(March 31) - While the downturns have been tough on GM, Delphi and many of the other suppliers, one result is an increase in business for the midwest heat treats that are the beneficiaries of local outsourcing.
Business is booming for Engineered Heat Treat in Madison Heights, Michigan with the company expanding capacity. Engineered has been around since 1959 so they've withstood the test of time for sure.
Below we have a photo of Ron Pilibosian and his recently (November) installed Ipsen Vacuum Furnace complete with touchscreen control.
Wages in "Low Cost Regions" - the Card Trick
(March 30) - With all the talk of bankruptcies and lower wages in the US manufacturing sectors we thought it would be good to add a comment from time to time on misconceptions.
You've heard it before: cheap labor makes it impossible for North American workers to compete in mature markets.
We're not entirely sure this is the case. For example we've read many times that the average Chinese/Vietnamese/Eastern European worker makes "8 to 12 times less" than a comparable worker in the US.
This isn't entirely true.
There's no question that Chinese (and Thai and Vietnamese and Czech, etc. etc. workers make less), but the fact is that true salaries are not accurately reported in many of these countries. Believe it or not, most salary in developing countries is still paid in CASH. That leaves the employer free to declare salaries for tax purposes at whatever level they see fit.
We know of a few examples where workers in developing nations are being declared at $2,000 per year to avoid taxes, but the workers are actually making $15,000. Seriously. Not that $15,000 is going to satisfy Joe Pyro in Detroit with a mortgage and two car payments, but it is one area where we simply aren't getting the full story.
In the story below Delphi wants $12.50/hr. That's about $25k/year before taxes. For a single worker taxes might take about 20% putting take home at $20k compared to his "low cost region" competitor at $15k. I might be crazy, but the papers all say we in North America have the highest productivity so how much savings does that $5k really bring? What are the quality implications? What are the economic implications?
Maybe - just maybe - we should make the products locally for local markets...uncluding North Americans building North American products...
Just something to think about.
If you have some thoughts or insights please chime in by clicking the "Add Your Comments" button.
UAW to Delphi: 'Try Again'
(March 30) - The UAW has turned down Delphi's latest offer, but signaled that it is a step in the right direction by not disengaging from talks. Of course Delphi's intention to invalidate current contracts if a deal can't be reached could have something to do with the UAW's position. That said, however, most experts agree that, if Delphi were to invalidate current contracts, the UAW workers would authorize a crippling strike. Originally Delphi has proposed cutting the average wage from $27/hr to $15/hr and then countered with $12.50/hr when the UAW more or less scoffed. The latest proposal is based on a gradual decrease in pay over many years.
We're no experts in sales here at HTN, but it's hard to imagine anyone agreeing to see their pay cut every year (not counting inflation). At the very least the resume would sure get a good polishing.
Some "experts" think that Delphi's latest offer is too generous and won't get support from Delphi's biggest customer, GM. If that happens Delphi is expected to go back to its $12.50/hr offer.
Bodycote Continues to Grow, Diversify
(March 29) - Bodycote is really stoking the fires of their testing group this year with multiple acquisitions. Yesterday they announced that they had acquired one of the dominant players in the fire testing companies, Warringtonfire Group, with offices in the UK, Belgium, France, Italy, Hong Kong, Dubai and Australia. Here's a snippet from the PR:
In acquiring the Global Warringtonfire businesses, Bodycote has taken a significant step forward in expanding its Global interests.
The range of services provided by Warringtonfire includes:
- Consulting services embrace fire safety engineering design.
- Fire testing services comprise fire tests to a large number of national & international standards.
- Architectural product testing services include comprehensive mechanical and environmental testing of components of building hardware, especially doors, windows and related components.
- Inspecting services evaluate conformity of installed fire protection products or systems, as well as assessing the adequacy of fire protection in accordance with regulatory requirements or the level of risk.
- Certifying products, contractors and completed projects is undertaken through CERTFIRE and FIRAS schemes and at a European level is provided in support of CE markings against various EU Directives.
(March 28) - There's a great article here on American Axle. With the list of Bankruptcies growing to include the likes of Delphi, Federal Mogul, Tower, Meridian and Dana, American Axle is talking about net positive cash flow in 2006 and new plants in both China and Eastern Europe. It's a great read about how a union-based, American manufacturer can thrive even when some of their biggest customers are defaulting on debts.
(March 27) - Oriental Heat Treatment is a commercial heat treater located in Thailand with ties to Oriental Furnace Company of Japan. Oriental Furnace Company is one of Japan's largest (nipping at the heels of Chugairo) and has a Joint Venture in China called Fengdong. Fengdong has been growing rapidly and is challenging China's furnace leaders, Ipsen and Aichlen.
