Thermal Spray Coatings | Business Aspects

Thermal spray equipment auctions

2010-06-12T09:09:00.001-07:00

Thermal spray companies everywhere have always attempted to lower the cost of their capital equipment budgets even in good economic times. Now that the global economy is in a downturn, thermal spray shops are even more sensitive to excessive capital spending for thermal spray equipment such as thermal spray robots, thermal spray booths and dust collectors, turntables, thermal spray consoles and such. One of the ways in which capital equipment costs can be lowered is by purchasing such used thermal spray equipment from auctions. In this brief article, we will address some of the basics involved in purchasing used thermal spray equipment from auctions and the general terms and conditions that are usually imposed upon by the auction houses.

The general underlying rule in purchasing used thermal spray equipment from auctions is that the equipment is usually sold as is without warranties and guarantees of any kind either expressed or implied. This means that you are purchasing the piece of equipment as is without actually witnessing the operability of the machinery. While this seems like a dangerous practice, namely purchasing something without seeing it in service, there are simple clues that will separate the real problem equipment from the reasonable ones. The original manufacture date, the number of hours clocked in the console, the general visual appearance, the source of the equipment, etc can give quite a bit of information that can be deduced regarding the abuse that the machinery has seen in its past life.

To give some examples, an integrated thermal spray coating system that has clocked in under a hundred hours in a government research laboratory or a university research center has probably been well taken care of as opposed to an integrated system that is in an auction house that came from a high volume thermal spray job shop production facility that has over twenty years of service exposed. Turntables that are loaded with over spray material everywhere with beat up looking cables are not to be your first choice to purchase regardless of the bidding level involved. Thus common sense and an educated evaluation are important to be considered.

Prior to going to these thermal spray equipment auctions, know your budget limit. Auctions can sometimes be high pressure scenarios and that is understandable since the agenda of the auctioneer is to get rid of the piece of equipment as quick as possible and hence auctioneers speak very fast and sometimes in great musical rhythm and if you are not mentally prepared and tempered to walk away at the appropriate time, you can end up spending a lot more than what you bargained for. Hence mental preparation as far as budgets and financial limits is extremely important.

Payments for the equipment successfully bid upon fall usually only into three categories. These are cash, company check or wire transfer. Auction houses are usually extremely strict when it comes to payment practices and will not tolerate the playing of games as far as payment practices. Check with the auctioneer in advance as to if there are any buyers premiums in effect, which are usual, and if so, what is the buyers premium rate.

And lastly, rigging and removal of the equipment is almost always the responsibility of the purchaser. Ensure that if you are using an outside rigger or transporter, that they have sufficient insurance certificates and demand that you get a copy of their insurance papers. This is essential because any damage or injury that occurs due to negligence on the part of your hired rigger may end up on your lap and you want to ensure that you are well protected. Thus purchasing used thermal spray equipment from auctions can bring you good deals, but you need to be aware of the necessary precautions that need to be taken up front.

Thermal spray deburring costs

2009-06-04T13:07:00.000-07:00

Thermal spray coating companies just like other manufacturing companies have to place extreme importance to cost control in their operations in order to compete effectively and to be profitable. One of the areas that is often overlooked in thermal spray coatings processing is the deburring operations involved. Generally thermal spray coatings estimators look at deburring as the last operation prior to inspection and simply put in a blanket costing for this step and do not think much of it. However, there could be some cost control opportunities in the de-burring department of your thermal spray coatings operation.

Cost controls in thermal spray de-burring can be effected by following a more holistic approach. Sounds like a medical healing technique, but seriously one cannot do anything of value if you take de-burring as a stand alone process. A little explanation may make this clear. If de-burring is looked upon as simply pulling thermal spray masking plugs or thermal spray masking tape and taking a couple of files and filing away the over spray and breaking any sharp edges, then the only way to reduce costs would be to lower the de-burring department’s wages to next to nothing so the employees can go home to their families with an empty bowl every day

What needs to happen is thermal spray process engineering needs to get involved and design masking in such a manner that very little de-burring is required in the first place. For example, reduce the amount of thermal spray tape masking to a minimum and invest in shadow masking and hard tooling. Modifications to spray gun angle so that the thermal spray coating feathers as much as possible, so sharp edges and overhangs are minimized. This may also need some parameter tweaking because at certain gun angles the micro structure may not meet the desired specifications and so parameters may have to be altered so the coating meets the specification even at the gun angle required to minimize subsequent de-burring.

Thus, interaction between thermal spray tooling engineers and de-burring technicians needs to be taking place quite frequently, on a part number by part number basis to result in cost savings being instituted in the de-burring area.

Thermal spray technologies blog

2009-05-31T10:06:00.000-07:00

As you may have noticed, this relatively newer site deals with the business aspects of thermal spray coatings. We deal here with the basic premise that thermal spray coatings companies, just like other businesses have to generate a profit at the end of the day. We deal here with thermal spray powders costing, quality costs, cost of re-work and so on. The thermal spray coatings industry may be a niche field in the area of surface engineering and surface treatments, nevertheless the principles of business have to be fundamentally applied to them even though there might be some tweaking needed to suit it specifically.

However, there are those of you that might be leaning more towards the day to day thermal spray coatings operations that deal with thermal spray coatings quality, microstructural problems, oxides control and so on. There might be some readers that are more interested in thermal spray testing such as metallography, tensile testing and so on. For such folks, there is an older blog I author and that is called http://thermalsprayedcoatings.blogspot.com which has been around a little while longer.

