China’s efficient steel giant
The world’s number one steel-producing nation, China, is struggling to balance an economic slowdown with industry over-capacity. Based in the country’s northwest, state-owned company MCC-SFRE Heavy Industry Equipment is facing up to these challenges by constantly focusing on improving efficiency.
A bulletin board stands at the gate of the machining plant operated by MCC-SFRE Heavy Industry Equipment Co in Zhuangli in north-western China. On it is spelled out the massive rolling-equipment manufacturer’s ambitious goal for 2015: generating CNY1.3 billion (EUR187 million) in industrial output.
Based in China’s Shaanxi Province, the company is a joint venture between China Metallurgical Group Corporation (MCC), a state-owned conglomerate, and Shaanxi Forging and Rolling Equipment Works (SFRE), a heavy-duty equipment manufacturer and developer with 50 years’ experience specialising in rolling equipment and strip-treatment equipment for steel works. The rolling equipment that the joint venture produces is purchased by steel manufacturers, who use it to shape steel into a uniform thickness, ahead of distribution to customers.
Cutting costs and increasing capacity
Yang Xuejun is Director of MCC-SFRE’s technology department and says the company has been forced to respond to a wide range of challenges in the wake of the 2008 global financial crisis.
“Even though market demand for steel has slumped, we have not cut production of rolling equipment, but rather increased it, because we have to cover operation costs and maintain the company’s momentum,” he says.
Yang adds that steel producers are ordering new-generation rolling equipment from the company to improve quality, eliminate obsolete production capacity and save costs. But because buyers dominate the deals, the company is producing more and making less money.
In 2008 therefore, MCC-SFRE invested CNY100 million to upgrade 80 per cent of its machining lines. The company now has the capacity to manufacture 50,000 metric tonnes of high-end-only metallurgy and rolling equipment a year.
“We have to maintain and improve efficiency in every way possible,” says Jia Xiaofeng, a manager at the MCC-SFRE No 1 machining plant. “The consumption of cutting tools accounts for a large part of our costs.”
Efficient production through quality tools
Seco Tools has been supplying cutting tools to MCC-SFRE since 2000. Today, half of all cutting tools used in MCC-SFRE’s plants are Seco Tools products, thanks to the durability, proficiency and value-for-money advantages that they provide.
“We use more than 20 brands of cutting tools, but Seco Tools have unparalleled edges, especially their milling tools which are sharp, resilient and fast,” says Yang. “That’s the major reason that we’re buying more from them and less from others.”
Tang Jie, a sales engineer at Seco Tools’ Shaanxi operation, says that in addition to product competitiveness, MCC-SFRE chose Seco Tools for its on-site services and because of the long relationship between the two companies.
This resulted in the biggest order to date, when in 2014 MCC-SFRE ordered tools worth millions of yuan, including 30,000 inserts and 100 cutters.
Meanwhile, the Seco Tools team in Shaanxi province interviewed machining plant managers to learn about how every turning machine operated. They were then able to use the data to provide the managers with proposals regarding the numbers and types of cutting-tool machines needed for both routine and non-routine jobs. The proposal was accepted by MCC-SFRE, reducing expenditures on cutting tools by more than 30 per cent.
“MCC-SFRE is a typical Chinese state-owned company,” says Tang. “It makes changes cautiously and does not accept new ideas overnight. We need to be on hand to better understand their needs and to provide the necessary help and on-site training.”
By Wang Huazhong Photos by Wang Jing
A state-owned giant
SFRE was established in 1966 and entered a joint venture with MCC in 2004. MCC-SFRE has four machining plants and about 3,000 employees, of which 600 are technicians, including 95 senior engineers. The venture manufactures a wide range of machines for many different kinds of industries, but its main products are machines for steel works, mainly strip mills and plate mills. Their rolling equipment meets the standards required by developed economies such as Europe and Japan. The company formerly operated its own schools, cinemas and hospitals in Zhuangli township.
A wide range of tools
MCC-SFRE uses over 20 brands of tools in its cutting processes. Half of those tools are manufactured by Seco Tools, including: Octomill face milling cutters, Turbomill square shoulder milling cutters, Copymill cutters, turning tools and boring tools.
Tough times ahead
While there has been pressure from an economic slowdown, steel production in China has not decreased in line with market demand. According to official figures, Chinese steel output in 2014 reached a record high of 822.7 million metric tonnes, up 0.9 per cent year-on-year, and accounting for 49.7 per cent of the world’s total. Rolling-equipment makers will have to manage costs in order to survive the tough years ahead, amid an estimated 425 million tonnes of over-capacity.