we’ve decided that being busy wasn’t enough!
There is a tremendous amount happening within TAV in Italy right now. We are currently completing a major expansion of our manufacturing operations with a new production building that will increase our overall production throughput by more than 50%. That is a significant investment and really speaks to both where the business is today and where we believe it is going.
I’ve joked that we should name it the Marco Baretti and Jay Jefsen Building, because Marco and I have promised ownership a whole lot of future business to help fill it. I’m just hoping that joke ages well! Sorry, Marco, if you’re reading this.
The growth we see isn’t limited to one market or one industry. Demand for vacuum furnace technology continues to be strong across aerospace, defense, energy, additive manufacturing, commercial heat treating, and other advanced manufacturing sectors. As that demand has grown, we recognized that our manufacturing capacity needed to grow with it.
But capacity is only part of the strategy. TAV has also been investing in ways to strengthen the overall organization and gain greater control over critical parts of our supply chain. That includes strategic acquisitions and investments within the broader TAV group.
For our customers, that is really the important part of the story. The goal isn’t simply to become bigger. It is to increase capacity, improve control over quality and lead times, strengthen our technical capabilities, and become an even more vertically integrated organization.
From my perspective here in the U.S., the timing couldn’t be better. We are building a stronger TAV USA organization at the same time our colleagues in Italy are significantly expanding the manufacturing capabilities behind us.
So yes, Gord, there is quite a bit going on. We have a new identity coming in the U.S., some additional North American news I’m apparently not allowed to tell you yet, a major manufacturing expansion in Italy, and continued investment throughout the TAV group. Now Marco and I just need to deliver on everything we promised!”
7. Obviously “TAV” is making some very substantial investments in the company, do these investments include technology investments such as updates to controls systems or R & D projects?
“Absolutely. Technology and R&D are a very important part of TAV’s continued investment and growth.
Now, Gord, I’ve been in sales long enough to recognize when someone is trying to get me to announce our future product-development plans in an interview. And I’ve recently been promoted to General Manager, so I’m going to give you my best career-politician answer here: we are always evaluating opportunities to improve our technology, controls, automation, and overall furnace performance. How was that?
In all seriousness, though, innovation is a major part of what TAV does. Vacuum furnace technology continues to evolve, and our customers are asking for more from their equipment than ever before. Better process control, more data, improved connectivity, increased automation, energy efficiency, predictive maintenance, and easier interaction between the operator and the furnace are all becoming increasingly important.
Controls are certainly part of that conversation, but our R&D efforts go well beyond the HMI or PLC. We are continually looking at the entire furnace system: process technology, mechanical design, thermal performance, vacuum systems, controls, software, efficiency, reliability, and maintainability.
One advantage TAV has is that we are an engineering-driven company. We have some incredibly talented people in Italy who genuinely enjoy solving difficult technical problems. Sometimes maybe a little too much. An American might look at something and say, “That works.” An Italian engineer will look at the same thing and say, “Yes, but we can make it better.” Then three meetings, seventeen drawings, and several cups of espresso later, we have a new solution!
So the short answer is yes, technology investment and R&D are absolutely part of the larger investment strategy at TAV.
As for exactly what we’re working on next… how about we save something for the next interview?”
8. It is apparent that you have been making very substantial investments which of course means lots of money. I am assuming this is backed up by a strong order book-how have sales been in 2026?
“What I will say is that 2026 has been a very strong year for TAV, and we are extremely pleased with where the business is today and, more importantly, where it is headed.
Personally, I’ve never been very comfortable bragging about success. I prefer to let the work, our customers, and ultimately the results speak for themselves. I think many of the things we’ve already discussed tell the story pretty well. We’re increasing our production capacity in Italy by more than 50%, investing in our supply chain, expanding our organization in North America, and transitioning to TAV USA.
Companies generally don’t make those kinds of investments unless they have confidence in both their current business and the opportunities ahead.
What excites me most about our order book isn’t simply the amount of business. It’s the diversity of the customers and markets we are working with and the number of long-term relationships we continue to develop. We are seeing opportunities across aerospace, defense, energy, commercial heat treating, and advanced manufacturing, and we continue to see a very healthy appetite for investment in vacuum heat treatment technology.
We are also seeing existing customers come back to us for additional equipment. To me, that is one of the best measures of success. Selling someone their first furnace is great. When they come back and buy another one, you know you did something right.