In that blog, I deal with more of the non-business aspects of thermal spray coatings, including some articles on thermal spray engineering, quality, plant layout and so on. And you are invited to visit http://thermalsprayedcoatings.blogspot.com anytime you want and get your dose of surface treatment euphoria from someone other than your colleagues and co-workers. The beauty of both of these blogs, I believe is the fact that I endorse no one company more so than the other. In fact, as you read you will find that I endorse nobody as a preferred supplier by name. Of course there are some qualities in some suppliers that make them superior to those that lack it. For example, a thermal spray shop that has no powder release system is definitely one that I would not endorse.

Additionally, I believe a casual discussion of both the technical and business aspects of the thermal spray industry is what I have sought to accomplish. And so there you are, Cheers!

Thermal spray quality audit costs

2009-05-06T12:59:00.000-07:00

Let us face it. Thermal spray quality audits are a pain in the rear. Unless you are in the thermal spray quality audit business, you have probably heard this over and over again by your peers or you yourself have thought of this. But the problem is that many people do not have the guts to say the truth the way it is. Now I am ALL for producing quality thermal spray coatings. After all, you will succeed in keeping your customers happy ONLY if you emphasize on quality when it comes to thermal spray coatings. Then why is it that thermal spray coatings businesses cringe at the thought of an upcoming quality audit?

The reason is simple. Most of the thermal spray quality audits that I have seen are about sixty to seventy percent sensible and about thirty to forty percent senseless. And thermal spray coatings vendors are made to jump through hoops to ensure that they comply even with the senseless requirements. Of course if you have a powders system that is totally out of whack you need to be punished. If you have released powders and unreleased powders in the same bin, then you have no business coating flight hardware. If you ship coated hardware without performing all of the metallurgical testing with the assumption that the tests will pass and your customer has not been notified that the parts are being shipped pending lab approval, then your thermal spray certification needs to get yanked out. These are some of the things that fall into the sensible category.

But what about requirements that ask for detailed written instructions regarding personnel succession plans? Don’t laugh. This was a requirement in one of the quality audits that I was in. Or how about the requirement to list approved sources and supplier audits for companies that you purchase met lab supplies. Or how about a traveler that an operator signed off using his signature but did not put his stamp on. I can see the arguments flying through on this last one. Of course it will be nice to have the operator put his officially designated stamp, but if the company has only five people, it is quite easy to figure out who this “culprit” operator was. And then again, stamp data is usually correlated with signatures anyway. So in a thermal spray court of law, this argument may hold valid, but in the courtrooms of common sense, it will be thrown out in a hurry.

And yet thermal spray companies live under the constant fear of failing a quality audit year after year. Not only is there a cost to “invite” the quality auditor, there is also the cost of “preparing” for the audit. The argument is that “if you have been adhering to strict quality guidelines all along then you don’t have to spend any time preparing for an audit”. Great. Tell this to the business owner who has just spent about fifteen thousand dollars scheduling an audit. It is like getting ready to take the SAT test without a day of preparation. I have seen great quality minded thermal spray companies basically wetting their pants preparing for these audits for weeks and even months wondering what senseless trap they will get put into. What about those costs?

The solution to this is only one. And that hinges on the quality auditor utilizing his common sense and observe if the vendor is quality conscious as far as the production of quality hardware. Quality systems audit is for the birds. The goal is to produce quality thermal spray coatings. And of course good quality systems do help in achieving the goal of producing good coatings. But good quality systems ALONE will not produce good plasma coatings. I have seen thermal spray quality auditors come in that have not even seen one good microstructure in their lives and yet they hold the future of the coating vendors’ future business. Is this fair? May be there should be a requirement that all these auditors must have a minimum of five years of experience as thermal spray operators before they can be given this position of power.

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2009-05-05T12:16:00.001-07:00

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Outsourcing thermal spray billing

2009-04-04T08:58:00.000-07:00

In the pursuit of increasing bottom line profitability and remaining competitive in the ever changing field of thermal spray coatings, thermal spray shops everywhere are looking for ways and means to cut costs. One way in which thermal spray shops can address this issue is by outsourcing their mundane day to day accounting tasks.

Thermal spray company owners need to realize that their strength and passion is in thermal spray coatings; not in taking care of accounts receivables and accounts payables. In fact many small thermal spray operators loathe these tasks and yet they continue to do it day after day when that effort could have been spent wisely elsewhere.

What I would recommend is to outsource your invoicing, accounts receivables and accounts payables to some accounting firm in India. Choose a vendor small enough so you can be serviced like a king, but large enough so they have the necessary infrastructure in place to take care of your needs. This company should also be tasked with the collection of outstanding invoices that have aged past the agreed to upon due date. This outsourced company should provide a report to you the owner only once a week and you in turn can choose to send them accounting advise once a week. Of course invoicing can take place every day and an automated system needs to be put in place for the same.

What this will do is to take away non-core thermal spray activities away from your day to day operations, leaving you the time to concentrate on engineering, sales and production and leave the accounting non-sense to some other slob who WANTS to do it and will do it for cheap. The moment he raises his price, dump him and find another. Don’t get married to any outsourcing firm. Remember they are dime a dozen!

