ISO 50001 Energy Management Systems Standard Certification .

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ISO 50001 Energy ManagementSystems standard certificationLincoln ElectricLincoln Electric is the world leader in the design, development and manufacture of arc welding products, roboticarc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing andsoldering alloys market. Headquartered in Cleveland, Ohio,Lincoln has 48 manufacturing locations, including operations and joint ventures in 19 countries, including Canada,and a worldwide network of distributors and sales officescovering more than 160 countries.About CAN/CSA-ISO 50001 EnergyManagement Systems standard certificationISO 50001 provides organizations with a structured framework to manageenergy in such a way that it can increase energy efficiency, reduce costsand improve energy performance. This standard is based on the commonelements found in all the ISO management systems standards, assuringa high level of compatibility with ISO 9001 (quality management) andISO 14001 (environmental management). It integrates energy efficiencyinto management practices by making better use of existing energyconsuming processes. Based on the Plan-Do-Check-Act cycle, thisstandard integrates both technical and managerial activities.Natural Resources Canada (NRCan) through its ecoENERGY Efficiencyfor Industry program is offering cost-shared assistance to industrialcompanies to implement energy management projects, includingCAN/CSA-ISO 50001 Energy Management Systems standard pilots.The program will provide financial assistance of up to 50 percent ofeligible costs to a maximum of 40,000.Photo: Lincoln Electric. Motivated staff are a big reason for Lincoln Electric becomingthe fourth Canadian company to achieve ISO 50001 certification. Pictured are theMachine Division crew, responsible for manufacturing the only True DC Generator Welderon the market.CASE STUDY SNAPSHOTIndustry: Welding wire and equipmentmanufacturingEnergy management system (EnMS)guidance/standard: CAN/CSA-ISO 50001Key driver for an EnMS: Cost controland environmental sustainabilityImprovement focus: Reducing theconsumption of electricity andnatural gasLocation: Toronto, Ontario, CanadaProducts: Welding wire and equipmentAnnual energy consumption savings:22 percent energy savings in 2013Employees: 250 to 300Energy sources: Electricity and natural gasEnergy reduction goal: Reduce energyconsumption at all facilities by 2 percentto 3 percent per year

ISO 50001 Case Study: Lincoln ElectricEnergy management system overviewThe Lincoln Electric Company of Canada’s energymanagement policy recognizes that the uncontrolledconsumption of energy can have a negative impact onthe environment and on business performance. Acompany commitment to follow this policy is at thecore of Lincoln Electric’s energy management system(EnMS).Led by a cross-functional team that includes a range ofemployees and managers, the EnMS focuses oncontinuous improvement to ensure that energy ismanaged efficiently. Cost-effective measures areemployed to deliver ongoing improvements in energyperformance. The EnMS assesses and prioritizes allproposed energy-saving measures by using the samecriteria used for other investments. Energy-savinggoals are set by management and monitored monthly.Energy performance indicators are reviewed quarterly.Employees are encouraged to submit energy-savingideas. They are also expected to embrace a corporateculture of energy efficiency. “We are a profit-sharingcompany, so that makes it easy to motivate staff tosave money through energy efficiency,” says Adel Mir,Director of Engineering Services at Lincoln Electric.Mir also cites the important leadership role played byJoseph Doria, President and CEO, and the seniormanagement team.Business benefits achievedBy implementing its EnMS, Lincoln Electric reducedenergy consumption by 22 percent in 2013. “Oursavings in our processes have mainly been targeted inour electricity use,” Mir says.§§ Lincoln Electric Canada won thecorporation’s premier award for exceptionalenvironmental, health and safetyperformance in 2013 out of 48 worldwidemanufacturing facilities.§§ Profit-sharing drives employee engagementin energy efficiency.§§ Typically, 90 percent of energy projectsuggestions from employees are accepted.Company profileThe Lincoln Electric Company of Canada was foundedin 1916. Its parent company opened its doors inCleveland, Ohio, in 1895. Globally, Lincoln Electric hasmore than 10 000 employees across 48 manufacturingfacilities in 19 countries. Combined, these facilitiesserve customers in more than 160 countries.The Toronto, Ontario, plant is located in the LeasideBusiness Park. It has three divisions housed in onefacility, each with different energy needs. Two divisionsproduce steel welding wire, and the third makesindustrial welding machines. Lincoln Electric sellsdiesel-driven DC generator welding machinesworldwide. They are used on an industrial scale forprojects such as pipelines, heavy construction, bridgebuilding and energy sector projects.All three divisions are ISO 9001, 14001 and 50001certified. In total, the plant measures just under75 000 square metres, with 250 to 300 employeesworking in shifts on a 24/7, year-round schedule.Some of the biggest benefits from implementing theEnMS come from establishing well-definedgoals. The company has developed a structuredapproach to embed energy management in all facetsof the organization – from purchasing to maintenanceand engineering. The system also allows for continualimprovement as the company builds a self-sustainingculture of energy management.Mir also points to how a focus on energy efficiency hasenhanced Lincoln Electric’s reputation, both within itswider corporate family and with customers andsuppliers. The Canadian plant’s energy efficiencyefforts were highlighted in the corporation’s 2013annual report to shareholders.2Photo: Lincoln Electric. This sign over the front door at TheLincoln Electric Company in Cleveland, Ohio, quotes founderJames F. Lincoln. All employees, including the CEO, walkunder it each work day.

