Tuesday, October 28, 2008

Obama's "Spread the Wealth": An Industrial Energy Retort

All of us, by now, have heard the outcry over Barack Obama’s intention to “spread the wealth.” While cable news pundits of all stripes are having a field day with that one, no one has yet to point to a glaringly obvious alternative:

Rather than spreading the wealth, why not ensure

greater access to wealth for a wider population?

Let’s now put this into the context of industrial energy efficiency. U.S. industry—the facilities that manufacture intermediate and final goods for global consumption—spent $94.4 billion dollars for the 16.4 quadrillion Btu of energy it consumed in 2002, the year for which most recent data is available. The same source explains that of all energy delivered “to the fence” of industrial facilities, 32 percent of that volume, on average, is lost to waste. That 32 percent equates to $30.2 billion. Yet again from the same source, there’s strong evidence to suggest that half that waste is economically recoverable—a total value of $15.2 billion.

Perhaps you anticipate this: Why not build wealth through better control of the resources we use? If we agree that energy is a resource, can we not agree that energy deserves to be managed like wealth? As this blog posited earlier, fuels and electricity are synonymous with currency. A successful business process transforms a small volume of wealth into a larger value. Energy, as an ingredient in every product that is manufactured, represents a value that can create wealth if we manage it properly.

Smart energy practices, procedures, and technologies provide greater access to wealth that is currently forfeited to waste. Corporate leaders take note: this dialogue is about rethinking the relationship between industry and the energy it consumes. It's about capturing and re-employing valuable energy resources that allow fixed assets to create a larger volume and variety of products. It's also about using alternative energy sources to offset the risks and liabilities associated with fossil fuels. This is about so much more than $15.2 billion in utility bill savings. It’s about the additional output provided by the margin of energy recaptured through efficiency—output with value that exceeds energy expense by many orders of magnitude.


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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