Price increases of higher and higher percentages for raw materials are part of toolmakers’ reality. But increases can occur more frequently, as recently happened to Cole Carbide Industries. Also, they can lead toolmakers to more frequently increase their own products’ prices.

John Cole, executive vice president of toolmaker Cole Carbide Industries Inc., Warren, Mich., appears to be settled into the reality of higher-percentage price increases for raw materials.

He recalled that carbide’s annual price increase was around 2 percent until about 2004 and has been about 5 percent since then. Given that, he said a price increase of up to 4 percent during a year wasn’t a big deal, but it’s a different matter when Cole Carbide faces multiple increases in 1 year, as it’s facing this year. Cole said his company experienced a 3 percent to 4 percent increase at the start of ’08, a 2 percent to 3 percent increase in June and now faces the prospect of another 2 percent to 3 percent increase by year’s end.

Also, carbide isn’t the only raw material in which price increases are larger than they used to be. Cole added that tool steel prices have increased 2 to 3 percent since ’04 and 5 to 18 percent in more recent years. “It’s been escalating over the past 3, 4 years, but it’s really come to a head here within the past 18 to 24 months.”

Olaf Klutke, president of toolmaker GKI Inc., Crystal Lake, Ill., said his company’s tool steel cost has increased about 25 percent since ’06 and that the raw material’s cost now behaves like oil’s or gold’s. “It’s almost a commodity now,” he said. “It’ll change day by day as far as what the costs are. It’s just much more volatile than it used to be.”

At toolmaker Keo Cutters, also in Warren, Mich., all of its tools are made from HSS. “My steel prices have tripled starting basically after the first quarter of 2004,” said Dirk Schadwinkel, Keo Cutters’ engineering and purchasing manager.

Cole Carbide has partly dealt with higher prices by making itself more efficient to minimize increases in its own products’ prices. For example, the toolmaker upgraded from manual grinding equipment to robotic grinding machinery, allowing one person to run more equipment simultaneously. The company also introduced scheduling software and equipment into its manufacturing operations to increase efficiency.

Toolmakers, however, have sometimes had to increase their prices. For example, GKI absorbed some increases in its suppliers’ prices, but it also increased its prices. Klutke said GKI monitors its competitors’ prices and partly bases its increases on that information. “Increases within our industry for our type of product have been ranging from about 5 to 8 percent over the course of the last year or so,” Klutke said.

Keo Cutters also has increased its prices, and at a faster rate than in the past. Schadwinkel, a 10-year employee, said Keo Cutters used to go 2 or 3 years between price increases, but it went less than 5 months between its most recent increases.

Toolmakers’ costs, of course, involve more than raw materials, and those costs can have a greater impact on tool prices and can be as beyond toolmakers’ control as raw material costs.

For example, Klutke estimated that GKI’s tool steel cost is about 15 percent of the company’s overall expenses. He cited another cost as having more impact on his company’s budget than his tool steel’s 25 percent increase. “Even though that’s pretty significant, it’s a small percentage of our total manufacturing cost,” he said. “We’re very labor intensive here, a lot of high-skill positions. Those labor costs; that’s really what’s increasing the most.”

Klutke estimated that GKI’s labor costs have doubled during the past 10 years, with the rise mainly due to increases in wages, salaries and benefits. Moreover, he commented specifically about the health care insurance’s increasing cost. “From last year to this year, our health care coverage [cost] has increased by 43 percent,” Klutke said. “As a small company, we don’t have a lot of buying power as far as negotiating better insurance policies.”

—Cutting Tool Engineering, August 2008

Toolmaker Sandvik Coromant Co., Fair Lawn, N.J., will sponsor Bill Miller Engineering’s Top Fuel dragster team at the National Hot Rod Association’s 2008 Mac Tools U.S. Nationals to be held Aug. 29 to Sept. 1 at Indianapolis’ O’Reilly Raceway Park.

Bill Miller Engineering has supplied NHRA teams with high-performance engine components, including pistons, rods and superchargers, since 1975. According to Sandvik Coromant, Bill Miller Engineering maintains its own Top Fuel dragster and races in NHRA events to refine its product designs.

Sandvik Coromant will invite customers to attend the U.S. Nationals as guests of Bill Miller Engineering. Their attendance will include a chance to spend time in the pit, where they can see NHRA drag racing firsthand.

—CUTTING TOOL ENGINEERING, August 2008

The global market for additive fabrication products and services grew 16 percent to an estimated $1.141 billion in 2007, according to Wohlers Associates Inc.’s Wohlers Report 2008, a quantitative and qualitative analysis of AF trends and developments. This is up from an estimated $983.7 million generated in 2006. Applications for AF technology include design review, concept modeling, prototyping and pattern making. It is also used to make products that are difficult or impossible to produce any other way, such as one with solid and mesh sections in the same continuous part.

