An Inside Look at the Chinese Forging Industry
We are privileged to bring you three exclusive essays written by the secretary general of the Confederation of Chinese Metalforming Industry (CCMI). These editorials deal with the current Chinese forging industry, where it is headed and its drive toward achieving advanced manufacturing status.
The State of China’s Forging Industry
The forging sector in China has made remarkable progress since 1978. Currently, the annual output of functional forgings reaches 11 million tons, occupying 39% of global production. Taking steel balls, hand tools, medical devices and standard components into account, the production increases to 16.5 million tons. With roughly 400,000 employees, China is the largest global producer of forgings with the most complete forging capacity.
Due to market and government pressure, China’s forging industry is striving to produce forgings with higher precision, higher efficiency, more pervasive digitalization, lighter weight and lower energy consumption. Many excellent achievements have been seen in forging-machinery R&D and manufacturing, application of simulation, IT application and especially precision forging.
In certain fields, such as nuclear-power and automotive, select forgings from China have been the leader among global peers. China’s forging producers are exploring overseas markets and increasing exports every year.
Similar to its global counterparts, this industry is facing a shortage of technical engineers and laborers, especially young workers. In fact, the problem is more serious due to rapid economic expansion in China. Forging robots and automation have been a highlight and a new investment trend in the past three years.
Most Chinese forging companies are small- and medium-sized, and their bargaining position is weak compared with strong upstream material suppliers and downstream users. Even the sharp steel price decreases in recent years were deducted by the users. The automobile industry is a case in point. Following Volkswagen China in April 2015, every manufacturer dropped prices by 5-15% to reduce inventory. As a result, automobile production may maintain slight growth, but general profit decreases sharply along the whole chain.
High costs of forging machinery and low profits have hindered technological updating and innovation in the past four years. Moreover, stricter requirements from the government on energy saving, lightweighting and environmental protection add a heavy burden. Since the depression began in 2011, many producers are struggling to survive or grow because production capacity for normal product far exceeds real demand.
Although China’s forging industry has built up a complete production chain and mastered many forging technologies, the biggest difference compared with advanced countries is the huge gap between the best forging companies and the rest, which means more industry consolidation is necessary.
The former can afford huge investment for the best machinery, automation, tooling and heat treatment, as well as good welfare for employees. Leaders of the latter companies – usually a poorly educated first-generation founder – would not be able to face poor conditions as well as before. Worse is that their children don’t want to be part of this noisy, tiresome and dirty business. Competition will be fierce, and cooperation will continue to be difficult among forgers.
Work is still needed in the following areas: equipment research and capability, reliability, productivity per worker, business management and marketing. The bad economic conditions force forging companies to pay more attention to management and marketing to reduce cost and increase profit.
China’s forging companies started from a very low point, and they are still struggling for equal payment for equal quality, even domestically. Producers are usually required to sell the forgings 10-20% cheaper than overseas counterparts. Since labor cost has increased significantly and China’s real tax burden is higher than any other country, it’s very difficult to sell lower-priced forgings.
It is also very difficult for China-produced forgings to enter the supply chain for Japanese and Korean cars. The true reason is not related to technology, price and quality. It is basically an undisguised technology or market barrier.
CCMI will organize ChinaForge Fair twice in 2016. It will be held June 2-5 in Dongguan, Guangdong province, to serve South China and Sept. 21-24 in Beijing to serve North China. This fair will showcase and introduce the latest technologies, business management and products to help Chinese forging companies better compete globally.
Automation, Intelligent Manufacturing in China’s Die-Forging Industry
Automation in China’s die-forging industry began in the 1970s. It aimed to reduce labor intensity, enhance productivity and improve the quality of forgings. Instead of effectively reducing labor cost, however, automated manufacturing seriously affected productivity and profit due to its unstable performance. The huge investment didn’t bring obvious benefits. That was why automation was not popular before 2000.
Chinese die forging steadily grew through the 1990s. During that decade, automobile production increased to 2 million from 1 million. From 2000 to 2009, production took a great leap forward to 13.7 million.
The forging industry is less attractive to workers who were born in the 1980s and 1990s. Companies in east China must pay each worker $8,000-15,000 per year (including salary, tax, insurance, etc.) on average. Even so, they could not keep the young workers long enough.
Due to increasing salaries and strict quality demands, die-forging companies must turn to automation. According to incomplete statistics, 30-40% of die forgings are produced on automatic/semiautomatic lines or single integrated automatic presses. It is estimated that fully automatic lines occupy less than 3% of all the forging lines in China, but the rate is increasing. The current problem is that many forging orders are of multiple varieties and small batches, which means it is more economical and reliable to continue to use human power than automation.
Meanwhile, forging automation is more and more reliable thanks to mobile information technology (IT) and big-data technology. In addition, the Chinese government and industry organizations are encouraging the application of automation and intelligent manufacturing.
In 2015, the Chinese forging industry faced its worst crisis with excess capacity and over-competition, and about 50% of companies were under deficit. Automation in die forging is still in the initial stage in China, and many forging companies are considering increasing their competitiveness with this new method.
