July 2008 Edition

cutting tools & material strategies

Era of waste is over

Working smarter is more critical than ever to offset rising metal costs

By Peter B. Alpern, Associate Editor

While commodities such as gold and oil have hogged the headlines — with a barrel of crude oil predicted to go to $150 this year — many of the lesser-known specialty metals are also following suit.

That surge in costs for metals such as cobalt, tungsten, tantalum, nickel, and beryllium has affected the price of cutting tools throughout the manufacturing sector.

Though the cost for cutting tools and their accompanying inserts hasn’t reached a critical stage, their customers have been forced to consider with what innovative techniques these tools can be best maximized.

"Everyone’s feeling the pain," says Michael Locker, president of Locker Associates, a New York City-based steel consulting firm. "Whether the Fed wants to admit it or not, we have galloping inflation on the cost of production. And you’re really feeling it in manufacturing."

There are many reasons for the cost increase: metals from all over the map have leapt in price in recent years as a result of the booming economies of China and India; the manipulation of supply in several countries where these metals are mined have affected the cost, along with the explosive growth of the aerospace and medical implant industries.

Work more efficiently

Many manufacturers have been able to ride out the tide by working more efficiently.

The days when a company could purchase strategic metals plentifully and cheaply are gone. For years, the routine was to use plenty of carbide to drill small, shallow holes. That was the way it was purchased, and that was the way machining was done.

"You look back then — and we’re talking just a few years ago — and they were often using pieces of carbide inserts for both milling and turning," says Mike Gadzinski, Iscar Metals national training manager. "It was way, way bigger than what they really needed. We’ve all had to downsize what we’re using."

For a time, one of the smarter machining strategies being bandied about was ways in which to extend tool life. But Gadzinski doesn’t see that strategy as the end-all solution.

"Nobody’s ever gone into business to save money — they’ve gone in to make money," he says. "So if I can spend less money on my inventory and material and do more work with a smaller piece of carbide, and ultimately get more parts out the door, I’m making more money."

Smarter machining

For years, working more efficiently could be loosely translated as relocating production to low-cost countries or downsizing. But diminished production or a weaker product often followed the immediate gratification of savings.

Cutting tool manufacturers have suggested that the easiest way for customers to survive the upswing in metal costs is through maximizing their productivity, improving their processes, and reducing their waste.

Sandvik Coromant has formulated a model for manufacturing economics, which draws on developments in advanced tooling — educating the tool user on the physics of the equipment — to achieve increased profitability in the global marketplace.

At the heart of the concept is the notion that getting it right saves much more than getting it cheap.

"The way manufacturing economics works is if you lower the purchase price of the tools by 30 percent, the customer will save 1 percent of the cost of the component," says John Israelsson, president of Sandvik Coromant USA.

"If he buys a better tool and increases tool life by 50 percent, he lowers the cost of the component by 1 percent," he notes. "But if instead he buys a better performing tool and speeds up by increasing cutting data, he can reduce the cost of the component by 15 percent."

Across the cutting tool industry — beyond the brands and manufacturers — the emphasis has evolved. No longer can materials be taken for granted or a machine simply be written off and replaced. Cost and results are holding greater weight.

High-speed machines have helped lessen the blow of higher carbide costs. High-feed tool geometries facilitate chip thinning to improve performance, along with geometries that create cutting paths to use methods other than the traditional straight-line milling.

"Everyone has got to get smarter with how they’re using their tools," says Gadzinski.

In some cases, that has meant working at higher speeds, using a different kind of edge preparation on an EDM insert or different form of natural depth cut.

As part of these strategies, high-speed machines have helped lessen the blow of higher carbide costs. High-feed tool geometries facilitate chip thinning to improve performance, along with geometries that create cutting paths to use methods other than the traditional straight-line milling approach.

A missing piece

As a methods analyst for FL Smidth, Dick Rohrer has watched the price for raw materials rise steadily for a decade now. And he sees what’s happened to cutting tools — and just about every industry that uses specialty metals.

FL Smidth builds kilns, hammer crushers, coal mills, and stacking belt conveyers for the cement and mineral industries.

"It doesn’t matter what brand or who’s selling it," Rohrer says. "You can always figure 3 to 5 percent every year. I’ve been buying tools for nine or 10 years now. And of late, it’s really, really been jumping in price."

The spike has necessitated FL Smidth’s search for better tools and more productive methods. Instead of focusing on longer tool insert life, the company took a look at refining its production methods.

Recently, FL Smidth increased the number of valves it was able to produce from a steel plate from three to 30 — all from switching to a high-quality carbide and working with toolmaker Valenite LLC to refine its process.

"I think that’s the challenge for a lot of companies," Rohrer says. "You’ve got to do the homework to find out exactly what piece you need for your process and invest in it."

Maximizing every resource

Over the last three years, Absolute Precision of Morrisville, VT, has watched its cost for carbide tools jump approximately 33 percent, according to owner Matt Alley. One way he’s tried to get around those costs is utilizing carbides only when necessary.

"We switch to indexable tooling as much as we can when we go to roughing," he says. "Our turning is all indexable. There are a lot of submicron grades out there that are fantastic in their wear properties."

Absolute Precision manufactures parts of complex geometry, necessitating high accuracy. For Alley, cheap tools are simply not an option.

