Insurance against failure

Published:  07 January, 2008

 By using the latest condition monitoring systems and services, manufacturing companies can reduce the risk and costs associated with unforeseen breakdowns to production plant and machinery, says Kate Hartigan, managing director of Schaeffler (UK) Ltd. PWE reports.


When it comes to owning and managing a high cost item such as a car or home, most of us are comfortable with paying insurance premiums, to help safeguard us against unforeseen accidents or breakdowns. The policy we take out is a type of risk management policy that invariably helps us to sleep better at night.

It therefore makes sense for manufacturing companies to take necessary steps to ensure high value capital goods, such as production machines and other critical plant equipment are adequately insured against the cost of unforeseen breakdowns. After all, depending on the manufacturing sector you're in, 'lost" production time can equate to anything from tens of thousands of pounds to hundreds of thousands of pounds per day - until the problem is rectified.

Although the cost of a machine component such as a bearing or motor is very small compared to the total cost of the machine, the cost of production downtime and any consequential losses as a result of the bearing failure, are often significant.

For example, take a steel or aluminium manufacturing plant. The typical cost of production downtime is 100,000 per day. Similarly, lost production in a paper mill equates to around 15k per hour. Total maintenance costs for a typical food or beverage manufacturer are around 15-20% of total costs. The pharmaceutical sector also spends similar amounts on maintenance.

Of course, every manufacturing company has a maintenance department to deal with problems like these, but often, because of time and resource constraints, the maintenance team becomes reactive, fire fighting problems around the plant as they occur, with no predictive maintenance systems, little preventive maintenance and often with no maintenance strategy at all.

But there should be no excuses for this today. There are numerous technology safeguards out there that when compared to the cost of lost production, are relatively inexpensive. Using the latest condition monitoring and predictive maintenance systems - including bearing vibration monitoring, acoustic emissions monitoring and thermography to protect plant and machines - is what the more enlightened manufacturers are doing. But many more firms need to pay heed.

Kate Hartigan, managing director of bearings and automotive components manufacturer Schaeffler (UK) Ltd. commented: "Manufacturing or maintenance managers need to justify any expenditure on condition monitoring systems and services, to their finance director or MD. She added: "We would suggest using a risk management approach for this. Ask the question of your finance director: 'What will it cost the company in lost production if I lose that critical machine for five hours?' Or 'What would you be prepared to pay as an insurance premium, to secure the running of the plant and to protect it against unforeseen breakdowns?" You may get some very positive responses.

One of the finance director's responsibilities is to ensure the company"s assets are protected. Risk assessments should be carried out regularly to see what effect breakdowns would have on critical, bottleneck machines and equipment. The severity and likelihood of breakdowns on particular machines are assessed and given a corresponding risk value. Those with the highest risk scores are given priority by the maintenance team and should certainly be protected with a condition monitoring device.

Of course, companies can protect their plant without using condition monitoring or predictive maintenance systems, for example, by holding more stock of a particular component such as a gearbox, bearing, coupling or shaft. This means when a breakdown occurs on a machine, the component that caused the breakdown is available to hand, ready for the maintenance team to fix the problem. However, as Hartigan pointed out: "As well as the obvious increase in stock holding costs, the company also runs the risk of the stock deteriorating or becoming obsolete over time. We would recommend that customers reduce the risk of unexpected failures, by implementing suitable condition monitoring systems on rotating plant and machinery. Don't think of this as capital outlay, but as insurance against the risk of possible lost production.


True cost of failure

So what is the true cost of a bearing failure in each of your key production machines?

Hartigan explained: "By installing a predictive maintenance system, the customer picks up a problem early. During the next convenient downtime period, the maintenance team can then remove and replace a bearing with minimum disruption costs and also avoid the risk of breakdown damage to the equipment.

Condition monitoring also prevents maintenance teams replacing components unnecessarily and introducing possible new and unrelated problems. Manufacturing maintenance staff should be using CM systems to predict when failures are likely to occur and plan replacement during production shutdowns.

Hartigan highlighted: "In too many companies, parts are changed on a time basis rather than on a condition basis because the maintenance team considers this to be the safest option. However, this introduces a further risk, because whenever there"s human intervention, problems can occur.

She continued: "Most companies work in a breakdown culture which is reactive rather than proactive.

"Rather than boasting about how rapidly they can repair or replace components and get a machine back into production, maintenance teams need to be asking themselves 'How can we prevent the problems occurring in the first place?' CM is the most effective solution.

If a manufacturer plans to achieve 100% production schedule adherence, predictive maintenance is critical. Unforeseen machine breakdowns simply cannot be tolerated. Similarly, OEE (Overall Equipment Effectiveness), TPM (Total Productive Maintenance) and TOC (Theory of Constraints) performance will suffer if unforeseen breakdowns occur that disrupt production.

For further information please visit:


Sign up for the PWE newsletter

Latest issue

To view a digital copy of the latest issue of Plant & Works Engineering, click here.

View the past issue archive here.

To subscribe to the journal please click here.


"How is your manufacturing business preparing for a net Zero target?"