So yes, the order book is strong and 2026 has been very good to TAV. Beyond that, I think I’ll stick with my philosophy and let our growth speak for itself.
Besides, I’ve already given Marco enough to worry about in this interview!”
9. Looking back over orders in 2026 are there any major projects you would like to comment on either with or without the customers’ name? Perhaps a larger than average sized system? A project where you were literally pushing the envelope on what vacuum furnaces are capable of? Perhaps entering a market new to the “TAV” team?
“There are several projects from 2026 that I would love to talk about, Gord. Unfortunately, there are also several customers who would probably prefer that I don’t!
But there is one project I can tease a little. Internally, and very affectionately, we’ve started calling it “The Beast.”
I can’t share the customer or get into many of the technical details yet, but this is a very large vacuum furnace system and certainly one of the more impressive pieces of equipment we have produced. The size and scale have required our engineering and manufacturing teams to push well beyond what would be considered a typical furnace project.
To give you some perspective without giving too much away, we are currently working through the logistics of eventually getting The Beast from Italy to its final destination in the United States. Let’s just say there is a legitimate possibility we may have to shut down part of an interstate system when it makes the final leg of its journey. So if you find yourself sitting in traffic behind an enormous vacuum furnace someday, I apologize in advance!
Projects like this are also a great example of what I enjoy about TAV. We’re not afraid of applications that require us to think differently. When a customer comes to us with something outside the normal envelope, our engineering team tends to get excited rather than scared. Occasionally, those ideas turn into something so large that the sales guy starts wondering exactly how we’re going to get it down the highway!
I think “The Beast” will be a project we’ll be able to talk much more about in the future. For now, I probably need to stop there before someone in Italy takes away my interview privileges.
But yes, 2026 has given us some extremely interesting projects, and The Beast is certainly one of them.”
10. Jay, one final question and probably the hardest to answer- what does the future hold for TAV and the heat treat industry both short term and long term?
“This isn’t hard at all, Gord. We plan to take over the world! I’m kidding, of course… mostly.
In the short term, I think the future for both TAV and the heat treat industry is extremely exciting. We are seeing continued investment in aerospace, defense, energy, advanced manufacturing, and the reshoring of critical manufacturing capabilities. All of that creates opportunities for companies in our industry, but it also creates new expectations.
Customers want equipment that is more efficient, more connected, easier to operate, and more reliable. They want better data and process control, and they expect stronger service and support after the equipment is installed. In my opinion, the companies that can combine great technology with great customer support are going to be the ones that succeed.
For TAV, our direction is pretty clear. We intend to continue investing in our technology, our manufacturing capabilities, our people, and our presence in key markets around the world. In North America specifically, I believe you are going to see a much bigger TAV presence over the next several years. The transition to TAV USA is part of that. The investments we are making in service and aftermarket support are part of that. And, of course, there is still that little announcement I won’t let you make me reveal until 2027.
Longer term, I think the heat treat industry is going to continue becoming more technologically advanced. Automation, connectivity, data collection, energy efficiency, predictive maintenance, and process optimization will continue to change the way heat treatment equipment is designed, operated, and maintained.
But as much as the technology changes, I believe this will always remain a relationship-driven industry. I’ve been in heat treating since I was 16 years old, and one of the things I appreciate most is how small this industry can feel. Customers become friends, competitors become colleagues, and you tend to cross paths with the same good people throughout your career.
Technology will continue to change. Furnaces will get smarter. Processes will improve. Companies will grow. But ultimately, people still want to do business with people they know, trust, and believe will be there when something goes wrong.
That’s the kind of company we want TAV to be.
So yes, Gord, the official plan is still world domination. We’re just going to do it one vacuum furnace and one happy customer at a time.”
“The Monty Heat Treat News September Edition“. Welcome to the August 2026 digital edition of “The Monty Heat Treat News” featuring almost 100 pages of the most up to date news and trends in the global heat treatment industry. Some top stories featured in this edition include these;
In addition to our very substantial news section we also continue to add to our used heat treat furnace listings. Recent interesting additions include these;
As always the entire team at “The Monty Heat Treat News” looks forward to your thoughts, comments, press releases and used equipment inquiries. Sincerely, Gord, Jordan and Dale Montgomery. “The Monty Heat Treat News” is a division of “WG Montgomery Ltd.“, a family owned business serving the heat treat industry since 1969. |
“The board of Bodycote Group (LSE:BOY) has recommended a £1.65 billion acquisition by Veritas Capital, with the US investment firm offering shareholders 940p per share following a competitive process that also drew interest from Apollo and CVC.
