Designing, Manning & Operating a World-Class Downstream Business
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Designing, Manning & Operating a World-Class Downstream Business

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A presentation by Dr Tom Farley, Managing Director

A presentation by Dr Tom Farley, Managing Director

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Designing, Manning & Operating a World-Class Downstream Business Designing, Manning & Operating a World-Class Downstream Business Presentation Transcript

  • Designing, Designing Mannin and Operating a ng World-Class Down nstream Business Dr Tom Farley y Managing Director Innoval Technology Ltd
  • Summary of Presentation Innoval Technology Background g Designing an Efficient and Viable Downstr ream Plant Market Analysis Equipment Specification Plant Design Cost Modelling Developing the Right Skills Achieving World-Class Standards Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 2
  • Innoval Technology Ltd l
  • Innoval Technology – Our Credentials Innoval Technology is an independent commpany providing a unique resource of expertise to the downstream aluminium industry Formed in 2003 as a result of closure o one of Alcan’s Global R&D centres of We are a group of 26 aluminium experts – our strength is the breadth of our aluminium knowledge Rolling and extrusion process expertise Metallurgy product expertise Surfaces expertise p Our engineers have an abundance of prodduct and process experience Most have been supporting the industry for over 20 y pp g ry years Many have held Senior Management p positions in global aluminium companies. Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 4
  • Innoval Technology – Strategic Support Innoval has undertaken the following types of strategic support work for potential s investors in downstream fabrication busine esses: Technical Due Diligence on existing plants Pre-Feasibility Studies and Greenfield plant design Plant investment and upgrade support t Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 5
  • Designing an Efficient and Viable Downstream Plant
  • Methodical Approach Market Analysis Equipment Specification Technical Configuration Technology Choices Plant Design Cost Modelling Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 7
  • Market Analysis Review all potential products for the plant Home market Export market Gather data on product sales prices Important to have understanding of marke price vs. production costs et Some products cost more to produce High sales price does not necessarily m mean high profit Analyse competition in home and export m y p p markets Quality required to compete in chosen market Decide on which products to manufacture Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 8
  • Methodical Approach Market Analysis Equipment Specification Technical Configuration Technology Choices Plant Design Cost Modelling Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 9
  • Assess Technical Challenges for Chosen Products Products vary in their complexity and in their difficulty of manufacture The products determine what equipment is required in the plant s Type of rolling or extrusion equipment Type of finishing operations Example – Can Body Stock (CBS) A single can line manufactures 2,000 cans per r minute (1 billion per year) 10,000 tonnes of aluminium per year (2 x 14 tonne coils per day) Some may think this is a simple product … BUT actually it is technically demanding Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 10
  • Can Body Stock - Thickness Reduction an Tighter Control nd Coca-Cola’s First All Aluminium Can, 1967 , Coca-Cola Aluminium Can, 2009 , (weight 21g) (weight 12g) Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 11
  • Can Body Stock - Thickness Reduction an Tighter Control nd Extremely tight specification for aluminium m sheet thickness Correct thickness tolerance can only b be achieved with state of the art thicknesss control systems ... … AND the know-how to get the most from know how these systems Unlikely to be achieved at start-up Failure to meet specification will lead to ca an coil l il length th plant jams and can strength issues ~10,000 m Profile ( (crown) ) ~0.5% Al strip 250 +/- 5 microns Strip wid ~ 1.8 m dth Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 12
  • Can Body Stock – The Challenge of “Earin ng” Ears “Earing” Anisotropic mechanical properties caused by crystallographic texture Sheet with “earing” that is out of specificat tion will Risk jamming and stoppage of the can n plant line Result in volume of can being too sma all can after re-draw and wall ironing with severe earing Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 13
  • Can Body Stock – The Challenge of “Earin ng” World-class earing can only be achieved w when rolling DC ingot through a Hot Line that includes a Hot Tandem Mill. Source: SMS Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 14
  • Summary of Sheet Rolling Process DC Hot reversing Hot tandem Caster mill mill ng Pre-heatin Hot coil Scalper Furnaces Filter Furnaces Filter Continuous caster Hot ll H t roller (Self- anneal) Cold coil Cold finish hing Cold mill mill Coating Final Inter-anneal Cold roughing mill anneal Doubling mmill Cold mill (foil) Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 15