I have the following opinions on automation and intelligent manufacturing:
- For the moment, a lot of forging companies are evaluating the cost and benefit of automation. It is more complex and expensive than many forging owners expected because the order, product structure, die, press, etc. have to be modified to implement automation. Even so, I believe that real investment will boom after the Chinese economy rebounds.
- For some top companies, automation is not nearly enough to enter the international market. Intelligent manufacturing is a higher-level production method. It is a complete turnkey solution, and intelligence is fully applied in each link of the whole process chain. Leading companies are currently preparing for intelligent manufacturing.
- To realize intelligent manufacturing in die forging, it is necessary to collect, analyze and use vast production and technology data. German and Japanese companies are doing this well. CCMI is cooperating with some domestic private companies to use this technology.
- Modern management technology and methods, such as mobile IT and modern management software, must be involved in intelligent die-forging production.
- The key point is high-quality labor, especially workers born after 1980 with higher education. Environment and facilities must adapt to workers’ safety demands, behavior habits and culture ideology.
CCMI is one of the active participants and promoters of this great process. The yearly MetalForm China exhibition and various activities, monthly seminars and conferences are perfect ways to promote new technology and push the progress of intelligent production forward.
China’s Forging Industry: Moving Forward
From 2000 to 2011, the machinery manufacturing industry in China increased annually by at least 15%. For example, automobile production was 2.07 million in 2000, and it was 23.72 million in 2014, with automobile forgings amounting to 4.98 million tons in 2014. Both the owners and employees of forging companies benefited significantly during that golden decade.
The Chinese economy has become weaker since 2012. However, it is widely anticipated that it will rebound in 2016. Forging companies are facing consecutive years of profit downturn and increasing labor costs, even in the midst of the roaring automobile forging sector.
Before 2011, forging companies devoted exclusive attention to enhancing output and were proud of being able to domestically produce a new forging that substituted for imported goods. Forgers are now more practical and realistic and are focusing on profit and cash flow because account receivables are really high and dangerous in the industrial chain.
The output of forgings in China amounted to about 10 million tons in 2013, including 6.4 million tons of closed-die forgings and 3.6 million tons of open-die forgings. Many companies own advanced and complete forging lines and technologies with global competitiveness. Meanwhile, too many friction screw presses (>400 ton, more than 8,900 sets) and drop hammers (>650 sets) are still in operation. We are glad to see that new investment is focused mainly on high-level machinery and automation with higher efficiency and lower energy consumption.
In 2011, the Confederation of Chinese Metalforming Industry (CCMI) organized over 100 experts to write the “China Forging Industry Technology Roadmap,” which proposed the following:
- By 2020, the output of cold/warm precise forgings should reach at least 12% of closed-die forgings.
- Accuracy should reach to grade 7 or higher from the current grade 5.
- Energy consumption for producing each ton of forgings shall be reduced by 10% (compared with the unit energy consumption of 0.44 ton of standard coal equivalent per ton forging in 2011).
- Material utilization shall rise 3-5%.
- Manufacturing costs of each part shall drop 20%.
- Annual output per employee shall increase 30%. In 2011, the output was 65.64 kg per hour per forge operator.
In 2013, CCMI was finally able to publish a book series entitled “Forging Technologies” after three years of work. This series systematically summarizes forging theories and technologies of process and equipment.
China’s forging industry also has several unique technologies. These include roll forging front beams; producing camshafts and large bearing balls with cross-wedge rolling technology; and integrated forming technology for high-precision forgings.
In general, China’s forging industry is progressing in the direction of providing complete solutions that integrate materials technology, forming technology and post-processing.
Author Zhang Jin is the Secretary General of the Confederation of Chinese Metalforming Industry. He can be reached at email@example.com.
Heat Treating in China
Arlen Luo – Editor, Industrial Heating China
Since the 1980s, the automotive, mechanical equipment, aerospace and aviation, rail transit, wind power and nuclear power industries in China have developed rapidly, as has demand for the necessary assemblies and basic parts that feed these industries.
Meanwhile, the existing stock of heat-treat equipment in China is comparatively backward and badly in need of upgrade. Motivated by energy conservation, consumption reduction, environmental protection and cost reduction, the way forward for heat treatment in China is to focus on developing a specialized and networked commercial heat-treating industry.
In total, there are more than 10,000 heat-treat facilities in China, about 3,000 of which are privately held commercial facilities. Most of the 300 largest are in the Yangtze River Delta (e.g., Shanghai, Zhejiang province, Jiangsu province) and Pearl River Delta (e.g., Guangdong province).
Additionally, priority will be given to the development of advanced processes such as step isothermal quenching, intensive quenching, gas nitrocarburizing, ion nitriding, sealed multipurpose furnaces and high-pressure gas-quenching (HPGQ) vacuum furnaces.
I believe that there will be more and more professionalized and networked heat treaters and well-known companies in China in the coming years.
Arlen Luo can be reached at firstname.lastname@example.org
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