The manufacturing world got some news late last week that is neither entirely uplifting nor completely dispiriting. The good news is that industrial production and capacity utilization did not decrease last month. The upward trend for US manufacturing continues, and we hope that it’s a sustainable one.

Growth continues, but not at eyebrow-lifting rates. According to the latest Fed figures, capacity utilization grew by 0.1 percent, from 77.3 to 77.4 percent. Industrial production was flat from January to February, but is likely to show an increase upon later revision — production figures initially showed no change for January, subsequently getting revised to show an increase of 0.4 percent.

The bottom line seems to point to one dominant issue (and two sub-factors) that challenges manufacturers and other sourcing organizations: uncertainty, brought on by 1) commodity/raw material price volatility; and by 2) the government policy landscape.

Commodity Price Volatility

Following the latest ISM PMI figure, which also decreased month-on-month in February but remained in positive growth territory, companies voiced concern over price volatility.

“Business is holding steady. Concern over commodity prices ongoing,” a chemical products manufacturer responded to the ISM survey. Another respondent, working in the machinery sector, said “”Still somewhat cautious about recovery. Expecting a good year, but not seeing orders yet.”

All metal categories were reported to be up in price for buyers, including aluminum products, copper products, rolled steel, scrap and titanium dioxide. The only commodity down in price was natural gas (which seems to be a trend that US and EU manufacturers are taking advantage of for the long term — see GM’s plans for natural gas vehicles, and a report claiming that 1 in 3 large vehicles in Europe will run on LNG by 2035.)

Manufacturing-Friendly Government Policy

Economist Chad Moutray, writing in the National Association of Manufacturers’ (NAM) Shopfloor blog, said that in order to see continued growth across all manufacturing sectors, Washington must put through more business-friendly policies.

This issue will be directly addressed at Day 2 of our conference, Commodity EDGE: Sourcing Intelligence for the New Normal. (The kickoff sessions begin later today!) Attendees will get both US and European policy perspectives at the panel discussion, “Public Policies Sure to Impact Sourcing Organizations.” 

Jennifer Diggins (Director, Public Affairs for Nucor Corporation) provides incisive policy viewpoints from the domestic steel industry’s perspective.

Thierry Decocq (Founder and Managing Partner of YQ Purchasing in Belgium) leverages creativity in the procurement process — if government policies are unbending, the wisdom goes, there must be more creative ways to structure your buys to help your margins.

And Mike Zadoroznyj knows a thing or two about regulatory compliance. As VP Product Center, Treasury and Regulatory Compliance Division at Triple Point Technology, Mike’s insight can help navigate manufacturers through periods of uncertainty.

In our messy policy landscape, manufacturers need to know which policies not only affect their business today, but which ones will rear their heads in the future. Uncertainty in prices and policies may reign for now, but equipping yourself with strategic sourcing practices to best meet those challenges — that’s up to you.

*Make sure to visit MetalMiner all day tomorrow for the latest updates from our panel discussions, keynotes speeches and breakout sessions!

Continued from Part One.

The MOM surfaces are cast and then machined to size and finally polished to a mirror finish to create a perfect fit. The idea is, a perfect fit means the surfaces should never touch each other, according to Dr. Timothy Wright, Kirby Chair of Orthopedic Biomechanics: “Just like the cylinder in an engine block,” he said.

But controversy has also arisen about the way surgeons fit these devices. The femoral head may be polished to a mirror surface, but then the ball surface is hammered into the thigh bone with a mallet, raising the question: how perfect is that fit going to be on assembly of the ball into the socket after such a process?

Nor is the problem confined to full hip replacements. The “replacement light” option of applying a metal coating to the patient’s existing femur and a metal lining to the pelvic socket has suffered similar problems of metallic ion contamination of the blood, suggesting heavy-handed surgery work on the full hip replacements is, at best, only part of the problem.

