Lately I have come up with the idea of launching a new initiative in this blog: interview relevant people working in the world of hydraulics and pneumatics, with the main purpose of informing you, readers and followers, about news that may affect our market.

I travel a lot, worldwide, to visit the main players in the field, and that gave me the idea: why not collect first-hand information, impressions, and trends from international stakeholders and share them on the spot with the community?

This blog is proving an excellent tool, and, believe me, I weren’t sure it was worth it at the beginning. Instead, from October 2015 when it was launched to today, followers have increased from 1500 to more than 6500! And all of you are qualified operators in the hydraulic and pneumatic field. This is a great satisfaction to me, because it means you find interesting and useful content here.

My commitment is to always strive to do better, and the idea of the interviews aims precisely at transferring valuable and helpful information to all of you.

Here is the first interview to Mr. K.K. Paul, President of T.P.I. (Tube Products of India)

It was conducted ​​in India at the Murugappa Group headquarter in Chennai on 2016, July 21^st.

The MURUGAPPA Group operates in India in different fields, like: agriculture, engineering, financial services and many others. With a total turnover of 4 billion of USD, T.P.I. is a fully owned company.

T.P.I.  is located in Chennai and, as far as I know and based on my experience, it’s the biggest cold drawing mill in the world.

The current capacity installed is ab. 15,000 tons per month and the current production (output) is about 13,500 tons per month.

T.P.I. is globally recognised as a market leader for Automotive Welded Cold Drawn Tubes covering app. 80% of the total production, mainly addressed for:

• Camshaft, Shock Absorbers, Vibration Dumpers, Power Steering, Axle Shaft, Side Impact Beams, Belt Tensioner, Propeller Shaft
• the 2 wheelers Tubes for: Front Fork (supplying 80% of the market) Handle bars, Seat Rest and Main Frame.

Their main customers are Suzuki Maruti, Hyundai, TATA, GM, Toyota, Nissan, Ashok Leyland, Piaggio, CNH, BOSCH, Honda, SUSPA, DANA, MagnetiMarelli, KYB, SHOWA, KOYO, Gabriel, John Deere, FORD and Mahindra.

I was really impressed about the quality of the products and the commitment of theirs workers to strictly follow the quality instructions. It’s a huge plant with a wide range of products from very small sizes of 12×1 mm up to 160x10mm.

But now let’s read Mr K.K. Paul’s actual words.

Dear Mr K. K. Paul,

first of all, many thanks for this opportunity, which is intended to present you and your company as fully as possible to the benefit of the hydraulic and pneumatic community worldwide. 

1. What are your main target markets?

India, ASEAN, Europe and USA.

2. How’s your perception of the today’s market environment?

My impression is that capacity is exceeding demand in the tube business. Hence competitive intensity is very high in putting pressure on margins.

3. What are your main opportunities and threats?

The main opportunity is to be a key supplier in the steel precision welded tube space for automotive and hydraulic cylinders. The main threat is the mismatch of supply and demand leading to margin lowering in the industry.

4. Have you developed a new product recently? If yes, what was the customer’s problem it was made to solve?

Yes, many. They present new characteristics of, for instance, light weighting, safety and emission, as well as precision on tolerances and surface.

5. What are the new challenges for the future, in your opinion?

The big challenge is to still achieve profitable growth.

6. Can you tell me the main reason why T.P.I. have launched a new investment of more than 50 mil USD in the Hydraulic Cylinders production?

Our intention is to enter the non-auto space of construction and infrastructure, allowing new growth opportunities in India and in targeted markets outside India.

7. Can you tell me whether other investments have already been executed by T.P.I. or are going to be executed within this year and why?

Yes, there are other investments in the pipeline this year and they will be channelized on capacity creation and capability building.

8. What’s your USP and why are you different from your competitors?

Our USP is wide range and scale; support to our customers on dynamically meeting their QCD targets; large R&D backup allowing us to develop newer steel grades with modifications to suit product application; make it easy for the customer to do business with us by helping in some of the down stream operations that the customer does with the tubes. Thanks to all that, we stand out among competition.

