You don't see smiles at the gas pump these days. Motorists are not yet accustomed to paying $2.00 or more for a gallon of gas and they may not get used to it for quite some time. Still, the high price of oil is becoming a rather sobering fact of life for drivers.

Oil on sheet steel is already a fact of life for many fabricators.  It is just accepted and no one thinks about the cost because there have been few practical alternatives. Until SCS came along. With the fabricating performance of P&O, but a clean, oil-free surface, SCS has fabricators pondering the true cost of oil on their steel.

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Lots of Anecdotes . . . But Tough to Quantify
Fabricators who have switched to SCS tell us they’re glad to be getting rid of P&O’s oil. They hate how it gums up equipment and makes sheets stick together when destacking, not to mention the extra cleaning and paint prep it requires. But no one we spoke to could put a pricetag on what these many aggravations actually cost their business. Since that is so key to understanding the value of SCS, we committed, in the March SCS UPDATE, to study the cost penalty oil imposes on fabricators and report our findings to you.

To avoid any bias, we commissioned an independent consultant to survey fabricators and quantify the findings. That consultant, Bill Perry of Mercury Business Development Services, has prior experience managing companies with extensive fabrication departments. Perry explained: “I’m quite familiar with the housekeeping problems P&O presents, and have seen firsthand the multi-stage paint prep it entails. But fabrication operations are so varied - buses to junction boxes - that I knew coming up with a satisfactory formula for figuring the cost of dealing with this oil would be a challenge.”

The Interactive Oil Penalty Estimator
Indeed, too many variables were identified to create a workable formula, so Perry built and refined a spreadsheet model capturing the important factors learned in the survey. That model - The Interactive Oil Penalty Estimator - is now available on-line for anyone to use. To try it, simply click here.

The Estimator requires only a few user inputs (the green shaded cells of the Estimator graphic shown at left). They include quantity of P&O consumed, wage rates, number of employees and sales volume - all inputs that characterize the size of your fabrication operation. The other key inputs are what specific fabrication processes you perform and which of those, if any, represent bottlenecks that constrain your output.

The Estimator calculates oil cost penalties in four ares:
      - Material cost when P&O is priced higher than SCS,
      - Labor-based costs if oil creates non-value added work,
      - Supplies/Consumables costs needed for dealing with oil,
      - Capacity cost penalty if oil slows operations throughput.

So what are some Estimator findings? The example above is for a midsize manufacturer of mechanic toolboxes. Using 16,750 tons/year of light gauge P&O with several fabrication processes, Estimator figured an annual oil cost penalty of $418,000 - nearly 2% of company sales.

Using The Estimator Effectively
But more important than the ‘bottom line’ penalty Estimator calculates is the sensitivity to key factors and assumptions. Doing ‘What-If’ analyses by changing inputs or turning certain fabrication selections on/off can provide insight into where the oil penalty may be greatest and why. Bill Perry agrees, adding that while the total calculated cost penalties should be ‘in the ballpark’ for many fabricators using P&O, he wants to see the Estimator improved through user feedback. “Pop-up comments appear when you ‘mouse over’ a cell to show the basis of the penalties and how they’re calculated,” he explained. “But users will know of other factors that work to mitigate or magnify the penalty. We want to hear about those factors and incorporate them into the Estimator.”

Some of the biggest oil-related cost penalties simply cannot be modeled by a tool like Estimator. For example, respiratory health hazards from the higher level fumes when welding P&O can’t be translated into a dollar amount. We could add in a cost to install and maintain improved exhausting for welding P&O, but Estimator currently adds only a minor penalty that is based on equipping welders with respirators.

Do you do extensive fabrication with P&O? Are you paying a high price for rust protection that oil provides? We suggest you try the Interactive Oil Penalty Estimator to get a rough approximation of what that cost may be. We also encourage you to contact us with your ideas on how we might improve this tool, and to learn how switching to SCS can get the oil out of your fabrication processes once and for all.

TMW’s SCS CUSTOMER TEAM                (left to right)    Kevin Voges, President    Bob Hoffman, Sales Engineer    Chris Liefer, Director of Sales    Alan Mueth, VP Engineering    Eric Fritsche, VP Operations    Feel free to contact any    Team Member by clickng on    their name above, or by calling    (618) 282-4200