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Metal Service Centers

Becoming a Top Metal Service Center

September 5, 2015 / , , , , , , , , , , ,


Staying ahead of the competition can often seem like an impossible task, especially in today’s marketplace. Continuous improvement is now the expectation, lean manufacturing is fairly commonplace, and uncertainty about market conditions makes it hard to gauge investments and risk.

So how do you get ahead in the current landscape? While it would be near impossible to truly answer that question, the LENOX Institute of Technology (LIT) gathered a few examples of high-performing service centers and outlined some of their key traits below. How does your service center stack up against these leaders?

Reliance Steel & Aluminum
Los Angeles, CA-based Reliance was ranked number one in Metal Center News’ (MCN) annual survey, “Top 50 Service Center Industry Giants.” The industry leader, which operates more than 290 locations in 29 states and 11 countries, continues to expand its reach. According to Reliance’s profile in MCN, the service center shines in three key areas:

A.M. Castle & Co.
In addition to distributing a wide range of metal and plastic materials, the leading metal service center also performs simple sawing operations at several of its locations, including its main distribution center in Franklin Park, IL. A case study, published here by LIT, describes the company’s three areas of focus:

Klein Steel Service Inc.
In May 2015, American Metal Market (AMM) magazine named Klein Steel one of its service centers of the year. According to the magazine, the Rochester, NY-based company experienced its largest year ever in 2014 in terms of weight shipped and revenue generated. The following are just a few notable attributes of the service center:

Metal Service Centers

Tips for Cutting Superalloys in Your Metal Service Center

August 5, 2015 / , , , , , , , , ,


Over the next few years, experts anticipate growth in the use of high performance alloys or “superalloy” materials such as Inconel and Hastelloy. The high-performance metals, which are known for their outstanding corrosion and high temperature resistance, continue to find uses in aerospace and aircraft applications, and more recently, are expanding into the oil and gas industries.

“Growing corrosion as a cost concern in exploration and production in offshore drilling rigs is expected to propel use of high performance alloys such as superalloys in oil and gas applications,” states one study from Grand View Research, Inc. “Non-ferrous alloys such as nickel and titanium are also expected to witness above average growth due to their high mechanical strength coupled with increased use in aerospace, oil & gas and gas turbine applications,” the study continues. Specifically, Grand View Research forecasts that superalloy demand will experience an annual compound growth rate of more than 3.0 percent from 2014 to 2020.

While there is certainly a science to cutting any metal material, tackling tough-to-cut materials like superalloys can be even more challenging as managers try to balance cutting speed, finish quality, and blade life. However, with the right tools and know-how, service centers can efficiently and cost-effectively handle tough-to-cut materials without compromising quality.

The following are three key tips for service centers that want to cut superalloy materials:

Metal Service Centers

Three Ways Metal Service Centers Can Prepare for Growth

July 5, 2015 / , , , , , , ,


As we reported in our Metal Service Center Outlook for 2015, metal service centers went into the new year optimistic. Unfortunately, shipment data has failed to meet expectations. According to monthly data from the Metal Service Center Institute (MSCI), U.S. service center steel shipments have been down all year compared to the same months in 2014. In May, MSCI reported that steel shipments decreased by a whopping 12.6% compared to May 2014, and shipments of aluminum products also registered the first decrease of the year, down 3.3% compared to May 2014.

In light of current conditions, it’s hard to fathom that any service center would turn down work. One would imagine that sales teams are working hard to ensure a steady stream of contracts, all the while hoping to land that huge, game-changing order. After all, growth is always the goal.

But what happens when that big order finally comes in, and it is clear that taking it on will require capital investment in either equipment or labor? What if you are running at capacity and the money just isn’t there, yet the growth opportunity a new customer represents is undeniable? What then?

As this article from Canadian Metalworking explains, most companies are left with three possible options:

  1. Delay fulfillment of the order, if at all possible.
  2. Beg the customer for a 50% down payment, hoping he has the financial wherewithal.
  3. Turn the customer away—or worse—send him to the competition

Obviously, none of these options are ideal, but this scenario is all too often the case for a large number of service centers that cut and process metal. However, not all hope is lost.

While there will always be instances when a company has to decide whether or not the business risk is worth it, there are ways to proactively prepare for potential growth. Below are three strategies that can help service centers be in a better position to accept new growth opportunities.

Focus on Reducing Operating Costs
In the midst of the day-to-day grind, it’s easy to put the most focus on getting the job done. However, keeping operational costs under control should always be a top priority for managers. According to consultant Lisa Anderson, businesses looking to find ways to grow profitably need to stay focused on maintaining low operational costs. Doing so not only saves money, it “provides pricing flexibility as you are able to reduce your breakeven point for covering costs.” Anderson explains.

