APPLIED PROCESS’S POSTHAVEN

In the Austempering business we are constantly amazed how limited the engineering community’s general knowledge of material/process selection really is.  Often, engineers make material selection based on the incumbent products or the guy with the most voluminous editorial or advertising material.  Or they can be pushed to lower density materials believing what they've heard, that low density = lightweight = green.  Ladies and gentlemen, The Stuff Matters.  I can’t blame the engineers.  Everybody’s being asked to do more with less and every engineer is expected to know everything about everything and they just can’t. 

So we found it mildly amusing when Ford announced a few months back (Automotive News August 2012) that they intend to reduce the mass of the US’ #1 selling vehicle, the Ford F-150, by 750 lb. (340kg).  The mass reduction will be accomplished by converting steel and iron components to aluminum in:

-The cargo box

-The tailgate

-The hood

-The chassis

-The suspension.

The mass reduction is expected to 1) increase the fuel efficiency of the vehicle by 8% and, 2) increase the cost of the vehicle by $3,000.  Hmmmm.  If one drives their F-150 10,000 miles (16,130 km) per year and gasoline sells for $3.50/gallon, this modification will pay for itself in 10 years.  In other words, it will be like buying $3,000 worth of gasoline IN ADVANCE.  (That energy is embodied in the aluminum that is substituted for ferrous alloys that require much less energy to extract from the earth).  It sounds green……a lighter vehicle, 8% better “fuel efficiency”…..but is it, really?  You decide.

To help engineers and buyers make better material/process decisions, Applied Process Inc. recently held its inaugural “AP University” in Livonia and Ann Arbor, Michigan.  31 attendees representing 16 companies participated in a 3-day seminar focusing on engineering conversions.  They learned how to design a casting, the metallurgy of ductile iron and Austempered Ductile Iron (ADI), solidification and 3-D modeling, machining and all aspects of converting steel and aluminum castings, forgings and weldments to ductile iron and ADI castings.  For the capstone events the attendees toured Applied Process’ Livonia facility and participated in mold making and a ductile iron pour at Joyworks Studio in Ann Arbor…..each taking home a rather snazzy looking Hostile Duck Iron, wall-mount bottle opener.

The AP University attendees asked great questions and learned much.  One attendee, an engineer with a purchasing function, working for a Tier One supplier summed it up the best: “There were things that I did not think would be (candidates) for the Austempering process…..so I would not have considered it before.  Moving forward, I can apply this knowledge to more new applications”.  THAT is the point of AP University.  Oh, by the way, one of the AP University attendees was a Ford engineer.  We hope he’s working on the F-150.

AP University could not have happened without the hard  work of Vasko Popovski, Kathy Hayrynen, Justin Lefevre, Henry Frear, Chad Kelsey, Ryan Breneman, Cindy Duman and the teams at Applied Process, AP Tech, Magmasoft and Communica.  Thanks to the lot of ya. We're growin' the pie here at Applied Process.

It is election season and here in the US we’re all about picking the right person for the job.  One group has a vision of a fixed-size pie and work hard to adjust the size of the pieces and distribute them.  Some, and we include Applied Process in this lot, envision a growing pie with enough for all, where less attention is paid to the individual pieces and more attention is paid to building a bigger pie.  You have a clear choice this November.  Exercise it.

So, speaking of picking the right person for the job, with this blog I am pleased to announce that AP’s COO, John Wagner, will add the title President to his business card.  John, a former Marine, with a sheepskin from the University of Wisconsin and decades of heat treat experience will  now lead the heat treat industry’s A-Team (or should I say AP Team?).  I will support John and his team as Chairman (and executive middle-linebacker).  We’re loaded for bear, having expanded our capacity by 50% in the past 18 months we’re all about growing the pie for Austempering.

