Bernard Salvi, Thermi-Lyon
First off Bernard I appreciate the time today, you have the distinction of being the very first heat treater from France who we have interviewed. First off please tell us a bit about the company-age, size, processes location etc.
“THERMI LYON was established in June 1960.The first location is Lyon (factory and head office). Today there are 8 plants in France in order to be closer to the main industrial areas, 1 in Romania and 1 in China. Some plants are dedicated to local industry such as THERMI GARONNE for aerospace in Toulouse, TREMPELEC for automotive in Arve valley (Mont Blanc). Our strategy is to perform all technologies of treatment and vacuum coatings to provide impartial advice. Today, 185 employees are working for THERMI LYON GROUP.”
Can you share with us the size of the company (approximately) when it comes to annual sales?
“Last year Annual sales were about 21 Million € and forecast for 2018 is about 23 Million €”
Do you have a guess as to how many commercial heat treaters there in France?
“95% of the French market is concentrated into 5 groups. 20 small players share the last 5%.”
Why did you start locations in China and Romania and do you have plans to expand into any other countries?
“For China and Romania the reasons are different. THERMI LYON has developed a new plant in Romania to accompany the development of one of our main customer. Plant in China is a JV with a tool steel maker called AUBERT ET DUVAL (Eramet Group).The idea was to provide the whole service: steel plus heat treatment especially to mold makers .A very big market in China.”
How did you personally get involved in the heat treating industry?
“I am an engineer specialized in materials and it is a real passion for me because without heat treating no plane could fly, no car and no train could roll…My father used to work for a steel company too”
Where does the majority of your business come from industry wise? Automotive? Aerospace? Energy?
“The 2 main markets in France are automotive(35%) and aerospace industry(20%).The oil and gas industry in France is not so important”
How far afield do you have to go for your customers? As a North American I am used to very large distances which means most commercial heat treaters don’t service an area more than 50 to 100 miles from their plant. Is it similar in Europe?
“Don’t forget that the maximum distance in France is only 1000 kilometers! So distance is not so critical. You can visit most of you customers during the day by car, train or occasionally by plane. There are also a lot of commercial heat treaters plants spread in the territory to shorten time delivery. Reactivity is very important”
That leads to another question closely related to it, do you get much business from other countries in the EU or do Germans stick with Germany heat treaters, Italians with Italian heat treaters etc.?
“Due to time delivery and shipment cost the main market for us is in France. Industrialized countries like Germany or Italy are able to perform their own heat treatment. It is possible to sale abroad for high value added part including special heat treatment or vacuum coating (niches). We plan to reach 10% of our turnover out of France but not more.”
I have seen enough of Europe to know that Eastern Europe is known for low costs, far lower than in Western Europe. Does this mean that you are facing increased competition from heat treaters in the East?
“Not really. Heat treatment is carried out close to customers to optimize the process flow. The competition mainly affects our customers because more than 70% of the parts we treat are exported. It means that they need to cooperate with us in order to win markets share. The competition takes place between the complete supply chains.”
This question goes hand in hand with the one above. Furnace automation (by furnace automation I mean installations that require little or no human intervention) in North America is relatively low due to the fact that there is a great deal of reasonably inexpensive labor available. However in places such as Japan in particular, but also Germany and Sweden I have seen a great number of automated heat treats. What is France like? A lot or a little automation?
“The labor cost in France is high and it represents more than 35% of internal cost. It is a reason why we are investing a lot in automation. Another advantage of automation is to improve the quality of the service: product quality and time delivery are more important that prices for our customers!”
What would be the most common type of furnace in Europe? Sealed Quench? Vacuum? Nitrider? Other?
“All of them. Sealed quench, vacuum (low pressure carburizing and quench), gas nitriding, plasma nitriding… Nevertheless furnaces are used for specifics markets and they are concentrated in some areas. For example, sealed quench furnaces are often used for automotive parts, thus you find them close to the bigger automotive suppliers.”
Which type of heat treating is growing the fastest in the areas in which you compete?
“Nitrocarburizing with post oxidation. This treatment is performed at low temperature for less distortion and it can replace Chromium coating”
Many estimates say that the % of heat treating in North America done in house is 90% with 10% being done by commercial heat treaters. Mexico is far lower as is India-what about France? Do manufacturers prefer to heat treat in house or send it out?
“According to my own information 80% in house and 20% by commercial heat treaters.”
I know there are a lot of European furnaces builders and most of them I have to say are pretty darn good at what they do. However do you see any signs that furnace builders from Asia or North America are increasing their market share in Europe?
“In France THERMI-LYON is buying furnaces mainly to European companies. Most of our furnaces suppliers and their suppliers are presents in Europe, Asia and North America. We have seen a lot of concentration in this sector since 2010. Those companies produce worldwide and often assemble locally. From North America, Nitrex is the only producer we know well, but the furnaces are built in Poland… In China we have bought both French and local furnaces. New suppliers are growing and improving quickly their quality in developing countries. Nevertheless they don’t have access to our market yet.”
What does the future hold for Thermi-Lyon? Any furnace additions or plant expansions you can share with us?
“I am optimistic for the future. We develop new markets like DLC coatings and new surface treatment dedicated to stainless steel. The demand is growing fast. Aerospace and automotive industries are also increasing .We need to develop capabilities and automation process. More than 25% of our turnover will be invested this year.”