The Acquisition of Modern Aluminum Extrusion Systems

Part 1: Motivation
Definition: Something that encourages.
Key Words: Profit, cost, lead time, productivity, recovery, safety, environment.

by Roger A.P. Fielding, BENCHMARKS

Like any successful business owner, the extruder seeks to increase profits by raising productivity while containing or reducing costs. However, the routes to increased profits are many and varied. While extruders in one part of the world pinpoint labor issues as their main focus — motivated by government regulations and the shortage of skilled persons, another area of the world is driven to reduce scrap — motivated by the relative cost of aluminum. Other extruders set their sights on quality improvement, lead times, and just-in-time delivery. The diversity of motivating factors is great, and regardless of the area of focus, all extruders seek increased profits.

Most extrusions are produced by heating an aluminum billet or log, loading a measured weight of billet into the container of a press, raising the temperature by extruding through a die, and cooling at a critical rate prior to stretching. The equipment used in this process varies widely from plant to plant — differing in design, manufacture, age, condition, and labor requirements. Whatever the physical differences between the equipment, all use similar extrusion dies, and all depend on variations of the same metallurgical processes. The same extruded products can usually be produced without regard to manning levels or the differences in production equipment, methods, and practices found throughout the industry.

Competition with others is a strong motivator, and most extruders try to understand their competitors’ businesses. As those who have been on the Aluminum Extruders’ Council of International Extrusion Technology Exchange Tours have discovered, comparison with extruders in other countries can be most revealing. There are few published statistics which directly compare the performance of extruders in different countries, but using statistics collected and analyzed by industry-wide associations, an extruder can get a measure of how they’re doing relative to local industry.

However, published industry statistics are at best averages compiled to disguise each individual plant’s performance. The serious extruder is further ahead evaluating their current performance at the extrusion press against what would be possible using the best practices and equipment, along with comparing plant operating performance against appropriate benchmarks established in unrelated industries.

Since the same extruded products can be produced without regard to manning levels or differences in production equipment and methods, monetary measures provide the simplest and most direct comparison between extrusion businesses. The performance of an aluminum extrusion company is measured by the cost of converting incoming billets into saleable extrusions. So while the volume of extrusion sales, labor costs, machine productivity, and recovery can be indicators of a profitable aluminum extrusion operation, the conversion cost defines the bottom line.

If conversion costs define profitability, why measure anything else? Well, there are other financial and non-financial measures which have a direct bearing on the extruder’s future, and should therefore be measured. Safety, delivery performance, customer complaints, inventory turns, and environmental values such as noise and effluent discharges — all these factors also impact profit. The benchmarks for these measures are sometimes obvious, as the chart above reflects.

What has all this got to do with the acquisition of modern aluminum extrusion systems? Modern aluminum extrusion systems are designed to operate with few people at high throughput rates. They are designed to maximize the recovery from each billet. They are designed to be reliable, safe, and environmentally-friendly. They are designed to reduce conversion costs and make money for the owners.

The Acquisition of Modern Aluminum Extrusion Systems - Part 2