July/August 2004

Light for PM at the end of the tunnel as the China question looms?

With shipments of iron, stainless steel, nickel and tin powders up last year, is the PM industry in the US slowly turning the corner? Does the rapid industrialisation of China represent a threat or an opportunity? The president of the Metal Powder Industries Federation, David Schaefer, and the organisation's executive director, Jim Trombino, shared their thoughts at last month's PM2TEC conferece and exhibition, held this year in Chicago…

The China inssue ran through the plenary sessions and some of the technical presentations at PM2TEC in Chicago almost as a secondary theme to the conference. Acknowledging that with more than 1 billion people and rapidly expanding middle class China represented huge potential for automobiles, appliances and power tools, Jim Trombino said there were already western companies with facilities in China and current rumours of a large US PM company setting up a joint venture, probably in the Shanghai area. Höganäs and Inco already have capacity there and Quebec Metal Powders is opening a blending plant near Shanghai early next year. Injection moulding machine builder Arburg officially opened their Shanghai subsidiary on July 1.

The Metal Powder Industries Federation (MPIF), was said Jim Trmobino, considering sponsoring a fact-finding trade mission to research the true condition of the country as far as real opportunities for PM companies went. And in a colourful, but telling, mixed metaphor he told the 800 or so delegates present: "We cannot put our heads in the sand and 'cry wolf' to Washington for help." MPIF members will receive more information about the proposal at the Fall Management Conference at St Antonio, Texas, in September.

Given the burgeoning Chinese market, it is no surprise that Metal Powder Report will stage its own conference and exhibition, PM Asia 2005, in Shanghai, 4 - 6 April next year to advance powder metallurgy in Asia and as an opportunity to bring together the Chinese industry and its international counterparts.

Upbeat for powder suppliers

Turning to the state of the North American PM industry, Jim Trombino said that in the US last year, iron powder shipments, the key indicator of the PM business, rose by about 2 per cent to 442 799 short tons, while copper and copper-base powder shipments were almost even with 2002 at 22 632 short tons. Stainless steel powder shipments increased by 4.7 per cent to 8 900 short tons and tungsten powder shipments were up an estimated 20 per cent to 3 000 short tons.

"After a roller coaster ride, 2003 actually ended slightly upbeat for metal powder suppliers and PM parts fabricators, while equipment and tooling manufacturers suffered," said MPIF president David Schaefer. "The iron powder market tracked very well through April 2003, when it hit the skids. An upturn surfaced in September that continued into November and December - very good business months that typically are not.

"At the beginning of 2004 most industry leaders were cautiously optimistic about the rest of the year. Iron powder shipments for the first quarter increased the 127 061 short tons, or almost 9 per cent compared to the same period last year.

"However, analysing current business conditions, most industry observers feel that iron powder shipments will be up by about 3 - 4 per cent maximum for the balance of the year. Copper powder shipments were up 9.62 per cent at 6 202 short tons."

Executive director Jim Trombino reminded delegates that the PM industry was subject to the same external strains and pressures as any other, but had shown resilience. "Although the industry is subject to the rise and fall of our national economy, domestic and international politics, rising commodity and energy prices, the volatile situation in Iraq and political unrest in other parts of the world, PM is basically sound and poised to enter its next growth cycle.

"We must not forget that other materials and manufacturing processes face the same problems as PM, but we seem to be more resilient and offer benefits and manufacturing efficiencies that provide answers to the prevailing cost/price squeeze model many customers have latched on to.

Profitability is a challenge

"PM's benefits of reduced raw materials, reduced energy usage and reduced labour and handling charges are more important than ever - and should be marketed vigorously to our customers."
Maintaining profitability is a challenge for PM parts fabricators, metal powder suppliers and equipment makers alike, he said. "The cost of doing business is rising across the board in the face of customers stonewalling price increases and demanding multi-year give backs. Without adequate returns companies cannot invest in research and development, new technology and the latest equipment."

The industry, he went on, needed new developments and applications, which meant more spending on R&D, while companies needed to improve speed- to-market and introduce performance-related advances such as improved magnetics, higher tensile strengths and better corrosion resistance.