9. Can you tell us a story of success that can be helpful to our community?

We made the right decision when we entered the Asian, European and US market. It was a challenge but it proved successful, indeed we have a long track record of success against international players. The confirmation comes from the trust our customers have placed on us over all this time, since for many of them we have remained their key supplier and supplier of choice.

Thanks Mr K.K. Paul for your time and the useful information you share with us.

I have a great opinion of T.P.I. and I do appreciate their contribution on our field in terms of high quality and professionalism. They are a world power and their key success factors are:

• they are excellent in meeting QCD expectations of their customers;
• they can boast a proactive product development strategy;
• they are smart in aligning product offering to mega-trends.

Stay in touch for the upcoming new interview and feel free to ask any questions I can transfer to the next market players.

With focus on the Hydraulic Cylinder Industry the following components are made by a Cold Drawing process:

• Cylinder Tube
• Piston Rod in many cases

When a 75,000 PSI minimum yield strength is specified for the design of parts in hydraulic and pneumatic cylinder there are several options for the material that will meet this regular specification.

1. a) Cold Drawn Cylinder Tubes – both welded or seamless

Grades : E355 , AISI-1020 or AISI-1026

1. b) Cold Drawn Round Bars used for producing Piston Rods

Grades : 1045 to ASTM-A311 or 38MnVS6

For both products is strongly recommend after the Cold Drawing a further annealing process by stress relieving.  The temperature and the time of permanence in the furnace depends on the steel grade of the product and also the cooling temperature and the time is extremely important to achieve the expected result.

Cold Drawing Tubes and Bars induce stresses in the product. These stresses can cause loss of tolerance, cracking and distortion, and contribute to in-service failures.

In the case of Cylinder Cold Drawn Tubes, with the exception of tubes called RTU ready to use or S.S.I.D. that for tolerance reasons and internal roughness do not require heat treatment after the cold drawing operation, in all the other cases stress relieving is  necessary, and in some cases, mandatory.

A stress relief operation is typically used to remove internal (residual) stresses that have accumulated in the material. The stress relief process is performed by heating in a furnace to a temperature below the lower critical temperature (Ac1) and holding at that temperature long enough to achieve the desired reduction in residual stresses

In the case of chrome bars used for the production of piston rods in different steel grades such as: CK-45, C48, Cf53, 20MnV6, 38MnVS6, 42CrMo4 Q+T, etc.

The work cycle to produce a chrome bar may vary depending on the type of material from which you start.

Generally the size of up to 30mm diameter people are using cold drawn bars. The work cycle start with grinding, polishing and chrome plating.

Size greater than the diameter. 30 mm is preferred start from hot rolled steel bars. The working cycle starts with peeling, straightening, grinding, polishing and chrome plating.

I decided to write this post to give some indication or address both to users of chrome bars and producers of drawn bars and/or hot rolled round bars for the production of piston rods.

In the case of cold drawn bars is highly recommend to provide a stress relieving treatment after drawing and before straightening and cutting.

In the case of hot-rolled bars I suggest a stress relieving treatment only for micro-alloyed steels or with yield values ​​of minimum 75,000 PSI.

In this case the relieving treatment is sufficient to a low temperatures and with very short residence times.

For these reasons, stress relieving is often necessary, and in some cases, mandatory.

A stress relief operation is typically used to remove internal (residual) stresses that have accumulated in the material and to prevent failure on the finish product especially if used in steering cylinders.

Stress relieving enhances the ductility over cold drawn products.

Ductility, as measured by % Elongation and % Reduction of Area, is significantly improved by a stress relieving operation. It gives the assurance that material can withstand design overloads without failure.

In case of Piston Rods – Side-loads due to unforeseen circumstances will bend the rod – not cause it to fracture – assurance against catastrophic failures.

Stress relieving enhances machinability.

Cold Drawing is generally used for getting a precise size tolerance and for increasing the mechanical properties.  During this operation the hardness change on the cross-section.