  • Rolling Technology Configurations for Var rious Products Hot Band Option HRM + 4-stand HTM coil-to-coil HRM Belt Caster Roll Caster Typical Capacity (tonnes pa) 700k 150k 120k 20k Can Body S C Stock (C S) (CBS) Can End Stock (CES) & Tab Foilstock Standards - Low Mg Products Standards - High Mg P Surface Sensitive Products S f S iti P d t Thick Products Clad Products Others meets world class quality requirements can be made but does not meet all quality requirements e cannot be ma or fails to meet most quality standards. ade Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 16
  • Making the Appropriate Technology Choic ces Need to identify correct technology options to achieve current customer quality s standards E.g. on-line measurement technologies There are significant variations in performa ance and price of equipment Consider future proofing the equipment to meet evolving customer needs Tightening of specifications Increasing coil weights (width and l gth) I i il i ht ( idth d length) Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 17
  • Methodical Approach Market Analysis Equipment Specification Technical Configuration Technology Choices Plant Design Cost Modelling Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 18
  • Plant Design – Capacity Calculations Correct sizing and multiples of equipment type E.g. What size of furnace and how many? g y Assessment of spare capacity within key a assets What other products could the plant make to fill any spare capacity? Awareness of the magnitude of process lo osses at every stage (recoveries) To sell 1000 tonnes of final product the rolling mill may need to roll 1200 tonnes e Example – Rolling Mill The capacity of a rolling mill depends on t products being rolled the A rolling mill represents a significant comp ponent of Capex so must be specified very carefully Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 19
  • Example – Rolling Mill Capacity Calculatio ons Product One Two Thre ee Four Five Final gauge [mm] 0.1 0.22 0.5 5 0.8 2 Percent of production 33% 23% 22% % 9% 13% Rolling time [min] 54 18 10 6 3 Handling time [min] 30 20 20 15 10 Overall capacity [ktonne/yr] Overall capacity [ktonne/yr] 110 Product One Two Three Four Five Removal R l Final gauge [mm] Final gauge [mm] 0.1 01 0.22 0 22 0.5 05 0.8 08 of heavy Percent of production 39% 28% 26% 7% gauge Rolling time [min] 54 18 10 6 product Handling time [min] g [ ] 30 20 20 15 Overall capacity [ktonne/yr] 83 Product One Two Three Four Five 10% Final gauge [mm] 0.1 0.22 0.5 0.8 increase Percent of production 39% 28% 26% 7% in pass Rolling time [min] 49 17 9 6 speeds p Handling time [min] 30 20 20 15 Overall capacity [ktonne/yr] 87 Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 20
  • Plant Design – Optimising Layout of Equip pment Based on knowledge of world-class opera ations Need to account for potential expansion Ensure efficient process flow Important safety considerations WIP Calculations (buffer sizes, WIP storag around plant) ge “Discrete Event Simulation”, if necessa Discrete Simulation ary Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 21
  • Methodical Approach Market Analysis Equipment Specification Technical Configuration Technology Choices Plant Design Cost Modelling Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 22
  • Cost Modelling It is easy to build a simple Excel-based co model ... BUT … ost Need realistic model inputs based on expe erience and expert calculation Product recovery vs year from startup Efficient staff levels R&D costs (~0.5% of turnover typical) Calculation f Capital Costs C l l ti of C it l C t (CAPEX) Inclusion of all key and ancilliary equipment Calculation of Operating Costs (OPEX) Requires a good understanding of the process s Computer models can be used to p p predict utility usage (electricity, gas, etc.) g ( y, g , ) Useful to attribute costs correctly to differe products ent More complex tools can be used to analys the model (e.g. Monte Carlo) se Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 23
  • Example of Cost Model Output 400,000 6,000,000 NPV [US$'000] 182,502 350,000 5,000,000 IRR 12% Cumulative Cash Flow [US$'000] 300,000 4,000,000 US$'000] 250,000 3,000,000 CAPEX [U 200,000 2,000,000 150,000 1,000,000 100,000 0 C 50,000 -1,000,000 0 -2,000,000 2009 2014 2019 2024 2029 2034 YEAR Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 24
  • Pre-Feasibility Study – Flow Diagram Market products d t Equipme ent equipment i t Plant Analysis volumes Specifica ation Design extra capacity capex & opex Cost Sales IRR, NPV, etc. Modelling prices no Viable? yes Bankable Study Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 25
  • Developing the Right Skills g
  • Typical Staff Requirements for a Downstre eam Plant Typical 250,000 tonne rolled products plan operating in Western World nt Per Shift 4 Shift S System Day Staff TOTAL Graduate 60 60 Skilled Labour 60 40 24 70 310 Unskilled Labour 15 60 6 60 430 Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 27
  • Typical Skills Requirements for a Downstr ream Plant Managerial Planninng Schedu uling Finance e HR Sales Sales mmanager for each major product group Technic Representatives at customer plants cal Technical Metalluurgists Engineers g Chemis sts Materia scientists als Plant d M i t Pl t and Maintenance Statistic cian Engineers Electric cal Mechan nical Other Craftsmmen Medica al Fire pro otection Driverss Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 28
  • Recruitment Issues Graduates Need a good supply of the correct disc p g pp y ciplines They will need further development an training nd Experienced Staff Internal transfer from other group operrations (if they exist) Access to “early retirees” from world-class operations Head-hunt from competitors Retention of Staff Risk of competitors headhunting your g good people Threat to both existing and new compaanies May come from a related industry, eg S y y, g Steel and aluminium rolling need similar g skills Potential loss of knowledge Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 29
