Current Status of the Cryogenic Treatment Industry of the USA by Robin A. Rhodes

Current Status of the Cryogenic Treatment Industry
A USA Market Survey

Robin Alan Rhodes
Cryogenic Institute of New England, Inc., Worcester, Massachusetts

Abstract

The process of treating materials – primarily metals – by an extended time and temperature soak profile has been practiced to varying degrees of success over the past twenty years. Its purported benefits have been embraced and promoted by some, and dismissed by others. While technical data and analysis has been generated by a variety of independent sources, it can generally be characterized most distinctly for its incompleteness. Simply put, there is not enough available published research to validate all of the claims of cryogenic treatment proponents, nor of its detractors.

So what is the status of the industry, and by extension, the technology, today? Quantifying the size of the industry and better understanding the applications that have formed the basis of its commercial viability are important yardsticks to be used in assessing the status of both the technology and the industry. This perspective provides the basis for an objective assessment of the industry’s outlook and its potential.

By reviewing the applications that form the basis of the industry’s current commercial success, we are able to draw conclusions about the current status of the technology and where it is headed. In addition, the critical gaps in scientific data form the basis for determining the technology’s most critical areas of future scientific inquiry. Through this type of analysis, we can establish a benchmark for the current status of the technology, together with a roadmap of potential applications that may yet to prove to be its most rewarding area of exploration.

Introduction

The methodology for conducting the market survey was:

  1. Prepare a market survey questionnaire
  2. Identify cryogenic treatment (service) companies
  3. Conduct phone interviews
  4. Tabulate results

The survey was designed to collect the following information from respondents:

  1. Business size (sales revenues)
  2. Year operation’s began
  3. Treatment work by end use application
  4. Treatment work by material type
  5. Revenues per pound of material treated
  6. Employees (based on Full Time Equivalents)
  7. Business trend (up, flat, down)

In order to identify companies that offered cryogenic treatment services, a comprehensive search of the following internet search engines was utilized. Noted below in parentheses  is the percentage of search engine listings generated that were reviewed in order to identify the survey respondents:

  1. Thomas Register  (100%)
  2. DMOZ Open Directory (100%)
  3. MSN Search Engine (100%)
  4. Google! (50%)

Naturally, there were multiple listings accross the search engines for the the identified firms.

Notable Exclusions

In addition, a number of companies that would be classified as “Heat Treaters” purported to offer cryogenic treatment services.  After an initial series of  inquiries at several of these “Heat Treaters”, it was determined to eliminate them from further survey. The reasons for this are as follows:

Certainly, within the world of  “Heat Treaters”, are a number of firms that offer “Deep Cryogenic Treatment” that  should be included within the results of the survey. But the confusion over terminology and the vastness of the audience made such identification a daunting, if not impossible, task for the author.

Other firms excluded from the survey are both known and unknown OEM’s that utilize Deep Cryogenic Treatment in their captive manufacturing operations. For instance, Worth Sporting Goods Company markets and sells thousands of softball bats that are subject to cryogenic treatment and labeled as “Cryogenic Stress Relief”.  Similarly, Porter Punches offers its line of metal punches as cryogenically treated and Nicklaus Golf Clubs are marketed as “Cryogenic Super Beta”.  There are other examples, such as Oster/Sunbeam cutting blades, several brands of guitar strings, and the like.  All of these known commercial applications of “Deep Cryogenic Treatment”, plus the multitude of unknown OEM applications, are not captured within this survey. 

Also excluded from the survey are companies that utilize deep cryogenic treatment within their operations for the purpose of extending tool life or enhancing performance of critical components. Examples of this include larger manufacturing operations that have elected to install a cryogenic treatment capability within their own operation for the purpose of treating all (or a selected segment) of machine tools within their tool crib.  Additionally, many professional motor sports competitors (e.g. NASCAR, Formula One, etc.)  have installed dedicated units for use within their own custom motor building operations.  Again, none of these applications are  captured within this survey.

Lastly, several manufacturers of cryogenic treatment equipment that did not  offer the treatment service to outside customers were not included in the survey results.

