Archive | January

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January 1, 2009
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Uptime: Lessons From Auto Manufacturing

0109-uptime

Bob Williamson Contributing Editor

In May 2007, this column carried an installment entitled “The Rise & Decline of Auto Manufacturing.” It pointed out how the “Big Three” U.S. auto manufacturers seemed to be on the way to repeating the mistakes of the British auto industry and government in the 1970s—something that led to that industry’s demise in the 1980s. Now, in light of current economic conditions and discussions of government financial involvement with General Motors, Ford and Chrysler, the U.S. automobile industry finally may be at the point of no return.

Throwing money at any problem without a strategy to make far-reaching change typically does not work. While the Big Three have made 50% gains in manufacturing productivity since 1980, it may not be enough. What happens in 2009 probably will be the ultimate wake-up call for traditional automobile manufacturing in the U.S, including the Big Three and thousands of suppliers to the industry. Will history repeat itself? Will high fixed overhead costs sink one or more of the Big Three? What should we learn from this ordeal?

Profitability issues
Maintenance and reliability initiatives, continuous improvement processes and “lean” are proven methods for improving productivity. Productivity has increased significantly in the U.S. auto industry via many of these proven methods. According to the “2008 Harbour Report” on the North American auto industry, Toyota and Chrysler led the six largest multi-plant automakers in total manufacturing productivity, averaging 30.37 labor hours per vehicle. The difference is that Toyota primarily uses its own employees throughout the manufacturing process while Chrysler outsources many of the subassemblies from suppliers. (GM averages 32.29 hours per vehicle while Ford averages 33.88 hours per vehicle.)

Although productivity gains are essential to a company’s success, it is PROFITABILITY that keeps the business going and growing. That’s the problem with the Big Three—their profitability. Again, according to the “2008 Harbour Report,” Honda and Nissan led the industry, earning $1641 pretax profits per vehicle produced in North America. Toyota was number two in per-vehicle profit at $922. Sadly, Ford, GM and Chrysler LOST $1467, $729 and $412 respectively. The Harbour Report continues: “This reflects that the Detroit Three still pay more for health care, pensions and sales incentives…and support more dealers relative to their market shares than either Toyota, Honda or Nissan.” More dealers require more vehicle inventory waiting to be sold, which ties up cash and leads to sales incentives, which reduces profitability.

What about labor cost? Industry experts estimate that the labor cost accounts for about 10% of the cost of manufacturing and about 5% of the manufacturer’s suggested retail sales price (MSRP) of a vehicle. Roughly speaking, here, per industry insiders, are the auto manufacturing cost contributors to MSRP, highest to lowest: The number one cost is materials. Fixed costs (depreciation, R&D, pensions, health care, advertising and overhead) rank second. The third highest cost—dealer markup—is followed by number four—assembly labor and manufacturing costs. Fifth in line is price discounts and promotions. Sixth is transportation and warranty, followed by profit per vehicle at seventh.

Labor cost often is (mistakenly) a big target for reducing costs and improving profitability. We recently have learned of the huge labor-cost gap between U.S.-based foreign auto manufacturers and the Big Three. And, the union-represented labor force receives a total package (wages, benefits and other forms of compensation) nearly three times that of the average private sector employee in the United States.

While the Big Three have negotiated a “two-tier” wage system that pays newer workers lower hourly wages than more established employees, their overall hourly labor cost (including wages, benefits and other compensation) still remains high. When you look at labor cost PLUS the fixed overhead cost that includes significant benefits and perks for all employees, the actual “labor cost” per vehicle can get out of sight.

The real challenges
Despite all the hype, high hourly wages are NOT the big opportunity for improvement in the auto industry—or most other manufacturing industries in America. The biggest opportunities for improvement continue to lay in labor PRODUCTIVITY plus the very high FIXED (or overhead) costs. The Big Three automakers have amassed these huge FIXED “legacy” cost from years of negotiations for job protection, retiree heath care and unemployment benefits. These costs do not affect productivity or manufacturing costs at all. They are a burden that is added to the selling price of each vehicle. If the Big Three are to compete on selling price and profitability, they and their union leaders will have to find a way out from under these extra burdens.

While compensation costs and overhead/fixed costs cannot be changed overnight—even under bankruptcy reorganization—they can be avoided by up-and-coming manufacturers. What is most important about the North American automotive industry is that it HAS improved its productivity because there was a compelling business case to do so. Moreover, there were proven models to adapt, based on the Toyota Production System and, later, “lean manufacturing” and the “lean enterprise.” The Harbour Report states: “By comparison, the automakers in North America, on balance, have become very competitive globally, only slightly behind Japan, but ahead of most other regions. Although labor costs remain high, the weak dollar and new labor agreements have made North America a more attractive region for manufacturing.” Overall, the U.S. workforce is the most productive in the world because of our innovative use of technology and our individual worker productivity. PRODUCTIVITY, coupled with PROFITABILITY, reflects the real challenges for the Big Three.

Productivity improvements in these capital-intensive businesses depend on reliable, high-performing equipment and maintenance and reliability for capacity assurance—that’s OUR niche! We know how to make equipment last longer and run more efficiently, and how to sustain new levels of performance with preventive and predictive maintenance methods. We also know that maintenance alone cannot make equipment reliable. It takes the entire organization from operations and spare parts procurement to engineering and programming, and more.

“Made in Mexico” and elsewhere
Mexico is currently one of the world’s major automotive manufacturing nations—as well as part of the North American auto industry. Considering productivity alone, Mexico’s plants are very lean and competitive, producing high-quality products with much less automation than in comparable U.S. facilities. I personally have experienced the great results with a Dodge truck I purchased in 1993 (and still drive) and with a 2008 Saturn Vue, both made in Mexico. And I’m not alone. Countless cars and trucks traveling on U.S. roads today, including Ford Fusions and Chrysler PT Cruisers, have been manufactured in Mexico. “Much less automation” in Mexican plants means much less high-tech maintenance and repair expertise is needed to keep those operations reliable. In an era of “skills shortages,” this is crucial.

