The contract maintenance question – Part I

With few exceptions, most mills I visit ask me what I think of contract, or outsourcing, of maintenance. In this column, I will elaborate on what kind of maintenance should and should not be contracted out, and the reasons for choosing either option.

Variability in workload
The better you manage the workload of your own resources, the less need you will have for contract maintenance. In weekly and daily maintenance activities, your workload should not vary much if you have disciplined priorities and a good preventive maintenance system in place. Even areas such as maintenance workshops and scaffolding services should experience very few urgent requests, which justifies keeping only a minimum crew, if any at all, for such services in-house.

Large variations in workload will lead to poor utilization of resources and overstaffing. This often leads to discussions about contract maintenance. However, contracting maintenance resources will not change anything. The contractor must provide a better system for people to work in. Otherwise, they will not be more effective than your existing system. If this is the case, you must ask yourself why you cannot improve the system yourself when the contractor can. The answer may be that you have tried many times without sustainable success. Your organization might be in gridlock because of politics, ingrained union practices, and so on. A situation like this can lead to an “act of desperation.” In other words, your organization has lost its power and ability to improve as fast as a contractor can (or at least promises to), so this becomes the reason why your maintenance is contracted out.

Temporary scheduled increase in workload
During scheduled shutdowns and major outages, it is natural that you contract out work. It can be very cost-effective to not only contract the resources for executing the work, but to also have the contractor plan and schedule major outages. However, periodic shutdowns – for example, every five to seven weeks – of a paper machine can, most probably, be managed better by your own shutdown planners.

Core business philosophy
Contract maintenance suppliers often argue, as a selling point, that maintenance is not a core business. Well, if you are a pulp and paper mill, or any other manufacturing plant, I would like to challenge that statement.

Why would maintenance not be a core business, while operations and manufacturing are considered core businesses? In fact, I believe that one of the best ways to approach outsourcing is to have a manufacturing contract that is not limited to maintenance alone.

In looking at maintenance contracts alone, you should look upon “equipment reliability tasks” as a core business. You can always question if it makes good business sense to have your own carpenters, painters, people for scaffolding, masons, tinsmiths and blacksmiths. Having the resources a phone call away and no invoice to explain will lead to more use of these resources than is needed. I sometimes wonder how many unnecessary paint jobs – and bookshelves, tables and other carpentry work – have been done just because the resources were available and the requestor of the work did not need to pay the full cost of it.

Equipment reliability is the result of maintenance work and it includes such essential elements as maintenance prevention, including lubrication, filtration, alignment, cleaning and operating practices. It also includes preventive maintenance activities such as vibration analysis, basic inspections, and so forth. I believe all equipment reliability activities should be performed with in-house resources, unless you contract out all maintenance on an equipment reliability performance and cost basis.

Lack of skills
If your organization does not frequently use certain special skills, it is necessary to contract for these skills. Even if you train your own people in specialty skills, they cannot maintain them because they do not use them frequently enough.

The present and the future shortage of skilled craftspeople, especially in the U.S. pulp and paper industry, might be one of the best sales arguments for maintenance contract suppliers – if they have these resources to offer. Also, it is not unheard for unions to hold back their own members from receiving training. This fact has never made sense to me, since it should be in their interest to support training of members so that they are competitive with contractors.