 Some heat treaters are great vendors.  They wait patiently to take orders for existing business and compete aggressively to continually increase their share of the existing business.  At AP we grow the pie.  If you’ve got a six-piece steel weldment, we’ll help you convert it to a one-piece ADI casting.  If those fat aluminum structural components are costing you a bundle, perhaps we can replace them at equal weight with thin-walled ADI castings.  Troubles with imported ground-engaging parts.  We might be able to help you convert to CADI™.  Are you being torqued off with your carburized or induction hardened shafts?  Perhaps we can solve your long nightmare with Carbo-Austempering™.  Are you paying an arm and a leg to hog large parts out of steel bar stock?  Perhaps our Monster Parts™ furnace will allow us to replace that machining nightmare with a near net shape ADI casting.  We get paid to heat treat people’s parts.  But what we really do for a living is help our customers to replace one material/process combination with a better, faster, cheaper one.

 John Wagner and the AP A-Team stand ready to help you grow the pie.  Check ‘em out……and remember to vote for pie growth, not redistribution.

Since Applied Process is involved in the heat treatment of manufactured goods, our business is a good barometer of US Industrial Production.  When people need more stuff Austempered, US Industrial Production is rising.  When people need less stuff Austempered US Industrial production is usually flat or falling.  In spite of what you hear or read in the news, US Industrial Production is rising (as it has been for 2-1/2 years) and should continue to do so for a while. 

In some sectors, production is still rising briskly.  Who would have thought in 2010 that by 2012 US ductile iron casting production would be UP by 50% and Chinese ductile iron production would be DOWN by 50%?  In fact, US manufacturers are facing a shortage of ductile iron castings as US ductile iron foundries are running at near capacity while a glut of Chinese iron foundry capacity is resulting in downsizing, business closures and government bailouts of state-run metal casting enterprises there.

A long awaited recovery in US construction activity is finally emerging which should help shore up overall industrial production as other sectors of industry are peaking in production.  HD Truck production is headed for a +250,000 unit year with HD trailer production at record levels.  AG equipment production may set another record.  US light vehicle sales are inching, once again, towards 16 million units.  Meanwhile the low value of the dollar versus the Euro, the Japanese Yen and the Chinese Yuan make imports more expensive and exported US goods more attractive to foreign buyers.

And…..don’t look now…..but US manufacturing workers remain the most productive on the planet.  According to the United Nations Bureau of Labor statistics, the average value-added for a US manufacturing worker is five times that of a Chinese worker, four times that of a Mexican worker, two times that of a German worker, 1.5 times that of a Korean worker and 1.3 times that of a Japanese worker.  Couple that with our new-found sources of domestic energy and the US is well-positioned to be the number one economy in the world for the foreseeable future.

As this is all going on, US manufacturers are looking for ways to reduce the mass and cost of their products.  Nissan recently reported that of the mpg gains on their 2013 US-produced models, 15% of the gain was attributed to mass reduction coming from material/process substitution.  Ford has indicated the desire to reduce the mass of their class-leading F-150 by 750 lbs. (340kg) by 2025, expecting most of that weight-loss to come from material/process substitutions.  HD truck trailer manufacturers are looking for “every pound” they can get, as every pound reduced in trailer weight is one more pound that their customers can add in paid-for shipped goods.

Applied Process offers an array of high strength-to-weight ratio options for the design community ranging from Austempered Ductile Iron (ADI) conversions from steel or aluminum, to Carbo-Austempered™ steel powertrain parts that can transmit more torque with the same, or less, mass.  Our engineers and technical staff are working with customers daily to develop product designs that are better, faster, cheaper and more sustainable.  It’s one of the most-fun parts of what we do at Applied Process.

Pay no attention to the man behind the curtain telling you that US manufacturing is “dead” or being “off-shored”.  Reality is quite the contrary.

If we could tell you all the good stuff we’ve got going on your head would explode.  But there’s PLENTY of good stuff we can report.  With our aggressive capacity increases we have now worked our backlogs back down to historical levels.  In fact, we caught up so quickly that we happily surprised some of our customers who had dialed in extended turn times.  It’s good to see some concrete around the bins again!