Oriental Heat Treatment of Thailand recently took delivery of a new mesh belt furnace from Oriental Furnaces Chinese joint venture, Fengdong. Of note is the very high quality of this furnace as shipped from China. Even the finish is impressive rivaling that of a new car.
The first photo is of the new mesh belt line as delivered:
In the second photo we have Ms. Thanissaro, Metallurgical Engineer with Oriental Heat Treatment, Ken Hinckly (consultant) and Nikorn, Sales Manager for CHS-Asia:
Rumors 101 - Dana and Eaton Changes
(March 24) - While digging for more on Ford's situation we came across a couple of interesting tidbits by way of forum member "Fatman" that we can only classify as rumors at this point.
The first is that Dana, now in bankruptcy, is looking to sell off its Russellville, Arkansas plant. Supposedly the primary suitor for the plant is Caterpillar.
The second whisper was that Eaton Corp may be relocating its plant and divisional headquarters from Marshall, Michigan to Hastings, Nebraska where it would be co-located with their existing facility.
Ford Sharonville Lay-offs Confirmed
(March 24) - The word we got earlier in the week that Ford was laying off workers at the Sharonville plant has been confirmed. In all about 200 workers are being let go. You can read about it in the Cincinnati paper here. Between Batavia and Sharonville, Ford's changes are hitting Cincinnati fairly hard.
Marathon & Transmisiones TSP (Mexico)
(March 23) - Another note from Mexico this week as we received word that Marathon and its Mexico office Marathon Systems Control, are very busy working new projects. While only operational for a few months, the new office is already generating good returns with nice comments from customers for the improved local support and dedicated staff.
One of those customers is Transmisiones TSP of Queretaro, Mexico. TSP has several large pushers and an endo generator as well as s modern control room which houses a nitrogen-methanol system and multipoint IR. Below we have a photo of Marathon's President, Eric Boltz, and Rafael Frias Ruiz, TSP's Production Manager.
Ford Sharonville Lay-offs?
(March 22) - We received some very serious news today that has not difinitively been confirmed. The word is that Ford is relocating much of the transmission work from its Sharonville plant to other locales and, as a result, lay-offs have begun. We will update you as soon as we can confirm and get more information.
Marathon Mexico & Federal Mogul Mexico City
(March 21) - Below we have a photo of Hugo Ortiz, Heat Treat Maintenance Manager at Federal Mogul in Mexico City and Roberto Jasso-Reyna, head of Marathon Systems Control in Queretaro, Mexico. Apparently business is very good for both companies.
MTI Releases Market Survey Results for February
(March 20) - Every month the Metal Treating Institute (MTI) surveys its members to monitor market trends in the US heat treating markets and publishes those results. Things are looking up! Here's their release:
Heat Treating Sales Rise 9.3% in February 2006
Heat Treaters’ billings reached $71.0 million in February, a gain of 9.3% over February 2005’s total of $64.9 million.
For the first two months of 2006 sales tallied $143.7 million, an increase of 10.4% compared to 2005’s figure of $130.2 million.
All but two MTI districts outpaced their February sales totals. Eight of nine districts reported higher sales for the year to date.
(March 19) - It's time for China's biggest annual heat treatment expo called "Metal + Metallurgy China 2006" in Beijing. The show is April 18-21 and we're sure all the players in this growing heat treat market will have a presence there. We'll have photos once the show is underway of course. For more information brush up on your Chinese and click here.
Chrysler to Workers: Make More? Pay More for Health Care
(March 17) - In what is bound to be a trend for the industry, Chrysler has come out with a plan to charge its higher compensated salary workers more for health care. While Chrysler has been profitable these last two years and survived a price crunch that has crippled GM and Ford, it is looking to continue that run by implementing some of the same ideas hatched by its competitors. Quoting the Detroit Auto News:
Monthly health care payments for 4,100 administrative employees will not increase, but 9,400 managers and 1,400 executives, including LaSorda, will pay more for health care coverage.
Beginning next year, top executives will pay up to 100 percent of their health care premiums, which will mean an additional $1,500 a year on average. Midlevel managers will pay an extra $450 in premiums, on average, next year.
Wow. Executives paying 100% and admin employees going untouched? Now that sounds more like it!