Shareholders are being offered 932.8p in cash for each Bodycote share, while retaining the 7.2p interim dividend declared in July, taking the total consideration to 940p per share.
On that basis, the transaction places a roughly £1.65 billion equity valuation on the specialist thermal processing group, with an implied enterprise value of about £1.85 billion.
The 940p figure is 25.3% above Bodycote’s closing price of 750.2p on 4 August, before the formal offer period began, and 37.5% higher than its three-month average price before takeover speculation emerged in May.
The outcome follows several months of approaches for the company.
Apollo’s unsolicited interest became public in May, after which Bodycote received separate proposals from Veritas and CVC. The board initially rejected their approaches as insufficient.
CVC later raised its proposal to 915p per share, including the dividend, while Veritas reached 914p. Veritas then returned on 31 August with the higher 940p offer now recommended by the board.
Bodycote chair Daniel Dayan said the proposal recognised the quality of the business while giving investors the opportunity to realise value immediately in cash.
Veritas, which had about $54 billion of assets under management at the end of June, has extensive exposure to aerospace, defence and highly engineered industrial businesses. It said private ownership would give Bodycote greater flexibility to invest and pursue both organic growth and acquisitions.
The engineer operates roughly 130 facilities across 22 countries, providing heat treatment and specialist thermal processing to customers in aerospace, automotive, energy and industrial markets.
The transaction will proceed through a scheme of arrangement, subject to shareholder, court and regulatory approvals, with the process targeted to become effective in the first quarter of 2027.”
This particular furnace was built by a very reputable builder “SECO/WARWICK” and is capable of processing 1500 pounds/hour, is gas fired and has an operating temperature of 1600F. It features a nitrogen & hydrogen atmosphere and incorporates a water quench system. To reiterate the system is in excellent condition.
So what is it worth? For 99.9% of heat treaters, it has absolutely no value except as scrap-mind you the scrap value of the retort alone will be considerable.
For the .1% of heat treaters who are looking for a retort style furnace it has considerable value. With an estimated new price of almost $2 million USD we would suggest that after taking into account removal, shipping and install a serious buyer would be willing to pay $500,000 USD for this system. Again, the issue is finding a buyer who needs such a system.
Have a question about the value of your equipment? We would be happy to provide a free, confidential evaluation [email protected]
It appears the furnaces are being built by “ProTech Thermal Services” of California, USA, a company which has been involved in the heat treat industry for some time, however to our knowledge this is their first entry into new vacuum furnaces. The firm was founded a number of years back and has always been heavily involved in vacuum furnaces offering hot zones, repairs, installs, vacuum pump services and a number of other related services. The company was founded by Mr. Keith Grier and his son Brian (it is worth noting that Keith was co founder of vacuum furnace builder “GM Enterprises” for a number of years-GM is now part of the Aichelin Group).
All we know about the “Raptor” Vacuum furnace is that it is a skid mounted, self-contained, 2 bar quenching system similar to the “Ipsen Titan” line of furnaces; they appear so far to be relatively small in size and that 2 or 3 have been installed to date. We will update you on this story as we learn more.
Over the course of a long career in the heat treatment industry, “Mr. Dan McCurdy“ has done it all; from developing some of the most advanced technologies in the industry, running one of the largest furnace controls firms in the world, President of “Bodycote North America” for a number of years and advising Private Equity (PE) firms on the commercial heat treatment industry.
We are extremely fortunate that “Gord Montgomery” of “The Monty Heat Treat News” was able to convince Dan to share some of his lifetime experience in this wide-ranging interview. Those who know Dan will not be surprised that his comments are blunt, honest and to the point-we have no doubt but that you will consider this a read well worth your while.
We are very excited to be speaking with Mr. Dan McCurdy, an individual who has had a long and varied career in the global heat treatment industry. Dan, I appreciate the time today. So where do we start off, Xtek? Cincinnati Steel Treating? Marathon Monitors? Bodycote? Let’s start with your first position in the heat treatment industry and move on with a summary of the firms you have worked with over the years.
