Hitachi Metals, Bain Capital, and Proterial

[azn_knives_4l]

Hitachi's traditional carbon steels take a lot of flack from the steel-centric segment of the market and that's fine and all but what does the purchase of Hitachi Metals and rebranding to Proterial by Bain Capital mean for traditional makers? Saw on a YouTube video today and confirmed at Bain's website because I had no idea. One of the US's leading steel manufacturers was sold recently, too.

 

[Just a DK]

You are going to start getting the US private equity special treatment. Endless surveys about if you are satisfied with the steel and what can be done to improve.

 

[azn_knives_4l]

You are going to start getting the US private equity special treatment. Endless surveys about if you are satisfied with the steel and what can be done to improve.

Lol. If only it were just that. Private equity is terrible for consumers.

 

[Just a DK]

Lol. If only it were just that. Private equity is terrible for consumers.

Chinese Heat treat White #1 that gets you 90% there here we come.

 

[azn_knives_4l]

Chinese Heat treat White #1 that gets you 90% there here we come.

If even Chinese leather knives are absolute trash and it's not because lack of manufacturing process, unfortunately

 

[dabes]

Having worked at a company which was acquired by Bain, I see a lot of cost cutting and diminished quality in their future.

 

[azn_knives_4l]

Having worked at a company which was acquired by Bain, I see a lot of cost cutting and diminished quality in their future.

Private equity in a nutshell

 

[JPAU]

Having worked at a company which was acquired by Bain, I see a lot of cost cutting and diminished quality in their future.

Might mean that competitors get an opportunity to disrupt? Good news for whoever produces Sheffcut, Spicy White and Wolfram Special? Or is production not at (economies of) scale that makes them viable steels for Japanese makers? I e really enjoyed Sheffcut and Wolfram as alternatives to Hitachi steels so far (but still no long term anecdotal data).

 

[azn_knives_4l]

Might mean that competitors get an opportunity to disrupt? Good news for whoever produces Sheffcut, Spicy White and Wolfram Special? Or is production not at (economies of) scale that makes them viable steels for Japanese makers? I e really enjoyed Sheffcut and Wolfram as alternatives to Hitachi steels so far (but still no long term anecdotal data).

Are these 'forging steels'? I think many of these traditional makers are still doing their heat treatment by eye and steel suitable to that is pretty important.

 

[JPAU]

Are these 'forging steels'? I think many of these traditional makers are still doing their heat treatment by eye and steel suitable to that is pretty important.

I can’t answer your (rhetorical?) question without engaging in some research… I’m a novice if there ever was one, although I’m sure it’s easy to find out. It’s a good point, I think. But it probably doesn’t matter - if steel stock is of poor quality, those Y Tanaka-type traditional ‘HT by eye and colour’ smiths will be forced to either find new materials, produce poorer quality knives, adapt to using more technology, or retire in favour of those who are willing to use different methods or materials. That is, after existing stock is diminished.

 

[azn_knives_4l]

I can’t answer your (rhetorical?) question without engaging in some research… I’m a novice if there ever was one, although I’m sure it’s easy to find out. It’s a good point, I think. But it probably doesn’t matter - if steel stock is of poor quality, those Y Tanaka-type traditional ‘HT by eye and colour’ smiths will be forced to either find new materials, produce poorer quality knives, adapt to using more technology, or retire in favour of those who are willing to use different methods or materials. That is, after existing stock is diminished.

Not rhetorical, I legit don't know what separates traditional forge and HT by eye steel from the stuff needing a furnace with PID. I remember a post from @MSicardCutlery talking about the challenges of AU in sanmai and presumably this is related. Agree on availability but the material cost of the steel is minimal against market price so it'd have to be a ridiculous price hike to drive people away.

Edit: Words for clarity.

 

[dabes]

Might mean that competitors get an opportunity to disrupt? Good news for whoever produces Sheffcut, Spicy White and Wolfram Special? Or is production not at (economies of) scale that makes them viable steels for Japanese makers? I e really enjoyed Sheffcut and Wolfram as alternatives to Hitachi steels so far (but still no long term anecdotal data).

That's a better question for the makers on the forum, cost is likely going to be a secondary factor to whether those steels are viable to their heat treatment process (controlling temps via a pile of ash + straw). Some makers have used things like 130WCrV5 before in place of Blue 1 so it should be doable.

I'd also bet that there are dudes with warehouses full of steel which could hold smiths over for a while.

 

[JPAU]

Yes, I agree. As I said ‘That is, after existing stock is diminished.’ If there is a diminution in steel quality, it’s only a matter of time until the old stock depletes (although, if sales tank perhaps Hitachi will revert, like New Coca Cola in 1980s). All speculation anyway, just interesting to have a yarn about it

 

[blokey]

https://www.kitchenknifeforums.com/threads/yasugi-steel-price-increase-250

 

[blokey]

Are these 'forging steels'? I think many of these traditional makers are still doing their heat treatment by eye and steel suitable to that is pretty important.

