Saturday, October 13, 2012

Weight of Steel does Matter?

Shed Retailers
As previously indicated getting started in the cold-formed steel industry was relatively simple. Get some standard calculations for a single shed which envelopes the size range of expected market. On a given sale fill in some c-section hole punching sheets, and send them off to rollformer. Have delivered to site. As far as such supplier is concerned they have no control over fabrication costs, nor control over construction costs. Therefore only issue appears to be the cost of the steel, reduce the weight of steel and therefore reduce the cost.

Steel erectors and other builders, have some control over construction costs, however any reduction in construction time results in lower fee for the job, and a need to get more projects per year, assuming their fees are time based. Often however their fees are based on $/sq.m of floor plan, some may charge $/tonne of steel erected. However tonnage doesn't really reflect the scope of the task. All that really changes from one shed to another is the area of the floor plan, which in turn increases the number of frames they have to erect. If frames get heavier then that may require moving from manual handling to need for mechanical handling. Increase in height of shed may also have an influence on costs due to need for people licensed to operate height related personal safety equipment (safety harnesses and fall arrest lines)

So as far as the builder is concerned construction costs are their fee and not something they wish to reduce, thus once again reducing the weight of the steel is the point of focus.

Fabricators + in-house Engineering
In some countires hotrolled steel sheds are engineered to suit the needs of the project. These sheds are either in hotrolled steel sections, or more commonly fabricated tapered beams welded up from flat plate. So here they have contol of fabrication, and also often control of construction. But once again, as with the builder, they have no real wish to reduce the cost of the activities which are seen as their income, and so the focus is still the weight of steel.

Optimum Solution is not Minimum Weight Solution
The flaw in all these cases is equating the weight of the steel to the cost of the steel. The real issue is the cost of materials, not the weight of steel. Further it is not the cost of materials on an individual project, but the cost of materials across many projects.

Hollow steel sections (HSS), such as SHS, RHS and CHS are typically considered expensive materials, and yet they found a market in small residential sheds and light industrial sheds, as did the use of hotrolled steel angles. They found a market because they were relatively light weight materials, and could be fabricated into welded trusses or bolted trusses. For a one-off project, the use of such sections and such fabrication would typically be considered far too expensive compared to the use of a single section in the form of a universal beam (UB) or possibly parallel flange channels (PFC). But for high demand small sheds, the smallest UB and PFC some what impractical and over sized. There was cost benefit in fabricating light roof trusses. Many home owners preferred sheds with trussed roofs they could store long items in the roof space, and otherwise use the bottom chord for a block and tackle to hoist engines from their cars. Then cold-formed c-sections emerged in the market, for a time trussed roof's held their place but slowly lost more and more market. The c-sections being light weight sections from high strength steel could and can span the required distances for small sheds without the need to expend time fabricating trusses. With c-sections no need for skilled welders, and possibly eliminate the need for bolt trusses. However as spans increase cold-formed sections bolted to form trusses can start to encroach on the market held by hotrolled UB's.

So in this we can see that cost includes fabrication and materials. At one time more fabrication could cut total costs by reducing the cost of materials used, that this then changed to lower cost materials bringing about a reduction in fabrication. The important characteristic about rollformed c-section, is that a significant amount of fabrication can be automated in the punching and rollforming process: and it is fairly rapid. {Maximum around 100 ft/min, or 30m/min}.

