Turning To Service Companies
While it has always been a
simple matter to blame potentially unpopular decisions on prevailing
economic conditions, the case of industrial companies opting for
outside maintenance personnel over in-house staff, must be seen,
in light of economic realities, as an obvious step toward fighting
current economic downturn.
of out-sourcing maintenance and repair work has arisen from what
has been variously called by some in the industry, downsizing, rightsizing,
or sometimes, "dumbsizing." (Dumbsizing occurs when a company trims
its personnel to the extent that it becomes too lean to function
in an efficient manner.)
A large percentage
of the industrial sector has been concentrating resources on production
and downsizing or eliminating the maintenance aspects of its operations.
It is simply less expensive, overall, to make use of off-site people
than it is to maintain a permanent full-time staff.
immediate cost savings built into such an arrangement. The user
company is not faced with the expenses of staff benefits, training
and upgrading at a time when budgets are tight.
Advantage of Resources And Expertise
of GE Canada Services, explains that the primary reason companies
are taking advantage of out-sourcing is the resources and expertise
inherent in the program, as well as the immediate cost savings.
"GE has access
to all it needs in the way of skilled personnel, equipment and training
to maintain a wide range of electrical and mechanical equipment
including motors, turbines, switchgears and transformers," says
the economic downturn many companies have had to scale down operations
and cut staff in non-essential areas," he says. "It's no longer
feasible for a company to keep a large in-house maintenance staff.
Many who do could find themselves asking why, in light of the fact
that it's simpler and more cost-effective to out-source ongoing
maintenance and major repairs."
out that companies are concentrating on doing what they know best
and out-sourcing their maintenance requirements, getting the best
possible return on their maintenance dollar. Although many have
been working to keep repair work in-house and keep people employed,
economic circumstances have been steadily forcing companies to turn
to out-sourcing. These companies are retaining only those personnel
who are key to their immediate business operations.
"We are working
toward offering partnerships to companies, in the form of the Equipment
Management Program" says Coleman. "GE will place an engineer on
site who is backed up by all of GE's expertise, equipment and staff.
We also offer long term contracts to maintain specific equipment."
that those large companies with 100 or more motors, generators,
etc., will benefit greatly from these long term contracts. So far,
30 companies throughout the U.S. are involved with GE's Equipment
Management Program and the company is now moving into the Canadian
Essential Maintenance Services
Westinghouse Services Division, explains that Westinghouse, too,
has a program through which user companies pre-qualify for essential
maintenance services on an ongoing basis. The pre-qualification,
in the beginning of what is an open-ended informal contract, saves
time and paperwork for the customer by discovering exactly what
will be required during the completion of the contract.
that many large, capital intensive industries are working to keep
their costs in line and there has been a growing shift to the partnership
idea. "Essentially," says Taylor, "these arrangements are made with
existing customers who have a good focus on what their requirements
will be, for a certain period. And since they are our own customers
we know as well, in advance, what their potential needs will amount
to. We are then, more readily able to meet those needs without interruption
out that this type of arrangement, indeed any service contract for
out-sourcing, increases the expectations of the customer, placing
the onus for quality and reliability directly on the service company
and its organization.
"We see our role as helping our customer make money or save money,
by cutting unnecessary costs to his operation." For Westinghouse,
he notes, this involves reducing the frequency of customer equipment
failure, reducing equipment damage to failure and reducing the duration
of outage should equipment failure occur.
Service Companies A Growing Trend
One of the
largest growth industries is switchgear life extension, Taylor claims.
Taking robust, existing equipment and upgrading it to today's standards
of technology - without changing the equipment function or purpose.
This involves much more than simple reconditioning; it involves
increasing the reliability and the capability of the equipment in
a costly manner.
out that service companies are used to dealing with emergency situation
on an almost regular basis and are, therefore, eminently qualified
to handle them in stride. He says that Westinghouse and its power
systems specialists grew to be respected in the industry by generating
customer loyalty through quality of service, knowledge and capability.
is not to sell," admits Taylor. "It is to help our customers succeed
in making and saving money."
