Unexplored potential of PDC Tooling package, for the export.

[madhav kapdi]

                    Sub. : Unexplored potential of PDC Tooling package, for the export.

 

                    Background.   

 

                    India is a Global player for IT exports, and this feat was achieved since the IT industry utilized our low cost indigenous talents, to maximise their exports. Similar feat is possible with the PDC Toolings, but Die-casters have not paid due attention to this hidden opportunity. 

 

                    01] Definition of the PDC Tooling package.

 

                    The package consists of the entire PDC Die assembly & Plunging-system right from the Plunger, Adapter, Plunger-rod, Shot-sleeve & Sprue-bush, later a part of the PDC Die assembly. In the Plunging-system, Graphite flakes, is a softest constituent of the Cast-Iron Plunger, while the Alloy Carbides is the hardest constituent of the SS & SB, made of HDS, and both should be Metallurgically compatible to each other, bin addition to the Adapter, made of EN24.

 

                    02] Profitability potential.

 

                    In the subsequent paras, I have narrated how we can make 2/3 extra sets of Toolings [keeping our own contribution intact] with only one set of overseas Tooling price. It is true that the performance of our Toolings is poor, but there is always a scope for improvement, since we are at the bottom of the performance, and from here, we have to go up only, but for that, you should know where the shoe is pinching.? 

 

                    To achieve this objective, you have to respect the professionals [Metallurgist] from the field. Plz refer to my article " Unexplored potential of Tool-steel Metallurgy." for details. Merely blaming we Metallurgist, will not improve your Tooling performance. You have been doing that for years, but your flawed  strategy has boomeranged since the competent vendors [Metallurgists] stayed away from the Die-casting industry. You ought to undergo the course correction.

 

                    03] The advantages associated with Tooling exports.

 

                    However, one Die-caster I came across in mid. 2001 [23 years back] visioned this opportunity, and is now exporting more than 30% of his production, with the corresponding Toolings as complimentary. More precisely, this is a self-financing business model.

 

                    Incidentally, the export of PDC components is a low margin business, while the Toolings is a high margin business activity. In addition, we get a De-facto subsidy [additional contribution] on account of our low labour cost in tandem.

 

                    04] But we have Technology [Tooling Design] related problems, with our Tooling performance.

 

                    The problems are also the opportunities if you think so. But we can also work on these problems, on the mission mode basis, for the improvement OR we also have an option of reverse engineering. We can learn a lot from reverse engineering, and fine tune our developments with the inputs      ................ Alternatively ....  hire the consultant, with a proven track record in the field.

 

                    05] Costing details for typical overseas PDC Die assembly.

 

                    01] Material cost. : 10 to 15%.

                    02] Labour cost. : 40 to 45%.

                    03] Heat-treatment cost. : Less than 2%.

                    04] Total cost. : 52 to 62%.

                    05] Contribution. : 38 to 48%.

 

                    The above data is obtained from the article published by the oversea author either in Alucast / GDC-Tech. The material is a common factor, and the only major variable is the labour cost. I am ignoring the HT cost since it is too small in comparison, but still it is the HT vendor [Metallurgists] who takes the beating for the poor performance of the Indigenous Toolings, without conducting any failure analysis investigations, or even the convincing logic either.

 

                    06] How can you hold a vendor with less than 2% contribution by value, responsible for the activities of 98% of others.?

 

                    Many have installed inhouse Vacuum Hardening treatment [VHT] furnaces, but still there is no improvement, but they [Die-casters] don't admit it.  I construe this as a frustration on the part of the Die-casters, which they are venting out on the HT vendors in general and we Metallurgist in particular. This mindset is not conducive for Development, but in the process, the real culprit goes scot-free, for the years together. In short, you have been sweeping the dust below the carpet so far.

 

                    07] Who is the culprit then.?

 

                    The culprit appears to be Tooling Design, which promotes the excessive Retained Austenite [R/A] which inturn gets converted into Martensite, during the operations. The difference in densities of both [Austenite & Martensite] develops the stress leading to the cracks, and the scrapping of the Dies. Lower the Retained /Austenite higher the Tooling life.

 

                    08] Can you compare the Indigenous & oversea labour cost.?

 

I came across an advertisement calling for the recruitment of workmen with Tool room exposure of 2 to 10 years, with a salary of 12 to 40 Dollars / hour. The contract was for 2 years with 1 months extra salary, with free lodging & local conveyance. The consolidated salary / month is as under,                              

                                             

                                                                 2 years experience.        10 years experience.

 

                    01] Basic salary.                    12 Dollars / hour.               40 Dollars / hour.