Remember, high-tech alone—much like higher wages alone—is not necessarily the answer to improving productivity. Consider the following case in point.

Roger Smith, the CEO of General Motors from 1981 to 1990, had a vision for technologically revolutionizing auto assembly. His GM-10 plan and his drive for modernization in the mid-1980s that called for nearly 14,000 robots in seven of his North American assembly plants has been characterized as “the biggest catastrophe in American industrial history.”

GM simply was not ready for all the new technology it got. After three years—and spending nearly $35 billion on 21st century modernization attempts—the company’s highly unreliable robots were mostly removed and assembly reverted to a level of technology that could be sustained.

Mr. Smith summed up the situation quite succinctly:

“Without paying attention to the people and training, all this new technology has allowed us to produce scrap faster.”

I was working with GM at the time to develop and implement new skilled trades training programs in two of the seven GM-10 plants. New job responsibilities had to be negotiated to enable union workers to be trained to work on these welding and assembly robots—WEMR, or “welder equipment maintenance and repair.” The skills required included a blend of electrical, electronic, mechanical and hydraulic. This was a slow, long, drawn-out process AFTER the equipment was installed! We learned then, and it applies now: New technology alone does not improve plant performance unless is can be operated and maintained to ensure sustained reliability. Without changes in training and job classifications— and sometimes compensation—innovations often fail.

No simple solution
We also have learned from the Big Three’s recent pleas for a financial bailout that the solution is not going to be simple. Their problems stem from a combination of complex, long-term strategic errors, traditional industry paradigms and governmental legislation. Because the industry runs as a single system, it is only as strong as its weakest link. Consequently, all parties that have been involved in creating the present situation also must be involved in the development and implementation of a sustainable solution—that means employees, retirees, labor unions, creditors, suppliers, dealers and shareholders.

Let us not forget government’s role in this mess, either. State, local and federal government entities all had a hand in getting the Big Three to where they are today. As part of the problem, appropriate government also MUST be part of the solution.

For example, our 1970s energy policy continues to haunt the Big Three, which, year after year had helped fuel America’s seemingly insatiable demand for inefficient, gas-guzzling behemoths. The 1975 CAFÉ (Corporate Average Fuel Economy) standards developed to conserve high-priced oil after the 1973-74 Arab Oil Embargo were designed to double the fuel mileage of new cars manufactured for sale in the U.S. by 1985. In addition to Congress setting the annual fuel mileage standards, the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) were charged with implementation and enforcement. Sounds like a plan, doesn’t it? Not really. Since 1983, automakers have paid more than $500 million in civil penalties for NOT meeting the CAFÉ standards. Add to that the expense of lobbying Congress for relaxed standards and you come up with a lot of money spent by the automobile industry for the sake of inefficiency.

Interestingly, Asian manufacturers have consistently met CAFÉ standards over the years and, thus, have not been penalized. But, therein is another issue. While most of the recent debate has focused on bailing out—or NOT bailing out—the Big Three, it’s important to remember the thousands of suppliers that provide parts and services to the “Big Six” (GM, Ford, Chrysler, Toyota, Honda, Nissan) and other auto manufacturers in North America (BMW, Mercedes, Kia, Hyundai, Mazda, Mitsubishi, Subaru, Isuzu, VW). They are at risk, too.

Many suppliers perform work for multiple auto companies and would be seriously hurt if one or more of the Big Three are allowed to fail. Over $150 billion of our country’s gross domestic product (GDP) per year is related to automotive manufacturing—not to mention billions and billions of GDP dollars associated with transportation engineering, professional-technical, administrative, warehousing, health care and financial services.

What we must do now
Historically, the auto industry has set the stage for manufacturing strategies across many other non-auto businesses. History repeats itself and often tells us why things are the way they are today. Status quo, complacency and ignorance can kill a once thriving business. We can — and we should — learn from history to avoid common pitfalls that have hurt businesses and their workforces.

Successful businesses and workforces help communities and nations thrive. Let’s do our part in our businesses, plants, departments and crews to remain competitive and prosperous. Let’s also keep the millions of automotive manufacturers’ and suppliers’ employees in our thoughts and prayers as we begin the New Year. MT


Suggested reading

  1. The Rise and Decline of the British Motor Industry, 1995. Roy Church
  2. The Machine that Changed the World, 1990. Womack, Jones, & Roos (Chapter 2: The rise and fall of mass production)
  3. The Harbour Report North America 2008, Harbour Consulting
  4. Factory Man (publication date: February 2009), James E. Harbour. Society of Manufacturing Engineers (SME)

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January 1, 2009
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Communications: The Accounting Partnership

0109-communications

Ken Bannister Contributing Editor

Interested or not, most of us are becoming quite familiar with the concept that “accounting makes the world go around.” In recessionary economic times like these, corporate fiscal restraint is inevitable. That makes it tough to push new initiatives to the starting gate and, more importantly, to defend spending on initiatives already in motion.

In both our business and personal lives, good accountancy is essential for well-being. It also provides early warning for any needed change to protect that state of well-being. When affairs are awash in red ink, it is difficult to approach any activity in a proactive manner.
Many business decisions are based on simple accountancy criteria requiring validated answers to such questions as:

  • “What is the total cost?”
  • “What is the return on investment (ROI)?”
  • “Are we within budget?”
  • “Can the budget be cut?”

As with every other corporate department billing to a cost center or project, the maintenance department must provide answers to the accounting department—the holder of the corporate purse. These answers are what justify each application for capital expenditure, budget expansion or simple budget retention!

Defining roles
For most maintenance practitioners, the perception of a maintenance/accounting relationship does not exceed recording and passing along time and material expenses against a G/L (General Ledger) account code number, from which an annual maintenance budget may be formulated. Often, the accounting department’s perception of maintenance is equally vague. That’s because accounting may perceive maintenance purely as a statement of debit against the corporate ledger — which is a legacy of historically having been viewed as a cost center and rarely as a profit center.

