Is there a silver lining for those tackling the manufacturing downturn?

A recent article in The Telegraph interestingly highlighted many of the issues affecting the manufacturing sector that the RVA Group witnesses on a daily basis through our decommissioning work worldwide.

Whilst confidence does seem to be growing there are still manufacturers facing incredibly tough decisions as to what to do with idling and redundant plant and we urge them to take a very close look at all the options available – innovative end-of-life asset management can bring many positives.

We are all aware that unprecedented pressures have been placed on chemical, petrochemical, pharmaceutical and manufacturing companies across the globe, and that unfortunately very few have proven recession-resistant. Some have consolidated their activities in a bid to work smarter from a smaller number of locations, whilst others have mothballed, rationalised or permanently closed down their sites.

The challenge for plant owners, managers and engineers is how to proceed with the safe and cost-effective management of their redundant assets, whilst minimising any environmental impact.

Operators often assume that there are limited options when closing a facility and many simply ask a local contractor for a ‘demolition’ price, before deciding whether to proceed with the exercise or not. Naturally plant owners wish to avoid abortive or non-essential spend yet delaying projects that are deemed unaffordable is not always the most appropriate solution. They will inevitably have to be tackled at a later date and in most cases at an overall increased cost due to continuing liabilities such as hazardous material containment, security provisions, regulatory compliance feed, care and maintenance costs, plus the burden of unavoidable overheads such as local authority building rates.

Other companies may initially try to sell their plant in-situ in an attempt to pursue a relatively ‘pain free’ site exit and where possible protect employees’ jobs. But in truth this course of action may not result in the highest possible commercial outcome, and if a buyer is not found processing firms may struggle to know what to do next.

Difficulties lie in making well-founded decisions about the future, especially at a time when pressures are mounting or there are knowledge gaps. Specialist tools such as feasibility studies therefore play a crucial role in the development of safe yet commercially sound redundant asset management plans.

The concept of the feasibility study is not new. For decades it has been regarded as a useful investigative exercise that generates reliable site and plant-specific data from which informed decisions can be made. But its widespread application is rapidly increasing, predominantly due to its ability to present previously unexplored solutions for even the most complex of plant closure projects.

By assessing every risk and exploring every opportunity these strategic management tools remove an element of the unknown and provide an insightful starting point from which value-adding business decisions can be made.

Leaders in cast iron technology Saint-Gobain PAM UK for example had initially thought that the cost to deplant and demolish its former Central Melting Plant and adjacent Hallam plant in Ilkeston would be excessive and prohibitive. Yet having ceased production in 2006 the mothballed heavy industrial posed a number of ongoing security and safety issues, therefore a series of feasibility studies was carried out investigate and cost the different solutions available to Saint-Gobain.

A number of opportunities were identified and it became apparent that the safest and most financially gainful solution was complete clearance of the site, which would generate sufficient funds from scrap materials to cover project costs and actually be cash generative.

Of course every project is different, however the goal should always be to maximise the return on assets where possible and safe to do so. It all comes back to the same thing – knowledge is power. Therefore informed and considered project strategies that involve the right people with the right engineering skill-set and experience, will help to ensure a safe, fully-integrated and professional approach, not to mention legislative compliance.