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Eric Maynard’s State of the Industry 2020
January 6, 2020
17 Min Read
Eric Maynard, VP, Jenike & Johanson Inc.
Powder & Bulk Solids asked Eric Maynard, vice president, Jenike & Johanson Inc., Tyngsboro, MA, for his thoughts on the current state of the dry processing and bulk solids handling industry.
In 2015, we asked Maynard to give us his perspective on both the markets that make up the dry processing and bulk solids handling field, as well as the equipment and technologies that are used to service these markets. Here it is five years later, and we have asked Maynard to update us on the State of the Industry.
Let’s first ponder some basic economic facts. In the past decade, the U.S. economy has steadily grown, with the Dow Jones Industrial average rising in 2009 from about 10,000 to over 28,500 as of December 31, 2019 (i). The U.S. unemployment rate is below 4%, whereas it was nearly 10% a decade ago (ii). Many companies struggle with finding skilled labor due to the tight labor market, with many implementing automation to address their production gaps. For instance, consider McDonald’s or any modern airport where the consumer engages with self-service kiosks.
The global economic growth has peaked over the past year at 2.9%, with trade tensions and overcapacity looming in several manufacturing sectors. The big five (iii) in manufacturing output remain as China, U.S., Germany, South Korea, India, and Italy, with nearly the same club emitting the greatest carbon dioxide (CO2) emissions! Unfortunately, the U.S. is also included in this club as a large CO2 producing nation.
You may have heard of the pending “Industry 4.0,” which involves the amalgamation of process digitalization, cloud computing of complex data collections, and blockchain for evolving security needs. The IoT (“internet of things”) and “5G” networks will be at play connecting facilities, operations, supply chains, and performance metrics (key performance indicators or KPIs) for agile market positioning and strategic execution.
Across a wide variety of industries, the use of global positioning systems (GPS) and drone technologies is making an impact on improved delivery, reaction to supply chain bottlenecks, and real-time surveillance.
Many plants are operating with wireless networks with immediate and remote access to their distributed control systems (DCS). This, along with customized real-time data-driven dashboards, provide metrics for production parameters compared to targets. Immediate access to this information allows management to react most-effectively to achieve quality, efficiency, and safety in their operations. With the advent of “Industry 4.0”, large sets of data will be analyzed by specialized algorithms for important trends that can feed back into the process.
Though this is exciting, it must be tempered by the critical needs for robust security as industrial hacking by foreign and domestic threats can easily compromise a plant’s DCS shutting down operations, or worse, inflicting run-away events that inflict catastrophic damage to plant/personnel.
State of Select Industries Trending up
The consumer products (CP) sector bellwether focus continues to be upon “value proposition.” However, in the past five years there has been a shift towards “sustainability” and “greater purpose.” CP companies, such as Procter & Gamble, Unilever, and Colgate-Palmolive have seen a large portion of consumers changing from asking “what does the product do” to now “how does this change my life?” For example, Procter & Gamble’s Tide PODS, which is a 3-in-1 laundry detergent, meets consumers’ needs for cleaning laundry, but also provides efficiencies, environmental benefits, and reduced packaging. Some auto manufacturers (e.g., Subaru), are incorporating pets into their marketing to draw in compassion, belonging, and charity, thereby enhancing their brand and sales-craft.
Many of the major CP companies are strategically positioning themselves to meet the needs of the estimated one billion new consumers coming into the market with the middle-class growth primarily in the Asia Pacific region. Global CPs making detergent must evolve to local market needs, such as heavy scented products in LATAM, or liquid products in the U.S. This requires specialized processing lines in local factories that may need to handle unique raw materials or limited supply chain products. For instance, in many countries outside the U.S., dry laundry detergent is more popular than liquids, and there are unique material handling challenges (e.g., caking, segregation) with producing granular detergent.
Eric Maynard will be leading a number of sessions at the 2020 Powder & Bulk Solids Conference. Click here for more infromation or to register.
This market sector has provided a myriad of commodity chemicals, such as acids, bases, and intermediates, in forms of liquids, gases, and bulk solids. Cost-cutting is still paramount in the chemicals sector, as manifest by mega-mergers of Dow-DuPont and Linde-Praxair. Chemical companies have had to evolve beyond only cost-cutting measures with consideration towards sustainability and the “circular economy” (iv) where there is emphasis on raw material substitution, use of renewables, energy recovery, and re-use by end users. For example, consider bio-plastics, where the material is easily supplemented with recycling collections. As the global economy has expanded over the past five years, the chemical sector has played an incredible role given they provide many building blocks and intermediates critical to manufacture of final products. In fact, China’s ferocious demand for chemicals and lack of domestic suppliers buoyed U.S. chemical sales over the past 20 years, with recent dampening of the trend as China’s growth has slowed in the past five years.
