Case Study – Benefits for fabricating in house & reasons why to stop losing money purchasing processed steel from steel service centres



Natural competitors of SMS can not identify how the machine they are supplying will drive efficiency and optimisation into their client’s workshops so it’s difficult to understand why a workshop would select that type of machine tool agent or machinery builder to meet their growth ambitions when they appear not to know how the steel industry works or how steel is fabricated?

  1. A fabricator may also provide in house detailing so the can add value to internal processes such as machinery, record management, 3D detailing and integrating to other steel management software such as StruMis
    • Value engineering is possible when the detailer selects the correct machine that has capability such as layout marking or machine/plasma coping.
  2. Deploying the full functionality of a steel processing machinery such as a beamline or coping robot will save 40% from the fitter/boilermakers workshop bench when comparisons are made to how the steel service centre with a beamline delivers steel to the fabricator
    • Clients of SMS have conducted tests to compare the time saved from purchasing processed steel from the national steel service centre compared to their in house beamline that used the full functionality such as:
      • Machining cope fitting preparation such as full penetration welding
      • Machining cope slots and compound mitre that the bandsaw can not cut
      • Machining traditional coping that the steel service centre with the beamline can not perform that historically the fitter on the bench performs manually with plasma/oxy torch
      • Layout marking that saves 5 minutes per add-on-part
      • Infra build in Poet Adelaide has a 1990 designed cheap beamline that can not provide the above functionality that your workshop WILL need to perform manually with skilled labour that is difficult to recruit
  3. The steel service REFUSE to layout mark add-on-parts as they do not want to slow their machine down and increase the deliveries that will ensure they miss out on selling a higher tonnage of steel at faster delivers as their machines are too slow to layout marking at least six times slower than SMS beamlines.
    • Whilst the steel service is committed to investing in the incorrect beamlines that are not designed to layout mark efficiently they will continue to refuse to layout mark AOP’s for the fabricator
    • A fitter/boilermaker can assemble (tack only) 50 add-on parts (AOP) per shift. Most fabricators agree in the estimate for the project allows for 5 minutes for the boilermaker to manually layout mark, 5 minutes for tack and assembly and 5 minutes for material handling, supervision and quality
    • Each fitter is costing $75K per year @ $60/hour to layout mark AOP’s
    • 10 fitters cost $750K or sell price of $1.5M for layout marking at marked-up prices to the client.
    • The fabricator can process between 28-32 meters per hour in fully automatic mode that includes the full capability of the beamline so a limited amount of manual labour is required on the workshop bench to complete the processing of any complex machines profiles that no beamline can machine (not many common profiles).
    • Sms can show you what these profiles look like & explain why no beamline can machine these examples
    • The steel service centre invests in the slower 1 meter per minute CONTOUR marking that is so slow the workshop can’t live with such a reduced capacity and longer delivery.
    • The 6m/minute V-scoring is the better technology that the steel service centre refuses to acknowledge they are using the incorrect layout marking philosophy.
      • They are concerned their culture isn’t sophisticated enough to have work in lights out or be able to sell the additional value to their clients so the higher specification machine capability won’t be utilised based on the centre’s historical processes and empathetic approach to understanding what the fabricator really need.
      • Why these companies don’t want to save their clients 40% from their workshop bench and charge accordingly if they order beamline machines from SMS.
        • The people specifying beamlines for all the steel service sites are not visiting their clients understanding how to specify a beamline to add value to solve these fabricators problems.
        • It is more comfortable for these national companies to like what they know and know what they like.
        • Even if they ordered a beamline from SMS they would be under-resourced to measure the gap in capability that drove additional revenue and profit into their business
        • The moment the steel service centre invests in beamlines from SMS it will make it very difficult for any fabricator to justify an investment in a beamline from any supplier when they can receive what they require from that steel service centre that ordered the beamline from SMS. They have to pay for the capability and then have the skills to apply this capability & value to the market and the culture and motivation isn’t there.
        • It’s the problem for the fabricator who may not want to pay for layout marking & nor should they when it’s performed so slowly on a machine designed not to do it correctly.
        • The fabricator, however, understands these costs and needs to be smarter so they can win more and do more against their local and foreign competition.
      • Why should a fabricator avoid investing in a traditional beamline like the steel service centres are committed to purchasing instead of the higher capacity and automated beamlines that fabricators are and should be investing in from SMS.

The numbers used in this example are a guide and will change based on the exchange rate the machines are purchased at, finance interest rates will vary and labour rates an individual workshop applies to the operators. We encourage clients of SMS to work in partnership to validate these numbers for their own ROI and charge our rates to the market.


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Contact Specialist Machinery Sales today to discuss a superior machinery strategy for your business.

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