 Just this week an OEM truck manufacturer gave AP Westshore the second highest quality audit score ever and the highest score ever awarded to a heat treater.  The auditor was effusive in his praise.  Well earned, Oshkosh.  Our customers know that for the highest quality Austempering services available anywhere the AP companies are the benchmark.

An international producer of critical pressure vessels is successfully testing ADI components.  A major tier supplier of heavy truck suspension components is forecasting a 30% increase in orders for critical ADI structural components that replaced expensive, heavy, steel forgings.  A major bearing manufacturer just cut AP Livonia the largest single purchase order ever.  Railcar production, and production of the critical ADI components on them, is skyrocketing. New ag, mining and turf care consummables are being converted to ADI and CADI™ weekly.  US light vehicle production is climbing and Austempered iron and steel components are included in their suspensions, engines and transmissions.

The Monster Parts™ Division is soon to be commissioned and we’ve already lined up major OEM’s and tier suppliers with components as large as 7 tons and two meters in diameter.  With our new Monster Parts™ capability we will be opening markets up to ADI and Austempered and Carbo-Austempered™ steel that heretofore were the sole domain of pearlitic and martensitic steel forgings, castings and weldments.

On a lighter note, just today, truck traffic into AP Westshore was blocked by a disabled truck.  Ironically, a cast aluminum wheel hub on the trailer had failed, shearing off the bolts and locking up the axle.  John Wagner and the APW crew were quick to point out to the driver that if he had been equipped with a lightweight, Walther EMC Duralight® ADI hub the failure would never have occurred.    

We’re here.  We’re energized.  We’re doing our jobs, making stuff in the USA……. and no amount of headwinds from Washington are going to stop us now. 

Energy. Green. Sustainable. Energy Independence. Carbon footprint.  Climate Change.  Greenhouse gases.

 The previous terms have been brought to you by the educational system and the media.  We’ve all heard them over, and over, and over.  So let’s have a rational discussion.  Perhaps as mere mortals we can, in fact, affect positive change.  But what IS positive change?  There is energy in everything we do, consume and utilize.  

We require energy to breath, to walk, to think and to do any function we perform.  It takes a lot of energy to heat us, cool us, feed us, water us and transport us.  We’ve heard that we need to have a smaller carbon footprint.  What the heck!? ….we ARE a carbon footprint.  All organic matter: humans, animals, plants are made of various carbon molecules and water.

 We’ve been told that CO₂ is a “greenhouse gas” that settles into our upper atmosphere and reflects heat back to the earth causing climate change.  Although millions of years ago CO₂ was higher than it is now, CO₂ content in the earth’s lower atmosphere is higher now than it is has been in thousands of years leading some to conclude that humans are to blame…..but then what’s with the much higher CO₂ millions of years ago?  Who caused that?  And what happens if CO₂  goes to zero?  What we used to learn in school is that plants take in water, carbon-based nutrients from the soil, CO₂ and sunshine to make cellulose and grow…..and give off oxygen.  If CO₂ in the earth’s atmosphere were to go to zero all plant life on earth would quickly perish, and so would we.

 At a recent Western Energy Alliance conference in Colorado author Robert Bryce, Senior Fellow at the Center for Energy Policy and Environment at the Manhattan Institute, cited statistics that world-wide energy consumption in 2010 increased 28% to the equivalent of 210 million barrels of oil per day, 87% of that from hydrocarbons (oil, coal, natural gas and their derivatives).  That’s a LOT of CO₂ being produced by burning hydrocarbons. 