I had two co-op jobs while at UC. The first was at International Nickel’s massive Huntington Alloys plant in West Virginia, I did hardness and room-temperature and high-temperature tensile testing on nickel alloys. My next job was back home in Cincinnati, where I was a co-op in the large captive heat treating department at Xtek. I then ended up taking my first job as a metallurgist there after I graduated in 1977.
As far as I know, Xtek still has two of the deepest pit carburizers in the world, each 6′ diameter X 20′ deep. This shop can effortlessly suspend 35,000 lb. mill pinions in these furnaces on water-cooled eyebolts, something I’ve never seen anywhere else in the world. We used a combination of Alnor dewpointers and Infrared CO2 analysis to control the furnaces and endo generators. Carburized case depths extended to 3/8″ on some components with cycles well over 100 hours at 1850F. In my time at Xtek, I helped to commission one of the first nitrogen-methanol systems (from Linde), and I installed my first oxygen probe (from Advanced Atmosphere Control Corp – AACC) in a batch IQ furnace.
My next job (1980) was as Quality Manager at Cincinnati Steel Treating (CST). This plant was both a commercial heat treat as well as a captive department for its sister company, Cincinnati Gear, who did a lot of high-precision gears for the US Navy, among others. This was a VERY different quality environment than I had experienced at Xtek. We did a lot of Gleason press quenching and the dimensional tolerances we were held to were difficult, to say the least.
During this period, I became Chairman of the local Cincinnati ASM Chapter, which was the only way to network with other local metallurgical professionals. CST was also a member of the Metal Treating Institute (MTI), so I had the privilege of attending a number of regional and national MTI meetings. I started to get to know other commercial heat treaters regionally and then nationwide. CST is also where I was introduced to how heat treatment was quoted to commercial customers. I hadn’t thought of the money side of heat treating before.
When I joined CST, the plant was still using Alnor Dewpointers for furnace atmosphere control. By this time, however, several new oxygen probe suppliers had appeared on the market, and the local Marathon Monitors rep (John Hansen, R.I.P.) insisted that I try one. I decided at some point that millivolts from an oxygen probe, in combination with a paper chart showing the relationship of probe MV and temperature to %C, was not the best way to control furnace atmospheres in real time. I derived an equation that related it all on a theoretical basis and sought out a local electronics/software expert to put that equation to work using the latest invention in the world: the microprocessor. My search landed on a local electrical engineer, also a UC graduate, named Don Riemenschneider. I got permission from CST’s owners to commit to the development of a protype instrument that would not only continuously calculate % carbon in the atmosphere at any temperature but also control it. The result was the first CST Multicarb, a prototype instrument which could control up to eight different furnaces, as long as each furnace had an oxygen probe and a natural gas control valve.
The teething pains were significant, but we got through them and started to control all the atmosphere furnaces at CST with the second version of the instrument. Lurking in the background was still John Hansen, who kept the principals in Marathon (Bill Thompson and Ted Berry) advised, and soon they were visiting the plant to have a look at the new instrument prototype.
One thing led to another, and Marathon Monitors acquired the newly-formed instrument division of CST including my services as well as those of several others including Don Riemenschneider. Marathon Monitors Inc. then proceeded to pick itself up and move from Connecticut to Cincinnati. Oxygen probe and instrument operations were combined and sales and production of complete furnace control systems commenced in earnest. It was 1984.
Marathon grew rapidly over the next few years, even adding a sales and service branch in the UK. Then, in 1989, a British Holding Company named Halma plc, listed on the London Stock Exchange, came calling on Marathon’s shareholders. Halma owned a whole portfolio of small technical manufacturing business in many industries in both Europe and America, and Marathon looked to be a desirable acquisition target. The deal happened and life continued, now under the Halma umbrella.
Marathon continued to grow and several events occurred in the years after the acquisition. Most notable were the eventual exits of the two founders, Ted and then Bill, and then the acquisition of Advanced Atmosphere Control Corp from Corning, who had previously acquired AACC and merged it into their own oxygen probe business, part of which was aimed at combustion applications. This acquisition put Marathon into several new oxygen probe markets including coal-fired power plants and glass manufacturing furnaces.
