issue: August 2005 APPLIANCE Magazine
The Metals Advantage
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by David Simpson, Contributing Editor
Metals suppliers work to provide appliance customers with suitable choices in a volatile price environment.
Carrier Corporation of Farmington, CT, U.S. uses carbon steel with an AgION coating on its commercial and residential air handlers. According to AK Steel, maker of AgION, the translucent coating inhibits the growth of mold, mildew, and bacteria through the release of silver ions.
Steel and other metals constitute more than 50 percent by weight of many appliances. Therefore, it is hardly surprising that appliance producers have recently been looking askance at metals pricing. Maytag Corporation (Newton, IA, U.S.), for instance, attributed less than stellar 2004 performance partly to surging raw material costs. “Higher material costs, particularly for steel, had a major adverse effect,” Ralph Hake, Maytag chairman and CEO, said in a statement. “If you look at steel pricing over the past century, the kind of spike we saw in 2004 has only occurred during one other period, World War I. The spot price of steel doubled in 2004 and prices remain near historical highs.”
According to John Lude, director, Corporate Metallurgical Services, Ryerson Tull, Inc. (Chicago, IL, U.S.), for most of 2004, material availability was a daily issue in the U.S. “Tight supplies and supplier consolidation caused metals prices to increase substantially in a very short period of time,” Mr. Lude tells APPLIANCE.
Metals pricing and availability are global issues. The International Iron and Steel Institute (IISI) estimates that 2004 was the first year in a long time in which worldwide steel demand outpaced supply, and added that pricing was at an 8-year high. Higher prices had much to do with reasonably strong world economies, with an outsized role played by China. As the region has rapidly built up its manufacturing capabilities and infrastructure, its appetite for steel and other commodities has grown apace. The IISI reports that in 2003, China used 27 percent of world raw steel production while producing 23 percent of the material. This gap has made the country a large net importer of steel. In 2004, the region soaked up some 29 million tons from other countries.
In an effort to address its steel deficit, China has been adding steel-making capacity and is by far the world’s largest steel maker. The growing Chinese capacity coupled with record worldwide steel production have squeezed the supply chain. The result is that users of scrap steel, iron ore, and coke have seen higher prices and sometimes inadequate availability. Even the ships used to transport these materials are costing more—all of which impacts steel-making costs around the world. At press time, it was reported that there has been some reduction in shipping costs.
Other metals have also been affected by rising demand. Copper, used in motors, wiring, and pipes, is about 20 percent more costly than a year ago. Zinc, used in steel coatings and castings, is up about the same amount. Even higher nickel prices are affecting appliance producers. While nickel used to make up 28.5 percent of stainless steel’s price, it has risen to just under 45 percent within the last year, says the IISI.
During the last 18 months, aluminum prices have increased, along with those of other commodities, points out J. Michael Murphy, marketing manager of Industrial Products at Alcoa Mill Products, Inc. (Lancaster, PA, U.S.). “The LME (London Metals Exchange) price has recently retreated from a 10-year high, but remains relatively high today. Aluminum is a globally traded commodity and prices have been influenced by strong demand from the developing ‘BRICK’ countries of Brazil, Russia, India, China, and Korea.”
Does the ferment in metals mean that appliance producers will increase their use of plastics? It is possible, but manufacturers are painfully aware that many plastics also cost more. Much of this is due to the high price of oil, used as a plastics feedstock. Another factor is that plastic resin production is lagging behind the increasing demand in some regions.
Whirlpool says its Satina finish provides the look of stainless steel, with some additional advantages. Unlike stainless steel, the vinyl laminate on steel finish has a glossy, smooth appearance that is never wavy or varied. Fingerprints are less visible and magnets work on it. The surface’s streamlined, sleek surface is said to be easy to clean with mild soap and water and requires no special cleaners.
