Fluid recycling can aid profits

Recent research has shown that top-performing machine shops annually invest two to three times more money in capital equipment than other shops. Not coincidentally, profit margins for high performers are almost double those reported by typical shops.

For all businesses, the objective is to achieve the largest possible profit margins. One way for metalworking operations to attain that goal is to appropriately invest in capital equipment—an expenditure that should not be limited to production equipment.

The Cost of Doing Business

Factors beyond an operation’s control are often among the most detrimental to a healthy bottom line. Two of the biggest market realities that shops are dealing with in 2019 are unavoidable and cannot be ignored.

When factoring in the ever-increasing price of cutting oil concentrate and the rising costs of spent fluid disposal, the goal of any metalworking fluids management initiative should be to increase the life of fluids. Images courtesy of PRAB

Tariffs. In March 2018, the U.S. imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, with few exceptions. President Donald Trump defended the tariffs, saying they were necessary to protect domestic steel production facilities and reduce U.S. reliance on imported metal. Despite promises of long-term benefits, many metalworking companies have felt short-term pain and been concerned that the tariffs would sharply increase prices for steel and aluminum, stop a number of planned projects and push orders away from U.S. manufacturers.

Coolants and fluids. It’s easy for people in the machining industry to consider coolants, cutting oils and other metalworking fluids a necessary evil. Many decision-makers, from those at small job shops to huge supply plants with global customer bases, tend to think of coolant only when there is a problem with it at a facility.

From a standpoint of dollars and cents, industry estimates indicate that metalworking fluids represent as much as 10 percent of the cost of a finished part. This includes the initial cost of the concentrate, maintenance, filtration and disposal. For comparison, cutting tools make up only about 6 percent of the cost—at most—of a finished part. When factoring in the ever-increasing price of cutting oil concentrate and the rising costs of spent fluid disposal, the goal of any metalworking fluids management initiative should be to increase fluid life.

Fortunately, many solutions for scrap metal processing and fluid recycling are available to help companies respond to these two factors and improve profit margins.

A Systematic Approach

Scrap metal recycling begins with volume reduction. Chip processing systems offer the dual benefit of reducing small to medium volumes of turnings and bushy wads to flowing metal chips while also separating chips from cutting fluid. This positions a manufacturer to increase the value of its machining scrap and reuse its fluid.