A stress relieve bar or tube is “dead” over the entire cross section and will not “move” while machining. With stress-relieving heat treatment, the tension in the material is minimized without major changes to the microstructure or strength.

This is a great advantage during subsequent machining. If there were still tension in the material, it would, for example, cause distortion during sawing or milling.

Stress Relieving enhances fatiguelife of the final component part.

For Bars and Tubes the Stress Relieving heat treatment is made just after the cold drawing operation. The Temperature and the time of permanence of the Thermal Treatment depend on the steel grade and on what we’d like to achieve at the end.  In all cases the temperature is below the first critical point.

In case of Cold Drawn Tubes in grade E355 the temperature can vary between 520 to 570 Celsius, Mechanical properties will remain unchanged and the elongation increase from ab. 7% to minimum 15%.  Sometimes is necessary to stay on the higher side of the temperature for achieving a better impact value KV either.

In case of Cold Drawn Bars, used afterward to produce Hard Chrome Plated Bars, Stress Relieving is a must to achieve the straightness on the final product with a minimum residual stress and by allowing further machining of the components without re-straightening. The lowest possible residual stress patterns in a finish part give the assurance to have the best possible fatigue life of the finished component.

In Conclusion

Stress relief is a simple heat-treating operation for all Cold Drawn Steel Products that depends strongly on the proper selection of temperature and time at temperature for its success. A proper cooling rate is also a surprisingly important factor.

Example:

                                   Cold Drawn Only                Cold Drawn & Stress Relieved

Product :                    Cylinder Tube 80×95                      Cylinder Tube 80×95

Grade :                       E355 +C                                 E355 +SR

Yield Strength :         84,100 PSI                             81,800 PSI

Tensile Strength :     94,250 PSI                             89,537 PSI

% Elongation :          7%                                         16,8%

                                   Cold Drawn Only                Cold Drawn & Stress Relieved

Product :                    Cold Drawn Bar 20              Cold Drawn Bar 20

Grade :                       1045 +C                                 1045 +SR

Yield Strength :         102,800 PSI                          97,660 PSI

Tensile Strength :     92,150 PSI                             86,537 PSI

% Elongation :          9,8%                                      15,2%

In this article I will touch a sensitive but extremely important point with the aim of making you, my reader, start questioning the notion we all have taken for granted for so many years “rating for corrosion resistance”. I will encourage you to ask yourself this simple question: “Is rating an accurate form for the evaluation of corrosion performance/resistance?”

We all know that in the hydraulics business there are few aspects more important or more spoken off than that of the rods corrosion rating. In order to evaluate the potential of a producer or that of its product, we have taught ourselves to ask questions such as “how long it will last in NSS?” or “what do you guarantee for corrosion resistance?”. The answer inevitably will be the blunt and totally unsatisfactory standard phrase that will hit you: “R9 at 200 hours”. This has become the standard answer received from every single chrome product supplier (big or small, good or bad) – it has become a “benchmark or a trademark” answer, as everybody is marketing their products as per this rating.

During these past few years, I have tried to find the answer to this question by trying to understand aspects such as: what does R9 means?  Is this satisfactory for my particular application? Does R9 mean that from the start I accept a rod that is not fully corrosion resistant for the given time? Can an accelerated test performed under controlled and unlike real world conditions, that give me a number as a result, is cause for reassuring me that the bar is good or bad? What is the real world condition test rating that corresponds to a rating 9, result obtained in laboratory conditions?

After carefully assessing various test performed on production batches as well as test runs spread over many years, I have come to the understanding that giving a “number” value (even the highest one found on a fix values scale), does not provide guarantees as per what I need, thus making me to realize envision the idea that the “RATING IS DEAD!”.

I know what you think as this has been also my first thought when I first envisioned this…….how can this be?

