Ten Tips for Tightening Expenses During Tough Times

TIP 1: Energy Savings Pay Off

One way to save money, often with a minimal investment, is to cut down on energy use. While most companies have already taken a few steps in this area, there are many ways to save on energy costs. Some are as simple as stem packing, but they can make a big difference, says Andrew Norman, president of growth and technology for Dresser Masoneilan and Dresser Consolidated. This is because poorly adjusted or aging packing can mean leaks and loss of plant media, and since there are gaskets and seals throughout a plant that can be sources for leaks, taking care of the potential problem can save considerable money.

"Customers with high-volume steam use should routinely check their steam traps for steam leaks, and repair or replace faulty traps," advises Rick Boylan, sales correspondent, Richards Industries. "A single leaking trap with a 3/16-inch orifice can waste up to 390,000 lbs. of steam per year (assuming a 50 psig differential and a plant operating 300 days per year)."

Boylan also suggests reducing recurrence of trap failure by "replacing cyclic bucket and disc traps (violent cyclic action causes metal wear) with longer-lasting modulating trap technology." Karl Lutkewitte, product manager, Richards Industries, adds that companies with process-critical, large-capacity heat exchangers need to note that "trap failures can directly affect the quality of temperature-sensitive products."

Another way to save steam is to use lift plug valves in certain slurry applications, says Dale Friemoth, vice president of technology & business development, Crane Fluid Handling. Such valves consume purge steam only while stroking the valve open or closed, he says, as opposed to ball valves, which in similar situations would continuously purge steam. "This results in a typical annual savings for one 10-inch valve of 8 million lbs. of steam or nearly $16,000 at $2.00/1,000 lbs.," he says. (See page 18, "Savings Are in the Air.")
 

TIP 2: Be Smart about Maintenance

When times are tough, cutting back on maintenance may seem logical, but not when production or safety might be affected. A valve failure costs much more than the maintenance that would have prevented it, and an accident or spill can be catastrophic. In fact, a slow time can be an opportunity to "send those maintenance people out there to perform the maintenance that we probably should have been performing when times were good," says Rich Oaks, marketing manager, AUMA Actuators.

Jim Knox, president, Allied Valve Inc., agrees and adds that this maintenance would include checking the packing and pressure seals on valves. Forgetting to do this, he continues, leads to leaks, which can mean paying someone to come in and stop those leaks or risking valve damage.
 

TIP 3: Bring in Outside Help

A formal asset program can carry significant upfront cost, and firms strapped for cash may not be in a position to conduct such programs. Fortunately, however, it is fairly inexpensive for consultants to help rationalize many maintenance practices. Even such simple things as reworking trim or changing operating conditions of a valve in the process can provide significant improvements. Consultants have the tools to log and record maintenance records on every valve.

Some manufacturers can supply software that allows both end users and suppliers to access the plant's maintenance database directly to allow for "things like shared inventory programs or automatic restocking once they do use parts," says Dresser's Andrew Norman. As a result, "they're never in a shutdown situation where they don't have the parts," he says.
 

TIP 4: Use Smart Instruments

Another excellent way to rationalize maintenance is to use smart digital valve controllers-their built-in diagnostic capabilities and data logging can help spot a problem before it causes a shutdown. Bruce Grumstrup, director of instrumentation, Fisher Controls, Emerson-Fisher Valve Division, cites this example at a chemical plant: A controller caught a problem that "if the valve had failed they would have lost the catalyst, and it would have been many, many weeks shut down trying to get the catalyst." The same type of digital diagnostics can also keep an operation from pulling out and tearing down a valve that has nothing wrong with it.

And, of course, smart digital valve controllers have the potential to provide better control of the process. These controllers require upfront investment, but as Grumstrup says, "with thinner margins out there, you've got to make sure your process is bullet-proof. And the control valve has always been at the heart of making sure that your process works properly." Start that bullet-proofing where things are most critical, he advises, either with respect to uptime or optimizing the process, "because in general, it's not a place to scrimp. In fact, it's a place to focus your efforts in a time when you're trying to squeeze the last drop of profit out of the pipeline," he says.

TIP 5: 'Exercise' to Keep Fit

Sometimes the smallest action can ?create large savings. For example, Oaks suggests that when part of a plant is shut down, it's a good time to periodically exercise the valves and actuators. "Don't shut down the process and then two years later start it up and expect that automated valve in place for two years will operate flawlessly as if it's been operated regularly," he says. Grumstrup agrees, but points out that it depends on the process. "If you've got a steam line and there's no steam in it, I don't think it's a problem," he says.

Knox adds that it's also a good idea to go out and occasionally hit the zerk fittings with some lubricant. He explains that one of the problems with actuators and gear operators on valves occurs because dirt gets in between the stem and the bushing. "This stuff gets as hard as a rock, and the next thing that happens is they end up damaging the stem," he explains. A little attention before that can occur is certainly less expensive than spending $5,000 on a new stem. But with lubricated plug valves, in particular, some people "don't read the fine print that says every time you use them you need to relubricate them, so they come back a year later and try to operate the valve, and they can't because the lubricant that was in there is all hard," he says.

