Conserving Energy and Cutting Costs

Energy efficiency roundtable discussion draws out how Ontario manufacturers are making conservation pay off.

Energy round table participants: front row (l-r): Tikendu Patel, President, Technocrates Inc.; Senka Donches, Manager of Energy Efficiencies, Magna International; and Dilesh Thurai, Roving Energy Manager, Toronto Hydro. Back row (l-r): Robert Flack, Manager of Manufacturing Operations, Hibar Systems; Sylvia Gaidauskas, Business Manager, Industrial, IESO; Thomas Steckel, Maintenance Manager, Autocom Mfg. div. of Linamar Corp.; Michael Cummings, Service Manager, Mazak Canada; Robert Cattle, Executive Director, Canadian Tooling and Machining Association; Jim Armstrong, EHS Specialist, Crown Metal Packaging Canada; David Aubin, Electrical Co-ordinator, Kuntz Electroplating; David Meredith, Senior Energy Manager, ArcelorMittal Dofasco; Peter Inman, Energy Consultant to ASW Steel Inc.; Ken Hurwitz, Senior Account Manager, Blue Chip Leasing. (photo: Stephen Uhraney)

Energy round table participants: front row (l-r): Tikendu Patel, President, Technocrates Inc.; Senka Donches, Manager of Energy Efficiencies, Magna International; and Dilesh Thurai, Roving Energy Manager, Toronto Hydro. Back row (l-r): Robert Flack, Manager of Manufacturing Operations, Hibar Systems; Sylvia Gaidauskas, Business Manager, Industrial, IESO; Thomas Steckel, Maintenance Manager, Autocom Mfg. div. of Linamar Corp.; Michael Cummings, Service Manager, Mazak Canada; Robert Cattle, Executive Director, Canadian Tooling and Machining Association; Jim Armstrong, EHS Specialist, Crown Metal Packaging Canada; David Aubin, Electrical Co-ordinator, Kuntz Electroplating; David Meredith, Senior Energy Manager, ArcelorMittal Dofasco; Peter Inman, Energy Consultant to ASW Steel Inc.; Ken Hurwitz, Senior Account Manager, Blue Chip Leasing. (photo: Stephen Uhraney)

In the vast spectrum of the metalworking industry in Canada, our resource-rich country occupies an enviable position from

mining the ores and steel making to our large and diverse metal machining, fabricating and manufacturing base. However, the globalization of industrial markets and increasing competition from emerging low-cost economies has placed a strain on every link in the metalworking supply chain, and the challenges have placed a greater emphasis on local producers to enhance their productivity and incorporate world-leading manufacturing practices to maintain market share locally and on the world stage.

With a primary focus on production and bottom-line results, Canadian metalworking companies seek to drive down costs to maintain a profitable and sustainable industry. The primary costs of manufacturing include raw materials, labour and energy, and while businesses zero in on minimizing cycle times to boost production-per-employee, little

strategic focus is directed towards energy conservation—an initiative which delivers the dual benefits of reducing costs and cutting down on the environmental impact of operations.

For manufacturers in the province of Ontario there are multiple incentives offered to promote energy management and incorporate cost-saving technologies. The price of electricity delivered in the province includes the wholesale price from the power generators and the Global Adjustment (GA). For consumers who pay the Hourly Ontario Energy Price or signed a retail contract, they will see a GA line on their electricity bills. This charge accounts for the differences between the market price and the rates paid to regulated and contracted generators and for conservation and demand management programs.

Large industrial manufacturers, like steel mills, are encouraged to avoid ramping up production during peak electricity demand periods in order to reduce their GA charges. In some cases, it’s more economical for the mills to shut down than incur the additional costs. For manufacturers of all sizes in Ontario, the best way to lower energy costs is to embrace the programs offered through the Independent Electricity System Operator (IESO).

To discuss how some Ontario-based companies are capitalizing on their energy management practices, Canadian Metalworking assembled a roundtable discussion in early September 2015 with a broad representation of industry stakeholders including steel makers, global auto parts manufacturers, energy consultants, utility representatives, a machine tool supplier and a financier.

Low Hanging Fruit

To kick off the event, the manufacturing representatives were asked to identify the most common areas in their operations where energy is being wasted and their solutions.

Senka Donches – “Most people who work in the plant think air is free. They don’t realize the cost involved in compressing that air.” (photo: Stephen Uhraney)

Senka Donches – “Most people who work in the plant think air is free. They don’t realize the cost involved in compressing that air.” (photo: Stephen Uhraney)

“The low-hanging fruit I’ve found is around lighting,” says Peter Inman, and energy management consultant working with ASW Steel Inc., a Welland, Ontario-based steel making facility. A common practice among many at the table is switching from metal halide to the more efficient T8 fluorescent bulbs, and more recently moving toward long-lasting LED and induction lighting.

