For The Executive With Plant Productivity Problems Final

For the executive with plant productivity problemsWhy outsourcing maintenance changes the game

Magnus Pousette, Oct 21, 2011

Wouldn’t it be nice …

To make one single decision, which would cause massive change and put your safety, productivity and costs on top levels for years to come?

Have maintenance costs go from highly fluctuating to a fixed declining cost for years to come.

To improve your entire plants' culture

To have peace of mind, knowing that that the maintenance and reliability is provided by motivated first-class expertise having practices developed and optimized by relying on latest international knowledge.

To be able to focus on the most important aspects of your business: product development, production and marketing.

The reality is …

Maintenance is an unavoidable expense, but the amount spent varies depending on the environment and operating strategy

Maintenance costs are one of those rare production expenses a business can decisively influence

The return on maintenance investments are often uncertain and often not used effectively to improve productivity in the business

Most businesses don't even know where their biggest losses are in productivity and are loosing millions due to it

Most companies are wasting millions of dollars in energy costs

Many maintenance organizations have a poor track record in safety as firefighting and safety mindset is not very compatible

Most businesses don't even know their current situation in maintenance management and how they perform compared to leading businesses in their field

Big decisions and changes scare people. However in every aspect of your business, speed of implementation will determine how successful you are. If you lack a blueprint to success, don't expect much to happen! ?

Quiz Question

Do you have objective data showing how your maintenance department is performing compared to others in your industry?

a) Absolutely!

b) Some, but not adequate

c) No

d) Don’t know

?

The media says …

The U.S. has permanently lost its manufacturing competitiveness in many sectors to China and other countries. Manufacturing may never return to its linchpin of the U.S. economy and manufacturing capabilities could erode past the point of no return.

In March 2010 it was reported that nearly 70 percent of Chinese manufacturers had begun to upgrade purchasing and purchasing quality (up from 56% in 2008), 69 percent have taken steps to modernize manufacturing process technology (up from 64 %) and 62 percent (up from 47 %) were realigning their manufacturing footprint.

Top executives report that there are next to no problems recruiting manufacturing talent in China, one of six however report that they have problems doing so in North America.

U.S. manufacturing is still declining after years of offshoring and neglect and they are saying the output may fall by half, meeting less than 40 percent of the nation's demand. 5 out of 12 million jobs are at risk ?

Quiz Question

Are all your plants rapidly implementing plans that will increase your competitiveness to top levels in all critical areas?

a) Absolutely!


c) No

d) Don’t know

?

Your pain is ours …

The foundation of ABB is power and automation. Without a strong North American manufacturing base, investments in power and automation will be limited.

This is what ABB can do for you …

ABB can help you understand how you are performing compared to the leading businesses in your field

ABB Full Service ® means a fixed price on your maintenance budget and we will even sign up for a year by year price reduction!

What about plant reliability? ABB Full Service ® is a true partnership where ABB’s profit is dependent on improving your plant’s productivity!

ABB also help you reduce your energy costs!

Together we will change the culture

Your control of the situation will increase. ABB ensures that information and the right data is available so you can see into the future and make better decisions

ABB Full Service ® proactively manage the risks involved from the very first day through a process tested at 100's of plants

We have helped many organization secure the long-term viability of their plants, by cutting costs and increasing reliability. Now we want to help you.

© ABB Group April 8, 2023 | Ver. 1.1 Slide 9

ABB Full Service®

What does this mean?