Fast-forward to 1998, I had reached a point where the business’s ever-increasing sales and profit pressures were no fun anymore and I felt I needed to make a change. I left Halma with the intent of taking a few months off to decompress and pursue other possibilities. As luck would have it, John Hubbard, former owner of Hinderliter Heat Treating whose seven (7) plants had recently been acquired by Bodycote (1996, Bodycote’s first foray into the US), heard about what I had done, tracked me down, and asked me to join him at Bodycote for a “few months” while I figured out what I wanted to be when I grew up. Bodycote had been a good customer of Marathon UK, and Hinderliter had been a good customer in the US, and I knew a number of people in both. So, I joined John and ended up staying for 25 years until I retired in 2019. During that time John himself became CEO of Bodycote before retiring some years later.
Interesting tidbit: The name “Bodycote” has nothing to do with metallurgical coatings; it was the surname of Arthur Bodycote, the founder, a fine example of a person’s surname matching a corresponding trade. He established the textile and knitwear business in Hinckley, Leicestershire, UK in 1923. At some point the textile business started to leave the UK for greener pastures (i.e. Asia), and the company needed to find new ways to survive. So, it bought its first heat treating shop. In 1972, it was officially listed on the London Stock Exchange. (ref: Wikipedia)
At Bodycote I started out doing a mixture of customer visits, technical troubleshooting in the plants, acquisition scouting, and other odd jobs, traveling around North America and the UK. Bodycote made a number of small acquisitions during this period building the US network bit by bit. Eventually, the Bodycote board decided to take the plunge and made a public offer to buy Lindberg Corp, then the largest heat treater in North America. The deal was completed and Bodycote now stood at 164 plants globally. Of course, many of the people at Lindberg already knew many of the people at Bodycote via ASM, and many at Bodycote had worked at Lindberg at some point and vice-versa. It took several years to work through the integration of two separate and distinct business cultures.
In 2006, Mario Ciampini, past President of Ipsen International in the US, decided to accept John Hubbard’s offer to join Bodycote to help with further acquisitions. Mario energized the US team on several fronts: North American acquisitions and further greenfield expansion in Asia, where we had just one plant up going in China at that point.
When John Hubbard announced his retirement as Bodycote CEO in 2008, The board brought in Stephen Harris to replace him. Stephen was not a heat treater, but he was an engineer and he clearly understood the needs and opportunities for heat treatment in the modern manufacturing world. He reorganized the plants into divisions according to what markets they mainly served: Aerospace, Defense, and Energy (ADE) on one hand; and Automotive and General Industrial (AGI) on the other. Hot Isostatic Pressing (HIP) was kept separate, as was Specialty Stainless Steel Processes (S3P). Only The AGI division was further subdivided by geography. I was given the role of President, AGI North America and Asia with 19 plants.
Further acquisitions and greenfield startups happened in Asia and North America, and my own portfolio of plants rose to around 35 (but still just 15% of Bodycote’s total). With many management board meetings in the UK and Europe, I was literally flying around the world almost every month. It was crazy. I eventually retired in 2019 at age 66. Then COVID came. I consider myself lucky to have dodged that particular bullet!
Although you retired several years ago, I understand that you have never truly retired-care to share with us what you are doing these days?
I took a few years off, determined to focus on family, hobbies (boating, music, and electronics), and phone calls with friends from the good-old days. Private Equity had already started to target the commercial heat treating industry. What I know now is that it took just one PE firm to start this rush, but clearly it was perceived by more of them to be a great idea and it’s still happening today. I got myself involved. My very first major project was looking at a failing multi-plant PE venture and attempting to explain to the owners what had happened to cause their problems.
I was able to surmise the primary cause quickly, which was poor hiring practices for key management positions. The people who had committed these sins were long out of the picture at this point, but the damage they had done left a substantial blast crater. Suffice it to say it was a target-rich environment in the plants.
I knew from experience that just about every heat treating plant had fallen into hard times at one time or another and was forced to dig itself out. At Bodycote, there was always a short list of plants with profit problems. The causes were often a mismatch between the plant’s current capabilities and/or operating methods and what the local customers needed and expected.
In the process of doing this work, I realized that some variation of these same causes can be found in almost any heat treatment shop. They don’t have to produce big losses; they usually just erode profit. I realized that hardly anyone teaches anything about how to diagnose and fix this stuff.
Of course we talked about these things all the time at Bodycote, and MTI does all sorts of things to promote fellowship and management training among member heat treaters. However, to protect members from antitrust violations, the MTI strictly enforces a policy that governs all discussions among members to prevent the exchange of sensitive commercial information that could lead to price-fixing or limit market competition.
