Energy: Is There a Crisis Affecting Heat Treaters Worldwide?
Changes are inevitable, but the world today is shifting oh so rapidly, keeping us on our toes. Two men from different parts of the world, both with significant experience within the heat treating community, reflect on the implications of these changes in the heat treat industry. With each new topic, will their views align?
The experts are Thomas Schneidewind, editor-in-chief of heat processing magazine, and Doug Glenn, publisher and founder of Heat Treat Today. Thomas’s expertise lies in the European market while Doug’s resides in the North American market. We will feature their responses in each print magazine. Will their views align? Time will tell. Enjoy this fifth installment of an ongoing column. This column was first published in Heat Treat Today’s February 2023 Vacuum print edition.
To what extent have high energy prices affected heat treaters?
Thomas Schneidewind, Editor-in-Chief, heat processing magazine
Editor-in-Chief
heat processing Magazine
In Europe, many companies are in shock. The energy crisis threatens the existence of energy-intensive companies. The hardening industry is coming under pressure as sharp price increases for electricity and gas lead to business losses. This is because the higher prices cannot be passed on to the customers, whose contracts do not allow price increases during the term of a contract. Most hardening shops are small or medium-sized businesses, while their customers are large companies and corporate groups.
Hardening plants must find short-term solutions to cushion the cost shock and ensure the survival of their business. Add this with a view to the long-term goal of decarbonization. Because, in the future, process heat must be carbon free. Whether energy-intensive production is still possible in Europe in the future will be decided by the flexibility and inventiveness of the industry. The task now is to find intelligent answers and to reduce the use of fossil fuels more quickly than planned.
An important step in this direction is the modernization of existing plants – retrofitting can become the efficiency turbo that saves the day in difficult times. Hardening plants should further develop electrically operated equipment and strive for intelligent furnace control. The use of energy saving motors for pumps, circulators, and fans is another option. Insulation on side walls and ceilings in high temperature furnaces and energy recovery from waste heat are among the basic measures.
Modern burner technology also offers the potential to reduce energy consumption. Hydrogen as a heating gas will become an important option in the future. Hydrogen fueled burners have been around for some time but are not currently used in contract hardening shops. Because there are good ideas and positive trials, but no long-term experience and reliable cost comparisons, it will take a little longer until a significant introduction in contract heat treatment takes place. Until then, there are still some problems to be solved, such as safety, availability, investment costs, and especially the price of green hydrogen.
One thing is certain: investments are necessary. OEMs are already making high demands on future carbon-neutral processing and delivery in their contracts, since many automotive manufacturers are striving for a climate-neutral value chain – dictated by regulatory framework conditions. Hardening shops first must survive this difficult phase to then benefit from modernization investments. The aim is to offer customers carbon-neutral heat treatment. Companies can only achieve this by using green technologies. There is no other way.
Doug Glenn, Publisher, Heat Treat Today
Publisher and Founder
Heat Treat Today
In North America, energy is typically one of the top three expenses in nearly all heat treat processes. Commercial heat treaters know this well because it is their business to know the costs associated with their livelihood. Manufacturers with in-house heat treaters, on the other hand, often don’t properly allocate all the true costs associated with their heat treating processes. However, energy costs are fairly easy to allocate, even for them, and it’s safe to say: energy prices are skyrocketing.
The impact of rising energy prices can be measured in the price for each BTU that goes into the heat treat process. Often, 50% to 200% increases have not been unusual in the U.S.
But less obvious costs that are not so easy to measure also impact heat treaters. For example, transportation, which is energy intensive, adds to overall processing costs, especially if not done in-house.
Even LESS obvious is the effect that rising energy costs have on quality, innovation, and standard operating procedures (SOP). When corporate profits plummet due to rising energy costs, all aspects of the business are scrutinized, not just the areas where energy is most intensively used. This oftentimes results in cuts to “non-essential” expenses, which may mean reducing new product or process development initiatives, cutting back on borderline or “unnecessary” quality or safety measures (!), and re-examining SOPs to make further cuts.
The rising cost of energy could even impact the competency of heat treat operators. During COVID, I spoke to a nurse who explained that quality of care was reduced when a large number of nurses left the profession because they chose not to take the vaccines or boosters. Patients receiving emergency medical care did not notice any shortage of personnel, but the fact was that the nurses filling the critical roles were not as proficient or qualified as the expert nurses they replaced. In a similar way, when energy prices skyrocket and cuts must be made, the internal allocation of resources may compromise some aspects of the business that are not as clear to the customer.
When energy prices rise as drastically as they have, companies will examine how they can cut costs and help maintain profits, which is a GOOD and appropriate thing. It will take time for heat treaters to adjust to the recent energy price spike. Adjustments won’t be cost-free. The question is: Which part of the company will pay?
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The American steel industry is the cleanest of the leading steel industries in the world. Of the major steel-producing countries, the U.S. has the lowest CO2 emissions per ton of steel produced. By contrast, Chinese steel production creates carbon emissions that are nearly twice that of the U.S. per ton of steel produced. The global steel industry contributes 8% of total world greenhouse gas (GHG) emissions, whereas the U.S. steel industry only accounts for 1–2% of total U.S. GHG emissions.
Steel is a critical component in the continued development of all clean energy technologies to reduce America’s carbon footprint. According to a recent study by McKinsey & Co1, steel is the only material critical to all low-carbon technologies. Wind, solar, and tidal renewable energy systems, zero emission electric vehicles, electric grid transmission, hydrogen production, and carbon capture systems all highly depend on steel. For example, steel comprises over 70% of the weight of a typical wind turbine. Grain oriented electrical steel (GOES) is a critical and irreplaceable material used in the production of power and distribution transformers that will be necessary for the greening and modernization of the domestic electric grid. American non oriented electrical steel (NOES) is used for electric motors, including those that will power the growing electric vehicle market.
