June 2009 Vol. 142 No. 6

Newsdesk

China's Lax Pollution Control Hurts US Manufacturers

The report focuses on China's rapidly growing steel industry, and documents China's ineffective enforcement of weak pollution-control standards, its failure to use adequate pollution-prevention measures, and the resulting high levels of pollution. For example, the maximum fine for noncompliance in China is $14,000 for most violations. By contrast, American companies may incur penalties of as much as $32,500 per day.

Because of the more restrictive and more actively enforced pollution control laws in the US, steel producers in this country are at a major production-cost disadvantage. This disadvantage is further increased by the fact that China's steel producers have received more than $27 billion in governmental energy subsidies since 2000.

China's production of steel has quadrupled this decade, making it by far the world's largest source of steel. It now produces more than the US, Russia, and Japan combined. And, while China produces one-third of the world's steel, it is responsible for half of the world's carbon dioxide from steelmaking, making it a leading contributor to global warming.

And it is not just the Chinese that suffer from this problem, the US EPA reports that, on some days, one-fourth of the particulate matter (dust and soot) in Los Angeles comes from China.

Lax enforcement of China's antipollution laws is not a surprise. That country's Ministry of Environmental Protection has about 300 employees, compared to the 18,000 who work for its US counterpart, the EPA.

Mori Seiki-Gildemeister Collaboration

Under the new arrangement, Mori Seiki's President, Masahiko Mori, and Gildemeister CEO Rüdiger Kapitza, will hold reciprocal seats on the partner company's board. Both parties agreed to a cross-shareholding investment of 5% in each company.

Both Mori Seiki and Gildemeister are leading machine tool builders with complementary activities in business regions and product development. The cooperation may extend to production, purchasing, and the development of machines, as well as sales and services in selected markets.

The companies plan to control costs by leveraging the joint procurement and purchasing power of two major machine tool builders on a global basis. In addition, there will be a consolidation of sales activities in selected regions. Establishing a finance company for customers is also under consideration.

The domestic operating structure, including sales, will remain unchanged for the foreseeable future for both companies.

Flow Will Not Acquire Omax

Flow and Omax agreed on March 10, 2009 to amend the terms of their merger agreement, changing Flow's opportunity to acquire Omax from an obligation to an option exercisable by Flow, and agreeing to a settling of patent litigation and other merger-related litigation if the acquisition did not close.

On May 12, Charley Brown, president and CEO of Flow, said: "After a thorough review of our financing alternatives, and discussions with Omax Corp. about modifying the terms of the transaction, we have decided that acquiring Omax would be excessively dilutive to Flow shareholders." Cost of the moves related to the acquisition effort was $35 million, and $29 million of that charge was taken in the third quarter of 2008.

With the acquisition option terminated, Flow will take a charge for the portion of the $35 million not already taken, representing $6 million. This noncash $6 million charge will be paid in four years, and flow will write off all previously incurred costs related to the transaction (about $4 million). Neither charge will require additional cash.

According to Flow, a major reason the acquisition did not occur was a refusal by Omax to reduce its price. At the price demanded by Omax, Flow management regarded financing alternatives as too dilutive to present shareholders.

Flow has concentrated on direct sales. Acquisition of Omax would have immediately given Flow access to a distributor network.

After announcing the decision not to acquire Omax, Flow announced that it recently established a network of distributors to meet its needs, building the foundation for a new channel of distribution to complement its direct-sales channel.

"We are building an additional distribution channel globally, initially signing on nine leading distributors in North America. These distributors will have access to the full range of Flow's standard products, and we look forward to the increased market penetration they will provide," stated Jeff Hohman, executive vice president of Flow.

Flow's new US distributors are: Capital Machinery Technologies (Tampa); Ellison Machinery Co. (Santa Fe Springs, CA); Fox Machinery Associates (Bridgeport, PA); Gladwin Machinery & Supply Co. (Minneapolis); Global EDM Supplies Inc. (Mason, OH); and Modern Machinery Co. (Spokane). In Canada they are: Modern Tool Ltd. (Calgary, Alberta); Wallace Machinery and Tool Co. Ltd. (Winnipeg, Manitoba); and Westway Machinery (Mississauga, Ontario).

