What Caused Job Losses in the Steel Industry?

Tim Worstall, a contributor to Forbes magazine, recently wrote an opinion piece, “It’s Not China Or Trade That Killed The Steel Jobs But Recycling.

The crux of the piece was that the job losses in the steel industry over the past half-century can be attributed to the rise of more efficient minimills capturing business that was once held by integrated mills.
I think this is an oversimplification of the issues and market dynamics at play.  My posted response follows…


I think you are glossing over some important considerations.

Most of the job losses you cite came in the early to mid-80’s when a vast number of obsolete integrated mills shuttered.  Yes, there were an increasing number of minimills built, but except for a few cases, the capacity of each one was 10-100 times smaller than the number of tons that could be produced out of an integrated mill.

It might be more useful to concentrate on the changes of the last 2 decades.  20 years ago, there were names such as Bethlehem, National, Rouge, Inland, and LTV Steel (where I used to work), with only US Steel larger than them.  USS absorbed National, and what became the world’s largest steelmaker for a time, ArcelorMittal, took over Bethlehem, National, Inland, and LTV (among others).  In all cases, there were tremendous job losses as “redundancies” were eliminated.  However, the only losses were in people – very little capacity was permanently removed from the market.  This led to improvements in “man-hours per ton,”  as did more efficient processes and practices.

Concurrent with this, the now-larger companies had fewer competitors (since they bought them) and as such were able to exercise greater pricing discipline, transitioning from chasing more tons that would lower fixed costs to going after more profitable tons associated with a greater percentage of value-added products like those used by auto and appliance OEMs.  In the past, with 10 potential competitors, getting significant tons from the largest customers usually meant lowering the price to critical levels.  With only one or two competitors, other factors became important to OEMs, like ensuring they were able to purchase enough tons of the advanced grades to satisfy their auto/appliance production levels.  Up until the past few years, the advanced grades were essentially the domain of the integrated steelmakers.

These advanced grades, either from a high strength/high formability perspective or from a surface quality perspective, are difficult to purchase from overseas steel companies in a cost-effective manner where just-in-time delivery is critical.  So this business is not being lost by domestic steel makers.  What is at risk is the lower end – the high-volume lower-cost products that do lower mill fixed costs.   You don’t need great strength or a perfect surface to make the rebar product you cite in the article.  Steelmakers around the world have the ability to make these grades, so any governmental actions to artificially adjust cost of production or sales price can distort free-market balances.

Finally, most integrated mills add around 25% scrap charge to all their melts, and minimills are investing in new technologies that will allow them to reduce the amount of scrap they need to use in their product.  This will allow them to improve ductility and surface, and reduce their exposure to the international scrap market fluctuations.


Danny Schaeffler
Engineering Quality Solutions, Inc.       4M Partners, LLC
http://www.EQSgroup.com           http://www.Learning4M.com

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New Press Hardening Steels with Hot Dipped Galvanized Coating

One of the challenges with direct hot forming a galvanized PHS is the risk of microcracks in the coating and an associated restricted process window. Steel company voestalpine has with their phs-ultraform® product developed a process that they have termed phs-directform®.  The process steps are similar to conventional direct hot forming with one significant difference – the use of a non-contact “pre-cooler” which cools the heated blanks to around 640°C before press hardening.  Using this approach produces a product that offers cathodic and barrier corrosion protection, rather than just barrier corrosion protect provided by the alternative Al-Si coating.

http://www.voestalpine.com/blog/en/innovation-en/phs-directform-direct-hot-forming-of-hot-dip-galvanized-steel-strip-ready-for-series-production/

Danny Schaeffler
Engineering Quality Solutions, Inc. … http://www.EQSgroup.com
4M Partners, LLC … http://www.Learning4M.com

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Nissan to Use 1.2GPa Steel to Reduce Vehicle Weight

Nissan just announced the expanded use of an Advanced High Strength Steel (AHSS) that has a tensile strength of 1.2GPa (= 1,200MPa = 175 ksi = 175,000 psi). This follows their initial announcement in October 2011.

Things we’ve learned:

  • The complex microstructure consists of 2 hard phases and 1 soft phase.
  • The scale of the microstructure is micron / submicron.
  • A new welding process needed to be developed to accommodate the microstructure.
  • This new grade of steel was developed jointly by Nippon Steel, Kobe Steel, and Nissan. (Nippon recently merged with Sumitomo Steel to form Nippon Steel & Sumitomo Metal Corporation)
  • Nissan plans to use AHSS on up to 25% of all body parts.

