Senseye has published a groundbreaking new report, The True Cost of Downtime, investigating the impact of machine failure and unplanned downtime at the world’s largest manufacturers. Our study has thrown up some genuinely eye-watering statistics. In this blog we look into some of the specifics.
We found that Fortune Global 500 (FG500) manufacturing and industrial firms are taking a near $1 trillion a year financial hit due to unplanned downtime. These companies are losing 3.3 million hours of production time annually to machine failures. The $864 billion economic impact of these lost hours is equivalent to 8% of annual revenues.
When production lines and machines fall silent, expensive plants start costing rather than making money. Still, the actual cost of unscheduled downtime at large industrial organizations this study reveals is staggering. Breaking the statistics down by facility or sector makes them no less startling.
On average, large plants lose 323 production hours a year or 27 hours a month to machine failure - that’s more than a day’s production. The average cost of each hour of unplanned downtime in lost revenue, financial penalties, idle staff time and restarting lines is $532,000.
This amounts to $172 million per plant annually.
Broken down by industry it looks like this:
- The cost of unscheduled downtime is highest in the automotive sector, where the products manufactured are of high value and plants and production lines are often closely interconnected, meaning downtime has a knock-on effect
- Automotive plants lose 29 production hours per month, costing them $557 billion a year - an estimated 20% of annual revenue. Encouragingly, however, 67% of professionals in this sector told us that Predictive Maintenance was now a strategic priority
- The average number of hours lost due to downtime is highest in the Oil & Gas sector: 32 hours per facility each month. This could be due to the safety-critical nature of the work: production stops at the first sign of a potential problem
- Shutdowns in the Oil & Gas sector cost each facility $220,000 per hour - amounting to $84 million per facility each year. In refineries alone, losses to FG500 companies cost an estimated $47 billion from 213,000 downtime hours each year
- Not surprisingly, given the safety-critical nature of production, 82% of those in the Oil & Gas sector said predictive maintenance was already a strategic objective, the most of any sector
- While mining, metals and other heavy-industrial plants lose the least number of production hours each month to machine failure (23 hours), the cost is exceptionally high
- Machine failures cost heavy-industrial companies $187,500 per hour, on average. This eats heavily into profits - totaling $225 billion a year across the FG500
- 60 percent of heavy industrial companies have now made predictive maintenance a strategic priority
- The last sector we looked in detail at was FMCG. Here manufacturers fared best of any sector, losing 25 hours a month to unplanned downtime. Across the FG500, this amounts to losses of $35 billion a year or 1% of revenue
- FMCG manufacturers had the highest uptake of condition-based maintenance, an essential first step towards Predictive Maintenance. 67% of manufacturers in this sector told Senseye they approached maintenance this way in at least some of their facilities
Senseye’s research comes from interviews with engineering and IT professionals at 72 multinational industrial and manufacturing companies in 21 countries. We estimated the level and cost of unplanned downtime experienced by FG500 companies by extrapolating our research findings with publicly available information on the number of plants operated by these companies and the people they employ.
There are more statistics and insights in our The True Cost of Downtime report, which you can download here.