Just how clear is your crystal ball? Over the past two years, The Doctor has had the good fortune of interacting with a large number of industrial clients and industry professionals from all over the globe. After listening, questioning and interpreting what they’ve had to say about the future of our industry, it’s time to share this information and my vision of where we are, where we’re going and how we will get there. Let’s learn more.
Heat-Treatment Market: Where We Are and Where We Are Headed
Today, the global heat-treatment industry is estimated to be in the range of $90-100 billion (Fig. 1). Four methods, each independent of one another, were used to arrive at both the total dollar value of the industry and how it is distributed geographically.
The first method involved an analysis of changes to the manufacturing portion of the gross domestic product (GDP) of countries around the world, based on data from 1995 to the present. The second method looked at the manufacture of passenger cars and commercial vehicles worldwide, while the third focused on the manufacture of commercial aircraft and more generally the fields of aeronautics and astronautics. Finally, military/defense spending was analyzed, both from the standpoint of historic and, more importantly, projected budgetary expenditures for capital projects. Also, the skill level (education) of the workforce in each country served as a check as to whether growth in the manufacturing sector was sustainable over time.
Of this total, heat treatment in North America is estimated to be an $18-18.5 billion industry servicing some 17,000+ manufacturers. It should also be noted that this study differentiated and excluded that portion of the thermal-processing industry dealing with primary metal production (e.g., iron, steel, aluminum) and other material production (e.g., glass) to focus exclusively on the heat-treatment industry (i.e., processing of semi-finished goods/component parts).
Finally, the study of economic forecast models suggest that the global heat-treatment market will grow to around $130-150 billion by 2030 and to around $200-220 billion by 2040 barring a significant or sustained global economic event. This forecast anticipates several minor downturns in the economy of various countries and in manufacturing segments due to economic and geopolitical factors in the coming decades.
Heat-Treatment Market Shift
A fundamental shift in the makeup of the heat-treatment equipment segment of the North American market began in the late 1990s and early 2000s as the industry transitioned from older, long-established practices and policies to embrace the demands for technological innovation, standardization (for cost containment) and changes in manufacturing methods and methodology. This trend is not only expected to continue but accelerate (Figs. 2-3).
The demand for higher-performance products, different end-of-life expectations (in some but not all products) and emphasis on systems with single-piece flow or small-batch productivity are just a few of the factors fueling this change. Other factors such as equipment obsolescence, predictive (as opposed to preventive) maintenance and the speed at which the manufacturing landscape is changing reinforce these conclusions.
From an equipment standpoint, vacuum furnaces and applied-energy systems will continue to experience rapid growth at the expense of more traditional atmosphere furnaces. Industrial ovens used primarily in the heat treatment of metal components have been included in the percentages of each identified category. Salt-bath treatment, a specialized niche, will remain essentially unchanged.
For example, the driving force behind the development, use and integration of vacuum technology into manufacturing is not only due to the fact that it is a lean, green and agile footprint but that it best addresses the identified needs of the heat-treatment industry, namely:
- Energy-efficient equipment
- Processing with minimal part distortion
- Optimization of heat-treatment processes (especially diffusion-related processes)
- Environmentally friendly by-products and emissions
- Adaptability/flexibility for new and advanced materials
- Process controls incorporating intelligent sensors
- Designs based on heat-treat modeling and simulation
- Equipment/process integration into manufacturing
Change: Its Pace and Form
A paradigm shift in the workforce coupled with the growing role of automation and communication in manufacturing is principally responsible for accelerating the pace of change in the heat-treatment industry from what has traditionally been slow-moving and slow-to-adapt to the rapid deployment of new products and innovations.
Today, equipment manufacturers and suppliers to the industry are either looking at product standardization to maximize profitability and thus drive the industry to “cookie-cutter” solutions or, in a diametrically opposite philosophy, looking to provide highly customized solutions, often with risk factors incorporated into the pricing as specialized solutions with high profit margins to application-specific needs.
