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Author

What is the Cost of Ignorance?

 

The Results of NOT Training

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Let’s start off with making sure no one thinks we are calling anyone STUPID.  Webster defines IGNORANCE as “lacking knowledge, education, training, or being uninformed in a certain area.  The days of being able to fix a machine with a hammer and adjustable wrench are long gone.  Today’s machines are extremely complex pieces of equipment.  And where does one find the cost of ignorance?  Yes – you guessed it,

Your Bottom-line be it Black or RED.

We are also talking about skills, not experience.  Experience is what you’ve done; skills are what you have learned.  Skills help you improve things in your company more than what you have experienced.  Experience may also be thought of more like “monkey see – monkey do”.

When we speak of the cost of ignorance we are talking of the results of untrained or poorly trained maintenance men, machine operators, supervisors, or managers.  I would submit that we really need to look at all these areas to get a complete picture.  

Issues that directly affect your Bottom-line

    1.      Today we find that 70% of all new maintenance improvement programs fail within 2 years.  The vast majorities of New CMMS programs are not used anywhere near their level of capability. 

    2.      [1]It is estimated that 1/3 of $600,000.000.00 spent on maintenance each year is spent on unnecessary efforts, inefficiency, the results of sub standard machinery,  or it is wasted because of poor management and maintenance practices.  

    3.      [2]How can reliability …effect cost?  One of the most significant areas is the amount of preventable or unnecessary work that occurs in every plant. On the average 40%    can be prevented.   Improving on this … also effects employee morale and translates into greater loyalty and productivity.  The impact that reliability has on per-share earnings can be directly calculated through changes in OEE and reduction in the price of maintenance. 

    4.      A Machine breakdown TRUE COST is sometimes hard to determine.  [3]A recent survey showed that the cost for a machine breakdown is far more than the maintenance labor and materials to effect the repair.  One survey showed the actual cost for a breakdown averaged 4 to 15 times these maintenance costs. 

    5.      [4]In mid 1990’s each maintenance person cost $100,000.00 per year.  This is about $50,000.00 per year in wages and benefits and $50,000 per year in parts.6.      The average skilled tradesman changes jobs about every 3 ½ years.  Maybe it is for some of the reasons above or maybe some other reason.  But according to the U.S. Department of Labor, it costs a company one-third of a new hire’s annual salary to replace him or her.  Using the average annual labor cost of $50,000.00 that Preston Ingalls shared years ago, this amounts to about $16,500.00 lost.  Even if your company only has about 15 maintenance people that is almost $250,000.00.  This can equate to $5,000,000.00 in shipped sales, where you did all the work but you won’t see a dime of profit. 

    7.      The following table shows how maintenance savings equate to extra profit without extra needed sales.  Maintenance is really a profit center when one considers equivalent sales.  It is not just a necessary evil.  

[5]Maintenance Savings impact

Maintenance Direct Saving

Equivalent Sales 
not required

$ 1.00 

$ 20.00 

$1,000.00 

$ 20,000.00 

$10,000.00 

$ 200,000.00 

$50,000.00 

$1,000,000.00 

$100,000.00 

$2,000,000.00 

[6]In the mid 90’s the ratio of Maintenance Personnel to Hourly workers in a plant was 17%.  Since then we have experienced the reality that the Big Three (Ford, GM, & Chrysler) lost about ½ of their skilled tradesmen to retirement.  [7]In the late 90’s the average age of all skilled tradesmen was 45-55 years old. 

For the last few years I have taught numerous skilled trades apprentice programs in Southeast Michigan & Northwest Ohio.  Each year I did a little, unscientific survey of my own, comparing the ratio of skilled tradesmen to hourly workers.  I checked to see what the ratio was continuing to be in my backyard.  It used to be in the same number range that Preston Ingalls survey showed in the mid 90’s.  Then it began to fall steeply.  In fact, today if you take the Big 3 out of the picture, it has dropped to a low of 6%.  The big 3 is still at 18%.  Maybe this is why they make up about ½ of the students in my classes. 