Steel has traditionally been a very cyclical industry. In 2000, steel prices were at a low level and much of the steel industry was suffering. In North America, the American Iron and Steel Institute (AISI) reports that the steel industry saw 41 bankruptcies and lost 55,000 employees, which it attributed to imports dumped in the U.S. over several years leading up to 2003. Broad-based U.S. tariffs on imported steel, in effect from March 2002 to December 2003, were aimed at giving the domestic steel industry an opportunity to improve its outlook. Many steel consumers blamed the tariffs for boosting North American prices and cutting availability. Even so, steel prices continued upward after the tariffs were ended.
With demand high, steel companies such as United States Steel (Pittsburgh, PA, U.S.) and Nucor Corporation (Mt. Pleasant, SC, U.S.) have been reporting strong financial results. Dofasco Inc. (Hamilton, Ontario, Canada) said 2004 was the most profitable year in its 93-year history. At the same time, some of the weaker players have been acquired and consolidated. The International Steel Group Inc. (ISG) purchased several North American steel production facilities, including those of Bethlehem Steel and LTV. ISG in turn has been acquired by Mittal Steel Company N.V. (Rotterdam, The Netherlands), which is now considered by many to be the world’s largest steel producer.
The AISI notes that the North American steel industry has undergone a transformation of its business model through massive consolidation and rationalization, and innovative new labor-management agreements. Benefits are said to include a globally competitive cost structure, re-capitalization, and heightened productivity.
More generally, the world steel industry is making efforts to ensure continued strength for its members and less of a boom-and-bust cycle. The industry has held talks aimed at discouraging government subsidies, which the IISI says distort the market and damage truly competitive companies because of the market’s overproduction. An exception would be subsidies to shut down inefficient operations. The industry association is encouraging investment in innovative products and improvements in steel production methods.
Melding Metals and Plastics
Over the years, sheet metal and plastics have competed heavily for their place in appliance design. “The plastics and metalforming industries, you could say, have typically run on separate, if not competitive, tracks,” confirms Norm Brozenick, program management, Semi-Crystalline Products, Lanxess Corporation (Pittsburgh, PA, U.S.) The company is part of The Lanxess-Group of Germany, which was formed earlier this year from most of the chemical businesses and large segments of the polymer activities of the Bayer Group.
This plastic/metal dichotomy, however, is being challenged in Plastic/Metal Hybrid (PMH) technology. In this technology, a perforated sheet metal part or parts is added to an injection molding die. In the injection cycle, plastic flows into and around the metal perforations. The two materials are mechanically interlocked, creating a high-strength composite structure. No post-molding treatment or painting is required.
The resulting combination possesses unique physical properties that cannot be attained with a single material. PMH parts can feature improved structural strength and component integration, significant weight reduction, increased cost efficiencies, and/or greater design flexibility.
Mr. Brozenick notes that, during manufacture, the PMH approach combines the benefits of both the deep-drawing process and injection molding, enabling ready-to-assemble components to be produced in fewer steps, with shorter cycle times, and resulting in cost reductions.
Compared to an all-steel design, PMH components eliminate the need for numerous high-tolerance joining operations, such as welding and fastening, and the additional costs these entail. Compared to purely plastic structures, the dimensional accuracy of the parts is less dependent on factors such as material shrinkage, temperature, and climate.
Using PMH technology, load-bearing metal structures can be designed with thinner walls because an over-molded plastic rib structure can significantly reduce the tendency of thin metal parts to buckle and bend under load. This can enable dramatic weight reduction without sacrificing structural integrity and strength.
“This technology has been in use since the late 1980s in the auto industry,” notes Tim Palmer, senior design engineer, Hybrid Technology at Lanxess. “Today there are more than 30 auto models on the road with PMH parts. We are now expanding this technology to non-automotive applications, including major appliances.”
By combining plastic and metal materials, thinner steel can be used and part weight reduced. This could be an advantage in appliance transportation and installation. Another advantage could come from molding plastic components to a steel major appliance base, which would eliminate the need for separate component screw attachment.
With Type 304 cold-rolled stainless steel recently priced at $2,450 a ton in the U.S., the popular “commercial” or stainless-steel look in appliances ranging from electric housewares to major appliances can be expensive to produce. U.S. prices have recently been higher than world prices and have drawn imports, despite tariffs on stainless steel sheet from some countries.
