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December 2004
Think bigger! the future is bright for MIM
There is a pervasive perception in North America and internationally
that injection moulding is a small, moderately growing industry.
In a hard-hitting analysis, Bob Cornwall and Randall German
argue that this view is both damaging and just plain wrong...
There are widely disparate estimates of the size of the worldwide
powder injection moulding (PIM) parts market ranging from
$422 million and growing at a rate of about 15 per cent as
postulated by the Metal Injection Molding Association (MIMA)
in 1992 to $750 million and growing at a rate of between 20
per cent and 25 per cent as projected by Innovative Material
Solutions in its PIM Industry and Market Report published
in 2000 (Figure 1).
This equates to roughly 70 per cent metals, 25 per cent ceramics,
and 5 per cent carbides based on sales income. One of the
major problems is that MIMA in the fall of 2003 estimated
a sales decreasing by $100 million (US) when compared to their
survey of 2002.
We reject both estimates because of, first, a tiny sample
size (MIMA represents less than 10 per cent of the companies
producing parts by PIM) and lack of rigour (voluntary submission
of data).
What was not stated in the MIMA statistics was the percentage
of the member companies that provided sales data. A variation
in just this factor year-to-year could account for errors.
We take advantage of this opportunity to put some facts in
place and to illustrate a more careful market analysis.
In doing so we find there is a self-diminutive character
to PIM, consistently projecting a negative image of a small
and unsophisticated business. In reality the PIM industry
is making tremendous progress and should be banding together
to better educate the users and promote the technology.
As a calibration on the MIMA estimates of sales we see that
similar global estimates are made in Asia and Europe. If one
were to apply six sigma concepts to these sales estimates,
we would find the tolerance bands need to be nearly 50 per
cent of the absolute value. For a supplier, equipment manufacturer,
or large multinational end-user the differences (high versus
low) lead to dramatically different conclusions. A reason
for the wide range in the global sales estimates comes from
the originators. Most of the projections for ceramics and
carbides come from the metal injection moulding parts producers.
In the ceramic and carbide arena the powders and markets and
sintering equipment are more or less the same as used for
die compaction, extrusion, cold isostatic pressing, or other
shaping. In the metallic arena, most of the PIM firms are
stand-alone. Although many offer injection moulded ceramics,
they are not full service parts producers.
For example, one ceramic PIM company that operates at just
under the $10 million per year sales range for PIM has 28
other plants that do die compaction and other technologies.
They do not belong to MIMA and consequently do not participate
in the industry surveys. Thus the metallic powder moulders
do not accurately capture numbers for ceramics and carbide
parts manufacturers. There is the further complication of
not even knowing about the 35 per cent of parts produced for
in-house consumption.
In all fairness, sales numbers are difficult to obtain because
many of the companies are privately held or a division of
a publicly held corporation.
In 2004, the PIM market is estimated to be just over $850
million because the worldwide downturn in the economy had
a negative impact on PIM sales when compared to the projections,
but was still up significantly when compared to other manufacturing
technologies.
When examining the differences between metal and ceramic
manufacturing business practices, metal manufacturers often
set up one production methodology in a plant - MIM, press
and sinter, casting, machining etc, while ceramics parts manufacturers
often use several processing technologies, including, pressing,
machining, and ceramic injection moulding all in one manufacturing
location. Example companies operating in this mode include
CoorsTek, Horn, Morgan Advanced Ceramics, and Circle C. They
will choose a manufacturing technology based on part geometries
and production costs, not on existing, on-hand, production
capabilities. This makes it more difficult to obtain valid
numbers for ceramic and carbide PIM production.
However, it is possible to make accurate estimations based
on publicly available company size and by simple metrics such
as the number of moulding machines, furnace capacity, mixing
capacity, number of employees, plant size, and facility use
factors at any PIM manufacturing facility.
Another factor that significantly contributes is the production
of casting cores in the United States, which is a substantial
industry using complicated ceramic PIM vanes that are destructively
etched out to produce hollow, single crystal turbine blades,
HIP shapes, or even melt filters. Indeed, this is the single
largest component of PIM and contributes nearly 30 per cent
of the industry sales. Several of these operations are for
in-house use, so statistics on size, sales, and other factors
require serious investigations. Example companies in this
arena include Alcoa, Carpenter Technology, and Precision Castparts.