Several of the new Flow distributors formerly sold equipment made by Calypso Waterjet Systems Inc. (Dallas). That company recently went out of business, and Flow succeeded in recruiting a number of these experienced waterjet distributors for its new network.

Omax Corp., in turn, announced the settlement of the outstanding patent litigation with Flow Corp., along with the cessation of the merger negotiations.

"Due to the risks and difficulties of obtaining financing inherent in today's capital markets, Flow elected to abandon the proposed merger between our companies," said John Cheung, CEO of Omax. "While we still believe the merger could have provided significant benefits for both companies, Omax was unwilling to further modify the terms of the merger agreement."

According to Omax, in consideration for Flow's termination of the merger and the patent settlement, Omax will receive $25 million in cash and $10 million in notes maturing in four years. A cross-licensing agreement has been reached for the patents involved in the litigation.

"No commercialized technology was exchanged between Omax and Flow, so we will retain complete ownership of the innovations that have made our company an industry leader," said Cheung. "The technologies exclusively available in Omax waterjets include Intelli-Max control software, direct-drive pump technology, and Intelli-TRAX, the world's first drive system designed exclusively for waterjet machining centers.">

Acquisitions

Systems Industrie Electronics AG, (Lustenau, Austria), a provider of computer hardware and embedded solutions, acquired Carlo Gavazzi Computing Solutions Inc. (Brockton, MA), a company specializing in electronic packaging.

Ringfeder Corp. (Westwood, NJ), a company specializing in powertransmission components, acquired the Gerwah Group (Fayetteville, GA). The company, based in Germany, develops, manufactures, and markets products such as shaft-to-hub couplings and safety-overload devices for mechanical power-transmission applications. Ringfeder markets power-transmission components, including shock-absorbing devices, flexible couplings, and torque limiters.

Bosch Rexroth AG (Hoffman Estates, IL) a company specializing in drive and control technologies, acquired IGUS ITS GmbH (Dresden, Germany). The German company develops, manufactures, and sells condition-monitoring systems for windenergy plants. Now known as S.I.E. Computing Solutions Inc., the company will maintain continuity in management and continue to provide customers with the same high level of service and innovation.

Expansion

Partners

Innovation Matrix Inc. (Santa Clara, CA), a foreign distributor of factory automation components and systems, partnered with Sightech Vision Systems Inc. (Santa Clara, CA), a manufacturer of self-learning vision systems. Innovation Matrix will be the main distributor of Sightech's PC-Eyebot machine vision systems throughout the Asian market.

Software

Online RFQ System Matches Buyers With Manufacturers

Mitch Free is founder and CEO of Mfg.com (Atlanta), a global online marketplace for manufacturing industries.

Manufacturing Engineering: Describe the new MFG.com platform.

Mitch Free: The new MFG.com platform has been several years in the making, much longer than I hoped, but it was a much bigger project than I realized. The new MFG.com platform brings together our North American, European, and Asian marketplaces into one single marketplace that will adapt to locales and vertical segments, on demand. Initially, seven languages will be supported. Much of the functionality and enhanced value, such as parts management, production monitoring, and complex multi-line-item RFQs are just a few of the hundreds of enhancements requested by our users that are incorporated in the new system. We rebuilt the platform from scratch on top of a service-oriented architecture [SOA] that will allow others to begin to build or integrate applications that add value to the MFG.com community.

ME: What does your system offer manufacturers seeking buyers/suppliers?

