Hamond Times

These days, price pressure is everywhere. Our customers ask us to reduce the price of a part we make for them. Especially in the last six months, with steel prices rising, reducing part price calls for some wisdom.

The fact is, a large component of part cost is designed in by the people who designed the part and drew the part print. As contract manufacturers, we can only make what the print allows us to make. If the design is wasteful in raw materials or machine time, there isn't much we can do to change it without active co-operation from you and your designers.

Ah, but with your co-operation and a good understanding of what the part needs to do, what a difference we can make!

So here's a good starting place for a designer eager to look over a design and trim cost:

• Examine the tolerances and the tolerances of the mating components. Are they overspecified? Can any be relaxed without effecting part function? Or redrawn so they are less complex or less demanding? If so, our staff have been pouring extra effort and time into making a part more perfect than necessary for the function. They will be able to set up the job more quickly, be making parts sooner, need to do fewer in-process inspections, etc. This is true for angular tolerances on bends, particularly for tolerances on second, third and fourth bends. And especially true if the parts have to go through heat treat afterwards.
  
• Slide forming is generally an resource-economical technology - that is, we make relatively little scrap. We use precision slitters and use the material slit line one of our part edges. Slitting is a low-scrap (almost no-scrap) operation. However, this can be defeated if a part dimension (usually the part width) is specified more tightly than needed, and more tightly than slitters can slit accurately. Slitters can generally slit down to ±0.005", depending on the material and thickness. If you've asked for higher accuracy, then we have to cut the part out ourselves in the die (yielding an accuracy of ±0.001" or better), but that causes scrap. This matters more in stainless steel and/or copper and it's alloys, but these days, even low-carbon steel has become an expensive commodity, and wasting any of it leads to unnecessary expense.
  
• Sometimes, the complexity of the part design slows down our machines. Metal needs time to flow, and the more complex the shape, the more time each part will need on our machines. If the shape complexity is "pretty" rather than functional, perhaps a simpler shape could be made faster.
  

We understand that your designers don't know how our machines work, just like our designers don't know how your industry works. That's why the best designs come from active co-operation between our designers and yours. If you want to set up a meeting to discuss part cost with us, please write our sales manager John Sheehy and he'll set up a meeting.

There are many other ideas that can yield a better result ... too many to be put into one short article like this. To see more good ideas for improving our cost benefit to you, check back with this blog from time to time.

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Recently, we've started to see metal stamping and forming jobs come back "onshore" from, amongst other places, Asia and Mexico. Some of the issues have been:

• reliable supply chains (see Nov. articles in the StampingOutALiving blog).
  
• quality.
  
• the amount of supervision required to ensure quality wiped out the expected savings.
  

We also have heard of interest rate hikes, infrastructure problems, energy shortages and potential econological problems in some of these areas. Add to this the pressure China in particular is under to let their currency float, and we are left with a very unpredictable delivery and cost environment to be outsourcing production into.

Perhaps some of these jobs shouldn't have moved offshore in the first place.

We, like many suppliers, are under near-constant pressure to reduce the cost of our parts. We see many parts which make inefficient use of resources, either raw materials, post-processing, machine time or downstream resources like assembly time on the line.

Time and again, we see these parts, not redesigned to make better use of resources, but rather merely re-sourced to a place where wastefulness can be accomplished more cheaply.

The wasted time or material is not reduced, it is merely wasted at a lower labour rate.

So it perked up our ears when we ran across this article in CRM Buyer:

Before You Move It, Improve It

Before you commit to moving a segment of your corporation overseas, pour your energy into significantly improving it. You may find that your efforts make the operation so cost-effective and so high-quality that you don't have to send it overseas. Either way, your improvement efforts will not have been wasted, says author Tom Devane.

Communication lapses, quality shortfalls, poor connection with customers -- these problems and others plague manufacturers who have taken the offshoring leap. And in the end, says a leading process improvement consultant, many companies discover that it would have paid to look a little closer before they leapt.

We keep hearing predictions that steel prices have reached their plateau and will shortly start to drop. We certainly hope so. Steel prices have risen as much as 60% in the last 6 months, depending on steel type and grade.

November is the first month where we've actually seen some small evidence of prices stabilizing. On recent stainless steel wire quotes, the surcharges for November were actually lower than for October. Not much lower, but at least we reversed the trend of the last 6 months, which had been steadily rising every month.

Behind the scenes, the rapid rise of steel consumption in China and the consequent inability of the marketplace to keep up with demand both seem to be abating.

On the demand side, consumption in China seems to have abated. And the Chinese government seems to have started to make real efforts to bring the overheated economy under control. They recently raised interest rates, for the first time in nine years. Economists are saying it wasn't enough, and they'll have to be rasied more, but it's something. Governments there are also cracking down on too-rapid industrialization in certain areas where the infrastructure isn't capable of supporting such growth.

On the production side, more steel producing capacity has been brought online all over the world. In most cases, the first and quickest moves have been to re-open blast furnaces that were mothballed over the last few years. This is always the fastest way to get more steel capacity. In addition, a number of new furnaces have been commissioned, in North America, in Europe and in Asia.

If you buy parts made from other metals, like coppers and brasses, you should know that copper prices are only slightly below a 16 year high at the moment. And copper and brass lead times are all over the map. We have to enquire individually for each case.

As always, if you have any questions, your salesman John will be happy to answer them.

Current re-order times for parts not in stock are running 3-5 weeks for smaller parts that run on our smaller machines, 4-6 weeks for larger parts. Most of the delay is related to our steel suppliers. Depending on the grade of steel, we've had major problems just getting our hands on raw material in a timely fashion.

The supply of certain types of steel is very tight. Where 6 months ago we could expect delivery in a few days, now we are being told one to several weeks. This is because all the excess steel in the supply chain has been picked clean. It's the exception rather than the rule now that we find steel we need already sitting on the shelf at a local depot. Often we are waiting in line while they roll (and in some cases) pour to our orders.

Therefore, we are strongly recommending that all customers examine their product needs and forecasts as far forward as they can, and place Blanket Purchase Orders with us for all foreseeable quantities. If for administrative reasons, you cannot place BPOs ahead, at least a letter of authorization to purchase raw material will allow us to go out and secure material for you so you are not caught flat.

Our design department and tool room are currently relatively busy, so there will be a short delay before they can start working on new tooling.

As always, you can consult our salesman John for more detailed information.

Check it out! See what Metalforming Magazine wrote about us (90K PDF File - you need adobe acrobat reader to read it) "