The 1 Trillion Dollar Elephant in the Room

There is a common problem that costs US industries up to 1 Trillion dollars every year. The irony is that a solution exists but owners, managers and engineers in manufacturing facilities are not aware of the elephant in the room.

In 1995 the Massachusetts Institute of Technology, (MIT) reported that American companies were losing about $240 Billion dollars a year due to improper lubrication. At that time, it was estimated that 54% of equipment failures were due to improper lubrication.  According to Lubrication Technology’s, Ken Bannister, today, that rate is 70%. Based on his calculations the current loss now is estimated to be $1 Trillion per year. The figures may be different depending on who is making the claim. Whether it is 30% , 54% or 70% of failures that are due to improper lubrication, the figure is too high.

According to what’s now known as Rabinowitz’s law, a calculation first introduced by Dr. Ernest Rabinowitz, a professor emeritus at MIT, 6% of US Gross Domestic Product is lost each year through bearing wear and tear and failure primarily caused through improper or insufficient lubrication. 

6% of U.S. Gross Losses due to lubricationDomestic Product (GDP) is lost through lube-related wear*. Applying his law to the US GDP for 2014, $17.7 trillion, results in a total loss of more than one trillion for 2014 just in the United States.  

Estimates vary about the total cost of lube-related failure on manufacturing output and GDP. Some focus on different parameters. But whether the total figure is $500 Billion or $1 Trillion, all agree that it’s a problem of enormous proportion and far reaching implications.

At the root of this $1 trillion annual loss is chronic equipment outages, manufacturing downtime, production losses, abnormally high lube consumption and maintenance costs, delayed detection of oil leaks leading to shorter life-span of expensive equipment, subpar technician productivity, lower resource efficiency, higher energy and environmental costs.

Ken Bannister’s survey, (Lubrication Technology, “State of the Lubrication Nation,” December 1, 2014) reported that only 12% of lubrication personnel from all industrial sectors are professionally certified. Management does not emphasize lubrication. The process of lubricating the plant is often left to the least experienced employee or the oldest. In many plants it is left to machine operators, electricians, mechanics or anyone who is available. In many cases, when things get tight, the oiler is the first person that gets cut.

The survey also revealed that 61% of companies do not keep track of instances of lubrication related failure. 

reactive maintenance problemsThe Problem – 40% of maintenance time is reactive maintenance. Lubricating is considered low priority. Lubrication practices not institutionalized. Lube personnel often the first to be let go. 60% of plants don’t track lube-related failures. Assigning lube tasks to personnel who are not dedicated to lubrication: electricians, mechanics,  millwrights etc. is common and management is not aware of the enormous hidden savings in their facility, people and equipment.

80% of Reliability Engineers Report Lubrication Related Failures
80% of Reliability Engineers report lubrication failures.  Computerized Maintenance Management Systems (CMMS) have been used for decades but this system doesn’t work for lubrication management. Information is often in text files or on spreadsheets. Work orders are issued per week, month, quarters, year and they are complicated to manage, update and edit.  More critically, lube techs are not trained to consider preventative maintenance and are often reacting to outages rather than maximizing uptime. 

foundational approach to lubrication

The Solution The solution is rather simple. It requires all to be involved from top management to the person doing lubrication. It requires the right lubricant being applied to the right place in the right amount at the right time using the right procedure. And making sure it happens every day with the right controls.

*$17.7 Trillion (US GDP, 2014**) X 6% = 1.062 Trillion

Leave a Reply