APPLIED PROCESS’S POSTHAVEN

Lightweighting again

There is an interesting article in the new Crain’s Automotive news on one company’s approach to lightweighting.  The article reads:

“Shiloh has created a stamped steel control arm that is lighter than the same control arm in aluminum, as well as a steel shock tower that is lighter than the aluminum version.   "Just because it's aluminum doesn't mean it's lighter," he says. "It will also be important on these projects to know what else is going on in the automaker's factory.”

Those words are absolutely correct.  However, it is incumbent on people like me and others in the iron casting industry to educate end users on how our methods and materials can help them to cut weight and cost from their products.  Ductile Iron and ADI will not solve every lightweighting question, but iron castings can genuinely be a major part of the mix.  Stay tuned and we will make that happen.

AP University Purchasing of Ferrous Heat Treatment Seminar

The first-ever AP University Purchasing of Ferrous Heat Treatment Seminar is scheduled for September 25, 2014.  This one-day non-commercial seminar will be held on-site at Applied Process in our purpose-built classroom and will include a plant tour. 

This is NOT a metallurgical seminar on the glories of austempering (though austempering really is glorious!).  Rather, AP has gathered some respected industry panelists to give presentations on “how to get what you ordered” and “how to get your money’s worth” when purchasing various types heat treatment for ferrous metal components.  All parties are hurt when purchasing decisions are made with incomplete information, so we are doing our part to help buyers make sound decisions (even on things that have nothing to do with AP).

Attendance will be limited to 30 people and it is already filling up very quickly.  There will be more details in this space in a week or so as plans firm up.   

Things That Need to be Taught to Humans #4

The referees do not really hate your team.  Except when they cannot help themselves (see below).

What Vasko is reading

What a perfect segue into this topic.  I have read the book Scorecasting by Tobias Moskowitz and L. Jon Wertheim.  It is a sports book with appeal for technical people with some understanding of variability and statistics.  It is not a trivia book, but rather it explores the realm where raw numbers overlap with the human factor (very much like technical sales!).  For example, the book explains with great detail why the home field advantage exists in various sports.  I was surprised to learn that it has little to do with sleeping in your own bed, etc.  Check it out – you will like it.

Sometimes this blog writes itself.  Yikes, I could use more days like today.

ADI in the news

There will be an article on ADI in the July issue of Farm Equipment Magazine.  You should all subscribe to this excellent publication as it provides insights into what end users and distributors care about in their equipment.  Seeing ADI in Farm Equipment Magazine is better than being on the cover of Rolling Stone.   I know I am getting 25 copies of that issue just for myself.

Things That Need to be Taught to Humans #2, courtesy of John Keough

Don’t drive your car with the handicap tag hanging from the mirror.  Motorcycles and cars approaching at certain angles disappear behind the tag … not to mention that it is against the law.

Things That Need to be Taught to Humans #3

Drive in the right lane, pass in the left lane.

Markets in Action

That same Farm Equipment Magazine has a piece on corn and soybeans.  Corn prices are down … because crops are up: “The USDA reports that 76% of the corn crop is in good to excellent condition, compared with 63% last year.”  These things happen.  The same article reminds us that “About a third of the U.S. soybean crop is exported to China, where there's a large demand for soybeans to feed hogs, poultry, and dairy cows.”  That trend will not go away, and remember you read it here first.

Market Distortions #1

In today’s Wall Street Journal there is an excellent opinion piece by John H. Cochrane on the “Failure of Macroeconomics”.  This piece agrees with things I have said for years: people respond to incentives and behavior changes at the margin.  These microeconomic ideas are no great insight yet nobody seems to pay attention.  Instead we get macroeconomic tinkering (bad bad bad) like we see today as microeconomic decisions are put on hold.  Cochrane asks “Who wants to hire, lend or invest when the next stroke of the presidential pen or Justice Department witch hunt can undo all the hard work?”  Who indeed?  This is why we have anemic growth.  Please read the entire piece.