Survey Respondents

In summary, the companies identified were service companies that offered Deep Cryogenic Treatment services to other companies or individuals for a fee. The internet search yielded 40 such companies within this profile. Of the 40 companies:

The companies identified were from across the United States (only) and distributed geographically as shown in Table 1.

Table 1: Geograghic distribution of identified Deep Cryogenic Treatment service providers. Only USA based companies were surveyed.

North East

4

Mid Atlantic

5

Mid West

17

South East

8

South West

3

West

3

Interestingly, the majority of companies identified were east of the Rockies.  This most  likely indicates that adoption of the deep cryogenic processing varies by region, perhaps reflective of different industrial  economies within the regions. (Most respondents indicated that the majority of their customer base was within a 250 mile radius of their location.) Alternatively, the West Coast may be under-penetrated or the search methodology may have had an unknown bias against the western region.

Macro View

Based on the responses of the 30 participants in the study, the following “headline” numbers were derived:

Interestingly, most of the total revenues generated came from a handful of companies. In fact, the 8 largest companies generated 66% or two-thirds of the revenue. The remaining 22 companies were responsible for a combined 34% or one-third of total revenues. Interestingly, four of the eight largest were in the midwestern United States, which also had the largest number of identified cryogenic service providers. This further bolsters the view that adoption of deep cryogenic treatment technology varies by region, and perhaps underlying that, the makeup of economic activity within the region.

The age (or maturity) of the companies surveyed was also a significant factor in determining its size (based on revenues). Fourteen companies surveyed were established in 1996 or before and collectively accounted for 80% of the total cryogenic processing revenues and 100% of the equipment sales captured in the survey.

The 22 companies that made up the 34% of revenues can be generally categorized by the following attributes:

VAR Strategy

A number of the companies surveyed had adopted a Value Added Reseller (VAR) component to augment their deep cryogenic treatment service business. This was found in some of the large companies as well as some of the small ones. Of those companies adopting this strategy, between 20% and 80% of total revenues were attributed  to VAR sales.

Companies adopting this strategy typically offered products  for sale that were modified via deep cryogenic treatment. In some cases they were sold under private label and in other cases they were branded products that were marketed and sold as enhanced or improved via cryogenic treatment. Many of these products were related to automotive applications or cutting applications. Industries served included pulp, paper, wood cutting, pumps, drilling, personal care, machine tools, fleet vehicle, high performance motor sports, audio, electronics, and construction. 

Pricing Analysis

It is difficult to come up with a general categorization of how the industry establishes pricing for its treatment services. There are many models in use, including:

A common denomintor that could be applied across all types of items treated  was determined to be the dollars generated per pound of material treated. While largely imperfect, it at least establishes a benchmark measure.

In the course of the survey, 24 companies provided data using this measure. The range was remarkably wide, with respondents reporting anywhere from $2.00 per pound to almost $30 per pound. This is understandable when considered within the context of the wide variety of items being treated. Heavy construction or mining pieces, for instance, weighing hundred or thousands of pounds, generated low dollars per pound, but large gross dollars, while carbide micro drills or other high value tooling, generated high dollars per pound but more modest gross dollars.

When averaged amongst all respondents, the dollars generated per pound of treated material was $5.35.  Of note, the largest 8 companies averaged almost $1.00 less per pound, most likely attributable to a product mix consisting of  heavier and/or bulkier items.

Employees & Ratios

Each company surveyed was asked to quantify the number of employees directly involved in all aspects of its cryogenic treatment service business. Further, a measure of Full Time Equivalents (FTE) was established, whereby one person working for 40 hours per week would account for one FTE.
Specifically excluded in the calculations were any activities not directly related to cryogenic treatment services. Also excluded were employees involved in production, sales or support of cryogenic processing equipment (when applicable).

Of the thirty firms surveyed, 36.9 FTE’s were identified. The largest eight firms had 22.7 FTE’s (62%) and the remaining 22 had 14.2 FTE’s  (38%).

