Hydraulic cylinder costs
Basically, the price of a hydraulic cylinder is formed out of four things; material costs, work, overhead costs and the sales margin set by the company. The price between cylinders differs greatly; all cylinders are different and own kinds of wholes and their features and materials have big differences.
The biggest factors of material costs are the cylinder’s piston rod and the cylinder tube; these usually form the biggest part of material costs, depending of the size of the cylinder naturally. The reason for this is because these two are the main components of a hydraulic cylinder. Also, the next big part are the machined parts or castings; for example, tube end, rod eye, piston and cylinder head. The standard components are their own category; the kind of parts that are there for anyone to buy; for example, cylinder seals, different kinds of valves, couplings and sensors.
There are great differences between availabilities and characteristics of steel and depending on the cylinder, they might be quite cheap or very expensive. The characteristics of steel do matter because the characteristics have an effect on the availability and price. If the cylinder and its application require different kind of more valuable material or special material, it effects on the price and availability. This naturally increases the costs, if the required material is not so conventional. This need might be for example because of safety requirements for the customers application. At Hydroline, we always pursue to find the most cost-effective alternative for each component and our sourcing department has a big role in this. They put bids for our suppliers in order to find the best possible solution. On average, the material costs form about 40% to 60% of the cylinder price.
The work that is done for the hydraulic cylinder consists all the handmade and machine-made work at the factory; the machining of tube and rod as well as welding, cylinder assembly and wash, painting and packing. Right from the beginning, as the cylinder is started to assemble, also the internal logistics needs to be taken into account. The more work the cylinder requires, the more the costs increase. At its most simple, the work operations that need to be done for the cylinder tube and rod are machining and welding but with some cylinder models these might need to be done even two times in different phases. This is because of the structure of certain cylinders; not everything can be done at once and the operations need to be decentralized.
The price also increases if different kind of sensors and valves need to be attached to the cylinder. Even though this increases the costs, this brings advantages in the cylinder functionality for the customer. Without certain special features, not every function can be made and the safety cannot be monitored as effectively as possible. For example, if the cylinder needs to be equipped with sensors, this requires a separately purchased sensor which increases the material costs and also usually requires modifications to the cylinder. The rod could be for example a solid rod to which a hole is drilled for the sensor or the cylinder head could require a modification so that the sensor can be integrated to the cylinder. In these days, putting sensors to hydraulic cylinders is already normal because with gathering information about the cylinder it is possible to have specific information about the cylinder’s functions, pressures and the fatigue it faces. Different valves and sensors may lift the price a little bit, however, they bring a lot of advantages for the customer and they might lower the costs somewhere else.
The setting times in manufacturing play also a role in cylinder costs. As the manufactured cylinder batch size increase, the individual setting times decrease. At Hydroline, we thrive to minimize the setting times and as it makes the manufacturing more efficient. In a smaller batch the costs per one piece are bigger than in a large series as the setting time is divided with the amount of pieces that are manufactured. We are constantly pursuing to lower the setting times in order to make the manufacturing more cost effective. A big batch size is not the solution for the cylinder price but instead we need to find the balance between the flexibility of production, flowing and the batch sizes. Our new Value Stream 1 will help with the setting times but we’ll tell you more about that in our upcoming blog.
The cylinder costs are already set when the cylinder designing process is started; the design sets a large amount of cylinder costs. This is because each cylinder is specifically designed for the customer’s needs and in a way that the cylinder is not more nor less than the intended usage requires. We do not want to design a cylinder that is too expensive for its actual use nor we want to provide a cylinder that has wrong kind of materials for its final use. We always pursue to have conversations with the customer as much as it is needed so that the best possible solution can be found. We want to know the final intended use and also the conditions the cylinder needs to work in. With a good design work, the costs can be controlled effectively.
At Hydroline, the Key Account Managers calculate the prices for hydraulic cylinders and all of our offers to OEM customers go through the sales department. In case you need a quotation, please contact our sales department. They will gladly help you to find the best possible solution for you and be willing to offer you our services.
The costs play an important role in hydraulic cylinder manufacturing; however, we always pursue to design our cylinders the best possible way for its application so that the most cost-effective alternative can be offered to the customer.
Arto Miettinen – VP Sales & Marketing