Our guest on today’s show is Steve Tamasi, owner and CEO of Boston Centerless, a distributor and manufacturer of ground bar stock. I asked Steve why there is such a shortage of raw materials for precision turning manufacturers and what companies can do to deal with this problem. We also talked about how the war in Ukraine is affecting metals prices. What is pig iron, anyway?
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Steve characterizes Boston Centerless as a value added distributor of precision bar materials, usually used in Swiss style screw machines. The company provides material for companies of all sizes from one employee to large OEMs. Boston Centerless provides bar for just about any material, but it specializes in stainless steel, titanium, aluminum, and red metals. The company even supplies plastic bars.
A One Stop Shop for Material
Steve says traditionally machining companies have bought material from a mill and then sent it to centerless grinding houses to be ground to their specifications.
Boston Centerless has a different business model because it sources the ground material for customers. Customers don’t have to have negotiate with multiple mills to purchase their bars and don’t have to worry about quality control from several sources. The company secures and procures material and takes care of straightening, grinding, chamfering, cutting if necessary, heat treating, and non-destructive testing. Tamasi says Boston Centerless seeks to simplify customers’ workflow and guarantees the quality of the material. If customers have material issues they only need to call one party to solve their problems.
History of Boston Centerless
Steve’s father started a centerless grinding business in 1958 after immigrating from Italy in 1946. Eventually his customers started asking him if he could supply material, rather than just grinding the material they provided. This laid the foundation for Boston Centerless’s business model today. The company bought bars from a mill that were slightly oversized, which then were ground down to the manufacturers’ desired specs.
In the 1960s and early 1970s manufacturers realized that if they ground the bars before machining, they could achieve much better tolerances. CNC Swiss machining emerged in the ‘70s.
Steve joined his father in the business in the ‘80s after working for Agathon, a high-end grinder manufacturer from Switzerland.
The Importance of High Quality Material
Machining companies have to have both high quality material and it must be cut to the correct dimensional tolerances. Without both of these characteristics the quality of parts suffers.
Steve says starting the machining process with quality ground bars can compensate for a lack of skilled labor or mediocre equipment.
Why is there a material shortage?
At the beginning of the Covid-19 pandemic, many of the major mills that produce high quality stainless steel and specialty metals let go of their most experienced people when demand fell.
When demand later skyrocketed because manufacturers had gotten rid of excess inventory during the downturn, mills were caught off guard and unable to satisfy demand. They were called upon to produce more high quality material than in normal times but with fewer good people. Steve says it takes a long time to train people at the mills, and it is even difficult to attract unskilled labor right now. Constrained capacity is the reason for the material shortage, not a bottleneck at the ports.
Right now, companies have to order certain materials 12-15 months out. Pre-pandemic material orders typically were six months out. Lead times are also being exacerbated by panic buying as companies want to insure they have material in the future, even when they don’t have the current work.
Advice for Dealing with the Material Shortage
Steve advises manufacturers to take a longer view of their businesses. They should communicate with customers that they need to project 12 months out. They also should go to suppliers to find out what their time frame is and then communicate that information with customers.
Boston Centerless can suggest alternative materials to use if customers provide them characteristics of the materials they need. Its experience and vast network of mills gives Boston Centerless as a good a chance as any source to find a supplier because they know so many different suppliers. They also have the ability to do spot buys from multiple sources.
Effects of the War in Ukraine on Material Supply
Currently there is a world shortage of pig iron, an essential ingredient in steel production. Ukraine and Russia happen to be two of the world’s largest suppliers for the natural resource. Scrap metal is an alternative to pig iron, which is causing scrap prices rise.
(According to Wikipedia, pig iron, also known as crude iron, gets its name because the traditional shape of the molds used for pig iron ingots is a branching structure formed in sand, with many individual ingots at right angles to a central channel or “runner.” They resemble a litter of piglets being nursed by a sow.)
Many of the raw materials to make titanium comes from Russia. Nickel is another element abundant in Russia. It is important in stainless steel production and other alloys for machining. It is also a prime component for lithium ion batteries.
Question: How are you dealing with the raw material shortage?