If maintenance is to be judged fairly and have any chance of receiving reasonable access to scarce funds, it must define a proactive role in the maintenance/accounting departmental relationship through exploration within the following areas:

  • Work with the accounting department to determine any relevant financial information and data useful to facilitating accounting activities, currently collected as part of the CMMS data, and deliver weekly or monthly reports from the CMMS. Such financial information can include monies spent on parts, internal labor, external labor, by project, account code, contractor, etc.
  • Determine how maintenance can support accounting in its preparation of budget planning. This can include forecasting PdM and PM contracts with third party contractors, investigation of preferred supplier contracts and Vendor Managed Inventories (VMI) arrangements.
  • Work with accounting to determine ROI parameters required to ensure successful submissions of cost/benefit analysis reports for special funding or budget extensions.
  • Include the accounting department in all relevant maintenance communications.

While it is the maintenance department’s role to furnish budget plans to the accounting department, it is the role of the accounting department to assist and provide the maintenance department with quality feedback. Both parties must work together to establish guidelines for budget submissions to ensure submission consistency.

Submission guidelines need to be published and circulated to all accounting and maintenance personnel for future reference.

As with all departmental relationships, it is incumbent upon the maintenance department to learn how the accounting department likes to receive information. The maintenance department may be successful in attracting the favor of upper level management with an improvement proposal, but unless the accounting figures are complete, and fall within the corporate funding guidelines, the new program or purchase could continue to be nothing more than a proposal.

Past performance
During the infamous 1990s downsizing era, the majority of maintenance departments were subjected to deep budget cuts. At that time, most were not ready to defend their programs. Consequently, these departments suffered huge losses in capital expenditure budgets and major losses to maintenance operating funds—for what should have constituted acceptable maintenance expenses.

In the early 1990s, maintenance departments that could articulate in “bottom-line” terms the economic consequence of deferred maintenance as a direct result of the budget slashing didn’t merely save their existing budgets. They also were able to capture additional funding for cost-saving initiatives. The tool these successful organizations used was the “Cost/Benefit Analysis” report. This is a report prepared by maintenance to show the impact of maintenance budget cuts.

Any report prepared for the accounting department should allude directly to profit and loss and ROI. By preparing a statement of record and using terms such as “return and investment,” the maintenance department does not only reflect good business practices, it also demonstrates a desire to contribute to the corporation’s bottom line. Clearly, this type of statement requires upfront research and planning. The effort, though, is worthwhile if your submission receives serious consideration from management and accounting alike.

The real ROI
To invest in something is to dedicate funds and/ or time to a project expected to yield a profit or income—profit or income only commencing once the initial funding or capital has been paid for. The time period between the release of funds and the payback of the funds through the profit or generated incomes is the “Return On Investment” period. It could range from minutes to years and varies enormously depending upon the application or project. Generally speaking, the faster the ROI period, the better chance the program or purchase has.

If a maintenance department is to survive recessive times, it must understand ROI and work intensively to understand the fundamentals of a partnership between itself and the accounting department. MT


Ken Bannister is lead partner and principal consultant for Engtech Industries, Inc. Telephone: (519) 469-9173; e-mail: kbannister@engtechindustries.com

Want more Ken? Then don’t miss the chance to hear what Ken Bannister and many of our other great contributors have to say in person, at MARTS 2009. Visit www.MARTSconference.com for details.

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January 1, 2009
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MT News

News of people and events important to the maintenance and reliability community

HUNTINGTON PROMOTED WITHIN SCHNEIDER ELECTRIC

The Schneider Electric North American Operating Division (NAOD) has promoted Amelia A. Huntington to the position of chief operating officer (COO) NAOD and president of Schneider Electric USA, effective Jan. 1, 2009. In her new role, Huntington will have NAOD managerial responsibility for the United States, Canada, Mexico, Juno Lighting Group and several other core division functions and business operations.

Huntington’s promotion was announced by Chris Curtis, who will remain CEO of NAOD, as well as assume additional responsibilities in leading the corporation’s global Building Automation and Energy Efficiency business. Curtis also is a member of the Schneider Electric Executive Committee.

GRUNDFOS ACQUIRES YEOMANS CHICAGO CORP.

One year after international pump corporation Grundfos added Peerless Pump Company to its portfolio, it now has acquired Yeomans Chicago Corporation (YCC) of Aurora, IL. YCC sells products under the Yeomans Pump, Chicago Pump and Morris Pumps brands and focuses primarily in the wastewater and sewage markets. Speaking about the acquisition, Jes Munk Hansen, president of Grundfos North America, noted: “The synergies with the Peerless, PACO, Yeomans and Grundfos brands will provide an immediate positive impact. There is no doubt that all of our customers will benefit from this powerful combination.”

In business for more than 110 years, Yeomans operations will become part of Grundfos North American operations and overseen by the Peerless group based in Indianapolis, IN. Peerless president Dean Douglas will become CEO of the combined Yeomans and Peerless operations.

(EDITOR’S NOTE: The $2 billion North American wastewater pump market driven by aging infrastructure, changing demographics and changing discharge regulations is expected to grow at a minimum of 5% annually.)

FLOWSERVE OPENS A NEW MIDWEST VALVE SERVICE CENTER

Flowserve has announced the opening of a new Quick Response Center (QRC) for valves in Portage, IN. QRCs are maintenance, repair and manufacturing operations strategically located throughout the world to supply Flowserve customers with a range of local services that help support the reliability of their rotating equipment. The 10,000-sq. ft. Portage QRC, the newest such facility in the Flowserve network, will be supplying full machining, welding and service capabilities for Valtek and Kammer valve customers in a six-state region, including Indiana, Illinois, Iowa, Ohio, Michigan and Wisconsin.

