Annual $1.5 trillion downtime costs in industry

The True Cost Of Downtime 2022 Report by Senseye, a developer of AI-driven solutions for scalable machine reliability, shows that unplanned downtime costs manufacturers at least 50 percent more today than during the 2019-20 period, due to rising inflation and higher-capacity production lines. The cost of a lost

hour now ranges from $39,000 for FMCG facilities to over $2 million in the automotive sector.

Downtime costs have skyrocketed despite a 23 percent reduction in production line failures. Large manufacturers now experience 20 unplanned downtimes per plant monthly, six fewer than two years ago. But since it takes longer to resume production after each failure, they have gained only two additional hours of production capacity each month.

Senseye estimates that unplanned downtime will cost Fortune Global 500 industrial companies nearly $1.5 trillion this year, 11 percent of their annual revenue. Previous Senseye studies from 2019 and 2020 estimated the cost for these companies at $864 billion per year, about eight percent of revenue.

Robert Russell, CTO and co-founder of Senseye, comments: "Our results clearly show that downtime is becoming more expensive - much more expensive. In all the industries studied, an hour of downtime costs significantly more than it did two years ago. This is a burden on profits that companies can no longer ignore. However, efforts towards digitalization and predictive maintenance are gradually showing significant impacts, and most manufacturers have successfully reduced the number of incidents affecting production."

Jim Davison, regional director for South England at Make UK, represents manufacturers in the UK and says: "Inflation is a major factor. Goods cost more, so the value of those not produced during downtime is greater, and as many factories operate at higher capacity, there is less leeway in the system to make up for lost time. The higher costs of energy, labor, and material waste when production lines fail have also contributed to a perfect storm of costly downtime for large manufacturers.

"It is clear that predictive maintenance can play a crucial role in reducing costs and increasing productivity. Especially when manufacturers need to use every tool available to meet the demands of an ever-changing industry."

Automakers limit costly losses through predictive maintenance

• The adoption of predictive maintenance (PdM) has accelerated in the automotive industry: the proportion of manufacturers with PdM teams has increased from 11 percent to 38 percent in the last two years
• The losses could have been worse. Large automakers have limited them by reducing lost production time by 45 percent in the last two years, more than any other sector,
• Downtime costs remain highest in the automotive industry, where large manufacturers now lose $646 million per plant annually - 40 percent more than before 2021

• FMCG reduces the number of failures but sees an increase in total downtime

  • The downtime costs for large FMCG manufacturers have increased by 36 percent to just under $10 million per facility per year - less than in any other sector
  • While the volume of production failures remained constant at 27 failures per plant per month, large FMCG manufacturers have reduced total downtime by 16 percent in the last two years
  • More than half (60 percent) of FMCG manufacturers now see PdM as a strategic priority, and seven out of ten are already conducting some form of condition-based maintenance
  
  

• Downtime costs double for heavy industry companies

  • The heavy industry was most affected by rising downtime costs, with average annual losses increasing by 145 percent to $128 million per plant in the last two years
  • This was the only sector where downtime increased by nine percent to 25 unplanned downtime hours per plant per month during the study period
  • The number of mining, metal, and other heavy industry companies conducting condition-based maintenance has nearly doubled in the last two years (to 89 percent), and the proportion with PdM teams increased from 13 percent to 35 percent as companies sought to limit their losses
  
  

• Rising prices lead to higher losses for oil and gas producers

  • Rising prices contributed to a 76 percent increase in downtime costs for large oil and gas companies in the last two years, with facilities averaging $149 million per year in downtime-related losses
  • However, digitization and PdM have helped limit losses, as oil and gas companies were able to reduce the number of failures and the total duration of downtimes by 25 percent and 16 percent, respectively
  • The number of oil and gas companies with dedicated PdM teams increased from 29 percent to 38 percent in the last two years