Alloys Newsletter Q3/2021

Dear Ladies and Gentlemen and Colleagues,

The first two quarter of 2021 are now behind us. The COVID-19 pandemic is still affecting our daily lives with more changes and challenges than ever before. The upward movement in incoming orders, which was first seen in the autumn of last year, is continuing and it is currently extremely high. From today's perspective, we will be able to significantly surpass the low management case projection. However, our delivery times are currently lengthening and our stock of basic materials is shrinking. To counteract this, we are increasing capacities in all production areas by increasing our staffing levels.

A comparison of incoming orders

  • August 2020: 27.5 tons
  • March 2021: 197 tons

Incoming orders have stabilized in the meantime.

Third-party business incoming orders are shown in the illustration.

Outlooks

Outlook for 2021
The boom in alloys continues to pick up and, as previously described, we are currently seeing a gratifyingly large number of incoming orders. In some divisions this has resulted in full capacity utilization in their relevant shift systems. 

Outlook for regional markets
Asia:
Our colleagues in our Shanghai office have already completed their 3rd trade fair in four weeks. The discussions were very promising for alloys, especially in the resistance sector. We are investing in a new flat wire rod mill that can meet higher tolerance requirements for our Taiwan business.

America:
The USA is still performing very strongly. The Biden administration's investments are starting to show results. The pandemic is no longer threatening to close plants immediately and this has removed a lot of uncertainty from the market.

South-west Europe:
Italy is showing good recovery and a strong number of incoming orders. Unfortunately, France is still very quiet.

Germany, Northern and Eastern Europe: 
We have had a strong four months with regard to incoming orders. Of particular note is our new partnership with Deutsche Nickel (DN). This means that DN has gone from being a competitor to being a customer.

Activities & Objectives

Activities
Examples of our current activities: 

  • The rolling mill has been completely dismantled. The hall will be completed during the next step.
  • The components for the EBW (Electron Beam Welding) production systems are currently being assigned and they are being held in Oberscheld. They will be assigned to Alloys on June 1, 2021 and, according to our plan, will be moved to Dillenburg at the end of 2021.

Objectives
I would like to return to the customer excellence topic covered in our last newsletter. Our self-image of always inspiring our customers under all economic conditions determines our daily actions. This also includes having the right quantity in the right place at the right time (at our customers’ machines) as well as technical quality and costs.  
Future orientation is a broad field. We are proud to have brought Alloys back to the forefront of our development activities. I have previously told you about our innovation process. In the meantime, two presentations have been made to the management and I am pleased to tell you that both projects have entered their next phases.

I would like to thank all of you for your cooperation, understanding, tremendous flexibility and dedication during the past year and the first months of 2021. I wish you good luck and good health to you and your families.

Jens Hartmann, Executive Vice President

What are your “pain points”? The innovation process at Isabellenhütte

In our last newsletters, we reported on the first two phases of the innovation process at Isabellenhütte. The aim of this process is to identify so-called "pain points" and to develop suitable solutions for eliminating them. The problem that has to be solved should not be limited to just a single customer, as it should apply to many customers. The two innovation projects have already passed through phases 3 - 5 and they are currently being evaluated.

During the previous project phases, discussions were held with many potential customer dealers, equipment manufacturers and users in order to obtain the broadest possible overview of the pain points.  As different as the interviewees were, the customer requirements and pain points were just as different. Finally, we were able to plan product solutions for the "Temperature controlling in medical technology" and "Alloy engineering” projects.

The "Temperature controlling in medical technology” project 

The "Temperature controlling in medical technology" project deals with providing precise temperature controlling systems in medical technology applications. Temperature controlling in medical technology is always a pain point when both cooling and heating has to be carried out within a very small area. Peltier modules are well suited for this purpose and they are already in use today, i.e. in PCR cyclers. Customers were not always satisfied with their current solution. That's right where we started. As our market volume in the medical technology sector itself is relatively low, our activities have been expanded to include the automotive, industrial and retail sectors. 
Isabellenhütte has the necessary expertise regarding thermoelectric materials and in recent years we have participated in national and international research projects that dealt with thermoelectric generators and their applications. 

The “Alloy engineering” project 

Our "Alloy engineering" project deals with the powder metallurgical production of alloy structures. Isabellenhütte has been researching the powder metallurgy sector for several years now and we also have a network of competent partner companies and innovative pilot customers who have the potential to realize a prompt entry into the relevant markets.
Heating the radar sensors in cars was chosen as an example application. Current heating solutions are associated with a complex assembly process, which will be made more efficient through the production technology selected for use during the project.

Defining the concepts and studying their feasibilities

Solution ideas have already been planned, compared and evaluated. The decisive criteria were both economic and technical and they were discussed at length so that a result could be reached through consensus. These project feasibilities are currently being studied from a technical point of view and whether they make sense from an economical point of view.
If the potential of these projects proves to be high enough, then specific product developments will be derived from them and we will present them to you in one of our future newsletters.