What is also extremely surprising this last semester was that 2/3 of the companies no longer even have an Electrician, not a one.  Most of the companies just stumble around trying to fix the new highly electrical machinery.  Some are forced to hire an outside Electrical Contractor costing about $47.00 - $65.00 per hour or even electrical panel builders.  This can add up to some real money fast.  I once incurred a cost of about $250,000.00 for one year before I could train a couple men to just step in to do the electrical work.          [8]… 50%-70% of our Electricians are leaving the trade either to retirement or moving into Supervision. 

I believe we are experiencing the “Law of the Farm”.  The Law says you harvest what you plant and if you don’t plant anything you won’t have anything to harvest.  Some companies try to let the other guy do it, but that is just not working anymore.  We must start growing our own skilled tradesmen.  If we continue to not plant (train our craftsmen) then we will continue to have nothing to harvest

Why are maintenance positions not very attractive today?

Some recommendations of how to improve conditions so new people will begin to start wanting to step into all of the empty slots that we now have to fill.  

    1.      Today – unattractive:  If I transfer from my production job they will cut my wages.  Someday I will probably make a little more but how do I pay my bills in the meantime?

Tomorrow attractive:  We must stop cutting peoples wages.  We must take the lead and invest in their and our future if we are to survive.  You must show that you have faith in this new talent.  You must begin to “put your money where your mouth is”. 

    2.      Today – unattractive:  I get to work the annual summer and Christmas shutdowns while everyone else is off celebrating with their families.

Tomorrow attractive:  Make sure to limit the work that is to be done is absolutely

Necessary.  If maintenance can find another way to do it, some other time, or in a shorter time then let them and then allow them to go home with everyone else.  We must stop being Bosses and start being Leaders. 

    3.      Today – unattractive:  I will sometimes get called in to work Thanksgiving Day, Christmas Day, or away from a New Years party while everyone else is having fun.  I am not sure my children will understand why work is more important than being with them Christmas morning while they open their presents.

Tomorrow – attractive:  These days must be for an absolute – absolute emergency.  The bosses must also work shoulder to shoulder with the men to show good faith that it truly is an emergency. 

    4.      Today – unattractive:  When I work these special days will anyone ever say THANK YOU.  Based on past history, I don’t think so, after all I am just one of those “Grease Monkeys”, a “Necessary Evil”.

Tomorrow attractive:  A leader tries to find his people doing things right and thanks them for it.  We should set up an “Atta-Boy” program. 

    5.      Today – unattractive:  A machine breakdown and I get all sorts of heat from supervision to get it running again.  And I didn’t buy it.  Why don’t they get the person who purchased this machine to fix it?  Does anyone ever think to buy a reliable machine or do they just keep buying one from the lowest bidder.  And when no one ever even cleans the machine it is worn out in about 6 months.

Tomorrow attractive:  Maintenance and production must be involved in the design, production, run off, and then the buy-off and the over all reliability of any new machine purchased.  It has to become their machine instead of something that is just dumped on them.  Strong leadership ability will be required to get this program on track. 

    6.      Today – unattractive:  Production Control won’t release a machine so that I can perform a PM on it.  So why does the Boss keep pushing me to get it done, is it because QS-9000 says we must?

Tomorrow attractive:  Production Control demonstrates an understanding of the necessity of PM’s and providing production time to do them.  P.C. must schedule 9 units of time for production & 1 unit of time to take the machine out of production so that the operators and maintenance working as a team can keep it PM’ed.  Also this time must be during the normal 40-hour week.  

    7.      Today – unattractive:  I get to go unplug the toilet that someone else plugged.  Great if this were to happen in my house I would call a plumber.  And now they want me to go back and work on a $15,000,000.00 blanking press.  Does anyone see a problem with this as I do?

