Plant Services - July 2008 - (Page 58)

energy eXPerT A New Day Dawning The good news in rising energy costs R from local workshops to the great manufacturing centers of ising energy prices are rarely greeted as harbingers Manchester, Essen and Pittsburgh. In effect, this process of good news. In the United States, industry is feelis continuing with the growth of manufacturing in China, ing the crunch from energy budgets being blown India, Mexico and elsewhere. out of the water. Energy managers are being challenged to Two centuries of manufacturing concentration and mifind the “answer” to rising energy costs, a challenge that gration have been built on almost equal parts on labor cost, has neither a quick – nor an easy – solution. This unease technical innovation and very cheap, freely available energy. is exacerbated by concerns about the effects of climate Low-cost energy allowed goods to be moved within and bechange legislation. tween continents to economically serve distant markets. It Maybe this uncomfortable picture has the seeds of good also frequently disguised the inefficiencies news in it. Energy is finally and unquesinherent in many factories, and did little to tionably making it toward the top of the encourage sustained improvement. list of senior management’s concerns. This It’s likely that the Rapidly rising energy costs are suddenly alone should have every energy manager United States and changing 200 years of assumptions. The cheering. For too long at most companies, Western europe are cost benefit of distant manufacturing is beenergy productivity concerns have ranked just above the color of the lines in the parkentering a phase of ing eroded in large part by the increases in ing lot. The energy manager’s role has sudreindustrialization. transport costs. As energy prices rise, the competitive radius of the farm or factory denly become an exciting opportunity for shrinks. For countries and regions that have personal growth and career development. borne the brunt of rapid globalization, this can only been Justifying resources to reduce current energy costs and seen as a good thing. It’s likely that these regions, which mitigate uncertainty has become a lot easier. The arithmetic clearly include large parts of the United States and Western is really simple. The returns on energy productivity projEurope, are entering a phase of reindustrialization. ects increase linearly with increases in market prices, and Now is the time for the strategic marketing teams to be become substantially more attractive as uncertainty grows. analyzing the effects of energy costs on their strategic comThis challenges us to question conventional wisdom and petitors and positioning new, efficient manufacturing to take a look at choices that traditionally would have been compete in a restructured world. In this world, the proximrejected. Now, large-scale heat recovery, cogeneration, reity of manufacturing to markets will again become a factor. newable energy and even fundamental redesign of manufacIronically, it’s also the time to look for opportunities in turing processes are on the table like never before. the same countries that have become manufacturing comWithin companies, groups that had little or no communipetitors. Rising energy prices, and the inevitable removal cation are being challenged to work hand-in-hand to manof energy subsidies, will push these manufacturers to focus age the economic, environmental and reliability effects of on their domestic and regional consumers, redefining their energy today and in the future. As multidisciplinary teams marketing challenges. This trend will produce new opporcome together to manage one challenge, they inevitably find tunities, the true scope of which is yet to be understood. other areas where they can enhance the operation. The party built on centuries of cheap energy is running Traditionally industrialized countries have seen vast arout of steam. The new party built on creativity and energy eas of their manufacturing base move east and south. We efficiency is just beginning. On balance, there is probably should pause and remember that this migration is really a more good news than bad in rising energy prices. continuation of a process that began at the start of the industrial revolution. As the steam-driven loom replaced the local weaver, and trains and canals moved products around Peter Garforth is principal of Garforth International LLC, Toledo, Europe and America, traditional employment migrated Ohio. He can be reached at garforthp@cs.com. www.PLANTSERVICES.com July 2008 58 http://www.PLANTSERVICES.com

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Plant Services - July 2008 Contents From the Editor Letters The PS Files Up and Running Crisis Corner Asset Manager Technology Toolbox Cover Story Compressors Power Transmission Flooring Web Hunter In the Trenches Product Picks Classifieds Energy Expert

Plant Services - July 2008

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