Market Distortions #2

In the most recent Economist there is a piece on the global education bubble.  I do not agree with all of the conclusions and I have little exposure to MOOCs.  However, I rejoice at anyone publishing eye-opening numbers like these, even when they are unhappy news:

“On one front, a funding crisis has created a shortfall that the universities’ brightest brains are struggling to solve. Institutions’ costs are rising, owing to pricey investments in technology, teachers’ salaries and galloping administrative costs. That comes as governments conclude that they can no longer afford to subsidise universities as generously as they used to. American colleges, in particular, are under pressure: some analysts predict mass bankruptcies within two decades.”

It goes on:

“Universities have passed most of their rising costs on to students. Fees in private non-profit universities in America rose by 28% in real terms in the decade to 2012, and have continued to edge up. Public universities increased their fees by 27% in the five years to 2012. Their average fees are now almost $8,400 for students studying in-state, and more than $19,000 for the rest. At private colleges average tuition is more than $30,000 (two-thirds of students benefit from bursaries of one sort or another). American student debt adds up to $1.2 trillion, with more than 7m people in default. …. Student enrolments in America, which rose from 15.2m in 1999 to 20.4m in 2011, have slowed, falling by 2% in 2012.”

Remember, in the Godfather Tom Hagen told Wolz “"Mr. Corleone is a man who insists on hearing bad news immediately."  I look at those numbers in the above paragraph and think that America has finally received the bad news and reacted. 

AFS 2014 Marketing & Selling of Castings Conference

The AFS 2014 Marketing & Selling of Castings Conference will be held December 10 –11, 2014, at The Westin O'Hare, Rosemont, IL.  At this conference I will participate in a panel, along with other members of AFS Division 14 (Marketing and Management).  The topic will be “Prospecting Case Studies in Success: Resources for Finding New Customers”. 

If you are involved in casting sales, purchasing, or design this event will be helpful to you.  This blog will keep you informed as plans shape up.

Things That Need to be Taught to Humans

This blog mostly discusses casting design, austempering, etc.  However, I will ask for some leeway to offer some periodic advice for all sentient humans.  Some people have been poorly parented and as such they display shocking ignorance of some basic rules. 

Today we start with “Things That Need to be Taught to Humans #1: Disembarking the Airplane”, which is stated as follows:

"When getting off of an airplane, do not proceed down the aisle until the entire row ahead of you has already gone before you.”

The only exceptions apply to those with tight connections, but even then the person in a hurry is obligated to ask first. 

I am willing to take suggestions on future “Things That Need to be Taught to Humans”.  You can email me with your ideas.  If your idea gets mentioned here you will get a free lunch on AP.

AP’s Dr. Kathy Speaks!

Kathy L. Hayrynen, PhD, FASM, will speak at Northeastern Wisconsin Chapter of the American Foundry Society on Monday, September 8, 2014.  Be there in person so you can feel yourself get smarter!

Target Article

The Wall Street Journal has an interesting article on Target department stores.  There has been a string of events illustrating a lack of leadership for several years. 

The piece states “interviews with more than two dozen former and current Target executives, managers and vendors reveal a deep malaise within a chain that, increasingly, had lost its way. Management became mired in a new thicket of bureaucracy. Creative leeway—once the DNA of the chain … took a back seat to rigid performance metrics.” 

Now, your blogger is the first one to say that meaningful metrics are critical in the execution and management of sales (B-to-C or B-to-B).  The operative word here is “meaningful.”  Please do read the rest of the article as a cautionary tale.

This is a blog about castings and austempering and economics.  These three topics are intimately related, and the evidence keeps rolling in. 

I have been asserting that a shortage of skilled labor from the energy boom means it is getting more expensive to do welding and machining operations in the manufacture of steel components.  That means the parts designer has a financial incentive to design parts to be closer to net shape earlier in the manufacturing process.  That means designing castings, and often the right cast material is ADI (hence my profound interest).  

An article in Crain’s Automotive News discusses the fact that auto dealerships are competing for skilled people with the oil and gas industry.  The article discusses things like signing bonuses and noncash benefits and recruiting.  Supply and demand apply to skilled labor and they take no holidays. 