This is a great technical achievement, but a bigger hurdle may have been in the collaborative alloy development approach: two steel competitors partnered with one of their customers.

How will this play out? Will the steel companies be allowed to supply the grade to other automakers? Will the steel companies be allowed to market the grade through their partners? Nippon has Joint Ventures with ArcelorMittal in the USA and Ternium in Mexico; Kobe has Joint Ventures with US Steel.

http://www.nissan-global.com/EN/NEWS/2013/_STORY/130312-01-e.html

Danny Schaeffler
Engineering Quality Solutions, Inc. … http://www.EQSgroup.com
4M Partners, LLC … http://www.Learning4M.com

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Industrial Design and Sheet Metal Forming

We all hear frequent discussion about Advanced High Strength Steels, increased use of aluminum, and carbon fibres. Much of the discussion in automotive focuses on materials and processes to increase product strength and reduce mass.  A pamphlet published by Volvo Construction Equipment (http://tinyurl.com/d3c3cvh) discusses the increasing role industrial design plays in new product development. Are we looking far enough forward in product design to anticipate the additional forming challenges we will face in producing new geometries?

A product’s aesthetic design is increasingly important across many manufacturing industries. Shape and color affect customer perceptions of quality, functionality, and style, along with the product’s maintainability and durability. As we develop new materials, tooling, and processes to meet our more “technical” specifications, we must also look forward to how our products will look in the future. These issues extend beyond automotive. Who would have guessed 15 years ago that the old beige washer/dryer in your laundry room would become a stylish showpiece item in a modern laundry room? Or that your computer would also become an item of style, merged with your phone, and held in your pants pocket?

Food for thought …

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Acura RLX will have Multi-Metal Doors: Aluminum Skins and Steel Inners

Honda has developed a production manufacturing process that lets them join steel to aluminum skin panels. The first application of this will be on the 2014 Acura RLX, which will have an aluminum door skin joined to a steel door inner. This technique is projected to reduce the weight of the doors by 17%, and improve ride stability by concentrating the weight closer to the vehicle center. This application is a result of three key breakthroughs: development of a 3D Lock Seam structure where the aluminum outer is hemmed twice, development of a process so the adhesive completely fills the gap between the panels, and development of a technique to account for the different thermal characteristics between steel and aluminum.

http://world.honda.com/news/2013/4130218New-Technology-Join-Steel-Aluminum/index.html

Danny Schaeffler
Engineering Quality Solutions, Inc. … http://www.EQSgroup.com
4M Partners, LLC … http://www.Learning4M.com

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Deformation Modes in Sheet Metal Forming

Through my website, someone asked about the deformation modes in sheet metal forming. My response:

The three deformation modes in three-dimensional forming are draw, plane strain, and stretch. These can be visualized by imagining a circle of known diameter etched into the sheet metal when it is still a flat blank. Deforming the blank turns the circle into an ellipse. By definition, the longest dimension of the ellipse is the major axis, and you can determine the major strain as the percent increase in that dimension. The minor axis is perpendicular to the major axis.

Depending on the shape of your blank and your tools, the dimensions of the minor axis can either be smaller than the original diameter, the same size as the original diameter, or larger than the original diameter.
→ If the dimension of the minor axis is smaller than your original circle diameter, you will have negative minor strain, and you are in the “draw” deformation mode.
→ If the dimension of the minor axis is the same as your original circle diameter, you will have zero minor strain, and you are in the “plane strain” deformation mode.
→ If the dimension of the minor axis is larger than your original circle diameter, you will have positive minor strain, and you are in the “stretch” deformation mode.

These three zones are represented on the Forming Limit Curve from left to right as the downward sloping section (draw), the lowest point on the Curve (plane strain, at 0% minor strain), and the upward sloping section (stretch) to the right of the lowest point.

Knowing your deformation mode in a given area will help with troubleshooting any issues related to local metal flow.

Best of luck!

