Fabrication material savings rarely produce significant profits when compared to the productivity improvements obtained on the shop floor.
For instance, a straight or cast-free weld wire costs more to produce and purchase but lowers the cost of use. A 26-inch cast weld wire is frequently purchased due to an attractive price or brand loyalty but can substantially add to the cost of fabrication and welding time.
Unfortunately, purchasing a product on price alone, without understanding its true costs, can be one way to go. If a sales presentation is based on cost to purchase rather than effectiveness, then the buyer might be unknowingly adding to his fabrication expenses. This decision can also be complicated due to a strong brand name, loyalty to a brand or a convincing salesman.
The result? Welders obtain wire that makes welding difficult and costly. This is sometimes smoothed over by adding the additional cost to the next quote.
Welding Wire that has a 26-inch cast and roughly a 6-foot circumference will have at least two complete twists in a GMAW torch with a 12-foot lead and 2 1/2 twists in a torch with a 15-foot lead. The wire will be pushed through the torch with additional resistance and wire distortion.
The electrical stickout for GMAW wire at 25 volts and 240 amperes is about five-eighths of an inch. On thinner sheet metals, the voltage would be in the 16-to-21 volt range and 100 to 180 amperes with an electrical stick out of approximately three-eighths of an inch
Cast-free wire improves productivity in both applications by allowing the welder to control weld width. It also reduces weld spatter, distortion and welding time. Cast-free wires’ deflection diameter is much less than that of a 26-inch cast weld wire.
A welding process melts a specific number of pounds of weld wire per hour. If the weld is controlled to a specific size on the blueprint, then it’s easier to make a profit. A 26-inch cast makes the weld wider than required. This additional weld width consumes 20 to 40 percent more wire and shielding gas.
Additional weld width adds 20 to 40 percent to labor costs, distortion expense and abrasive purchases. Therefore, the lower cost 26-inch cast weld wire does more to destroy your bottom line. This might mean that your quote on future business is higher than someone using cast-free welding wire.
For the sake of simplicity, let’s assume that the electrical stick-out is five-eighths of an inch. The wire that has a 26-inch cast requires about eight pounds of loading in the feed rolls. This contributes to additional wire scoring, flaking and twisting. This pressure on the feed rolls to push a 26-inch cast weld wire will rotate at the arc by more than three-eighths of an inch. This compromises the welder’s ability to make sound welds or even leak-proof welds, leading to over-welding and adding time and costs to all of your fabrication steps.
To help understand costs per weld, let’s assume that 26-inch cast wire is $0.10 per pound less than cast-free weld wire. Therefore, if the cast-free wire costs $1.00 per pound, then the 26-inch cast wire is cheaper at $0.90 per pound. The typical deposition rate is about five pounds per hour.
Provided that 10 parts per hour are made with the cheaper wire, purchased savings should be about $0.10 multiplied by five pounds per hour or $0.50 per hour per welder. Without further explanation, this seems to be a better way to weld. Upper management will believe this to be a good deal.
The truth? Choosing cast wire turns out to be more expensive. What isn’t immediately understood is that cheaper materials don’t always mean a savings or increased productivity.
Compared to the 26-inch cast wire, cast-free welding wire might cost $0.10 or more per pound to purchase but it reduces the fabricator’s bottom-line costs.
This is because when you are welding wire with a 26-inch cast with an electrical stick-out of five-eighths of an inch, this will produce a circular movement at the tip of the wire of about three-eighths of an inch. Trying to control this movement, the welder will be forced to over-weld to make the surface acceptable. Over-welding is frequently considered to be more than 50 percent of the AWS requirement, but for this article only, let’s imagine that it’s just 20 percent over welded.
Now assume that labor is only $10 per hour. If a deposition rate of five pounds per hour is typical, and the same number of parts are welded in one hour using only four pounds, (20 percent smaller fillet size) then the savings is 1 pound of wire.
Let’s say that we saved only 1 pound of wire, which is $1. Though it may seem small, this is still more than twice the savings from the cheaper 26-inch cast wire.
Another possible result is that the operator makes more parts per hour, increasing the pounds per hour consumed. This means that 5 pounds of wire at $1 per pound was used for an additional cost of $1 per hour with 20 percent more parts produced. We said that the labor was $10 per hour but only if we look at labor expense using the cast-free weld-wire labor and the overhead has not changed.
Therefore, incrementally, you’ve produced one more part, and that is a lot more significant than the $0.50 per hour saved using the cheaper 26-inch cast wire. The cast-free wire is a true productivity improvement. You’re making more products with the same or less input.
Multiply this by the number of operators and then again by the number of hours welding, and it’s easy to see that productivity is the best and only way to beat the low prices from overseas producers.
Some large corporations decide that because they buy 1 million pounds of Welding Wire per year, that $0.10 is worth $100,000 per year. But the purchasers fail to understand that increasing productivity by using less wire would produce a lower cost per unit that would far outstrip the $100,000 investment.
How is this achieved? The same job is completed with 10 percent less wire, 20 percent less time and labor along with reduced indirect labor due to distortion or sanding off weld spatter or a reduction in rework for leaking assemblies.
Why then do companies purchase 26-inch cast weld wire? It’s the easy thing to do. It assumes that input product cost drives your job quotes. That would be true if all weld wires were the same. Most comply with AWS chemistry; however, the unknown costs of weld wire cast, helix and surface condition is critical to lowering fabrication expense. Cast-free wire impinges accurately every time in the weld joint. It uses less wire, travels faster, has less indirect labor and improves quality.
Shifting gears, let’s discuss incremental costs. If a fabricator charges $100 per hour for labor, Equipment and overhead, and builds parts for 500 hours per month, then income would be about 500 times 100 or $50,000 per month. Should a productivity advantage or improvement of only 10 percent be made available to the fabricator, then the work could be completed in only 450 hours. All of the bills, equipment and labor have been paid during the 450 hours. The additional 50 hours produces a significantly better margin for the fabricator because the bills have been paid. The additional 50 hours produces $100 per hour or $5,000 of income. This leverage is due to the improved productivity.
“This point is frequently missed by many fabricators that are looking for a productivity home run, which is a rare improvement,” Larry Cherne, Marketing Manager, Laser Gases for Praxair. “When a fabricator looks at small details like cast, helix and twists of the welding wire, it could hit the home run against the competition.”
According to Cherne, here is a suggestion that has worked for a number of companies over the years: hire a distributor to make good decisions not based on price, but rather on productivity. If his suggestions reduce your fabrication costs, you purchase those products from him. He becomes your trusted consultant.
If a welding distributor presents a productivity approach, take the time to listen. They should know what you need and your concerns. Do you need more sales or profits, or are you concerned about quality or speed? Not every corporation has the same needs and concerns.