“LED lighting for medium and high bay is just becoming mature,” says Dilesh Thurai, roving energy manager with Toronto Hydro. “People were hesitant before, but I’ve had at least two customers that have implemented LED high bay.”

The addition of motion sensors and automatic shut-offs for lighting in low-traffic areas was another recommendation. “We had sensors set up in areas that had previously been lit all the time, and with that we got about a 50% reduction in demand and about a 95% reduction in energy,” reports Inman.

Around the table, compressed air systems were also identified as major energy hogs. “Most people who work in the plant think air is free. They don’t realize the cost involved in compressing that air,” notes Senka Donches, manager of energy efficiencies with Magna International based in Aurora, Ont. “We’ve begun to implement a compressed air awareness program in some of our plants to get the employees more involved.”

Aside from replacing older compressors with new variable frequency drive (VFD) systems, according to the group, the greatest challenge with compressed air is managing leaks and analyzing systems to ensure air is going where it’s most needed.

“We actually initiated energy audits on the air side twice a year, to try to pinpoint the leaks, and then we outsource the repairs,” says Thomas Steckel, maintenance manager with Autocom Mfg. a division of Linamar Corp. in Guelph, Ont. “We tabulated the potential savings and created a business plan, and as soon as management saw the numbers they went for it. In my facility—it’s only a 120,000 sq. ft. manufacturing facility—we managed to curtail about a $70,000 loss.”

Other solutions mentioned include heat reclamation projects—diverting excess heat from compressors into the plant to lower heating costs—HVAC system retrofits and more expensive co-generation projects that allow shops to switch to gas-fired generators for power during peak electricity demand periods.

Installing newer machinery also leads to energy savings. According to Michael Cummings, service manager with Mazak Canada based in Cambridge, Ont., new generations of machine tools operate more efficiently. “The motors, drives, moving parts, they’re always evolving and becoming more efficient. It’s the competitive nature of the business,” says Cummings. “And it’s not just the efficiency, but the accuracy and the speed that’s improved as well.”

Steckel backs up the claim. “Linamar’s philosophy has always been to repurpose equipment, but because of the energy efficiency improvements, especially yours [pointing to Mazak’s Cummings]—I have to give credit where it’s due—we are actually making business cases now to replace older equipment with new. It just makes business sense.”

Tikendu Patel: “Recently we had a plant change out an old compressor and they are receiving incentives of around $200,000. That’s huge for a company of any size.” (photo: Stephen Uhraney)

Tikendu Patel: “Recently we had a plant change out an old compressor and they are receiving incentives of around $200,000. That’s huge for a company of any size.” (photo: Stephen Uhraney)

Incentives

IESO’s Save on Energy programs provide funding incentives to manufacturers for projects ranging from lighting analysis and replacements to compressed air audits and fixes. The key is to engage your local distribution company (LDC) early in the process and work with them to identify available incentives. “The audit funding is where you have to start before you purchase any equipment,” notes Thurai from Toronto Hydro.

Everyone agreed the programs are not too complex, but companies need to understand where to start, because the rewards can be substantial. “We work with small to big facilities,” notes Tikendu Patel, president of Technocrates Inc. in Mississauga, an energy management consulting firm. “Recently we had a plant change out an old compressor—a 450-horsepower compressor for a 300-horsepower—and they are receiving incentives of around $200,000. That’s huge for a company of any size.”

Like others at the table, Donches recommends getting audits done by an independent third-party company.

For larger projects, Sylvia Gaidauskas, a business manager with IESO on the industrial side, encourages taking advantage of funding available for engineering studies. And when companies are looking for a starting point she also recommends IESO’s Opportunity Accelerator, a free service where technical advisors will visit, identify energy projects and put some early energy savings numbers and project implementation costs

behind the proposals.

Business Case

The upfront cost of implementing energy efficiency programs is the stumbling block for manufacturing facilities. Often incentivized by production numbers and bottom-line results, general management’s focus is on cycle times and not environmental efficiency.

“It’s back to sales 101,” suggests Ken Hurwitz of Bluechip Leasing, who has sold and financed machine tools for decades. “When you can show bottom line energy savings, you’ve got to find the person in the corporation where those savings are meaningful.”

Robert Flack, manager of manufacturing operations with Hibar Systems Ltd. (photo: Stephen Uhraney)

Robert Flack, manager of manufacturing operations with Hibar Systems Ltd. (photo: Stephen Uhraney)

When considering a return on investment for energy projects, most firms are looking for a one-year payback, but it was pointed out that the savings on these initiatives don’t stop once the incentive is received, they keep piling on. “I tell customers not to look just at one year or two year returns, but when you project out for five or 10 years, specifically with the LEDs, you can see a large savings,” says Patel.