The use of MOM hip replacement devices has been dramatically reduced with DuPuy’s ASR model, along with others, since being removed from the market in September 2010. The worry for the industry is toxicity caused by MOM joints may cause a backlash against use of metal components and hasten development of ceramic and plastic alternatives. Already new ceramic materials are far less brittle than earlier types, opening up the prospect of extremely close tolerance viable ceramic joints in place of metal on plastic designs.

Joint manufacturers and the medical profession knew of these problems as far back as 2006 and have since done little more than monitor rejections and failures; so one has to say, if the repercussion is a dilution of a metals-dominant role, the medical industry will have done the metals industry a considerable disservice.

The metals industry is rightly proud and producers understandably value the successful application of metal alloys in the medical implants industry. From high-purity refining through forging and casting operations, machining, coating and treating the use of titanium, cobalt, chrome and stainless steels in addition to a number of less common metals, this has been a source of considerable profit for the sector over recent decades.

So the current furor about metal-on-metal (MOM) hip implants has understandably stirred up a lot of debate and not a little media hype into the bargain.

Here in the UK, a recent BBC Newsnight program and British Medical Journal (BMJ) report have thrust the debate into the public domain and a flurry of articles have played up the potential risks — risks that could ultimately lead to a sharp decline in the use of metal alloy implants if subsequent research supports early fears.

The procedure of hip implants has been around since the 1970s, but over time the materials and designs have changed as lessons have been learned. Earlier problems with stainless steel and post-operative dislocations have encouraged a move to cobalt-chrome and titanium alloys for the femoral head (the ball-shaped section with a spike that fits in the femur or thigh bone) and gradually larger femoral heads to counter the tendency to dislocate.

To reduce wear rates found in earlier metal-to-plastic joints, metal-to-metal joints were developed by a number of producers, but notably Johnson & Johnson’s subsidiary DuPuy. As a result, possibly of the larger surface area resulting from larger heads, tests have revealed that minute metal particles worn from the metal-to-metal contact are finding their way into the surrounding tissue and bloodstream.

An article in the Independent says metal ions appear to break off from the implants and leak into the blood, causing local reactions that destroy muscle and bone, cause severe pain and even long-term disability. Studies have shown that the metal particles can seep into the bloodstream, spreading to the lymph nodes, spleen, liver and kidneys before being excreted in urine. There are also concerns about damage to chromosomes, leading to genetic changes that could increase the risk of cancers.

The BMJ report is probably the best source of impartial information on the topic, even giving measured toxicity levels for cobalt and chromium blood tests. The Telegraph recently reported that in the US, experts studied 46 MOM implants retrieved from 44 patients at the Hospital for Special Surgery, in New York, where all implants removed from patients are kept for study.

They found that 98 percent of the cups of the implant and 93 percent of the heads showed moderate to severe scratching. Moderate to severe pitting was found in 43 percent of the cups and 67 percent of the heads; and near the cups and heads, the implants had completely lost their sheen.

Continued later today in Part Two.

Source: planespotters.net

It may indeed by a good holiday season for the likes of Boeing, as they sewed up contracts of considerable size with emerging markets, to begin supplying planes for the next couple decades.

Of course, their tussles with Airbus always keep things interesting, and Chinese and Russian plane-makers are joining the game as well. Some of our best-read aerospace posts of 2011:

1. Boeing and Airbus Put on Notice: China’s Comac Breaking Up the Duopoly Party

2. Not So Fast, Comac: C919 is DOA, But Boeing and Airbus Duopoly Dead Anyway

3. Aerospace Booming, Supply Chain at Risk

–Taras Berezowsky

Like you, I have now read probably half a dozen pieces on the amazing contributions of Steve Jobs. A visionary, an innovator, Thomas Edison-like, perhaps our modern Albert Einstein¦we’ll leave the big thoughts to others. But in our world of metals, we have only one observation — nobody has made metals as sexy and as cool as Steve Jobs.

Steve Jobs left a profound legacy for anyone that produces, fabricates, casts, pours, bends, stamps, shears, slits, extrudes, shapes or pours metal.

We here at MetalMiner, especially my colleague Nate Burgos, have often written about Apple’s achievements in product design. We pay tribute now to some of these.

