Top manufacturers looking at US$1.5 trillion unplanned downtime costs for 2022 warns report
22 Nov 2022
Unplanned manufacturing downtime is on course to cost 500 of the top global industrial companies a staggering US$ 1.5 trillion this year, claims a new study.
Senseye’s latest annual True Cost of Downtime Report states that inflation coupled with higher capacity production lines has resulted in unforeseen production outages soaring in cost. Such failures now come with a 50% higher bill than in the 2019-20 financial year, say the authors.
Ironically this has coincided with production line failures reducing nearly a quarter, by 23 per cent. Major manufacturers’ currently average 20 monthly unplanned downtime incidents per facility compared to the average of 26 recorded fewer than two years ago.
However, recovery times are longer, limiting the amount of additional production capacity to just two additional hours of production capacity in an entire month.
Senseye’s 2022 estimates concludes unplanned downtime will cost Fortune Global 500 industrial companies close to $1.5 trillion this year. In 2019 and 2020 it calculated the cost at $864 billion annually. This increases downtime costs from around eight per cent of turnover to 11 per cent of annual revenues.
Senseye CTO and co-founder Robert Russell warned: “It’s clear from our findings that downtime is getting more costly – much more costly. In every sector surveyed, an hour’s downtime costs significantly more than it did two years ago. This is a drag on profits that businesses can no longer afford to ignore.”
He added though that digitisation and predictive maintenance was beginning to exert a significant and positive impact, a point echoed by Make UK South of England Region director Jim Davison, who said it was clear is that predictive maintenance could perform a vital role in reducing costs and boosting productivity.
However, he cautioned: “Inflation is a big factor. Goods cost more, so the value of those not made during downtime is greater, and with many factories operating at higher capacity there is less slack in the system to make up for lost time. The higher cost of energy, labour and materials wasted when production lines fail also contributed to a perfect storm of costly downtime challenges for major manufacturers.”