Maintenance Manager

© ABBMarch 11, | Slide 10

ABB takes full responsibility for your maintenance cost and plant performance

ABB Full Service® Typical Outsourcing Contract

ABB profits improve only as benefits are delivered

Sub-Contractor profits increase with customer cost increase

Long Term commitment and sharing of risks

Transactional with limitedsharing of risks

ABB commits to total maintenance costs and Plant Performance Improvement

Sub-Contractor commits to rates and resources only

Our business case is based on maintenance best practice

Not primarily concerned with driving good maintenance practices

People are valued individuals People are a commodity

Pay-for-performance attracts skilled, engaged trades people

Flat pay rate attracts low-skilled, unengaged trades people

Dedicated and motivated service team executing maintenance strategy

Service persons executing tasks as directed

Comprehensive life cycle focus from the installation and commissioning

Maintenance focus is action based and reactive

Maintenance value increases Maintenance value decreases

Lab

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aterials C

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G&A

Scope of Maintenance Services under the typical ABB Full Service® Agreement


Aren’t there a lot of risks?ABB’s implementation process has been proven 100’s of times

• Understand the Customer

• Present business concept

• Buy in from the organizations

• Complete Confidentiality Agreement

• Decide upon Feasibility Study

• Prepare the Feasibility Study

• Perform on-site assessment

• Analyze improvement potential

• Present Feasibility Study results and ABB Proposal (Improvement potentials ($))

• Establish Partnership Development team

• Build the solid foundation

• Finalize the Business case

• Develop Maintenance Management Master Plan (MMMP)

• Develop mobilization and communication plan

• Resolve legal issues

• Develop leadership for the launch.

• Build the unit organization, plan the functions and facilities.

• Develop and execute communication and support processes.

• Engage subcontractors and material suppliers.

• Prepare MMMP implementation

• Partnership Fulfillment

• Reliability Maintenance

• Maintenance Operations

• Plant Performance Improvement

• Leadership & Strategy

• HSE & Quality

• People Management

• Finance & Cost

• Materials & Contractors

• Information

ABB Full Service -ProcessPartnership

developmentFeasibilityScreening Mobilization Execution

Regional sales Project mgr Project mgr Start-up mgr Site mgr

Agree onFeasibility Study

Sign Letter of Intent (LOI)

Sign Maintenance Alliance Agreement

Take over responsibility

Renew the agreement


Reference SitesPulp & Paper

Amcor Packaging – Botany, Australia

Aracruz, Brazil

Carter Holt Harvey (CHH) – Kinleith, New Zealand

Carter Holt Harvey (CHH) – Tasman, New Zealand

Corenso United LTD Oy, Finland

Georgia Pacific, Finland

Huhtamäki, Finland

Myllykoski Paper Oy, Finland

Puhos Board, Finland

SAPPI Fine Papers North America, USA

Stora Enso (Efora), Finland 6 mills

Heinola, Imatra, Oulu, Uimaharju, Varkaus and Kemi Mills

Stora Enso Packaging (2), Finland

Stora Enso Packaging, Latvia

Stora Enso – Skutskär, Sweden

Uniboard – Moncure, USA


Reference SitesMetals

Boliden Harjavalta Oy, Finland

DMS Powders, South Africa

Norilsk Nickel Oy, Finland

Outokumpu – Degerfors, Sweden

Outokumpu Stainless TubularProducts – Jakobstad, Finland

Outokumpu Stainless Tubular Products AB – Torshälla, Sweden

Ovako Wire – Koverhar, Finland

Severstallat, Latvia

Wise Alloys, USA


Reference SitesMinerals & Mining

Anglo American / Xtrata, Chile

Codelco Chile División Andina, Chile

Codelco Chile División Codelco Norte – Calama, Chile (2)

Codelco Chile División El Teniente – Rancagua, Chile (2)