Finding thermal spray jobs in any economy

2009-02-21T08:42:00.000-08:00

Thermal spray coatings engineers are finding themselves in a precarious situation nowadays considering the global downturn in the economy. Companies everywhere are downsizing and eliminating thousands of jobs and the thermal spray coatings industry is not immune to this sad phenomenon, leaving thermal spray engineers wondering if their jobs would be the next in line for elimination. While that may be the case for a few lucky ones, many thermal spray engineers are already unemployed and are actively seeking new employment. In this article, we will briefly explore the traits that you need to develop quickly so you can find thermal spray employment quickly in any economy including at times of recession as the current time indicates.

The first tip involves learning all of the thermal spray specifications by heart and keep them in your memory. The ability to be able to rattle off specification levels of hardness, micro-structure, porosity levels, oxide levels and such as are required by various specifications quickly without having to dig through mounds of specifications impresses those interviewers that you have to have on your side more than any other aspect. While this may sound to be too much to do, that is what differentiates you from the other candidates. The power of memorizing these specifications cannot be underestimated.

The second tip involves making a note of all of the thermal spray techniques that you have instituted that has caused an increase in productivity and parts throughput at your previous place of employment. Employers everywhere, especially now, are looking to produce product as fast as they can with as little as they can and productivity improvements that you may have engineered are a key to quickly finding new employment. Add to this some level of training and expertise in sales and marketing skills and you will have yourself an impressive resume.

The third tip involves networking. Most thermal spray coatings jobs are not advertised and the ones that do get advertised get overloaded with applications from lots and lots of people. Networking involves communicating with fellow thermal spray coatings colleagues in different companies and writing and talking with them even if your position has not been eliminated. Make sure during networking though, that you do not reveal proprietary secrets of your current employer as that is considered a violation of most company policies. However, being a part of the networking events hosted by reputable organizations like the International thermal spray association, the American welding society and such are very much a part of the jobs search that will bear fruitful results when needed.

Thermal spray cash flow

2009-02-07T07:58:00.001-08:00

Thermal spray businesses everywhere have the same problems and business basics to consider as any other business. Even though the thermal spray company may have been initially started as a passion of the entrepreneur, very soon he or she will have to get to the basics of managing the thermal spray business as any other business is. While business management and the daily accounting of business activities may not be what gets the juices flowing of the thermal spray business founder, that however is the reality that has to be faced. And while there are many aspects of business management skills that one needs to acquire or put into practice, what we shall limit ourselves in this brief post is simply managing the cash flow in the thermal spray business.

Managing cash flow in the thermal spray business basically boils down to adjusting your incoming accounts receivables to match or exceed the outgoing accounts payables. Notice that we are very carefully choosing the term incoming accounts receivables as opposed to saying your incoming revenues. This is a key phrase. Because most thermal spray companies seem to be extend credit to their customers to ridiculous levels, with the result that a large portion of their incoming revenues is actually tied up with their customers. When their vendors and suppliers expect payment in thirty days but their receivables run into one hundred and twenty days, a catastrophic cash flow situation is bound to ensue. The accounts receivables department needs to maintain strict credit standards, regardless of who the customer is. A weak collections area is a definite negative in your thermal spray operations.

The next step in managing cash flow is the management of debt service for your real estate and equipment. Every so often, you have to shop around to find the lowest interest rates that you can find and refinance your debt to lower interest levels. This is an area that most thermal spray businesses do not even seem to consider. Once a loan is obtained for building or building expansion, thermal spray equipment purchase and the like, that loan is seldom revisited and reevaluated. Consider paying off loans with very small outstanding balances to enable improvement in cash flow management.

Extend the terms of your payables in turn to as long a payment period as possible without incurring interest charges. A very good strategy in this regard is the implementation of consigned inventory on your thermal spray consumables such as powders, nozzles, electrodes and such. Establishing a strong line of credit is a must for every business, but ensure that the bank will honor the line of credit and not baulk at renewing it every year. Some banks lately are NOT renewing the lines of credit for their business customers and check with your bank well ahead of time before you need to dip into it.

In all cases, whether you like it or not, managing cash flow is extremely important for the very survival of the business and anything less than perfect control in this area is liable to cause lots of problems down the road.

Thermal spray accounts payables

2009-01-30T12:48:00.000-08:00

Thermal spray companies everywhere are being subjected to the same levels of credit pressures that every industry is facing in the world today with the woes of the global credit crunch. With banks not willing to lend money easily, thermal spray companies are faced with increasing pressure to manage their cash flow positions in order to survive, let alone to prosper. This is going to result, I am afraid to say, in a large number of weak thermal spray businesses simply go bankrupt. Of course this means lesser of a competition for those thermal spray shops that are able to survive this economic tsunami that is raging throughout the world. Well, how to ensure that your thermal spray company will not become a statistic in this global economic downturn is the main purpose of this post. Particularly, how do you handle your thermal spray accounts payables in order to survive well is the topic of discussion.

When we talk about thermal spray accounts payables, we are not talking about paying for thermal spray coatings services as would be the case if you are a user of thermal spray coatings. Rather, we are talking about you being a thermal spray vendor who performs these coatings services for end users of thermal spray coatings. And we are going to maintain high business ethics in achieving this goal – something that seems to have been forgotten by the stock market experts everywhere in the world. In my opinion, Wall Street is not the only culprit, rather stock exchanges worldwide have participated in the greed and unethical practices that has led us to where we are today.

