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Monthly Archives: September 2014

  • Make It or Buy It? Part 1: Manufacturing Overhead Costs

    Source: http://www.wisegeek.com/what-are-indirect-manufacturing-costs.htm Source: http://www.wisegeek.com/what-are-indirect-manufacturing-costs.htm

    Doug Sharpe President of Elasto Proxy

    What types of products does your company make? No matter what your industry, manufactured goods have two types of costs: direct and indirect. Direct costs, such as labor and materials, are expenses that you can attribute to the production of specific items. Indirect costs, such as management salaries and property taxes, represent all of the other costs of doing business. These overhead costs can be fixed or variable, and include manufacturing overhead costs (MOH) that some companies underestimate.

    Until you capture all of your MOH or factory costs, your company may price its products too low – and fail to turn a profit. Your technical buyers and production managers may also make the wrong decisions about outsourcing the production of parts such as rubber gaskets. Although some companies claim it’s cheaper to produce these components in-house, their true factory burden indicates that outsourcing is cheaper.

    So how can you determine whether it’s better to outsource your gasket fabrication?

    What Are Your Costs?

    Every company is different, and manufacturing overhead costs vary by industry, location, plant size, and sales volume. By expressing overhead as a percentage or proportion – a rate – instead of a dollar amount, you can compare indirect costs to direct costs and calculate total expenses. According to Grant Thornton, one of the world’s largest accounting firms, overhead rates can vary from 20% to 130%. Often but not always, these rates are lower at larger companies because these firms can spread the cost of indirect expenses across higher volumes of manufactured units.

    Years ago, the Harvard Business Review studied the challenge of reducing factory costs and concluded that “across the spectrum of U.S. industry, manufacturing overhead averages 35% of production costs.” The RAND Corporation, another well-respected institution, reported that general and administrative (G&A) costs in one industry alone (defense) could exceed direct labor costs “by a factor of two or more”. An EPA study of the automotive industry puts the ratio of direct costs to indirect costs at 1:1 or 1:1.5.

    Only your cost accountants know your company’s MOH costs, so let’s apply a range of overhead rates to an example of in-house gasket fabrication. In this way, even if you can’t pinpoint a percentage, you can see for yourself whether outsourcing is more expensive.

    Some Examples

    In North America, the average hourly wage for a factory worker is about $25. According to the U.S. Department of Labor, workers earned $24.93 (USD) in August 2014. In Canada, the last available data is from May 2014, when workers earned an average of $22.80 (CSD). Canadian manufacturing soared in August, however, so it’s likely that number is now higher. Even considering the U.S.-Canada exchange rate, it’s reasonable to put manufacturing’s hourly rate at $25.

    Let’s say you need gaskets to complete a project, and that a custom fabricator can supply them for $20 each. Your alternative is to buy standard rubber profiles at $5 each, and then cut and splice the parts in-house. If per-unit production takes 30 minutes, you’ll spend about $12.50 for labor and $5 for materials (not including waste). That $17.50 is less than what you’d pay for outsourced, fully-finished $20 gasket.

    Remember, however, that $17.50 represents only your direct costs. Now let’s apply a range of overhead rates to see what your total per-gasket costs could be.

    Direct Labor Direct Materials Total Direct Costs Overhead Rate Overhead Dollars Total Gasket Cost*
    12.50 5.00 17.50 25% 4.375 21.88
    12.50 5.00 17.50 50% 8.75 26.25
    12.50 5.00 17.50 75% 13.125 30.63
    12.50 5.00 17.50 100% 17.50 35.00
    12.50 5.00 17.50 125% 21.875 39.38
    12.50 5.00 17.50 150% 26.25 43.75
    12.50 5.00 17.50 175% 30.625 48.13
    12.50 5.00 17.50 200% 35.00 52.50

    *Total gasket costs include rounding

    Some Conclusions – and Questions

    Across every scenario, it’s cheaper to outsource your gasket fabrication than it is to produce these parts in-house. Why can the custom fabricator produce these components more cost-effectively? Instead of using a cardboard cut-out and a utility knife, the gasket fabricator uses a state-of-the-art waterjet cutter. Instead of splicing profiles by-hand, the specialist uses a splicing machine. Ultimately, this means that outsourcing’s per-unit costs are lower, both in terms of labor and materials.

