U.S. buyers of semi-processed cold-rolled
motor lamination (CRML) sheet are battling global forces as
they attempt to hold on to a dwindling market share. Being a
small market to begin with, it's not an easy battle.
With few options and little optimism for
improved market conditions in the near term, numerous U.S.
customers are relocating operations to China and Mexico amid a
domestic housing market that continues to lag.
One stamper no longer involved in the CRML
business summed up market conditions fairly succinctly "We're
not in that business any more. If we were in that business
right now, we'd be out of business because all of that business
went to China."
Those in the business say the migration of
customers to foreign markets has cut deeply. "We're seeing some
weakness in motor lam," said a source at one stamping company
in the northern United States. "We've lost a lot of local
customers to China and Mexico. A lot of customers we used to
supply here have moved out of the country. We can only surmise
(that they are leaving to take advantage of) lower labor
It is impossible to tell, of course, how many
stampers have moved to China or Mexico, but the migration has
been heavy, according to market sources. Most CRML is sold to
stampers, with only small amounts going through steel service
The product depends heavily on the fortunes
of the housing market, as it is used in motors for household
appliances like dishwashers, washers and driers, refrigerators,
garbage disposals and range hoods, in compressors and fan
motors for heating, ventilation and air-conditioning (HVAC)
applications and small motors in power tools. It also is used
in automotive applications.
"It is a fairly small business segment," a
market source in the Midwest said. "The problem with it these
days is twofold. First, a lot of customers have moved out of
the country. Second, the housing market in the U.S. is really
U.S. housing starts plummeted to a seasonally
adjusted annual rate of 1,006,000 units in December, down 38.2
percent from 1,629,000 units in the same month the previous
year and off 14.2 percent from a revised November figure of
1,173,000 units, according to U.S. Census Bureau data.
CRML also turns out to be a difficult product
for mills to manufacture because of costs. Since the motors are
so small and so little is used in any one application, much of
the leftover CRML ends up as scrap.
"There are times when it doesn't make sense
for mills to make it," the Midwest market source said. "They
can't make any money on it. Steel Dynamics (Inc., Fort Wayne,
Ind.) used to make it but they're not doing it any more. They
(the mills) can't sell much right now, so there aren't as many
making it as there used to be."
Industrial applications for higher grades of
CRML or for the fully processed material lie in electrical
transformers, portable generators or lighting ballasts. It is
produced to maximize the performance of the products for use as
electromagnetic core materials in electrical equipment
"There are still plenty of opportunities to
use motor lam," the stamping company source said. "Look around.
There are literally dozens of little motors in use all over
your house or where you work. There is very wide usage. But the
problem we are facing is that our customer base is shrinking.
We've had a lot of customers move out of the country."