These findings in fact validated that deep cryogenic treatment is almost a “part time” activity for many of the smallest 22 service providers. On average, each of these companies employed less than one FTE (0.65) each. Contrast that ratio with the largest eight, which dedicated almost three FTE’s (2.85) each to deep cryogenic treatment services. Importantly, not all small companies are, in fact, “part time”, but dedicated employee resources to other product lines or revenue streams when not engaged directly in cryogenic treatment activities.

The ratio of sales revenues to FTE across all companies was $162, 602. Among the largest eight, the ratio was a healthier $176, 211 to one and among the remaining 22 an average of $140, 845 to one.

Applications

The goal of this part of the survey was to try to understand the predominant market drivers of the deep cryogenic treatment community.  By better understanding what applications were sustaining the industry,  one could reasonably conclude the greatest areas of penetration and opportunity. The measure employed was revenues generated by application type. The results, presented below in Table 2, were remarkably evident.

Table 2: Based on the total revenues generated by the 30 survey respondents, a breakdown of the revenues by market and/or application.


Rank

Application / Market

% of Revenues

1

Motor Sports/ Automotive/ Rotors

42 %

2

Industrial/ Tooling/ Cutting

30 %

3

Heavy Components

10 %

4

All Others

18 %

 

Within the above categories, a further description is provided below:

Table 3: Detail of “All Others” as presented in Table 2. “Undisclosed” represents applications that respondents were unwilling to reveal due to contractural or confidentiality issues. Recreational is primarily consumer (retail) treatment of golf clubs, softball bats, etc. Other categories are self explanatory.

Rank

Application/ Market

Revenues

1

Undisclosed

$600K

2

Recreational

$100K

3

Firearms

$100K

4

Audio/ Electronics

$100K

5

Paper/Pulp

$ 60K

6

Pumps/Piping

$ 60K

7

Gears

$ 50K

8

Copper Electrodes

$ 40K

9

Food

$ 30K

10

Grinding Wheels

$ 10K

 

Treated Materials

Unfortunately, it became apparent over the course of the survey that the majority of companies did not have historic data that was readily accessible that provided a breakdown of the type of materials they were treating either as a percentage of their whole, or in absolute terms (e.g. weight). Nevertheless, after examining revenues by application, the respondents were able to identify their top tier materials and characterize them. This, coupled with the author’s analysis of all the data available, resulted in a ranking of the types of materials treated as it related to overall volume (by weight).

  1. Cast Irons (all types)
  2. Tool Steels
  3. Carbon Steels
  4. Alloy Steels
  5. Stainless Steels
  6. Carbides
  7. Mold Steels
  8. Aluminum
  9. Copper

While somewhat subjective, the ranking provides a general guideline of the relative volume of  materials treated by type.

Equipment

While the survey did not specifically set out to evaluate the installed base of cryogenic processing equipment, some interesting findings did emerge and are worth discussing. Twenty five of the survey respondents provided information on the cryogenic processing equipment that they were using.
Of the 25, 28% were using a custom built processor and 72% were using a commercially manufactured processor.

The brands of commercial equipment  included:

*No longer manufacturing / selling equipment

In the course of the survey, five manufacturers of commercial equipment were interviewed. Again, this was not an equipment survey and is not fully representative of the commercial cryogenic processor market. In fact, the five interviewed represent no more than half of all the suppliers of such equipment.

Surprisingly, though, those manufacturers, when combined, reported delivering approximaley 500 cryogenic processing systems within the last decade.  If the other manufacturer’s were added to this, it might not be unreasonable to expect that an additonal 500 units could be identified.

What makes this so significant is that the commercial operators interviewed account for less than 20% of these units.
This begs the question: Where are all the units and who is using them and for what applications?  By extrapolation, the commercial cryogenic treatment services industry may represent only a small fraction of the universe of cryogenic treatment activity.  This is one reason that the “Notable Exceptions” section in the beginning of this paper may be as or more important than the commercial service providers surveyed herein.