    When you calculate the cost of in-house production, do you include the cost of re-work, too? Unless your production team cuts profiles all the time, they won’t have the experience of a custom fabricator. Also, are you still “saving money” since each worker requires training, and quality assurance personnel must check each fabricated part for defects? Your tooling costs may be as inexpensive as a utility knife and an adhesive, but how much longer does it take to use them?

    There are material costs to consider, too. Do you track waste from in-house production? If so, how much rubber is wasted? Whenever a worker makes the wrong cut and throws away a profile, those costs are absorbed by your business. As the complexity of cutting and splicing increases, so does waste – or muda, as it’s known in lean manufacturing. Seals for five-sided doors, and profiles that require 30° or 35° cuts are challenging. So are rubber floor mats that must fit cabs precisely and account for bolts and pedals.

    How Can We Help You?

    Do you need finished gaskets for applications such as automotive, construction, defense, electronics, food equipment, green power, mass transit, medical equipment, or mobile specialty vehicles? For 25 years, Elasto Proxy has been helping partners to solve sealing and insulation problems. From compound selection to seal design and custom fabrication, we’re ready to listen. How can we help you?

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

  • Rubber and Plastic Tractor Parts

    Rubber and Plastic Tractor Parts

    Doug Sharpe President of Elasto Proxy

    Tractors help put food on our tables and bring innovations to industry. Wheat, corn, soybeans, and potatoes feed hungry humans. Oats, alfalfa, and other grains are also eaten by livestock. Today, crops such as corn are used in everything from ethanol to processed foods to bioplastics and fillers for rubber. Polymers and elastomers also have a great many uses, including the rubber and plastic parts used on tractors and other mobile specialty vehicles.

    Recently, a supplier shared with us the image that accompanies this blog entry. As you can see, there are callouts for plenty of parts. For years, Elasto Proxy has supplied door seals, window rubber, and interior trim for roll-over protection structures (ROPS). Our custom fabrication specialists have also supplied rubber floor mats and thermal and acoustic insulation for engine bays and tractor cabs. Let’s take a look at some other rubber and plastic tractor parts Elasto Proxy can provide.

    Under the Hood

    Most farm tractors that are built in North America have liquid-cooled engines. Typically fueled by diesel or gasoline, these power plants use an engine-driven pump to circulate coolant through passages in the engine block and cylinder heads. Engine cooling tubes and engine cooling hoses are important parts of this system, and are made of rubber and plastic materials that resist water, antifreeze, and corrosion inhibitors. These coolant tubes and hoses must also resist extreme service temperatures.

    Coolant hoses for tractor engines are often made of elastomers such as silicone, EPDM, or neoprene. Runs of hose are either straight or branched, and may be reinforced with wire or fabric. For radiator hose, the SAE 20R4 D1 standard describes construction characteristics. Rubber and plastic parts for engine cooling systems may also include auxiliary cooling assemblies for tractor transmissions. High temperatures can cause transmission fluid to break down and increased component wear to occur.

    In addition to under-the-hood cooling systems, rubber parts are also used to support engine lubrication.  With smaller tractor engines, oil tubes are often made of cost-effective, oil-resistant rubber such as neoprene or nitrile. On engines of all sizes, the oil cap may be made of a thermoplastic such as polyvinyl chloride (PVC). Tractors also use hood to cowl seals made of weather-resistant rubber such as EPDM. These gaskets are fabricated from weather stripping and provide a reliable seal.

    In the Cab and Around the Tractor

    Tractor cabs or cabins also provide protection from weather-related conditions. Operators, instruments, and interior components such as seats, armrests, and steering wheels can avoid rain, wind, and strong sunlight. Modern tractor interiors support operator comfort, and often feature satellite radio, heat, and air conditioning. AC tube and hose assemblies are made of polymers that resist specific refrigerants. Butyl rubber is a common choice for the hose inner tube, and may be reinforced with braided steel wire.