In accomplishing the goal of meeting thermal spray accounts payables consistently, I would strongly advice against putting off payables to as long a period as possible. This is the route that short term focused accountants advise. That is, in my opinion, playing cat and mouse games. There is no way your thermal spray business is going to succeed if you believe in squeezing your suppliers and letting them sweat for the last penny YOU owe them. In actual practice, and believe me, this is being practiced by some small but very healthy thermal spray companies, wherein you pre-plan the amount of thermal spray purchases you and your people can make based upon a budget for the upcoming purchase period. In other words, you develop a budget even for the purchase of consumables such as thermal spray powder or gun components and such based upon the amount of cash that is already set aside in an account that will be used up to pay when the bills arrive.

This may sound like operating the business in an extremely conservative fashion, but it is those high values of fiscal responsibility that allows companies to weather rough economic storms as we are facing today. This by the way is a technique that has existed several decades ago in the U.S., and that is the reason why companies had a policy of getting an accounting signature when ordering materials through purchase requisitions. This allowed a control on spending to prevent spending more than what the budgeted amount for purchases was. Unfortunately that ended up being another chore that managers went through and getting signatures became a regular matter of course rather than a serious consideration of the cash available for making accounts payables on time.

Thermal spray accounts receivables

2009-01-15T13:13:00.000-08:00

The thermal spray coatings industry gets more and more competitive everyday with more new thermal spray coatings players getting in on the game every year and the existing thermal spray companies getting more and more aggressive in their sales and marketing efforts to garner more and more of the thermal spray contracts that are out there. The result is a scrambling around of the thermal spray business owners to get more orders and an ever increasing number of places that users of thermal spray coatings can go to get their parts coated. This has resulted in the thermal spray coatings industry becoming a buyers market for quite some time now, wherein the customer has many choices of vendors.

This has resulted in tremendous pressure being put on the sales and marketing teams of many thermal spray coatings outfits. To accomplish their goals, naturally the thermal spray salesmen seem to do everything possible from cutting down prices to promising shorter deliveries to improving quality and so on. Essentially, they are willing to do anything to win orders for their companies. And there is nothing wrong with this level of enthusiasm and willingness to give the customer what they want.

But associated with this, I have noticed an alarming trend from a business standpoint that is beginning to cause concern. And that deals with accounts receivables in thermal spray businesses. It has been standard practice in the thermal spray industry and for that matter in most manufacturing and surface finishing industries to extend credit for thirty days. But customers cannot take forty five or sixty or ninety days to pay their invoices. There have been some stray instances of people regularly taking one hundred and twenty days to pay. This will end up causing significant cash flow problems if not addressed immediately.

And if several customers start taking their own sweet time in paying you for the thermalspray services that you have provided, but you in turn are asked to pay your suppliers within thirty days, you end up acting like a bank and unless you are in the banking business, you are carrying the cost of this extended credit. And then to add fuel to the fire, you may end up hiring people to chase these late paying customers and that is added burden to your payroll costs.

There is only one way to solve this problem. You need to be firm with your customers regarding your accounts receivables. They NEED to pay in thirty days or they can take their business elsewhere. The first step in invoking this is to write a one page accounts receivable policy of your company and then mail it to all of your customers. Have them sign it and send it back to you. This policy must be given also to all new customers. Secondly, an abridged one short paragraph version of this policy must be included in all of your invoices. Thirdly, the first time that someone is late on payment by one day, you must send the violator of your policy at least a friendly e-mail reminder of your policy and a request to pay up their past due accounts.

But these three steps alone will not be sufficient. It is imperative that you pass on the burden of collecting the money to the salesman assigned to the specific account. That will show the salesman not to promise the world to a customer who does not care about your lunch. After all without accounts being paid, no one in your thermal spray shop eats!

Thermal spray shipping costs

2008-12-24T07:42:00.000-08:00

Thermal spray companies everywhere are facing increasing competition nowadays. The recent downturn in the global economic conditions has put in undue stress on all businesses and thermal spray facilities are no exception. In order to maintain a significant competitive edge, it is imperative that you hold on to a strong control on all of your costs, failing which the bottom line of your thermal spray business will start seeing a downward trend. In keeping with the trend of thoughts in the last few posts, we will address in this post the issue of thermal spray shipping costs.

Thermal spray shipping departments are seldom looked at seriously by companies as a cost center. All said and done, once thermal spray coatings processing has been performed, after all the numerous costs have already been incorporated into the hardware, getting the parts over to your customer is the last step in processing prior to billing. The costs involved in shipping obviously need to start with the labor costs of your shipping department and companies usually have a good handle on this aspect. The next item to concentrate on is the cost of shipping supplies that might include boxes, bubble packing materials, heavy wadding, shipping and strapping tapes and banding. Because thermal spray coatings are fragile and chipping and other damage to the thermal sprayed coatings are not acceptable, extensive care needs to be exercised in the packing and shipping process. Many thermal spray shipping departments use foam in place packing methods and this can get to be quite expensive too. Negotiating costs with the shipping supplies vendor is a cardinal must for every thermal spray company. Also, adding the cost of shipping must be a definite line item addition when quoting jobs and or in the billing cycle. Because someone needs to pay for all this shipping material and most often it is your customer that needs to pick up the tab.

Another key area in shipping that one needs to avoid overlooking is the cost of the shipping carrier. Carefully choosing freight carriers is extremely important, unless your customer insists on using a specific freight carrier, in which case he needs to pick up the costs completely. If you are paying for shipping, then negotiate discounts. Another case in point is that you do not need to stick with one carrier for all your shipping needs. It might be cheaper to use a string of carriers for various customers, such as by zone of shipping, domestic, international, by shipping weight, shipments by air or ground and so on.