Nevertheless, this paper establishes a benchmark for commercial cryogenic processing activity within the United States. To the best knowledge of the author, it is the only comprehensive industry market survey ever published. Because it is a first effort, and based on the observations noted above, it undoubtedly only scratches the surface of  the world of cryogenic processing activity. Future efforts should attempt to gather deep cryogenic treatment activity in the following areas:

This will undoubtedly be challenging because many adopters of deep cryogenic treatment perfer to keep its application secret.  Once revealed to competitors, the advantage of  its utilization could be lost.  Certainly in the process of  conducting the interviews, many commercial providers were reluctant to speak of specific applications because of contractual constraints ( e.g. confidentiality agreements) that prohibited them from revealing certain specifics.  A more comprehensive survey will undoubtedly uncover similar obstacles.

Summary

The commercial cryogenic treatment industry in the United States is dominated by a handful of players that are more likely than not to be in the Midwestern USA.  The balance of providers make up almost a “cottage industry” of  regional, geographically distributed companies.  In most cases, these smaller suppliers have other product lines that generate a substantial portion of their total revenues. In some cases, it involves the sale of cryogenically modified tools or components.

Adoption of the technology varies considerably by region and industry. Clearly, automotive and industrial related applications dominate, but a host of other niches are beginning to emerge.

In general, the technology is still in an early adoption phase, somewhere between “bleeding edge” and leading edge.  The good news for commercial providers is that there are some true success stories out there.  In all cases, these were found among older firms that were able to sustain the revenue drought of their  initial years and who were nimble enough to develop a cadre of customers  or  adopt other revenue streams such as value added reselling of products that benefit from deep cryogenic processing.

References
Research is based on private communications between the author and the individuals listed below who so generously agreed to participate in phone interviews of the market survey.

  1. Jim Murphy, American Cryogenics, Inc., Waukesha, WI
  2. John Koucky, 300 Below, Inc., Decatur, IL
  3. Bill Groeschen, Diversified Cryogenics, Burnsville, MN
  4. Charles Lenker, Leading Edge Cryogenics, Camp Verde, AZ
  5. Charles Barrisford, Cryogenics International, Scottsdale, AZ
  6. Frederick J. Diekman, Controlled Thermal Processing, Rockford, IL & Charlotte, NC
  7. Adam Weitzel, Badger Cryogenics, Reedsburg, WI
  8. Rick Wyacoucci, NW Cryo, Littlerock, CA
  9. William Lis, Johnson Packings, East Longmeadow, MA
  10. Tim Stever, Solar Atmospheres, Souderton, PA
  11. Jeff Carlson, Subzero Cryogenics, Tampa, FL
  12. Rob Simons, Paulo, St. Louis, MO
  13. Jeff Collins, Cryogenic Treatment of Indiana, Zionsville, IN
  14. Jeff Winkel, Seals Inc. & Cryoforce llc., Lenexa, KS
  15. Leon Patterson, York Cryogenics, York, PA
  16. Garry Crabtree, Tech Spec Inc., Kansa City, MO
  17. David Hutchinson, Cryopro Temper Master, Rogersville, MO
  18. Kathy Bond, CryoPlus Inc., Wooster, OH
  19. Scott DeWitt, Future Technolgy Services, Lapeer,  MI
  20. Bob Wells, DMP Cryo Systems/ Cryo-Temper, El Paso, TX
  21. Bill DeFelice, Fountainhead Cryogenic Processing, York, PA
  22. Curt Salem, Arrow Cryogenics, Blaine, MN
  23. Doug Betzel, Alpine Cryogenics, Moscow, PA
  24. Lyle Moore, Performance Cryogenics, Cleveland, GA &  Mooresville, NC
  25. Dr. Jeff Levine, Applied Cryogenics, Burlington, MA
  26. Duane Kersteen, Cryo Tempering Technologies Inc. of North Eastern Pennsylvania, Kingston , PA
  27. Daniel Watson, Metal Science Services, Driftwood, TX
  28. Mike Mills, 300 Degrees Cryogenic Services, Oakland, CA
  29. Kahrs Thermal Technology Inc., No. Charleston, SC
  30. Robin Rhodes, Cryogenic Institute of New England, Inc., Worcester, MA (as paper author)

 

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