In most cases, lowering operating costs won’t require any capital investment, but rather is a matter of taking better care of the investments you’ve already made. For instance, according to the white paper, The Top 5 Operating Challenges for Metal Service Centers, proper management and proactive maintenance of metal-cutting equipment and tools can save companies a lot of money. On a band saw, for example, low coolant levels can lead to premature and uneven wear of band wheels, which typically cost about $1,000 each. By instituting regular coolant checks as part of a PM program or daily operator checks, managers can eliminate this unnecessary maintenance cost, as well as the time needed to replace the band wheel.

Anderson agrees that PM is a key strategy and goes on to list several other strategies here. In the end, reducing operating costs is a good practice for any company, but it is essential for companies looking to expand.

Evaluate Your Position
In addition to cost readiness, managers need to be able to gauge whether or not their operation could logistically handle any growth. This requires measurement. An article from IndustryWeek describes several metrics that can help managers determine factory readiness.

Below are two key metrics that should be evaluated quarterly, according to IW:

Get Finances in Order
If that big order does come in, companies should be sure their finances are in order just in case financing is required. According to the Canadian Manufacturing article, the following best practices can help companies of any size can be in a better position to get financing:

Metal Service Centers

Use Value Stream Mapping to Reduce Lead Time in Your Metal Service Center

June 5, 2015 / , , , , , , ,


According to data from the Institute for Supply Management, the May PMI increased 1.3 percent to 52.8, indicating growth and economic expansion in the manufacturing sector for the 29th consecutive month. Of course, this is good news for the manufacturing supply chain, and many service centers are taking steps to position themselves as preferred suppliers. These steps include everything from holding inventory and working directly with mills, to preparing material to custom specifications and upgrading to electronic databases.

Service centers are also continuing to work hard to address the increasing demands for faster turnaround. Although efficiency improvements have been the focus of almost every manufacturer the last several years, data shows that it is still a major challenge for most industrial metal-cutting companies. For example, according to an industry benchmark study from the LENOX Institute of Technology, machine downtime, blade failure, and operator error remain the top-three sources of frustration for industrial metal-cutting operations on the shop floor. In other words, there is still room for improvement.

Mapping it Out
To improve efficiency, many leading companies are using a lean manufacturing tool known as value stream mapping. In fact, one company, featured here in IndustryWeek cut its lead time in half—from 10.5 days down to 5 days—by creating a value stream map.

Value stream mapping, as described by iSixSigma, is a paper and pencil tool that helps managers see and understand the flow of material and information as a product or service makes its way through the value stream. The “map” takes into account not only the activity of the product, but the management and information systems that support the basic process as well. This can be especially helpful when working to reduce cycle time because managers gain insight into both the decision making flow in addition to the process flow.

Although it is easy to become overwhelmed by the terminology, an article from Ryder does a good job of outlining the process in five simple steps:

 

 

 

If you want to learn more about value stream mapping, iSixSigma provides a wealth of information available here, and the Lean Manufacturing institute offers educational classes and webinars.

Taking the Time
In an industry driven on speed, taking two days to participate in a class or complete a value steam mapping exercise may seem like a lot. However, managers need to consider the price of not taking the time. Investing in tools like value stream mapping can help your metal service center operate more efficiently, reduce lead time, and, most importantly, allow you to better serve your customers.

Metal Service Centers

Metal Service Centers Investing in Operator Training

May 5, 2015 / , , , , , , , , ,


According to data from the Metal Service Center Institute, service center shipments of steel were essentially flat in March 2015 compared to the prior-year period while aluminum increased slightly by 4.6 percent from the same month in 2014. With less than stellar shipments, metal service centers are focusing on business conditions they can control.

As this white paper from the LENOX Institute of Technology points out, one area that many companies are focusing their time and efforts on is training and maintaining talent. According to a recent article from Forward, Chicago-based service center Ryerson Inc., for example, has created a formal training initiative called The Ryerson Academy, which is a six-month program that trains up to 40 employees per year with a dedicated curriculum covering operations, supply chain, and more. Attendees also visit one of the company’s facilities to receive hands-on training with products and equipment.

Smaller service centers are also taking note. Westfield Steel, a service center also featured in the Forward article, has created on-the-job training to improve retention and skill rates. Based on each person’s existing knowledge, the training program lasts from four weeks up to four months. Workers observe best practices and also learn with hands-on work under the observation of their trainers.

With many skilled workers preparing for retirement, it’s no surprise that companies like Ryerson and Westfield are investing in training to improve operator capabilities and ensure their technology and equipment investments are used properly. In fact, the trend seems to be stretching across every industry. Citing data from Deloitte’s 2014 Corporate Learning Factbook, Forbes reports that U.S. spending on corporate training grew 15 percent in 2013—the highest growth rate in seven years.

