Operating Principle - Robust Safety and Compliance

Safety is a priority in all Quanex businesses. At Vehicular Products, the Heat Treating division serves as a model of what can be achieved by emphasizing and applying rigorous safety programs. An empowered safety team, workplace audits and professional safety counseling contributed to improvements resulting in zero lost time accidents during 2002, compared to four in 2001.

Operating Principle - Quality, Service, Value and Innovation

Japanese automotive and related components manufacturing markets are growing in North America and MACSTEEL’s recent agreement with Sanyo Special Steel Co., LTD. will better position both companies to meet that demand. Under the partnership, process technologies will be shared.

Operating Units
MACSTEEL, Ft. Smith, Arkansas
MACSTEEL, Jackson, Michigan
MACSTEEL Heat Treating, Huntington, Indiana
MACSTEEL NitroSteel, Pleasant Prairie, Wisconsin
Piper Impact (2), New Albany, Mississippi
Temroc Metals, Hamel, Minnesota

Products
Engineered carbon and alloy hot-rolled steel bars, MACPLUS® cold-finished steel bars, bearing and aircraft quality ultra-clean steel bars, heat treated bars and tubes, corrosion resistant bars and tubes, steel and aluminum impact extrusions and lineal aluminum extrusions and components.

Steel Bar and Extruded Component Applications
Engine and motor components – camshafts, connecting rods, crankshafts, and gears; Wheel assemblies – hubs, spindles and brake cams; Steering systems and drivetrain parts – axle shafts, C.V. joints, torsion bars, ring gears; Safety related and other – air bags, suspension parts, heat exchangers, hydraulic applications.

Technology
MACSTEEL engineered bar mills use a continuous cast process and highly refined melting and finishing practices. The process technology utilizes electric arc furnaces for melting, ladle furnaces for chemistry refining, vacuum arc degassing for cleanliness, advanced rotary continuous casting, turning and heat treating.
NitroSteel carbon and alloy steel bars and tubes are surface hardened by the Nitrotec process. This is an atmospheric furnace treatment that combines the high surface hardness and corrosion resistance of nitriding with the additional corrosion resistance gained by oxidation and quenching.
Heat Treating is a technically advanced induction heating facility that specializes in bar and tube heat treating. Full support equipment for customized cutting, straightening, tensile testing and sophisticated metallographic analysis is part of this in-line process, which can handle lengths up to 60 feet.
Piper Impact has high volume capacity and tool and die design capabilities to produce high strength components using aluminum and steel. Using impact presses to 2,000 tons, components require little outside finishing as Piper can complete secondary machining, plating, painting and heat treating in-house.
Temroc Metals produces quality aluminum extrusions and components using liquid nitrogen injection, thermal processing and machining.


Robust Safety and Compliance Disciplined execution of basic
operating principles is critical for success in every Quanex
business. Safety programs are extremely important in the day to day operations with work rules and programs developed and implemented to avoid accidents. In addition, all manufacturing is done using equipment and systems that are optimized for safety, efficiency and quality production.

Meeting Customer Needs with Quality, Service, Value and Innovation
Quanex is committed to bringing increased value to its customers. The Vehicular Products segment is recognized by oem customers for producing custom designed, high quality products that can be delivered on a just-in-time basis. To assure customers are consistently provided superior quality and unmatched service, capital expansion and improvement projects are ongoing.

MACSTEEL is a custom steel bar producer where scrap material for each heat lot is individually blended, poured, cast and rolled for a specific customer order. Chemistry, dimensional tolerance, and surface requirements are strictly adhered to for each intended end use application. This strategy continues to serve them well within this niche market.

MACSTEEL is recognized for its responsive service to customers, employs a highly involved and participative work force, and thrives on innovation. To satisfy their customers’ ever-increasing quality and service requirements, MACSTEEL has continuously improved its value-added capabilities. Since 1990, over $285 million has been invested to enhance its steel bar manufacturing and refining processes and improve its rolling and finishing capabilities. Shipping capacity has been increased to 720,000 tons per year with more than a third of that capacity representing value-added bar products. Phase VI, the group’s latest value-added project, was finished in December 2002 and increased the production of their premium product,
MACPLUS, by 50%. MACSTEEL now has six bar turning lines,
capable of producing some 270,000 tons of its highest quality
MACPLUS cold-finished steel bars. The capital expansion also added heat treating, automated inspection equipment and a bar cutting facility at the Jackson plant, which enables them to perform blank cutting, end preparation, inspection and packaging.