Innovation will always play an important role with chemical companies. Consider Corning, a major glass/ceramics supplier that disrupted the glass market with their Corning Gorilla glass product that is in use in most smartphones, tablets, and touch screen electronics. Also, companies are developing “safe” cleaning products, with alternative active agents that can operate effectively, but, reportedly do not harm the environment.
According to The World Bank, about 20% of the world’s population work in farming (v)! It has also been stated that 75% of the world’s food output is from the U.S., Brazil, Russia, India, China, Mexico, and Indonesia. By 2040, the global population has been estimated by the United Nations to exceed 9 billion (vi), with 75% of people located in Asia and Africa. Hence, one can imagine the impending pressures on the future food chain supply. Clean water and environmentally friendly nutrients (i.e. fertilizer) will be important components to sustainability.
Food/Ag companies have witnessed commodity prices drop by nearly 50% from five years ago, which has financially impacted the growers (e.g., Cargill, ADM), but has helped food manufacturers (e.g., Nestlé, General Mills) due to lower raw material costs. Major Ag companies have positioned themselves to operate in multiple product lines, such as cereal grains, oil seeds, meats, dairy, and soft products like cocoa, coffee, or sugar. This has allowed them to diversify their portfolio so that not all their “eggs are in one basket.”
Alternative sweeteners, such as SweetLeaf Stevia, still play a prominent role in many food products, and having processing equipment that can handle the wide-range of flow characteristics of powdered products can be quite challenging. Consider a company offering a powdered drink mix: in today’s portfolio, there may be 100 SKUs to blend, process, and feed to packaging considering use of sweetened/unsweetened additives, flavors, antioxidants, vitamins, etc.
Technology and efficiency will remain important operating principles for global companies as labor shortages and increased costs will put pressure on profit margins.
State of Select Industries That Are Steady
The pharmaceutical industry continues to lead the pack with a strong focus on R&D, whereby the cost to develop a blockbuster new drug could be on the order of $500 million dollars and take upwards of 10 years with no guarantee of success. Consider that in the U.S., only 50 or so drugs are approved by the Food and Drug Administration (FDA) yearly (vii). Factoring in the opioid crisis in the U.S., big-pharma has not received the greatest of accolades over the past five years.
However, consider the incredible achievements of this industry -- medicines and therapies that have saved millions of lives (e.g. vis-à-vis vaccines, antibiotics). With ever-aging populations in the U.S., Japan, and China, the pharmaceutical market will be stronger especially with M&A’s in the industry making mega-companies like Pfizer and Merck even more market dominant.
In biotech, the advent of CRISPR therapeutics – replacement gene sequencing technology – may be an incredible game changer to the industry, with the potential ability to edit-out diseases and genetic anomalies. Though powder handling has not been a critical process step in the biotech industry, scale-up of powder operations has been challenging for some life sciences companies as they deal with flow issues, segregation, and potential dust explosions as powders are added to bio-reactors.
Metal powders can be handled in many forms, applications, and industries including automotive, specialty chemicals/catalysts, paints/coatings, medical, jewelry, explosives, and the rapidly growing technology of additive manufacturing (AM or “3D printing”). The automotive market consumes about 75% of powdered metal (PM) output, therefore, as auto sales grow or contract, so does the PM sector. After record auto sales nearly five years ago, sales softened in 2019, with continuing contraction expected as “millennials” are not purchasing cars or trucks at the same rate as former generations.
In automotive/machinery/tooling component manufacturing, PM has generated a large efficiency gain when making parts such as bearing races, gears, shafts, as secondary machining operations like grinding and drilling can often be eliminated. Though a sintering step is required with the “green compact”, the total cost of this process remains lower than from the sum of secondary operations and wasted metal generated from cutting/drilling. If the output from the primary metal production process is in powder form, then considerable cost and energy savings can be realized by direct conversion to semi-finished or final shapes from PM pressing, hot-isostatic-pressing (HIP), or metal injection molding (MIM).
AM is a process of making parts in layers in a semi-compact sized machine directly from computer-aided design software output, without the need for complex and costly tools and with minimal waste material (near net shape). Most common methods of AM use either selective laser melting (SLM), selective laser sintering (SLS), or electron beam melting (EBM) to form the metal powder into its component shape.