"I’m sorry, but cheap tools do not cut it," he says. "They do have their place in different markets. But, boy, as far as I’m concerned, you need reliability. And the amazing thing is so many people get scared away (by the cost of quality tools)."

Both Absolute Precision and FL Smidth utilize the technical help that’s offered by tool manufacturers. Regardless of whether a transmission shaft or a belt buckle is produced, the underlying science of what happens when tool meets metal — and the sometimes sizeable room for improvement there — is an exact science. Namely, physics.

According to Bill Naill, materials manager for Ingersoll Cutting Tools, while tool cost represents about 3 to 5 percent of the product value, if a customer learns how to optimize a machine, it could bring in savings of 15 to 25 percent.

Naill says Ingersoll, like others industry-wide, offers cost-cutting support to customers.

"We take a very active approach to salvaging chips, and the carbide, and being much more aggressive and selling them back to recyclers, to recoup some of the cost," he says. "Every rock is turned over."

The days are gone when a tool could be ordered and a machinist could experiment with it to determine what works best, Alley laments.

"You can’t do it," he says. "There are too many different parameters. When you can call a toll-free number and get the exact answer you want, that’s worth its weight in gold."

Supplies tighten, demand soars

The two metals most closely associated with cutting tools are tungsten and cobalt. Tungsten is combined with carbon into a crystal, creating tungsten carbide (WC), which is then mixed with cobalt as a binder. Carbide leaves a better finish on the part, allowing for faster machining, while withstanding higher temperatures than standard high-speed steel tools.

These days, cobalt has been one of the most difficult metals to procure.

"That’s the one that’s giving us fits," says David Landsperger, director of metallurgical operations at Kennametal Inc.

Statistics show only 10 percent of the world’s supply of cobalt is used in cutting tools. But recently, cobalt’s price has skyrocketed. Since last August, it’s jumped roughly 100 percent and is now inching toward $50 per pound.

Cobalt is most often sought for use in jet engines, turbine blades, rechargeable batteries (including those used in hybrid vehicles), and solar panels.

Cobalt mining has had a long history of turbulence in supply due to the geopolitical climate of the Democratic Republic of Congo and Zambia, where much of it is found. It is also found in Australia and Canada.

Equally important has been the concentration of cobalt producers in recent years.

"If supply and demand are in close balance," Landsperger says, "it’s not difficult to move the market one way or another if you’re a trading house with deep pockets."

China’s chokehold

Tungsten, compared to cobalt, would appear to be the far more stable metal … except history suggests that it’s anything but.

Tungsten is best known for its use in light bulb filaments. It has long been considered a strategic metal due to its use in cemented carbide parts for wear resistant applications such as drilling, mining, and metalworking. It is also critical in the manufacture of jet engines, the production of super-alloys, and armor-piercing ammunition.

China has a virtual chokehold on the world’s access to tungsten. It holds approximately 85 percent of the world’s mine production of tungsten ore within its borders, and 65 percent of the world’s reserve base.

Cutting tool manufacturers have suggested that the easiest way for customers to survive the upswing in metal costs is through maximizing their productivity, improving their processes, and reducing their waste.

An independent study by specialist metal marketing consultants GBRM Ltd. estimates that through 2012, the annual consumption of tungsten is expected to increase from 81,200 tons to 109,328 tons, thereby requiring almost 22,000 tons a year of new production.

While there has been a significant increase in exploration and mine development outside of China in recent years, no major new production has been realized and isn’t predicted to occur until 2009, according to the GBRM study.

Meanwhile, China has not only curtailed its domestic mining programs, but has actually become a significant importer of tungsten concentrates and scrap.

All of which drives home just how small a quantity of material the world is working with.

Landsperger says he calculated once that the tungsten ore the world consumed in a year was equal to the amount of iron ore produced in two minutes.

"That should give you an idea of just how much these are niche materials," he says. "And cobalt consumption is a little bit less than tungsten."

Price fluctuations

The whims of the raw materials market are, by nature, turbulent. But even Ingersoll’s Naill is stunned at what he’s witnessed in recent years.

"I’m not sure I’ll ever see the prices that I was getting two or three years ago for material," he says. "What was 52 to 59 cents a pound is up to $1.40 to $1.50 a pound. And that’s even before heat treatment [which adds even more cost, due to the energy used]."

The fear of losing loyal customers is another consideration that comes with higher costs of materials.

"We have seen examples where the supplier is able to pass on perhaps a 5-percent increase out of a 50-percent jump in his own input prices," says Anders Rune, chief economist at the Association of Swedish Engineering Industries. "And smaller players are usually less able to secure beneficial raw material prices by using forwarding contracts."

The extra cost is often shifted down the "food chain," from the manufacturer, to second and third-tier suppliers — those that are furthest removed from the end user — all the way down to the customer.

"[The rise in costs] makes us think wiser and try different things and experiment a lot more," says FL Smidth’s Rohrer. "You try to look around for people that are willing to invest a little time and improve the process."

Iscar Metals 

Sandvik Coromant

FL Smidth

Ingersoll Cutting Tools

GBRM Ltd.

Association of Swedish Engineering Industries;

Locker and Associates

Kennametal Inc.

Valenite LLC

What do you think?
Will the information in this article increase efficiency or save time, money, or effort? Let us know by e-mail from our website at www.ToolingandProduction.com or e-mail the editor at dseeds@nelsonpub.com.