Wasted Energy Equals Lost Profits

Columns From: Products Finishing, , from American Finishing Resources, LLC

Posted on: 12/3/2010

12 questions that every surface finisher should ask.
Energy costs can comprise upwards of 15% of the operating budget of a typical surface finishing operation.

Energy costs can comprise upwards of 15% of the operating budget of a typical surface finishing operation. Given this observation, it is interesting how often energy reduction efforts get relegated to the “efficiency improvement B list,” taking a back seat to programs that reduce labor cost, or minimize paint, powder or metals consumption. Not that the latter aren’t important, but oftentimes steps to reduce energy use can have a major impact on the bottom line, and are comparatively easier to achieve.


Not sure where to begin an energy usage reduction program? I recently prepared a list of 12 questions that every surface finisher should pose to his or her operations team. How does you operation stack up on the following questions?


1) Do I have targets in place for the key consumers of energy in my plant?
As the old adage goes, what gets measured improves. Has your management team created metrics or targets for energy usage by department, work area, machine and energy source (natural gas, electricity, steam, etc.)?


2) Do I review actual to targeted performance at least monthly?
Just having targets in place is not enough. Does the team measure actual to projected performance regularly and are the reasons for variances quickly identified and rectified?


3) Have I met with the representative of my state’s energy efficiency or renewable energy program in the last 12 months?
As a result of the American Economic Recovery and Reinvestment Act of 2009 (a.k.a. “The Stimulus Package”) $50 billion is being poured into the energy sector, much of which is being distributed through state programs. A finisher’s investments in capital equipment additions and other initiatives that reduce energy consumption can often be offset in part by government funding.

 

4) Have I reduced my plant’s business volume adjusted water use by more than 15% in the last 3 years? If not, opportunities await. Not only does the procurement and the utility’s treatment of water cost money, excess water usage creates other forms of waste, including additional in-house treatment and electricity cost.


5) Do I have a “Turn off the lights” program?
I recently conferred with the general manager of a large OEM, whose plant includes both powder and e-coat operations. His finishing department managed to reduce annual energy spending by $70,000. When I asked his secret he referenced some new equipment and practices, but noted that the biggest single impact resulted from turning off equipment when not in use.


6) Have I upgraded my plant lighting in the last seven years?
Major changes in lighting technology have created a double win—of sorts—for finishers. First, energy efficient plant lighting, funded in part by government grants, offers a very quick payback period on the finisher’s initial investment, leaving the finisher to reap the financial benefits of lower electricity expense following the payback of the initial investment. Second, new lighting is more effective. By creating more light on the plant floor, defects are detected more readily, the plant is more presentable when customers come to visit, and shopfloor employees really appreciate their improved working environment.


7) Do we totally understand how we are charged for energy?
If you have ever studied an electric or natural gas bill you know that they are a maze of charges. Peak versus off peak, delivery charges, surcharges, taxes and so on. One key to reducing energy cost is to first understand what drives the various charges to begin with, and then adjust behavior and strategy to minimize charges.


8) Do we hedge natural gas?
Don’t let today’s historically low natural gas prices fool you. If we know anything about natural gas it is that prices fluctuate. Buy next quarter’s and next year’s expected gas usage today—at a reasonable premium over the current market price—in order to create a predictable business model for tomorrow.

 

9) Has my compressed air system been audited in the last 18 months?
A finishing company I know well reduced its electricity expense by $300 per month just by finding and rectifying leaks in its compressed air system. It may not sound like much, but $3,600 a year can be put to much better use than wasted payments to the electric utility.


10) Do I know for a fact that my make-up air system is properly balanced?
Excess exhaust on a finishing line means excess make-up air, which must be heated on its way into the plant during colder months, thereby wasting natural gas.


11) Do I know the exact payback period resulting from replacement of my critical capital equipment with new equipment?
Especially with government incentives noted above, payback periods on energy efficient equipment are quicker than ever. Capital equipment additions that were formerly cost prohibitive might just make sense today, but the finisher must know which additions offer the most benefits for the lowest cost.

 

12) Am I producing at an efficiency level of at least 85% of standard?
Doesn’t sound like an energy question? Every empty rack, fixture or hook; every part rejected on the line, every minute of downtime, means energy required to run and maintain the line goes to waste. Improving efficiency on the line does more to reduce energy cost than any other single effort.
In my view, the more questions to which you answered “No” the better, because performance improvements await you. Make your list and get started. Wasted energy equals lost profits. 

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