A Material View of Creating a Sustainable Company

With production of any major component, the number one cost in most cases for a manufacturer is material cost. Over the last several years, material availability and cost has been like a roller coaster in an amusement park. Small to mid sized manufacturers have had mixed success with passing on material cost increases. Depending on the industry, many end users are resisting these types of increases saying it’s a cost of doing business.

This month our focus is on material, what it takes to succeed and how partnering with your suppliers can make a difference.

In production machining, material is a significant portion of each company’s budget, and the availability of steel and cost fluctuations have been significant over the years. In addition, regardless of the industry, the pressure for different types of steel and the introduction of lighter weight material has been almost as important. In industries such as automotive where CAFÉ regulations are putting pressure on design and product development, everyone is looking to reduce weight in the vehicle. In the 1980s, the automotive industry had reached a level of weight reduction on many vehicles that was outstanding and had put vehicles in a new weight class.

But over the years with the addition of new technology, new powertrains that provide much more torque and performance and the desire for vehicles that hold more cargo, weight has increased again. This is a continuing problem that many automotive OEMs are concerned with as they work to reach the current CAFÉ regulations.

The goal the current administration would like to achieve by 2025 seems somewhat unattainable. Nonetheless, each company’s research and development teams are working to drive new technology into their vehicles to meet this requirement. They are also working with all of the steel manufacturers to help reduce weight throughout the vehicle and powertrain to assist with reaching these numbers.

This is where the material provider enters the picture. There have been many suppliers that have come forward to the automotive industry with new and innovative ways to drive cost from their product in recent years. These developments were done with the assistance of the material suppliers who joined forces with their customers up front in the process before the design was complete, to study the problem and develop either new materials for the products, new processing techniques to machine the metal or a new design that would require less steel than the previous model.

Over the years the automotive OEMs have done some amazing things with cost reduction, but in recent cases, we have seen some reversal of this effort. When companies form a metal door, hood, underbody component or anything metal in a stamping press there is a certain amount of offal that is generated from the areas of the steel blank that are not used for the part.

In the 1990s, the automotive OEMs spent a great deal of time working with their engineering staffs, steel providers and suppliers to design blanks and coils of steel that allowed for better material utilization over the years, saving millions of dollars for the automotive OEMs.

Additionally, equipment suppliers such as Makino have worked diligently to train and educate people on more effective machining methods to ensure less cutting and less need to over spec material.

Today, some of that work has also gone backwards with the focus placed in other areas of the business. Like anything, some manufacturers do this better than others. But the fact remains that with the changes in the automotive industry, and the trouble they have gone through in the last decade, some of the issues of the past have come back to haunt them. Now that they have new CAFÉ regulations to meet, there is a renewed sense of concern.

The supply industry will continue to be asked for new innovations and processes to help the OEMs to reach their target. The best companies will work hand in hand with their material suppliers to develop the best possible methods to enable their customers to meet their goals. To meet this lofty goal, it will take a village.