Insurance levels for your shipments in another area to be looked into when it comes to shipping your thermal spray coated parts. Companies blindly use the insurance provided by their freight carriers. This does not always end up being the most cost effective alternative. There are many third party insurance companies available that will insure your freight for much lower costs sometimes and you need to pay careful attention to these insurance costs. Thus thermal spray shipping costs can add up to be quite a bit and there is no need to be ignorant about these expenses.

Thermal spray masking costs

2008-12-23T11:34:00.000-08:00

Thermal spray coatings processing almost always involves some kind of masking to prevent certain areas from receiving the thermal sprayed coating. Such thermal spray masking can be very basic such as sticking a thermal spray masking tape or the use of painted on liquid masking or it can be very elaborate and technically involved as the design and use of sophisticated thermal spray hard tooling. Masking plugs to cover up holes and polymer based re-useable thermal spray masking materials such as polyurethane masks have also been used quite successfully.

In all cases, the cost of thermal spray masking can end up being quite significant in the overall processing of the hardware and it is essential to keep an eye on these costs. The best engineering talent needs to be put forth in thermal spray masking design and such design needs to be continually improved and updated to reduce masking costs. Some poor design methods can be inexpensive up front but very much costly later on by involving very high labor costs for example. A case in point is in simply using masking tape everywhere instead of spending the time and thought in designing proper shadow masks and hard tooling.

When using hard tooling, it is advisable to coat the hard tooling with some kind of a release agent in order to remove all the overspray that the hard tooling takes on. There have been many thermal spray companies that do such an excellent job of maintaining their hard tooling that it is unbelievable. They go through a stripping method to remove all the over spray and maintain their hard tooling so that they do not have to keep fabricating new hard tooling every so often and at the same time the proper masking cut off dimensions are accurately maintained. For without that, part quality will begin to suffer.

Most thermal spray facilities simply cringe on the costs of the masking department and think that the way to squeeze costs out of masking is to drive their masking personnel to work harder and harder than the previous day. What might provide more effective cost control is to have the engineering department re-visit EVERY single thermal spray job in house and re-engineer the masking methods to see if a more cost effective method can be developed. That is where real costs savings can be accomplised.

Thermal spray conference attendance

2008-12-21T09:30:00.000-08:00

Attendance of thermal spray conference and expositions has been long been a staple of thermal spray marketing and sales teams as a means to garner more business. The costs involved in having a presence at these thermal spray conference and expositions is quite steep, depending upon the level of participation involved. Having a fifteen feet by fifteen feet booth is not cheap and neither is the cost of having four or five of the thermal spray sales and engineering personnel to man these. Add to this the cost of transporting the thermal spray booth along with its exhibits, the cost of air travel, accommodations, meals, rental cars and other miscellaneous expenses and you are talking an undertaking of tremendous magnitude. And yet quite often, companies participate in these thermal spray conferences much to the opposition of the poor slob spraying parts every day for a measly hourly rate whose pay rate increase is frowned upon every time!

Now, I am NOT against the attendance to these thermal spray conferences and exhibitions. No, not by a long shot. But I have witnessed time and again, the tremendous waste that is allowed in these and the attitude of many ( not all ) that this is just an excuse to get out of the shop and have a good time. Well, note that the good time is coming at a tremendous expense. In order to justify the attendance to these thermal spray conferences, I would suggest what follows in the following to make it worthwhile and get a decent bang for the buck that is expended.

Usually, these conferences have a seminar and technical session. If you allow for your team to attend the conference, then make it imperative that they present at least one technical paper. Ensure that they attend at least one third of all the papers presented. Ensure that they talk to potential customers and generate leads that are targeted and specific. Follow through and ensure that the leads generated result in actual thermal spray sales. Prior to the next conference, the people that attended the previous show must demonstrate in real terms the new business that was generated from the previous show. If the results are dismal, then stop attending the show. Upper management is paid to steer the business in the right direction and tough choices need to be made based upon the performance of the sales efforts.

You might find that the show really did produce new business. In that case, continue attending the next session and re-evaluate and attend again and again. If the performance is poor, turn to other forms of advertising and marketing media to get the word out about your capabilities and offerings. I was involved with a thermal spray company once where they sent in twelve people to attend a thermal spray conference and included in the list of people attending was the plant expeditor whose job it is to expedite production and schedule the running of various jobs depending upon the requests from customers. What his attendance did to the bottom line of the sales effort, I have no clue. This kind of waste needs to be aborted and focus be directed strictly to engineering and sales teams attending such shows.

If you want to throw in a good time for your employees, then do so clearly; not under the guise of attending a thermal spray conference!

Thermal spray maintenance costs

2008-12-20T10:13:00.000-08:00

In continuation with our discussion on hidden costs that go unnoticed in most thermal spray shops, we will be concentrating on costs associated with thermal spray maintenance in this post. Most thermal spray companies have ongoing routine maintenance programs such as thermal spray gun maintenance, turntables, up-down traverses and other thermal spray equipment maintenance such as grit blast cabinets, degreasers, thermal spray dust collectors and such. While this is important for the proper and smooth functioning of your thermal spray business, it is important to identify the costs associated with such maintenance.