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TIP 6: Work with Your Suppliers

A good way to save money on parts and materials is to work closely with suppliers, says Norman. A supplier often has knowledge that customers may have lost through downsizing and the resulting loss of experience. That supplier can provide the expertise to allow customers "to not over-maintain but maintain at a reasonable level and focus more on the critical applications than one-size-fits-all throughout the whole plant," he adds.

Ed Holtgraver, CEO, QTRCO, Inc., reports his company has had positive results through minimizing its total number of suppliers. "If we buy investment castings we'll buy them all from the same company-we don't place an order for a specific part," he says. Instead, "We place an order for all the parts that company makes on a monthly basis, and we project out three or four months into the future so our suppliers know they have an assured customer." Also, this creates a situation in which there's no need to expedite, and the supplier can build ahead to even out its work load.

Holtgraver says another way to save money is to buy materials as kits. "If we bought a group of parts for any given product from a supplier, we're now ordering kits," he explains. As a result, time is saved that would have been spent getting parts ready to put together, and the company has been able to increase production volume by a factor of four with no increase in personnel, he says.

David Moser, president of DFT, Inc., says another good idea is to be vigilant and make sure suppliers' prices are in line with raw material costs. For example, though stainless-steel prices have been high, in recent months the prices of steel scrap and nickel have come down, so it's important to make sure that prices quoted by materials' vendors come down as well, he explains.
 

TIP 7: Don't Scrimp on Quality

When times are hard we switch from fine wine to beer and from sirloin to hamburger, but such downgrading isn't always a good idea when it comes to buying valves or other industrial supplies. "What I'd encourage," says Holtgraver, "is that users pay attention to what their total cost is after a product has been installed for a while."

Norman adds this warning: "Be wary of duplicated parts, because the tolerances, the materials, the coating and the finishes are not going to be the same as original manufacturers."
 

TIP 8: Compare Outsourcing, Insourcing and Backshoring

While outsourcing certain functions can save money, be careful because such arrangements often have hidden costs caused by administration headaches, unexpected labor disputes, poor communications and other factors. In fact, some companies are discovering they can save money by moving previously outsourced functions-including manufacturing-back home. For example, the most-cited reason for moving production to China was low labor costs. But Chinese wages are beginning to increase.

On top of that, shipping costs have increased. "We saw the fuel prices skyrocket," says Mark Cordell, president, Distributed Valves Division, Cameron International, and "we saw freight costs just skyrocket at about the same pace."

As far back as August 2008, Supply Chain News quoted Dr. David Simchi-Levi, Professor in the Department of Civil and Environmental Engineering at MIT, as saying increases in fuel prices and transportation costs have led many companies to a tipping point, "where logistics costs have started to negate the unit cost advantages of China and other Asian countries." Some have shifted production to Mexico, and others have brought it all the way back to the U.S., according to the article.

There also can be differences in quality between offshore and American-manufactured goods. "I don't want to be too specific," says Knox, "but I'm well aware of a number of situations where quality coming from China has not been up to expectations." And, says Oaks, there's that nagging worry: "What will happen with my Chinese sources? I wonder if they're stealing my patterns?"

Not all outsourcing is to China, of course; European companies tend to look to Eastern Europe for low-wage labor. But North America can look good even compared to Eastern Europe, according to Oaks. Many global companies have been sourcing low-tech components from that area for several years, he explains, and still are doing so, but "we're sourcing in Canada, where people are paid a good wage, where there are strict environmental regulations, and these guys provide us the material we need in a timely and competitive manner."
 

TIP 9: Sometimes Simpler is Better

While smart valves and digital controllers can offer ways to save, it's also sometimes possible to save by reducing the level of technology. For example, "one great way to save money is to substitute a self-operated temperature control valve for a temperature control loop," says Al Stahler, regional sales manager, Richards Industries. "The valve operates on a simple bulb and capillary sensor that will open and close the valve to maintain the set point temperature."

As a result, "You avoid the cost of a controller and the cost of a thermal ?couple with the associated wiring. But more than that, you avoid the cost of installing electrical and pneumatic lines. If your temperature control need is remotely located this can be a substantial savings," Stahler says.

Lutkewitte has a similar idea: "To reduce capital expense on liquid or gas process projects, use a low-droop pressure regulator instead of a more expensive pressure control loop... for pressure control."

TIP 10: Don't Panic

No matter how bad the economy may seem at the moment, remember that a recovery will come; we just don't know when. But while we wait for that recovery, we can try to avoid either being blindsided or panicked by events.

To keep from being blindsided, Knox says it's wise to "know your customers and stay on top of what's happening in the market, so you're as far ahead of the curve as possible." In addition, watch what's happening with your customers and their competitors, he adds, because the last thing you want to do is to wake up one morning and find out your most important customer just declared bankruptcy.

Also, don't decide that the end of the world is at hand so you must dump all your people, because you will need them again. As Cordell, says, "If you work hard to find people, to train people, and you work hard to retain them in a real up market, then you hold on to those people in a down market." You'll likely find that if you keep faith with employees during the bad times, they'll keep faith with you when the good times come again.

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Peter Cleaveland, a contributing editor to Valve Magazine, has extensive experience writing about the flow control industry. Reach him at pcleaveland@earthlink.net.