Whilst there is likely variability in rollforming feedrate say going from C7510 to C30030, I hazard it is off minor significance to productivity compared to length rollformed. The importance of this is that the retailers, do have some control over fabrication. For example can choose C7510 girts at 600 c/c or C15012 girts at 1200 c/c. {c/c = centre to centre}. If adopt the larger section, then have fewer rings around the girth of the building, that is the net length of section required is less compared to the smaller section. Therefore hazard it will take less time to rollform the total length of C15012 required compared to the total length of C7510 required. {Few in any supply C15010} If using coil of same total diameter, and strip of same thickness, then have the potential to get more complete jobs from the one coil, and therefore fewer coil change overs for the rollformer. Not sure about total length in a coil, but assuming it is 2000m, then say shed requires either 500m of C7510 or 250m of C15012, then from one coil can get either 4 sheds or 8 sheds.Sure the strip width is wider for the C150 than it is for the C75, but total volume of steel approximately the same. {The C150 requires slightly more steel: due to differences in flange sizes, and also differences in outer girt requirements.} However it is the total cost of supply which needs to be considered, and also the timing of supply. It should be noted that a  several years BHP held a seminar for consultants and they pointed out that some 80% of the cost of steel was in the cladding and cladding support system, but little effort was and is put into its design.

With respect to fabricators with in-house engineers, once again it is a flawed concept to assume that the value lies in them getting the weight of the steel to a minimum and therefore minimum cost frames. The benefit of going to such fabricators is that they can optimise the design to better meet their fabrication facilities and available resources. If get a consultant to design a shed and then go out to tender, then the shed will not relate to any fabricators production capability nor their available resources. If consultant says fabricate by folding, fabricator will want to weld up from plate: the fabricators will have alternative preferences to the design consultant. A consultants design may specify 250UB but the optimum design from a fabricator maybe from 310UB, because they have such steel lying around the workshop which is not going to be used for anything, and is tied up capital. In another situation the fabricator may have 250UB lying around and the consultant specfies 310UB, but fabricator can weld cover plates, castellate, or fabricate in a variety of ways from plate and their available sections to create a more economical structure. Most especially the case if the price of steel is on the rise, and most fabricators have to buy steel now whilst a handful of fabricators have stocks of steel bought previously at lower price. So in some countries (eg. India), holding stocks of flatbar and plate, and welding up into I-sections to suit the job, is more economical than using hotrolled UB's, UC's. The optimum solution, the minimum cost solution is highly dependent on circumstances.

Now in a market where increasingly software is being used to get minimum section size to suit a job, it may appear that getting the minimum section size is essential to minimum cost solution. I will hazard to say not so. During the 1990's there was a shift, from minimum cost optimisation to maximum profit optimisation: the purpose of a business is to maximise profit not minimise cost. Further more the minimum cost of everything is zero, don't do it. If choose to do something then it costs what it costs.

Business is a real world experiment, therefore costs and prices are not certain, they are highly variable. Buy something for one price doesn't mean can sell it at equal or greater price, it may be necessary to sell it at lower price to free warehouse space and cut inventory costs. Similarly can push prices up and up, until sales volume drops off. With higher prices can make same profit for less effort, sometimes this is necessary. By raising prices can cut demand, and therefore reduce the need to expand production facilities or otherwise generate the funds to expand production facilities. The latter is key, those who want to supply useful gooods, versus those who simply want profits for personal luxuries.

Those who want to supply will expand production facilities, they will eliminate waste, they will improve quality, and add value to their products. They may also cut per unit production costs, but not necessarily cut sales price to the full extent possible because the market will already be happy or partially happy with the existing market price.

The minimum size of structural section which can be demonstrated compliant with a code of practice is the lowest quality, lowest value product which it is legal permissible to sell to the market. Anything not compliant with the code of practice is considered defective, until demonstrated otherwise to be suitable for purpose and the codes modified accordingly. It is not science it is politics. It should be noted that the codes are actually deficient: for example the wind loading code is based on horizontal flow of air over a building typically producing suction or uplift on the surfaces: in non-cyclonic regions the primary storm event is a violent downdraft: rather than roof being lifted of the building more likely to have buidling flattened against the ground. Similarly the Australian interior is likely to experience tornado activity: also not covered by the codes. When it comes to the crunch, the requirement is not whether it complied with the codes but whether or not it was actually suitable for purpose.