ASSOCIATION NEWS: ASE LOOKS FOR THIS YEAR’S STARS OF ENERGY EFFICIENCY

Have your battle cry heard—your energy efficiency battle cry—or help put a deserving spotlight on someone else’s. The Alliance to Save Energy (ASE) is inviting individuals and organizations to submit nominations for this year’s round of its prestigious”Stars Of Energy Efficiency Awards.” Categories include:

  • Charles Percy Award for Public Service: This award recognizes an individual for an outstanding public service contribution and/or a lifetime commitment to energy efficiency.
  • “Galaxy” Star of Energy Efficiency: Nominees with more than $150 million in annual revenue are eligible.
  • “Super Nova” Star of Energy Efficiency: Nominees with less than $150 million in annual revenue are eligible.
  • “Andromeda” Star of Energy Efficiency: Nominees with less than $10 million in annual revenue are eligible.
  • “I-Star” Award for Energy Efficiency: This award recognizes the outstanding contributions to energy efficiency achieved through special projects or activities overseas that are led by nominees based outside of the U.S. territories.
  • “Innovative” Star of Energy Efficiency Award: This award recognizes an emerging technology or service that has the potential to transform a sector of the energy efficiency market but which, given the early stage of the innovation, has yet to generate proven savings.

These awards will be presented at ASE’s “17th Annual Evening With The Stars of Energy Efficiency Dinner and Awards Ceremony,” slated for Sept. 17, 2009, at the Andrew W. Mellon Auditorium, in Washington, DC. For more information on this prestigious program, or to make a nomination, visit www.ase.org/dinner or contact Audrey Cotton at acotton@ase.org. MT

Your News Is Our New!Our Readers Want To Know All About It! Send MT News Items To: jalexander@atpnetwork.com

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January 1, 2009
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Publisher’s Notes: Who Can You Trust?

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Bill Kiesel, Vice President/Publisher

I would have preferred to start out with a cheerier “Happy New Year” message. But, let’s face facts: we have a real challenge on our hands. Stock market turmoil, mortgage meltdowns, credit crises, plant closings, crooked investment advisors, you name it, the hits just keep coming.

Over the last few months, as the economic news has gone from incomprehensibly bad to incomprehensibly worse, you’ve probably wondered, more than once, if you can really trust anyone or anything anymore. I believe that you can, and I offer Applied Technology Publications (ATP) and its brands as examples.

World-class companies don’t have knee-jerk reactions to economic conditions. If at all possible, they take advantage of slow times to stay ahead of their competition, by innovating and investing in their products and capitalizing on their reputations and strengths. That’s what we are doing at Maintenance Technology. We look at these tough times as an opportunity to grow by building on our 22 years as the number one publication in the “Capacity Assurance” marketplace. By doing so, we’ll be able to better serve both our readers and our advertisers during this current downturn, and even more so as the economy rebounds.

  • We’ve added to our editorial staff and are constantly striving to improve content and develop new, value-added print, electronic and educational offerings. Watch for them.
  • We are continuing to grow our BPA-audited circulation—despite the high cost to do it—and mailing our publications free of charge to almost 60,000 readers every month.
  • We’re pulling out all the stops—despite bleak times—in presenting MARTS 2009 to meet your ongoing professional development needs.
  • We are working with more leading industry groups than ever, including the Fluid Sealing Association (FSA), Motor Decisions Matter (MDM), Pump Systems Matter (PSM), MIMOSA, ISA, SMRP, ARC and Infraspection, just to name a few. These partnerships (and others in the works) are all focused on providing more and more value for our readers going forward.

Your interest in/need for capacity assurance solutions doesn’t stop based on Wall Street’s gyrations. We won’t stop supplying that information to you. As for some specific people you can trust to do the job, please refer to the adjacent staff masthead. The individuals on it are working tirelessly to produce the quality publications and products you’ve come to count on from us. Like me, they greatly appreciate you, readers and advertisers alike, and look forward to delivering for you now and in the better times ahead! MT

Best Wishes for 2009!

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January 1, 2009
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Solution Spotlight: Capturing Savings with Heat-Recovering Compressors

Sullair

Energy costs represent 82% of the expense of compressor ownership. At least that was the case until Sullair launched its energy-efficient single-stage, 7500 S-energy® Series with Energy Efficiency System (EES) heat recovery. These lubricated rotary screw air compressors are available both as constant speed and variable speed drive models, 100 (75 kW) horsepower with capacities of 369 to 493 acfm and pressures from 100 to 175 psig.

The combination of the S-energy® Series energy-saving features has proven especially effective in reducing total life cycle costs. Contributing to the energy savings is Sullair’s time-tested air-end design with the low-restriction inlet valve, low-pressure-drop air-fluid separation system that prevents energy loss, and a high efficiency fan.

Additional energy savings are achieved with optional Variable Speed Drive (VSD) compressors that provide the flexibility to vary both capacity and pressure to match system demand. On models with Variable Capacity Control (VCC), Sullair’s variable displacement air-end matches system pressure to plant demand. Part load capacity and efficiency can produce additional energy savings up to 17%.

Multiplying energy savings/maximizing ROI
With the EES, the heat of compression is recovered and converted into recirculating air for comfort heating in plants or pre-heated air for boilers or processes. By bringing in a continuous flow of outside air, the EES provides positive make-up air to virtually eliminate negative pressure in the plant. When not required, heat is rejected to the outdoors.

Annual energy savings for just the EES may reach $10,993.00. This 100 hp compressor generates 1,649,000 BTUs per year. Calculations are based on climate conditions for Chicago, IL and natural gas at $0.50/therm (subject to market fluctuations). Payback period is 7 months as a result of the energy savings.