Well, let’s check out some of the facts that made me challenge the “rating 9” myth being the benchmark of the industry:

• salt spray test performed and interpreted in according to EN ISO9227 and EN ISO10289, lacks real world conditions of cycling between wet and dry conditions, heat and cold, various UV radiations to which the rods are exposed during its life span. To this end many OEM’s have started to ask for SCAB (Simulated Corrosion Atmospheric Breakdown) tests according with EN ISO11474, and while slower and more difficult to achieve, this sort of testing is more suited to mimic the conditions that rods will face in real world applications, thus providing a somewhat more reassuring result;
• limited sampling of the test specimens. A typical production batch can run for thousands of meters but you only test 0,00..% out of that production run;
• results interpretation by the lab technician;
• lack of ability to compare actual results over a spread of time (results incidents – how many R8, how many R9, how many R10; at what intervals and with what frequency for each one).

Does this mean that all ratings are useless?

Well, yes and no!

YES because as already pointed out, you can’t place the equal sign in between. An R9 obtained under controlled laboratory conditions (accelerated conditions, true), and an R9 obtained in real world conditions.

NO because these tests can still be used to compare fast and with relative ease, different types of rods (either of different steel grades, chrome plating techniques and or thickness).

In my opinion the only evaluation/guarantee that needs be requested from any hard chrome plated supplier is the one that does not allow for any interpretation, any argument or any negotiation, and that notion is simply “NO RUST AFTER ‘X’ HOURS”.

If you have any comments, input or observations, feel free to share them here. I’d be happy to know your thoughts.

If you wish to be advised on my next posts and to receive additional material and updates soon, please leave your email-address here.

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Why and were to use nickel and chrome plated rods

In extreme corrosion environments such as the ones close to a coast line or offshore platforms the passive oxide layer that covers the chrome plating is being attacked and destroyed in a much faster way than in normal conditions, thus allowing the corrosive agents to penetrate the chrome by using the micro cracked structure of the chrome (Pic.1), and attack the steel material that we are aiming to protect. In contact with the steel base, the corrosive agents attack the structure of the steel and through the same micro cracked structure releases corrosion products that deposit themselves on the exterior of the rods as rust or oxidation (Pics.2A & 2B).

Pic.1 – Sample in cross section – normal chromed rod – high density micro crack structure reaching down to the steel base

Pic.2A – How corrosion is happening on a hard chrome plated bar

Pic.2B – Macro & micro analysis of corrosion point on steel plated rod

Such working environments require more corrosion protection, something that traditional chrome plating does not provide. A standard approach to address the increase corrosion resistance request is to apply a layer of nickel (around 10 µm) on the base material before chrome plating (Pic.3). This layer of nickel will “cut off” completely access from the corrosive agents to the steel base. The chrome layer will give way and the corrosion agents will penetrate the chrome layer by using the micro cracks, but once it will get at the nickel layer, advance of the corrosion agents will be stopped (Pic.4)

Pic.3 – Structure deposit of nickel / chrome product

Fig.4 – How corrosion is happening and were does in stops in a nickel/chrome bar

How is nickel plating done?

There are two approaches currently being used in large scale industrial process regarding nickel plating:

1. Electroless nickel
2. Electroplating nickel

The obvious questions here would be – what is difference in between the two and which one is best for my process?

Bellow we are going to try to explain how each individual approach for nickel plating works.

1. Electroless nickel is an auto catalytic chemical process used to deposit a layer of alloy nickel (85 – 95% nickel) and other materials such as phosphor, boron without the use of electrical power. Basically “electroless” refers to an immersion reaction that does not use a power source to achieve a coating onto another metal surface. This is achieved by a chemical catalyst already present in the solution that creates and causes the nickel to plate autocatalytically. Since the use of electrical power is not needed, this represents a great cost reduction but also a simplification of the actual nickel plating process as there is no use of rectifiers, electrical power, complex filtration methods and no sophisticated machines. Also another major advantage of this system is that the nickel layer deposits itself with the same thickness on all areas of the parts as since no current is involved and the associated problems of current distribution do not exist (Fig.5 a & b).