The most authoritative written work about heat treating economics can be found in the ASM Handbook, Volume 4B (2014), written by Jon Dossett. In his section, Jon, who was a midwestern heat treater himself for many years, walks through appropriate cost calculation methods for different heat treatment processes, and it’s very good. In the end, however, overall pricing levels depend on what the heat treater’s ROC (Return on Capital) requirements are just to stay in business (on the lower end) and really prosper (on the higher end).
Back to the Controls business: When you look at control systems today what is your impression? Have we come as far in technology as you would have expected, or possibly further?
Yes and no. My years in furnace control and software were challenging and fun because we were operating on the cutting edge of several technologies: atmosphere sensors, digital control instrumentation, computer data acquisition and archiving, and computer process modelling. What we were doing back then was exciting, but it all looks so primitive when compared to what’s happening today in the overall tech space.
Today’s control and data acquisition systems are much more compact and powerful, and the interfaces are easy to navigate on nice bright color touchscreens. For example, the newest gas flowmeters from SuperSystems have no moving parts and are networked with their controllers, allowing affordable flow control for all process gases right in the process recipes. They are brilliant. I wish I could have had that sort of control at my fingertips back in the day.
Outside of LPC and nitriding, the furnaces themselves have not advanced much, which is disappointing. At one point I thought LPC with high-pressure gas quench was going to give conventional batch IQ’s a run for their money. This has not happened. It’s still not possible to do LPC in a commercial environment where what’s in the load changes every cycle. It only seems to work reliably if the recipes have been carefully tailored for an exact-sized load of specific parts. This has limited it to only certain high-volume uses.
Gas nitriding has really matured with the newer low-temperature horizontal furnace designs from Europe and control systems that allow both precision nitriding and FNC, as well as protected atmosphere tempering in the same furnace, with no pits or overhead cranes required. The accompanying process modeling software has also advanced substantially. However, nitriding remains a tricky process that can be greatly affected by the surface characteristics of the incoming parts. Sometimes it’s chemical films that are is difficult to remove, and other times it’s the “smeared metal” effect on some of the parts’ surfaces that results from dull tools used in machining. These sorts of things rarely stand in the way of successful atmosphere carburizing or carbonitriding where surface prep is less critical.
Bodycote continues to be the world’s largest commercial heat treater and they continue to be profitable – what is the secret to their longevity and “staying power”?
At any point in time, some Bodycote plants will naturally be much more profitable than others. Fast forward by 3-5 years, and the mix will have shifted: plants that were doing well now aren’t, and others that were sucking wind start to look brilliant. Customers close, or move, or lose big jobs themselves. It’s the combination of it all that makes it look like Bodycote is all working perfectly from year to year. In fact, Bodycote is essentially a global mutual fund of heat treatment plants. Management tweaks the portfolio constantly to keep the whole thing headed in the right direction. It sounds easier than it really is, because each plant represents a sizable chunk of capital as well as a valuable group of people. Unfortunately, no one has ever invented the portable heat treat shop to follow desirable customers around the globe.
Local markets around the plants themselves are also constantly shifting. There were more than 60 commercial heat treaters in the greater Cleveland area at one point: now there are fewer than 20. Bodycote’s response has sometimes been to follow the work using plants in other locations, and a few times it has followed customers all the way into other countries. A local heat treater can’t do that. There is a very good argument for being geographically diversified and Bodycote has taken this to the extreme with its global operations. Having said that, the company is not everywhere. It has sought to avoid countries where business corruption is tolerated; that’s still a sizable chunk of the world as it turns out.
There is another secret that Bodycote uses: making sure each plant stays in its lane. The automotive-focused plants don’t do aerospace work, for example, because the customers’ behavior, the quality systems, and the employee skill sets required are completely different. If a local manager comes up with a hair-brained scheme to add an induction machine to a plant without demonstrated success with that process, it gets shut down quickly.
Finally, Bodycote runs on the knowledge that all a heat treater has to sell is FURNACE TIME. Time is limited to 168 hours per week for each primary furnace. An hour running empty is lost forever once it has passed. While many heat treaters determine their weekly operating schedules based on the convenience for the human staff, the best-run Bodycote plants run 24/7 and modulate the number of furnaces that must be hot during those hours to meet the forecast demand. The shifts are staffed accordingly. Saying the same thing from another perspective: a hot furnace should not be allowed to run idle if it can be avoided. Many people outside of Bodycote find this philosophy to be counter-intuitive since labor is the highest cost in the business, but the math has been shown to work if the scheme is carried out correctly.