We are all happy here in Western Pennsylvania when frackers are spending dollars and injecting vitality into the local and national economies.  Real jobs are good for us all.  That said, the manpower situation for skilled labor is a genuine problem for US manufacturers.  Supply and demand are fickle mistresses indeed.  The best win-win scenario is to bypass the welding backlog and just make your parts as castings.

You can contact your favorite domestic foundry to get started. 

Ag looking up globally

This blog has limited insight into short-term demand for agricultural castings.  That said, the current issue of the Economist validates what this blog asserted a few days ago.  Specifically, the global megatrend for agricultural demand is pointing up.  The article states: “With rising incomes and more diverse diets, Chinese people are consuming much more fatty food and fizzy drinks. Meals now contain more than twice as much oil and meats as in the 1980s.”  That means more grain for hog production and also more for soda production (think high fructose corn syrup).

This demand for grain will require more innovation from ag equipment makers who are trying to do more with less (meaning fewer skilled tradespeople).  Part of the solution is combining large assemblies into one-piece castings.  Please think ADI, people!

Mining Knowledge Nugget

I met with a very sharp and innovative engineer of mining equipment this week.  His company makes some very large machines indeed, and they use a lot of castings.  He told me something that makes perfect sense but that is not readily apparent if you are not a CPA.

Some large mining firms are still making money but a lot of global metals prices are down.  That means the profits being made from mining operations are being invested elsewhere in non-mining activities.  Once metals prices rise again the mining profits will be more likely to go into mining equipment because the ROI will justify it.  Well, I suppose so! 

Also, he validated something I heard elsewhere, which is that a lot of mining equipment being bought is being bought used.  The mining industry is still using up the machinery left over from the 2009 recession.  Yikes!

I am commenting a lot on the Wall Street Journal of late.  Please be patient with me.  I read more than one publication every day, but they are hitting on some pertinent things lately.

Aluminum in vehicle bodies

There is a piece in the Wall Street Journal today describing how, according to a survey of executives, “Auto makers plan a broad shift to aluminum from steel in larger vehicles over the next decade in North America, and 18% of all vehicles will have all-aluminum bodies by 2025, compared with less than 1% now, according to an industry study released this week.”  One counterpoint from a pro-steel person was that “aluminum often has hidden costs compared with existing steel parts.”  For example, "aluminum pillars are light but they're also fatter than steel pillars, and that can obstruct vision … It's not always about weight."

Truer words were never spoken.  An individual component has a set of requirements to meet in terms of size, strength, cost, etc.  Aluminum is sometimes the answer, and sometimes it is not.  The brilliant engineers at Walther EMC do just fine competing against aluminum.  If you are interested in designing lightweight your structural components and you want to do it cost-effectively, you need to put austempered ductile iron (ADI) on your list for evaluation.

More protein = more soybeans and grain = more castings

Yesterday’s WSJ had an article discussing a topic near and dear to my heart.  One of my favorite pundits, Spengler in the Asia Times, wrote about this topic three years ago (as we will see).  The WSJ piece states that “Consumers from Beijing to Boston are gobbling up more meat and dairy products, fueling multibillion-dollar mergers in the food industry and reshaping global agriculture.” 

It goes on to state “World-wide meat consumption will rise 1.9% a year over the next decade, according to projections from the U.S. Agriculture Department, as rising incomes in places like China, Mexico and Central America allow consumers to afford more pork, chicken and beef.  The United Nations Food and Agriculture Organization has projected that by 2030 the average person will consume about 99 pounds of meat a year, versus 86 pounds in 2007 and 73 in 1991. The U.S. Agriculture Department predicts that China and Hong Kong will boost beef imports by 55% by 2024.In response, farmers from the U.S. to Ukraine have planted more corn and soybeans, core ingredients in most livestock feed. U.S. farmers planted 97 million acres of corn in 2013, the most since the 1930s and up from 75.7 million in 2001.”

In 2011, before the Egyptian revolution, Spengler wrote in the Asia Times: “… China, not the United States or Israel, presents an existential threat to the Arab world, and through no fault of its own: rising incomes have gentrified the Asian diet, and - more importantly - insulated Asian budgets from food price fluctuations. Economists call this "price elasticity." Americans, for example, will buy the same amount of milk even if the price doubles, although they will stop buying fast food if hamburger prices double. Asians now are wealthy enough to buy all the grain they want.”

