Machines are the core of any production environment. If they come to a standstill, this can have wide-reaching effects on the company in question, from expensive and time-consuming repairs, to loss of revenue, loss of reputation and even loss of market share. To minimize disruption to business caused by damaged machines and equipment, commercial property insurer FM Global employs over 250 engineers who are responsible solely for assessing production-critical equipment.
Having machinery and equipment break down due to damage can present companies with huge problems, as the machinery in question cannot produce essential components until the necessary repairs are made. In the very worst-case scenario, an unexpected breakdown can bring the entire production process to a halt because the next station in the production line is lacking a specific (and irreplaceable) part.
Breakdowns are increasing in every sector
According to a study by FM Global, turbines are the leading cause of equipment breakdowns, causing 42 percent of all failures. Damage is not restricted to any particular industry, and the study showed that machinery and equipment breakdown were responsible for 28 percent of FM Global losses across all industries in 2018. Furthermore, the insurer points out that losses caused by equipment breakdowns have risen over the last five years, particularly in high-risk industries — specifically, the chemical industry, power supply industry and mining industry, as well as the paper and pulp industry. Anyone who has ever been in the production halls of a paper manufacturer, for instance, knows that turning a tree into individual sheets of paper requires exceptionally large, complex and expensive machines. If these machines are not designed, operated or serviced correctly, breakdowns are an inevitable consequence.
The more specialized the machine, the longer it can take to get it back up and running after a breakdown. This is because complicated and specialized machines are often built to order, which means options are limited when it comes to suppliers. This, in combination with a lack of available spare parts means that replacing machines can be a very lengthy process. For example, it can take more than six months to put a power plant back into operation after a power outage caused by a machine breakdown. Despite the risk of operations being disrupted for an indeterminable amount of time, companies do not always seem to make loss prevention a priority. According to FM Global, in the high-risk industry alone, for instance, up to 70% of losses can be attributed to equipment breakdowns. Why is this?
Analysis of large-risk losses reveals the reasons
The same two factors are cited time and again in connection with damage to machinery and equipment. These factors are also mentioned in an analysis of large-risk losses conducted by FM Global in 2018. The human factor played a significant role in almost half of all losses caused by equipment breakdowns. This problem can be addressed by improving staff training and knowledge -sharing processes.
The second factor is insufficient maintenance, which accounted for 62 percent of losses caused by equipment breakdowns. The reason for this is simple: when business is booming, many companies do not take their machines and equipment out of operation to perform preventive maintenance. This strategy works up to a point, but it falls apart when problems arise which require expensive repairs, or which may lose the company sales — and that could potentially even lead to loss of market share if the breakdown means orders can no longer be fulfilled.
Loss prevention: Get expert advice
Given that machinery and equipment losses could threaten a company's very existence, it is vital that decision-makers are aware of the risks that a breakdown could entail and take sufficient action to minimize these risks. For almost 200 years, FM Global has been conducting research into all the risks that can disrupt business operations, and continually improving its range of solutions to help make companies more resilient. This includes reducing disruption caused by machinery and equipment breakdown. To achieve this, FM Global has recently recruited a number of specialized engineers, resulting in a workforce containing over 250 engineers responsible solely for production-critical equipment (such as boilers, turbines, generators, transformers, chemical containers, compressors, pulp machines and paper processing machines). Thanks to their specialist training, combined with FM Global's analysis and research capabilities, these experts can create an extremely detailed picture of the condition of clients’ machinery and equipment, as well as the maintenance schedules for them.
In this day and age, there are highly effective methods for preventing equipment and machinery breakdowns— and avoiding consequential damage that could prove economically fatal. However, it ultimately comes down to each company to decide how resilient their operations will be.