PM has been dealing with issues of powder segregation, part density variability, and part weight variability for decades. However, with the increase in use of specialty powdered metals, such as titanium, aluminum alloys, and magnesium, significant safety issues have arisen due to powder combustibility and explosibility potentials. This is especially important in AM, whereby major safety incidents (e.g., fires, dust explosions) routinely occur globally as many are not adequately prepared to handle the metal powder’s hazardous nature.
The special materials and processes used in PM can pose hazards to life and property. The high surface-area-to-volume ratio of the powders can increase their chemical reactivity in biological exposures (e.g., inhalation or ingestion), and increases the risk of flash fires and dust explosions. Materials considered relatively benign in bulk can pose special toxicological and ecological risks when in a finely divided form. For instance, aluminum in powder and dust form is far more dangerous than an aluminum laptop casing or car tire metal rim.
Nano-scale metal powders, such as iron alloys, copper, nickel, aluminum, and titanium are also becoming common in AM with particle sizes on the order of 100 to 1000 nm (nanometers), which is 0.1 to 1 µm. Passivation of the metal powder surface may not exist, thereby creating potential for the powder to energetically oxidize and become pyrophoric (ignition at temperature less than or equal to 130ºF/54º C in air). Thus, safe handling of these types of powders is of paramount importance.
Known as the number one construction material in the world, cement continues to play a key role in global commercial and residential construction projects, as well as infrastructure development and repairs. The recent five-year U.S. trend of people returning to cities (vs. suburbs) bodes well for the cement sector, as high-rise buildings and city infrastructure consume large volumes of cement/concrete.
The cement market is dominated by several large companies (LafargeHolcim, Anhui Conch, CNBM, Heidelberg Cement, Cemex), most with plants located throughout the world to provide not only cement, but also ready-mix operations for concrete supply.
Key trends for the cement market include: Clinker substitution by other cementitious materials (e.g., pozzolan, CKD); use of alternative fuels (AFs; tires, plastic scrap, refuse) for kiln/pre-heater firing; and energy recovery (e.g., using waste heat from kiln to pre-calcine limestone).
This industry has always been challenged by extremely difficult material handling problems in plants located in rainy regions. For example, handling limestone and clay in Indonesia can be problematic for more than half a year due to monsoon rains, and specialized bulk material handling equipment is necessary to avoid major handling inefficiencies.
A few looming issues for the cement industry are the lack of reliable ash supply, which is an important raw mix additive, and CO2 emissions. With ash, plants are looking towards other raw materials with alumina content to provide the necessary chemistry. However, with CO2 emission reduction, this is far more difficult given cement plants contribute (viii) upwards of 8% global CO2 due to simple calcination of limestone (CaCO3 + heat --> CaO + CO2) in the kiln. Some cement companies are investigating CO2 capture and reuse. However, this technology is in its infancy.
State of Select Industries That Are Trending Down
As the saying goes “as the economy goes, so does the price of copper.” Economists have long tracked the commodity price of base metals, such as copper, iron ore, and aluminum as harbingers for economic health (or malaise!). With copper, for instance, if orders are delayed or canceled, prices will drop, thus being indicative of a looming recession, whereas if orders are rising, prices will rise indicating a productive economy.
About 10 years ago, iron ore was near record high prices ($187/tn), but the bottom dropped in the market in 2015 ($45/tn) with a recent return to mid-level pricing ($95/tn) in 2019. As production of ships, construction of buildings and factories consume steel, iron ore consumption moves in lock-step.
The same fluctuation can be said of the precious metal gold. Ten year ago, its price ($1,850/oz) was at a record high, with its price nearly cut in half in 2016, and a strong recovery to $1,530/oz as of the new year. Gold is an inflation-proof investment that can physically be hard-to-recover from mineral resources. For example, the best gold ore mines in the world produce gold at a rate of 20 g/tn, while most mines yield generate 1-5 g/tn. In other words, you have to blast/crush/grind/extract on the order of 2 to 90 tn of ore to yield only 1 oz of gold! Though other metals, such as copper, are often interlaced with the ore, extraction of the metals is very energy intensive and environmentally impactful.
An interesting facet of mining involves lithium and cobalt, which are two vital metals required for the large storage battery industry (e.g., for cars, scooters, buses). Electric vehicle consumption drove prices high around 2017 but softening demand has allowed these metal prices to drop 50% from their 2018 peak. The majority of lithium is mined in Australia, China, and LATAM, while more than 60% of cobalt (ix) originates from the Democratic Republic of Congo.