So … in short … Popovski would summarize this as:

1.  The rising global middle class has added meat to their diet.  They are not going back to an inferior menu.

2.  Each pound of meat requires some larger number of pounds of grain

3.  More pounds of grain will be needed and more acres of grain and beans will be planted

4.  More castings will be needed from nimble, responsive domestic sources to build this equipment in an era that is short on welders (yet another piece in the WSJ … goodness gracious they seem to just type up what I see in real life)

World Cup begins today

If you do not follow soccer it is OK to get on the bandwagon this month.  The FIFA World Cup begins today.  Team USA starts group play against Ghana on June 16.  I am very pro-USA, but we are in a challenging group (Portugal, Ghana, and Germany). 

These events bring to mind a happy memory from a business trip to Italy.  The Italian national team had won the 2006 World Cup and I was getting a morning coffee with my excellent friend Fabrizio.  I asked him if how he felt about the triumph and he was only moderately happy to discuss it.  He was more concerned about his favorite club team, and I asked him why.  He replied something to the effect of “if Italy wins the World Cup I cannot easily and politely bring it up to some random Korean at the coffee shop.  If Inter wins a league game, then there are plenty of Juve supporters to tease about it.” 

Well said.   I see both sides.  Forza USA.  Forza Inter.

DUG East

I attended the DUG East show in Pittsburgh this week.  That is a trade show for the fracking industry.  I hate to say that I saw multiple steel fabrications with almost no castings (though I did see a couple of Ridge Tool pipe wrenches).  This should logically be fertile ground for firms who do casting design and casting conversions.       

US Manufacturing in the Wall Street Journal

The Wall Street Journal published a long article a few days ago titled “Why U.S. Manufacturing Is Poised for a Comeback (Maybe)”.  The mass media sometimes see things before I do and sometimes it is reversed.  I can see that the creative side of US Manufacturing is back and very strong indeed.  More specifically, companies who provide new technology and innovative thinking are doing just fine.  Companies who deal in commodity thinking on the sales and purchasing sides are struggling more – they still face declining margins and often overwhelming price competition.

The article itself was done in a point-counterpoint fashion.  On the negative side this passage stood out to me: “Meanwhile, political gridlock in Washington leaves companies highly uncertain about future taxes, health-care costs and repairs to the nations' crumbling roads, bridges and ports. Caterpillar says capacity constraints and outdated technology at U.S. ports have prompted it to use Canadian ports for about 40% of the company's imports and exports.”  That kind of uncertainty is a manifestation of an abject lack of leadership from elected officials.  Nobody wants to make big decisions when future events are so clouded by the whims of Washington.

On the positive side I recognize this reality: “These days, companies are increasingly focused on reacting quickly to changes in demand … Being nimble reduces the risk that companies will be stuck with excess stocks of unsalable items or a shortage of items they could sell. … It's a lot easier for companies to act quickly when they're making their products close to the customer. Manufacturing in the U.S. can reduce the time needed to obtain goods to days or weeks from the two months or so needed to ship goods across the Pacific and get them through customs.”  

Things are very different now than just a few years ago.  If Washington gets out of the way then US manufacturers can and will respond creatively to the marketplace.

Vasko speaks!

Hold the jokes, please.  I am tentatively scheduled to speak at the Northern Indiana AFS on March 9, 2015.  Mark your calendars!  I will even buy you a club soda if you show up!

AP Publishes White Paper

I was privileged to work with my colleagues at AP as well as my excellent friends at Urick Foundry and AerWay in publishing a recent white paper. The topic is the Trunnion Bracket with Guard casting mentioned in an earlier post. The paper can be downloaded from the OEM Offhighway website. You might need to fill out a very brief form, but is worth the effort.

In this paper we explain how the casting conversion process enabled the designer to combine multiple assembled pieces into a single cast part. It is also an example of a collaborative effort leading to excellent results. Thanks again to the good people at AP, Urick, and AerWay!