It is obviously critical to understand what an hour of time in each furnace is worth at the retail level, in $/hr, all in. This is a key to pricing. Another important key to pricing is determining how much labor will be required to handle the individual parts in each load. It’s obviously no good leaving a furnace idle while the shift workers are building the next load for it which requires 8 man-hours to accomplish. Adequate tooling (baskets and fixtures) are often an unexpected constraint that prevents optimum results.
The best-run Bodycote plants measure and control Yield ($/hr) and Utilization (% of a 168-hour week that the furnace had a load in it) to keep track of how efficiently the plant is running. Idling a furnace for an entire shift while there’s work sitting in front of it is an indication of a problem.
None of the above has anything to do with how the work is priced. That’s a whole other topic. But obviously, the pricing scheme must be derived from the concepts discussed above in combination with other factors including the overall return of capital expectations.
You and I had a very interesting conversation recently about the commercial heat treat industry and how it has been “discovered” by the venture capital (VC) industry. In your opinion has this been a benefit to industry?
Private Equity (PE) firms are working hard to find new industries to invest in that haven’t already been consolidated by others. It was only a matter of time before the commercial heat treatment industry came onto their radar.
The first thing PE notices about the commercial heat treating business is that it’s a service business, as opposed to a manufacturing business. The heat treater doesn’t make anything, nor does it maintain raw material or finished goods inventory. The second thing they notice is that the cash flowing through the business has a high velocity. A heat treater receives the parts and does the service within a few days, issues an invoice, and gets paid within 30 days. That doesn’t happen in classical manufacturing businesses with both raw material and finished goods inventories, where cash velocities are anywhere from 90 to 365+ days.
Then they notice that the highest costs are people, and then energy. Surely, they think, these two easy-to-understand costs can be managed better than ever under the lean financial control that PE firms specialize in.
A spreadsheet gets created that is used to convince the investors and lenders that a group of commercial heat treating shops can be put together and turned into an asset that is worth much more than the sum of the parts. The plan is to ‘optimize’ sales and costs in each acquired business for a few years and then sell the whole collection together at a profit to another, bigger investor, who is very likely to be another PE firm.
A PE project will be working toward an exit date in just a few years and is not interested in the longer term. There will also be little interest in using precious capital to acquire real estate along the way unless it’s absolutely necessary. Rather, it will very much want to lease any required real estate. This may play into a current owner’s hands, as it allows putting off his capital gain on real estate and it while providing ongoing rental cash flow over time during the owners’ retirement which may be partially offset by the continued depreciation of the buildings.
During operation, the PE firm will also not be interested in further CapEx in the business unless the projected payback is likely to be extremely rapid (< 1-2 years). Cash is reserved for more acquisitions or to pay down any debt.
The first deal gets made with a heat treater who is ready to sell and it’s off to the races.
With the former owner/operator of the business gone, the PE firm must appoint a new general manager for the shop. In the absence of any existing candidates from within, the PE firm will likely turn to someone who they already know who has managed in an PE environment before. They rely on the rest of the existing staff to tend to the technical details of heat treating, while the new manager focuses mainly on cash flow and “right-sizing” the business.
The original owner of the shop, who knew exactly how to run it profitably, has cashed the check and gone to his retirement villa leaving the operation to his former staff whom he has trained well, with a new boss who may or may not be suitable for the job at hand.
This whole cycle repeats itself with the second acquisition, and so on.
Many scenarios are possible at each shop during the PE holding period. On one hand, things could go really well, with the whole venture coming to the eventual planned exit for the investors. I have personally not seen any of these.
On the other hand, there could be trouble in any or all of the acquired shops. Many issues are possible, but high on the list are things like accurate pricing of work, quality problems, and maintenance of the equipment.
As any experienced heat treater knows, there are two ways to maintain furnace equipment: the quick way, and the right way.
The quick way involves emergency patches done in the process of taking a furnace down and bringing it right back up. If the needed parts are not on hand or in stock at a local supplier, an expedited order must be placed. This method is a bad habit: the furnaces become less and less reliable over time and start to go down even more often, sometimes with important loads in them. Maintenance overtime is given, and no one can guess what will go wrong next, or when.
