If you have read this column for any length of time, I am about to repeat something you have heard before. I am always in favor of removing obsolete and unused equipment quickly with one glaring exception. That exception is this: power plants.
The answer to dirty energy today seems to be electricity. For mobile transportation, cars and trucks, electricity moves the emissions from many points (tail pipes) to either single points (power stations) or theoretically no points (solar, wind and hydroelectric). The first thing we need to understand is that our choice of energy is cost, ease of use, and emotions. Notice that glaringly absent from this list is science. Energy choices have long since left science out of the equation.
Of course, it is. You ask how I can write a column about this. What we don't realize is how rapidly and how important energy has become to modern societies. The following is a column I wrote for my hometown newspaper about six months ago. While not about energy, it describes a real scenario, that while current, could have easily been widespread conditions about 70 years ago in the United States. The boiler, an important object in this piece, was manufactured only about sixty years ago.
On the Nip Impressions calendar, May is energy trends month. There is hardly a timelier topic, except perhaps food trends, but Nip Impressions does not cover food and my doctor wants me to lose ten pounds, so I try not to think about it. I would guess a good half of the headlines in the popular press today are about energy. These then fall into two categories, security of supply and what to do about, what I will call "dirty" energy.
I was doing some consulting in a mill a number of years ago that had a sign by their entrance that stated they had won some "safety award of the year" some years before the time I visited. I chided them and asked what they had been doing since the time of the award? Obviously, they had not won it again. Unfortunately, about five years after my visit, they had a triple fatality at that mill--contractors on an outage. There are a couple of issues I would like to unpack from my opening paragraph.
Many of us take OTC (Over The Counter) drugs. These can be abused, too. Especially on outages. I'll tell a story on myself...
There was a fatal automobile accident in our neighborhood lately that can serve as an excellent study on how we think when there is little time to sort out the situation. There are lessons here for all of us.
I like to remind people of the following resource any time I get a chance. It is a good way to start off safety month here at Paperitalo Publications. It is simply this. On our website, PaperMoney (www.globalpapermoney.com), we have been keeping track of the industry's safety performance. In its sixth year now, the department, "Reported Risks" is a current chronicle of "Risks: Fires, Fatalities and Catastrophes." It is a good learning resource and a source of endless safety meeting subjects.
It has been over a decade ago that I started talking about manufacturing your own spare parts with additive manufacturing. It is now moving from an interesting idea to a vital necessity. Between logistics problems and world turmoil, the spare parts needed for your machine may not be available. Most, except those of the most critical metallurgy, you can make in your own shop with less skills than a first-class welder or machinist.
Over the years, I have talked about this miserable old mill that I worked at long ago. When I was young, when I had a choice, I always ran towards opportunities that had lots of problems. My philosophy was that situations in trouble were the best way to advance your career. I have never been interested in career safety, it is boring and leads to complacency. So, I end up at this mill, in the prime of my career. It is large, ancient and a mess...
We have more aids for maintenance today than ever before. Detection instruments, storeroom software, built in monitors, training, you name it. Maintenance has never had more help than is available today. So, why do we still have maintenance failures?
Probably after August (Pulp Rats Month), Maintenance Month is my favorite month of the year on the Paperitalo editorial calendar. My dad was notorious for avoiding maintenance. It was an expense he loathed in the same manner as many mill managers and operations executives do. I followed his example for a while, saw the fruits of such policies and became a maintenance fanatic. A couple of old family incidents are in order.
I don't think most mills realize how close we are to interacting with robots every day. The box plants are ahead of us on this. The new Super Plants require about two thirds the employment for the same level of productivity. They are all 110" corrugators and they have a heavy component of robotics. I am expecting to see a flurry of box plant upgrades between now and 2030. Super plants won't be super then--they will be the norm. Back in the papermill, a couple of ready for here and now human aids are available.
In today's world, you may want to think long and hard about how the new or replacement piece of equipment (or other vital supplies) reach your mill. If you can afford to wait 12 - 18 weeks for those special refiner plates to arrive, put them on a ship. If you are losing production or quality every day because you do not have them, fly 'em, the most economical overall cost.
Back in the old days, we used the term "FOB." This meant "Freight on Board." There are other terms these days, but they mean nearly the same thing. One could purchase items "FOB seller's dock" or "FOB purchaser's dock." Internal logistics personnel have, for the last couple of decades, thought it smart to handle the logistics and freight themselves and purchase nearly everything "FOB seller's dock." They think they are saving money and justifying their existence. No more. In today's world, I would recommend that you purchase nearly everything, especially capital goods, "FOB purchaser's dock."
If you are like most facilities these days, your transportation system, outside the fence, if not in shambles, is at least limping along. What to do?
Give your operations and maintenance folks the help they need to make the project truly successful.
I've often been asked, "how often should our project team meet once our project is under way?" My answer is based on your average spend over the life of the project and at peak times (especially in rebuilds).
I have written assessments on lots of projects. Every one of them follows the same pattern in the same order. Three questions: 1. What are the markets? 2. What are the raw materials? 3. What are the assets (including tangible assets and human assets) that you place between (1) and (2) to have a successful project? If you don't start here, your chances of success are very low.
Have you ever had a conversation like this? "I was going to by a car from Brand X because it is cheaper and has more features than Brand Y." "Well, you obviously bought Brand Y. Why?" "Brand X didn't have any in stock and didn't know when they would get any." So, really, in the end, Brand X didn't mean anything because you could not get Brand X. Their price could have been twice the price or half the price of Brand Y, it just didn't make any difference. You may find yourself in this place with certain pieces of capital equipment now. You may have to become a "satisfier" instead of an "optimizer."
Most of the people I talk to today have not prepared or managed capital budgets under the conditions we find ourselves in now. Well, I saw my first capital budget in an industrial setting in March of 1970. Perhaps I can help you a bit--we had similar issues back then as those we are facing today--the administration in the White House in those days thought they could control inflation with price controls which caused me to miss two planned 25 cent raises as a co-op student, from $2.75 per hour, to $3.00 per hour to $3.25/hour, over a period of 18 months. Glad I could do my part to help tame inflation; as a student operating on the pay as you go plan (no loans), one makes too much money anyway.
I don't think this is a one size fits all question as you look at your marketing going forward. Some customers will be interested in your energy usage, others will be interested in what your products can do to save them costs in their manufacturing and logistics schemes. Please note that in all scenarios in this column, I will be talking primarily about business-to-business sales, not business to consumers.
I recently read an article in the Wall Street Journal which was discussing the write down coming in some energy assets, such as coal reserves, as the economy switches to "greener" energy sources. Like it or not, agree with it or not, there seems to be a move afoot to completely change our acceptable energy sources. You can interpret this as follows: energy is going to get more expensive, a lot more expensive, in this new world.
What concerns me today is that we seem to be more interested in the form of energy rather than its efficiency or cost. Energy has taken on somewhat of an "identity politics" persona. In earlier days, it was security of supply and efficiency. Today it is products of combustion that seems to garner the attention.
If you have read this column for any length of time, you know that old Jim has told you countless times to carefully mothball energy assets that are out of favor, for sooner or later, they will come back into fashion again. This statement is a corollary to my principle, all energy decisions are political. This calendar year has seen a sudden swing to an overwhelming global opinion that climate change is "settled science" and we can't decarbonize fast enough. Couple this with ESG (Environmental, Social and Corporate Governance) principles and boards of directors worldwide are moving at warp speed towards these extremely popular ideas.