Therefore there is a problem if shed manufacturers are running around trying to find engineering which will justfy smaller compliant section sizes to compete. If the cost of the frame is an issue, then I say they are not offering any major benefit over the custom design project and going out to tender to find a contractor. The problem with tender/contract is that the fabricators typically use relatibely crude and cumbersome fabrication processes, with relatively poor capability at replicating parts. No one is going to spend ten's of thousands or a few million dollars to make a die for replication of a few dozen parts. Something which could be stamped from sheet metal in a few seconds, will be fabricated from heavier gauge steel probably at the rate of an hour or more per part and these parts in turn will have an influence on the nature of associated parts. So to start with the consultant engineer cannot produce minimum weight solution in first place, unless the crude fabrication techniques are the only practical techniques for the size of structure. Buildings fit into classes, some classes have high demand, those high demand classes are suited for automation of repetitive components. However, to permit mechanisation and automation, it may be necessary to work with more robust components, and that may result in an increase in weight of material compared to the structural requirement. Whilst weight has increased, the per unit production cost have decreased and the volume produced per unit time increased.

The building industry zero inventory approach does not altogether deliver at the right time, nor to the right quality: not really something that manufacturing industry should be aiming for. Some inventory is necessary to buffer the flows required to satisfy the market at the right time.

Take example from another industry. Several years back I ordered a desk, there were different sizes available in terms of widths of the tables. I ordered the smaller width. The width I ordered wasn't in stock, and needed to be made, but they had a larger version available. They offered me the larger version at the same price as the smaller version: I didn't really want the larger version, but then again I didn't really want to wait either, so I accepted the larger version. They got rid of stock occupying space, I put my desk to work sooner.

Reducing the section size, is reducing the value of the shed structure, whilst increasing the section size makes the shed more robust. Shed retailers have the potential to negotiate with their preferred rollformer, and compare sales forecasts of shed sizes, against demand for various size c-sections. By doing so, they can cut the operational costs of the rollformer, and share in the cost savings, by buying high volume of a specific larger section at lower price, whilst prices of other sections are higher.

It should be noted that the rollformers want to sell steel, so reducing weight of steel sold not good for them. Rollformers entering the shed and carport industry, is so that they can sell more steel, but they have to balance this with competing against their customers. Their customers, may just decide to buy their steel from elsewhere. However, there should be more added value to the shed, than to the c-section. If trying to sell more steel then reducing weight of steel structure doesn't make sense: unless shed price has more added cost than added value and consequently sales of sheds are low.

It should be noted that many DIY's have priced materials and consider they can fabricate and build themselves for much lower than they can buy shed from any supplier. So suppliers do need to consider the other costs, and their desired profits. The buyer has to be able to see value, rather than cost and profits going to owners.

Capturing a greater share of the market does not require decreasing unit price, it requires grabbing the markets attention and selling them the function and value they need. People don't want sheds they want buildings for a specific purpose: domestic workshop, hobby room, double garage, storage room, chicken shed, stable, mechanics workshop, warehouse, self-storage units. Each of these buildings has characteristics beyond the performance of the portal frames comprising the structure. There are doors, windows, ventilation, shelving and a multitude of internal and external requirements. If the buildings are off-the-shelf as buyers tend to expect then suppliers would have such designs already available. Once again the unit price of say a stable from one supplier may be less than from another, because they have optimised that particular type of building. On the other hand the higher priced supplier may win the sale because of perception of higher quality product, and much safer for the horses stabled.

It is upto sellers to identify value in their products, and sell that value to prospective buyers. I know one supplier who was an agent for one brand of shed, and otherwise also custom built sheds. Samples of the branded shed were erected at their display site: they kicked and pushed and shook the branded shed and said they were happy to supply that shed, or for slightly higher fee they could supply their own more robust built shed. Its not necessary to reduce price to make a sale. However its difficult to kick and make the larger sheds shake, also not so convenient to have installed on a display site. So for the larger sheds a different kind of customer education and information activity is required.