Also of interest is how the per-part sales value is calculated.
For instance, an orthodontic bracket made by PIM can cost
0.25 to 0.50 dollars to fabricate, sell to a distributor for
$1 to $2, but can sell from $3 to $10 per piece as a final
cost to the dentist. What is the appropriate value of that
part when determining the size of the industry? Note that
almost all of this is produced in-house at companies such
as American Orthodontics, Rocky Mountain Orthodontics, Ortho
Organizers, and Unitek 3M.
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Arburg are among the innovative moulding
machine manufacturers that have supplied the PIM companies
answering the increased demand from industry
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The worldwide cemented carbide industry is estimated to
be more than $10 billion. Reports have surfaced that PIM,
because of its ability to produce complex shapes, makes up
about 1 per cent (and growing) of all carbide production.
Most all of the major firms in this industry run some of their
products through the PIM route, but in most cases that fact
is held in great confidence. One part alone sells for $14
000 per kg, making it 10 per cent more costly after PIM than
gold.
The use of PIM for carbides has been growing steadily for
10 years and is now a widely distributed fabrication route
practiced by firms such as SECO, Kennametal, and Multi-Metal
Molding for Vermont America. Based on installed equipment,
employment, and other statistics, PIM carbides could be generating
as much as $100 million in sales, but so far our study can
only directly account for about $30 million.
Finally, one must mention the hidden parts of PIM and especially
some of the very successful pockets in Asia. For example,
Advanced Technology and Materials in Beijing, that employs
less than 20 moulding machines to produce seven million parts
per month, or Advanced Materials Technologies in Singapore
which is of similar size, or some of the other hidden operations
such as Shandong Jinzhu Powder Injection Manufacture company.
These companies all started in the 1990s after PIM technology
was stabilised and just go out and make parts with little
fanfare. So instead of speaking to their competitors via organisations
such as MIMA, they simply focus on customers - an amazingly
simple formula. But data collection, and even identification
of the actors, requires considerable effort.
Figure 2 gives the relative sales volume by region of the
world for metal, ceramic and carbide manufacturing. In rough
numbers nearly 50 per cent of all parts sold are manufactured
in the Americas with Asia and Europe dividing the remaining
50 per cent nearly equally. Asia is coming on strong, particularly
in low-labour-cost countries including China and India that
are seeing aggressive growth especially in the last few years.
In fact, several of the existing manufacturers from both Europe
and the Americas have or are considering adding production
capabilities in this region.
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Regional Sales by Material
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Metal and carbide powder prices will move slowly lower as
increased volume purchases by feedstock manufacturers lead
to economies of scale. Powder sales continue to increase,
more often to the feedstock suppliers and less often to new
PIM parts manufacturers. Powder producers are adding production
capacity and/or are refining their processes to produce higher
yields.
Ceramic powder prices are not much affected. Parts manufacturers
are looking to use preformulated feedstocks leading to greater
part-to-part uniformity. Customers like the preformulated
feedstocks because of the ability to move tooling between
manufacturers and still maintain part specs without significant
changes to the tooling. This helps to drive part costs down.
There are currently a handful of viable feedstock manufacturers:
in Europe - BASF, Zchimmer and Schwartz, and Imeta; in the
US - BASF, Advanced Metalworking Practices, and Latitude;
and in Japan - BASF, Witec, and Pacific Metals Company. Just
last year BASF increased their available capability considerably
to meet the growing worldwide demand.
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This award-winning MIM connector from Singapore’s
Advanced Material Technologies shows that Asian companies
are among global leaders in terms of innovation and
quality.
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There is an estimated installed equipment base of more than
1200 moulding machines, 650 furnaces and 300 mixers worldwide.
Moulding machines: The average annual sales per moulding
machine for successful companies - those running three shifts,
six days a week hovers around $1 million per machine (and
in a few cases approaches $2 million) which far exceeds the
plastics average of $580 ,000 per machine. This can be considerably
less for low volume manufacturers, especially those that only
operate one shift per day. Companies with more machines have
a higher average than companies with fewer machines. In key
markets and special applications, it is possible to do considerably
better than the average.
More bang for your buck
Furnaces: Over the last few years, there has been a small
increase in the number of furnaces, both continuous and batch.
