How Energy Solutions Increase Profits for Manufacturers
Overview Manufactures can experience significant impacts from things such as commodity price changes, tariffs and taxes, labor rates, updated regulations
Overview Manufactures can experience significant impacts from things such as commodity price changes, tariffs and taxes, labor rates, updated regulations
Manufactures can experience significant impacts from things such as commodity price changes, tariffs and taxes, labor rates, updated regulations and keeping up with advancing technology to name a few. From a financial prospective, all these challenges have the potential to cut into profits.
Add to that, management of inventory, capital equipment, and a few other ingredients and you can understand why U.S. manufacturers are required to work intelligently to maximize profits, remain cash flow positive to be financially solvent.
Today, the manufacturing industry can be very competitive. Beating the competition puts pressure on production and product pricing resulting in potentially reduced profit margins. To increase profit margins, it’s crucial that every operational aspect is run as efficient as possible. This can include:
Competitively managing equipment by ensuring you are using the right machines and equipment for the job, keeping equipment utilized 95% of the time and keeping equipment well maintained.
Utilizing subcontracted manufacturers for certain types of work that requires specialized equipment or skills.
Managing and controlling indirect spending is also important. Indirect spending can quickly grow out of control if not regularly monitored; things such as employee payroll, rent, supplies and insurance.
Finding the right employees for the job can sometimes take more time but goes a long way in increasing profitability and efficiency in the long run. Providing good training materials, motivating employees in a positive way and establishing clear cut expectations is also crucial.
Other things such as making sure insurance covers the correct things and regularly working to improve insurance coverage and pricing, rent and building efficiency; not paying rent for unused space and finding the correct sized buildings.
Many things go into optimizing operations to increase profits, allowing you to remain competitive while maintaining quality.
According to a recent study done by the Department of Energy, businesses and commercial energy customers waste about 30% of the energy they use due to inefficiency. And The average U.S. manufacturer uses about 95 KWH and over 500,000 in BTU of natural gas per square foot.
Do the math and it’s clear that manufacturers can see great increases in profitability by better managing energy usage.
Better Rates Saved an Indiana Based Cement Manufacturer $500,000
For manufacturing plants in deregulated states, finding better electricity and natural gas rates is the fastest way to immediately reducing energy costs. Whether you are already mid an energy contract or working with an energy broker, being open to viewing lower rates and better contract terms can open the door to hundreds of thousands of dollars back into your bottom line.
Last year, Energy Professionals helped an Indiana based cement plant find natural gas rates and contract terms that lead to them saving $500,000.
Reaching Your Sustainability Goals Can Be Profitable
U.S. manufacturer combined use about 31% of total U.S. energy consumption. Outside of the day to day challenges, some manufacturers are facing stiff sustainability goals set by management or by local or state regulations as more and more states pledge to go green; sourcing all their energy from renewable energy sources.
To many manufacturers who uses a lot of energy, such goals can seem daunting or can require massive investments. However, with the right solutions in place sustainability can lead to more profits. Such was the case with a solar commercial project that was recently completed. Not only did it realize an immediate reduction in monthly energy spend but the new installation is projected to save a total of $1.9 million dollars in the years to come.
Energy Efficiency Project Saves $2.1 Million
At the end of the day, the more efficient a manufacturer is, the more profit; so, it is with energy. Energy efficiency solution include;
Power factor correction and peak demand management solutions that not only work to reduce energy demand during peak periods but can also earn money back based on the amount of reductions.
Onsite generation can target specific plants or machines that require a lot of energy. Producing onsite energy, reduces the amount of energy required by the grid and can go a long way in reducing energy costs.
Energy intelligence and automated AI systems not only provide important data and analytics about energy usage but can detect and prevent areas of overspend and machines or equipment that requires repairs.
Battery and backup solutions help manage peak demand and prevent interruptions or power outages that will keep plants and facilities operational despite grid reliability problems.
While these are just some examples of solutions, the Energy Professionals’ professionals approach works to reduce costs, find ways to reduce and better manage energy use and then, with that being done, helps reach sustainability goals.
In a recently launched partnership with the American Composites Manufacturers Association, Energy Professionals offers consulting services to manufacturers; providing energy strategies that use innovative solutions to helping increase profitability by reducing costs and energy usage.
“This is one of our most under-utilized member benefits at ACMA and one that has significant potential cost-savings for composites companies,” says Scott Lindley, ACMA’s VP for Membership, Marketing and Sales. “We’ve had several members report 5-figure savings in yearly energy costs by simply having Energy Professionals analyze their energy usage and negotiate for better rates.”
Founded in 1999, Energy Professionals is one of North America’s leading Energy Consultants working with commercial customers to reduce and control their energy budgets, building comprehensive energy strategies that factor in our client’s goals and objectives. Utilizing our extensive network of suppliers and energy solution partners, we provide effective, efficient and innovative technologies that pave the way for energy savings; providing energy independence with more choice and less waste.
Energy Professionals is committed to finding its customers the best possible rates on electricity and natural gas. Tell us your location and service type and our energy manager will connect you to the most competitive offers.
Switching to an alternate supplier is easy. There is no chance of service disruption, and you'll continue with your current utility for energy delivery and emergency service. Take a few minutes to discover your best offers, and enjoy the benefits of retail energy in your home or business.
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