Free: Suppliers want to make more profit and buyers want to pay less for their parts. MFG.com automatically matches RFQs from buyers to our supplier members that have the right equipment, expertise, capacity, and credentials at the right moment in time, whether they be in the same neighborhood or on the other side of the world. We facilitate the entire sourcing, collaboration, quoting, negotiation, and due diligence process online, and all with a complete audit trail. Most suppliers are typically doing business with only a few customers within a relatively close proximity. MFG.com allows suppliers to cast a wider net and find more of the work that they do extremely well and most profitably, versus taking whatever work they can find in their local market to keep the shop busy. In turn, by connecting with suppliers that are well-suited to make the parts being sourced, buyers end up receiving the best parts. Market transparency and intelligent real-time connections allow buyers and suppliers to each achieve their objectives.

ME: How can this system help improve manufacturing productivity?

Free: It helps improve productivity in a number of ways. MFG.com has made the sourcing and supplier-discovery process faster, which is a huge time-saver for our customers. But probably even more interesting are some of the comments from our users telling us how MFG.com allows them to quickly manufacture in a distributed manner close to their customer demand around the world. Others have told us about how MFG.com allows them to have a virtual factory that can scale up and down in an instant, with no investment in facilities or capital equipment.

ME: What new features are included in the new platform launch?

Free: I'm not big on talking about features because features are only a means for achieving value of some kind. We've really obsessed over removing friction points in the sourcing, collaboration, intellectual-property protection, and quoting process, as well as tracking the production all the way to receipt of the parts. And we think a lot of value is created by giving people the tools to make informed decisions about with whom and where to do business for the best total landed-cost value.

ME: Why would manufacturers want to migrate toward this type of sourcing system?

Free: It's simply more efficient than any other method for sourcing and procuring engineered or made-to-order components. The system is secure, web-based, and on-demand. The system gives you market transparency like never before, so you procure parts at the lowest possible total cost from suppliers that can give you that price and still make a reasonable profit margin. Market transparency is very powerful and a natural win-win.

ME: How does the business climate look for the rest of the year?

Free: No doubt about it, it will continue to be a tough environment with as many opportunities as challenges. Certain companies are strong and lean and they will weather the storm just fine, while others just were not as prepared; they will not make it and will go out of business. As such, the strong will get stronger with less competition coming out of the recession, and will be well rewarded. I'm stating the obvious but until the housing market levels out, new construction resumes, and credit markets free up, it going to be a rough ride. I'm not a fan of bailouts, as I think all that does is kick the can down the road. Ultimately, we will still have to pick it up later and address the real issues.

Dental Software

The system is said to be geared towards orthodontic processes in dental laboratories and it offers a multitude of efficient machining strategies that can be very easily integrated into existing processes. Users can combine a scanner, CAD/CAM system, and milling machines from different vendors. The hyperDent CAM software offers machining strategies ranging from 3-D milling to five-axis machining for a variety of tasks. Even complex dental structures can be programmed quickly using drag-and-drop, shortcuts, and mouse clicks. Dental applications include digital manufacturing of high-quality crowns, multipart bridges, abutments, caps, or implant bridges. All materials that are used in dental engineering are supported, such as zirconium oxide, titanium, base metal alloys, or precious metals. Partially machined stocks can also be reused for manufacturing.

New Releases

Originally developed to inspect complex aerospace parts to the CAD model, Verisurf is now used for reverse engineering, model-based tool building, and inspection. The company's reverse engineering solutions are used for high-volume point-cloud acquisition and management. Using Reverse, they can convert to a mesh, surface, or solid model that can be directly used for manufacturing or inspection purposes. AutoSurface provides the advanced ability to utilize meshes to create surfaces and boundary curves. The AutoSurface is automatic, with no curve network required. With a single button command, users can import points, point clouds or STL meshes and get the surface model. All shapes, primitives, free forms, and open and closed volumes are supported in Reverse.

Machine tool supplier Bystronic Inc. (Hauppauge, NY) has introduced its new Plant Manager Cutting software that allows manufacturers to perform fact-based planning and monitoring of all laser-cutting and waterjet cutting processes. The PMC software module automatically processes order and CAD data independent of any programmer intervention, eliminating the time required for cutting plan preparation and feedback to the production planning system.

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