Whether it’s the metal used in the basic design of key products:

Metal In Apple’s Design Language

Photograph by Shrine of Mac

Photograph by MailCones, Flickr

Photograph by mackeer, Flickr

or the more “progressive” selection of glass (vs. plastic) that relies upon exotic metals such as indium, Complementing Aluminum iPad’s Magnetism and Glass:

A model flexes a piece of Corning’s Gorilla Glass. Source: Corning, Inc./AP

or to liquid injected metal Apple’s Manufacturing Move to Liquid Metal

or the stainless steel case in the iPhone 4, Elegant Design Steel Bound iPhone 4

Detail of iPhone 4 by Apple, Inc.

to my personal favorite, the aluminum behind the new notebook (in my case, the MacBook Air, which I love) Aluminum Brick Behind Apple Notebook

to spreading the wealth to a host of Apple accessory suppliers Happy Days for Apple’s Metal Casting Suppliers:

Apple iPod cases made by Catcher Technology.

iPhone cases.

A Macbook frame.

Catcher’s touch panels. Photos: Catcher Technology

Catcher has the capability of extruding and casting a variety of tech parts.

…it’s undeniable that Steve Jobs has done for metals what Henry Ford did for auto production.

Perhaps it was Jobs himself who said he liked to play in the intersection of liberal arts and technology. We’d argue liberal arts and technology with a preference for metals. This industry will likely never see another advocate like Steve Jobs again.

–Lisa Reisman

Much has been made — maybe too much — of the dire straits the world will shortly be in when the Chinese finally choke off supplies of rare earth metals, or elements (REE) to the outside world. No one would deny REEs have many critical uses, but you can’t help wondering if there aren’t a lot of vested interests behind some of the clamor. (For more MetalMiner coverage on rare earth elements/conflict minerals, click here and here.)

In the process, the supply side constraints on many other metals (with a few exceptions) are overlooked — until now, that is. The British Geological Survey has produced an intriguing report called the Risk List 2011. The analysis is, in their own words, intended to give a quick and simple indication of the relative risk to the supply of 52 chemical elements or element groups which we need to maintain our economy and lifestyle.

The list is much more than a simple list of rarity, REEs being a case in point; they are not rare, but the combination of relative abundance, location of deposits and concentration of production in certain countries makes them a much higher risk than metals that are rarer, but whose production is more widely distributed among politically reliable sources. Each element is given a score from 1.0 to 5.0 for each of the following criteria:

  • Scarcity
  • Production concentration
  • Reserve base distribution
  • Governance

A score of 1 indicates a low risk, a score of 5 a high risk. The scores for each criterion are summed to give an overall risk to supply score obviously the larger the score, the greater the risk.

Low-Risk Metals

The lowest scores are (from the bottom up):

Titanium  2.5

Aluminum   3.5

Chromium  3.5

Iron  3.5

No major surprises there. Occurrence is plentiful and widely distributed, as is production. One may have expected to see titanium and chrome, both of which rely in part on supplies from Russia and South Africa, to have scored a little higher, but the report lists Australia and Canada as the leading producers for the first three and although China is listed as the leading producer for iron ore, they are also the leading consumer and a net importer.

Higher-Risk Metals

Unfortunately, not so at the other end of the list. China comes out as the leading producer of 27 of the elements listed and ranks as the leading producer in six of the top nine most at-risk elements all of which are metals. The reason we chose nine instead of the top 10 is because items 10 and 11 are bromine and graphite respectively, but following these, the list promptly gets back into metals through the middle orders.

Extract from BGS Risk List 2011:

*PGM’s include the Platinum Group Metals: Ruthenium, Palladium, Osmium, Iridium and of course Platinum, but interestingly Rhodium is not mentioned. Source: British Geological Survey.

How often do we hear of supply risks to antimony, mercury or tungsten? Yet these metals are used in a bewildering array of applications. China produces nearly 90 percent of the world’s mined antimony and 85 percent of the world’s mined tungsten, according to the USGS. Arguably, tungsten is as critical as REEs, used as it is in a huge array of metal alloys for electrical, strength and wear resistant applications. Like REEs, China is restricting exports of tungsten and the BGS ranks the supply risks as even higher than REEs.