 I could be a little cynical here and say that perhaps we should just plant a bunch of trees….which would grow like weeds in the CO₂-rich environment and provide additional carbon-based fuel and useful cellulosic materials.  But let’s just suppose that it’s a rational, sustainable solution that can’t POSSIBLY work.  So what’s left?  Conservation.  What is conservation?  It is doing the same amount of “stuff” with less energy or doing more stuff with the same amount of energy.  In manufacturing it’s what we call increasing productivity…..producing more with the same or less…..less man-hours, less materials, less space…..all things that embody a certain amount of energy.

 Speaking of sustainability, what about wind, solar and nuclear?  Nuclear provides clean, efficient power…..and low-level nuclear waste that must be safely stored for thousands of years.  Wind and solar power are conceived as sustainable but the reason they are so expensive is that they consume huge amounts of energy to produce the wind turbines and the solar panels.  That up-front energy cost is the barrier to entry and in some cases their lifetime energy output never equals the energy input to build and maintain the devices.  So, are these methods “sustainable”?  We hope that engineers and scientists can make them so in the future.

 Recent natural gas and oil finds in North America make the prospect of us becoming energy independent a near-term possibility.  At a recent meeting of the Kentucky Oil and Gas Association, Brian Havacivch reminded the attendees that five years ago we expected to be importing large quantities of liquefied natural gas (LNG) and we capitalized facilities in the Gulf States to receive those imports.  With the oil sands of Canada and fracking technology allowing us to reach huge fields of natural gas in the north-central and Appalachian regions of the US those facilities will be put to use soon but for EXPORTING instead of importing LNG.  The current US natural gas price of about $4/MMBTU makes the export of LNG to Europe at $10/MMBTU or Korea at $12/MMBTU very desirable to producers.  This same new upswing in, now accessible, reserves will keep the price of natural gas low for a long time going forward……but not forever.

 So, this is all very good news for the US.  We’ve got lots and lots of natural gas which produces less CO₂ than coal or oil when burned.  These reserves stand to make us energy independent.  But in the end it brings us back around to us…..we consume the energy.  We can argue about mankind’s effect on the climate but what we can agree on is that we need to continually increase our productivity and energy efficiency which, by definition, both require us to do more with less energy.

 At Applied Process Inc. we are doing our part.  As Austempering experts, a principal process of ours is Austempered Ductile Iron (ADI).  ADI, with its high strength-to-weight ratio can replace steel or aluminum castings, weldments or forgings at equal mass.  When you then add that ADI embodies far less energy per unit of mass than steel or aluminum technologies, ADI is a green alternative……and that’s just the material/process consideration.

 Applied Process Inc. is committed to continually increasing productivity.  In our fiscal year 2011 we increased our output per man-hour by nearly 11%, our output per furnace hour by nearly 6% and we reduced our energy consumption per unit sale by nearly 6%.  These improvements did not happen by accident.  They were the result of aggressive employee training, demanding internal quality systems, fervent preventive maintenance, focused capital expenditures and implementation of new technologies.  Our customers, our stakeholders and our communities expect it, and AP is delivering.

We were working in the lab, late one night,

When our eyes beheld an AWESOME sight,

When the MONSTER we created began to rise,

Then suddenly to our surprise…….

There’s a Monster coming!  With Halloween just around the corner it seems fitting that I’d be talking about a MONSTER in this blog.  It’s not some gored zombie, or Sasquatch, or Frankenstein (although it’s big and has bolts in its neck).  It’s not even organic, although we’re breathing life into it now.  It’s the Monster Parts™ furnace that’s dwelling in Oshkosh……and it’s a MONSTER.  With a footprint that is 7ft x 8ft and the ability to swallow ten tons in one sitting it’s the largest integral quench atmosphere batch furnace in the world.  Oh, and did we tell you that it has a salt quench?

Long in the making, this MONSTER will allow us to Austemper steel and iron parts heretofore not possible.  The furnace design required extensive (and close) teamwork between the Applied Process companies (www.appliedprocess.com) and AFC-Holcroft (www.afc-holcroft.com).  As described by AFC-Holcroft’s Bill Disler, “This project was a collaborative effort between AFC-Holcroft’s engineering and production staff and the engineering and plant services staff at the Applied Process companies”.  And here’s the cool part.  The Monster Parts™ furnace will run all the stuff that our customers now have AND adds the capability for us to run large and heavy steel, iron and Austempered Ductile Iron (ADI) parts.