Maintenance-friendly designs
According to the manufacturer, these 7500 S-energy® Series compressors also are among the most reliable and maintenance-friendly compressors in the marketplace. Their package designs meet the need for a small footprint and their enclosures allow routine maintenance of consumable items to be performed from the same side of the compressor. The units’ simplified, concise WS Microprocessor Control System provides critical operating information. A Windows-based PC can be used to remotely monitor, upgrade the software and set-up system changes. MT

Sullair Corporation
Michigan City, IN

For more info, enter 30 at www.MT-freeinfo.com

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January 1, 2009
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Heat Recovery Technology Fuels Growth + Sustainability

Through recycling and environmentally responsible manufacturing efforts, this pulp and paper mill is decreasing annual greenhouse gas emissions by 270,000 tons. That equates to sparing 1.5 million trees, saving 580 million gallons of water and preventing the addition of 250,000 cubic meters of landfill volume every year.

heat-recovery-tech1Minas Basin Pulp & Power Company is a family-owned and operated company that produces 100% recycled products, such as linerboard and coreboard. Founded in 1927 in Hantsport, Nova Scotia, the company constantly strives to improve the quality of its paper while reducing its impact on the environment. Focused on growth, with sustainability, Minas Basin engaged Johnson Controls to implement paper machine exhaust heat recovery technology at its paperboard mill, reducing its energy consumption by 20% and increasing production throughputs.

Environmental stewardship is built into the company’s corporate policy, which states that it will meet or exceed all environmental standards and regulations. Minas Basin was the first mill in Nova Scotia and one of the first in Canada to totally comply with all Federal Pulp and Paper Effluent Regulations. It was also one of the first to use a 100% recycled fiber in production. The company’s recycling reduces the need for approximately 10.8 million cubic feet of landfill space each year, making it the largest Canadian recycler east of Montreal.

In light of the large amount of steam energy consumed, the product drying process at Minas Basin is quite expensive. Through a performance contract with Johnson Controls, the company achieved another industry first, applying an innovative heat recovery technology to its dryer exhaust system to signicantly lower production costs and, in keeping with its environmental stewardship, reduce emissions. Energy and operational savings resulting from the new system pay for this infrastructure improvement.

Developing a comprehensive solution
Johnson Controls conducted a full-scale energy utilization audit on Minas Basin’s plant and developed a technical solution including a guaranteed level of savings that would be achieved. The audit involved multiple site visits, discussions with Minas Basin operations personnel, reviews of process control system data, paper machine and process-related documents and drawings, dryer exhaust volume, temperature and humidity measurements and monitoring process water temperatures.

heat-recovery-tech2Upon completion, the audit revealed that there was 28 mmBTU/hr available for reprocessing. Based on a detailed energy balance, a system capable of recovering 18mmBTU/hr was chosen as the optimal application. The recovered heat energy is used to generate water with temperatures between 135 F and 145 F for use in industrial processes and plant heating.

The system distributes recovered heat through heat exchangers connected to the mill’s production process and auxiliary systems that previously consumed steam. The system’s direct contact design enables optimal recovery of both sensible and latent heat, even in varying operating conditions. The technology is capable of recovering up to 85% of the heat normally lost through the paper machine dryer’s exhaust.

Operational and environmental benefits
Johnson Controls monitors and maintains the waste heat recovery system, which is guaranteed to deliver more than 89,000 mmBTUs annually over the three-year performance contract. The solution is able to reprocess enough waste heat to reduce Minas Basin’s energy consumption.

In addition to the heat recovery benefit, this solution causes a reduction of 92 tons of sulfur dioxide, 8350 tons of carbon dioxide and 16 tons of nitrogen, helping achieve Kyoto targets and create significant environmental benefits for the surrounding areas. These pollutant reductions also generate certifiable emission credits for Minas Basin. MT


Terry Gerhardt is vice president – operations for Minas Basin Pulp and Power Company, Ltd.

For more info, enter 2 at www.MT-freeinfo.com

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January 1, 2009
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Growing Reliability Down on the Wind Farm

growing-reliability1To most casual observers, the forecast of sustained growth across the worldwide wind energy sector in the years ahead would seem quite sunny. Down on the wind farm, however, where operators are striving to generate a consistently competitive power source, storm clouds related to reliability issues can drastically darken the horizon.

There’s no getting around it. Over its typical 20-year service life, a wind turbine may be exposed to some of the most extreme operating conditions on the planet. Equipment problems WILL arise. Costs from unplanned shutdowns and maintenance fixes can be staggering, not to mention compounded by accessibility issues. That’s because a turbine’s nacelle—a veritable “command central” that contains a gearbox, low- and high-speed shafts, generator, controller and brake—can be perched hundreds of feet off the ground and/or situated miles out at sea. When equipment fails, wind farms must deal with exorbitant crane mobilization expenses, lost energy production, soaring costs per kilowatt-hour and untimely delays in obtaining replacement parts in a burgeoning industry where the demand for necessary components routinely outstrips supply.

While wind farms cannot avoid the uncertainty of the changing wind and weather, operators can act to reduce uncertainties regarding the reliability of equipment. Proactive maintenance activities hold the key to unlocking optimized capacity and long-term profitability.

Among technologies successfully cultivated from applications in other industries, condition monitoring systems enable early detection and diagnosis of potential component failures Maintenance. In addition, automatic lubrication systems deliver accurate and timely lubrication with minimized maintenance support to keep all points properly lubricated and components performing as anticipated.

Monitoring for timely maintenance
Condition monitoring is a strategy whereby physical parameters (such as vibration, temperature, lubrication particles and others) are measured regularly to determine equipment condition. This procedure makes it possible to detect machine and component problems before they can result in unexpected downtime and the high costs associated with maintenance and interrupted production.

An integrated on-line condition monitoring system within a typically difficult-to-reach wind turbine nacelle (like the one shown in Fig. 1 on the next page) offers a powerful tool for managing day-to-day maintenance routines and consolidating risky, costly maintenance activities. These systems pay off for wind farms by allowing operators to monitor and track deteriorating component conditions in real-time— which leads to maintenance decisions based on actual machine conditions instead of arbitrary maintenance schedules.

growing-reliability2

A condition monitoring system developed and dedicated for wind turbines allows for round-the-clock monitoring of key turbine components. (A capability for remote monitoring via the Internet or GPRS provides a solution for offshore turbine operations.) By tracking component performance, maintenance activities can be coordinated across the wind farm; service calls can be better planned and combined; and operators can take advantage of planned shutdowns to service several turbines at the same time, since machinery conditions are known from the monitoring. All contribute economies and efficiencies for the wind farm operation.

