Increasing your profits 7 percent by changing metals
October 9, 2003
All businesses tied to the metal forming industry are scrambling to find areas in which they can lower costs without sacrificing quality. Adding to this burden are a tight cash flow and a lack of financial resources to invest in process improvement equipment. Therefore, the savings must come from doing more with less.
Raw materials and overhead account for 75 percent (see Figure 1) of an average metal forming company's total operating cost. Improving these two areas can make the biggest impact on your bottom line.
But what if you've optimized your material costs by paying the lowest price for your metal. Let's say your labor cost is the lowest it can be without sacrificing the required skill level; you have an energy-efficient plant; you've applied every quality and efficiency program known to the industry; and your scrap rates are at industry lows. But have you looked at your forming lubricant?
You might view lubricants as minor and the least likely variable to have a significant impact on your bottom line. After all, forming lubricants account for only 0.5 percent of most stamping operations' total operating cost. However, lubricants play an influential role in the effectiveness of the 75 percent spent on raw materials (metal) and overhead.
You may assume that lubricants are necessary but not significant when it comes to improving the bottom line. Metal grade and tooling design are major influencers of metal flow and part dimensional quality; however, forming lubricants also have a direct influence. A low-performance lubricant can increase scrap and die polishing downtime, while a high-performance lubricant can reduce scrap rates and downtime.
Lubricants influence formability because they provide a performance film that protects the metal from hanging up, fracturing, or welding to the tool. The proper lubricant also reduces frictional heat, allows the metal to flow consistently, and controls wrinkling or fractures.
Raw materials and overhead account for 75 percent of an average metal forming company's total operating cost. Improving these areas can make the biggest impact on your bottom line.
Another way to improve your bottom line is to change your metal grade. Draw-quality cold-rolled (DQCR) steel often is considered to be the only metal option without having to reduce the severity of the draw or add special processes, such as annealing between draws, or increasing the number of draw operations. Cold-rolled also has the surface quality needed to meet external visual requirements for appliance and automotive applications, but it comes at a price.
For example, let's say DQCR is approximately $400 per ton, and draw-quality hot-rolled that is pickled and oiled with a final temper pass (DQHRPOTP) can be substituted for about $330 per ton. Newer flat-rolled mini-mills now have the capabilities to produce hot-rolled steels at gauges that were previously available only as cold-reduced sheet. The temper pass gives steel in the 0.050- to 0.120-gauge range the required surface quality, but the steel's formability needs to be enhanced. Based on a potential $70 per ton, or 17.5 percent savings, and a profit contribution of about 7 percent, the financial incentive to consider a change to hot-rolled is huge.
Both charts show the metal strain or stretch for various lubricants. For example, the metal coated with a low-viscosity nonoil fluid (LVNOF) achieved a 7.2 percent strain before fracture. The metal coated with the nonoil dry film (NODF) was able to stretch 100 percent more, or 14.7 percent, before fracture.
Production and lab studies have proven the impact lubricants have on metal formability. Figure 2 shows the metal strain or stretch for various lubricants. In this example, the metal coated with a low-viscosity nonoil fluid (LVNOF) achieved a 7.2 percent strain before fracture. The metal coated with the nonoil dry film (NODF) was able to stretch 100 percent more, or 14.7 percent, before fracture.
Deep-drawn parts like lawn mower decks and automotive truck parts previously stamped from higher grades of cold-rolled and aluminum can be produced with lower steel grades by upgrading lubricant technology. The financial effect of a more expensive lubricant can be small or nonexistent because higher-end lubricants are used in smaller quantities. The price per gallon of a high-viscosity nonoil fluid may be 20 percent more than high-viscosity straight oil, but in most cases, 20 percent less is needed to improve formability, so the total lubricant cost is the same.
With the need to do more with less, you should take an active role in understanding the impact lubricants have on your overall costs and profit and document the return on lubricants as an investment. Your lubricant suppliers should act as process consultants by providing needs assessments, cost analysis data, formability measurement, and proposed cost savings. Here are five questions you should ask to help you measure lubricant ROI:
So, what is your lubricant ROI?
Operating cost data provided by Plante & Moran. Lubricant cost data provided by IRMCO. Metal data was provided by Larry Dalsin of Ferro Business Solutions, firstname.lastname@example.org.