What Vertical Integration Means in Cutting Tool Manufacturing
In the cutting tool industry, vertical integration means a single company controls multiple stages of production — from raw material to finished product. Most drill bit manufacturers buy their HSS bar stock from steel mills, then grind, heat-treat, and coat it into finished tools. A vertically integrated manufacturer goes further: producing the steel itself.
JacoTools operates a fully integrated HSS cutting tool production chain. We smelt high-speed steel, produce wire rod and drill blanks, and manufacture finished drill bits and hole saws — all within our own facilities. Here is why that matters for buyers.
The HSS Supply Chain, Explained
A typical HSS drill bit passes through these stages before reaching your hands:
1. Steel smelting — Raw iron, tungsten, molybdenum, vanadium, and cobalt are melted and alloyed to create HSS ingots
2. Hot rolling — Ingots are rolled into wire rod or round bar
3. Drawing/grinding to blanks — Bar stock is drawn or ground to drill blank dimensions
4. Flute grinding — CNC grinding machines cut the spiral flutes
5. Point grinding — The cutting tip geometry (118° or 135°) is ground
6. Heat treatment — Blanks are hardened and tempered to achieve target HRC
7. Coating — TiN, TiAlN, black oxide, or other coatings are applied
8. Quality inspection — Dimensional checks, hardness testing, visual inspection
9. Packaging and shipping
Most manufacturers enter at step 3 or 4, purchasing blanks or bar stock. JacoTools starts at step 1.
Why Starting from Steel Matters
1. Material Traceability
When we say a drill bit is M35 HSS, we know exactly what is in it — because we melted the steel. Every heat (batch) of steel we produce has a full chemical analysis on file. We can trace any finished drill bit back to the specific steel melt, the rolling batch, and the grinding run.
This end-to-end traceability gives our customers confidence in the material certifications we provide — every document traces back to our own production records.
2. Consistent Quality
HSS quality depends heavily on factors that happen during smelting: carbide distribution, inclusion content, and alloy homogeneity. By controlling the melt, we ensure consistent carbide structure across every batch. This translates directly to consistent cutting performance — bit to bit, order to order.
3. Cost Control
Steel is the largest single cost component in an HSS drill bit (typically 30-40% of total manufacturing cost). By producing our own steel, we reduce raw material costs and our exposure to spot market price fluctuations.
This cost advantage is passed to our customers. We can offer competitive pricing on M35 and M42 products where the cobalt content makes raw material cost even more significant.
4. Custom Alloy Capability
Need a non-standard HSS grade? When you control the melt, custom alloys are a production run away — not a special order with high minimums and long lead times.
Our Production Numbers
What This Means for Buyers
Distributors and Importers
Vertical integration means stable pricing, consistent quality, and the ability to private-label products with confidence. When your customers report that "every box performs the same," that consistency starts at the steel melt.
OEM and Industrial Buyers
If you need drill bits that meet specific material certifications (mill certs, spectral analysis, hardness reports), we can provide documentation that traces back to our own steel production — full transparency from melt to finished tool.
Tool Manufacturers
We also sell HSS raw material — wire rod, round bar, and drill blanks — to tool manufacturers worldwide. If you need guaranteed-composition HSS in M1, M2, M35, or M42, we supply it directly from our smelting facility.
The Bottom Line
Vertical integration gives us full control over material quality, production consistency, and cost structure. For buyers, that translates to reliable products, competitive pricing, and complete traceability on every order.
Want to see our production process? We welcome factory visits and can arrange virtual tours for international buyers. Contact us at info@jacotools.com.
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