    Air conditioning hose needs to meet application requirements for maximum working pressure (psi) and working temperature range. Compliance with the SAE J2064 Type B, Class I standard indicates a hose’s suitability for off-road use. Farm tractors and agricultural equipment such as combines also need hydraulic hose assemblies, hydraulic tube assemblies, and structural tube rails. These rubber and plastic parts must resist hydraulic fluid, and meet various general, dimensional, and performance specifications.

    For the operator, the tractor cabin contains the controls for several hydraulic systems. In addition to steering and braking, hydraulics are used to raise and lower loaders, mowers, cutters, and seeders. Each implement may use rubber or plastic parts. With the flip of a switch, the tractor’s operator can also activate windshield wipers with rubber blades. Rubber door and window seals, edge trim, and floor mats all provide examples of how elastomers are used in agricultural machinery.

    How Can We Help You?

    Elasto Proxy doesn’t build tractors, but we do specialize in the custom-fabrication of rubber and plastic parts that help keep them running smoothly. Our experienced solutions providers are ready to help you select the right compounds, design seals and insulation with all of your requirements in mind, and strengthen your supply chain. How can we help you?

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

  • Taping for Rubber Seals and Gaskets

    Taped Part

    Doug Sharpe President of Elasto Proxy

    Taping keeps rubber profiles in place for temporary or permanent fastening. This joining technique isn’t right for every sealing application, but taping is especially valuable when space is limited. For example, the automotive industry uses taped parts with car windows and cab profiles to form an effective seal. Taping also provides faster installation times than plastic pins, which require drilling a hole for each pin and then pushing each pin through.

    As a full-service custom fabricator, Elasto Proxy offers taping services that can reduce installation times and promote production efficiency. For out-of-the-box sealing solutions, ask how we can supply taped rubber gaskets with an adhesive backing. In this way, your production team can simply peel-and-stick components during assembly. By water jet cutting your seals to the dimensions and specifications you provide, Elasto Proxy can also help you to reduce material waste associated with assembly-line cutting.

    HATS and PSA

    For dependable, cost-effective taping, Elasto Proxy supplies rubber parts with either HATS adhesive or PSA double-sided tape. By analyzing your sealing requirements and your business needs, our solutions providers can recommend the taping solution that’s right for your application. Technical knowledge and application expertise inform our decisions, but Elasto Proxy’s commitment to you means promising to fully understand your needs and delivering on them.

    For example, 3M’s heat-activated adhesive taping system (HATS) is right for applications that require excellent adhesion and holding strength along with strong stress-handling and weatherstripping capabilities. HATS is used with automotive paints and plastics, but also with sponge profiles that require permanent sealing. Double-sided PSA tape is used for bonding rubber trim, seals, and gaskets to rough or porous surfaces. Since PSA tape is removable, these taped parts are easy for installers to work with.

    Taping Now and Then

    Both HATS and PSA taping are highly-effective, but recent equipment upgrades are enhancing Elasto Proxy’s capabilities while driving down costs. Just as we introduced an infrared film splicer, the taping machine in our custom fabrication facility now features an IR pre-heater to improve bonding strength and reduce energy consumption. Our taping machine also has an automatic feeder to speed this labor-intensive task, which once required two operators.

    During custom fabrication, the IR pre-heater is used to heat the surface of the tape before it passes through our taping machine, where forced hot air finishes the task. Automatic feeding reduces setup times and streamlines production by eliminating the need for operator intervention. By strengthening production techniques and driving down costs, Elasto Proxy is investing in the future.

    How Can We Help You?

    For 25 years, Elasto Proxy has been solving sealing and insulation challenges in a wide variety of industries. By listening to your needs and analyzing all of your requirements, we can recommend the right taping technique for your applications. How can we help you?