Up With New Technologies
of Schneider Canada Services believes that out-sourcing is a trend
that will continue in the face of ever expanding high technology.
"It's becoming difficult for the average maintenance electrician
to deal with computerized equipment," he says. "Users need expert
and training are provided with the sale of equipment, the maintenance
personnel may not have occasion to work on the part until many months
after purchase. Retaining and upgrading that training knowledge
may not be possible in all cases and instead of the user tinkering
with a piece of equipment to get it on line again, he should contact
the experts immediately.
hourly cost of out-sourcing repairs is far outweighed by the potential
for lengthy and costly down-time," he cautions.
that users rely on the manufacturer and the supplier of the equipment
for maintenance and major repairs. "They are the first source that
should be investigated."
He says there
are also a growing number of third-party services in the marketplace
who have sterling reputations in the field. But, there are also
some that do not. It may become a sore point in the future and the
user is cautioned to beware of the unknown.
the customer must use common sense and look at the track records
and references of a potential servicer. All reputable third-party
service companies will supply references and other pertinent information
upon request. Those who do not are to be strictly avoided.
Pacific of B.C. is in a unique position within the out-source service
industry, in that it was formed two years ago by ABB Power Apparatus
Service and B.C. Hydro.
of PowerServ, explains that the joint venture was entered into to
make greater use of an existing B.C. Hydro 80,000 square foot shop
that wasn't being utilized to full effect. And she says that since
B.C. Hydro is a crown corporation and disallowed from bidding in
the private sector, the best way to make use of the enormous space
was through combining strengths and serving the market by making
greater use of both. The combination now boasts 130 employees and
contracts throughout Canada, as well as an international foray into
the U.S and Mexico.
garners a large percentage of its business from the maintenance,
repair and reconditioning of switchgears, transformers and generators,
as is the case with many other service companies interviewed. In
fact PowerServ is in pursuit of ISO 9002 registration because more
customers are focused on the quality of the services they require
for their critical equipment.
"I think that
the need for our services will grow in the future as our customers
continue to strive to reduce their operating costs in many ways,
including out-sourcing." PowerServ has been very active locally
and internationally in working with their customers' out-sourcing
she admits the service out-sourcing business fluctuates in its demands,
between preventative maintenance and emergency repair work and the
success lies in being ready for either, or both.
Not A Major
of ABB Power Apparatus Service says he hears a lot of talk about
out-sourcing, but he has not seen it as a major trend yet. He says,
however, that although it may not be a trend yet, it will continue
to grow gradually until the industry will notice it as the norm,
rather than a trend or fad.
that industrial and commercial enterprises seem to be ignoring their
present needs in favor of economic streamlining. Some have reached
a point where even the most basic maintenance jobs, like changing
lights bulbs and fuses are being contracted out. He sites this as
a form of dumbsizing. He predicts that those companies that continue
to ignore their own needs will find themselves badly lost somewhere
down the road.
that when a company lays off well-trained, necessary personnel,
it's usually true that when they finally miss them it's because
they need them desperately and realize it too late. That's when
he sees a definite increase in the use of service companies.
that industry is suffering badly because of economic conditions.
His division is doing work it never did just a few years ago. Jobs
like major refurbishing and rebuilding were relatively unheard of
in the recent past. When things broke down on such a large scale,
companies usually replaced them. Now, however, costs of replacement
are becoming prohibitive. The intelligent thing is to repair and
reuse for as long as is possible and cost-effective.
He says this
kind of mind set is likely to continue at least until the economy
allows for mega-dollar purchases again, if it does, and then the
trend may well reverse itself. Until then,"You do what you're good
at and do it well. Look for your niche in the marketplace and grow
with the business," he says.
service companies will succeed as long as they know what their customers
wants and give it to them at a reasonable cost. And if the current
trend should reverse itself in the future and the economy begins
to grow again, those companies now performing out-sourcing work
will likely look to greener pastures and move into other areas of
greatest need to their customers.
the system of out-sourcing proves a more efficient and cost-effective
method of performing user maintenance functions, it may also prove
to be more than simply another economy based industry, and survive
future economic growth as a winning and viable concept.