APPLIED PROCESS’S POSTHAVEN

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.

The quadrennial metal casting exhibition, GIFA, was held in Dusseldorf, Germany June 21 through July 2.  Coincident shows included NEWCAST, THERMPROCESS and METEC.  This massive show covered 12 convention halls with 900 exhibitors (54 from North America) and 53,000 visitors from all over the world.  The European technical organization CIATF sponsored 54 technical papers.  Applied Process Inc. and its affiliates ADI Treatments, ADI Engineering, HighTemp, AP Suzhou and Jilin ADI sponsored a booth in the NEWCAST pavilion.  Hundreds of visitors stopped by our stand to discuss potential applications of Austempering, with specific interest in ADI and CADI.  (They’re discovering that Ausferrite is AWESOME).

The worldwide mood in metal casting and related manufacturing is one of cautious optimism.  European markets have recovered to over 80% of their pre-recession business levels, the US and India are experiencing best ever business levels.  Australian manufacturing is suffering.  Chinese manufacturing has recovered fully in sales levels but is being hit with a high currency valuation, high energy prices and double-digit wage inflation.

We were pleased to announce at NEWCAST the upcoming commissioning of the production Austempering line at Hightemp’s Pune facility.  Pune is the automotive manufacturing capital of India and scores of Indian visitors to our booth expressed unvarnished optimism for the near-term growth of manufacturing in India.

ADI Treatments (UK) hinted at the commissioning of their planned German sister operation, ADI Technik, perhaps in 2012.  This would put leading edge Austempering technology in the heart of Europe where demand remains strong for high-tech conversions to ADI from steel and aluminum castings, weldments and forgings.  

The feedback from Washington this week was grim, with very few new jobs being created (overall) and national unemployment rising to 9.2%.  In contrast, since the recession, US manufacturers have added hundreds of thousands of jobs and all the feedback from North American manufacturers points to growth at least through the middle of 2013.  That’s good news for Austempering, which is already breaking new records.  We are fulfilling our mission to “Grow the Pie” for Austempering…..and we’ll continue to do so.

On another note: Hat’s off to our Australian friends for another fantastic Aussie Boat adventure on the Rhine River near Dusseldorf’s Alt Stadt (Old City).  They sure know how to work and play hard.  They are now even more familiar with Hostile Duck Iron and our www.appliedprocess.com website.  Several Australian foundries have, in fact, joined the US-based Ductile Iron Society (www.ductile.org ).  They include: Graham Campbell Ferrum (parent company of ADI Engineering), Intercast & Forge and Trigg Brothers Foundry.

This Thursday, 21 April 2011, I have the honor to speak to the Detroit-Windsor Chapter of the American Foundry Society ( afsdetroit.com ).  The topic of my presentation is, “ADI- A Green Alternative”.  Did you know that nearly 25% of a vehicle’s life-cycle energy is embodied in its manufacture?  When you then consider battery and battery/hybrid vehicles the life cycle energy contained in the vehicle’s manufacture can rise to nearly 50%.  Austempered Ductile Iron is a low energy material that can cost effectively replace aluminum and steel weldments, castings and forgings.  Following the lead of the Architectural community I investigated the concept of “embodied energy”; the energy contained in a component from mining it, forming it, machining it and finishing it; through recycling…..all inclusive.  The results showed a clear correlation between the embodied energy in a component and its price.  Going further, one can calculate the embodied energy necessary to produce the components out of different material/process combinations to achieve the same mechanical results.  In this presentation I will use case studies to demonstrate the concept of embodied energy and to compare Austempered Ductile Iron (ADI) to other, competing technologies.  Join me at Vladimir’s for some good food, good friends and an ADI talk……what could be better?

The Applied Process team is just back from the 115th American Foundry Society Casting Congress in Schaumburg, Illinois and it was a good one.  Everybody is bouncing back nicely from the Great Recession and demand for castings is rising smartly.  Demand for Austempered Ductile Iron (ADI) is no exception.  Visitors stopped by the AP booth and shared their experiences (and Dr. Kathy's home-made cookies).

Numerous attendees were actively looking for equipment to increase the throughput and productivity of their metal casting plants.  At the Hoyt Memorial Lecture, Denny Dotson, of Dotson Iron Castings (www.dotson.com ) raised the curtain a bit on Saugus 2, a collaborative "foundry in a box" that is slated to be the first greenfield cast iron foundry in the US since 1974.......principal customer, location and collaborators to be announced…..but he claims they’ll be “pouring iron in 2013”.

Kathy Hayrynen chaired panels and presented on the AFS Cast Iron Committee's activities while I presented the paper "ADI- A Green Alternative" in both design and marketing sessions.  Vasko, Justin and Henry visited with customers both existing and potential.

Discussions abounded about conversions from steel and aluminum castings, weldments and forgings to ADI……and we’re up to the challenge.  I don't know yet what the final attendance was but the papers were well attended, the show traffic was steady and the mood was positive.  It’s great to see our metal casting industry smiling again.

Every once in a while you get the opportunity to work collaboratively with a company in a way that stimulates both concerns to grow.  Call it synergy or what you like.  One of those companies for me is Walther EMC where Chris Walther and Phil Fensel have built a company on sound engineering and a straight forward business plan; to build wheel-ends and associated components for heavy vehicles.  Their cornerstone product, Austempered Ductile Iron Dura-Light® Hubs replace premium aluminum hubs at equal weight.  (Huh? Iron hubs can replace aluminum at equal weight?).  But, SURPRISE, this little company, tucked on a hillside in Franklin, Ohio USA is not what it would appear.  Inside robots load and unload components in automated machining cells.  Satellite stations have various new products under development.  If you think what they make now is cool.  You ain’t seen nothin yet.  www.waltheremc.com .