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

  • Rubber and Plastic Truck Parts

    Rubber and Plastic Truck Parts

    Doug Sharpe President of Elasto Proxy

    Powerful machines inspire us. Maybe that’s why a single type of vehicle is known by so many different names. In North America, the combination conveyances known as tractor trailers consist of a powered truck and one or more detachable trailers. These transports are also called semis, big rigs, and 18-wheelers, a reference to the number of tires that hit the pavement. As big as these vehicles are, there’s more rubber used in them than just the tires. There’s plenty of plastics, too.

    Recently, a supplier shared with us the excellent image that accompanies this blog entry. As you can plainly see, there are callouts for plenty of parts. Polymers play an important role in sealing and trim systems, fluid transfer systems, and fuel and brake delivery systems. Front the front end of the truck to the rear end of the trailer, custom fabricated parts seal out wind and weather, convey fluids and fuel, and help support larger assemblies.

    Let’s take a look at some of the rubber and plastic parts in truck products. As an experienced solutions provider to the automotive and mobile specialty vehicle industries, Elasto Proxy custom fabricates the components that let drivers keep on trucking.

    Front End

    Truckers travel by day and night, and in weather conditions that keep other motorists at home. Rubber headlamp seals need to keep out wind and water, withstand a wide range of service temperatures, and demonstrate material compatibility with metal, glass, and plastic components. This includes headlamp lenses that are made of poly(methyl methacrylate) or PMMA, a transparent thermoplastic used as a lightweight, shatter-resistant alternative to glass.

    The front end of a truck also contains rubber and plastic parts such the transmission oiler cooler (TOC) hose, TOC quick connect, and oil pickup tube. Along with oil and abrasion resistance, compliance with Society of Automotive Engineer (SAE) standards is important. The overmolded bracket that’s behind the headlamp assembly must also be tough. Typically, this injection-molded part is made of a hard plastic. Finally, the front end’s brake-line assembly needs to provide chemical and pressure resistance.

    Engine Compartment and Cabin

    Rubber and plastic truck parts also play a role under the hood. For example, the truck’s fluid transfer system includes polymer parts such as coolant and engine oil tubes. There are also rubber radiator hose and coolant hose assemblies, along with a plate-style transmission cooler and liquid-level sensor. The brake line assembly for the anti-lock braking system (ABS) is critical, and the hood to cowl seal protects the entire engine compartment from the outside environment.

    The truck’s cabin also contains seals, trim, and fuel and brake delivery systems. From interior trim and trim seals to glass run seals and encapsulated glass, rubber and plastic helps to protect the driver. The truck’s cabin also features inner and outer belts, bulb seals, an extender fairing, and cabin flooring. There’s usually floor matting, too. Fuel and brake line components made of rubber include air brake lines, the rear brake line assembly, and both the fuel tank bundle and the brake and fuel tank bundle.

    How Can We Help You?

    Elasto Proxy doesn’t build big rigs, but we do specialize in the custom-fabrication of rubber and plastic truck parts that help keep them running smoothly. Our experienced solutions providers are ready to help you select the right compounds, design seals and insulation with all of your requirements in mind, and even source the door and body seals on the trailer. How can we help you?

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

  • Would You Travel by Vacuum Tube Train?

    Image: Terraspan.org Image: Terraspan.org

    Doug Sharpe President of Elasto Proxy

    Thomas Edison discovered that electricity could travel in a vacuum. Elon Musk, the founder of Tesla Motors, may yet prove that vacuum tubes can transport rail passengers, too. Although the Canadian-American billionaire ruled out the use of vacuum tunnels in his proposed Hyperloop transportation system, a company called Terraspan is now curiously quiet about building a 4,000 mph (6,437 km/h) vacuum tube train, which would double as a superconducting power line.

    Back in the summer of 2012, the website Gizmag asked readers why such an ultra-efficient, high-speed train wasn’t being built. Did Terraspan determine that vacuum-tube transport was unsafe? Was the cost of using mag-lev technology too high? Pay a visit to the Terraspan website today, and you’re prompted to “stay posted for the latest on how Terraspan and Hyperloop complement each other.” So what might Terraspan have in mind, and do vacuum tubes have a place in our transportation future?