The monitoring process for a wind turbine can effectively reduce lifecycle costs and extend service life. Implementing necessary repairs when problems begin to surface, for example, proves easier and much less expensive than running a turbine to catastrophic failure. Conversely, as demonstrated at the U.K. wind farm (see Sidebar on previous page), data can prompt repairs for the most opportune time—without risking additional damage or failure.

Today’s monitoring systems can handle any number of turbines and multiple data points. Using vibration sensors mounted on a turbine’s main shaft bearings, gearbox and generator, systems (in tandem with software) will continuously monitor and track a wide range of operating conditions for analysis. Wireless capabilities allow operators to review data from any location with a computer or hand-held device with Internet access (which can shorten lead-time from alarm to solution). The collected data also can be figured into root cause failure analysis, which can then be applied to eliminate recurring failures.

Among the operating conditions that can be targeted for early detection, diagnosis and remedial action:

  • Unbalanced turbine blades
  • Misalignment
  • Shaft deflections
  • Mechanical looseness
  • Foundation weakness
  • Bearing condition
  • Gear damage
  • Generator rotor/stator problems
  • Resonance problems
  • Tower vibrations
  • Blade vibrations
  • Electrical problems
  • Inadequate lubrication

Monitoring systems can play vital roles in highly reliable maintenance forecasting, which is an essential requirement for improving turbine reliability and availability. This is made possible by continuously recalculating fault frequencies and delivering accurate values based on reliable trends, which facilitates alarms at various speeds and loads, including very low main shaft speeds. (The trend data also enables trend-based root cause failure analysis.)

Ultimately, a tailored condition monitoring system can assist wind farm operators in performing appropriate maintenance at the right time and set the stage for Condition-Based Maintenance activities, whereby maintenance, inspection and overhaul of plant machinery are scheduled largely on the basis of machine condition. In this approach, rollout of maintenance relies upon condition data instead of the calendar.

As a result, wind farm operators can extend maintenance intervals, consolidate maintenance initiatives, cut operating costs and costs per kWh, reduce the risk of unplanned shutdowns, prevent lost energy production due to breakdowns, and predict remaining service life by turbine.

Turning to automatic lubrication
Just as condition monitoring technologies can optimize resources for timely and appropriate maintenance deployment, centralized automatic grease lubrication systems can contribute their own reliability benefits. Systems engineered for bearings, pitch and yaw gears and other locations in a wind turbine can efficiently deliver exact and clean quantities of appropriate lubricant at the right positions at the right time. The maintenance benefits: Timely and effective lubrication helps to reduce wear, minimize lubricant consumption, maximize efficiency and curb unscheduled downtime.

survival-guide5Automatic delivery of lubrication also lifts a heavy burden from the shoulders of the maintenance staff. According to industry averages, 10-20% of the uptower time involved in servicing a turbine is spent on relubrication (technicians crawling around in the cramped nacelle and hub to grease lubrication points numbering from 10 to more than 80 with several different greases in each turbine). And, in the case of conventional manual lubrication methods, over- or under-greasing (leading to potential failure) always is an unwanted possibility. Lubrication intervals may be sporadic or ill-timed, contaminants can inadvertently be introduced and equipment performance may be compromised.

With centralized lubrication, every point receives the proper lubricant in an accurate amount with the objective to minimize wear and promote longer service life. The problems associated with excessive lubrication can vanish; lubricant consumption can fall over time; maintenance time, energy and costs can diminish; more informed and timely decisions can be made for lubricant purchases; and operational reliability can be improved. (The only requirements: Refill the lubrication reservoir and occasionally inspect the connected lubrication points.)

Advanced systems additionally offer the capability to provide central monitoring of all feeder outlets, if desired, at relatively low cost, and can incorporate lubricant collectors attachable to open geared wheels and lubricated pinions for pitch and azimuth drive wheel.

Centralized lubrication systems can be applied to all bearings at a turbine’s rotor shaft, blade pitch and azimuth positions, as well as non-rotating applications inside the turbine.

Decision-making for the most appropriate system will depend, in general, on the application and, in particular, on a range of other parameters, such as the operating conditions (variations in the operating temperature and lubricant viscosity); accuracy requirements for lubricant quantities; turbine system geometry (size, dimensions and symmetry); and monitoring demands, among others.

When planning, installing and—subsequently—implementing a centralized lubrication system inside a wind turbine, remember to:

  • Determine the number of lube points.
  • Choose the proper lubricant for the temperature, speed and load conditions.
  • Calculate appropriate dispense rates and quantities for the application.
  • Choose pumps consistent with the type of actuation and system capacity.
  • Consider monitoring systems that can be integrated with the lubrication system.

Additional “moneymakers”
The previously mentioned condition monitoring and lubrication technologies represent “umbrella” approaches for achieving consistent reliability and uptime in wind turbines. But they’re not the only moneymaker strategies available. Other things can help wind farm operators generate profits, too.

As a few examples, customized bearing housings for main shaft applications can be modified to fit the frame and shaft dimensions and incorporate high-quality labyrinth or lip seals to reduce the subsequent need for maintenance. Hydraulic couplings can be specified to accommodate the limited space of a nacelle and enable easy mounting and dismounting in a fraction of the time (and labor) required for mechanical couplings. Insulated or hybrid ceramic bearings can keep maintenance at bay by protecting generator bearings against the passage of damaging electric currents.