How does your training program stack up? Is it time for some investment in this critical area? Using experiences from Ryerson, Westfield, and others, Forward offers four best practices service centers should use when implementing or enhancing their training programs:

 

 

As the industry adopts advanced technologies and sees a shift in its talent pool, the need for skilled operators is increasingly important. Have you invested in your people lately? Doing so may just have big pay offs.

Metal Service Centers

Metal Service Center Outlook for 2015

April 5, 2015 / , , , ,


Like most sectors of the metal-cutting industry, metal service centers are hoping that experts are right about the growth prospects for 2015. After 2014 fell short of expectations and with recent data showing less than favorable numbers, most companies are trying to stay optimistic about the months ahead.

Shipments Down
The latest figures from the American Iron and Steel Institute show that February steel shipments from U.S. steel mills were down 10.8 percent compared to January 2015 and decreased by 9.1 percent compared to February 2014. Shipments year-to-date were down 5.3 percent compared to 2014 shipments.

According to data from the Metal Service Center Institute (MSCI), U.S. service center steel shipments declined in the first three months of 2015 compared to the same months in 2014, although March shipments were only down by a tenth of a percent. Shipments of aluminum products, on the other hand, increased in both February and March after being down in January. Meanwhile, steel and aluminum inventories grew in the first three months of 2015, MSCI reports.

Cautiously Optimistic
Even with a rough start to the year, analysts remain optimistic that there will be growth in 2015. As we reported in our 2015 Industrial Metal Cutting Outlook, forecasts for steel demand are positive, but growth rates will not be as strong as they were in 2014. According to the Short Range Outlook 2014-2015 from the World Steel Association (worldsteel), U.S. steel demand is expected to increase by 1.9% in 2015—much lower than the 6% growth the U.S. experienced in 2014. Globally, worldsteel forecasts that global apparent steel use will increase by 2.0% this year.

Many industry leaders are also fairly optimistic about this year. In a mid-February statement announcing its 2014 financial results, Reliance Steel & Aluminum Co. said that it expects the U.S. economy to continue to improve throughout 2015. The Los Angeles, CA-based service center believes high levels of metal being imported into the U.S. will continue given the strong U.S. dollar and weaker economies in other parts of the world, which will continue to put downward pressure on steel prices. In addition, due to normal seasonal trends and an improving demand environment, Reliance expects higher tons sold in the first quarter of 2015 versus the fourth quarter of 2014, but lower average selling prices and margins.

OEM Outlooks
Of course, no one really knows how this year is going to shake out. Perhaps the greatest gauge for how metal service centers might fare in 2015 is to look at segment forecasts. Below are outlooks for three OEM categories that will likely play a large role in determining demand in 2015:

Metal Service Centers

Tips to Optimize Your Service Center’s Precision Circular Sawing Operation

March 5, 2015 / , , , , , , , , ,


In today’s fast-paced paced and competitive market, the main objective for most service centers is optimization. While getting orders out the door is always a priority, leading companies know that speed isn’t everything. In fact, running a circular saw too fast can lead to shorter blade life, unexpected downtime, and even poor quality and rework, all of which decrease a cutting operation’s overall productivity.

Optimization requires managers to weigh short-term factors such as cutting speed against longer-term factors such as blade life, maintenance, and cost. Of course, this challenge is easier said than done. As this article from Canadian Metalworking points out, the overall performance of your cutting tool depends on a variety of factors, including speed, feed, depth of cut, and the material being cut.

To help service centers optimize their precision circular sawing operations, the LENOX Institute of Technology (LIT) compiled a series of charts that describe some of the common cutting challenges operators face and possible solutions.

The following are LIT’s tips and tricks for keeping your circular sawing operation running at peak efficiency:

charts 1 and 2
chart 3

For more information on optimizing your precision circular sawing operation, including best practices, white papers, and case studies, check out LIT’s resource center here.

Metal Service Centers

Top Trends Affecting Metal Service Centers in 2015

February 5, 2015 / , , , , , , ,


Based on recent data, the metal service center industry entered 2015 on the right foot. According the latest Metals Activity Report  from the Metals Service Center Institute (MSCI), U.S. service center shipments of both steel and aluminum were higher in December 2014 than in the prior year. In addition, year-to-date U.S. steel shipments were higher than 2013 by 4.2% while year-to-date U.S. aluminum shipments were up 8.1% year over year. Canadian results for December 2014 and for the year were similar.

