Powder Metal Potential Reaches Critical Mass

Diesel Progress North American Edition, Feb, 2001 by Rob Wilson

GKN Sinter Metals seeking to leverage global P/M capability to bring technology into the mainstream of manufacturing

"Powder metal parts production has been a fascinating manufacturing alternative for more than 50 years," said Seifi Ghasemi, president and chief executive officer, GKN Sinter Metals. "There's no question that much has been achieved during that time from a technical point of view.

"On the application side, however, we have only scratched the surface. This extremely fragmented industry has largely marched forward one part number at a time. We are only now reaching the critical mass stage and the potential is simply enormous."

With its global headquarters in Auburn Hills, Mich., GKN Sinter Metals has been gathering its critical mass through internal growth and acquisition. Sales have grown from approximately $100 million in 1996 to $850 million in 2000. Together with a continuous internal growth rate of 8 to 10 percent per year, in 1998 the company set a strategy of aggressive acquisition that has the company on a path to achieving sales of over $1 billion by the year 2002.

Today GKN Sinter Metals accounts for 16 percent of worldwide powder metal (P/M) parts production. Total worldwide P/M sales are estimated at $5.3 billion, with the United States accounting for 45 percent of the total, Europe and Japan with approximately 24 percent each, and the balance scattered among other nations.

Recent acquisition of Fairview Sintered Metals, Michigan Sintered Metals, Zenith Sintered Products and operations from Borg-Warner and Federal-Mogul have established GKN as the clear global market leader, making it nearly five times larger than the next largest P/M producer on a worldwide basis.

"Size does matter," explained Ghasemi. "Some 70 percent of our sales are to the global automotive manufacturers. They insist on global support and production capability. They insist on a clean balance sheet, on our stability, confidentiality and commitment. They seek a partnership where our resources enable them to go forward. And, naturally, all of these operational characteristics are also attractive to customers in non-automotive markets.

"More important than size, however, is people. Our acquisitions have been many, but they have been strategic and not a matter of capacity for capacity sake. It's the overall capability that is pre-eminent and that comes from our people in combination with our resources."

GKN now has nearly three dozen strategic production facilities in Argentina, Canada, Germany, Italy, South Africa, Sweden, the United Kingdom, and the U.S. It has sales offices in Auburn Hills, Buenos Aires, Paris, Sao Paulo and Tokyo, and joint ventures in India and the Peoples Re public of China. In its production stable, GKN now has production facilities for sintered structural components, powder forged parts, sintered bearings, porous sintered filters, high per- formance composite plastics and metal injection molded parts.

"The automotive market is the most competitive market there is and that's why it is so attracted to P/M technology," claimed Ghasemi. "The automotive market is the cradle for production innovation and efficiency. Other industries often feed off those advances.

"And the United States is the most competitive automotive marketplace in the world and that's why it is the number one P/M market by far. Cost saving ideas are pursued vigorously in the United States and adopted more quickly. Successes rapidly migrate to similar parts and families of parts."

If you were to look at a typical vehicle produced in the U.S. in 1998, according to GKN estimates, you would find that it contained about 36 lb. of P/M parts. The typical vehicle produced in Europe would contain about 16 lb. of P/M parts and in Japan approximately 14 lb. By 2002, P/M parts content is expected to grow to 40 lb. in the U.S., 19 lb. in Europe and 15 lb. for the typical Japanese vehicle.

Sintered parts are typically associated with engines, transmissions, steering mechanisms and other miscellaneous parts. Some 40 percent of the world production of continuous velocity joints is now made of P/M materials.

Other key P/M markets include lawn and garden equipment, general machinery, home and office products, electrical appliances, sport and hobby products, electrical and engine-driven power tools. These account for approximately 30 percent of P/M parts production.

The automotive potential is easily over 100 lb. per vehicle, Gihasemi believes, and he feels that is true even as vehicles become increasingly lighter. Changes that include more hybrid vehicles or 42 V electrical systems are all viewed as opportunities. Ghasemi's reasoning is that anytime there is a change in vehicle design, production methods and assets of the past get stranded and the winning production technology for the new design initiative will be the most efficient available.

It is not uncommon for P/M technology to bring more than a 50 percent savings in the installed cost of a part. In fact, such savings are typical. The more complex the part and the greater the functional density of the part, the greater the opportunity. Eliminate or minimize machining and finishing operations. Simplify assembly. Lower scrap rates, energy costs and environmental impact. These are all expected benefits from the application of P/M technology.