In this series of articles, we will provide a detailed introduction to the thermal processing industry in Vietnam. 

Domestic demand is still low

In Vietnam, industries such as automotive transmission components, forklifts, agricultural machinery, and construction machinery have not yet fully developed, and there is still a low demand for products requiring heat treatment. Therefore, the number of heat treatment companies in Vietnam is still limited.

Most of the heat treatment companies in Vietnam have a history of decades, with predecessors being state-owned enterprises or military enterprises, equipped with full equipment and machinery to perform processes from mechanical processing to heat treatment and surface treatment, with a closed production policy. In addition, there are also 100% privately owned enterprises that invest in in-house heat treatment equipment in their factories. They prioritize self-reliance to meet orders because the number of orders coming to suppliers is low, affecting costs and progress.

Some notable companies in Vietnam

The Vietnam Engine and Agricultural Machinery Corporation (VEAM) and its subsidiaries, Southern Engine and Agricultural Machinery Company (SVEAM), Pho Yen Mechanical Joint Stock Company (FOMECO), Manh Quang Mechanical Engineering Co., Ltd., Phuc Anh Precision Mechanical Joint Stock Company (PAPM), and JK Vietnam Industrial Joint Stock Company…

Difficulties faced by Vietnamese companies

The lack of a complete domestic supply chain (with most raw materials needing to be imported, many manufacturing sectors still underdeveloped, etc.) makes it difficult for Vietnamese companies to meet the material and surface treatment specifications on drawings, even with sufficient machining techniques. Specifically:

  • Most state-owned mechanical processing companies have invested in equipment that is several decades old, making their technology outdated.
  • The locations of manufacturing and heat treatment plants are not connected, and they are often far apart.
  • Some components manufactured according to Japanese customer orders are small in size, and after the first round of machining, when they are sent for heat treatment, the angles can expand, making it impossible to reposition them on the machining equipment. These factors increase the time and cost of quality control and the need for a second round of machining.

In the past 5 years, the number of heat treatment companies has blossomed

In the past 5 years, the number of heat treatment companies in Vietnam has grown rapidl, meeting some of the demands of the industry. Customer quality requirements seem to be less strict than before, giving machining companies more choices, and local heat treatment companies are increasingly gaining market share due to their advantages in price and delivery time.

QCD balancing is not only a concern in the thermal processing field, but within this industry, there are particular factors that buyers need to consider when planning to place orders in Vietnam.

Choosing quality or choosing price.

In the field of thermal processing in Vietnam, there are two main groups: the “cost priority” group and the “quality priority” group.

  • Japanese companies have good quality management processes but their prices are high and processing time is longer.
  • Vietnamese companies have much lower prices. However, with lower prices come higher risks for customers, such as incorrect hardness, deformation of parts, changes in mechanical properties, unstable quality, and a higher rate of defects and repairs.

Nevertheless, when the total costs of thermal processing and repairing defective products are considered, it is still lower than the cost of outsourcing to Japanese companies. Therefore, for orders that do not require high difficulty, many customers still choose to work with Vietnamese companies.

It is necessary to consider the form of cooperation if there are special requirements for surface permeability.

  • The steel quenching method is divided into two major groups: volume quenching and surface quenching. In particular, regarding surface quenching, this is a technique that few heat treatment companies in Vietnam can handle well, especially with specific requirements for the depth of the permeable layer.
  • Vietnamese companies can relatively well meet the requirements of the drawing, but it is difficult for them to actively control input factors such as materials, equipment, tools… thus they may not ensure the quality of the product.

Therefore, when there are special requirements for surface permeability, buyers should consider dividing the order placement, which could involve rough processing in Vietnamese companies, then heat treatment and precision processing in Japan or Japanese companies to take advantage of the strengths of each unit. Vietnam has advantages in terms of labor costs and low production costs for large quantities, while Japan has high technical proficiency and superior capabilities in precision processing and surface treatment.

(Source: NC Network Vietnam, CNCTech, Pro-Vision, Oristar, KDH)