It is important to collect this data on thermal spray maintenance, but equally important is the fact that you need to use this data effectively to enable improvements in the company’s bottom line. Of the few that do collect this data, fewer still make judicious use of it. Now, using this maintenance costs data wisely can provide information on where the most amount of resources are being spent and also in judging if it is time to get rid of an old piece of equipment and replace it with a new one or not. For example, I was once involved with a thermal spray facility where the x-y traverse was going down every other week and this piece of equipment was installed in a high volume booth which produced about five thousand parts every week. So every other week, when the traverse was removed from production for service, it made absolutely no sense from a production stand point. We kept nudging the higher ups to get rid of this piece of clunker and replace it with a state of the art thermal spray robot. Needless to say, the people higher up were paying no attention to the maintenance costs and where the costs were getting sucked up, otherwise they would have made this decision a long time ago.

Additionally, the costs of maintenance must be somehow amortized on a per sales dollar basis, so that quotations reflect the associated costs properly and thermal spray pricing can be submitted accurately. In other words, find out the total amount spent on thermal spray maintenance over a specific time period, say a year and then using the sales value for the same time period, determine the percentage basis of maintenance costs per sales dollar revenue and use this percentage to mark up the thermal spray quote accordingly. Someone has to pay this cost of maintenance and more likely it is going to be your customer. I have seen many quotation work outs that do not even come close to utilizing such information. Well, in such cases, the maintenance costs really end up coming from the bottom line profits of the company when in actuality there is no need for this. Additionally, if you find that specific areas are more maintenance intensive such as low pressure plasma spray cells, then such jobs can be priced accordingly utilizing a higher maintenance mark up.

Thermal spray rework costs

2008-12-18T12:43:00.000-08:00

No manufacturing operation is one hundred percent error free and thermal spray operations are no different. As a matter of fact, because of the multiple steps involved in part preparation and the myriads of variables involved in the actual thermal spray coating operation, thermal spray processing is more prone to errors than many other industrial processes. This is not stated with the intention of justifying all the mistakes made by thermal spray operators, but rather to stress that mistakes can happen during processing. In fact, some of the reasons why parts get rejected in the thermal spray operation may be completely out of operator control, such as when a robot decides to malfunction and lock up with the gun lit and the powder feeding on the part, what is the operator to do besides react as quickly as possible and shut off the gun and feeder and hope he was not too late. The hope in all cases is that a rework procedure be available so the part can be redeemed rather than scrap the hardware which may be the case in some instances.

Nevertheless, thermal spray rework costs money and this cost needs to be worked into the pricing sheets for future thermal spray quotations. Obviously, the less the rework rate in your thermal spray shop, the lower these added costs will be and the more competitive your bids can be. But I observe time and again that for one, many companies do not even attempt to quantify their rework costs and second, even if they do quantify these costs, they do nothing with the data. Rework costs data is very valuable in adjusting pricing on future thermal spray jobs and must be included in the pricing calculations.

A simple way to accomplish this is to find out all of the parts that were reworked in a specific time frame of say a year. Then find out the costs for reworking these parts. Let us assume that is ten thousand dollars. Then find out the total sales in the same time frame. Let us say that is one million dollars. With these two pieces of information, you can compute the rework costs as a percentage of sales volume. In this instance we can deduce that for every dollar of sales generated, one penny goes towards rework; in other words there is a one percent rework expense. Hence when quoting a job for ten dollars, you really need to quote it at ten dollars and ten cents in order to accommodate the rework rate in your thermal spray facility.

This rework costs data is thus an extremely important piece of information for thermal spray estimating personnel, but should also be used to improve the operations of your company by having a measurable goal to reduce rework. But please let it not be used to start battles between the quality department and production personnel; let us grow up and be real thermal spray men!

Thermal spray powder costing

2008-12-16T12:12:00.000-08:00

One of the most crucial steps in pricing thermal spray jobs is the costing of thermal spray powders. Thermal spray powders can get to be quite expensive, especially since many of the thermal spray powders consist of expensive alloys and alloying elements, plus the fact that they need to meet quite stringent specifications often. An error in the computation of thermal spray powder costs can throw the quotation data quite off the mark and you may end up with a loser contract or end up losing a contract that could have otherwise come to your thermal spray shop rather than that of your competitor. In this post, we will address only the issues dealing with costing of thermal spray powders in the quotation cycle.

In determining thermal spray powders costing, obviously the first step is to determine the volume of thermal spray coating material in the final finished product. This is done using standard formulas for volume of a shape. Then add to it a certain thermal spray over spray allowance on either side of the coating area and add this volume to the initial value. Incorporate a deposit efficiency value to this. This is needed because not all of the thermal spray powder material that goes through the thermal spray gun ends up as coating on the hardware being coated. Hence there is some waste of material and this needs to be accounted for. Additionally, a target efficiency value needs to be incorporated because the amount of material that does not even hit the target to be coated needs to be identified and accounted for. Once the volume of powder has been obtained, using the density of the thermal spray powder, you can determine the weight of the material that is expected to be used on the subject hardware. Then of course, use the price per pounds of material and you end up with the cost of the thermal spray powder to be used on the job.

Most companies add a markup to this raw material cost. That value, however, depends upon the sales and marketing and accounting functions of your company and sometimes how much greed factor gets built into it! Nevertheless adding a small safety factor to take into consideration imminent price hikes in raw materials costs and inventory carrying costs is not a bad idea. Of course, if the quotation that you have submitted to your customer is off only by a very small margin and you can safely bet that the prices will not go up beyond expectations, then you may want to adjust this markup depending upon how desperate you are in winning the contract.

