"Coal to gas" difficult transformation

“Environmental standards have been met, and I did not expect the cost to increase.” Li Zhiren, who had just received a $1.5 million order, was worried. After replacing the heavily polluted coal-fired boilers with natural gas stoves, the cost of producing a ton of flanges has increased by nearly 200 yuan. Coupled with the rising labor costs, this single business has just kept capital.

Li Zhiren, who was once the head of the local state-owned enterprise, is now the general manager of Shanxi Guanli Flange Co., Ltd. The sharp drop in international orders, increased environmental pressures, and rising production costs... His worries are the epitome of the existence of hundreds of private forging companies in Dingxiang County, Shanxi Province, which is known as the "hometown of Chinese forging."

Located at the foot of Wutai Mountain, Dingxiang County is known as "a bucket of sesame blacksmith." Since the 1970s, relying on low-cost advantages such as land and labor, the size of the Dingxiang forging industry has expanded rapidly, becoming the largest flange production base in Asia and the largest flange export base in the world.

“However, the flanges are beautiful again, and they are only parts of connecting pipes.” Zhang Hairui, assistant to the county governor of Dingxiang County, said that as the labor, land, environmental protection, energy, RMB exchange rate and other factors continue to rise, the Dingmao forging industry continues The 30-year low-cost competitive advantage is disappearing. Only 1/3 of the 567 forging companies in the county are producing normally.

To get rid of the predicament, transformation and upgrading become the only way out. However, heavy pollution and high energy consumption in the forging industry, and the country's rigid environmental protection requirements, the industrial transformation is facing greater difficulties.

Regarding environmental protection and profits, Li Zhiren calculated an account for the reporter. In July this year, the local natural gas price rose from 2.53 yuan/cubic meter to 3.7 yuan/cubic meter, and the coal price was reduced by more than 100 yuan over the same period of last year. After using natural gas boilers, the cost of producing one ton of flanges increased by 165 yuan over the previous year, and the profit rate of enterprises dropped from 15% to less than 5%. "Especially, large companies have switched to natural gas, but a large number of small and medium-sized enterprises are still burning coal, and they are not competitive in terms of cost."

Despite the unexpected increase in cost, Shi Zhiliang, director of the office of Shanxi Astor's Naisen Forging Co., Ltd., insists that it is an inevitable trend for the forging industry to use natural gas to expand the market. “In the past, the old workers went to work to burn the boilers at 3 o'clock in the morning. After 4 hours of heating, they could start working. At night, they had to put out the boilers at work and then burn them again the next day. This kind of production method wastes resources and pollutes the environment. To ensure product quality. After using the natural gas furnace, the heat treatment process is controllable and the quality of the product can be guaranteed."

What makes it exciting to Han Junwei, deputy director of the Sui County SME Bureau, is that apart from “coal to gas”, there is still a lot of room for local technological transformation. At present, the average steel utilization rate in the local forging industry is only 56%, which is far below the national level of 75% to 84% in the forging industry. “The reason why companies are facing upside down costs and prices, and they are afraid to take orders because it is difficult to tap the potential and increase the efficiency of the traditional processing methods based on clamp hammers. After the technological transformation, the production capacity of a 9-ton electro-hydraulic hammer is equivalent to 16 parts. Clamping hammer production capacity."

Li Zhiren, who replaced the electrohydraulic hammer, is considering how to extend the industrial chain in order to obtain more profits. "Flanges exported for 10,000 U.S. dollars can be sold abroad at a cost of 13,000 U.S. dollars. The reason is that the supply is not timely." It takes 3 months for domestic companies to take orders, organize production, and deliver goods to the customs, and establish them abroad. After the warehouse, you can pick up the goods within a week.

In addition, to help companies fight for market orders, Zhang Hairui said that the local market is building a flanged e-commerce market and plans to publish the price of flanges of various specifications and materials on the Internet in a timely manner, and finally launch the “China Flange Price Index” to attract More merchants, integrate upstream and downstream companies. "This type of business is only one in China," he said.