If think the competition are using smaller section sizes, then that suggests that comparitive information is available in the environment: if only the fact the building site is accessible at some point. Therefore there should be no problem releasing decent technical specifications, which properly inform buyers of what to expect.

Yes I know, civil engineers representing the ASI shed group are all into custom design for the site, and therefore the requirements are uncertain, and so are into promoting an uneconomical infinite spectrum of goods. Once again, just because a lighter structure is possible for the site, does not make it the lowest cost structure, nor the optimum solution for a given set of conditions. Structures can be pre-engineered for a given set of conditions, those conditions can be compared against the project conditions, and a stock standard solution adopted. One manufacturers stock standard solutions should not be the same as anothers. This differentiation means they sell more specific products, to specific markets.

For example the cold-formed carport industry as largely moved away from using c-sections, to more customised boxed sections (actually variation of two channels designed to clip together), these custom box sections are specific to a single manufacturer, consequently their carport and verandah tables cannot be used to size a carport whilst buying steel from elsewhere. Whilst the development approval process, attempts to protect investment in RD&D, it has little control over what happens after approval. So city councils can reject a carport proposal submitted by one carport builder based on another suppliers tables. But little control and ability to check, that a builder submitted a proposal based on one suppliers tables and then bought c-section from elsehwere. It is largely this activity that pushed the industry to introduce a product which is more unique, of course everyone who wants to jump on the bandwagon is dreaming up their own variation of a stylish box section. With such sections its not so simple for the salespeople and buyers to compare section sizes, and argue about weights.

Whilst structural design is important, it is really architectural and industrial product design that the shed industry is in need of, not structural engineering. Each structural section has a limiting envelope for a given set of parameters: determining that envelope is a once of exercise. The issue is once have such envelope, what can be done with the section to create useful buildings: what value can be reaped from such standard design.

For example many people build American barn style sheds as holiday shacks. This is something of a waste as they then proceed to construct a substantial amount of timber framing internally for plaster board linings. But they have a building envelope constructed rapidly, and now can proceed at own pace as a DIY, fitting out the interior. Cold-formed steel buildings provide for rapid enclosure of space: that is value. Further the real standard design is a portal frame: not really a shed. That portal frame has more uses than providing the frame for a shed: those frames can be used in housing where large open spaces are required free from bracing walls. But for such purposes the frames would need to be stiffer,  to better control deflections, and that would push up section size.

Manufacturers should set their own performance criteria for their product, and not rely on regulatory authorities to impose.

When a business is offering a broad range of products, or more to the point offering nothing in particular, then it shouldn't be so concerned about the loss of sales based on price. Consulting engineers arguing about under cutting of fees typically offer nothing in particular. Shed suppliers offer nothing in particular. Not surprising therefore that some other business offering nothing in particular wins the sale on the basis of lowest price.

Products will always be compared on price, if that is the only observable difference. Suppliers need to differentiate their products: that is the combination of goods and services. Engineers are not all the same, noticeable from the fact that sheds are not all the same yet designed to same performance based codes. If sheds, and shed suppliers are not all the same, then why the focus on price, and the focus of weight of steel contributing to price difference? One reason is that the suppliers are too small, none really has a real product, they are really just retailers for pallets of steel: and often completely lacking instructions explaining how to assemble into a shed, and also lacking parts. They may advertise sheds, they may promote sheds, they may have pictures of sheds supplied in the past (or others have supplied): but they have little to no evidence they can supply the shed the current customer is seeking.  For the price what does or can the customer expect?

From many of the shed suppliers, all the customer can really expect is a pile of steel, and a lot of hassle getting development approval, along with a building which is a problem to assemble on site.

Buyers of light industrial and commercial sheds really need to be wary of unexpectedly becoming owner-builder, or otherwise leaving it to some salesperson to play architect and civil engineer in an attempt to make building and site compliant with requirements for development approval.

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