Petra Schmidt, Alloys R&D Manager and Nils Achenbach, Alloys Area Sales Manager.

Relocation of welding systems to Dillenburg

 

The decision to move the welding system from our facility in Oberscheld was taken a long time ago. The original plan was to move it to our Manderbach facility. The location issue was raised again as our ISA-Weld® division is currently seeing strong growth.

The strong growth of our ISA-Weld® division has brought about several changes. Initially the location and secondly, the need for another welding system. The dismantling of the hot rolling mill in Dillenburg, which was completed in April this year, gave us new options. The production area that was freed up there amounted to approx. 1,100 m² and it offers decisive advantages over Manderbach:

  1. This area in Dillenburg will allow us to install three welding systems (electron beam or laser welding), whereas only two systems could be installed in Manderbach. 
  2. The close proximity of our new logistics center to this hall in Dillenburg will give us a much leaner value stream.

Based on these advantages, the management decided in March this year to relocate the two existing EBW (Electron Beam Welding) systems to Dillenburg. According to the time schedule, the welding systems will probably be moved from Oberscheld to the old rolling mill in Dillenburg in Q4/2021 or in Q1/2022 at the latest.

The following steps are currently being planned

Reconstruction and modernization of the rolling mill hall and preparing the new requirements

  • The planned completion of the "construction work" will be in the fall of 2021 at the latest.

Relocation and organizational changes

  • Our EBW business unit was organizationally incorporated in our Alloys business unit on June 1, 2021. Generating pre-run time on the welded strips will be decisive for a realistic moving date. This is why we are working to increase the overall system effectiveness in our welding systems. The timely supply of semifinished materials (copper and alloy strips) will also play an important role in achieving the planned pre-run time.
  •  A decision was taken in favor of a "Topflow" production data acquisition system with regard to future system use. The transition is being prepared and it is expected to occur prior to the physical move in August 2021. 
  • The new pot annealer is about to be delivered and it will also be installed in the old rolling mill hall. Final preparations for designing the pit and the necessary media supply and infrastructure are currently underway. 

The project organization is very similar to the tried and tested structuring of the “Manderbach facility” project. According to the time schedule, the welding systems will probably be moved from Oberscheld to the old rolling mill in Dillenburg in Q4/2021 or in Q1/2022 at the latest.

Manuel Georg, Director Production Alloys 

New organization in our Alloys business unit

Isabellenhütte is repositioning itself under the new management and we have also introduced a matrix organization. You can find out what our intention is behind this and what changes this will bring about for you as a customer and partner in this report.

What is the purpose of a matrix organization?

  • it will strengthen our Business Units (BU) and the co-entrepreneurship of our managers and employees
  • this will enable us to provide a clear customer focus along the entire value-added chain 
  • we want to promote interdisciplinary, process-oriented thinking and acting 
  • we want to make faster and more decentralized decisions
  • we want to develop our expertise firstly through specifically orienting our BUs to their business sectors and secondly, through specializing within the specialist sectors

We invite you to accompany our change process both constructively and critically. Do tell us where we motivate you as a customer.

Do let us know where we still need to improve!

Internal changes

We have been working as a BU for a long time in Alloys. Internally, the biggest changes are that our buyer, our project engineers from Industrial Engineering and our alloy development manager now report to the relevant BU manager on a disciplinary basis and no longer to their division managers. We have also staffed our internal sales and production control divisions with young managers who report directly to the BU manager. An "agile team" has been formed for projects and processes and this team is now responsible for all process development and improvement issues as well as any issues that might occur in our projects, and they report directly to the production manager. This means that the main processes for all centralized value-added chains in production, the supply chain, sales and development are now the responsibility of the BU manager. 

What are we going to do better than before?

We are confident that this new organization, which is just one project of several within our customer excellence offensive, will help us to be able to keep to our delivery and quality promises to an even greater extent in the future. The intriguing question still remains - what can we do better to avoid any possible disadvantages such as the need for better coordination or contradictory specifications from several managers as potential consequences of a matrix organization:

  1. This objective describes Road 2027 - our path to customer excellence. Every manager, every employee can align his/her actions with this objective.
  2. We will respond to problems openly. Communications between all entities should ensure that quick solutions can be found. 
  3. Transparent resource management is the greatest challenge. Our managers should not just have access to all employees, but they should also make it clear why and for how long they need the employee's support. In the event of a conflict, it will help to look at No. 1 again with the question “What will get us there more quickly?”.
  4. Every employee should/will be encouraged in his/her ability to think as an entrepreneur within the company through this organizational change.

This will not be an easy path, but all of our managers are highly motivated to implement it.

Elmar Ensman, Director Human Resources

Sales volumes

Turnover