The Fort Collins, Colo., independent consulting firm identified a couple of the reportedly thousands of organizations benefiting from AF technology. Rockwell Collins, Cedar Rapids, Iowa, makes communication and aviation electronic products and can produce 6,000 parts in 4 months using one AF system and one worker. Another company, Graco Children’s Products Inc., Exton, Pa., can produce 7,000 to 10,000 parts annually with four systems and one person.

“Additive fabrication significantly reduces labor costs, making it much easier for organizations in the West to compete with companies in countries where labor rates are low,” said Terry Wohlers, president of Wohlers Associates. “This will become especially important as companies apply AF technology to the manufacture of end-use products.”

He noted that companies are increasingly applying AF systems for manufacturing custom and replacement parts, and short- and medium-run production. The systems are also being used to produce manufacturing tooling, such as jigs, fixtures and assembly guides.

The report states the industry will continue to grow substantially. By 2012, annual global sales of AF products and services will reach an estimated $2.3 billion, with unit sales of 12,000 systems for that year, according to Wohlers Associates. By 2015, the company believes the industry will be at $3.5 billion for the year, with unit sales reaching 20,000 systems.

—CUTTING TOOL ENGINEERING, August 2008

GF AgieCharmilles took two measures of the U.S. manufacturing industry. The measures, however, suggest the industry’s performance may be slipping.

According to the Lincolnshire, Ill.-based machine tool builder, April’s 30-day delinquency rate for machine tool leases was less than 1 percent, while the rate for home mortgages was 6.35 percent.

“Machine shops are stable, and machine tool leases are solid,” said Harry Moser, GF AgieCharmilles’ chairman.

He cited several reasons for that stability. The weaker U.S. dollar is contributing to America’s increasing competitiveness vs. imports and its competitiveness in export markets. The industry is buoyed by activity in the aerospace, power generation, oil-field equipment and medical industries. Some work, moreover, that had been outsourced to overseas operations is returning to the U.S. partly because of rising shipping costs.

A measure of the delinquency rate is the Agie Charmilles/USBEF Machining Industry Financial Strength Index. That index increased from 385 in March to 400 in April. Readings of more than 100 indicate that U.S. Bancorp Equipment Finance’s machine tool lease payment delinquencies are at a rate below the average rate of 1990 to 1999.

Delinquencies are viewed as an indicator of machine tool users’ liquidity and consistent profitability. April’s 400, however, is less than April 2007’s 526.

The other measure, the AgieCharmilles Machining Business Activity Index, decreased from 62 in March to 50 in April.

Started in October 2004, the index surveys machine tool users, asking them to compare their current business levels vs. those of 3 months earlier. Readings greater than 50 indicate that business activity has improved.

According to AgieCharmilles, the indexes reflect the condition of U.S. manufacturing because almost all mid-size to large manufacturing companies purchase or lease machine tools.

—CUTTING TOOL ENGINEERING, August 2008

Machine tool builder Okuma America Corp. and machine tool distributor Morris South-Machine Tool Systems, both of Charlotte, N.C., are investing $1.5 million in Clemson University’s International Center for Automotive Research.

CU-ICAR, Greenville, S.C., consists of a 250-acre site where university, industry and government organizations can collaborate on auto industry projects. The center has more than $200 million in commitments.

Okuma and Morris South’s investment consists of $1.1 million of Okuma machine tools and $400,000 in training and support from Morris South for the automotive engineering research and graduate education programs in the Carroll A. Campbell Jr. Graduate Engineering Center, a part of CU-ICAR.

Also, Okuma plans to continuously upgrade its equipment at CU-ICAR with new, improved versions.

—CUTTING TOOL ENGINEERING, August 2008

Joseph Frisch, a pioneer in CAD and a University of California-Berkeley professor emeritus of mechanical engineering, died June 15 of congestive heart failure. He was 87.

Frisch investigated direct numerical control in design and manufacturing as a means to network CNC machine tools. His investigation included developing a method for choreographing a machine and workpiece’s movements to create complicated workpiece geometries and shapes. His efforts contributed to changing manufacturing from a craft to a production industry.

“He had a great curiosity for applying technology from different fields to what was then considered grunty, dirty factory stuff,” said former colleague David Dornfeld, a UC-Berkeley mechanical engineering professor.

A son, Jonathan Frisch, recalled his father having an early computer as a professor. The machine took up more than half of a room and featured flashing lights, toggle switches and paper tape with holes in it that ran through a reader.

“We take computers for granted now, whereas then they were new, rare, extremely large and very exotic,” Jonathan Frisch said.

Also, Joseph Frisch served as an adviser to the Atomic Energy Commission, NASA and the aerospace industry.

He was born in Vienna, Austria, in 1921 but left in 1938, fleeing from the Nazis. He arrived in the U.S. in 1940, escorting six Jewish children also escaping to America.

He’s survived by his wife, Joan Frisch, daughter Teri Frisch Sallette and sons Jonathan and Erich Frisch.

Source: San Francisco Chronicle

—CUTTING TOOL ENGINEERING, August 2008