All such solutions suggest that partnering with a services provider experienced in the many interrelated aspects of wind turbine technology can provide operators with the most current engineering resources to help keep the blades turning productively. MT


Kevin George is manager of Wind Energy Business Development for SKF USA Inc., based in Marietta, GA. An active member of the American Wind Energy Association www.awea.org, he holds a BSME from the Georgia Institute of Technology. Telephone: (770) 591-8747; e-mail: Kevin.S.George@skf.com

When it comes to profits…Timing Can Be Crucial

Fortunately for today’s wind farm operations, condition monitoring information even can be used to control or postpone repairs. This was the case at a U.K.-based wind farm where one of SKF’s WindCon condition monitoring units was deployed. The unit was installed on a wind turbine that had already experienced damage to the low-speed part of the gearbox (and the gearbox replacement already was planned). The system not only registered the damage, but also determined that the damage was stable enough to postpone the gearbox replacement and keep the damaged turbine in operation.

After monitoring the damaged part for almost 12 months, the system eventually detected a rapid increase in the damage pattern, and only then was the turbine taken offline for gearbox replacement.

By postponing the gearbox replacement for a year, the wind farm was able to accrue interest on the capital needed for the overhaul and efficiently plan for parts delivery, shipping, personnel and cranes for the job. The alternative would have been a rushed operation accompanied by unnecessary costs, several weeks of downtime and lost productivity.

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6:00 am
January 1, 2009
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A Survival Guide for Impending Cost Reduction

As maintenance and reliability professionals, we are being asked to deliver like never before. Today’s economic conditions demand greater levels of reliability and increased maintenance productivity with an ever-increasing focus on reducing costs. In order to survive, an organization’s plans must turn to optimizing maintenance capacity as a means to achieve its goals.

Continuous improvement processes such as lean and its tools have been the process of choice for most organizations over the past 10 years. Although the business sides of these companies realize tremendous improvements, oddly enough many maintenance processes are left to be a part of someone else’s lean event—or simply made “leaner” as a result of having less than before. There’s no doubt the maintenance process eventually will be targeted for change through the revelation that maintenance cannot keep up with the reliability demand of a leaned organization, thereby becoming a victim of lean. On the other hand, a savvy organizations can choose to proactively apply lean tools to improve its process by design.

Across the industry, we see three business motivators driving our need for improvement:

  • Companies already impacted by market conditions, trying to “survive” implemented decisions
  • Companies preparing for impending reductions.
  • Companies which are unaffected by current market conditions but must remain competitive within their industry.

Although each of these motivators targets improvement for different reasons, the solution is common. You must open the flow of the maintenance process and improve capacity if you are to survive.

Among the reasons maintenance “bats in the cleanup spot” in the continuous improvement lineup is the traditional view held by many companies that a maintenance department is simply a “cost” to an operation. Thus, the only way to improve “cost” is to reduce it! Additionally, many organizations are cutting what they consider to be “muda” (Japanese word for “waste”) out of their maintenance budgets without necessarily making changes in how they operate. Doing so, they severely handicap the maintenance organization’s ability to ensure adequate reliability in equipment and processes, therefore furthering the negative spiral. In this scenario, there are even considerations of decentralization, which places maintenance at the place of concern to compensate for the absence of reliability.

0109-survival-guide2What exactly is lean maintenance?
First, lean maintenance is process improvement, not an outcome or consequence of cutting resources to keep up with external demands. Otherwise, maintenance will have appeared to achieve the goal of being lean, but probably lack the effectiveness and efficiency required to sustain itself or deliver the value required by the environment at which it’s applied.

Secondly—and quite simply—lean maintenance is the application of lean techniques and tools to the maintenance process to drive out waste (anything within your process the end user would not be willing to pay for). The challenge is converting or translating already-known elements of lean into the maintenance process. The most common elements of lean can be applied to any process, including maintenance.

The Lean/Maintenance Conversion Chart (see Table I) takes lean elements and shows the maintenance equivalency in three primary areas of the maintenance process.

  • The process overall focused on workflow and market demand
  • 3-Dimensionsal PMOptimization which drives waste from the forecasted backlog
  • Planning & Scheduling Optimization which drives waste from existing ready backlog.

Getting started
Value stream mapping of the maintenance process…
In their 1996 book Lean Thinking, James P. Womack and Daniel T. Jones de? ned ? ve basic principles that characterize lean. These basic principles should be applied for each product or product family:

  1. Specify value in terms of the end user.
  2. Identify all steps in the value stream, eliminating those that do not add value.
  3. Make the remaining steps ? ow smoothly.
  4. Have the customer pull value from the previous upstream activity.
  5. Pursue perfection though continuous improvement.

In order to apply lean principles, we must agree that maintenance is indeed a process, rather than an event. As a process, Preventive, Predictive, Corrective, Reactive, Project, Production Support, etc. can have different value streams. Therefore, they must be addressed individually, much the same as different products in the production value stream.

Principle 1: Specify value in terms of the end user…
The end user of the value provided by maintenance can be de? ned either as the entity that requires the equipment to operate, or as the end user of the product being made by the equipment. It doesn’t matter because the required behavior should be the same. The value typically can be defined as work performed in order to attain the required level of reliability of the organization’s equipment. Naturally, not all work performed will provide the same level of value. Consequently, work must be prioritized based on the criticality of the equipment to the operation, as well as its impact on safety, the environment and production throughput.

In maintenance, this value is produced via our throughput (transaction) of applied labor hours. This is our “product.” Questions around this product can include:

  • Of my 40 hours, how many are converted into throughput and how many remain as untapped inventory in our system?
  • What is the market demand for these hours (backlog analysis)?
  • What is the productivity in making my product (average productivity in maintenance is 25%)?
  • What are the things eating up the remaining output?

Principle 2: Identify all steps in the value stream, eliminating those that do not add value…

  1. 0109-survival-guide3Create a current-state Value Stream Map (VSM) considering each maintenance work type. Identify all steps and determine which add value and which do not. Of those that do not add value, some will be easy to eliminate immediately, whereas others might require other changes and resources prior to elimination.
  2. Create a future-state map indicating the non-value-added steps removed. This is one of the major opportunities for
    waste elimination/minimization. The map also provides other benefits:
    • Visualizes waste. Creates a sense of urgency to eliminate non-value-added activities as most waste is considered “part of our jobs” or “just how it is here.”
    • Helps standardize how work is done, yielding consistent results.
    • Helps show others outside of maintenance what goes on in the seemingly “black hole” of maintenance.
    • Shows others where maintenance requires their involvement in the maintenance and reliability process.

