Material value

How is it that materials are seen as of such little value? The waste stream is now so great that densely populated countries are running out of space to store it. We recycle some, but only under duress; it takes legislation, subsi­dies, and taxes to make us do it. Gold doesn’t get thrown away; its intrinsic value protects it. There was a time when the same was true of iron, alumi­num, and glass, but not today.

Trends. The three trends plotted in Figure 11.1 give clues. They show, in order, the aggregated price index of a spread of materials,1 the price of energy,[42] [43] and the purchasing power, expressed as GDP per capita,[44] of devel­oped nations over the last 150 years, all normalized to the dollar value in

2000. [45] In real terms, material prices have decreased steadily over time, making them cheaper than ever before. The price of energy (with some dramatic blips) remained pretty constant until 2008 when, in a very short period, it more than quadrupled, setting back to a value about twice its previous average. Purchasing power, measured by GDP/capita, increased enormously over the same 150 year period. Materials and the goods made from them are cheaper, in real terms, than they have ever been. But though the relative cost of materials has fallen, that of labor has risen, shifting the economic balance away from saving material toward that of saving time.

If the price of energy rises, what happens to the price of materials? Making them, as we have seen, requires energy; the embodied energy of some is much larger than that of others. The ratio of the cost of this energy to the price of the material is a measure of its sensitivity to energy-price rise. A value near 1 means that energy accounts for nearly all the material price; if energy price doubles, so too will the price of the material. A value of 0.1 means that a doubling of energy price drives the material price up by 10%. Figure 11.2 shows the result. Aluminum and magnesium are energy intensive and thus vulnerable to a change in price. The price of materials such as CFRP has a smaller energy component (here labor and equipment

costs play a larger role), making it less sensitive to energy-price fluctua­tions. Commodity polymers (PE, PP) lie in between.

Material price and product price. I f energy price rises, what happens to the price of products made from particular materials? That depends on the

material intensity of the product. Figures 11.3 and 11.4 explain. The verti­cal axes are the price per unit weight ($/kg) of materials and of products; it gives a common measure by which materials and products can be compared. The measure is a crude one, but has the merit that it is unambiguous and easily determined and it bears some relationship to added value. A product with a price/kg that is only two or three times that of the materials of which it is made is material intensive and is sensitive to material costs; one with a price/kg that is 100 times that of its materials is insensitive to material price. On this scale the price per kg of a contact lens differs from that of a glass bottle by a factor of 105, even though both are made of almost the same glass. The cost per kg of a heart valve differs from that of a plastic bottle by a similar factor, even though both are made of polyethylene. There is obviously something to be learned here.

Look first at the price-per-unit weight of materials (see Figure 11.3). The bulk "commodity" materials of construction and manufacture lie in the shaded band; they all cost between $0.05 and $20/kg. Construction mate­rials like concrete, brick, timber, and structural steel lie at the lower end; high-tech materials like titanium alloys lie at the upper. Polymers span a

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The price-per-unit weight diagram for materials. The shaded band spans the range in which lies the most widely used commodity material of manufacture and construction.

similar range: polyethylene at the bottom, polytetrafluorethylene (PTFE) near the top. Composites lie higher, with GFRP at the bottom and CFRP at the top of the range. Engineering ceramics, at present, lie higher still, though this will change as production increases. Only low-volume "exotic" materials lie much above the shaded band.

The price per kg of products (see Figure 11.4 ) shows a different dis­tribution. Eight market sectors are shown, covering much of the manu­facturing industry. The shaded band on this figure spans the cost of commodity materials, exactly as on the previous figure. Sectors and their products within the shaded band have the characteristic that material cost is a major fraction of product price: up to 50% in civil construction, large marine structures, and some consumer packaging, falling to perhaps 20% as the top of the band is approached (family car—around 25%). The value


added in converting material to product in these sectors is relatively low, but the market volume is large. These constraints condition the choice of materials: they must meet modest performance requirements at the low­est possible cost. The associated market sectors generate a driving force for improved processing of conventional materials to reduce cost without loss of performance or to increase reliability at no increase in cost. For these sectors, incremental improvements in well-tried materials are far more important than revolutionary research findings. Slight improvements in steels, in precision manufacturing methods, or in lubrication technology are quickly assimilated and used.

The products in the upper half of the diagram are technically more sophisticated. The materials of which they are made account for less than

10%—sometimes less than 1%—of the price of the product. The value added to the material during manufacture is high. Product competitiveness is closely linked to material performance. Designers in these sectors have greater freedom in their choice of material and are more willing to adopt them if they have attractive properties. The objective here is performance, with cost as a secondary consideration. These smaller-volume, higher – value-added sectors drive the development of new or improved materials with enhanced performance: materials that are lighter, or stiffer, or stron­ger, or tougher, or expand less, or conduct better—or all of these at once. They are often energy intensive but are used in such small quantities that this is irrelevant.

The sectors have been ordered to form an ascending sequence, prompt­ing the question: what does the horizontal axis measure? Many factors are involved here, one of which can be identified as "information content." The accumulated knowledge involved in the production of a contact lens or a heart valve is clearly greater than that in a beer glass or a plastic bottle. The sectors on the left make few demands on the materials they employ; those on the right push materials to their limits and at the same time demand the highest reliability. But there are also other factors: market size, compe­tition (or lack of it), perceived value, fashion and taste, and so on. For this reason the diagram should not be over-interpreted; it is a help in structur­ing information, but it is not a quantitative tool.