Managing Shutdowns for Improved Profitablity
September 1, 2007 By Pulp & Paper Canada
Unplanned shutdowns of plant or equipment are notorious productivity killers. But what about planned shutdowns — is there a way to manage those to your advantage, to initiate studies and best practic…
Unplanned shutdowns of plant or equipment are notorious productivity killers. But what about planned shutdowns — is there a way to manage those to your advantage, to initiate studies and best practices in a manner that will preserve capital, lengthen maintenance intervals and reduce emergency outages — without losing productivity?
A growing number of profit-minded companies are beginning to believe there is, particularly those in industries beset by volatile energy costs, resource scarcities, cutthroat competition or other uncontrollable dynamics.
“The consequential damage from process interruptions during an equipment failure or power outage could be widespread,” says Dan Schreiner of the North Central Group. “It’s important to get the damaged equipment back on-line quickly, which can require repair, rebuilding or replacement. However, equally important is preventing the failure in the first place. Combining effect repair processes with long-term preventative maintenance strategies can save companies millions of dollars per year.”
One such believer is Vancouver, BC-based Canfor Corporation; the integrated forest products company. Five years ago, Canfor undertook an initiative to reduce the costs of planned shutdowns at its three Prince George, BC pulp and paper mills, which produce northern softwood kraft pulp and high-performance kraft paper.
To get the best possible handle on the situation, Rod Duncan, Dan Schreiner, Canfor engineers, managers and staff members conducted a review of shutdown practices. To ensure that all relevant resources were included, outside contractors and suppliers involved in shutdown and maintenance activities were also consulted.
During the first two years, the three year average production losses dropped by 9% although the cost remained the same or slightly lower (even though inflation was at 2% per year). The following year, the Canfor operation joined with Shell Global on a complete asset management program.
“We were not sure how efficiently we were handling our shutdowns, but felt confident that there could be a significant cost reduction without losing any of our productivity,” explains Rod Duncan, shutdown manager at the Intercontinental Pulp and Prince George facilities.
“Meaningful cost reduction coincided with our asset management,” Duncan says. “And when I started discussing shutdown cost savings with Dan Schreiner, it only took about two minutes to see that effective cost reductions would require meaningful changes, not just tweaking the system.”
After months of arduous evaluation, procedural analysis and testing at its Prince George facility, Canfor Pulp & Paper had successfully expanded the intervals of planned shutdowns from one year to 18 months. Savings after three years in the asset management program have been approximately 20% of the overall $100 million annual maintenance budget. Shutdown costs were about 40% of the annual maintenance budget and those have been reduced 20 to 25% over a three-year cycle. Canfor operates three pulp and paper mills, so the actual number of shutdowns and savings vary somewhat year to year.
Although the overall program is subject to continuous reevaluation and improvement, Duncan says there were several steps taken that were critical to the success to date:
* Consider the skills and experience of staff members first when it comes to resources. However, it often does not make sense to employ fulltime staff primarily for work that happens periodically, as with Canfor’s 18-month maintenance shutdowns. Therefore, it is wise to know which suppliers can provide the necessary periodic services, including non-traditional or contract labour.
* Consider the scope of services needed by customers during service intervals, in order to accommodate such requirements.
* Consider expanding maintenance intervals. According to Schreiner, 15 years ago most pulp and paper mills had scheduled shutdowns twice a year. A few years ago companies like Canfor went to one primary annual shutdown, and now shutdown every 18 months to achieve their desired cost savings and maximize production capacity.
With the influx of advanced technologies such as microprocessor-controlled equipment, the service intervals related to such equipment may be much longer. In some cases, they may require no shutdown, although periodic testing may be required as with Canfor’s pulp and paper mills.
Validate what makes sense. Duncan adds that you should evaluate whether it is necessary to rebuild or replace equipment at each interval. For example, a piece of equipment might cost $20,000 to change and $100,000 to rebuild. “Every year this piece of equipment is costing you $120,000,” says Duncan. “But if you can delay that repair to another maintenance cycle, you now have a cost of $120,000 spread over two years — three years in our case. But you have to be careful. You have to ask what will be the cost if this equipment fails because you didn’t rebuild it. Occasionally we learn that we can’t do delay maintenance for 18 months.”
Duncan says the Canfor maintenance cost reduction initiative revealed that sometimes the seemingly obvious is taken for granted. He also feels that it is vital to let your contractor know what you want them to do to repair or replace equipment. “We’re writing Best Practices for inspecting and repairing equipment,” he says. “And that is helping us to reduce the amount of maintenance work we do on shutdowns, which has proven to be the key to saving over 20% on maintenance costs per year.”
North Central Group provides fully integrated emergency and scheduled maintenance services to numerous pulp and paper plants throughout British Columbia and Alberta. For more information: (800) 539-3492; firstname.lastname@example.org or visit the web site: www.ncmachineworks.com.
Ed Sullivan is a technology writer based in Hermosa Beach, California
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