Pic.5A                                                                                                          Pic.5B

2. Electroplating nickel is an electrolytic process for depositing a layer of nickel upon a metal – electrodeposition (Fig.5a). Electrodeposition process essentially involves passing an electrical current between two electrodes immersed in an electrolyte. The metal that we want to be nickel plated is the cathode (negatively charge) while the positively charged electrode represents the anode. The electrolyte contains soluble nickel salts along with other. When dissolved, the nickel salts dissociate into divalent, positively charged nickel ions (Ni++) along with negatively charged ions. When current flows, the positive ions react with two electrons and are converted to metallic nickel on to the cathode surface. A key characteristic of this method is the increase speed with which the nickel deposits itself onto the cathode, unlike electroless nickel plating, and ease in compliance with the RoHS and REACH directives as per the absence of restricted substances such as Lead, Cadmium, substances that are present in the electroless process.

As it can be seen, there are fundamental differences in between the two types of nickel plating technologies / approaches, and while these are important aspects to be considered for the actual nickel / chrome platter (balance between increase speed of deposit the nickel using electroplating, the economy made by not using electrical power or complex machinery, the even distribution offered by electroless plating, or the thicker deposits possible by using electroplating, etc), these have no impact for you, the end user of the product.

What is important to the end user of the rods is that nickel plating increase resistance to corrosion, ability generated by the amorphous alloy that is free of any pores and / or cracks.

If nickel plating is so resistant to corrosion, why not have only nickel plating a bar?

By themselves, both chrome and nickel offer a number of advantages and disadvantages. General nickel plating, while resistant to corrosion is subject to tarnish and has a lower hardness value (in between 500 – 700 HV0.1) than that of chrome. While much harder with hardness values easily reaching 900 – 1000 HV0.1, chrome is not as resistant to corrosion because of its micro cracks, but provides better wear resistance layer with excellent low-friction characteristics for the piston rods as exemplified in Picture 6.

Pic.6 – Nickel / Chrome plated rod

Using nickel / chrome plating a rod will achieve great results when tested in salt spray conditions, results that amount to:

1. NSS  environment (ISO9227) up to 1000 hours no corrosion
2. AASS environment (ISO9227) up to 500 hours no corrosion
3. CASS environment (ISO9227) up to 100 hours no corrosion

*All above mentioned results confirmed during extensive laboratory tests, tests performed and results evaluated as per ISO9227 and ISO10289.

If you have any comments, input or observations, feel free to share them here. I’d be happy to know your thoughts.

If you wish to be advised on my next posts and to receive additional material and updates soon, please leave your email-address here.

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In this article you will learn what a hard chrome plating is, how it is made, what is its structure and which are its advantages.

Hard chrome plating is a technological process that ensures a product has increased wear resistance, reduce friction, and most important, gives increase corrosion resistance to a metallic product aspect critically important especially in the hydraulics industry. Chrome plating is an ever changing or transforming process, one that has brought forth many improvements over the past few years, but also a lot of marketing “attacks” (example thousands of hours of Rating 10) – this will be something I will  write about in a future article.

How is hard chrome plating achieved?

Hard chrome plating is an electrolytic process utilizing a chromic acid based electrolyte, or easier still, coating of metallic chrome that is deposited electrolytic on a metallic material.

The process is quite simple and requires energy, chromic acid, big enough baths or lines (if working in continuous chroming) depending on size/lengths of chromed products and anodes.  In the chroming process, the product that is going to be chromed, becomes a “cathode” that gets through an “anode” that is found in the chroming bath. Thus, the chromium metal gets build on the metal surface that we want to chrome. A typical chroming process is made out of 4 different stages:

1. degreasing
2. washing
3. activation baths (anodic attack)
4. chroming cell (baths)

The chroming process depends on many factors:

• the surface quality of the metal that is going to be chromed (roughness, raw material defects such as holes, overlapping of material…),
• damages from product manipulation such as dents or hits,
• parameters that are being used (current, chroming solution, catalysts, temperature) during the chroming process. Any variation within any of these parameters can cause small or big problems on the chromed batches such as porosity, exfoliation of the chrome layer, surface color difference of the chrome layer and many others.

