IPFW GEOLOGY DEPARTMENT CLOSURE: THE SEM DILEMMA

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1 IPFW GEOLOGY DEPARTMENT CLOSURE: THE SEM DILEMMA CPET 575 Spring 2017 Presented by Stephen Mitchell Table of Contents Introduction Fort Wayne Metals: Company Overview Competitive Marketplace Technology Strategy and Challenges Decision Framework: Microanalysis/SEM Laboratory Summary and Conclusion References 2 1

4/25/2017 INTRODUCTION IPFW Realignment Purdue

) Department Geology Closures Department A complete

excavate, clean, and preserve the skeleton.

2 4/25/2017 INTRODUCTION IPFW Realignment Purdue University Northeast (?) Department Geology Closures Department A complete mastodon skeleton was discovered in 1968 on Orsie Routsong s farm. The IPFW Geology department was commissioned to excavate, clean, and preserve the skeleton. In 1970, the mastodon was chosen as the school mascot. Source: IPFW.edu 3 INTRODUCTION The Argast Family (IPFW) Microanalysis Laboratory Closing in May 2018 Scanning Electron Microscope (Hitachi S-3400N) Corporate Partnerships Why 4 does an SEM matter? Source: www4.dcu.ie 2

FORT WAYNE METALS: COMPANY OVERVIEW Our company was founded and continues to grow because of our dedication to the manufacturing of medical grade wire.

3 FORT WAYNE METALS: COMPANY OVERVIEW Our company was founded and continues to grow because of our dedication to the manufacturing of medical grade wire. Our mission is to continually improve the quality of our products, the speed in which we respond to customers requests, and our level of understanding of the materials we work with and recommend. Company Mission Statement 5 FORT WAYNE METALS: COMPANY OVERVIEW Company History CEO: Scott Glaze Founded: 1946 Ardelle Glaze Restructured in 1970 s to serve medical device market. >1,000 Employees 8 Mfg. Facilities in Ft. Wayne, Columbia City, and Castlebar (Ireland) Raw Material Melt Shop Boutique Alloys 6 3

FORT WAYNE METALS: COMPANY OVERVIEW Market Segments Fort Wayne Metals

products: Vascular Therapy, Orthodontic, Orthopedic, Cardiac Rhythm

Product Forms Innovator in wire forms for medical device market:

Nickel-Titanium Many Conventional Forms (Round, Flat, etc.

Concept: Self Disruption Dedicated Research and Development Facility

4 FORT WAYNE METALS: COMPANY OVERVIEW Market Segments Fort Wayne Metals (FWM) serves virtually all medical markets that require metallic wire products: Vascular Therapy, Orthodontic, Orthopedic, Cardiac Rhythm Management Expansion into industrial applications. Product Forms Innovator in wire forms for medical device market: Drawn-Filled-Tube (DFT ) Helical Hollow Strand (HHS ) Tube Silk Nickel-Titanium Many Conventional Forms (Round, Flat, etc.) 7 FORT WAYNE METALS: COMPANY OVERVIEW Innovative Strategy Strategic Concept: Self Disruption Dedicated Research and Development Facility Absorbable Stents Bionic Appendages 3D Printing Source: coolmaterial.com Source: dartmouth.edu 8 Source: 3dprintingindustry.com 4

COMPETITIVE MARKETPLACE FWM Faces Pressure from competitors with specific advantages: Vertical Integration Geographically Favorable Location Responsiveness Import/Export Costs Artificial Cost

5 COMPETITIVE MARKETPLACE FWM Faces Pressure from competitors with specific advantages: Vertical Integration Geographically Favorable Location Responsiveness Import/Export Costs Artificial Cost Structures e.g. government subsidized manufacturers in China 9 COMPETITIVE MARKETPLACE Competitor Highlight #1: Heraeus Group Producer of Precious Metals Vertical Integration Fills Various Roles for FWM: Customer Competitor Supplier 10 5

6 COMPETITIVE MARKETPLACE Competitor Highlight #2: Furakawa Techno Material Established: Employees Vertical Integration of NiTiNOL Production (mining, melt, forge, wire) Resultant Price Pressures Responsiveness Control of Quality 11 TECHNOLOGY STRATEGY AND CHALLENGES FWM leverages a number of strengths: High Mix, Low Volume Material Knowledge Startup Friendly High-End Technical Support Root Cause Analysis Reverse Engineering Application Support Laboratory Services (FWM Materials Testing Laboratory) 12 6

TECHNOLOGY STRATEGY AND CHALLENGES The Fort Wayne Metals Materials Testing Laboratory (FWM-MTL) ISO 17025 Accredited Laboratory Standard for Laboratory Quality FDA

Questions to Answer 1. How will FWM replace the current demand for capacity? 2.