All of that good news falls in line with most industry forecasts. As we reported here, industry trade publication Modern Metals says the outlook for 2015 is mostly positive. However, the magazine also warns that “competition, domestic and foreign, is always the overriding force that determines whether volume, price and demand forecasts are in balance.”

Indeed, even with positive expectations, service centers need to be aware of some of the potential challenges they will face and, even more so, start finding ways to be prepared. Earlier this month, MSCI President and CEO M. Robert Weidner III discussed the top trends challenging the metals industry in his State of the Industry address. Below are the three of the five challenges that he outlined, as reported by thefabricator.com (you can read the full coverage here.):

In his last two points, Weidner stressed the importance of employee safety and ongoing training as a means of attracting and maintaining workers. Investing in areas like safety and education shows employees that you value them, which only encourages them to invest right back into the company. In addition, LENOX Institute of Technology’s benchmark survey of industrial metal-cutting companies provides evidence that investing in areas like training can provide additional benefits, including better quality, faster on-time customer delivery, higher revenue per operator, and lower rework costs. In other words, it’s a win-win for everyone.

Only time will tell if industry performance plays out the way everyone expects. After all, forecasts are really only educated guesses. However, managers need to be sure they remain aware of trends like those outlined by Weidner so they can make informed decisions and be as prepared as possible for whatever 2015 brings.

Metal Service Centers

Why Your Metal Service Center May Want to Consider Coolant Recycling

January 5, 2015 / , , , , , , , , , , ,


If your metal service center is doing its part to ensure proper coolant management, then you are fully aware that it is not as simple as it seems. From choosing the right coolant to proper fluid prep and monitoring, getting the most out of your metal-cutting fluids takes time and effort, but it is well worth the investment.

Cut quality, productivity, and cost savings are all major reasons your service center should continue to make coolant management a priority. Case in point: As this white paper explains, low coolant levels on a band saw can lead to premature and uneven wear of band wheels, which can cost $1,000 each. Poor fluid management can have negative effects on circular saws as well, causing blade problems such as excessive edge chipping and tooth damage. (You can read more about that here.)

Really, any informed manager can typically accept the ROI argument for most areas of coolant management, except maybe when it comes to disposal. In today’s environmentally conscious world, coolant waste disposal can get expensive (up to $0.50 a gallon), and if you are a larger service center, this adds up fast.

For this reason alone, more and more manufacturers are investing in in-house coolant recycling. Some experts claim that coolant recycling can cut coolant waste disposal costs by up to 90 percent, and according to an archived article from Manufacturing Engineering magazine, tool life can also be significantly extended—from 25 percent up to 209 percent—with effective coolant recycling equipment.

In a recent article from Canadian Metalworking, Tom Tripepi, technical director for the fluid filtration division of PRAB, discusses some of the advantages of in-house coolant recycling. Below are a few highlights from the article:

To read about some metal-cutting companies that have reaped the benefits of coolant recycling, check out these case studies. SME also offers technical papers that discuss more recycling best practices as well as a review of the different types of recycling technologies.

Metal Service Centers

Preparing Your Metal Service Center for the Next Generation

December 5, 2014 / , , , , , , ,


Metal service centers, just like every other segment of the manufacturing industry, are facing a huge challenge that is only going to intensify in the years to come. That challenge is the skills gap, and if you aren’t facing this issue head on just yet, you will be soon.

As stated in a previous blog post, skilled production workers are one of the largest workforce segments facing retirement in the near future, which will have an impact on the number of experienced workers on the shop floor. Meanwhile, the next generation of workers just isn’t interested in pursuing manufacturing careers. Large corporations like GE are trying to change that, but shifting cultural perception isn’t something that happens overnight. This is leaving manufacturers with a small pool of talent from which to choose.

Many experts believe that actively attacking the skills gap will require managers to adjust the ways they both hire and maintain talent. While larger company goals and expectations should never be compromised, part of the solution will be for your service center to adapt to a new generation of operators. In other words, it will serve you better to embrace—not fight—the generational traits of Millennial workers, which includes taking into account their upbringing, their strengths, and their weaknesses.

What are some of these traits? In a recent article published in Forward magazine, Neil Howe, president of consulting firm LifeCourse Associates, provides a few attitudes and behaviors that define Millennials:

According to Howe, companies need to re-brand their operations with these tendencies in mind if they want to attract a new generation of operators. For example, Howe says managers should focus on creating teamwork-oriented activities—a tactic that fits well within the premise of lean manufacturing. “Give Millennials shared responsibilities, the chance to learn from peers, and let them collaborate on design and production work,” Howe suggests.

These types of strategies, combined with community efforts such as plant tours and working with local universities, will not only help your service center close the skills gap, but just as importantly, prepare you for a next-generation of customers as well.

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