IMPACT OF MAINTENANCE

Maintenance costs are a major part of the total operating costs of all manufacturing or production plants. Depending on the specific industry, maintenance costs can rep- resent between 15 and 60 percent of the cost of goods produced. For example, in food-related industries, average maintenance costs represent about 15 percent of the cost of goods produced, whereas maintenance costs for iron and steel, pulp and paper, and other heavy industries represent up to 60 percent of the total production costs.

These percentages may be misleading. In most American plants, reported maintenance costs include many nonmaintenance-related expenditures. For example, many plants include modifications to existing capital systems that are driven by market-related factors, such as new products. These expenses are not truly maintenance and should be allocated to nonmaintenance cost centers; however, true maintenance costs are  substantial and do represent a short-term improvement that can directly impact plant profitability.

Recent surveys of maintenance management effectiveness indicate that one-third—33 cents out of every dollar—of all maintenance costs is wasted as the result of unnec- essary or improperly carried out maintenance. When you consider that U.S. industry spends more than $200 billion each year on maintenance of plant equipment and facil-

ities, the impact on productivity and profit that is represented by the maintenance oper- ation becomes clear.

The result of ineffective maintenance management represents a loss of more than $60 billion each year. Perhaps more important is the fact that ineffective maintenance management significantly affects the ability to manufacture quality products that  are competitive in the world market. The losses of production time and product  quality that result from poor or inadequate maintenance management have had a 

dramatic impact on U.S. industries’ ability to compete with Japan and other countries