7 TECHNOLOGY STRATEGY AND CHALLENGES The Fort Wayne Metals Materials Testing Laboratory (FWM-MTL) ISO Accredited Laboratory Standard for Laboratory Quality FDA Testing Independence from Parent Organization Multiple Test Disciplines Metallurgical Mechanical Chemical Failure Analysis 13 TECHNOLOGY STRATEGY AND CHALLENGES Questions to Answer 1. How will FWM replace the current demand for capacity? 2. How will FWM account for the loss of expertise provided by the current arrangement with IPFW staff? 3. What are the expectations for demand in the next 5-10 years? 4. What decision is best aligned with FWM s mission as a high-technology company? 14 7

8 FWM-MTL Leases Time/Contracts Services in the IPFW Microanalysis Laboratory: Annual Automated Analysis Requests Manual Analysis Fractography 90 Chemical Evaluation Surface Imaging Automated Feature Analysis 50 Nickel-Titanium Alloy (NiTiNOL) 40 MP35N/35N LT Alloy Analysis Requests Three Options to Evaluate: Option A: Use SEM at IPFW/FWM Provides Automation Operator Option B: Use SEM at IPFW/IPFW Provides Automation Operator Option C: FWM to purchase SEM 16 8

9 Option A: FWM Manual Use + FWM Automated Use The Low Cost Option Majority of current cost from contract work Dedication of new or existing employee to automated analysis (30+ hours weekly) Questions to Answer Will an IPFW staff member maintain routine maintenance of the SEM? Corporate Academic Balance Time Management: 17 Option B: FWM Manual Use + IPFW Contracted Automation Unsustainable Option Increasing volume projects annual cost in excess of $500,000 within 5 years Questions to Answer Will an IPFW staff member be able to adequately respond to contract demand? Will the current cost structure be grandfathered? Will the SEM be available for FWM manual use? Corporate Academic Balance 18 9

10 Option C: FWM Purchases SEM for Internal Use High-Tech Option; High Initial Capital Expenditure Lower cost to FWM than Option B over 3-5 years On-demand access for FWM Staff Expanded automated analysis capacity Questions to Answer Which unit would FWM purchase? How would an FWM Microanalysis Laboratory be organizationally structured? Would FWM maintain the corporate partnership with IPFW? 19 Option C: FWM Purchases SEM for Internal Use Simple Replacement Option: Hitachi SU ,000x Magnification Tungsten Filament Electron Source 100 hour lifetime (filaments = $60.00/each) Dual Imaging Mode High-Tech Replacement Option: Hitachi SU ,000x Magnification Schottky Field Emission Source Extended/Indeterminate e - source Lifetime Beam Stability = Extended Automated Analysis 20 Dual Imaging Mode 10

11 Financial Summary Total Cost 21 Estimated Cost (by Option) $4,500,000 Expense Option A Option B Option C $4,000,000 $3,500,000 $3,000,000 Up-front Cost [A] $0 $0 $300,000 - $480,000 $2,500,000 $2,000,000 Annual $1,500,000Costs [B] $80,000 $250,000 $85,000 $1,000,000 $500,000 Total Cost Year 1 $80,000 $250,000 $385,000 - $585,000 $ Total Cost Year $335,000 $1,160,000 $740,000 - $940,000 5 [C] Year OP C (SU 3500) OP C (SU5000) Option A Option B SUMMARY AND CONCLUSION FWM must respond to the realignment/closure of the IPFW geology department. Option A and B as the IPFW Dependent options. 22 Many best-case assumptions made Uncertainty Loss of microscope access potentially costly without a replacement Strategic and Financial Option C as the strategically safe option. Opportunity for higher capacity, and higher order analysis Well-aligned with FWM mission statement Challenge of preserving IPFW-FWM partnership 11

12 References [1] Standard Specification for Wrought Nickel-Titanium Shape Memory Alloys for Medical Devices and Surgical Implants, ASTM F2063, [2] Standard Practice for Determining the Inclusion or Second-Phase Constituent Content of Metals by Automatic Image Analysis, ASTM E1245, [3] Fort Wayne Metals. The Markets. Internet: [March 2017]. [4] Fort Wayne Metals. The Materials. Internet: [March 2017]. [5] Furukawa Techno Material. Company Profile. Internet: [April 2017]. [6] Heraeus Group. About Heraeus. Internet: [April 2017]. [7] L. Kay, R. Bouthot, Fatigue Failure Analysis of Enhanced 35N LT, in ASM Materials and Processes for Medical Device Conference and Exposition, Boston, MA, November [8] Hitachi SU3500 Scanning Electron Microscope, Technical Brochure, Hitachi High-Technologies Corporation, [9] Hitachi SU5000 Schottky Field Emission Scanning Electron Microscope, Technical Brochure, Hitachi High- Technologies Corporation, [10] Oxford Instruments X-Max SDD, Technical Datasheet, Oxford Instruments, [11] Hitachi SU Oxford 80 mm 2 SDD Detector, Budgetary Quotation, Hitachi High-Technologies Corporation, [12] Hitachi SU Oxford 80 mm 2 SDD Detector, Budgetary Quotation, Hitachi High-Technologies Corporation, [13] General Requirements for the Competence of Testing and Calibration Laboratories, ISO/IEC 17025,

Country Focus: USA +2.2% $43 5.7% Trillion 21.7% of the total global GDP 1 Government Spending on Infrastructure. 80% of GDP. 3% of GDP.

Country Focus: USA +2.2% $43 5.7% Trillion 21.7% of the total global GDP 1 Government Spending on Infrastructure. 80% of GDP. 3% of GDP. North America Country Focus: USA Key facts GDP $19.5 +2.2% Trillion 21.7% of the total global GDP 1 Government Spending on Infrastructure 3% of GDP Annually TIC Services $43 Billion GDP Growth Services