Sandvik Machining Solutions (SMS), a division of Swedish engineering group Sandvik, may be the top manufacturer of metal cutting tools in the world, but that doesn’t mean they don’t need to work hard to stay that way. Right now, SMS holds one-fifth of the $17 billion metal cutting tools market, but the industry has been stagnant in recent years. In the last seven quarters, SMS’ organic order intake has steadily declined, thanks to decreasing demand from manufacturing and oil and gas customers.
While plant closures have helped SMS maintain operating margins above 20 percent, the overall decline doesn’t look like it’s going to reverse – partially because of the emergence of electric cars, which require less machining than metal-heavy combustion engines. Improvements in casting technology are also reducing demand for traditional metal cutting tools, so things could look bleak for SMS – but fortunately, the company is ready to adapt.
3D printing, which also poses a threat to traditional machining processes, is an area that Sandvik has been interested in for a while. Last year, the corporation invested a significant amount of money in a new 3D printing research and development center, intending to explore the ways that 3D printing could be implemented in their various fields of production. Jonas Gustavsson, President of SMS, believes that the company needs to adapt to overall changes in the industry and to the increasing customer expectations for cost efficiency by exploring new technologies such as 3D printing.
“We are quite convinced that we should and need to start looking at a larger part of the production chain. So that is an evolution of our positioning,” Gustavsson said. “We are going to want to take a position within additive in one way or another.”
Gustavsson also intends to acquire software firms to increase the company’s expertise in CAD/CAM simulation, as well as measurement technology and quality assurance. He plans to look for new commercial opportunities, as well, based on SMS’ growing expertise in 3D printing. However, he is by no means giving up on or planning to phase out the company’s traditional cutting tool manufacturing business.
“I also believe we will have found one or two areas that are strongly linked to what we do today,” he said. “We are talking about additive as an interesting area that we are looking at, but there are other areas as well.”
Half of SMS’ sales come from engineering, and just over a quarter come from the automotive industry. While battery-driven cars may pose a threat to those automotive sales, hybrid electric cars could actually be a boon for SMS, as they require a combustion engine as well as an electric battery and motor. In addition, the development of more complex materials like composites will likely benefit SMS as well, says Gustavsson, as demand for more expensive and specialized cutting tools increases.
The demand for round tools is also growing, Gustavsson added, as well as for advanced five-axis machining processes and the manufacture of smaller components, which SMS has been capitalizing on through new product launches.
“This segment is not going to collapse and disappear,” he said. “But we have to develop our offering so we are not as dependent on the standard inserts volume as we have been.”
It’s a refrain we hear often – while traditional manufacturing companies may face challenges as 3D printing and other frontier technologies come to the forefront, adaptation is key for survival. SMS, and Sandvik overall, seem to be doing a fine job at that. Discuss in the SMS forum at 3DPB.com.[Source: Reuters]