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CRML SHEET Offshoring has all but obliterated the US consumer base

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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 costs."

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 centers.

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 slow.

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 components.

"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."


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