WHEN ARE REPAIRS TOO COSTLY?

     When difficult economic times arise, it can be tricky to convince management to replace equipment.  The temptation to continue repairing faulty equipment can sometimes be a costly error.  A very simple analysis can tell you when it's time to replace the equipment.  It is a matter of comparing monthly or annual losses due to the equipment with the total installed cost of a new piece of equipment.  We will assume that the new equipment functions properly once installed.

EXAMPLE ONE:  "Motor Failure"

     A reactor agitator motor fails about once every two months.  The repair is relatively simple, but the problem is recurring.  Each time the motor fails, the result is one hour of lost production and one hour of B-grade material before A-grade production resumes.

 Reactor throughput = 5000 lb/h

Product price = $0.80/lb

Price difference between A and B grade product = $0.20/lb

Percentage of normal production that is A-grade (rest is B-grade) = 95%

During the 2 hours of abnormal production:

Normal production would have yielded = (2 hours)(5000 lb/h)(0.95)($0.80)                                                                                                                  + (2 hours)(5000 lb/h)(0.05)($0.60)

                                                           = $7600 + $300 = $7900

During abnormal production due to motor = (1 hour)(5000 lb/h)($0.60) = $3000

NET LOSS DUE TO REPAIRS = $7900 - $3000 = $4900

     In a year, the total losses due to this agitator motor could be as high as $29,400 if it fails every 2 months.

     Although this is a drastic example, sometimes repairs such as this "slip through the cracks" in a chemical company due to poor documentation or other communication problems.  It is important to keep track of how much money equipment repairs are costing and to have a well formed record of equipment history.

EXAMPLE 2:  "Maybe it's that heat exchanger"

     A conventional plate heat exchanger is used to transfer heat from an 80% benzene stream to cooling water.  Conventional plate heat exchangers have gaskets to seal the plates and keep the fluids from mixing.  Gasket failure can sometimes be fairly commonplace.  The result can be two fold:  additional strain is placed on separation equipment downstream, and, in extreme cases, significant amounts of cooling water can be sent to wastewater treatment.  When gaskets do fail, they are very inexpensive to replace in comparison with the additional energy costs that they can cause.  A quick investigation into possibly replacing the conventional gasket plate heat exchanger with a wield-sealed plate heat exchanger may save more than you think in energy costs and headaches.  Your analysis will be largely dependent on the amount of cooling water that enters the process stream during a leak and the energy needed to complete the separation with the additional water in the process stream.

EXAMPLE THREE:  "How old is that tank?"

     A 50,000 gallon storage tank is used to store methanol before shipping to customers.  The tank was installed 10 years prior and was constructed of steel.  Recently, several customers have complained of minor metallic contamination in the shipments.  Management is considering installing a more thorough filtering system for the line exiting the tank.  Some quick anticipation reveals that as the filter is operated, it will require frequent cleaning and monitoring.  Also, the tank will have to be replaced eventually.  So how do you convince management that the tank should be changed now?  Provide customer feedback about how they would feel about receiving contaminated methanol.  Then show them the cost involved in paying for a returned shipment of methanol.  Then add in the fact that the customers may go elsewhere to get their methanol and that updating the filtering system is just a temporary solution to a problem that may hold millions of dollars in lost revenue in the balance.  Customers demand a high quality product in today's market and those who don't deliver, don't last!