And once an energy-saving project is successful it’s critical to keep the momentum within the organization. Gaidauskas indentified how several participants in IESO programs use the incentive money they receive from one year to invest in their next project.

“We’ve made a lot of efforts towards being more energy efficient and we’ve looked at it project-by-project,” says Robert Flack, manager of manufacturing operations with Hibar Systems Ltd. in Richmond Hill, Ont. “The idea of using the savings from one area to fund additional projects, that’s definitely something that I’m going to be pushing at our company from here on.”

Energy Teams

A key development for many manufacturing facilities is the creation of energy teams that serve to engage employees, identify areas for savings and move projects forward. “At Magna, our CEO Don Walker has placed energy savings as one of his top priorities for this year in regard to our sustainability program and our world class manufacturing efforts,” notes Donches. She adds that Magna has energy teams in place in 90% of its plants in the Americas, about half of its European plants, and 10% of its Asian plants. “We’re planning by the end of 2017 to have an energy team in each of our 340-some plants globally,” she says.

The company also has an Intranet site to share best practices and a quarterly newsletter that highlights energy projects from different parts of the world. At year end their energy teams report on projects, incentives received and savings in kilowatts as well as dollars. As a benchmark the corporation also has a high-level plant-specific KPI (key performance indicator)—production sales vs. kWh used. “Upper management wants to be aware that each plant is doing something in the quest to save energy,” says Donches.

A cross-functional make-up on energy teams is highly recommended. Employees from human resources to production managers, plant engineers and faculties managers are necessary, and the general manager and someone from finance are a must.

“I sit on five energy teams at industrial companies in Toronto,” says Thurai. “I’ve noticed the ones that are most effective have an executive or director attend the meetings. Immediately you see a difference in everybody’s level of engagement.”

Dave Meredith, senior energy manager, ArcelorMittal Dofasco. (photo: Stephen Uhraney)

Dave Meredith, senior energy manager, ArcelorMittal Dofasco. (photo: Stephen Uhraney)

A challenge most shops find, large or small, is fighting what some call the “old world tunnel vision”, the idea that “This is how we’ve always done it, why change?” It’s a culture problem.

“Sometimes people get beaten down because they’ve made recommendations and they been shut down, and it kills their enthusiasm, but stay enthusiastic, even when it’s tough sledding. It’s worth it,” says Dave Aubin, electrical co-ordinator with Kuntz Electroplating Inc. in Guelph. Aubin sits on the energy team at Kuntz that was established by the company’s vice president. Kuntz has implemented various initiatives from LED lighting to a co-generation unit to offset electricity use.

Energy Managers

A relatively new program is the support for energy managers in larger organizations, with a dedicated full-time role of identifying energy saving strategies and bringing projects to fruition. Through the Energy Manager initiative from the IESO, the salary of the participants is greatly subsidized. “Energy managers are a great, new, “in” thing in the last five years,” says Dave Meredith, senior energy manager with steel maker ArcelorMittal Dofasco. “Probably 10 years ago the maintenance guy was just taking care of things and hopefully it worked. But because costs have risen, it’s driven companies to really focus on energy management, and corporations now benchmark energy usage with an energy manager. And if it wasn’t providing savings, we probably wouldn’t have energy managers.”

Robert Cattle, former owner of a small precision machine shop and now executive director of the Canadian Tooling and Machining Association, noted how electricity costs have risen significantly over the last 10 years, and he recognizes the need for the industry as a whole to speak with a single voice to combat escalating costs. “If we want to keep competitive in the global marketplace we have to put pressure on reducing the cost of our electricity.” Cattle adds that it’s important for manufacturers to continue seeking conservation efforts and also become informed of the incentives available.

Everyone around the table agreed, regardless of the size of the shop it’s in every manufacturer’s interest to embrace energy conservation. “When I talk to people about conservation, they think about, “What do I have to give up?” says Inman. “My definition of conservation is to eliminate energy use that provides little or no value, and when you do that you’re just eliminating the waste.”

As manufacturer’s across the county seek to enhance their productivity, cutting out waste in the process is a key metric, and looking at the reduction of wasted energy consumption is an area worth exploring.

 

 

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Robert Cattle – “If we want to keep competitive in the global marketplace we have to put pressure on reducing the cost of our electricity.” (photo: Stephen Uhraney)

Robert Cattle – “If we want to keep competitive in the global marketplace we have to put pressure on reducing the cost of our electricity.” (photo: Stephen Uhraney)