Those are all forging steel, Spicy white/26C3 is just white class steel with bit of alloy, SheffCut is British 26C3 so the same, Wolfram special is closer to something like blue steel. Tho I doubt Japanese smiths will pick up specialty western forging steels as apart from 26C3 quantity is not there yet, but Hitachi is not the only player in Japanese market, Takefu also roll variants of forging steel like V-Toku, V1, V2, Shiro steel

 

[Hockey3081]

Well, looks like Hitachi will soon take on a ton of debt, fire a bunch of people, pay dividends to Bain and then close up shop like a shell of itself.

 

[azn_knives_4l]

Those are all forging steel, Spicy white/26C3 is just white class steel with bit of alloy, SheffCut is British 26C3 so the same, Wolfram special is closer to something like blue steel. Tho I doubt Japanese smiths will pick up specialty western forging steels as apart from 26C3 quantity is not there yet, but Hitachi is not the only player in Japanese market, Takefu also roll variants of forging steel like V-Toku, V1, V2, Shiro steel

Good to know

 

[panda]

white1 & blue1 > others idgaf
iwasaki is close

 

[MSicardCutlery]

Not rhetorical, I legit don't know what separates traditional forge and HT by eye steel from the stuff needing a furnace with PID. I remember a post from @MSicardCutlery talking about the challenges of AU in sanmai and presumably this is related. Agree on availability but the material cost of the steel is minimal against market price so it'd have to be a ridiculous price hike to drive people away.

Edit: Words for clarity.

I happened across this by chance, I didn't get a notification that I was tagged oddly...

Anyways, basically the higher the alloy content, the better the temperature control needs to be. 52100 is relatively low alloy, and most people would not be able to produce reliable results by eye with it. It's not just a matter of hitting the right temp, but holding it there long enough for the steel to austenitize properly. Technically, the basic carbon steels shouldn't need to soak at all. A steel like 52100 needs 10-15 minutes at temp.

The difficulty of using AU in san-mai is that it has a much lower melting point than most forging steels and is easily overheated, as well as that it's a deeper hardening steel, so full immersion quenches on soft clad blades can cause core splitting.

 

[azn_knives_4l]

I happened across this by chance, I didn't get a notification that I was tagged oddly...

Anyways, basically the higher the alloy content, the better the temperature control needs to be. 52100 is relatively low alloy, and most people would not be able to produce reliable results by eye with it. It's not just a matter of hitting the right temp, but holding it there long enough for the steel to austenitize properly. Technically, the basic carbon steels shouldn't need to soak at all. A steel like 52100 needs 10-15 minutes at temp.

The difficulty of using AU in san-mai is that it has a much lower melting point than most forging steels and is easily overheated, as well as that it's a deeper hardening steel, so full immersion quenches on soft clad blades can cause core splitting.

Thanks for the info! I spelled wrong so I think that's why you didn't get notification. Sorry about that

 

[kot_blini]

The paper steels are not especially expensive to manufacture relative to other steels, right? More likely they'll simply be discontinued so proterial (f.k.a hitatchi metals) can focus more on industries that have gone "ludicrous mode"

 

[azn_knives_4l]

The paper steels are not especially expensive to manufacture relative to other steels, right? More likely they'll simply be discontinued so proterial (f.k.a hitatchi metals) can focus more on industries that have gone "ludicrous mode"

I think the main difference is going from ingot to powder metallurgy? CPM-Magnacut doesn't cost more to produce compared to CPM-M4 but both are more expensive than AEB-L.

 

[kot_blini]

I will be honest I know very little about steel manufacturing, I have also heard that the main difference for knife steels is PM vs conventional processing. But if Bain judges that cutlery steels are not profitable enough as-is, I'm not sure they'd make the effort to set up a parallel Chinese supply chain or w/e to cut costs when they could just liquidate it or repurpose their manufacturing facilities for more profitable purposes. I guess the question is: are the paper steels used for anything more profitable than cutlery/traditional carpentry tools? If not I bet they'll get the axe

 

[azn_knives_4l]

I will be honest I know very little about steel manufacturing, I have also heard that the main difference for knife steels is PM vs conventional processing. But if Bain judges that cutlery steels are not profitable enough as-is, I'm not sure they'd make the effort to set up a parallel Chinese supply chain or w/e to cut costs when they could just liquidate it or repurpose their manufacturing facilities for more profitable purposes. I guess the question is: are the paper steels used for anything more profitable than cutlery/traditional carpentry tools? If not I bet they'll get the axe

It's not that simple from a finance perspective, right. Even 'profitable' is not enough, as you say, and it's due to opportunity cost. We can tell because VC legit expect 50% or more year over year for their risk. Just part of the infinite growth ethos of American private equity

 

[kot_blini]

It's not that simple from a finance perspective, right. Even 'profitable' is not enough, as you say, and it's due to opportunity cost. We can tell because VC legit expect 50% or more year over year for their risk. Just part of the infinite growth ethos of American private equity

“infinite growth” and “japanese industry.” two terms I would not match together if i were doing some free association. im sure they have big plans all mapped out though

 

[MSicardCutlery]

Thanks for the info! I spelled wrong so I think that's why you didn't get notification. Sorry about that

No worries