Dana Licenses AtmoPlas™ to US Army
(March 16) - In spite of the incredibly bad news of filing for bankruptcy, Dana still managed to snag a nice contract from the U.S. Army for the licensing of its AtmosPlas™ portable heat treating technology. Here is the PR:
Dana Corp. signed a licensing and training agreement with the U.S. Army's National Automotive Center (NAC) for the use of Dana's AtmoPlas™ microwave atmospheric plasma technology in the Army's Mobile Parts Hospital (MPH). The MPH is self-contained, self-sustaining mobile manufacturing center that designs, tests, and creates vehicle parts in the field. Under the terms of the agreement, Dana will supply the NAC with a portable heat-treating system that utilizes Dana's proprietary AtmoPlas™ technology. With the technology, military personnel will expand their ability to manufacture and repair individual metallic parts on demand, allowing a vehicle's crew to safely complete a mission before returning to base for maintenance. Additional benefits include lower inventory costs, faster equipment readiness rates, and reduced time for parts procurement.
Toyota & Honda Forced to Downgrade BHP Ratings
(March 15) - If you bought a Toyota or Honda (or Lexus or Acura) in the last few years it turns out you might not have as much going on under the hood as you were led to believe.
In all about 14 different models from the two manufacturers were found to have inflated horsepower ratings under new testing standards.
In contrast, domestic models from the Big Three have trended toward under-stating their actual power. You can read the details here.
Lead Thai Heat Treatment & Ken Hinkley
(March 14) - Below we have a photo from Lead Thai Heat Treatment in Thailand. Thailand is a real hotbed of heat treat growth these days. With Toyota slated to build what will be one of their largest plants (called "Toyota City") in Thailand it's bound to continue.
Lead Thai's new facility is comprised of a 12,000 sq ft factory adjoined to about 2,000 sq ft of office space. The facility is located on 3 acres in the tropical and gorgeous area of Rayong, Thailand. They just completed construction of this facility about 6 months ago. They specialize in mash belt and pit work.
(March 13) - TI had never heard of this before (honestly), but March 8th was "International Women's Day." While I don't think too many people celebrate this day in the USA, it's quite a big deal in other countries. In China, for instance, female employees get the day off and exchange gifts.
Here is a shot from a group of heat treat folks attending the China Exhibition mentioned below. In the first shot Sunny (Beijing Waves), Yvonne (Marathon Sensors) & Aileen (Beijing Waves) celebrate the day with MMI-China's GM, Yakun Liu. I'm assuming Yakun had to get the check!
In the second shot the same women from above are shown at the MMI-China booth at the exhibit.
Vietnam Up and Coming Economic Force in Southeast Asia?
(March 13) - The Vietnam International Industrial Fair has been growing steadily for 15 years. It's being promoted heavily throughout Asia, Eastern Europe and the former Soviet states. We mention this because industry - including heat treating - is growing rapidly in this country. Since there is no heat treat exhibition in Vietnam, this is the place to go for showing & or finding your wares or investment opportunities. Here's their pitch:
15th VIETNAM INTERNATIONAL INDUSTRIAL FAIR
(VIIF 2006)
DATES : 17th – 21st OCTOBER 2006
VENUE : VIETNAM EXHIBITION CENTRE, HANOI
ORGANIZER : VIETNAM EXHIBITION FAIR CENTRE (VEFAC)
VIETNAM : AN IDEAL LOCATION FOR INVESTMENT & DOING BUSINESS
STATISTICS VIIF 2005
There were more than 292 domestic Vietnam companies & 104 foreign exhibitors from 13 countries & 30,024 visitors.
EXHIBIT PROFILE
· Expertise, Technology, Machinery & Equipment in manufacturing, Mining, Energy, Ship building, Construction, Transportation, Processing Industries….
· Machine Tool Manufacturers, Equipment & Accessories
· Machinery & Equipment in Plastic, Packaging & Printing
· Products & Services of Information & Telecommunication Technologies, Automation,
· Electronics & Electricals
· Means of Communications
FOR MORE DETAILS CONTACT:
A & S Exposition
Email: sales@ansexposition.com
ajay@ansexposition.com
Tel: +91 22 28704788 / +91 22 28704316 / 022 32953608
DaimlerChrysler AG to Invest $1 Billion in Mexico
(March 9) - DaimlerChrysler AG has announced that it and its suppliers will invest $1 billion in its Mexican manufacturing operations, most of which will go into upgrads at its Toluca assembly plant. Toluca is the only place in the world that produces Chrysler's very popular PT Cruiser. Most of this investment is slated to be made during the 2006 calendar year.
This announcement comes on the heels of Chrysler's recent announcement that it was investing $1 billion in two plants near St. Louis and that it had just finished a $419 million upgrade at its plant in Belvidere, Ill where the Dodge Caliber is built.