CSR Viridian – Alexandria, Australia

CSR Viridian – Dandenong, Australia

CSR Viridian – Ingleburn, Australia

Kunda Nordic Cement, Estonia

LODE, Latvia

maxit Estonia AS, Estonia

NordKalk Oyj – Tytyri, Finland

Voisey Bay Nickel Company, Canada


Reference SitesOil, Gas & Petrochemicals

Compania MEGA – Loma La Lata, Argentina

DOW EDN, Brazil

Exxon Mobil, Pan-European

SARPI SPA, Algeria

Shell Icolub, Brazil

Snam Rete Gas, Italy


Reference SitesDiscrete Manufacturing

ABB Electrical Machines, Italy

ABB Electrical Machines Factory, Estonia

ABB Electrical Machines Ltd, China

ABB Machines & ABB Control, Sweden

ABB Motor Factory, Poland

ABB MV Power Products, Italy

ABB Oy Bu Drives, Finland

ABB Oy Machines, Finland

ABB Power Products, Sweden

ABB Power Products (Plast), Sweden

Incap, Finland

Lindström, Estonia

Nokia, Hungary

Nokia, Finland

Philips Lighting, Brazil

Ruukki, Sweden

Sogefi Filtration S.p.A, Italy

Spiro Development AB, Sweden

Suominen Yhtymä, Sweden

Waco, Sweden

ABB Power Systems, Sweden

ABB Power Technologies, Sweden

ABB PP Division Transformers, Spain

ABB Turbo Systems AG, Switzerland

Alstom (Schweiz) AG, Switzerland

Biohit, Finland

Cooper Tire, USA

Draka Keila Cables, Estonia

Ford, Brazil

Hägglunds Drives, Sweden


Reference SitesChemicals

Ab Rani Plast Oy, Finland

Canexus – Nova Lima, Brazil

Golden Jomalina Food Industries Sdn Bhd, Malaysia

Hoechst Trevira GmbH - Bobingen, Germany

PolymerLatex, UK

Solvay – Bahia Blanca, Argentina

Solvay – Santo Andre, Brazil

Sun Chemical, Denmark

Tequimar, Brazil


Reference SitesFood & Beverage, Utilities, Crane & Harbor

Cadbury Schweppes, Australia

Chilectra, Chile

Cloetta AB, Sweden

Fazer Suklaa, Finland

Galbani SpA (3 sites) Italy

Käppalaförbundet, Sweden

LU Suomi, Finland

Northport, Malaysia

Premier Foods, UK

Raisio Skandinavia Oy, Finland

Ravintoraisio Oy, Finland

Valio Oy (2 sites), Finland

Viking Malt, Sweden

Vamy Oy, Finland

Pori Energia Oy, Finland


How does ABB implement? The Site Execution Model


Partnership Fulfillment

Maintenance Operations

Reliability Maintenance

Plant Performance Improvement

Leadership Policy & Strategy

HSE Quality

Finance and Cost

Supply Chain InformationPeopleManagement

Results

ClientValue

ABBValue

People Value

Energy Efficiency Improvement

How does ABB change the culture?Driving Overall Equipment Effectiveness

Common OEE target!

A

P

Q

x

x

= OEE

Maintenance Operations

?

Quiz Question

Does your company measure the plants’ culture?

a) Yes

b) No

c) Don’t know?

© ABB Group April 8, 2023 | Slide 22

Global Engineering CentersReliability Basics, Mexico


Support start-ups of new sites and boost existing sites in Reliability Basics implementation

Deliverables

Compile equipment information from the field, construction of hierarchies, BOM, Criticality Analysis, Develop PM’s, Scheduling together with plant staff, Plant personnel training

Support Feasibility studies in Reliability area

Management of Benchmarking Database and support

Reliability Line (phone and e-mail) for any reliability questions

Other Services

Hosted preventive maintenance plans management

Hosting solution for ABB CMMS (PM30) and Maximo

General management/admin of any CMMS

Started Reliability Faculty at Monterrey Technical University in San Luis Potosi

Fully operational since 2009


Global Engineering CentersPerformance Measurement, India

Implement Equipment Performance Measurement System (cpmPlus) at Full Service sites

Deliverables

Implementation of Overall Equipment Effectiveness (OEE) and Energy Efficiency measurement systems (ABB CPM+ software and hardware)

Start up of Plant Performance Improvement process basics

Transitioning in 2011, fully operational Q1-2012



Global Engineering CentersEnergy Efficiency, China


Support Full Service sites delivering the Energy Efficiency part of the value proposal

