21 Nov What does the falling pound mean for component manufacture?
We may be six months on from Britain’s now famous Brexit vote, but what the vote to leave means for businesses both inside and outside the UK in the long term is yet to be fully understood. In the short term, however, the impact on our industry is beginning to be felt.
The pound is at its weakest for some time, dropping to $1.242 in October. This means two things for businesses: firstly, the prices of raw materials are increasing, pushing up costs in the process; secondly, as producers’ costs increase they’ll eventually need to pass on some of those to customers, which will lead to inflation.
Unfortunately, the rising costs of raw materials are unavoidable. Raw materials increased in cost by a record 4.6% between September and October alone, contributing to a staggering 12.2% yearly rise.
As a result, many experienced manufacturers are looking at ways to improve internal processes and efficiency in a bid to offset some of the costs of raw materials. In most manufacturing techniques this won’t be achievable, especially those that are raw material-intensive, such as milling. But some, including cold forming, offer a unique opportunity.
Cold forming is the process by which metal is shaped at room temperature, without removing material. A simple blank (either sawn or cropped from around bar or wire or as a cold headed pre-form) is placed within a die and a punch is pressed into the blank at ambient temperature. The blank then takes on the form of the punch and the die.
Compare this will the wasteful milling process, which removes material from a workpiece to achieve the desired result. Surprisingly, this technique is often used ahead of cold forming, despite the latter being capable of delivering precision engineered parts with up to 80% less scrap than machining processes
Put simply, processes such as milling, which require larger volumes of raw materials, are a luxury at this point, especially when there are techniques such as cold forming available that can deliver an equal – if not better – end product at a lower cost.
Now that increasing raw materials costs begin to impact on profitability, and inflation looks set to compound this issue, it’s time for businesses to get smart and take advantage of efficiency enhancing and cost saving opportunities such as this as soon as possible.
Click here to learn more about cold forming and how it can reduce your costs through using less raw material.