Tomorrow attractive:  Never – never have highly skilled personnel do low skilled tasks like cleaning up messes that someone else made.  Hire janitors and plumbers for these jobs. 

    8.      Today – unattractive:  I probably won’t be given any skills training on even some of the basic crafts.  I will just have to use my best guesses to get the machines back into production.  If I should be lucky enough to be offered some training, do I really feel like going after working 10 – 12 hours a day, 6 to 7 days a week?  I don’t think so.  I think I will just go home and go to sleep.

Tomorrow attractive:  Immediately begin providing all of the needed Multicraft skills training that is needed to do their job effectively and efficiently.  Only schedule the men receiving the training to work 8 hours on training day; or, no work if you schedule their training on a Saturday. 

    9.      Today – unattractive:  Since our company only has a 6% ratio of Maintenance Personnel to Hourly Personnel I will have to work 10-12 hours per day and weekends for who knows how long.  Did someone forget I have a family like everyone else and I would like to see them?

Tomorrow attractive:  Start growing your own Multicraft skilled tradesmen to get the number back up to an acceptable level.  Don’t over work your men because you are not doing the job that must be done.  They will quickly recognize if you are “walking your talk”.  Also start teaching your operators how to take ownership of their machines. 

    10. Today – unattractive:  We never seem to have the right part when a machine breaks down.  Why do we have over a ½ dozen different types of valves or cylinders and never the right one?  We never seem to standardize on any one manufacturer’s product line.  I just have to try to fix things with chewing gum and tape knowing full well that it will break again.

Tomorrow attractive:  We must learn how to fix something right – once.  We must develop and enforce our own Robust Machine Design Standard including a recommended spare parts program. 

Can American Companies solve this ignorance problem?  I’m sad to say I believe only a few of the progressive ones will.  Those are the ones who have Leaders.  But most won’t.  Those are the ones who only have Bosses.  I think it is similar to the past Dr. Deming phenomena.  He tried to tell the American Automobile Industry that Quality is important and they wouldn’t listen to him.  So he then went to Japan and trained the Japanese on how to build cars with quality, and as they say, “the rest is history”. 

In the end I believe that foreign competition which has a history of training its work force well, will force our American Industry to “get with the program”.  It is really a cultural thing, a leadership issue.  But for the most part we seem to only respond well when we are the underdog. 

We also do not have much time to start this training.  In about 10 years the “Baby Boomer Bubble” will move through our demographic system.  On the backside of this bubble there will be even fewer people available to train.  This problem can be turned around.  You can begin putting money on your company’s Bottomline instead of draining it.  It won’t take a large investment to do it.  All that is really needed is someone with leadership ability to step forward and demonstrate the willingness to see it through. 

Only time will tell if my conclusions are true.  Only time will tell if you are

The Hunter or The Hunted.  If we don’t wake up and start training our people then our competition (the rest of the world) will replace us. 

Based on the above facts the question is not, “what if I train them and they leave?”  It is more a question of what do I do if I can’t get enough trained people, or what if the untrained ones stay?  How will this hurt my Bottomline?


[1] Total Productive Maintenance by Terry Wireman

[2] Maintenance Technology “How Reliability affects Earnings per Share” by Keith Burres

[3] Total Productive Maintenance by Terry Wireman

[4] Establishing Meaningful Measures of Maintenance Performance – Preston Ingalls

[5] Achieving Real Maintenance Return on Investment by Thomkins Associates Inc.

[6] Establishing Meaningful Measures of Maintenance Performance – Preston Ingalls

[7] 1998 Maintenance Technology Magazine survey

[8] Electrical Contracting Magazine, May 2000

TPMonLine thanks Bob Schultz his sharing this article with us. It is very enlightening and in agreement with the TPM and Lean Manufacturing philosophies.  Enrique Mora 

 

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This page last updated on

4 February, 2009 5:48

 

 

 

 

 

 

 

 

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