The purpose of the Risk List is not to cause alarm, but to alert policy makers and consumers to possible supply disruption in the future. As competition for resources grows, these metals currently present the highest risk due to geopolitics, resource nationalism (state control of production), strikes and natural disasters impacting a highly concentrated supply base. Metals buyers and product designers could do worse than spend a few minutes perusing this list and reflecting on their own raw material supply arrangements.

–Stuart Burns

Guest contributor Alex Burns studies biology at Cardiff University in the UK. Continued from Part One.

So why is titanium used at all?

Well, one of the more concerning complications is what is known as Ëœcatastrophic failure‘ with the ceramic implant. Unfortunately, being ceramic, it can crack and break much in the same way porcelain does, creating very sharp edges that could do serious internal damage so close to the femoral artery. A greater range of modern composites are conquering the problem, though it is of some concern to many orthopedic physicians. For many patients, it may not be worth the risk of it breaking and the metal implant works very well. The hope is new technology will overcome the problem entirely and provide hip replacements that outlast their owners.

Which ceramics are used?

Alumina ceramic and zirconia ceramic are the currently preferred materials, chosen for their extreme hardness (the only thing harder than aluminum oxide is diamond). They also have the advantage over the metal implant in that ceramic implants release debris of a different nature to the metal.

Not only is the amount of debris given off by an implant important, but also the type. The body reacts differently to different substances, and so leading down different biological pathways with different results. Metal debris causes loosening of the joint far quicker than ceramic debris. The metal implants’ debris is in the form of metal ions, which could be harmful to the patient or to an unborn fetus. Hence pregnant or attempting mothers are advised against metal implants.

Finally, there is a relationship between the size of the femur head and the amount of wear. A smaller head reduces wear but increases the risk of dislocation. With the ceramic implant, the surgeon is free to use a larger head and create a safer implant without worrying about the increased wear.

These developments hold out great hope for patients while the consequence for metal implant manufacturers could be far-reaching. Metal implants are an extremely lucrative industry for high-tech western metals casting and forming companies, not to mention high-quality titanium refining companies. Fortunately for primary producers, titanium’s uses are growing daily and a gradual migration of body part implants to ceramics would not be too dramatic — but for the processing firms in between, it could be a profound development.

–Alex Burns

Guest contributor Alex Burns studies biology at Cardiff University in the UK.

You’ve heard of Car Wars – now how about Titanium vs. Ceramic?

What did ceramic say to titanium?

Move over. More and more now, ceramic composites are used in hip replacement in favor of titanium. The hip replacement is one of the most successful and widely done operations around the world. 90 percent of patients report pain-free movement, and a wider range of mobility. How is this miracle performed?

Doctors completed the first hip replacement in 1891 with the use of ivory, but they soon moved on to metals. With the invention of Teflon, the wear and tear along with the metal build-up in the bodies of the patients was reduced until modern alloys were introduced. These days, the typical metal femur head replacement consists of a titanium stem attaching to the femur and a cobalt chromium head for hardness. The head is machined to size and then polished to reduce the rubbing on the bone. Not too long ago a plastic spacer of polyethylene was put between the head and the socket to further reduce wear, but it was found the cobalt chromium head lasts longer on its own.

How long does a hip replacement last?

The average hip replacement lasts around 25 years, but with the usage of ceramics this could be lengthened even further. The main cause of a revision hip replacement is wear and tear; the heads grind down over time, causing a build-up of material which is related to loosening of the joint and a return in pain along with a loss of mobility.

Ceramic implants, however, are much smoother and harder than their cobalt chromium counterparts and so wear less. That’s one of the reasons they’re used in high performance brake pads on cars. For younger patients receiving hip replacement, this could be a massive bonus. If they got a metal implant at the age of 45, by the time they were 70 it would need revision surgery at a stage in life where their bodies are far less able to heal and deal with any complications associated with the surgery. With a ceramic head, the implant should hopefully outlast them and so rid them of the necessary operation to change it.

