America's Business to Business Journal for Industry

Manufacturers Slash Utility Costs by Benchmarking and Energy Monitoring

Manufacturers are constantly searching for ways to slash costs. Maybe use less expensive material. Hire another worker to avoid overtime expenses. Repair versus replace existing equipment. But how focused is your company on becoming more efficient with utilities?

On average, the cost of gas, water and electricity can represent 30 percent of a manufacturer’s budget. By benchmarking and monitoring energy consumption, companies can save five, even six figures, on their utility bills.

There are 16 different types of buildings that can be benchmarked against each other, ranging from school buildings and government offices to places of worship. Although the process involves comparing a building’s energy use to another building of the same type and size, this is more difficult to do with manufacturing plants. Two plants may have the same square footage, for example, but produce totally different products that require different machinery, each consuming different amounts of energy. However, manufacturers can still engage in this process by benchmarking against themselves.

Team Effort

Just by alerting employees to energy conservation, manufacturers can save four percent on utilities, according to recent industry reports. Take office employees who make a conscious effort to turn lights off when they leave a conference room or plant workers who immediately shut down equipment when daily tasks are completed.

To maximize the benchmarking and monitoring process, consider applying these inhouse strategies:

  • Drive your energy conservation program from top down. Senior executives set the tone and need to demonstrate their commitment to decreasing energy consumption throughout their plants and especially corporate offices.
  • Solicit employee feedback for energy savings ideas. Reward staff [praise from top management counts] who offer realistic ideas that save money.
  • Identify a champion of the cause, a staff member who really cares about energy conversation. Make benchmarking and monitoring part of his or her daily responsibilities.
  • Educate all employees about ways to conserve energy during staff meetings or seminars.
  • Establish priorities. Identify which processes will offer the quickest return-on-investment, then implement them.
  • Share results, not only with top management, but every employee.  People like to know that their work ideas, struggles or even sacrifices were worth the effort.

The first step for the individual overseeing your benchmarking and energy monitoring program is to gather your company’s utility bills over the past three years.  Compare them. Analyze the differences. After factoring in price hikes by utility companies, why were costs lower last March than this March? Identify when you use the most electricity, gas or water. Is it during the peak period established by your electric utility? If so, are you paying a premium or perhaps penalty?

To monitor utility usage in the future, you will need to hire a mechanical contractor that specializes in energy monitoring to place monitoring systems on your utility meters. Sometimes, electrical contractors can also provide the same service. Many help manufacturers cut utility costs by 20 percent each year when aggressive energy conversation tactics are put into place.

The size of your facility combined with the number of existing meters or points you want to monitor will determine how long the process takes to put monitoring equipment in place.

Cost, too, is impacted by the same variables. If your plant only supports one or two steam presses that you want monitored, the price might be several thousands of  dollars. In a year’s time, that plant could save 20 percent on utility costs and reach a breakeven point within five years. However, a larger facility like an automobile plant can spend hundreds of thousands of dollars but save millions within the same five-year period.

Data-Driven Decisions

These monitoring systems can deliver live data to a computer dashboard on how much energy your company is using at any given point in time. They can also deliver the data as key performance indicators (KPI). For instance, they can tell you specifics, such as how many kilowatts of electricity are used to produce one widget or the total amount of utilities used for each piece or product coming off your assembly line.

This data is an important tool that can help you make better decisions on a wide variety of challenges. When should you start assembly lines after being shut down for the weekend? Will it be cost-effective to reduce the temperature on a production line? How cool should the temperature be in your corporate office? Or maybe the data reveals that your highest energy usage is during peak times. So instead of operating three shifts, you only run two shifts, shutting down production during early evening hours. In some situations, the data persuaded plant executives to change the lighting from metal halides to fluorescent or LED lights.

By monitoring the data, you can also see the results of how your actions have saved energy. Keep in mind that changes usually happen first in office areas where energy usage is easier to control. Turning off office machines or lights in offices that are not being used doesn’t require much forethought. But changes on the plant floor demand careful consideration since they could negatively impact a variety of production components, such as product quality or the amount of time it takes to assemble a product or package it.

Take Control

In today’s manufacturing environment, employers are under pressure to reduce costs and build profits, yet still must focus on production quality. Many are digging deep and exploring alternative cost-saving strategies related to every aspect of the production process.

Energy is one of the largest expenses that can be internally controlled. By benchmarking and energy monitoring, you can positively impact your budget with immediate, bottom-line savings.

Dave Hellman is the director of energy and performance at Alpha Energy Solutions in Louisville, Ky., which supports approximately 250 employees. The company is a division of Alpha Mechanical Service (AMS), and is dedicated to helping AMS’ industrial and commercial customers identify potential savings opportunities and implement energy savings solutions to save money.

Contact Hellman at 502-664-4513 or at

Most Recent

comments powered by Disqus