Beating rising steel prices and offshore competition
February 12, 2004
As steel prices rise and offshore competition increases daily, steel and overhead optimization are driving U.S. metal stamping and forming companies. Companies that survive and thrive are taking a different approach to managing change and cost and are discovering savings in areas never seriously considered before.
Business owners now are paying closer attention to forming lubricants. Why? Because new data has linked lubricants to an important driver of business profits—steel efficiency. With metal representing close to half of a company's total operating cost and manufacturing overhead another 19 percent, any variable that optimizes or jeopardizes these areas is being scrutinized closely (see Figure 1). While lubricants represent only .05 percent of the total operating cost, they can make or break steel operating efficiency and impact a company's bottom line.
Combined with metal strain data and production efficiency monitoring, lubricants have become critical to the manufacturing process. A poorly performing lubricant causes a spike in scrap, more downtime, and the need for higher-quality steel. A high-performance lubricant reduces or eliminates breakout scrap, allows for a full production run before die polishing, and, in some cases, allows for a switch to a lower steel grade. The fact that lubricants influence steel performance isn't new, but to what degree is.
Metal strain data obtained in the lab and during production shows that some lubricants allow metal to stretch up to 50 percent more before it fractures. The Interlaken strain analysis test (Figure 2) shows that a nonoil dry film (NODF) stretched commercial-quality cold-rolled steel 50 percent more then a low viscosity nonoil fluid (LVNOF).
Production strain analysis techniques reveal similar numbers. Forming limit diagram (FLD) data generated from circle grid analysis or by the new computer-generated Argus technique (Figure 3) provides tangible production data to determine at what level steel can be optimized. This data can be used to determine which steel and lubricant grade combination is the most cost-effective. In many cases, a lubricant upgrade allows for a steel downgrade or a significant reduction in scrap.
A midsize metal stamping company uses 40,000 to 60,000 tons of steel annually at a cost of $350 to $500 per ton. Lubricants cost from $4 to $7 per ton. Typically, lower-cost lubricants are used on higher-quality steel, and higher-quality lubricants are used on lower-quality steel. In any case, the lubricant is a small percentage of the total cost.
The cost calculator shown in Figure 4shows that the combined annual steel and lubricant cost difference between grades 3 and 4 for a 60,000-ton steel user is $2.9 million. That represents an additional 5 percent increase in profits for a company with $60 million in revenue. With the average manufacturing company making a net profit of only 5 percent, this could mean a 100 percent profit increase, possibly the means to stay in business.
In some cases, increased metal formability means reduced breakout scrap. For every 1 percent reduction in scrap for a 60,000-ton grade 3 user, $273,000 is contributed to the bottom line. A 5 percent scrap reduction increases profits 2.5 percent, or $1.3 million.
New steel processes and surface quality options also can benefit from higher-performance lubricants. For example, one new steel grade, stretched cold-rolled surface (SCS), has the surface quality of cold-rolled steel, is oil-free, but costs significantly less than typical cold-rolled steel. Using SCS in combination with a high-performance lubricant can provide substantial savings.
Because lubricants can make or break your business's performance, be sure to hold your supplier to the highest standards. Below are some suggested guiding principles:
Process Accountability— Require your supplier to help measure and document a lubricant's effect on tooling, steel performance, and part quality.
Data-driven Change— Don't select a lubricant or supplier based on assumed value. Too much is at stake. Use tangible data to drive change.
Process Cost Measurement, Not Invoice Price—Lubricants are only .05 percent of total cost; risking the 64 percent of operating cost they impact without validation is profit suicide.