Structure

The micro-structure of the chrome coating is influenced by how you managed to control the hydrogen evolution and the evolution of the chrome film being deposited on the cathode. Basically the micro-structure of the chrome coating is ranging from tight coatings with inner tension to tension free coating with up to 2000 micro-cracks per cm. The chrome is deposited in a hexagonal crystal, reorganizing itself into a tighter centered cubic structure, setting free the buildup Hydrogen. The pillar structure of conventional coatings implies hardness and crispness. The classic hard chrome coating is micro-cracked and tension-free but not tight. Chemistry controls the release of inner tensions and transforms them into micro-cracks measured as number of cracks per cm – as results we may conclude that hard chrome is inherently micro-cracked.

The structure of the chrome film is also affected by exactly the byproduct of the chemical reaction during chroming – the release of the hydrogen. Basically at a critical point, the hydrogen buildup will be released eventually and this will create a fine “exit” point on the surface of the chrome product, point that is prone to corrosion. In order to prevent such an issue, at regular intervals the hydrogen buildup is intentionally made to release itself by flipping the bar and by adding a circular movement on the bar.

Advantages of hard chrome plating

1. Corrosion resistance

Corrosion resistance is given by the chrome oxide that is being formed as a result of the chromic acid oxidizing the outmost surface layer. Basically the chrome oxide creates a fine passive film that acts as sealant on the total chromed surface – this oxide acts as “fillings” that “corks” all surface imperfections, pitting and micro-cracks, thus ensuring corrosion resistance. This oxide film is extremely thin up to 5nm and is vulnerable to certain types of wear, although the film is restoring itself in oxidizing environment. In order to potentiate the lifespan of this film, various treatments of the chrome surface are being carried out, such as chemical passivation or polymers.

2. Wear resistance

Hard chrome is resistant to abrasive wear (moving particles plans away the surface coating) as long as the surface pressure of the abrasive particles are low. Limited space and hard particles can peel off chromium from the surface accelerating destruction of hard chrome coatings.

Hard particles hitting the coating with high speed in a path perpendicular to the surface can     lead to erosive wear and destroy the chrome oxide film initiating corrosion attack provided that the flowing media is acidic and reducing.

3. Friction resistance (roughness)

The chrome oxide layer provides low friction between hard chrome and other metals. However friction is also influenced by the roughness of the chromed raw material as hard chrome does not possess any leveling / filling ability at all, chrome just copies the aspect of the chromed surface.

4. Surface hardness

At around 1000 HV0.1, chrome plating is harder than most industrial abrasives and steel counter faces. Unusually, it combines this hardness with a degree of toughness, so the deposit can stand up to high stress contact.

My next article will be released soon and will be related to the Corrosion Resistance.

If you want to learn how to achieve it, how to control it and why it is so important in the hydraulic business, please don’t miss my next post.

Stay tuned,

Luciano GIOL

I began my professional life way back in 1976. We’re now towards the end of 2015.

That means nearly 39 years of experience in the hydraulic and pneumatic cylinder industry.

Mapping the market thoroughly is the backbone of an overall business and marketing/sales strategy, therefore, being the first post of this specialized category, I believe it is useful to make a sort of recap of how the market is made up, of its players and its dynamics.
Nowadays the hydraulic and pneumatic cylinder industry is controlled by two main types of customers:

1. Hydraulic/Pneumatic Equipment manufacturers
2. Hydraulic/Pneumatic Cylinder manufacturers

Before taking a look more in detail at each of them, I just want to make a preliminary observation.

The use of Hydraulic/Pneumatic Equipment can be found in a wide range of sectors, for instance:

• Agriculture
• Construction
• Material Handling
• Automotive
• Marine & Offshore

Equipment manufacturers encompass large multinational corporations, medium-sized companies, down to small producers with local interests only. The key question for any marketing strategy to answer is: do equipment manufacturers produce their own cylinders or are they supplied by cylinder manufacturers, the second group?
This is the very starting point. A smart customer database is structured according to this criteria and, like this, it provides an exact picture of the market.