Deliverables Support Business Development with Energy Efficiency studies &

Improvement potential calculations Support existing sites with energy efficiency projects implementation

(management of the projects)

Fully operational in 2011


ABB High Level Action PlanStrategic Goal: Improve Plant Production Output

Start-up:

Q1 2011

OEE (%): baseTMC Savings: baseTMC Run Rate:

Achievement:

H1 2011

OEE (%): base +Savings: base +TMC Budget:

• Top 10 bad actor reporting in place

• Audit PM Execution & integrate train of technicians

• RCA training, Natural Team• Optimize CMMS with work

flows & ops training• Data clean/BOM started • Centralize storerooms• Start parts delivery program• 5S Kick Off • KPI’s well understood and

OEE measurement in place• Satisfaction surveys done• Individual Training plans in

place

Achievement:

H2 2011


• RCA with Natural Team intensified

• SMED Implementation• P&S Certification Complete • Comprehensive Inventory

Analysis completed• Start Vendor Stocking and

Vendor Managed Inventory.• Outside Contractor reviews• Establish preferred partner

program (consolidation of vendors)

• Pchsg. Classification project

• Optimize Shift Structure• Performance Management

Plan completed for everyone w/evaluation

Goal:

2012


• Predictive Maintenance Optimization

• Start FMEA Dvlpmt.• Criticality updated • Cont’d CMMS development• Black Belt Projects-

Continuous Improvement• Parts ”kitting” and delivery

stabilized• Career Development and

cross training process in place (longer term)

• Supervisor Certification program

• Review ”insurance” spares and inactive inventory

• Annual and 5yr PM program in place

• Satisfaction surveys done

• KISS Safety Program• Leadership Team/Structure

in place • Key employees

identified/retained• Workforce hired• Add Planners• Add Reliability Engineers• Labor position known• MMMP/MMOP jointly

developed• P&S Certification with

Natural Team Started• PM Optimization• Supply Management

Excellence Program started• Integrate CMMS/ERP


Mai

nte

nan

ce H

ou

rs

Preventive Maintenance

Condition-Based Maintenance

Reactive Maintenance

… with the right set up, plants do not have to “reinvent the wheel” and learn things the hard and expensive way …

Fixed Term Replacement

What will be different?Delivering reliability

Overall result is reduced maintenance volume

A professional combination of People, Processes, and Technology can reduce maintenance volume and costs dramatically …

Typical Objective

What kind of results can be achieved?Boliden (copper smelter & refinery)Harjavalta, Finland

Baseline Year 1 Year 2 Year 3 Year 4Continuous Improvement of planned & scheduled maintenance activities over 4 years

Planned maintenance (%) 35% 41% 48% 54% 60%Scheduled maintenance (%) 55% 61% 68% 74% 80%Continuous Improvement in asset availability over 4 yearsAvailability (%) 88% 89% 89% 90% 91%Continuous Improvement in asset reliability over 4 yearsOverall Equipment Effectiveness (Availability X Rate X Quality) 88.7% 89.5% 89% 90% 93%Continuous Improvement in cost reduction over 4 yearsTotal Maintenance Costs €19.9m €21.8m €18.4m €18.5m €17.5mHow the improvements were accomplished

Carter Holt Harvey (pulp & paper mill)Tokorua, New Zealand


Planned maintenance (%) None No focus 55% 65% 70%Scheduled maintenance (%) None No focus 70% 80% 85%Continuous Improvement in asset availability over 4 years

Availability (%)* 70.5% 76.4% 78.4% 84.3% 87%Continuous Improvement in asset reliability over 4 years

Overall Equipment Effectiveness (Availability X Rate X Quality)* 67.5% 71.5% 76.5% 82.1% 85%Continuous Improvement in cost reduction over 4 years

Total Maintenance Costs NZD60.6m NZD51.5m NZD50.3m NZD48.5m NZD47.9mHow the improvements were accomplished

*Includes yearly & monthly shutdowns, a total of 17 days lost production. If shutdowns are excluded,then availability and OEE are ~6% higher.

