The last 25 years have seen standards created and implemented to increase the quality and repeatability of valves procured from low-cost manufacturing sources around the world. As part of the process, potential sellers into the U.S. market have reportedly spent millions of dollars improving facilities and processes. But what’s the consensus: has it worked?
VALVE Magazine reached out to the valve manufacturing community to get reactions to the question of whether they feel that valves manufactured partly or fully in countries with lower costs are better now than a quarter century ago.
Most respondents agreed that in some ways, these valves are better. But problems still exist.
Bert Evans, manager of Educational Services, Final Control at Emerson Automation Solutions, said that, “Improvement has come by developing, then enforcing, comprehensive specifications that include such things as vendor qualification, weld procedures, inspection and testing, and compliance certificates.”
In earlier days, many overseas companies were certified to quality standards such as ISO [International Organization for Standards] 9001 by their governments with no accreditation and little attention to process control, valve professionals explained.
But as more and more OEMs demanded proper certification, the quality processes and equipment improved, says John Ballun, president and CEO, Val-Matic.
It also was common in some foreign companies to publish counterfeit industry certifications such as American Petroleum Institute approval in literature with no basis in reality. Hopefully, those times are behind us, VALVE Magazine respondents said.
Carlos Davila, product manager, Crane, noted that two types of low-cost manufacturers are involved—U.S. companies operating in the other countries and companies that are strictly local manufacturers. What’s happened with each depends on which type.
“U.S. manufacturers did not go to LCMs [low cost manufacturing areas] for quality, but for cost,” he pointed out. Yet they maintained a presence in these countries to make sure the quality was upheld.
“This was at additional cost, but essential to keep their names free of failures,” he explained.
Local manufacturers didn’t have that incentive.
Meanwhile, some valve professionals do not think quality from low-cost areas of the world has changed that much.
David Bayreuther, vice-president of engineering at Metso, said quality still runs the range of top-of-the-line products from good companies to “downright disgraceful” from bad-quality providers.
“What I am seeing is that the purchasers are getting wiser and taking more care to ensure they get the level of quality they need,” he says. That means fewer poor-quality items are entering the global market from some areas, “but it is still possible to get very poor quality.”
PROBLEMS AND PROGRESS
According to Jim Barker, director of Customer Order Management and Field Service at DeZURIK, one of the most significant concerns over the 25 years from lower-cost sources is casting quality, a sentiment mentioned by every person who responded to VALVE Magazine’s call for comments on this area.
As Ballun explained, “Castings would have internal defects such as porosity and external defects such as inclusions and extreme surface roughness.”
One source, who asked for anonymity because of confidentiality issues, related instances of castings from India that fractured during hydrotest due to incorrect heat treatment. He also saw radiographic-tested castings with holes large enough “to put your fist through” when defects were excavated and said through-wall leakage on machined castings that had already been “tested” was not uncommon.
As a result of what was coming this way, “U.S. manufacturers were forced to rigorously inspect and ultimately eliminate multiple suppliers over the years,” Ballun said. Meanwhile, some foreign markets simply accepted this level of quality at the time and some of that poor workmanship still exists.
Evans pointed out that machining accuracy was frequently problematic.
The problems “were caught by inspection and testing, but received high rejection rates of as-cast or post-machined valve bodies,” he said.
Also, consistency varied considerably from area to area, which meant monitoring and inspection was vital for the entire process, according to Howard Williams, group sales manager for Rotork North America.
Any companies sourcing from LCMs needed “feet on the ground at the point of supply” to constantly monitor the manufacturers and ensure quality all the time, he said.
Although casting was a pressing concern, it wasn’t the only one. Bayreuther noted that material quality was one of the most significant issues.
He also said that over the years, the need to compete by price resulted in degradation in quality and longer delivery times. Also, low-cost supply bases had less product knowledge and experience, leading to additional quality challenges.
That having been said, there have been substantial gains in the past 25 years, most respondents said. When asked what issues appear to have been effectively addressed, Barker felt that casting quality and product quality in general has improved while Williams noted that good suppliers who can be relied upon for consistent quality have started to emerge in many areas of the world.
Another movement forward has resulted from awareness of counterfeit valves and parts from overseas factories.
Ballun stressed, however, that with counterfeiting, “It is imperative that the valve industry maintain vigilance in stopping this practice.”
Bayreuther noted significant improvements in sealing performance as well as material quality over the last few decades.
“Emissions performance has improved due to better designs,” he said, and better gasket and sealing materials are being used. Material quality for low-cost regions has also improved based on lessons learned and implementation of increased quality oversight.
While gains have been seen, several issues need to be addressed more fully.
The top concern mentioned by several people was the loss of intellectual property.