This year, Automotive Industries magazine recognized MACSTEEL as a “Quest for Excellence Winner” in the ferrous material category. The magazine determines which OEM suppliers are the “best of the best”, based on rankings by customers. Companies are judged on critical issues of quality, delivery, service, innovation and price.

In addition, for the 10th consecutive year, MACSTEEL received top ratings as the best SBQ (special bar quality) supplier in surveys conducted by Jacobson & Associates. These surveys determine results based on quality, delivery, price, service and overall performance. The survey also ranked MACSTEEL as Number One in Overall Customer Service.

During August, MACSTEEL entered into an agreement with Sanyo Special Steel Company, LTD. to collaborate on a variety of technical and manufacturing issues related to producing specialty steel for transportation markets. MACSTEEL and Sanyo will use their combined knowledge to define and implement mutually beneficial projects. Under the agreement, the companies will exchange their respective expertise on production methods to develop high quality steel products for the future. Of particular focus is the Japanese automotive and related component manufacturers in the North American market. This partnership will put both MACSTEEL and Sanyo in a better position to serve this growing segment.

NitroSteel is a bar and tube processor offering an environmentally safer alternative to chrome plating. During 2002, the plant expanded its value-added manufacturing capabilities by installing grinding operations. Along with newly installed overhead cranes to increase throughput, these investments will enable NitroSteel to increase its value proposition to its customers.

Piper Impact performs custom parts design and tool development for the high volume impact extrusion presses it uses to make near-net shaped components for customers in the automotive, ordnance and commercial markets. The near-net shaped extrusions are work hardened in the extrusion process, making them stronger, lighter and more cost effective than other design options. Piper is committed to being the “supplier of choice” and works closely with its customers’ engineers early in the product design stage to provide technical and metallurgical expertise. Strong relationships and a growing customer base are gaining momentum as the development and qualification of new programs continue.

This year Piper received the Excellence Award from the Mississippi Quality Award Program. The awards program provides organizational self-assessment using a structure similar to the Malcolm Baldridge National Quality Award, which is often considered to be the best measure of performance excellence in the world. The annual awards encourage the application of continuous improvement principles and sharing of best practices.

Temroc Metals produces value-added aluminum extruded products in many different shapes and alloys for a diverse market base, with the majority of sales to the recreational vehicle market. Equipped with a complete in-house fabrication facility, the Company focuses on developing capabilities that can provide solutions to its customers’ specific needs.

Lean Thinking Lean manufacturing practices are the cornerstone of production improvement programs throughout the Quanex organization. The Vehicular Products segment of Quanex embraces the concept of lean, including value definition and mapping, pull, flow, and pursuit of perfection in every aspect of the business, from the administrative offices to the production lines, all in an effort to eliminate waste and increase productivity.

MACSTEEL is an engineered steel bar producer with world-class manufacturing and processing plants that are inherently lean. The continuous cast process employed by MACSTEEL allows them to make high quality steel bars at less than half the man hours per ton than the industry average. With few layers of management and superior customer service, MACSTEEL effectively uses its plants and processes as marketing tools.

In addition, recent MACSTEEL lean initiatives have further improved yields through modifications of the melting, casting and rolling practices. The MACSTEEL Heat Treating facility continues to work on lean projects to improve the finishing and inspection areas that, when completed, will result in increased throughput and single-piece flow.

Over the past several years, Piper Impact has restructured its facilities resulting in increased labor productivity and reduced
manufacturing lead times. Cellular processes at Piper are designed to improve the flexibility of operations and replace the more traditional “batch” production methods. Space on the shop floor is used more effectively, changeover times are reduced, and product quality is enhanced.

Temroc’s lean manufacturing journey will raise its production flexibility, improve the quality of the alloy extrusions, increase machine efficiency and reduce material handling. Investments will continue to be made to support lean improvements, such as the recent purchase of a five-axis machining center being installed in-line with an injection molding press. This will substantially raise throughput and reduce cycle times.

“We Can Do It Better” Culture Both MACSTEEL engineered bar facilities are certified ISO 9001 and QS 9000. MACSTEEL’s Heat Treating division received a recommendation for ISO 9002 certification this year. And most recently, the NitroSteel plant successfully completed the last necessary audit and has now received ISO 9002 certification. They are now planning to move to ISO 9001.

Temroc Metals is expected to gain ISO 9001 in 2003, which will open up market opportunities with prospective vehicular customers. Training on the new procedures is underway and activities to attain certification have been scheduled.

The Vehicular Products group is at the top of its class in many ways, but continues to stretch to meet the pressures of an increasingly competitive global environment. Giving customers what they need is the top priority, but can only be accomplished with superior operating processes and a dedication to excellence.