                    02] Salary / day.                          96 Dollars.                        320 Dollars.

                    03] Salary / month.                   2400 Dollars.                     8000 Dollars.

                    04] Salary in Rs.                         1.92 lakhs.                         6.40 lakhs.

                    05] Amortisation of

                    extra salary.                               00.16 lakhs.                        0.53 lakhs.

                    06] Total salary.                          2.08 lakhs.                         6.93 lakhs.

                    07] Indian salary.                        0.20 lakhs.                         0.70 lakhs.

 

                    Assumptions. 

 

                    I have considered 8 hours working / day, and 25 days a month, and the Dollar conversion at Rs.80.

 

                    09] Cost comparison of indigenous & overseas Toolings.

 

                    From the above figures, it can be concluded that our labour cost is less than 90% of the overseas. In a nutshell, it is average 5% against 40 to 45% overseas Tooling price and the balance will be our additional contribution. In a way, we can manage 2/3 extra sets of Toolings with the overseas pricing, without sacrificing our own contribution.

 

                                                          Overseas costing.                 Indigenous costing.

 

                    01] Material cost.              10 to 15%.                                 10 to 15%.

                    02] Labour cost.                40 to 45%.                                5% average.

                    03] HT cost.                      less than 2%.                            less than 2%.

                    04] Total cost.                    52 to 62%.                                 7 to 22%..

                    05] Contribution.               38 to 48%.                                78 to 83%.

 

                    The above hidden opportunity was visioned by a Indian Die-caster i have interacted with and his case-study in brief is as under,

 

                    He quoted against an overseas enquiry for 5 lakhs PDC components, and was found lowest for the PDC component, but the customer was willing to pay for only 2 sets of Toolings [with 2.50 lakh shots as their norm] for 5 lakh components, while his own norm was 70000 max. Just to get a foothold in the international market, he accepted the Tooling price offered, and executed the order. In the process, he not only made the money in PDC components, but even the Tooling was also his handsome supplementary profit center.

 

                    10] Vision is more important than techno-savvy credentials.

 

                    Today he is exporting more than 30% of production, which has been rising continuously, and this feat he has achieved on account of his vision. The mute point to note is, he is not a Metallurgist OR even a Mechanical engineer either, but claims to be a Graduate in Industrial engineering, but in reality he is a Commerce Graduate. 

 

                    I doubt if his Tooling performance has improved beyond 1.00 lakh shots, in the last 23 years, but I appreciate his vision. Just imagine the laurels he would have achieved with the Qualified Metallurgist on his payroll as a consultant / adviser. Many times, down the line staff sabotage such moves, fearing a loss of their own importance in the organization. The owners, who by and large are Non-technical, then succumbing to such moves, is not ruled out.

 

                    11] Is there any further scope for the cost reduction.? 

 

                    Yes, very much. 

 

                    Following options can supplement further cost reduction & productivity improvement concurantely, subject to the performance linked pricing. [PLP]

 

                    01] Switch over from VHT to Pit-type furnace.

                    02] Product specific HT hardware & practice.

                    03] Use Secondary-melting & Refining for Shot-sleeve & Sprue-bush.

                    04] Near shape castings for step 03.

                    05] Ones step 04 is ratified, with the authentic operational feedback, then switch over to PDC Dies as well.

                    06] Step 3 to 5 will reduce your material & machining hours and reduce your  operational cost and improve your productivity as well.

 

                    12] Points to ponder.

 

                    01] If the Commerce Graduate can take technical decisions, then the Mechanical engineers holding the fort, should derive inspiration from him. He has encashed only the low cost labour option, while you can encash, indigenous Metallurgical software option in addition to the labour. Obviously, your contribution will be much higher than his.

 

                    02] I met a 90 years old Tool Room manager [TRM] of Indian Standard Metal [ISM] a Tata group Die-caster, getting a life of 2.50 to 3.00 lakhs shots. He was  looking for a Salt-bath furnace to improve his Tooling performance further. Incidentally, Tatas left Die-casting industry, since the echo-system was not conducive for their style of business.  They were having 12 PDC machines 40 years back, should speak for the size of their PDC setup then.

 

                    13] Bottom lines. :

                    01] Improve the Tooling Design, for the reduction in Retained Austenite [R/A] 

                    02] Stop venting out your frustration on we Metallurgists, who only can cure your disease.

                    03] Shake off your CRBC [Cost-reduction by cheating] business model, which has kept competent vendors [Metallurgist.] away from the Die-casting industry.

                    04] Tatas followed the above principles and achieved the laurels in the Tooling performance. If the Tatas can, why you can't.?

 

                    Madhav Kapdi.