Danny Schaeffler
Engineering Quality Solutions, Inc. … http://www.EQSgroup.com
4M Partners, LLC … http://www.Learning4M.com

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Supplies and Suppliers Limited Chrysler Sales in 2012

Sales of the 2013 Dodge Dart were lower than initially projected in 2012 because only manual transmissions were available at launch, with a six-speed automatic sourced from Hyundai serving as a stopgap until a promised nine-speed automatic is available. In addition, Chrysler reportedly is pressuring Jeep Wrangler and Grand Cherokee suppliers to increase capacity after bottlenecks cost the company 60,000 to 70,000 lost sales globally in 2012.

http://www.autonews.com/apps/pbcs.dll/article?AID=/20130114/RETAIL01/130119913/marchionne-says-darts-slow-start-due-to-transmission-availability
http://www.autonews.com/apps/pbcs.dll/article?AID=/20130114/OEM02/130119892/chrysler-lost-60-70k-jeep-sales-to-production-bottlenecks-marchionne

Danny Schaeffler
Engineering Quality Solutions, Inc. … http://www.EQSgroup.com
4M Partners, LLC … http://www.Learning4M.com

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Automotive Aluminum: Prices, Supply, and Demand

Bloomberg article highlights:
* Morgan Stanley predicts a 29 percent gain in aluminum prices by 2018.
* At current aluminum prices, which are more than a third below 2008 highs, at least 30 percent of aluminum companies aren’t making money.
* The metal has failed to revisit the $3,317 a ton level reached in 2008, averaging about $2,200 in the past five years.
* The global surplus of aluminum may reach 1.8 million tons in 2013, as output rises to 51.4 million tons from 47.9 million in 2012.
* A switch to aluminum among U.S. carmakers could add as much as 40 percent to North American demand in coming years.

http://www.bloomberg.com/news/2013-02-05/carmakers-use-aluminum-over-steel-in-boost-for-rio-commodities.html

Danny Schaeffler
Engineering Quality Solutions, Inc. … http://www.EQSgroup.com
4M Partners, LLC … http://www.Learning4M.com

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Making bottle crowns 50 microns thinner leads to multimillion dollar savings for SABMiller

Global brewing company SABMiller has developed a bottle crown that reduces the crown thickness to 0.17mm from a typical thickness of 0.22mm to 0.24mm. This thickness change of 50 microns reduces the standard crown weight from 2.38g to 2.14g, corresponding to a 360g reduction on every pallet. Although this may not seem like a significant reduction, SABMiller uses 42 billion steel caps a year. If implemented globally, this change will reduce raw material costs by more than $12 million. The technical challenge involved avoiding springback, which could have lead to leakage and improper sealing.

http://www.sabmiller.com/index.asp?pageid=149&newsid=1638

Danny Schaeffler
Engineering Quality Solutions, Inc. … http://www.EQSgroup.com
4M Partners, LLC … http://www.Learning4M.com

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Calculating Sheet Metal Thinning in a Formed Part

Through my website, someone from a manufacturing company asked how to calculate thinning in a sheet metal part made from 2mm thick high strength steel. My response:

First, I assume the nominal or expected thickness is 2mm. But this is just the aim thickness. The steel mill is allowed to ship product that has some deviation from this gauge – maybe 1.85mm to 2.15mm as an example. So you must get an accurate measurement of the actual starting thickness. You should try to get it from the blank you will use to form the part in question, or at least from an adjacent blank. The reason for this is that there is likely a thickness variation down the length of the coil. This normal and inherent variation occurs even when the product is completely within specification. Similarly, you do not want to make your thickness measurement at the coil edge. Due to a rolling phenomenon called “crown,” the edges of the coil are usually thinner than the rest of the width. Again, this is allowed within most specifications in that all minimum gauge measurements are to be made no closer than 25mm from the coil edge (as an example). Across the coil width, the thickest part is at the center width position of the master coil. For this reason, I recommend taking your thickness measurement at the 1/4 width or 3/4 width position.

The next step is to form the part. In the areas of interest on this formed part, it is necessary to get an accurate thickness measurement. Some companies will cut the part and use a micrometer to measure the as-formed thickness, while others will use a calibrated ultrasonic thickness gauge. The second approach does not destroy the sample, and the part can be put back in for normal processing after it is measured. If your area of interest has feature lines or small radii, it is necessary to use the proper tools and techniques to get an accurate thickness reading.

At this point, you have two measurements: the starting thickness of your sheet metal (call that S) and the formed thickness of your part at the location of interest (call that F). The percent thinning is calculated as T% = 100 * (S-F)/S

If you have accurate measurements, you can have confidence in your results. Best of luck!

