in Vol. 7 - November Issue - Year 2006
New European Order in the Metallic Abrasives Industry
Steve Cowling, Managing Director
Erwan Henry, Commercial Director
Leading-edge technology: RSR (rapid solidification rate) atomizing process
Melt deck: Production creew single-minded about achieving superior quality
Ervin Headquarters in Ann Arbor, Michigan
Since the turn of the century, the metallic abrasives industry has undergone dramatic changes, like never before. This article sheds a new light on the events taking place and on the key role Ervin is playing in shaping a new order.
Order - in the historical sense, describes, at a given time in one industry, the balance of power between the players, the rate at which the technology evolves, the geographical flows and the economics, namely cost factors and prices.
Note there is a 6/7 year cycle in this industry, somehow linked with the automotive one. For 3 cycles, or about two decades, the "order" of the metallic abrasives industry in Europe has been very stable, business-wise, technology-wise, geography-wise. Consumption was concentrated in Germany, Italy and in the UK; customers were supplied mainly by local manufacturers; the blasting technology was well established; the business models in the industry were running smoothly; the overall structure of the industry seemed carved in stone.
And, all of a sudden, the winds of change blow away the entire picture. This has nothing to do with September 11th. This is due, rather, to a combination of factors:
1. Blasting technology leapt forward, with a new generation of spectacular new machines, computer-driven, better integrated into the production line, with efficient handling-systems... These new machines replaced much older equipment, relieving considerably the task of maintaining and tuning them up.
2. "Globalization" hurts the industries involved in blasting (foundry, structures, shipyards ...) and large-scale relocations take place. In other words, many western European metallic abrasives customers are closing doors and opening new facilities in Eastern Europe, India, China etc... further away from their old abrasives suppliers but closer to new ones.
3. New suppliers of Metallic abrasives, from Asia or Africa, burst onto the market, breaking into Europe and supplying the newly-established sites overseas.
What are the consequences of this change?
Customers are more demanding:
The new generation of equipment does not need the type of ‘back-rubbing’ service, where a guy checks the operating-mix every week and makes sure the amps are at maximum level. The tough, competitive environment is an eye-opener for those customers who are no longer ready to pay a premium for Mickey Mouse technology or "tests" made on 35 year-old machines.
The competitive situation is merciless:
Two global manufacturing newcomers have failed to make the breakthrough they sought, through lack of management resources. The Chinese producer could not finish its new facility and the South African producer has been taken over. The fake competition with semi-competitive and multi-branding sales channels, employed to confuse buyers, is no longer credible.
The withdrawal of long-standing shareholders seriously hits some players:
Two key European manufacturers have been sold by their shareholders, who had owned them for decades, to private equity funds, with far-fetching consequences on strategy and business models. This largely impacts working capital, prices and HR.
The business models are challenged:
The ‘high price + average quality + smokescreen’ marketing model, in particular, is crumbling.
Ervin Amasteel and the new order
Ervin is approaching this new order by concentrating on a very simple and effective offer: superior quality and genuine innovation. Amasteel provides the best value for money and peace of mind, with no frills attached. Ervin’s proprietary manufacturing process is, by essence, quality-orientated: the production crews are single-minded about achieving consistent quality; the manufacturing control is focused on superior quality... the outcome of applying, for decades, a philosophy based on quality and achievement is sturdy and reliable shot and grit, the best friends of productivity and cost effectiveness for our customers.
Ervin plays a significant part in enhancing the technology, with spectacular innovations and unique solutions, with no confusing marketing. This innovation potential comes from the genuine R&D facility in Tecumseh, Michigan.
While other players are re-engineering their business models, Ervin accelerates its course while, as the dust settles, our way matches expectations: sturdy abrasives and true innovation, at a fair price.
What does that mean in practice?
A sturdy abrasive is one which does the job: namely, it transmits the necessary energy to clean, etch, peen, etc for long enough to be cost-effective. Period. Ervin’s customers are invited to experience the difference, to witness the superior abrasives, to control what Amasteel commits to, to be impartial referees and to make a conscious decision, based on facts, rather than on a nice brochure.
The sales organization in Europe, as in the US, carries the Ervin testing machine and can run blind tests, comparing energy transmission and life of different samples. The Ervin testing machine measures, in identical conditions, how two samples behave and last providing, in a short period of time, fact-based figures for, and a technical evaluation of, each product.