"Parts makers must also consider product life cycles, which have compressed from the 'normal' 10-year cycle down to between three and five years. Sales people need to beat the bushes more and develop new applications for PM to stay ahead of the curve."

The European PM business had declined over the past three years compared to the US, said Mr Trombino, with European Powder Metallurgy Association (EPMA) statistics showing indicating that shipments of powders for PM applications had declined 1.3 per cent in 2003 to 175 000 short tons. The market is slightly ahead of 2003 so far this year.

Japan, by comparison, had fared better with iron powder shipments up 6.5 per cent last year to 120 000 short tons. Total iron powder shipments increased 5 per cent to 228 000 short tons.

The hoped-for advance of the US MIM business had yet to materialise he said, for although there was a rebound this year with firearms and medical applications looking strong, the MIM business last year was slow or flat at best.

The automotive market continues to be PM's largest customer in the US and will continue to be so at least through to the end of the decade, said David Schaefer.

PM content increasing

North American light vehicle production in 2003 was 15.8 million units and this year is expected to be a repeat performance.

"PM content in vehicles is still increasing and could hit 43 pounds per vehicle. It is estimated that PM will add at least another pound per vehicle every year for the next three years. PM is a significant contributor in overall cost savings for the Big Three original equipment manufacturers (OEMs) and they will continue to design more PM parts, especially in new engines and transmissions."

Ford Motor, he said, already averages about 48 pound of PM parts per vehicle, much higher than its competitors, and around 95 per cent of Ford vehicles contain powder forged (PF) connecting rods. It is estimated that more than 500 million PF con rods have been manufactured since 1986!

Transplant sales needed

Potential applications of PM aluminium, titanium, magnesium, composites and intermetallics include con rods, camshaft bearing caps, valves, balance shaft gear sets, pulley sprockets, electronic base plates, rocker arms, oil pump gears, piston pins, cylinder liners, brackets and piston cap inserts.

PM high-strength gears are being tested for transmission applications, said Mr Schaefer, and manual gear boxes offered a new opportunity for these gears, especially in combined automatic/manual transmissions popular in Europe.

However, he sounded a word of warning. "Sales in the North American automotive market are levelling and it presents a further dilemma to PM parts makers by virtue of the Big Three losing market share to transplants and European and Asian car makers.

“Soaring gasoline prices will throw cold water on sales of sports utility vehicles, especially those with larger engines that contain more PM parts.

"The domestic PM industry needs to make a greater concerted effort to sell PM to transplants, which use about 50 per cent less PM parts by weight than the Big Three," he added.

There are growth areas for today's more highly engineered steel powders in a bewildering variety of applications and methodologies, said David Schaefer. Copper powders, too, had broadened their range to include MIM, micro bearings, high-strength structural parts, metal-plastic composites, green bullets, lead-free brazing alloys and powders for water filtration.

Jim Trombino left until last news of the progress on the Global PM Database, due to be launched at the World Congress at Vienna in October. This ambitious project will provide the latest property information to design engineers involved in using PM.

He said the MPIF and the EPMA reached agreement on the development and funding of the global database with financial support and co-operation from the Japan Powder Metallurgy Association.

"This is truly a landmark project involving the co-operation of the three leading international PM trade associations, for the first time, but not the last time.

Investment with huge returns

"MPIF members were mailed information about the database in February and members of the Metal Powder Producers Association were sent the Global PM Properties CD with templates and instructions for data input covering ferrous structural, non-ferrous structural and bearing alloys. In future the database will expand to include other materials such as MIM, tool steels, light metals and refractory metals.

"We cannot overemphasise the potential impact of this project to the industry. For example, potential and current customers will have one single source to find up-to-date PM property information.

"The database will provide user-friendly information to help design engineers make more intelligent decisions when selecting PM or comparing PM to other materials.

"We are very proud of this effort, and thank our colleagues in Europe and Japan for joining forces with us. This will save time, money and duplication of effort, something very relevant in the global industrial community. The cost of this global programme is budgeted at well over $200 000, but the pay-off on the investment will be huge."