Continued in Part Two.

–Alex Burns

Source: 14kgoldteeth.com

Strangely, gold is the hottest commodity quickly and pervasively filtering not only into investment portfolios and central bank coffers, but also into peoples’ mouths and onto their teeth.

To wit, one of our posts about gold grillz — the technical name for gold-based jewelry custom made for the oral cavity — is the most-read post of the summer. Go figure.

The important thing is that we sometimes like to have fun with satire and silliness amidst our commentary on metals markets, sourcing strategies and macroeconomic issues and policies, and this next installment of MetalMiner’s Best Of Summer Series showcases just that. Enjoy!

1. Gold Grillz A Hedge Against Dental Monotony

2. A Thief’s Sourcing Guide to Stealing Scrap Part One

3. A Thief’s Sourcing Guide to Stealing Scrap — Part Two

4. Do War Dogs Have Titanium Teeth? No But They Have Some Sweet Metal Gear

–The Editors

My colleague Taras wrote late last month about the booming order books for new aircraft at Boeing and Airbus. In an FT article out this week, Forecast International are quoted as saying they expect production of commercial and military aircraft to jump more than 50 percent to 4,870 units within just five years. Anyone reading the good news that at least some parts of the manufacturing sector are doing well may imagine the supply chain is rubbing its hands in glee, but the reality is both the aircraft makers and their suppliers are worried that some parts of the vast sub-supplier network may not be up to the task.

United Technologies UTC, makers of helicopters, aircraft engines (Pratt & Whitney) and aircraft control systems, is not taking anything on trust. In a Financial Times article, Eileen Drake, vice president of operations at UTC, explains how the firm has developed sophisticated monitoring tools in what should be an example of best practice for the industry. The program has a ten-year forecast for some 2,000 of the most critical suppliers the firm uses, and monitors both the historical performance and future investment plans of each supplier.

The article makes no mention of how far down the suppliers’ tiers of sub-suppliers the analysis drills, but it is likely at least two to three layers to be robust enough to ensure security. According to the article, UTC has already identified four key areas where supply is looking tight and might benefit from closer supervision including bearings, titanium, sand forgings and composite materials.

UTC – Not the Norm

But industry experts are not confident all firms in the supply chain are as well prepared as UTC. Already the supply chain is showing signs of stress with lead times for some components made from titanium and nickel alloys more than doubling in the past year. Rob Stallard of RBC Capital Markets is quoted as saying that despite the efforts to work together, suppliers and their customers are often at odds over when to hire or build up stocks.

“No one wants to be the one left holding the inventory hot potato. You are always trying to keep it with someone else, he said.

Not surprising, when you look at the repeated delays major projects such as Airbus’ A380 and Boeing’s 787 have suffered; any supplier gearing up for takeoff of those projects’ original start dates would have been sitting on investments for the last few years without a return. Finally, though, the 787 seems to be rolling, RBC Capital markets expects Boeing to deliver six 787s this year, with 33 next year and 108 by 2015 that will be a steep ramp-up for many sub-suppliers, especially those in an already tight titanium market (upon which the 787 is highly dependent).

Fortunately the big boys are already ahead of the game. Allegheny Technologies has made heavy investments in metal manufacturing over the past few years, and by the end of 2011 the company will be able to churn out about 47 percent more titanium products compared to the prior peak in 2007 and 13 percent more nickel alloys, while Eaton, makers of hoses and couplings, is confident they can readily ramp up 15 percent with existing facilities.

Not all will be as well prepared though, as Boeing acknowledged it only takes one supplier failure to bring the whole production line to a halt, and with the aircraft makers bringing both an increase in plane build rates and new models online at the same time, the risks are obvious. So too for associated industries that draw on the same supply base; think medical devices that use titanium and cobalt alloy forgings and castings, automotive, nuclear…the list goes on.

A buoyant aerospace order book is certainly a good state of affairs for US and European manufacturers, but it will come at a price and buyers in related industries may be the ones to ultimately pay.

–Stuart Burns