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Mechanical Insulation Maintenance = Return on Investment = Job Creation = Energy Efficiency = Economic Recovery
industry has viewed many maintenance activities as a necessary expense or
barrier to obtaining profit objectives. This thought process is especially
prevalent in a tough economic environment, which has certainly been the case in
the United States since the recession began and even during recovery.
Management has developed and applied justification methodologies to delay, or
even abort, maintenance activities on facilities and processes. It appears that
businesses require confidence in a sustained economic recovery before they
commit to investing in endeavors such as maintenance of mechanical insulation.
Maybe businesses, and/or governing bodies, are looking at mechanical insulation
Mechanical insulation maintenance is one of the few maintenance
activities offering a definitive and attractive return on investment (ROI)
that, in terms of short- and long-term energy cost reduction, increases
profitability and creates direct, indirect, and induced jobs-the core component
to sustained economy recovery. This article explores how increased focus on
mechanical insulation maintenance will increase a company's profitability,
create jobs, help our country obtain its energy independence goals, and help
stimulate our nation's economy.
Mechanical insulation is most notably recognized for its inherent energy
efficiency attributes, but energy efficiency measures are not always looked
upon in a favorable light in troubled economic times. In an October 2012 white
paper entitled "Energy Efficiency Job Creation: Real World Experiences,"1
Casey J. Bell, with the American Council for an Energy-Efficient Economy (ACEEE),
observes, "The notion of energy efficiency as a driver for widespread,
sustained employment may not be immediately intuitive. Increasing energy
efficiency means higher levels of productivity and output achieved through
lower levels of energy use. At first glance, it may seem like producing less
energy to accomplish the same amount of work would have a negative impact on
employment. This view, however, falls short of recognizing the complete
economic impact of redistributing saved resources."
Bell notes that many energy
efficiency initiatives take substantial human resources to plan, manage, and
implement. Mechanical insulation maintenance, however, does not—nor does it
take a significant amount of capital. It can be treated as an expense—an
advantage from a tax perspective if potentially a deterrent to short-term
profitability—but it provides ROI in many cases in fewer than 6 months. The
exact ROI will depend on the application, but seldom is the yield lower than a
25-percent internal rate of return; and on many industrial or manufacturing
applications, 200 to 400 percent is not uncommon.
The bottom line is that, as
Bell observes, "a company that spends less money on its energy bills likely has
more cash on hand to expand and hire." In turn, that employment can translate
into additional job growth in the local economy, which then impacts the
regional and national economy.
The United States Bureau of
Labor Statistics includes in its definition
of "green jobs" those "in which workers' duties involve making their
establishment's production processes more environmentally friendly or use fewer
natural resources."2 Insulation workers without a doubt perform
green jobs. Mechanical insulation maintenance is an excellent example of green
job opportunities that can be implemented within weeks or months, versus years.
It can put tens of thousands of people to work immediately and retain existing
jobs while contributing to the competitiveness of U.S. manufacturing, reducing
our country's dependence on foreign energy sources, improving our environment,
and increasing profitability of private and public businesses and facilities.
Equally important, the majority of insulation contractors who install and
maintain mechanical insulation systems represent independent small businesses
in every state. Mechanical insulation is a proven technology. It does not
require research and development, engineering, or design processes. Materials
and skilled craft personnel are available now and ready to be deployed, and 95
percent of the materials are made in the United States.
The total number of jobs
created by implementing a comprehensive mechanical insulation maintenance
program extends well beyond the direct and indirect jobs that are created. The
employed workers spend their earnings on a variety of products and services,
stimulating growth in other sectors, providing those businesses additional
dollars to spend on capital, expansion, or other projects as a result of
reduced energy cost. Thus, the cycle of job creation is ongoing.