Compare this with industrial tests, run in shotblast machines, during actual production: firstly, old abrasive remaining in the operating mix has to be flushed out or completely used; then, the production variations, possible leaks, tuning-up adjustments, repair and other events taking place in a manufacturing operation, can have a significant influence on the trial. This makes a measurable and clear comparison difficult. The Ervin tester provides a level playing-field, to make perfectly valid and fair assessments, which can be duplicated in perfectly stable conditions. Indeed, this proves and measures how superior in quality Amasteel is!
Innovation at Ervin
The Tecumseh facility of Ervin Technologies is by far the largest and most sophisticated R&D center in the entire Metallic Abrasives industry with leading-edge technologies and resources, some coming directly from the space and military sectors. The things which happen there are remarkable in nature, turning metallic particle concepts into industrial and commercial realities. Ervin is, for instance, the only manufacturer in this industry to have mastered technology such as RSR (rapid solidification rate), which enables production of particles, near perfectly spherical shape, with amorphous metal structures and perfectly uniform chemistry.
Take Amacast, the stainless steel product: the particles are vacuum-atomized in a dedicated armoured vessel. It is hard to imagine such an operation on an industrial scale, involving the absence of atmospheric pressure, remote-controlled processing and fully-computerized monitoring of all parameters (flow, speed, size, cooling-cycle, shape, etc ...). The outcome is an exceptionally strong, austenitic microstructure, with an outstanding bond of molecules, in perfectly regular clusters. The well-rounded and compact shape of the particles is an indicator of the sturdiness of the microstructure. There is also a total absence of surface oxidation, as the atomisation process takes place in a vacuum. Amacast enjoys a high mass/density ratio per particle delivering, indeed, more energy. This is why Amacast is by far a superior blasting media, outperforming ordinary stainless media, water-atomized without any control of the key parameters, by a wide margin. Typically, the Amacast premium in life and energy transmission ranges from 20 to 60%.
Another example of innovation is Ervin’s special mold-cleaning media, based on a unique metallurgical treatment, which results in steel particles of a strikingly low hardness. This new product is patented, which is still unusual in this industry. This exemplifies the kind of technology gap built by the Ervin Technologies.
Amasteel also, the high-carbon steel shot and grit, benefits greatly from this R&D expertise. The process itself is continuously refined: atomizing to an exceptional level of round shapes, complex heat treatment cycles to obtain the most sturdy microstructure, new generation of crushers to flash break the particles, minimizing residual stress and the subsequent cracks, etc.
Ervin Amasteel is now introducing a set of new products which will, again, make a breakthrough in the blasting industry and set new standards in productivity and effectiveness: high-speed blasting media to match the generation of new wheels (80+ m/s and more); high-yield productivity orientated grit to clean faster...
In shot peening, Ervin is by far the largest producer in the world of cast steel AMS shot. This position has been achieved through Ervin’s superior technology and is maintained by continuous improvements in the manufacturing process, generated by R&D. This enables Ervin shot peening materials to set the performance standard in the aerospace and automotive sectors.
How will this new order evolve?
Ervin has set the standards in North America for many years. The Ervin business model is now prevailing in Europe. European customers demand good value for money, consistent and superior quality with no frills, sturdy abrasives, fact-based evaluation for control purposes and a straightforward business approach. They are tired of salesmen carrying several business cards in their pocket, employing confusing marketing methods.
How will the new order evolve? How can one be a fortune teller? However, like in a sailing contest, a prognosis based on the weather forecast and currents (the market) and the capabilities of the ships (the players) can be made. The metallic abrasives industry is undergoing a period of deep change and the rules are different: a reshuffling is taking place between leaders and challengers; the methods and models are being re-engineered. The shareholders are facing serious dilemmas: operating on a global scale, but suffering very high fixed costs; trading off long-term market position for short-term profit; holding steadfastly to a business model or running perestroika risks... Ultimately, the shareholders hold the keys: investment or divestment; sticking to or changing the business model; milking the cow now or implement a long term strategy...
The recipe for future success is a combination of a sturdy and effective business model, minimum fixed costs and more innovation. Players with an aging business model, high fixed costs and little or no genuine innovation will soon be severely restructured by their shareholders or creditors. They will remain a force, but on a smaller scale (in geographical or business terms). The newcomers will not trigger a revolution in the market, as industrial and marketing effectiveness is a long haul, complex and expensive task.
Ervin is the best-positioned player to take the lead, enjoying the necessary resources to grow further industrially and to develop business. Ervin Amasteel shall soon be a defining player, setting the standards in Europe.
George Henry Road
Great Bridge, Tipton
West Midlands DY4 7BZ, England
Tel + 44.1215.222 777
Fax + 44.1215.222 501