Case Histories: Industrial/ Warehousing
Assessing the Benefits of Better Lighting: Saving energy may lead to improving safety
By Richard Morse
Energy conservation is a good thing — no one argues that. However, cost-effective production is also important. Most energy conservation decisions are based on the dollar value of energy savings compared with the cost of achieving those savings. However, this approach may be inappropriate when the issue is lighting.
Consider the case of Metal Industries, Inc., Elizabethville, Pennsylvania. The company’s management decided that better lighting was not necessarily defined as lighting that cost less to operate and maintain. Instead, lighting that could help employees do their work better, faster, and less expensively was the overriding goal.
With that in mind, the company spent $8,000 to install a new lighting system that raised operating and maintenance costs almost 400 percent, to $27,000 per year. What kind of payback could the company expect from such a change? According to research performed by the National Lighting Bureau, payback occurred in 37 hours. Based on report data, the company achieved a return on investment (ROI) of 23,741 percent per year. How?
The company had a relatively low accident rate before the change, but that rate fell by 15 percent after the new lighting was installed. Because the lighting was the only change made, the company attributed the reduced accident rate to the lighting upgrade. The improved safety record saved the company about $3,000 per year by lowering the costs of accident cleanup and related paperwork. The reduction in the number of accidents also led to lower insurance premiums, saving another $3,000 annually. More important to the company was the reduced rate of absenteeism attributable to accident-related injuries, which it valued at $225,000 per year.
In addition, the company found that its new lighting improved conditions for its employees, allowing them to work faster and more productively, which it valued at $1.5 million annually. Employees made fewer mistakes, resulting in a 25 percent reduction in the company’s reject rate, saving another $200,000 per year.
The company’s story is unusual not because of the benefits realized but because of the deliberate increase in lighting consumption. The increase occurred because more light was needed achieve optimal conditions for the tasks, workers, and spaces involved. In most cases reported to the National Lighting Bureau, productivity increases, safety improvements, and other benefits are achieved through lighting system modifications that also reduce lighting energy consumption.
For example, Superior Die Set Corporation, Oak Creek, Wisconsin, calculated its savings at about $45,000 annually as a result of improved productivity and reduced downtime resulting from a $3,000 lighting system upgrade that also cut lighting operating and maintenance costs by 45 percent. The company also experienced improvements in security and a lower absenteeism rate.
Similarly, American Hardware Supply, Butler, Pennsylvania, cut its lighting operating and maintenance costs by 25 percent by implementing changes to its lighting system that reduced accident costs by $1,000 per year and improved productivity by $35,000 per year. After new lighting was installed, the company recorded fewer accidents and found that its employees worked faster while making fewer mistakes. The company also credited the new lighting with improving its image with visiting customers, which in turn led to an increase in sales of about $50,000.
Better lighting does not necessarily mean more lighting, nor does more lighting necessarily mean more energy consumption. Better lighting does mean more effective lighting and more efficiency through less energy waste. Above all, the value derived from energy savings alone may be small compared to the overall value derived from more effective lighting.
This is not to say that one is exclusive of the other. Often, more effective lighting also results in lower energy consumption. However, the decision process should not be driven solely by a motivation to conserve energy. Energy conservation issues should be considered only after determining which lighting system effectively supports the particular tasks, workers, and spaces at a site.
Evaluating Existing Lighting
Illumination systems that are designed to be functional are those that provide what the National Lighting Bureau calls High-Benefit Lighting®. Founded in 1976, the bureau provides education and information services on behalf of the lighting industry. Sponsored by manufacturers, trade associations, and U.S. governmental agencies, the bureau’s goal is to convince people that quality lighting is essential to optimizing the success of their businesses.
To this end, the bureau recommends that an evaluation be made of current lighting systems. Ask workers if the lighting causes problems such as eye strain. How do they think improved lighting would improve working conditions? After completing an informal survey, audit the existing system. What types of lamps are used? How well are they maintained? How much light is being produced?
A publication that provides guidance on performing self-audits is available from the National Lighting Bureau, and experts are available through a number of organizations or private companies to assess individual systems. Those performing the audit should determine the optimal lighting support for the people performing the specific tasks at the business.
Justifying Lighting Upgrades
How can improved lighting be justified? Consider the number of people who are employed at a plant and calculate the annual payroll value for each. This figure is usually an individual’s annual salary or wage multiplied by 1.35 to account for the value of insurance, paid leave, and other benefits such as retirement and Social Security taxes.
If an existing lighting system is a least 10 years old, new lighting is likely to boost worker productivity by at least 1 percent. Typically, the layout of an area and the tasks performed there change every 2 ½ years. In addition, lighting degrades over time, so 10-year-old fixtures may not provide the same amount of light that they did when they were new. If the same tasks were performed by the same workers over a 10-year period, better lighting might be required because as people age, they require better lighting to work effectively.
Assuming that a new system will improve lighting enough to save 36 seconds per hour, a 1 percent productivity gain will be realized. For an annual payroll expense of $1 million, a 1 percent productivity boost is worth $10,000. This figure does not include other benefits, such as savings from a reduction in accidents and the related paperwork, the improved quality of products, and the intrinsic value of generally happier customers.
Consider the location of the lighting. How is the lighting used? What would happen if the lighting were removed, and what would happen if the lighting could be improved?
Do not settle for a system that promises only improved energy efficiency. Look for lighting that provides solid support for your company, your workers, and your bottom line while consuming as little energy as possible to get the job done.
Reprinted with permission from the December 1997 issue of the Fabricator. Copyright 1997 by the Croydon Group. Ltd.