Money in the right places

Why do some organizations continue to pinch nickels within capital budgets, while making decisions that burn enormous sums of money over time in other areas? I'd guess that separate budgets, departments, or line items for capital investments, maintenance, or operations have something to do with it. Perhaps people involved haven't done the math or don't think they need to, since such things ofte...

By Mark T. Hoske, Editor-in-Chief July 1, 2005

Why do some organizations continue to pinch nickels within capital budgets, while making decisions that burn enormous sums of money over time in other areas? I’d guess that separate budgets, departments, or line items for capital investments, maintenance, or operations have something to do with it. Perhaps people involved haven’t done the math or don’t think they need to, since such things often are buried, unconnected, and invisible over time. Here’s a timely personal example. There’s a 15-mpg difference between the most-efficient and least-efficient vehicles I’ve ever owned. I drive about 18,000 miles a year. At $2.15 a gallon, that’s $25,800 in gasoline savings over 10 years, or $30,906 savings adding a mere 5% interest (taxed), as the savings grows monthly over that period. That’s huge, even without savings in maintenance and insurance.

Holistic thinking yields benefits. Taking a wider view in automation and controls, motor energy efficiency and services frequently are untapped faucets of potential savings in many organizations, perhaps in part because of a ‘that’s not my budget’ lack of consciousness.

Spending a little more for the highest-efficiency motor at time of purchase can deliver huge savings. For industrial applications, 97-98% of the lifecycle cost of well-used motors is in the electricity they consume. Save electricity, and your organization pockets the dollars. But, because the electric bill is someone else’s problem, those buying and specifying motors and drives might have little incentive to pay 15% more in up-front capital, even though that’s chump change compared to electricity to run the motor during its life.

Similarly organizations can integrate automation, instrumentation, and controls, and then choose not to invest enough in services to keep automation upgraded and optimized. Savings potential, especially over multiple lines and plants, can be huge, through increased efficiencies, lower operating costs, and less downtime. Again, adequate investment requires foresight and cooperation among multiple areas within plants.

The equation’s easy’: Small savings x long time = big money. Please investigate and communicate these areas of potential savings and follow up with other departments as needed. For more on motor efficiency and services, see the cover story and ‘Back to Basics’ in this issue. For access to related reading and some online calculators, read this column online at www.controleng.com/archive , July 2005.

Mark T. Hoske, Editor-in-Chief

MHoske@cfemedia.com

Online Extra
The savings calculation used https://moneycentral.msn.com/investor/calcs/n_savapp/main.asp , an MSN Money site that also has tools for figuring for calculating debt, time, and income.

Related reading in Control Engineering
In July 2005, see the cover story on energy-efficient motors and the “Back to Basics” on services at www.controleng.com/archive.

  • May 2001: “Efficient Motors Can Ease Energy Crunch.”

  • October 2004: “Suppliers’ automation services to approach $15 billion by 2008.”

Looking ahead, the Control Engineering “Buying Smart Guide” in August 2005 will include advice on how to buy smart in a number of key areas, along with major vendors, and how to use the expanded and improved Control Engineering online buyer’s guide, CESupplierSearch at www.cesuppliersearch.com .