May/June 1999
The Timken Company—now celebrating its centennial—has become a world-class producer of alloy steels and bearings by emphasizing scrap consistency and quality in its operations.
By Robert L. Reid
Robert L. Reid is managing editor of Scrap.
Becoming the world’s leading manufacturer of highly engineered bearings and alloy steels doesn’t happen overnight.
For The Timken Company, the journey to that position began a century ago when Henry Timken and his sons, William and Henry (or H.H., as he was known), entered the bearing business in St. Louis in 1899. They later moved their company—The Timken Roller Bearing Axle Co.—to Canton, Ohio, to be near the growing automotive industry. They wanted to supply car manufacturers with tapered roller bearings that would support a vehicle’s radial load (weight) as well as its thrust load (that generated by rounding a curve).
While the future of the automobile was bright, car factories were nonexistent in the early 1900s. So the three Timken men traveled from machine shop to machine shop promoting the benefits of their product—and slowly building a name for themselves.
By 1916, Henry had passed away, leaving his sons in charge. With the war effort in full-swing, steel was in short supply and bearings were in big demand. William and H.H. then made a momentous decision—to manufacture their own steel—making their firm the first and, to this day, only U.S. bearing company to do so.
Over the years, the company continued to expand at home and overseas. Today, The Timken Company has $2.6 billion in annual revenue, with 155 sales offices and plants in 25 countries encompassing some 21,000 employees. In 1997, the firm’s steelmaking operations had more than 1.25 million tons of annual melting capacity.
And it has established itself as the leader in the specialized niches of bearings and alloy steels—all made from scrap.
The Consistency Key
Since Timken makes steel and steel products to order for manufacturers of industrial, automotive, aerospace, and medical products, it must start with consistent, high-quality scrap from its suppliers.
“We’re known for being very particular,” says Randy Ehret, manager of strategic sourcing for steel. “We’ve found that if a scrap supplier understands what we as the customer want, they can learn over time to repeat it with consistency. And at Timken, consistency is a key element in everything we do.”
Such uniformity of product doesn’t come easily. Timken spends much time and effort training scrap suppliers about its needs. Sometimes, new suppliers can struggle for months to get up to speed, during which time Timken “tries not to be punitive,” Ehret says. “We work with them to show exactly what’s wrong.”
For scrap suppliers, the key to long-term success with Timken is effort. “If they’re trying, we’ll work with them,” Ehret says, noting that Timken has been working with some East Coast suppliers for more than a year. “Sometimes they fall on their swords. But if we know they’re working toward a goal and have a system in place, then we’ll give them a chance.”
Timken holds a conference every two years at which new and potential suppliers learn what the company expects—and not just in terms of quality. They learn, for example, that Timken’s scrap orders must be filled within 30 days of release—and preferably spaced evenly throughout the month—or else the firm has the right to cancel.
Also, all scrap shipments arriving by truck must be accompanied by a valid PO-Line-release and recognizable point of origin. And Timken won’t accept any deliveries from frameless trailers or from trucks with vertically opening tailgates because both will add to its internal logistics costs.
In addition to these conferences, Ehret notes, “we spend a lot of time in scrap yards, explaining to processors what works for us and what doesn’t,” such as which grades are acceptable, why a particular large piece of scrap won’t work, and so on.
When Ehret says “we,” he’s referring to himself, Scot Bowman, manager of direct materials and scrap operations for the steel business unit, and Steve Farley, principal raw materials analyst, known by some as the scrap team’s “inner circle.”
The next circle out includes staff from scheduling, marketing, the general purchasing director, and others from senior management and the plant. The inner circle and this group meet monthly to coordinate the firm’s scrap purchases and set its short-term strategy.
A larger group meets quarterly, encompassing the monthly team as well as staff from the technology group and melt shop. The purpose of these meetings is to develop long-term scrap strategies. “We’re looking at long-term continuous improvement and the course of our scrap usage one to three years out,” Ehret explains.
Then, too, there’s the purchasing supply management program. Headed by Cengiz Kurkcu, director of purchasing and business administration, the program conducts quarterly reviews of the steel division. “We go before senior management and show them the ideas we’ve been working on,” says Ehret, noting that “over the past few years, we’ve implemented ideas that have saved millions of dollars.”
One idea, he notes, was a basic change in how the company uses scrap. “A year ago we regulated our purchase and use of scrap to maximize our production. Today, however, we’ve switched from an organization driven by throughput to one that is very much driven by cost-consciousness,” Ehret says. “We’ve significantly changed our melt practices so that we may better take advantage of lower-priced scrap.”
Partnering for Success
Another way Timken keeps a firm handle on its scrap purchases and “partners” with its scrap suppliers is through a portfolio management program, now in its third year.
The program is based on what scrap the company would be able to use in three scenarios: worst case such as a recession, normal business conditions, and best case when the firm could operate at full capacity. “From there, we established three ways to buy,” Ehret says. In “firm” scrap purchase agreements, Timken agrees to buy a specific amount of scrap and the supplier agrees to supply that amount, with penalties on both sides for failure to honor the agreement. “Conditional” purchasing arrangements are similar, with the major difference being that they give both parties an out—if Timken doesn’t want to buy the material or if the supplier can’t get the material. Then there are spot purchases, which cover traditional month-to-month buys.
Firm tonnage accounts for a third to half of Timken’s scrap needs, “so if we’re running at 75-percent capacity, then we’re primarily allocated to our portfolio partners,” Ehret notes. “We’ve tried to set conditional tonnage at levels that would allow us to buy it at least 90 percent of the time. Firm and conditional tonnage take care of about two-thirds of our needs, with spot tonnage making up the rest.”
