Friday, October 10, 2008

Energy & the Economy: Industrial Crisis or Opportunity?

True story: A regional manufacturers' association posed a question to its members, seeking some idea of what industrial organizations are doing in response to the real and perceived threats imposed by the current financial and economic crisis.

My response: Some manufacturers are looking at the reality of downtime due to a slowdown, but they are seeing this as an opportunity to make plant and equipment changes that will make their processes more efficient and profitable. This includes many energy-related improvements. If work slows down due to a lack of orders, staff can be put to work fixing steam and compressed air leaks, tuning up boiler and furnace combustion, tightening seals on mechanical insulation, replacing loose and frayed belts on motor drives, and many other improvements. All manufacturers should have an energy audit that itemizes these opportunities. Many actually do, but their report is collecting dust on a shelf. It's time to dust off those reports and put staff to work making efficiency improvements that will allow the plant to be more profitable when the orders start coming back in. And they will come back in.

Another way to think about it: We all buy stocks and mutual funds. Those shares are on sale right now. The shares that you buy at today's depressed prices will provide the greatest gains to your portfolio when the stock market recovers. Similarly, the efficiency improvements you make today will improve your production costs per unit, providing more profit per unit today and especially when the plant returns to full capacity. Manufacturers owe it to their owners, staff, and to the economy as a whole to make an opportunity of this current crisis.



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