“As technical designs, processes, and technology are shared with factories overseas, it is difficult to secure the information for the exclusive use of the sponsoring valve manufacturer,” Ballun said.
His company was advised to duplicate its patents in China as a defensive measure to prevent Chinese businesses from patenting its products.
“It would be impractical to defend intellectual breaches in foreign courts,” he pointed out.
Barker also mentioned concern about the integrity of certifications and quality programs while Williams raised concerns about health and safety issues as well as general labor practices and laws within LCM countries.
Meanwhile, Bayreuther said he believes that while most of the challenges have been addressed and risks reduced, he feels the most significant issue may be what the whole industrial world is facing: loss of tribal knowledge.
“Most end users and manufacturers have an aging work force nearing retirement,” he warned. In this country, for example, U.S. Bureau of Labor statistics show that the number of new entries into the metal manufacturing industry is low.
“The loss of product knowledge and application experience is happening in many companies today. Product knowledge and experience takes many years to develop, usually by making mistakes and learning from them. I hope our industry can react in time to avoid any significant mistakes,” he pointed out.
Still, in general, end users around the world appear to be more comfortable with today’s valve quality, including from low-cost areas. Ballun gave credit to the adoption of quality and industrial valve standards and the introduction of robotic computer numeric coding and welding equipment, which have contributed to improved manufacturing processes.
Williams observed that, “It is inevitable that anything that is manufactured today will have some material content that’s ‘globally sourced’.”
End users today, however, are more trustworthy of brand name manufacturers that know how to demand quality from LCM vendors, he added.
Davila, on the other hand, pointed out that some end users are still not comfortable purchasing from LCM countries. They may have good working relationships with any U.S. manufacturer on their approved manufacturers list “but still not accept material from some low-cost countries,” he said.
Evans and Bayreuther felt that end users are more comfortable with products from LCM countries, “provided the valve supplier can demonstrate a rigorous and comprehensive quality specification,” Evans said. Bayreuther noted that the comfort level is also rising.
“Ultimately, it is not the low-cost countries that establish the product quality; it is the manufacturer’s responsibility to ensure they are purchasing quality material and delivering quality valves,” he said. “Manufacturers have adapted their quality processes and purchasing methods to help eliminate the risks,” he added.
There is also speculation that some areas of the world considered low-cost in previous years (India and China, for example), are now in a process of losing that status.
Costs in those two countries are rising rapidly so many manufacturers and end users are looking around for other areas where “lower costs” might still be active.
Williams observed that, “The last time I read about this topic, it was Vietnam that was fast emerging [as low-cost], but I am sure things are moving on.”
What’s more, “one thing you cannot expect to get from a country such as Vietnam when compared to China or India is scale and scope of operations,” he said.
Eventually the world will run out of LCM countries, but technology will continue to evolve so that “some of the traditional methods of manufacturing will be replaced by simpler and more efficient processes,” he said.
Meanwhile, some developing countries are going through their industrial revolution now, “which in turn will raise costs as the skilled workforce becomes more demanding,” Williams said.
Barker and Bayreuther noted that Africa is frequently mentioned as a source for low cost possibilities because of its large labor force.
However, “it is lacking the material production facilities for castings and machining, as well as transportation,” Bayreuther said.
Those three conditions: a large, low-cost labor force, facilities for casting/machinery and transportation access are key to finding sources.
“China and India were the last untapped regions with all these capabilities,” Bayreuther said. As they expand, their costs are leveling out.
“My current thinking is that automation or production will minimize the labor cost differences and enable production to move close to supply and customer bases,” he said.
Ballun pointed out that, over the last half century, companies have traveled from Japan, to Taiwan, to China, and to South America in search of the lowest cost labor and resources.
“There is no telling where future opportunities will appear given the unstable governments around the globe,” he said.
No matter where the next LCM country is, however, there will be a learning and relationship-building curve. Does that mean the parties that go there will need to start from scratch in the new areas?
Ballun observed that, while many of the lessons learned in China and South America will be applicable to future locations, “Learning to interface with the individual governments will always be unique and challenging.”
Davila pointed out that, in many instances, end users must approve all manufacturing locations, and audits are required at great expense to the manufacturer. Because of that reality, any future LCM country will have to prove promising to take the financial risk involved.
On the other hand, Evans didn’t think manufacturers would be back at the starting gate. “Valve manufacturers’ quality standards are much more mature today than 25 years ago, so they should be easier to apply with new vendor qualifications,” he said.
Bayreuther does not think the next region will bring new types of problems, but will instead face the same challenge all the industrial world is facing: lack of experienced labor. He said his hope is that automation will enable production to return to North America and Europe, which means finding low-cost sources won’t be as critical.