The right way is to schedule every piece of equipment for quarterly shutdown and inspection, with subsequent replacement of any worn components at that time. This method requires advance ordering of critical parts (a.k.a. inventory) that may be needed based on actual records which someone has to keep.
In a developing cash crisis, the PE manager may start to take exception to the practice of structured preventative maintenance, arguing that it frequently reveals only minor problems. If this happens, it’s unfortunate because it may signal the end of preventative maintenance in the plant. Multiple key pieces of equipment can begin going down for breakdown maintenance. Unbelievably, up to 50% of the equipment in the shop may be down at any one time, with green work piling up all around. In an environment where every equipment maintenance event is an emergency, maintenance costs are as high as they can possibly be, and the customers are losing patience. The maintenance personnel aren’t very happy either, even though they are making a lot of money in overtime.
At this point, the plant is in serious trouble, and it will be difficult to climb out. The thought of preventative maintenance is totally lost in the scramble to keep equipment up and running. Nothing seems to be getting better.
The financial consequences of all this are obvious. The lost furnace hours are gone forever, and customers are starting to move on to greener pastures, and the best people in the business start to consider their options.
The ending to all of this may not be pretty. A PE firm with a portfolio of breakeven and loss-making plants is a disaster for everyone involved except the competitors. There may still be some good businesses somewhere in there, if anyone can manage to gain access to them again.
Once the crisis is roaring, the current PE personnel themselves still get vilified. This is a bit unfair because the ones who are trying to fix the problems are not the ones who caused them; those guys have moved on, now spoiling someone else’s day.
None of the above is exaggerated. I’ve seen it and worked on it. It’s incredibly difficult once the consequences of mismanagement drive a business into a cash crunch, allowing a once-thriving business to fall into disrepair and chaos. It’s certainly a target-rich environment for a retired heat treat business consultant!
Editors Note; “The Monty Heat Treat News” has recently had several articles explaining why the dramatic growth in AI centers is driving an unprecedented demand for vacuum furnaces “AI Data Centers Spiking New Vacuum Furnace Orders-Update”. This interesting press release from furnace builder “SECO/WARWICK” supports these previous articles.
SECO/WARWICK is supplying its tenth Vector vacuum furnace to a partner for producing high-performance gas turbine components essential for modern energy stability. Why are vacuum furnaces so important for today’s energy sector?
- The furnace handles extreme temperature components requiring high precision.
- The unit features a large 1200x1200x1800 mm working space.
- It supports hydrogen, argon, and nitrogen processes for flexibility. Gas turbines are critical for stabilizing renewable energy systems.
The furnace will be used to produce gas turbine components, among the most advanced structures in the energy sector. Gas turbines often operate at temperatures exceeding 1300°C, and their key components, such as blades and flow path elements, must withstand extreme temperatures, material fatigue and oxidation. That is why the heat-treatment processes for these parts require very clean vacuum conditions, stable temperature control and high process repeatability.
The Partner’s technology fleet includes approximately 50,000 wind turbines and more than 7,000 gas turbines. Solutions of this scale require technology partners capable of delivering world-class production equipment.
The unit on order is based on the proven design of Vector vacuum furnaces. The furnace has a working space of 1200 × 1200 × 1800 mm (47.2″ × 47.2″ × 70.9″), enabling the heat treatment of large components used in gas turbine production.
The furnace can operate with three process gases: hydrogen, argon and nitrogen. Two cooling gases, argon and nitrogen, are also used, allowing cooling parameters to be flexibly adjusted to the specific process. The unit features a round heating chamber with excellent temperature distribution at +/- 5°C (±9°F).
“This is our flagship model, designed for highly demanding production processes. High vacuum, temperature stability, and the ability to operate with various process gases are key here. Thanks to its large working space and refined heating system design, the unit enables the processing of oversized components while maintaining very high process cleanliness,” said Kamil Siedlecki, Sales Manager at SECO/WARWICK.
The new furnace will help support growing production and enable the heat treatment of a new generation of components used in gas turbines. These turbines play a key role in the energy transition by helping to stabilize energy systems powered by renewable energy sources. Thanks to their high efficiency and fast start-up, they are among the most important components of modern power systems.”