Using job multipliers derived
from MIG's IMPLAN model3, in the ACEEE white paper, Bell indicated
that $1 million spent on energy efficiency in the construction sector supports
approximately 20 jobs. That number is potentially low for mechanical insulation
maintenance opportunities because of the magnitude of the ROI. The National
Insulation Association (NIA) estimates that implementing a comprehensive
mechanical insulation maintenance program in the commercial and industrial
market segments and going beyond the minimum standards in new construction,
would lead to the following, on an annual basis:
Energy savings of 1.22 quads of primary energy, or $4.8 billion
ROI ranging from 25 to 100 percent
of 105 million metric tons (MMTCO2)
What do those numbers equate to on a national
Energy savings of 1.22 quads per year equates
115 billion kWh of electricity—enough to power 10.8 million households
(9.4 percent of U.S. households) for a year, equivalent to annual output from
26,300 wind turbines
207 million barrels of oil—enough to fill about 103 supertankers
49 million tons of coal—enough to
fill 490,000 railcars
1,220,000,000,000,000 Btus (1.22 quadrillion Btus) of primary
energy—about 1.2 percent of total U.S. annual consumption, or 4.5 days of
energy consumption for the entire United States
105 MMTCO2 of CO2 reduction per year
Adding 4.6 billion mature trees (10.6 million acres of new forest, an
area the size of Maryland and Massachusetts combined)
Removing 19.2 million cars from the
roads, about 7.6 percent of the cars registered in the United States
Removing the emissions equivalent of 25 coal-fired power plants, or 3.7
percent of U.S. installed, coal-fired capacity
Installing 1.8 billion compact florescent light bulbs, equivalent to 6
light bulbs for every man, woman, and child in the United States
Examining the mechanical
insulation maintenance opportunity, and applying the October 2012 ACEEE energy
efficiency job creation methodology, approximately 153,000 total jobs would be
created—more than double the actual direct and indirect jobs. Achieving these
numbers cannot be accomplished overnight, but even with a relatively slow
implementation rate, imagine what the numbers would be on a compounded basis
over 10 or 20 years.
Some operational and
maintenance managers have said that maintaining mechanical insulation is a
never-ending process. They are probably correct, because people and/or Mother
Nature are the primary causes of damage. Educating personnel as to the real
cost of damaging a mechanical insulation system would yield long-term
dividends. Most people truly do not understand or appreciate the effects of one
small hole in a mechanical insulation system. They walk on the system; lay
equipment and tools on it; run into the system with vehicles; hit it for some
unknown reason; remove it for substrate inspection or maintenance of adjoining
equipment and do not replace it, exposing the remaining insulation, etc. The
list of issues is seemingly endless.
Mother Nature is another story.
She can do extensive damage in a very short period time. Again, educating
personnel as to the value of proper and timely repair of that damage will yield
a substantial return.
To management, we can only encourage recognizing the ROI aspect with
mechanical insulation maintenance—stop only looking at it as an impediment to
the bottom line, and do not accept excuses to delay corrective actions. It is
so easy to take insulation systems for granted and talk yourself into believing
that delaying action for a few weeks is no big deal. Weeks turn into months,
and eventually years, and then you could be facing major problems beyond that
of replacing the insulation system. An insulation system failure is normally
blamed for corrosion, operational cost increases, underperforming equipment,
capital investment required, etc., when in most cases it comes back to taking
the insulation systems for granted and delayed corrective action, not the
insulation system itself.
While this may sound like
common sense, you may or may not be surprised about the lack of respect
mechanical insulation systems are given throughout the design, operational, and
maintenance processes. Designing, installing, and maintaining a successful
mechanical insulation system for below- or above-ambient applications,
regardless of geographical location, requires a conscious and continual effort.
Policies, business decisions,
and regulatory requirements typically revolve around numbers, so look at the
numbers: Increased focus on mechanical insulation maintenance will increase a
company's profitability, create jobs, help our country obtain its energy
independence goals, and help stimulate our nation's economy. Whether you
examine the numbers holistically or on a prescriptive basis, the equation does
not change: Mechanical Insulation Maintenance = ROI = Job Creation = Energy Efficiency
= Economic Recovery.
Want to respond to this article? Interested in authoring an article for a future issue of Insulation Outlook? Contact the Editor
Ronald L. King
Ron King is a NIA Past President and Consultant. He was awarded NIAs Presidents Award in 1986 and again in 2001.
He is a 50-year veteran of the commercial and industrial insulation industry
who has held executive management positions at an accessory manufacturer and
specialty insulation contractor. He retired (2004) as Chairman, Chief Executive
Officer, and President of a large national insulation distributor/fabricator.
Mr. King currently serves as a consultant to NIA on a variety of educational,
outreach, and governmental initiatives, including coordinating allied
association alliance-partnership activities. He has served as Chairman of both
the National Institute of Building Sciences National Mechanical Insulation
Committee and the Consultative Council. He also serves as NIAs liaison to the
Federation of European Insulation Societies, which represents the European
mechanical insulation market. He can be reached at 281-360-3438 or RonKingRLK@aol.com.