Material handling challenges in the mining industry remain ever-present, especially with ore bodies being reclaimed below-the-water-table or with greater clay content. Issues of chute plugging, poor live-capacity reclaim from stockpiles, and abrasive wear of equipment are frequently experienced due to lack of knowledge on how to prevent these problems. The “big three” iron ore companies – BHP, Rio Tinto, and Vale – have invested in engineered solution approaches for their tough material handling problems using Discrete Element Method or DEM (x) modeling technology to visualize flow of iron ore through reclaim equipment, hoppers, transfer chutes, and around port operations. These companies have invested the most in capitally intensive rapid-growth-projects (RGP) with major port construction and new mine development or expansions so that iron ore can be efficiently reclaimed, processed, and delivered to port to maximize operating margins. Those not taking care of material handling problems have been forced to abandon operations because production costs have exceeded their revenues.
A tremendous amount of energy is needed to extract metals and precious minerals from ores, and new technologies are being tested to reduce energy consumption needed for comminution. For instance, the Canadian Institute of Mining (CIM) has a special grant-based program underway focused on identification of novel technologies that use far less energy in crushing or grinding rock [“Crush it! Challenge” (xi)].
The plastics industry has experienced a boom in the past few years driven by strong demand for resins to make medical devices, automobiles, appliances, construction products, and packaging. However, the industry is now considered at over-capacity with new construction plants coming on-line to produce polyethylene and polypropylene at high production rates. Plastics companies are trying to innovate for the circular economy to replace, recycle, re-use, and recover energy involved in resin manufacture. Consider that two-thirds of plastics end-up in landfills or the environment (xii), thereby degrading slowly or accumulating (such as in the ocean in massive floating islands). Some states and towns are outlawing the use of plastic shopping bags, which has in some cases had an adverse reaction with increased overall plastic consumption as consumers end up using larger plastic bags or throw away more durable plastic containers used in place of bags.
Recent trends in the plastics industry are with reinforced plastics and plant-based biodegradables. Many resin manufacturers are now routinely adding anti-caking agents to their pelletized products to avoid “blocking” in rail cars, Gaylord boxes, or sacks.
At the turn of the century, about 50% of U.S. electrical energy generation was from coal-fired power plants. Two decades later, this has dropped precipitously to under 30% (xiii) given environmental pressures and recurrence of renewable energy sources (e.g., solar, wind, biomass). Furthermore, enhanced oil exploration via fracking of shale formations in the U.S. has led to massive natural gas yields, making combustion of gas far more attractive (i.e. profitable) than handling/grinding/burning of coal. For instance, in New England, almost all of the full-load coal-fired power plants are decommissioned, with only a few remaining (Bow, NH and Bridgeport, CT) as back-up operations for peak load demand.
As an interesting aside, during my initial years consulting about one-in-three engineering projects at our firm involved coal handling. Now, almost 25 years later, about one in 50 projects are with coal! Many of the engineering firms that serviced energy generation from coal are either defunct or have had to reinvent themselves to operate in other markets/industries to remain solvent. Though ample U.S. government investment has occurred over the past decade for renewables and biomass R&D, this funding is focused on the research aspect and not on large-scale industrial facility design and construction.
The energy industry is now pivoting towards enhanced efficiencies with renewables, smart-grid energy management, and home/business energy storage via battery technology. With wind and solar energy often only able to provide only six hours of power per day, energy storage is the next mountain to climb.
The global and U.S. economies are expected to remain steady in the near term, though some economists are predicting 30% chance (xiv) of a global recession in 2020. Manufacturing plants in all industries must focus on continuous improvements to three main areas: Productivity, quality, and safety. These improvements are often measured by KPIs such as “zero accidents”, “no defects”, or “80% operational utilization.”
Proven engineering technology has been available for more than 50 years to effectively design powder and bulk solids storage and transport equipment unique to the myriad of market sectors and industries highlighted above.
Though safety is often not considered a major factor to the “bottom line” as productivity and product quality, it can have a major cost. Have you performed a safety audit to review hazards from dust explosions, potential silo failures where storage equipment has visible signs of distress, or where environmental impacts could result from poorly maintained equipment like dust collectors? Keep in mind that if you handle a combustible dust (70% of powders are!) in your process, you should be having a dust hazards analysis, or DHA, (xv) before September to ensure you’ve evaluated the potential for fire, flash fire, or dust explosions and are taking measures to prevent and protect facilities and personnel in the case of an event.
Eric Maynard is vice president, Jenike & Johanson Inc., Tyngsboro, MA, and has been with the company for 24 years. For more information, email Eric at [email protected], call 978-649-3300, or visit jenike.com.
Here are a couple more articles by Eric Maynard that may interest you:
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