Challenges Ahead - This year will bring many challenges and opportunities for the chemical industry. There will be opportunities with alternative feedstocks and challenges to reduce costs while sustaining asset performance in order to capitalize on favorable markets as they occur.

John Gilbert, managing director of a $4 billion line of business for a global chemical company, sees bright spots of opportunity for the customer-centered specialty chemical firms, despite the predicted gloom of global growth slowing to 2.2% this year.

"Overall, there is a confidence and a resurgence for the chemical industry to invest," Gilbert said.
However, due to volatile petrochemical prices in recent months, leading groups in this value-driven sector have been approaching innovation and investment cautiously and this has been having a knock-on effect within the financial markets.

Rethinking Feedstock

According to Gilbert, some chemical groups are radically rethinking their business in terms of feedstock. The boom of shale gas and the quest to commercialize bio-based succinic acid have garnered interest as future petroleum alternatives. The potential rewards from these feedstock alternatives lies in the usefulness of both producing the building blocks for a plethora of secondary chemicals cheaply. More importantly, these alternatives offer long-term, low-cost feedstocks, particularly in North America and Europe.

"In my 26 years in this industry, the challenges to changes in feedstock availability and price as well as labor cost, energy cost, differential rates of economic growth and environmental pressures never change," he said. Fundamentally, what has changed in more than a quarter of a century in the chemical industry is the increased focus on the margin. Each year, I've noticed a new level of competitive intensity that is driving not just the commodity field but fine chemicals, too.

"What is critical these days, in view of long-term sustainability, is to increase production and on-stream time in a plant; while, at the same time, looking for cost-cutting potential and pushing for operational efficiency."
Philip Morel from asset management firm T.A. Cook Consultants has seen the difficulties of putting these profitability strategies into action on a plant which was not organized efficiently.

"One of our clients has a global footprint worldwide in specialty chemicals but was receiving inaccurate data from its new South American site," Morel said. "Our analysis uncovered short-comings in both the planning and scheduling of maintenance jobs. As a result the maintenance technicians worked too often on their own initiative without adequate supervision. Due to the lack of management control and a reporting system this situation was not detected and therefore not being dealt with appropriately."

Any profitability strategy relies on asset availability. Gilbert concured: "When it comes to the bottom line, every second your maintenance can't fix a piece of equipment, and there is no production, you're losing enormous potential. Effective asset management brings dollars to the bottom line."

Taking Control

But what are the areas of influences that can help you strategically control and manage the maintenance process within your factory?

"Asset managers and planned maintenance were unheard of concepts 25 years ago," Gilbert said. "As this is an asset-intensive industry, overall equipment effectiveness is essential and maintenance is critical to the operation. Predictive maintenance was not considered a major drive to profitability a quarter of a century ago."
T.A. Cook Consultants work side-by-side with companies to assess business practices and develop solutions which, when implemented, drive the required behaviors to make sustainable improvements.

"An overall picture begins with an analysis of the maintenance data supplied and the maintenance practices we see," Morel said. "This involves scrutinizing the frequency and quality of maintenance, the gate keeping management and the data collected from the practices of regular planning and scheduling.

In our experience, after an analysis we can help design and implement a stronger structure and a sustainable operation tailored to a client's business needs that will enable them to better manage attainment of their business targets. In the case of our South American assignment we created a 25% increase in efficiency during the execution of maintenance jobs, leading to a reduction of maintenance costs."

Success Through Coaching

"The people involved in planning, scheduling and supervising all needed coaching in properly conducting a management review of the existing reporting," Morel said. "It was a new way for them to look at their own production reporting but they soon saw the value. The client greatly benefitted from T.A. Cook's hands-on guidance during the implementation. Our coaching helped ensure there was proactive management and supervision on the shop floor directing people's activities in the proper direction."

Another challenge to effective asset management is the communication gap between production and maintenance.
"From my experience," Morel said, "it is more common than not to find that the working relationship is one of adversity instead of a relationship of cooperation."

The root cause of the problem is often a conflicting set of priorities between operations and maintenance when deciding how to operate the equipment and how to best look after it. T.A. Cook's approach is to implement best practices and management reporting system through a facilitated series of workshops to have operations and maintenance collectively look at ways of improving this relationship and turn it into a working partnership. With roles and responsibilities established and reinforced through on-the-floor coaching.