Appliance companies are also utilizing stainless steel alternatives such as polymer laminates over steel and painted steels that look like stainless. Advantages often extolled include a glossy, smooth appearance, less visible fingerprints, and the ability of magnets to attach to the surface.
In addition stainless steel, laminated steel finishes can replicate other materials, including brass, wood, cloth, and various types of stone finishes such as marble and granite. Mike Stiller, projects manager, Market Development and Product Applications at Dofasco, observes that polymer laminate sheet metal has been adopted in Europe and is an emerging product in North America. His company makes the Innovacoat™ family
of laminates. “The finished product can provide high-quality decorative patterns and textures not available from traditional coil coating
methods,” he says. “Polymer laminate sheet steel can also have high-gloss and anti-fingerprint finishes, have improved corrosion resistance performance, and can be performance-tailored to specific end uses.”
Within stainless steels, less-expensive alternatives exist to the frequently used Type 304. Lee Price, principal engineer, Applications Engineering - Specialty at AK Steel Corporation (Middletown, OH, U.S.) suggests Type 430. This magnetic stainless steel contains 16-percent chromium, but almost none of the costly nickel that is used in 200 and 300 series stainless steels. With inherent strengths greater than carbon steel, this type of steel provides an advantage in applications where thinner materials are preferred.
AK Steel offers this type of steel coated with a translucent AgION™ compound, which is said to inhibit the growth of bacteria, molds, fungi, and other microbes through the release of silver ions. The 0.3-mil coating tends to seal the steel surface. Polished stainless steel is typically made by sanding the surface with a number 120 grit sanding belt. This scratched surface is craggy and can easily trap dirt, grease, and oils. By cleaning the polished steel and then applying the thin, tightly adherent and smooth coating, dirt and oils can not penetrate the rather open polished finished.
“Typical applications for coated stainless steel would be for the kitchen appliances—refrigerators, ranges, and dishwashers,” says Mr. Price. “Most appliance customers prefer the look of stainless steel, but just don’t want the fingerprints. By coating a polished 430 product, the customer gets all of the benefits of stainless but without the fingerprints or the high price.
Carrier Corporation (Farmington, CT, U.S.) uses carbon steel with an AgION coating. Its applied commercial air handlers use the coating on all inner liners. Larger, more custom units offer the coating as an option. “It is a very strong and cost effective selling point, since the coating is an offering in our applied air handlers,” says Carrier’s Brian P. Dwyer, vice president, Commercial Sales. He adds that working with AgION coated steel is no different than working with any other uncoated steel.
steel. Stainless steel, copper, and aluminum, which are non-magnetic, are valuable enough to be manually separated. North American appliance recycling rates are around 90 percent.
“Fortunately, in North America, there is a strong economically driven recycling community, and little need for direct involvement by appliance companies,” points out Wayne Morris, vice president of Division Services, at the Association of Home Appliance Manufacturers (AHAM). “There are new regulations in Europe, which will be implemented in late 2005 and 2006, that would require appliance company, first importer, or retailer involvement at the end of an appliance’s life. These programs in the EU member states rely on a visible fee by consumers at point of purchase of new appliances to fund the historical waste.” In addition, the Province of Ontario is considering regulations on take-back of end-of-life appliances.Mr. Morris makes the point that designing for recycling is just part of a broader need to design an appliance for the environment. “Looking at any appliance’s impact over its lifespan—from conception, to development, manufacture, sale, use, and finally to disposal—the biggest environmental impact by far is during use. The key here is to have the lowest energy impact.”Bill Heenan, president of the Steel Recycling Institute, a unit of the AISI, says that a big concern with the appliance industry is that if metal content gets too low, the appliance may not be profitable to recycle. “Microwave ovens, for one, are no longer making it into the recycling stream,” he says. “Steel by weight in an appliance can be up around 90 percent for a gas range, or down in the 50s for dishwashers. Once the content gets below 50 percent, it may not pay the peddler to collect the appliance.