Technology/Innovation Drivers and Industry Trends
Heat treatment is a core manufacturing competency. As such, decisions continue to be made to either heat treat in-house (85-90% of companies) or outsource to commercial heat-treatment shops. What is more prevalent today than ever is the tremendous pressure being exerted on manufacturing from senior management to increase product velocity and reduce unit cost.
As a result, the most significant trends in today’s North American heat-treatment industry are:
- Growing the manufacturing portion (percentage) of GDP through mobility and adaptability
- Obsoleting older equipment and technologies and replacing them with innovative, new and/or high-productivity heat-treatment systems. Examples include:
- Transition of carburizing/carbonitriding from atmosphere to low-pressure (vacuum) processes with either oil or high-pressure gas quenching or both
- Use of single-piece heating and quenching of parts and/or small-batch (versus large-batch) processing
- Change of design to allow more low-temperature atmosphere treatments (e.g., nitriding, nitrocarburizing)
- Expansion of hybrid technologies (e.g., combining both vacuum and atmosphere features)
- Using advanced quenching techniques and quenching technologies
- Implementing artificial-intelligence-based modeling and simulation software capable of equipment control and process optimization
- Implementing next-generation intelligent sensors, real-time data-collection methods and analytics (including cloud-based computing)
- Changing the focus of companies from generalization toward specialization with respect to products, services, processes (proprietary or unique) and new or innovative technologies so as to capture greater market share or present greater opportunities to generate higher profit margins
- Accelerating the implementation of lean manufacturing strategies and applying these strategies to heat treatment
- Eliminate high labor costs (via automation and controls), simplify operations (i.e., reduce the number of manufacturing steps) and adopt build-to-order strategies.
- Conservation of energy, on-demand part production, shortening of process cycles and the move toward smaller lot sizes is the order of the day.
- Continuing the transition from heat-treatment departments to integrated manufacturing cells
Of particular note is that these forecasts do not reflect revolutionary changes (e.g., additive manufacturing) and/or global technology shifts (e.g., gasoline to electric-powered vehicles, alternative materials not requiring heat treatment). Should these occur, heat-treatment growth will level off or decline proportional to their impact, but the relative percentages (with respect to the installed equipment base) will remain proportionately the same.
Two Key Differences Between North American, Global Markets
People often wish to know why a technology or innovation introduced in one marketplace or region cannot be easily and quickly ported to another location. Two examples of fundamental philosophical differences between the North American market and other global markets are:
- Initial investment cost remains a key driver of equipment purchases in North America as compared to use of total-cost-of-ownership models, a view adopted elsewhere in the world.
- Energy efficiency and reduced emissions are viewed from the standpoint of regulatory compliance (the principal driver in the North American market) versus a desire to accomplish these goals through a more holistic approach as adopted elsewhere.
The heat-treatment industry is alive and well. The future is bright as we find that the only constants are evolution and change. Adapting to the rapidly evolving needs of manufacturing will be a key to growth and profitability.
Some of the key criteria for successful heat-treatment-system users include: meeting ever-more stringent product performance criteria; exceeding reliability, flexibility and quality standards; achieving fitness for purpose; and reducing manufacturing steps through the avoidance of introducing non-value-added operations.
Other key metrics include: strengthening aftermarket parts and service support; improving metallurgical, engineering and technical expertise; enhancing practical skills; finding and educating a workforce; and creating a support network focused on building personal and industry-wide relationships.
- Herring, Daniel H., Vacuum Heat Treatment, Volume I, BNP Media, 2012
- Herring, Daniel H., Atmosphere Heat Treatment, Volume 1, BNP Media, 2014
- ASM International, Vision 2020, 1999
- Private research, The HERRING GROUP, Inc.
- Barbezieux, L., ATKearney Paris, private correspondence
- Mr. Craig Darragh, AG Fox, LLC., private correspondence