  • Approaches to Graduate Development University-based “Centres of Excellence” Specialised focus ( g Aluminium, Rolling or Extrusion, Surface Science) p (e.g. , g , ) Sponsor students, projects and depart tments In-house R&D Centre Develop specific skills within R&D projects Transfer R&D people to plants in opera ational roles Ongoing Development of Staff Use specialist training courses Mentoring from experienced profession l M t i f i d f i nals Can be provided by independent exterrnal organisations Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 30
  • Training Example – Aluminium Rolling Tec chnology Course ALUMINIUM ROLLING TECHNOLOGY COURSE - Innoval Technology, Banbury 11-15th May 2009 MONDAY 10 TUESDAY 11 WEDNES SDAY 12 THURSDAY 13 FRIDAY 14 Intro K Smith / T Farley y Outline of Sheet Rolling Thermal Aspects Lubric cation Vibration Flatness Process of Control Rollng Tom Farley The Business of Rolling Mark F Foster Flatness Control Tom Farley COF FFEE Condition monitoring Workshop COFFEE Chris Davenport Tom Farley Dan Miller COFFEE COFFEE COFFEE Mechanics Thermal Aspects Surface G Generation of Rolling Workshop Flatness Gauge Control Control Chris Davenport Chris Davenport Mark F Foster Mechanics of Rolling Mechanics of LUNNCH Dan Miller Workshop Profile & Flatness enroute Jaguar e Wrap up Session Chris Davenport Kyle Smith Dan Miller LUNCH LUNCH LUNCH LUNCH TOUR OF INNOVAL Machinery of Rolling Control Systems Profile Measurement COURS VISIT SE and Control (JAGUAR) Tom Farley Dan Miller Kyle Smith COFFEE COFFEE COFFEE Process Metallurgy Control Systems Profile Measurement Gary Mahon and Control Dan Miller Process Metallurgy Kyle Smith Workshop Rolling Process Models Wrap up Session Gary Mahon Wrap up Session Chris Davenport Free Social Event Fr ree Social Event Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 31
  • Managing Knowledge Assets Important to maximise the knowledge that exists in employees t Staff with valuable knowledge which is not being exploited s Share knowledge of manufacturing to improve product quality Determine gaps i th k D t i in the knowledge b e (R&D programme) l d base ) Loss of long-serving, knowledgeable e employees Standardise operations and develop “B Best Practice” Knowledge Management using K-Maps Team-based Workshop approach invo olving – Manufacturing – Technology – Sales Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 32
  • K-Map of Aluminium Extrusion Operation How to Build a K-Map Assemble those with knowledge Define Product Attributes Define the Process Stages Define the strength of relationship Develop content via Intranet Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 33
  • K-Map Summary Level Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 34
  • Achieving World Class Standards d-Class d
  • State-of-the-Art Equipment is Not Sufficien nt Realisation that investment in world class equipment does not on its own give world class products. Many examples in aluminium rolling mills a extrusion plants. and Return on investments taking longer th planned han Cannot match quality of world-class prroducts Need expertise that equipment supplie do not usually possess ers Equipment manufacturers looking to partner with product specialists to deliver a com mplete package Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 36
  • Benchmarking & Technical Audits World-class companies frequently use the internal resources to benchmark their eir operations against their own “Best Practice”. Team assembled f several days to re for eview and observe operations – Experienced operators – Technical experts – Host plant – Experienced facilitator Output is a “gap analysis” of areas to be im mproved. Action plan established Progress then reviewed at regular intervals Repeat visits to provide additional support, as required For single-site companies the same function can be carried out by external consultants Can also be of benefit to large multi-na ationals to get a “fresh view” Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 37
  • Typical Check-list for Technical Auditing & Due Diligence Environment, Health & Safety Accident recording and rates Equipment Operation Standard Operating Practices Use f St ti ti P U of Statistic Process C t l Control Maintenance schedules and strategies Investment plans Operational Efficiency Machine utilisation Recoveries Product Quality Test p ocedu es est procedures Reject Rates Technology System Approach to problem solving Product and Process improvement methods Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 38
  • Summary An efficient and viable downstream plant c be designed using Innoval’s methodical can approach based on >20 years working in t industry the Market Analysis Equipment Specification Plant Design g Cost Modelling A key stage is matching equipment specifi ication to the optimum product mix in order to maximise the financial returns from the pla ant We have emphasised the need for a broad range of technical skills and routes to d develop this important resource locally Achieving the anticipated financial returns requires more than just state of the art equipment and technology – but also input from world-class expertise and know-how Commercial-in-Confidence, © Innoval Technology Ltd IP08-006, Slide 39
  • Thank you for your attention … your
  • Innoval Te echnology An independent c company providing expertise to the aluminium industry www.innov valtec.com