The Monster Parts™ furnace will be capable of heating the parts in a carburizing or neutral atmosphere.  The recovery rate and temperature uniformity will meet or exceed that of our existing lines…..in a big way.  Quite frankly, this furnace is awesome.  Our Technical Sales Group Leader, Vasko Popovski says that “the new furnace means the engineering community is now freed from the overwhelming reliance on large-scale steel components in favor of less costly and lighter ADI components”.  Think about it; weldments, stampings, forgings all machined and welded together to make a large, gangly component.  Replace that with a one-piece, elegant ADI casting.  Wow!  That being said, this line will also carburize and/or neutral harden big steel stuff too. 

This furnace line will give Applied Process a unique opportunity to work with engineers, buyers and the management of manufacturers to develop new, cost-effective conversions of large parts….Monster Parts™…and will increase our capacity to process conventional Austempering work.  We’ve been anxiously awaiting this MONSTER…..and now it’s coming.  Trick or Treat.

If we haven’t scared you away yet you can contact Vasko at vpopovski@appliedprocess.com and he’ll be glad to listen to your scary story.

Austempered steel and iron components are critical to today’s Class 8 Trucks (over the road trucks with load capacity exceeding 33,000 lbs).  Austempered Gray Iron (AGI) cylinder liners make diesels more durable.  Austempered Ductile Iron (ADI) suspension, powertrain and engine components make those systems quieter, lighter, more durable and cost effective.  (In fact, heavy truck is the number one market segment for ADI worldwide).  Austempered and Carbo-Austempered^sm components in heavy duty powertrains push their performance envelopes.  Applied Process is proud to be a world-wide leader in Austempering technology and the significant role we play in the production of world-class heavy trucks.

Today’s Class 8 trucks are lighter, more powerful (yet more efficient) and more durable than ever.  Tiered, increasing Federal engine regulations in the last ten years have caused sales to lurch initially up, and then downward, from over 350,000 units per year at the peak to less than 150,000 units last year.  But those regulations (and the Great Recession) are now behind us and demand is stirring.  With TransCore’s North American Freight Index running 10-15% ahead of last year month-to-month and fuel prices moderating, trucking firms are in a buying mood.  Heavy Duty Tucking reported on research by ACT Research that orders in the first quarter of 2011 are the strongest since 2006.  In fact, the article reports that the backlog (as of June) of orders for new, Class 8 trucks is an eye-popping 126,000 units……a 55 month high.

In an interview with Heavy Duty Trucking, Navistar’s Senior VP of North American Sales was quoted as saying, “There are a lot of orders out there, but I’m going to tell you something: they aren’t going to get built because (there) just isn’t the supply base out there to handle the kinds of increases we’re seeing”.  Ditto comments by the President and CEO of Daimler Trucks North America, Martin Daum made at the Mid-America Trucking Show.  Hebe referred to supply chain problems with “tier two and three” suppliers in places like India, China and Korea failing to deliver and then, “the whole thing falls apart”.  In the interview Herbe verbalized what we already know, that “A lot of production has also moved to Mexico in the past few years.  There isn’t the capability to ramp up capacity in those other countries like we have here.  It’s just not going to happen”. 

Hmmm, that would seem to be an endorsement of US production capabilities.  If they went off shore for components and moved assembly to Mexico to save money and now cannot produce say, 50,000 additional trucks this year, I wonder how much money they actually saved?

