The hidden side of efficiency savings

Reducing energy is far from the only way to improve the bottom line

By Ole Gerlich, Sales Development Director, Grundfos Machining Industry

Times are getting tough for the machining industry. After the golden years of 2010-11, it seems that 2012 is turning into a year of decline.

We are now seeing the German machine tool industry fall about 10-15% according to German VDMA (Figure 3), a big drop that takes it back to its 2008 level. Japan is stagnating, selling well below 2011 and its top year of 2008 (Figure 4).

China’s boom in consumption of machine tool equipment seems to be slowing down. To control inflation, the country has put several measures into place, such as restrictions on loans for new production equipment. USA is seeing a bigger demand, but it is too small to affect the big picture.

The hidden factor
When you are in a “slow-down” market, it is important that you focus on improving wherever you can. Our industry is talking about efficiency. Grundfos and many other companies talk about saving energy as one way to improve efficiency. By saving energy, we save not only some money, but we also save CO2, and that is good for the climate.

That is all extremely important, of course. Grundfos supplies premium equipment that is best in its place in energy savings. Our motors come with higher efficiencies (IE2 and IE3) than laws require – such as Europe’s Energy Using Products (EuP) legislation on high efficiency pumps.

So: energy is important, but it is not the only factor in improving performance and your company’s bottom line in today’s market.

If you look at the total costs of producing, say, a gear wheel, energy accounts for only around 2-3% of the total component cost, according to the German Federal Statistical Office (see chart).

Source: German Federal Statistical Office, 2010

Source: German Federal Statistical Office, 2010

The material itself makes up somewhere between 40-50% of the cost. Imagine what happens to your bottom line if you can save 10% of the material. What if you can save half?

Running low
Resources affect our bottom lines more and more. Oil prices have risen extremely. If you look at the most common metals – copper, aluminium, stainless steel – their prices have all increased heavily over the last ten years (See graph for copper).

Source: Metal Bulletin

Source: Metal Bulletin

Quite simply: we are running out of resources. Can you imagine running out of copper? All electrical equipment needs copper. One study (Roper 2011) shows that we will extract all of the world’s copper resources completely within the next 70-80 years.

Obviously, this gives another good reason for you to find ways to save on materials. You are not only saving your company on the side of rising costs, but you are “saving the planet” in another way.

Smart water use
Water consumption is also challenging the planet, as freshwater sources disappear and the population grows. We know it takes 148,000 litres of water to produce a car. Some industries are being forced to adapt, finding new ways to conserve and reuse water, and these are the pioneers.

One good example includes the Nissan plant near Bangalore, India. They simply cannot get the necessary amount of water from their municipality, and on top of that, the quality is poor. Nissan thus built a reservoir that collects rainwater from its own factory’s huge roof area. They treat the water, use it, then recycle and reuse it in the production.

Look at the whole process
Last but not least, look at your “support resources.” These are things like coolant, which you use to lubricate your machinery. Up to 35% of a machine’s total energy consumption comes from coolant supply, according to research from the Laboratory for Machine tools and Production Technology at RWTH Aachen University.

Why do I mention all of this as a pump supplier? Because if we should add value for our customers, then it is important to focus not only on the pump itself but on the entire manufacturing process.

Last year we introduced our Grundfos Design Tool, the first “do-it-yourself” desktop program that can allow people to design their coolant, nozzles, pipes and pumps for resource-efficient machining operations. Pumps and pump systems in this application are frequently dimensioned poorly. By designing the right system, you will not only improve your machining process but you will be saving materials, water, energy and money.

In the future, we are also planning to expand our Grundfos Pump Audit service to a full Machine Audit, helping customers to analyse the total machining process.

Together, we must find ways of reducing the amount of wasted materials and resources. We are not just looking for a short-term fix during a tough economic time. We are looking for a solution that will carry us long into the future that can both help save the planet – and our bottom lines.

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