Batch furnaces predominate in the industry with typical yearly
sales per batch furnace at greater than $340 000 per cubic
foot per year as compared with continuous furnaces that can
maximise at around $5 million per year. Companies that have
both continuous and batch capabilities are better able to
maximise productivity by balancing short-run batch jobs with
high volume parts in the continuous furnace.
Mixers: More than 50 per cent of parts producing companies
have one mixer. Increasingly, small companies are buying preformulated
feedstock for specific parts. Average sales per mixer are
roughly $3 million but can fall off considerably for startup
and small companies.
Two other interesting metrics are the sales per employee
and the sales per unit of manufacturing space. They run from
terrible ($40 000 per employee per year) to superb ($255 000
per employee per year). Median values put PIM far ahead of
traditional powder metallurgy, so this makes PIM a more attractive
option in high-population areas in contrast with traditional
manufacturing which tends to migrate to low-population and
low-land-cost areas.
In numerous studies, surveys and conversations with manufacturers,
it is obvious that there are a number of issues, both technical
and business related that affect the industry. Below are the
major issues.
• Parts manufacturers are too widely dispersed, fragmented
and serving too wide a variety of markets to effectively grow
the technology in a big way.
• Potential customers often need to be educated as to
the process and its capabilities in order to sell them parts.
This is a time consuming and costly process. And the frequency
of job changes often complicates this process.
• Energy costs are increasing globally leading to increased
raw material, processing and transportation costs.
• There is a shortage of people skilled in the intricacies
of the technology. PIM is a complex manufacturing process
that requires a wide skill set.
• There is an increase in the number of parts being
shipped between manufacturers.
• Customers are expecting shorter lead times.
• There is a tendency for sales reps to oversell the
technology and its capabilities leading to failed relationships
and dissatisfied customers. This has also happened with manufacturers
trying to sell larger size parts which mostly are more efficiently
and economically produced by competing technologies.
• Uneven growth from small numbers of high-volume parts.
• Overseas competition from low labour rate countries.
• A consideration for parts manufacturers is to switch
to manufacturing their own feedstock for major products to
reduce costs.
• An inability of the industry to come together and
market the technology from a coherent perspective.
Customers have a different perspective on the industry.
• They see variability between vendors as a problem
because of processing and, ultimately, final part differences.
Because of the process complexity there can be major part
property and dimension variations from different powder suppliers,
feedstock rheologies, and processing conditions. This creates
problems when customers look for multiple vendors for large
orders.
• All manufacturing is concerned with quality issues.
PIM is no exception.
• Repeated mistakes/learning - because the industry
is so widely dispersed and there is much secrecy in PIM processing,
there is a great deal of time and effort spent on relearning
what has already been known, and repetition of mistakes that
have already been made.
• Despite its prevalence, there are still many design
engineers and buyers who have limited knowledge of the technology
and its implications for their product lines.
New startups, shutdowns, buyouts and consolidations have
and will continue to change the industry. Evidence has demonstrated
that it is possible to start up a new PIM production facility
for $3 million - $5 million. This includes equipment and the
first two years of operation. For many companies and investors,
this is not a large barrier.
Companies contemplating this also tend to look at acquisitions
to buy the existing technologies and customer base although
candidates for acquisition almost always tend to overestimate
their sale price.
Good growth prospects
There will be strong growth despite worldwide economic conditions
because of the benefits of the technology. PIM will continue
to have growth rates at between 10 per cent and 25 per cent
over the course of the next few years as expanding opportunities
in automotive and large-scale industries as well as other
unique applications fuel growth. Asian and European markets
will grow at a faster rate but the US market will dominate
because of its sheer size. Profitable companies will maximise
machine use by operating 24/7 using best business and manufacturing
practice.
PIM is a viable technology with many opportunities to serve
traditional industries as well as emerging industries. In
order to be successful, parts manufacturers should consider
operating in a flexible environment, using the latest technology,
manufacturing processes and optimised equipment. The future
is bright for PIM.
The Authors: This feature is based on Powder Injection
Molding - World Markets and Technologies, a paper given at
PM2004 in Vienna by Robert G Cornwall* and Randall M German**.
*Innovative Material Solutions, Inc, 605 Severn Dr.,
State College PA 16803, USA, rgc@imspowder.com.
** Center for Innovative Sintered Products, 147 Research Building
West, Pennsylvania State University, University Park PA 16803
USA, rmg4@psu.edu.
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