Sixth West China Int'l Forging, Die Stamping, Plate Work and Industrial Furnace Exhibition Opens in Chongqing, China
IBC Coating Technologies Goes with SECO/WARWICK for 12 Bar Universal HPQ/LPC System
(March 9) - A bit more SECO/WARWICK news: IBC Coating has just chosen a SECO/WARICK 12 Bar HPQ vacuum furnace to expand it's Lebanon, IN facility. Here's the PR:
IBC Coating, a leader in plasma nitriding technology, is expanding their Lebanon, IN facility with the addition of a SECO/WARWICK 12 Bar Universal HPQ™ (High Pressure Quench) vacuum furnace with Low Pressure Vacuum Carburizing for hardening and carburizing bearing steel and aerospace components. The furnace has a hot zone of 24"x 24" x 36" (600 x 600 x 900 mm) and a maximum temperature rating of 2400°F (1350°C) and 1500 pound (750 kilogram) gross loading capacity. The Universal HPQ provides advanced diffusion surface treatment with a fully automated power management control system that allows process flexibility with the lowest cost of operation.
About IBC Coating Technologies, Inc.
IBC Coating Technologies Inc. is a privately owned company, located in Carmiel, Israel and in Lebanon IN, USA. The company started its activities in July of 1996 as a research and development project, based on the know-how and experience of its founders. IBC develops diffusion surface treatment technologies for anti-wear and anti-corrosion applications.
New Vice President, Vacuum Systems at SECO/WARWICK
(March 9) - ILooks like SECO/WARWICK has a new VP for Vacuum Systems. Here's the PR:
Jeffrey W. Boswell, President and CEO has appointed Janusz Kowalewski Vice President, Vacuum Systems. He has been employed by SECO/WARWICK since 1990 as Sales Project Engineer, International Manager and the Director of Pacific Rim Operations in Beijing, China.After his tenure in China, Kowalewski served as High Pressure Quench/Vacuum Carburizing Product Manager and Applications Engineer. Mr. Kowalewski holds a Bachelor of Science from Edinboro University, and an MBA from Gannon University. An active member of both MTI and ASM, he has authored many articles on vacuum technology and serves on the editorial committee for Heat Treat Progress.
Heat Treating in Southeast Asia
(March 8) - It's interesting how different heat treat operations run in different parts of the world. One guy who has seen many of them is Randy Simmons of CHS-Asia. Randy cut his teeth in heat treat with MMI running the service department and still does a fair bit of freelance in North America. CHS-Asia, however, is his daytime job and, by all accounts, they're doing very well. Here's a recommendation from Randy on efficient heating for folks looking to start up or tune up operations in Southeast Asia:
In South East Asia the heat treat equipment is most commonly electrically heated. Recently, we have been seeing more Gas/Electric Belt Furnaces; this is a very efficient way of Heat Treating.
The first two zones are Gas Fired the Second two are electrically heated and the temper is electric. Based on the prices of Gas and Electric in South East Asia this is 5-10 percent more efficient.
Anyone planning to set up a commercial or in house heat treatment in this region should consider this option. Because the gases in Asia are quite different we suggest sourcing the actual burners out of Taiwan or Japan for longevity.
If you are planning to visit this region or have Question regarding Heat Treatment, Labor Cost and such feel free to contact me randy@chs-asia.com
Kind Regards,
Randy Simmons
Linde AG Makes Cash Offer for BOC
(March 8) - Linde AG is looking to buy BOC outright in a huge deal. Here's their PR:
Linde AG (Wiesbaden, Germany; http://www.linde.com) has agreed to make a pre-conditional offer to acquire the entire share capital of the BOC Group plc, Windlesham, UK, for 1,600 pence in cash per share. The board of directors for BOC intends to recommend BOC shareholders to accept the offer. The making of the offer is subject to the satisfaction or waiver of European and U.S. competition authority clearance pre-conditions, and offer is subject to the requisite approval of BOC's shareholders and the English Courts. If the pre-conditions are satisfied by the end of this month, the transaction is expected to be complete in the third quarter of 2006. Following the acquisition, Linde will be on the world's leading industrial gases and engineering groups with combined gas and engineering sales of approximately Euro 11.9 billion.