“As it is, recycling potential creates value in an appliance at its end of life,” Mr. Heenan continues. “HVAC, for instance, is virtually 100-percent metal. In most cases, commercial HVAC contracts will specify removal of the old unit, and will sometimes pay the owner to do so. In the residential area, appliance dealers can get a few extra dollars by removing and recycling the old appliances. They may even receive a disposal payment from the customer.”
AHAM is conducting a major study on Extended Producer Responsibility in 2005, similar to but more comprehensive than the 1997 study it completed on the state of recycling. One element of the study is to produce a detailed tracking of material flow of appliances in the recycling stream. A second track is to look at the ages at which appliances enter the recycling stream. Third will be a detailed analysis of appliance material content.
To do this, AHAM’s contractor has disassembled 42 new and 42 older major appliances from the waste stream. The study will break down some 30 different metals and plastics. “We want to support recycling as much as we can,” notes Mr. Morris, “and we will pass on what we learn to the recycling community.”
Metallic and Environmental
Recycled content is important in metals production. Basic oxygen furnaces use about 25 to 30 percent of old steel to make new steel. Electric arc furnaces work with virtually 100-percent old steel. Using recycled aluminum can save 95 percent of the energy that is needed to produce aluminum from virgin ore. And zinc globally uses more than 30-percent recycled content, including zinc from coated steel.
Steel, copper, and aluminum are currently the most valuable products to be recycled from appliances, and recent higher prices for scrap metals have encouraged appliance recycling efforts. In North America, most appliances go through shredders, which cut up the appliances and magnetically separate the
Has the recent price volatility and sometimes tight supplies changed appliance industry metals selections? “It’s not just in the last year or two that appliance companies have been cost conscious and looking for ways to cut their costs,” points out Peter Recchia, manager of Sales and Service at United States Steel. “Customers are constantly looking at thinner gauges, but especially with the great run-up in prices. A challenge is for coatings suppliers to develop more flexible finishes for these thinner steels.”
Another cost-saving approach some customers use is to pick a hot-dipped galvanized steel to be used, for instance, in the back of a refrigerator or in inner components. “The advantage is that these steels don’t need painting and may even eliminate the need to operate a paint line,” Mr. Recchia explains.
As far as delivery, he extols the virtues of a supply chain management system. “Our system works with customer schedules, makes any necessary adjustments, and enters orders automatically. The system, along with the work of our reps, gets the credit for keeping our delivery schedule on track at a time when supplies could be tight,” he says.
With the availability of metal improving this year, appliance producers are working to balance the increased cost of materials with numerous cost savings programs, observes Mr. Lude of Ryerson. “When looking at thinner gauge product, the biggest challenge is maintaining stiffness of the component. Since material strength levels typically have little impact on this process, joining techniques and part design also need to be investigated.”
Best practices can include continuous joints that serve as stiffeners as compared to discontinuous or “stitch-type” joints. Often adhesive bonding alone or in combination with traditional joining methods can provide strong solutions. Designing a part with built-in embossed patterns also provides stiffness based on a slightly modified part geometry.
“From a manufacturing viewpoint, material formability is also an issue when the material thickness is reduced,” Mr. Lude adds. “It’s very important that any material change does not affect the robustness of the manufacturing process.” As a result, he says that his company’s engineers support appliance customers’ design teams in the areas of material selection, cost-effective material application, and manufacturing..
Mr. Murphy of Alcoa says that demand for common alloy bare and painted aluminum sheet products has been extremely strong since the first quarter of 2004. “We have been able to meet the demand of our long-standing, strategic customers, but we have had limited capacity available for new customers,” he notes. “We communicate closely with strategic customers with regards to their demand projections and our capacity to supply. The key is regular communications and being closely connected to our customers’ businesses. Mill production reliability and on-time delivery performance is something that we constantly work on.”
Of course, forecasting future prices and availability of metals is, at best, an inexact science. However, one projection seems fairly safe: metals will continue to be an important part of appliance manufacturing and design, no matter the cost.