So, this year in North America we’ll build 225,000 or up to 300,000 trucks depending on how well the Indian, Korean, Chinese and Mexican suppliers do?  Thank goodness for our Steady Eddy US manufacturing customers who are stretched to the limit, but supplying high quality components just-about-on-time. I’m all for sourcing parts in China for the Chinese market, or in India for the Indian market, or in Korea for the Korean market,  but do you think the Class 8 OEM’s might re-think sourcing parts in those countries bound for trucks built in North America?  I guess this year the answer to that question will depend on how much the “low-cost” outsourcing costs them in new truck sales.  Don’t mind me. I’m just the heat treater…..it must take a high-paid OEM bean counter to figure this stuff out.

Hundreds are expected to attend the 5^th China ADI Conference 7-9 August 2011 in Changchun, Jilin, China.

This week marks the 5^th gathering of the China ADI Conference.  The venue is the city of Changchun in the Chinese province of Jilin.  (If you are looking for it on the map just look a few hundred miles north of the Korean border).  Loosely translated, Changchun means “long spring” but the winters here are none too short and right now the summer is quite hot.  The conference will feature dozens of papers presented by authors from several countries.  (Sorry for you non-Chinese speaking people, the language of the conference is exclusively Mandarin).  It will include an Open House at Jilin ADI, a new commercial heat treating shop (and an Austempering licensee of Applied Process Inc.) that has as its centerpiece an 80”x80”x56” Universal Batch Quench / Austemper furnace, currently the largest integral salt quench batch furnace on the planet. 

A large turnout of the hometown First Auto Works (FAW) crowd is expected.  FAW already incorporates some ADI designs in their vehicles but they are busily designing components from differential gears to multifunction suspension brackets to axle components.  To give you an idea of the scope of FAW’s importance to this town, 2011 is a down year for truck production here and they’ll still produce about 120,000 heavy trucks……one company, in one city.

China is the worldwide leader in the production of ductile iron.  In recent years the quality and capability of the ductile iron producers in China has improved markedly.  In tandem, world-class Austempering capabilities have been capitalized and ADI production in China is climbing rapidly.  Heck, they’ve even got their own, brand spankin’ new ADI standard.

If you’re so inclined, hop a plane (or two, or three) and come on out to see what’s shakin’ with ADI in the Middle Kingdom.

Our Mission is to Grow the Pie for Austempering……and BOY is the pie growing!  Demand for Austempering remains at record levels.  Producers up and down the supply chain are straining their capacity, resulting in a flattening out of US manufacturing growth.  With certain parts of the economy still in recession, manufacturers have been slow to pull the trigger on capacity-expanding capital expenditures.  Orders in the capital equipment business have now increased, but the entire US manufacturing industry is the bottleneck right now……Applied Process Inc. included.  It will take several months to right-size capacities with demand but accelerating growth in US manufacturing is expected in 2012.

In a longer-term view, SAE Off-Highway Engineering magazine reported on recent comments by John Deere’s Chairman and CEO, Samuel Allen.  Mr. Allen stated that, “A steadily growing population will result in at least 30% more people to feed, shelter and clothe in the next 40 years.  This must be done with basically the same amount of land, water and other inputs such as fertilizer”.  Just think of that….a 30% increase in per-acre productivity.  Mr. Allen further stated that, “Largely as a result of productivity advances, the typical US farmer today feeds over 150 people; six times more than in 1960”.  In the 1930’s approximately 40% of the US population was directly employed in the production of our food.  Today, less than 2% of the US population is feeding the US and exporting food worldwide.  So dramatic productivity increases are not new to US farmers and ranchers.

John Deere is the leader in the US agricultural equipment industry.  The Agricultural equipment industry, worldwide, will play a central part in future productivity gains in food production.  But whether the equipment is green, red, yellow or blue; Austempered Steel, Carbo-Austempered^sm Steel, Austempered Ductile Iron (ADI), Carbidic Austempered Ductile Iron (CADI^sm), Austempered Gray Iron (AGI) and Locally Austempered Ductile Iron (LADI^sm) processed by the Applied Process companies and our affiliates will be getting the job done.