GM & UAW Negotiating Buyouts for 20,000 Hourly Workers, GM Says Deal on Health Costs Critical
(March 7) - Last week GM identified some 37,000 UAW workers at its plants that are eligible for retirement. This week its discussing a possible buyout of up to 20,000 hourly employees in what would be one of the largest deals of its kind ever. Considering that GM has stated it wants to shed 30,000 workers by 2008, that's a hefty chunk. All told the cost for GM to keep an active factory worker runs about $130,000 versus $50,000 for a retiree.
I'm sure it's just a simply coincidence that GM is simultaneously pushing the U.S. District Court to approve a plan to cut heath care costs by $1 billion...by shifting costs to - yeah, get this - hourly retirees!
We know GM is in a bind, but we'd rather see them get their top line in shape with some fresh designs. As nutty as hybrids may seem for the long term, they're selling like crazy.
Cost cuts may help in the short term, but GM has to get people buying to make a profit and to keep its end of bargains it has made over the years. They've got the quality - let's see some fresh blood in the line-up!
Another Auto Parts Bankruptcy: Dana Filed Last Friday
(March 6) - It would appear that the problems at GM, Ford and Delphi are starting to have a domino effect. When one of these big boys files for bankruptcy a whole lot of debt gets eaten by their suppliers. Then the suppliers start filing and those who file first have less debt burden and force the others to follow suit. It's not a pretty picture, but don't expect Dana to be the last bankruptcy in this industry.
Dana employs about 46,000 workers and said it lost $1.3 billion in the third quarter of last year. Considering they've only secured $1.45 billion from lenders, Dana will have to move quickly on its planned restructuring. This comes on top of the recent announcement by the Securities Exchange Commission that they were opening an investigation into Dana's financial practices.
NEWS FLASH -- MP Steel Will NOT Rebuild Plant 1 - Sells Plant 2!
(March 3) - Here's a big congratulations to Mike Moxy, former Plant Manager of MP Steel. It turns out that Mike is the lead investor of a group that has purchased Plant number 2 from MP Steel. The new company is called Advantage Thermal Services.
You'll recall that last year MP Steel's Plant 1 suffered a major fire. Initially the plan was to rebuild with all new equipment from Surface Combustion. Things changed, however, and it looks like Plant 1 is to be no more.
HeatTreatNews.com Surpasses "The Monty" for Website Traffic!
(March 3) - Internet traffic tool Alexa tells the story. While we're not nipping at the heels of the likes of CNN.com or Foxnews.com, HeatTreatNews.com is a nearly 1 million places higher in the Alexa web traffic rankings than our competition at Gord Montgomery's site. We're pretty excited about that!
While they like to brag about "hits" we all know it's page views that matter. "Hits" is one of those bogus web stats that don't correspond to actual number of visitors. (Heck, we can log 23,000 hits per day for only 200 visitors!)
So why have we passed them so quickly? It might be because we offer lower advertising fees, we have no three-month minimum ad run and we allow commission free classifieds in our forum - where everyone can post!
To celebrate our new celebrity status we're going to offer a 3-for-2 month special on ads and make a point of directing more traffic from the home page to our classifieds.
Bodycote News
(March 2) - Bodycote is a bellwether of the industry so it's always interesting to track their news. In addition to preliminary 2005 financials that highlight 10% revenue growth, 10% operating profit growth and a 30% improvement in return on capital employed (ROCE), we also have news that Bodycote has acquired ACT Laboratories. According to Bodycote's press release the acquisition strengthens Bodycote's presence in the automotive testing market.
Ipsen & AK Steel Strike Updates
(March 1) - Ipsen has now laid off approximately 50 UAW workers (UAW Local 2056) from its US operations as a strike continues. Talks are continuing into their fourth day in what is the first ever UAW strike at Ipse since the union organized there in 1978.
Meanwhile, AK Steel (Middletown, Ohio) has implemented a lock-out of its 2,700 union workers after the company and labor were unable to come to an agreement on a new contract yesterday. See our "Steelinks" down the right-hand side of this page for more details on the AK Steel strike.
Heat Treat Heaven?
(March 1) - Like most places, heat treat shops in Southeast Asia tend to be hot and dirty. The upside is that they have a tendency to be located near shipping ports. By some stroke of coincidence these shipping ports tend to be located near beaches.
Today's heat treat photos come courtesy of CHS-Asia and heat treating consultant Ken Hinckley. The shots are of Ken, Randy Simmons and CHS-Asia's finance wiz, Warunee, as they enjoy a rare day of rest on an island off the coast of Thailand.
Must be tough.
Here's a shot of the neighborhood:
and a shot of Randy Simmons and Warunee:
Finally a shot of the infamous heat treat legend Ken Hinckley and Randy:
Heat treating in Thailand doesn't look too bad...
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