As shown in Fig. 1, one of the most effective methods for performing a VSM for maintenance is to participate in standardized “ride-along” exercises. These physically trace a job from start to finish, documenting all steps and times captured for each with the exception of actual work times. Estimates are fine, as the emphasis is on the muda “around” the job, not questioning the craft skills within the job. (IMPORTANT: This is NOT a time study and the exercise must be preceded by educational materials that convey the point that the muda is a reflection of the process, not the worker.)

Principle 3: Make the remaining steps flow smoothly…
Once identified, muda that is preventing optimum flow must be removed—but in an order that maximizes labor without consuming it, as it is easy to become overwhelmed by the opportunities uncovered by the VSM exercise. At this stage, it is important that the productivity of the system be measured to document improvements to the system.

  • Measuring Flow—In production it is easy to measure the equipment generating output. In maintenance, however, this presents a unique challenge. The elusive “wrench time” has been the Holy Grail of maintenance—regularly discussed but never captured since resistance to self-incrimination is a human trait. Whereas OEE (Overall Equipment Effectiveness) measures loss in equipment, OME (Overall Maintenance Effectiveness) measures loss within the maintenance process (not the worker) and can trend the impact of improvements (see Fig. 2). Again, don’t be surprised if the initial OME averages 25% of the overall process. The OME typically reveals two of the three types of backlog loaded with muda (undocumented backlog ie: reactive maintenance cannot be addressed until capacity improves, otherwise these efforts become additive) making the forecasted backlog and ready backlog target-rich areas where muda hides.
  • Forecasted Backlog—This is the part of the backlog that is always known in advance, typically including Preventive (PM) and Predictive (PdM) Maintenance. Because these tasks are recurring, there is a signicant opportunity for waste elimination or minimization using a process of 3-Dimensional PM OptimizationSM. This is a series of 14 techniques that are analogous to the application of 5S to PM & PdM tasks, typically yielding:
    • 40% reduction in PM labor hours
    • 35% reduction in scheduled downtime
    • 50-100% increase in PM coverage

    0109-survival-guide4The 3-Dimensional PMOptimization utilizes lean tools itself by incorporating waste removal in the first dimension: Initial Optimization through an application of four of the 5S’s to the PM data as well as the identification defects in the PM. Dimension 2: Task Pass/ Fail Analysis and Dimension 3: Equipment Reliability Analysis provide the Sustainment aspect of 5S as the PM program is now dynamic.

  • Ready Backlog—This is the part of the backlog that is already documented minus forecasted PM work. It usually includes corrective, projects and carryover jobs. Based on the ride-along studies, muda identified are evidence for Planning Optimization. From various stages of starting planning to dialing in an existing effort, sites can realize:
    • 50-100% reduction in work order cycle time.
    • Spare parts time and costs minimized.
    • Scheduled down time minimized as shorter cycle times are applying quick change over disciplines.

Principle 4: Have the customer pull value from the previous upstream activity…
Having the customer pull value from the process is comparable to not performing work before it is required. It is frightening to see how many organizations think of backlog as a bad thing. They see this work as being overdue. Allowing work to accumulate in the backlog for a reasonable amount of time provides several benefits, including:

  • Providing more time to plan the jobs, assuring all resources are available and ready prior to the work commencing.
  • Enabling more efficient scheduling of work.
  • Allowing work to be completed based on importance to the organization via work priority and equipment criticality.
  • Eliminating backlog that is usually indicative of a highly reactive maintenance organization. In these cases, more work exists than what is known and documented in the backlog. It is just not addressed until it fails.

Principle 5: Pursue perfection though continuous improvement…
As with anything, the goal must be to continuously improve against your key performance indicators (KPIs). However, once a process is documented, particularly one as intangible as maintenance, it becomes easier to make adjustments that can be leveraged across the organization. With a documented plan, and using the exact tools in other areas of the operation, it becomes easier to communicate the maintenance process, ensuring less chance that performance will slide back to what it was prior to the improvements.

Survive to thrive
By removing muda in the maintenance process through proven lean techniques, work order cycle time is forecasted and ready backlog is reduced, driving the need for optimized scheduling to fill smaller windows of availability. This cause and effect scenario demonstrates a dynamic process where true continuous improvement can be pursued.

Although you can find most companies already working on “pockets of excellence” driven by local need, such as Planning & Scheduling, PMs and work order systems, true systemic strength comes not from activity-based improvement but from a holistic solution focused on flow. The identification, measurement improvement and analysis of our true commodity, applied (value-added) labor hours, is the key. That’s because the powerful combination of these tools in the correct order will almost double the flow of your maintenance system without increasing individual performance. This untapped capacity is the key to survival. MT


Ed Stanek, Jr. is the co-owner/president of LAI Reliability Systems, Inc. With a focus on maintenance and reliability systems for the past 24 years, he has worked extensively on all aspects of process optimization. Combining the concepts of constraint management, lean and reliability, Stanek has redefined how maintenance optimization and continuous improvement are implemented.

Tibor Jung, co-owner/CFO of LAI Reliability Systems, Inc., has over 25 years of experience in the field of maintenance and reliability improvement. His expertise in optimizing key production processes, as well as maintenance and reliability processes, allows him to provide more holistic solutions to clients’ needs. Such solutions are geared toward bringing together previously conflicting factions within an organization, with the focus on greater reliability to “get more product out the door” and lower costs.

Telephone Stanek and Jung at (615) 591-8900.

LAI Reliability Systems®, PM Optimization, 3-D PM Optimization, 3-Dimensional PM Optimization, OME, Overall Maintenance Effectiveness and Reliability Fusion are service marks of LAI Reliability Systems, Inc., Antioch, IL (with regional of? ces in Franklin, TN). All rights reserved.

For more info, enter 1 at www.MT-freeinfo.com

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