This program has advantages for both sides. For Timken, the program has resulted in lower transportation costs and a consistent, reliable supply of scrap.
For suppliers, “if a company sells to us over a period of time, they can find ways to make our product at less expense, so there’s a cost benefit for them,” Ehret says. “They also have the benefit of a known home, one they can count on when the market is down. Now, for instance, the only firms we’re buying primarily from are our portfolio suppliers.” Typically, he says, Timken goes to its portfolio partners first when looking for spot tonnage.
Why, you may ask, does Timken go to such lengths to partner with its scrap suppliers? For starters, the firm purchased $135 million of scrap—about 900,000 gross tons—in 1997. Explains Kurkcu, “Direct materials are our largest cost and scrap is the largest component thereof. It’s one of the single largest purchased items within the company.”
Quality Rules
In addition to consistency, quality is a top priority for Timken—in its final products as well as the scrap from which they’re made.
Attesting to the company’s dedication to quality, all Timken steel mills are certified as QS-9000- and ISO 9000-compliant, notes Ehret. Timken “has long been a leader in environmental responsibility,” he explains. In all, 16 Timken facilities have achieved ISO registration; 15 are QS-9000-certified.
From start to finish, all scrap as well as all final products are scrutinized for quality. “Suppliers are checked against specs and are held to them,” says Bowman. “Every load that comes in is inspected. If there’s a problem, we’ll either reject it or regrade it. We log suppliers’ grades and examine them monthly to compare total tons with problem tons to achieve a quality measurement. With individual suppliers, we strive for 98 percent or above.”
Incoming scrap loads are given more than a cursory glance, Bowman notes. “We do some sampling before a load is delivered and then a visual inspection when it arrives. With railcar shipments, once the material is out of the car, we inspect the center of the load for quality.” Tests are also done at every stage of the melt process and taken to the company’s on-site chemistry lab.
Timken has even implemented a “quality-pledge” program with its scrap suppliers. In this program, suppliers promise to deliver scrap that meets a specified chemistry based on Timken’s regression analysis. On the plus side, suppliers that consistently exceed specifications may obtain premium prices. Those that fail to deliver the proper chemistry, however, face strict penalties.
From Scrap to Steel
Timken buys primarily shredded, busheling, and high-dense, which is transformed into alloy ingot, blooms, or bars. These products are then manufactured into bearings, gears, seamless tubing, and other products. The company used to also consume small amounts of pig iron, but “every time we ran the numbers, scrap priced itself as the most economical alternative,” says Ehret.
The 70-acre Harrison plant, the older of the two, has about 700 employees and runs two 130-ton electric-arc furnaces that produce 500,000 tons a year.
Scrap enters this plant usually by truck, though the mill also has two rail spurs. All incoming scrap is identified, then stored in bins according to grade and supplier. Timken “controls which companies dump into which bins,” says Stan Whitehouse, senior logistics analyst. “Our scrap keeps its identity all the way into the charge bucket.” It’s Steve Farley’s job, in particular, to use monthly and daily linear programming projections to determine the scrap grades and quantities that need to be kept in inventory and loaded into charging bins.
Various grades of scrap are combined in a 900-cubic-foot charge bucket based on a computer-generated metallurgical “recipe.” The density of the scrap is important because the higher its density, the fewer buckets need to be charged. Plus, the melt is more efficient, which directly affects production. As Whitehouse explains, “Each time you open the furnace you lose heat, which is a big problem when you’re throughput-constrained.”
In the initial melting stage, “our furnace aims for chemistry are fairly wide, and we’re trying to pick up as much alloy as possible,” Whitehouse says.
The molten metal is subsequently tapped and transferred, if necessary, to a holding station where its temperature is either adjusted or maintained. Throughout the melting process, slag is skimmed from the metal’s surface and chemical analyses are performed to ensure that the proper chemistry is being achieved.
Next, the metal heads for the ladle furnace where alloys are added, then moves on to the ladle-refining station where it’s degassed. At this point, final metallurgical and chemical properties are adjusted.
After degassing, the metal is ready for casting in the mill’s four-strand continuous-sequence caster. There, molten metal is poured through chrome-coated copper dies, which produce strands measuring 11 by 14.75 inches. A bar chain is inserted from underneath to help pull the metal through the dies. The chain releases at a specified point, allowing the now-cooling strip of metal to channel itself down the casting strand, explains Mike Buckley, operations coordinator. As the metal makes its way down the caster radius, it’s misted with water for further cooling. As it moves along a horizontal path, the strand is cut to pre-specified lengths, and the cut blooms are taken to the rolling process for conversion to bars prior to being shipped.
The Faircrest mill, Timken’s flagship operation, is just down the road. The mill, built in 1985, sits on 450 acres, with one ultra-high-powered 160-ton electric-arc furnace that can churn out 16.5 heats a day. Though it was designed to produce around 550,000 ingot tons annually, the mill made a record 869,000 ingot tons in 1997. The mill accounts for about two-thirds of Timken’s overall melting capacity of 1.25 million tons.
In contrast to the Harrison mill, Faircrest receives all of its scrap via rail and has fewer employees at 475. “Most everything here is remote-controlled,” Farley points out.
Similar to the Harrison plant, scrap selection at Faircrest is made according to linear programming, and supplier identity is no less important. A vendor extension code is given to every supplier and every grade that comes in here, Farley notes. Again, consistency and quality are the keystones of the operation, and they’ll likely continue to be Timken’s priorities. “Here at Timken, we are scrap-based,” says Ehret, “so we will definitely have a need for scrap in the future.” •
The Timken Company—now celebrating its centennial—has become a world-class producer of alloy steels and bearings by emphasizing scrap consistency and quality in its operations.