Now let’s see how the two customer types differ from one another:

1. EQUIPMENT MANUFACTURERS PRODUCING THEIR OWN CYLINDERS
   The requirements imposed by these customers are typically: detailed technical specifications, audit of the production facilities, sample inspection for homologation. If these criteria are met, a regular business relationship can be established. Doing business with this type of customers means supplying a specific and limited range of products and sizes, depending on the area where the equipment is used in. Long-term supply contracts are common and variations in executions and quantities are known very much in advance before implementation. In case of relationship with the very big players, production forecasts can span over several years.
2. HYDRAULIC/PNEUMATIC CYLINDER MANUFACTURERS
   This group of customers supplies the equipment manufacturers who do not produce their own cylinders.
   They might specialize in certain application areas or cover all types. In terms of requirements, they generally meet the standard material specifications, they usually cover the full range of sizes and executions and their delivery timeframe must be tight and prompt. Larger producers usually determine supply contracts on a yearly basis and align them in the light of production forecasts of their main customers. They rarely are involved in spot business.

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If you have any comments, input or observations, feel free to share them here. I’d be happy to know your thoughts.

I

 have come across a really interesting article lately from a very notable source, the Harvard Business Review, about the topic of the price war and how to fight it (or not). I recommend a thorough reading but for those of you who have a more schematic mindset I’ll make a list of, let’s say, the best practices to adopt in case of a price war occurring in your market. I also have a first-hand example of a price war broke out among the European producers of hard chrome plated steel bars in 2008 whose consequences are still underway.

Let’s start with some useful and precise information:

• Price is the weapon of choice for many companies to ward off competitors;
• But it’s not all about price! Your competitive move against a price war, instead of a retaliatory price-cut, can be a diagnosis of quality, service and other non-price factors that might add value to your product or service.

A good analysis revolves around four key areas:

1. Customer issues: what’s the price sensitivity of your customer segment? If prices change, are new customer segments going to emerge? Needless to say, some consumers are more sensitive to quality than price. In the B2B, for instance, buyers are often willing to pay more for prompt delivery or reliable quality as a guarantee of their businesses running smoother and more profitably.
2. Company issues: what are your business’s cost structures, capabilities and strategic positioning? Changes in technology or business practices can affect cost structures and, if successful, might lead to price-cut (for instance: outsourcing vs in-house activities), but this must be coherent with your pricing strategy.
3. Competitor issues: what are your rival’s cost structures, capabilities and strategic positioning? Understanding, and even empathizing with, your competition must be the backbone of your analysis. Your market research can lead you to ask yourself which competitors you should watch: direct competitors only or even indirect ones? By identifying your current and potential rivals, their strength and weaknesses, you will draw important pricing implications that can answer some key questions, such as: how does price fit their strategic position? How do they make pricing decisions? What are their capabilities and resources?
4. Contributor issue: before engaging in a price war, you must also consider other factors, like profit margins for suppliers and distributors, commissions for sales representatives, after-sale service etc., which might considerably affect the outcome of a price war.

If you have carried out a smart analysis, you will realize you have in front of you 5 different ways to fight a price war:

1. Stop the war before it starts by revealing in advance your strategic intentions and your cost advantage;
2. Adopt a non-price tactic, by focusing on quality, and consequently by alerting customers to the risk of poor quality and other negative effects;
3. Adopt a selective-pricing tactic, by modifying only certain prices or by cutting prices in certain channels;
4. Fight it out, if a competitor threatens your core business, if you have a cost advantage, if you have more economic resources than your competitor, if you can achieve economies of scale, if you identify a large and growing segment of price-sensitive customers.
5. Retreat and cede some market share, if you are not willing to prolong a costly battle.

Now, as mentioned, I can give direct evidence of the price war engaged by the hard chrome plated steel bars producers in Europe from 2008 until today. Please fill out the form below to get these insights.

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If you have any comments, input or observations, feel free to share them here. I’d be happy to know your thoughts.