For manufacturers, it’s all about improving efficiencies. Efficiencies in procurement, efficiencies in production, efficiencies in distribution — improving processes in these and other areas can save a manufacturer thousands or millions of dollars annually.

That’s money that can be reinvested into the plant in the form of new equipment, used to start an additional shift and increase productivity, or hire additional employees.

Traditionally, manufacturers have grappled with utility costs, and have viewed these costs as uncontrollable to the extent that they could reap any significant financial benefit from improvements. If manufacturers were inefficient in their utility usage, they believed there wasn’t much they can do about it.

However, in virtually every manufacturing plant there are opportunities to substantially reduce utility costs.

Perhaps the best way for manufacturers to begin getting their arms around high utility costs is to have their facilities audited by their utility company.

Many times, manufacturers request an audit because of fluctuations in their monthly utility bills. They want to know why this is happening and what can be done to correct the fluctuations.

A utility specialist conducts a thorough energy analysis of a facility, including existing systems, recommends where energy can be saved, and proposes efficiency upgrades and potential savings.

The depth of the audits depends entirely on the customer. It can be as simple as a walk-through audit— a visual inspection where suggestions on energy savings are given without concrete evidence — or as comprehensive as the utility company becoming its customer’s energy manager. Here, the utility company periodically instructs employees on ways to conserve energy in different parts of the facility.

“We’re trying to help them save money,” said Rick Cheloha, new business supervisor for Loup Power District, which provides energy to four Nebraska counties. “Our goal is to help keep end users’ costs as low as possible.”

For a company that is expanding its own facility, or is in the midst of relocating to a just-acquired facility, a utility audit can help ensure that energy costs are as low as possible from the very beginning.

“It’s a good idea to audit an existing building and see what the previous owner spent on electricity,” said Natalie Barnes, engineer for energy services for Allegheny Power, which serves numerous steel and other manufacturing plants in Western Pennsylvania and parts of Ohio, West Virginia and Maryland. “You can look at the history of the facility and see what parts of the year they spent more money, and see what parts of the building might have been more expensive to power.”

Audits are especially beneficial to expansion projects. Many times, high-tech equipment is being installed in the expanded facilities, meaning power output likely to be different than in the past.

“Many companies are becoming more sophisticated, equipment- and technology-wise,” said Jim Hotovy, industrial and business account consultant for Nebraska Public Power District (NPPD), a wholesale power supplier to Nebraska utilities, including Loup. “They are more susceptible to issues such as power quality and power factor correction. That’s why it’s a good idea to perform an audit before operations begin. We try to be part of the process.”

Audit was Part of Bigger Process

An audit was a priority when Plastic Recycling of Iowa Falls, a manufacturer of several recycled plastic products, opened its facility in Iowa Falls, Iowa, in April 1999. The company had just acquired the plant out of bankruptcy, and the previous owners did little to maintain the equipment or customer base, said Jim Hoffman, CEO of Plastic Recycling.

The 60,000 square foot plant runs four extrusion lines and operates 24 hours a day, five or six days a week.

“We wanted to expand production capacity in the plant and improve productivity,” Hoffman said.

Enlisting its utility company, Alliant Energy, Plastic Recycling had the plant audited as part of an overall endeavor of getting the plant to run on maximum efficiencies.

“We had a good understanding of what the cost of running the plant was, and where the potential savings were,” Hoffman noted. “We had a solid business plan and financial models to project costs.”

Some recommendations from the audit were self-evident, according to Hoffman. This included moving a lot of the company’s loads to off-peak hours, including 400- and 500-horsepower grinders.

More importantly, the audit showed how the company could save money on its cooling system.

“[The cooling system] is one of the biggest energy hogs we have,” Hoffman pointed out.

Plastic Recycling annually grinds and processes 4 million pounds of plastic and normally extrudes the plastic at 400 degrees, then cools the product in water. It takes a great amount of energy to carry out the process.

The company was using mechanical refrigerant chillers for cooling the water, an expensive process that Hoffman said the company wanted to change. The audit suggested building a cooling tower system.

“Once we started crunching the numbers, we knew that was the way to go,” he noted.

Once the recommendations were implemented, Plastic Recycling saw a 20 percent reduction in the cost of electricity per pound of product produced.

“These recommendations, combined with some manufacturing efficiencies in the grinding operations, has helped us save a lot of money,” Hoffman said. “This is money that goes straight to the bottom line.”

Rising Energy Costs Prompts Audit

The opportunity to reduce its energy bill led medical device manufacturer BD Medical Systems to undergo an audit of its 400,000 square foot, multi-level facility in Columbus, Neb.

“Energy costs keep rising nationwide, and we’re concerned about deregulation coming to Nebraska in the future,” said Randall Cook, facility engineering coordinator for the company, a manufacturer of hypodermic needles and syringes for human use. “We had not done a thorough energy analysis for about seven years because of a massive amount of construction going on at the site. We thought the time was right.”

Working with its provider, Loup Power District, and NPPD, BD Medical Systems formed a working group to brainstorm some ideas. Before long, BD Medical Systems was on the path to undertaking numerous audit-related projects.

The company looked at demand factor closer than ever before, a new lighting system for energy conservation and using reduced temperature power water to offset the use of chillers.

A central chiller water plant was added to the facility (replacing about 100 rooftop units) to reduce costs, and a leak analysis was conducted in the company’s compressed air system.

“Compressed air leaks was a big-dollar item for us, but we had not done good analysis at the plant in a long time,” Cook said. “Because of the analysis, we’ve come down in the number of compressors it takes to run our plant daily. That saves energy, which in turn saves money.”

BD Medical Systems recently opened a 200,000 square foot plant in Columbus. Currently, the plant is operating at 60 percent capacity. At some point, after capacity increases, the company plans to have audit conducted there.

Energy savings is a highly effective way to lower a facility's operating costs and ensure the viability of a company, and an audit is the first step in that formula.

“Any plant at any time can use a utility audit,” NPPD’s Hotovy said.

—Ken Krizner is managing editor of Expansion Management magazine. He can be reached at kkrizner@penton.com.

What’s in an Audit

A utility audit includes an in-depth analysis of company’s facilities and equipment, including:

Building Envelope (Insulation, roofing, etc.)

HVAC System

Lighting

Motors

Refrigeration

Water Heating

Industrial Processes

Equipment Operation