A Futuristic Look at the North American Heat-Treating World
This article was originally published on January 7, 2015.
The objective of this paper is to highlight the heat-treating markets of North America with respect to equipment and processing, comparing current 2014 status and projecting expectations for 2024. Historical growth and industry expectations for the future will be discussed.
In order to establish a basis for projecting the future of the heat-treating industry in North America, it is important that we analyze the industry over the past 20 years.
Heat Treating: Past and Future
The Metal Treating Institute (MTI) produces monthly records of sales from its members and provides a Heat Treating (HT) Index to cover up-to-date current and historical performance. This index highlights the past ups and downs of the industry and tends to reflect market trends.
Using the above historical data and trends as well as additional data from other sources qualified to analyze and make future projections, we have determined the following:
• Major downturns seem to occur approximately every 10 years as seen in 2000 and 2009-2010.
• The HT Index growth from 1994 to 2004 was approximately 18.5%.
• The HT Index growth from 2004 to 2014 was approximately 17.0%
• We are projecting growth from 2014 to 2024 will be approximately 15.5%. Although this might seem conservative, we foresee a small downturn in 2016 and a more serious downturn in 2020.
• The major downturn in 2009 was approximately 33%. We predict the major downturn in 2020 may be on the order of 18-19%.
The historical HT Index and our projection for the next 10 years are shown in Figure 1.
Comparing the HT Index to the S&P 500 Index
It is interesting to compare the industry past-performance index with an established financial index. We selected the S&P 500 as a major financial index to illustrate the relative performance of the two indices and created the chart shown in Figure 2. Notice how closely they follow each other.
North American Furnace Markets
The North American furnace market continues to grow, with a trend away from atmosphere-type equipment toward increasing use of vacuum furnaces.
As is illustrated in Figure 3, atmosphere furnaces can be very dangerous to operate and control. They are rarely shut down and therefore consume excessive process gas when not in use. This is inefficient from an operating standpoint. From an environmental standpoint, they are becoming more and more challenged.
From a process standpoint, they do not have the capacity for close monitoring of work temperature.
The vacuum furnace is an environmentally friendly piece of equipment (Fig. 4). It is typically easy to load and unload, and an operator can view the work positioned in the furnace prior to closing the furnace door. Thermocouples can be attached to the work for exact processing temperatures to ensure accurate cycle performance and satisfactory resulting metallurgy of the parts.
Furnace manufacturers must comply with standards that have been established by the NFPA committees. These are recommended guidelines that are not necessarily enforceable by law but will be recognized by the “Authority Having Jurisdiction” (AHJ), who may rule on such things as zoning codes and occupancy permits, meeting local fire codes, and possibly insurability.
The following NFPA standards apply:
• NFPA 86 and 86D (Furnace Standards)
• NFPA 55 (Compressed gases and 29 CFR 1910.103 hydrogen systems)
• NFPA 70 (National Electrical Code [N.E.C.])
Furnace Sales and Market Share 2014
Figure 5 illustrates the North American total furnace market as established for 2014. These annual sales numbers are based on various financial reports and other multipliers, such as sales per employee, and represent as accurate an estimate as possible.
As shown in Figure 5, the atmosphere furnace market is approximately 1.69 times that of the vacuum furnace market. However, this ratio is continually decreasing as processing changes occur. These changes lean toward vacuum processing.
Projected Furnace Sales and Market Share 2024
Based on projected HT Index growth and other factors, we are able to create a chart (Fig. 6) highlighting furnace sales projected for 2024.
Figure 6 reflects the growth of the vacuum furnace market and its acceptance by the heat-treating world. We expect this trend to continue in future years.
The pie charts (Fig. 7) reflect the projected growth of the vacuum furnace industry comparing furnace sales of 2014 versus 2024.
In-House/Captive vs. Commercial Heat-Treating Markets
Based on financial information from MTI and other sources, we are able to state the approximate current sales volume for commercial heat treaters in North America (Fig. 8). The estimated sales volume for the in-house/captive industries is based on several sources and previously established multipliers. The overall resulting ratio of in-house/captive to commercial is about 7.1 to 1 with a projected downward trend.
Using our projected growth of 15.5% for the next 10 years, we can project what can be expected by the year 2024 (Fig. 9). The comparative growth of the two heat-treating groups for the years 2014 and 2024 is shown in Figure 10.
The world of vacuum heat treating is continuing to find new applications and processes. Figure 11 lists the current processes and their relative market size and projects what they might look like in 2024.
New and Growing Heat-Treating Markets of North America
Based on current and future developments along with new applications, we are predicting the following major growth and new areas of vacuum processing:
• Heat treatment of emerging specialty alloys
• Refractory-metals processing (molybdenum, niobium, tantalum, tungsten)
• Additive manufacturing (3D printing)
• Heat treatment of titanium for aerospace market
• New sintering applications
• Heat treatment of medical components (implants, surgical instruments, electronic instrumentation)
• Diffusion bonding and diffusion processes
• Nano materials
• Low-pressure (vacuum) carburizing
• Vacuum-purge gas nitriding
• Low-temperature (≈8000F) vacuum carburizing and nitriding of stainless steels
Shrinking Heat-Treating Markets
Several heat-treating markets are currently shrinking primarily due to offshore manufacturing. These markets include:
• Automotive parts
• Smokestack industries, quench and temper
• Tool and die industries (locally)
• Entertainment and communications, electronic
Based on our analysis, we can conclude the following:
• The growth of the heat-treating industry in North America will be approximately 15.5% over the next 10 years with a major downturn around 2020.
• The overall furnace market will change with vacuum furnace sales approaching overall atmosphere furnace sales by 2024.
• In-house/captive versus commercial heat-treating market will remain fairly constant with a ratio of approximately 7 to 1 over the next 10 years.
• Several new applications and processes will develop over the next 10 years to rapidly grow the vacuum-furnace market.
• Continual concerns about the environment will also have an impact on finding more applications for the vacuum furnace.
• Availability of electric power will also impact the general heat-treating industry.
FOR MORE INFORMATION: Contact Reàl J. Fradette, senior technical consultant, Solar Atmospheres Inc., 1969 Clearview Road, Souderton, PA 18964; tel: 267-384-5040, ext. 1560; fax: 267-384-5060; e-mail: firstname.lastname@example.org; web: www.solaratm.com
Reference Material and Sources:
1. MTI Index Numbers – averaged by year
2. GDP and General Bond index numbers
3. DeWolf and Associates forecast letter and other input, MTI Consultant
4. Industrial Statistics – Pell research (Internet)
5. NAICS 3328 Index on Heat treating and Allied Activities (Internet)