Compania MEGA (natural gas plant)Loma La Lata, Neuquen, Argentina


Planned maintenance (%) 80% 84% 88% 91% 93%Scheduled maintenance (%) 80% 91% 88% 89.63% 92.73%Continuous Improvement in asset availability over 4 years

Availability (%) 99.6% 99.6% 99.6% 99.6% 99%Continuous Improvement in asset reliability over 4 years

Overall Equipment Effectiveness (Availability X Rate X Quality) 80% 92.63% 87.96% 83% 85%Continuous Improvement in cost reduction over 4 years

Total Maintenance Costs / Replacement Asset Value 2% 1.8% 1.7% 1.7% 1.6%How the improvements were accomplished


ABB Full Service® delivers record results in NA

Celebrated a fast ramp-up and achieved 90% of rated capacity for the mine concentrator in just three months at a Greenfield site

Grew OEE to exceed 90%, reduced nearly 100 maintenance and support personnel and significantly reduced maintenance costs at a tire plant

Drove a paper mill’s paper machine from worst to first, within the company globally

Helped a metal manufacturer to exceed product shipment targets by 7% and reduce cycle times in roll changing and roll grinding by 50% within the first six months of the Full Service agreement

Broken every single record ever recorded at Aluminium rolling facility

Quiz Question

Does your company have a proven blueprint for success in maintenance and reliability?

a) Absolutely!


c) No

d) Don’t know

?


Creating Value Together – Big Picture

10%

OEE %

5 years0

10%

TMC $

5 years0

5%

Energy Efficiency %

5 years0


Typical OEE commitment

Contractual commitment

Bonus above the curve, 80/20% of value to Customer/ABB

Established in Feasibility Study, verified and agreed in Partnership Development Phase

Value normally exceeds total maintenance budget

+10%

OEE %

5 yearsStart Up

World Class


Typical TMC commitment


Established in Feasibility Study, verified and agreed in Partnership Development Phase

Sub-contractors normally thru ABB books

If material thru customer books, cost deducted from fixed price

+10%

TMC

5 yearsStart Up

World Class

Actual TMC to ABB


Typical Energy Effectiveness commitment


Bonus above base-line, 50/50% of value to Customer/ABB

Drafted in Feasibility Study, projects established and agreed in Partnership Development Phase

+5%

EE

5 yearsStart Up

World Class*

* Real World Class can only be achieved with capex – this is calculated using WC benchmark minus effect of capex projects

Base-line

Yes, ABB Full Service® can do all this!

All you need to do is to take one single decision, that will cause massive change and put your safety, productivity and costs on top levels for years to come

We will partner with you and make sure that maintenance costs go from highly fluctuating to a fixed declining cost for years to come.

We will partner with you and change your entire plant’s culture.

You will get a peace of mind, knowing that that maintenance and reliability is provided by motivated first-class expertise having practices developed and optimized by relying on latest international knowledge.

You will be able to focus on the most important aspects of your business: product development, production and marketing.

Big decisions and changes are scary, but ABB Full Service® comes with a blueprint for success!


Next Steps: Development of a value proposition for you

Follow the ABB Full Service® Process and conduct a Feasibility Study

Perform quantitative and qualitative benchmarking analyses

Define improvement potential in Plant Performance, energy and maintenance operations

Present a firm Value Proposition and Business Case;

Identified financial improvement potential

ABB tangible proposal for next steps

ABB commitment to the partnership

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

% C

han

ge

Year 5Year 1BeforeABB

Year 2 Year 3 Year 4

Plant Performance Improvement

Energy Cost

MaintenanceCost

“We begin the process with an offer of openness and an assumption that there is

significant common ground”

For The Executive With Plant Productivity Problems Final

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