Thermalspray environmental compliance costs

2008-12-13T08:00:00.000-08:00

Continuing our discussion of the hidden and often times overlooked costs in thermal spray coatings processing, costs associated with the environmental compliance issues in thermal spray coatings facilities will be the focal point of this post. Thermal spray environmental compliance has taken on a life of its own in recent times, with countless numbers of laws and regulations in place and more environmental laws that affect the thermal spray industry being enacted more frequently than ever before.

Regardless of whether you are an environmental wacko as Rush Limbaugh terms some people, whether you are a reasonably sane environmentally conscious person or if you have an environmentally irresponsible outlook on things, regardless of which category you belong to, as long as you are involved with the thermal spray industry, you will have to obey the laws that are already in the books, failing which significant monetary harm could result for your thermal spray company. The environmental regulations, needless to say, vary quite a bit from one country to another and sometimes are quite distinct from one region or state within the country to another. So, it behooves that you be well aware of the laws in your own locality in addition to federal or national environmental laws as it pertains to your thermal spray operations.

The costs associated with environmental compliance have to be somehow worked into your thermal spray costing sheets; otherwise who is going to pay for these costs? There are three types of environmental compliance costs that need to be identified. The first is the capital equipment costs associated with being in compliance. These costs will come under capital equipment and these are not the focal point here. Items in this category may include things such as fume hoods and dust collectors . These costs will flow down just like the other capital equipment such as thermal spray robots and such. The second category is the on-going repeating costs of environmental compliance such as hazardous waste shipments of degreasing fluids, stripping chemicals, thermal spray dust collections and so on. These are costs that occur once or twice every year and more often depending upon the volume of these items generated. Such costs will have to get amortized over the number of jobs performed annually and then worked down to the thermal spray costing sheets.

A third category that cannot be overlooked is the cost of administering the environmental compliance programs in your thermal spray facility. Some large companies may have a dedicated individual that spends their entire time in ensuring compliance. Some smaller firms may have an engineer who is assigned a part time task of environmental compliance. These tasks may include filing of environmental compliance reports, collecting and maintaining air quality data, updating environmental compliance procedures, inspecting point air emissions and so on. The labor cost of this individual needs to be considered when considering environmental compliance costs. Thus one can observe that the costs associated with thermal spray environmental compliance cannot be overlooked when determining the costs of individual thermal spray jobs.

Thermal Spray Lab Costs

2008-12-11T12:39:00.000-08:00

In a previous post entitled Thermal Spray Pricing part2, we discussed about considering material costs for those steps involved in thermal spray processing that are quite hazy and grey such as grit blast materials, part cleaning chemicals, thermal spray masking compounds and such. Continuing in the same stream of thought, in this post we will address thermal spray lab costs and specifically the consumable materials used in thermal spray metallurgical lab evaluations.

The way most thermal spray companies cost out their lab work is by simply putting on a blanket lab cost of let us say fifty dollars or hundred dollars or some such number that never really reflects the actual cost. The only way the actual cost can be envisaged is if the thermal spray lab evaluation work was outsourced to someone else and then you can simply take their invoice value and apply it towards your own costing procedure for the future. That is a very simple procedure, but then again, the cost of the outside outfit may be higher than your own internal cost or lower than your own internal cost and this needs to be kept in mind when using this approach.

The labor rate of your lab is fairly easy to figure out both from payroll data and the amount of time it takes to process and evaluate a metallurgical mount or tensile test and such. What is usually overlooked is the cost of the metallurgical lab supplies. This can run into the thousands of dollars depending upon the amount of work that your internal metallurgical laboratory puts out. Take into consideration costs associated with all of the metallurgical lab supplies including but not limited to polishing papers, polishing cloths, diamond compounds, cutting saws, mounting materials such as epoxies and bakelites, tensile testing buttons, tensile testing epoxies, etc and find out the amount spent per year and divide it by the number of jobs processed through your thermal spray production facility. This will give the cost of metallurgical supplies per job on an amortized basis. This should be the value used for future costing purposes. Added with labor data and a reasonable ( note the importance of the word reasonable ) mark up will allow for lab costing data to be applied to the overall costs data, so you can price your thermal spray jobs effectively.

Thermal Spray Pricing Part2

2008-12-10T12:23:00.000-08:00

In a previous post, we discussed the issues of thermal spray pricing from the stand point of competitiveness. We discussed therein the dangers of pricing thermal spray jobs strictly from the point of view of what the competition charges and what the customer is willing to pay for a specific thermal spray coatings service. In then this post and the ones that follow this, however, we will discuss the thermal spray coatings pricing issues from a more detailed stand point; we will analyze the nuts and bolts of the pricing process for any specific thermal spray job at hand. More specifically, in the current treatise we will discuss only the thermal spray material costs issues for those areas that are grey and hazy.

There are certain steps in the thermal spray process that simply cannot be accurately costed out. For example, how do you determine accurately the cost of the degreasing and cleaning materials used per job. Or for that matter, if you are going to use thermal spray liquid masking or five feet of thermal spray masking tape, how do you accurately determine the cost of the materials used. Another key area is thermal spray grit blasting. What is the accurate cost of the grit used on a specific job? This is really very difficult to determine for standard companies that may be processing many small lot jobs through every day. Then again, is it really worth it to do all that becomes a puzzle whose answer can vary depending upon who you talk to. So certain material costs will have to get amortized over all the jobs that run through your thermal spray facility. So, such steps can use a blanket material cost. For example, if you have spent 5,000 dollars on cleaning and degreasing fluids and compounds and you have processed 2,000 jobs in a year, then from history you can allocate two dollars and fifty cents per job of cleaning and degreasing materials. The same is applicable in the case of masking tape or thermal spray grit blasting materials. Thus, if the total amount of money spent in thermal spray liquid masking and tapes and such was ten thousand dollars in a year in a facility that processed 2,000 jobs then each job needs to incur a cost of five dollars for masking materials.