Bloomberg Businessweek buries the lede (yes, that is spelled right, Philistines!)

Bloomberg Businessweek had a recent article titled “Companies Choose Profits Over Productivity” which explains that when “the U.S. economy emerged from the recession in June 2009, productivity was rising at a fast clip. Companies had spent the downturn cutting jobs and were lean and efficient. Productivity—output per hour worked—jumped 5.5 percent in the fourth quarter from a year earlier as workers did more with less. But as the recovery has chugged on, productivity growth has stalled, averaging less than 1 percent a year since 2011. Workers were actually less efficient in the first quarter of 2014, producing fewer goods and services per hour than they had during the previous quarter.” Yikes! We are living in strange times to see such conditions!

However, if you keep reading to the seventh paragraph, you will find that a “key tax break has also been downsized. Since 1983 businesses have been able to record as an expense new machinery and equipment. The result was a reduction in taxable profits. From 2010 to 2013 that amount was $500,000. But the deduction expired at the end of 2013; now companies can write off only $25,000, the lowest since 2002.”

Well, there goes five minutes of my life that I will never get back again. I could have told them that without opening the magazine. Do they pay people to write this?

Now, this blog discusses casting conversions and austempered ductile iron (ADI) and economic things ... so it is clearly a place to discuss the latest session of AP University, which occurred earlier this week at sites in Livonia and Ann Arbor, Michigan.  I write this post with a profound sense of thankfulness and humility at the trust and goodwill shown to me and my colleagues this week by the attendees at the most recent session.

We hosted 29 guests who wanted to learn about casting conversions in ductile iron and ADI.  Component designers from a variety of industries attended, such as heavy truck, agricultural, rail, and light vehicle.  Foundry people also attended to learn more about this type of metallurgy and to contribute their knowledge in a non-commercial setting.  Attendees came from as far east as Philadelphia and as far west as Alberta, Canada.  People at AP are thankful for their participation, and this week’s event was our best session yet.

This photo shows the new purpose-built classroom at Applied Process the day before the attendees arrived.  That’s Chris and John checking out the new projector.  The next two days featured a progression of speakers discussing casting design, metallurgy, and examples of casting conversions.

Day 3 of AP University happens at Joyworks Studio in Ann Arbor.  AP’s Henry Frear is shown here with Mark, a very sharp designer from Amerequip just prior to that flask being filled.

Here we have a photo of a mold being made at Joyworks.  There are some VERY smart and industrious interns at Joyworks who will no doubt be high-performers in the engineering world.

John Keough of Applied Process describes a casting to some friends who design heavy truck components.  Weight surely matters in that business, and ductile iron allows the designer to readily put material where it is needed and to remove material from where it is not needed.  The natural flowability of ductile iron allows for some intricate shapes indeed.

A great time was had by all, and I think we all taught each other a few things.  I cannot wait until the next session!  If you have an interest in attending then let me know as the spots are filling up fast!

Reshoring

The LA Times has a very interesting story about reshoring of work that left North America for distant shores over the past decade or so.  The facts are that US manufacturing has many strong built-in advantages, and that is becoming clearer all the time.  The article discusses wages, energy, currency, and other factors.  Personal anecdotal evidence bears out these trends.  Do please read the whole article.

Joyworks in the news

Joyworks Studio is in the May edition of modern casting magazine.   This is a nice article and a credit to Justin and his colleagues at Joyworks.  If you have never been there, you are missing out, I promise you!

AP’s Casting of the Year submission

AP submitted an ADI casting conversion as a candidate for the 2014 AFS Casting of the Year.  We did this in collaboration with our friends from Urick Foundry and AerWay.  We didn’t win this year, but we will be back!  Congratulations to the winners, our friends at Aarrowcast with their excellent 842-lb. John Deere oil pan.  Yikes!  842 lbs.!   

Vasko’s Reading Pick

The City Journal is a site with some well-written and well-researched articles.  I do my work in the field, and stories that are based on field observation resonate with me.  Here is an article on the city of Havana that you might want to read, quietly, with a very dark cup of coffee.