Investment has put Servosteel in the spotlight as Debbie Giggle discovers from Phillip Guest and David Perks
The last three years have been critical for steel processor Servosteel. Bold investment, new IT, and factory relocation were part of the strategy to strengthen the company’s position in the domestic market, but there has been a welcome side-effect. Having solely served the UK throughout its history, Servosteel is now regularly processing material for steel service centres and some European producing mills.
Servosteel supplies processing in the UK market for strip mill products, worth between seven and eight million tonnes per annum. It is the largest toll processor in the UK and offers coil to coil pickling, slitting, and decoiling of coils up to 28 tonnes. It currently processes around 30,000 tonnes of steel for customers per month. Its storage capability – usually stockholding around 40,000 tonnes of customer raw material – makes it attractive to importers. In addition, Servosteel’s strategy of maintaining capacity ahead of demand – up to 450,000 tonnes per annum with current machine capability – means it can offer competitive lead times, typically two days from order placement to dispatch.
At the heart of the company’s recent success is an ambitious investment in processing technology which makes Servosteel unique in Europe. An SCS (smooth clean surface) coil line was installed in 2006 and commenced production last year.
The benefits over alternative processing methods are enormous. SCS is a hot rolled black (dry) material that has been taken through an environmentally friendly process which uses only water and high speed brushing – no chemicals, acids or heat. The resulting steel coils and sheets are dry (there is no need for oil) and are naturally rust inhibited. As the surface is clean and rust-free, the material can be delivered to customers ready to paint and suitable for dry storage, without the need for oil or other preservatives. SCS coils remain in this clean rust-free state for months, or even several years depending on storage conditions. The use of roller levellers and high tensions during processing also means that the degree of flatness is greatly improved compared to other methods.
David Perks, commercial director, explained: “For operations like laser cutting, sheet metal work and tube manufacture there are immediate benefits over both HR dry and HRP&O. The SCS product often cuts out a shot blasting or a de-greasing process, paint prep is simplified – saving labour – and hazard exposure is reduced. SCS may also be used as a cold reduced replacement for certain applications as its surface finish is improved by the brushing process, and there is, of course, no oil. The thin wustite layer is bonded to the steel and stays intact on both inside and outside bends without splitting or micro-cracking.
“Weld joins with SCS steel are significantly stronger than with traditional systems. A certain amount of the weld arc’s energy goes into burning the oil on HRPO sheets. This introduces more contaminants to an already fairly ‘dirty’ surface. In comparison, the clean SCS surface provides a higher weld integrity.”
Investment on this scale, around £3.4 million during 2007, is quite unusual for a steel processing company with no mill alignment.
Phill Guest, operations director, explained: “It gives us a significant competitive edge, but SCS is just one factor.”
Advanced IT also plays a part. Steel service centres and other customers can log in online to Servosteel’s system, using secure access codes. Here they can interrogate real-time stock levels and see exactly where their materials are within Servosteel’s processes.
“I think we’re unique in offering customers this level of information,” said Guest. “It helps customers to streamline their own manufacturing and make supply chain improvements. Very often a lorry will be scheduled to arrive from a customer with raw material and return with processed coils.”
Perks commented: “The interest from European customers came as something of a surprise to us, but when we looked into it, we could see why Servosteel was proving a valuable supplier. Steel processing capacity in Europe is pretty full, and lead times are typically a fortnight. But at Servosteel we have deliberately built in over-capacity in order to turn round orders more rapidly. So we can have materials processed and on their way back to a customer within just two days.”
Guest added that the company’s ability to offer competitive lead times has been helped by its continuous improvement activities. It runs a paperless system. Once the order is placed, everything remains computerised to the point of printing out the address label for delivery.
This administrative streamlining is part of a wider lean manufacturing programme.
“We embarked in earnest on our continuous improvement programme three years ago with the help of an external consultant,” said Guest. “Today the consultant visits on an ad-hoc basis to review and set goals. These actions are taken on by individuals or teams for implementation. Initially we only measured OEE but that’s a very general metric, so we’ve added additional KPIs including one we call Person Performance. This highlights aspects outside our control, for example the quality of the raw material supplied by customers. Using this measure we can drill down to improvements needed in individual jobs, processes or even parts of a process.”
The continuous improvement programme embraces health and safety and environmental performance in the same way. A recent recipient of ISO 14000, Servosteel has an active environmental programme in place encompassing an energy management policy and waste minimisation projects. The investment in the SCS coil line, which replaces an acid/chemical based process with a water-based one, has made a significant impact within this.
“We’re fortunate in that we have a very stable workforce and a tradition of investing heavily in training,” commented Guest.
As well as including business improvement techniques training for the whole workforce, numerous individual training programmes, and sponsorship of a university placement, the company last year provided every member of staff with a £100 training voucher for a course of their choice, whether for IT skills or to improve their golf. “It’s important to foster an appetite for learning,” concluded Guest. “Without that, bringing about change in an organisation can be very slow.”
Looking forward, Servosteel believes that there is further opportunity for growth, particularly in the SCS side of its business, both in the UK and the rest of Europe, as awareness grows of the benefits of material processed in this way.