Now there are some blatant exceptions to the rule. For example, amongst the jobs you process, there might be some that really take on a lot of masking materials and it is glaringly evident that the standard amortized materials costs cannot apply. Of course, in such cases, use what is more appropriate. The whole point is that if you are utilizing a small amount of material, you cannot simply ignore the associated costs.

A key issue when it comes to masking costs that is often overlooked by thermal spray job shops is the cost of hard tooling. Now, everything cannot be clubbed into the category of general shop tools or general shop supplies; because doing so will not enable implementing any cost saving or efficiency improvement strategies. If everything from shop cleaning supplies to hard tooling materials is categorized under one heading then how can you improve the bottom line by addressing specific targets? Hard tooling is not only job specific hard tooling but also things like shadow masks and turn table Y- tooling and such. One needs to find out the total expenditure per year and amortize it over the number of jobs handled through in a year to get somewhat of a cost that can be allocated to each job.

Thus, every single material that is used in the processing of thermal spray hardware has to be costed out for each job and each and every job needs to take on the burden of supporting these costs. We will analyze some more details of such situations in the coming posts. Remember, without knowing your costs, you cannot price anything accurately. You should always wish that your competitor does not have a clue about his costs, because that is the sure fire way he will miss out on thermal spray business success!

Thermal Spray pricing part1

2008-12-09T12:56:00.000-08:00

In this post, we will address ideas regarding thermal spray pricing from a competitive stand point. The issue of thermal spray pricing itself will be split into two parts. In the second part we will discuss more specific details. Here though, we will address the competitive nature of the pricing issues dealing with pricing thermal spray jobs. There is many a time an argument that erupts or a strong disagreement that ensues between thermal spray sales teams and the estimators. Needless to say, the goal of the thermal spray sales team is to garner as much business as possible for the thermal spray facility and the goal of the estimating team is to ensure that the pricing provided will definitely meet the costs involved with the application of the thermal spray coating and to add a reasonable profit margin. And both these teams are well meaning in their intentions. Obviously, the sales team does not want to blamed for poor sales and the estimating team does not want to be blamed for mis-quoting jobs. And so, for the most part each team tries to do the best of their ability when it comes to this issue.

Why then is the disagreement and how to effectively solve this dilemma? First things first. While both the estimating and sales teams are interested in doing their individual parts, it must be clear in their minds that the combined overall interests of the thermal spray coatings company exceeds the individual interests to excel. Team work is more important than individual accomplishments. That said, the themal spray estimating department needs to come up with accurate costs for the thermal spray job at hand and then include the profit margins separately under each subheading. The reason I bring this up is because most of the time, each individual item is marked up by a certain amount. For example, if the cost of the thermal spray powder ends up being fifty dollars, lets say; then the powder cost is multiplied by 1.2 and used as sixty dollars. This procedure is continued and at the end there is an overall markup put into the whole job of say thirty percent or so. The marketing department then comes in and says that at this price, they can never sell the job and that the price needs to be in line with what the competition charges.

It is at this point that the marketing and sales team needs to hold the line and understand that if the competition price is lower, then it is acceptable to lower the markup margins but is absolutely unacceptable to price jobs below what the costs are just so you are in line with the competition. In such cases, it is better to lose the thermal spray contract than to get a contract that is guaranteed to lose money. I know of a company that kept playing the game of undercutting all their competitors' prices and they ended up in such financial distress that they first had to sell their beautiful building and then eventually they went bankrupt. This may sound like too big of a disaster, but be it known that if very close watch is not being paid to the estimating and pricing structures and adjustments, then major business failures can result. This area is not to be taken lightly and it is better to have arguments and colorful discussions between the estimating and sales teams rather than end up with a bunch of what we call loser thermal spray orders!

Thermal Spray Business Success

2008-12-08T13:27:00.000-08:00

Success in the thermal spray business involves four main ingredients. These are excellence in thermal spray sales, excellence in thermal spray product quality, excellence in customer service and excellence in business sense. While the first three aspects deal with the thermal spray industry in particular, the last item deals with business in general. After all, without a strong business sense, you cannot operate any business successfully including the thermal spray business. In this blog, we will deal only with the business aspects of thermal spray coatings. That in mind, while we may occassionally deal with engineering, quality, thermal spray research and the like, those will not be the particular points of interest herein. There are other places where those are dealt with.

There are a large number of thermal spray coatings houses in the United States, Europe and Japan. However, China and India are very busy currently putting up thermal spray shops all over. Needless to say, there is a big demand for these surface coatings as these countries manufacture more and more products that require surface enhancement. Additionally, as these countries start putting up more and more industries such as pulp and paper, printing and other industies with components that wear out, thermal spray refurbishment needs rise simultaneously. We will also explore these emerging thermal spray markets and see how one could capitalize on their growth and prosperity. Remember, the goal is to grow and prosper together and not at the expense of each other.

I believe these are exciting times to be involved in the thermal spray industry. Let us share our thoughts through this humble blog!