    The Past as Prologue

    During the 1800s, pneumatic tubes transported telegrams and inspired inventors to envision projects for moving people. New York City’s first subway system, the Beach Pneumatic Transit, could fit 22 travelers in a single car, but lasted just three years. Terrapsan’s plans are far more ambitious than a 312-ft. train tunnel and a massive fan. According to the Gizmag article, the futuristic transit company aims to build a network of underground vacuum tunnels that would link eastern Canada to points south and west.

    That’s not all either. “Embedded in the train tunnel network,” the article continues, “would be a series of thick superconducting energy cables that would form the heart of the first true continental power grid.” Does that remind you of Are Solar Roads the Way of the Future?, Elasto Proxy’s controversial blog entry about the viability of solar paneled roadways and their underground conduits for power cables? As a noted non-engineer named William Shakespeare once wrote, “What’s past is prologue.”

    It Will (Never) Work

    Are vacuum-tube trains viable? That’s not an idle question for business travelers like me. As the co-founder and co-owner of a global company with headquarters in Quebec, I could travel from Montreal to Shanghai in just under two hours, and from Montreal to Sao Paulo in even less time than that.  Mag-lev technology isn’t new, but are Terraspan’s plans cost-effective? Building Japan’s Linimo HSST, a low-speed mag-lev line, cost approximately $100-million (USD) per 0.62 miles.

    Concerns about cost are just scratching the surface, too. For example, how well would Elon Musk’s Hyperloop, which has been likened to “a cross between Concorde, a railgun, and an air hockey table”, work in the real world? In the Terraspan system, how well would the vacuum function if part of a tube wall failed? In other words, would efficiency losses mean that the trains no longer run on-time?

    What We Know

    Recently, Elon Musk posted a 57-page proof-of-concept about the Hyperloop Alpha. According to the abstract, Hyperloop would feature low-pressure capsules that are “supported on a cushion of air” and “accelerated via a magnetic linear accelerator affixed at various stations on the low pressure tube with rotors contained in each capsule.” For travelers like you and me, the cost of a one-way ticket from Los Angeles to San Francisco would be an estimated $20 (USD).

    Hyperloop Alpha won’t help with my own intercontinental travel plans, but both Musk’s capsules and Terraspan’s trains would surely need the kind of sealing and insulation solutions that Elasto Proxy can provide. Wind, rain, and sunlight aren’t part of a vacuum tube’s environment, of course, but railcar designers must still account for a variety of factors in compound selection and part design. Ultimately, both vehicle performance and passenger safety are critical in all transportation applications.

    What We Wonder About

    Here at Elasto Proxy, we’re following mass transit innovations with great interest. At the same time, concepts such as the Hyperloop Alpha and Terraspan raise many questions. For example, would the demand for lightweight rubber materials be more, less, or about the same with ultra-efficient trains? In terms of passenger health and safety, how would flame, smoke, and toxicity (FST) standards evolve, and what could that mean for the use of fireproof rubber materials?

    Underground vacuum-tube trains would need other critical components, too. As Elon Musk’s proof-of-concept explains, “a ground based high speed rail system is susceptible to Earthquakes and needs frequent expansion joints to deal with thermal expansion/contraction and subtle, large scale land movement.” As a supplier to the building and construction industry, Elasto Proxy has met custom fabrication challenges like this, too.

    Is the Hyperloop Alpha a bridge too far? Will Terraspan build a network of high-speed international trains? Will Elon Musk and others take the giant strides of Thomas Edison, or will they follow in the small footsteps of Alfred Beach, inventor of New York’s short-lived pneumatic subway?

    How Can We Help You?

    For 25 years, Elasto Proxy has been solving sealing challenges in a wide variety of industries, including mass transit. By listening to your needs and analyzing all of your requirements, we can recommend the right solutions for your applications. How can we help you?

    Please contact us for more information, or join the conversation on our social media channels. Look for a post with a link to this blog entry on LinkedIn, Facebook, Google+, and Twitter. Elasto Proxy has a YouTube channel, too. Finally, please subscribe to our free e-newsletters. They’re a great source of information delivered right to your email inbox, and they provide links to blog entries like this one.

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