Danny Schaeffler
Engineering Quality Solutions, Inc.       4M Partners, LLC
http://www.EQSgroup.com           http://www.Learning4M.com

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Ultra High Strength Steel in 2013 Honda Accord

2013 Honda Accord body structure is made of >55% high strength steel with tensile strengths starting at 440MPa. Of this, >17% is ultra high strength steel, with tensile strengths of 780MPa, 980MPa, and a martensitic grade 1500MPa. This 2013 model represents the first use of UHSS in the Accord lineup. In addition, the subframe has steel and aluminum components that are joined via friction stir welding.

http://www.honda.com/newsandviews/article.aspx?id=6825-en
http://www.autofieldguide.com/articles/honda-accord-the-ninth-generation#

-Danny Schaeffler
Engineering Quality Solutions, Inc. 4M Partners, LLC
http://www.EQSgroup.com http://www.Learning4M.com

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Automotive Lightweighting Workshop: February 12-13, 2013 in Ann Arbor, Michigan

The next meeting of the National Research Council (NRC) Committee on Fuel Economy of Light-Duty Vehicles, Phase 2 will be a lightweighting workshop focused on lightweighting, mass reduction and their impact on fuel economy. On the agenda for the meeting that will be held on
February 12-13, 2013 in Ann Arbor, Michigan are representatives from the steel, aluminum, composites, and carbon fiber industries.

Agenda:
http://www8.nationalacademies.org/cp/meetingview.aspx?MeetingID=6475&MeetingNo=5
Registration: http://www8.nationalacademies.org/EventRegistration/public/Register.aspx?event=70292DDD Info: http://www.cargroup.org/?module=News&event=View&newsID=40

-Danny Schaeffler
http://www.EQSgroup.com http://www.Learning4M.com

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Steel, Aluminum, and Automotive Market Concentration in China

Currently, around half of China’s total steel capacity is owned by the 10 biggest steel firms; the government aims to bring this to 60% by 2015. Also by 2015, targets call for 90% of automobile production and 90% of aluminum production to be done by the 10 largest firms in their respective industries. Furthermore, steel mills will not be permitted to build new capacity in 47 large cities, including Beijing, Shanghai, Tianjin and Chongqing.
http://www.reuters.com/article/2013/01/22/china-steel-capacity-idUSL4N0AR1J220130122

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Advanced High Strength Steel (AHSS) for Exposed Applications

In one of the first uses of AHSS for automotive skin panels, POSCO is supplying Hyundai with an exposed quality advanced high strength steel with 490 MPa minimum tensile strength. Hyundai was able to reduce the mass of the door by 7%, since this higher strength steel allowed for use of a thinner sheet while maintaining dent resistance.

http://www.posco.co.kr/homepage/docs/eng2/jsp/prcenter/news/s91c1010025v.jsp?idx=2103

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FASTLITE: French Program to Cut Vehicle Weight

In the next 5 to 7 years, the French FASTLITE project is attempting to take 200 kg (440 lb) out of vehicle weight. FASTLITE is subsidized by the French government, and involves Renault, PSA Peugeot Citroen, a dozen suppliers, research labs and universities.
A PSA Materials Expert was quoted as saying that carbon fiber is too expensive for mass production even when considering lifetime fuel savings. However, SMC (sheet molding compound) becomes more economical, since the lower lifetime fuel costs can outweigh the additional costs associated with manufacturing. In addition, he says that “We are not sure that the materials needed are existing today … We need modeling tools, automation, numeric tools; and our teams need to learn how to design composite parts.”
The article describes a presentation from the Massachusetts Institute of Technology comparing extra costs of different materials with the possible weight savings. High-strength steel adds €1 to €2 ($1.33 to $1.66) per 2.2 lbs. (1 kg) and saves 5% to 20% of mass, while carbon fiber adds €10 to €16 ($13.30 to $21.25) in manufacturing cost to save 40% to 60% in mass.

http://wardsauto.com/vehicles-amp-technology/french-researchers-driven-cut-vehicle-weight

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Audi A3: Mixed Materials Leads to Lighter Weight

The current model Audi A3 is 80 kg lighter than the prior version, resulting from “relatively thin-walled, form-hardened steels that make up 26% of an A3’s body materials, many aluminum parts including the hood and fenders, plastic for the front passenger airbag housing, and magnesium for the MMI human-machine interface monitor bracket.”
http://www.sae.org/mags/aei/11143

http://www.sae.org/servlets/dlymags/dailymag/articleImage.jsp?imgsrc=/dlymagazineimages/11143_14204_ACT.jpg&alttxt=Audi%20A3%20Materials%202.jpg

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