ISO 50001 Case Study: Lincoln ElectricEnergy cost by division2%Machine division and flux wire* (electricity)Machine division and flux wire* (natural gas)45%47%MIG wire** (electricity)6%*MIG wire** (natural gas)Flux wire is used in arc welding, which uses an electric arc to melt metals at the welding point.** MIG wire is so named because it is used in “metal inert gas” welding to join metal structurally.Business case for energymanagementLincoln Electric sees energy efficiency as a keycontributor to remaining viable as a Canadianmanufacturer. This view encouraged the company toseek ISO 50001 Energy Management Systemsstandard certification.“ISO 50001 fits well with our company philosophy thatenergy management is a cost-containment activity, andas a way to remain competitive as a Canadianmanufacturer,” Mir says. “Energy management alsoallows us to manage a part of the business that may beoverlooked during traditional cost-containment andcost-reduction activities.”Rising energy prices, particularly for electricity inOntario, was another key driver of the business casefor energy management. The more the plant canreduce its exposure to price volatility, the moremanagement can execute long-term business plans. Infact, Lincoln Electric views effective energymanagement as a core component of an effectiverisk-management strategy.Taking a systematic approach to energy managementalso allows plant staff to identify problems withequipment before they happen and reduce the loadand operating hours of machinery and equipment. Thispractice can boost productivity, reduce labour costsand extend the productive life of the equipment.Mir was able to make the business case for energymanagement by avoiding borrowing to financeprojects. Instead, a combination of funding fromgovernments and utilities, together with savingsgenerated by the projects themselves, was relied on.Key energy managementplan components§§ Ensure adequate resources areprovided for energy managementprograms.§§ Undertake periodic reviews of thebusiness to identify areas where energyreductions can be made.§§ Ensure controls are in place toeffectively maintain equipment andsustain energy efficiency initiatives.§§ Review the energy management policyregularly to remain committed tocontinuous improvement.3

ISO 50001 Case Study: Lincoln ElectricEnergy management systemimplementationLincoln Electric was introduced to ISO 50001 through a2011 pilot project that was funded by the ConservationFund of the Ontario Power Authority and delivered byconsulting engineers from Hatch Ltd. At the end ofthe pilot project, Hatch estimated improvements inelectricity use intensity at the plant ranged up to16.5 percent, with concurrent reductions in greenhouse gas emissions of up to 950 tonnes annually.As part of the pilot project, an energy assessmentof key systems at Lincoln Electric was done.As well, customized training, measurement andanalysis support, templates, and coaching onall aspects of the requirements for attainingISO 50001 certification were provided.The plant had already started complying with the U.S.Management System for Energy (MSE 2000) standardbefore developing an EnMS. MSE 2000 is widely seenas the forerunner of ISO 50001. “Starting with MSE2000 meant moving to ISO 50001 certification was thenext logical step within our continuous improvementmodel. We also had ISO 14001 in place,” Mir says.Laying the groundwork for an EnMS paid off quicklywhen it came to achieving ISO 50001 certification inMarch 2013. “We worked flat out for five months.”Steps to earning the ISO 50001designation41.Gain commitment from seniormanagement and staff.2.Select a team and an EnMS coordinator.3.Define the project scope.4.Collect baseline data on energy use,production and managementpractices.5.Develop an energy policy.6.Develop energy metrics, goals and targets.7.Provide technical and procedural training.Photo: Lincoln Electric. A welder works on a wind turbine.Lincoln Electric is one of the world’s largest suppliers ofwelding and cutting equipment to the wind tower industry.Energy teamLincoln Electric relied on a cross-functional energyteam to drive the EnMS. The team benefitted fromtechnical and procedural training provided by Hatchand used Six Sigma techniques and tools for processimprovement. Lean manufacturing principles alsodovetailed nicely with the continuous improvementethos of ISO 50001.The five-member team is led by Mir and hasrepresentatives from engineering, finance, production,maintenance, purchasing, and environmental healthand safety. The team meets monthly and conductsan energy review – its overall focus is on costcontainment. A running list of action items helps driveday-to-day activities. Every quarter, the energy teamreviews key energy performance indicators. Mir acts asa conduit between senior management, the energyteam and the rest of the plant. A key driver in thisinitiative is the support of Lincoln Electric’s presidentand CEO, J.G. Doria.Energy performance is tracked monthly againstpredicted energy performance. This predictedperformance is based on regression modellingcompleted in the energy review.

ISO 50001 Case Study: Lincoln ElectricLincoln Electric energy teamMembersDutiesEngineering andmaintenance Initiate, track and makeprogress on energyconservation projectsFinance Support energy managementinitiatives Conduct lifecycle costassessmentsProduction Support project training Run operational controls Submit energy savings ideasPurchasing Oversee energy management Evaluate the energy profile ofproducts from suppliersEnvironmentalhealth andsafety Coordinate ISO 14001 systems Track documentation Conduct audits Address corrective actionrequestsMotivated employeesAll Lincoln Electric employees must be familiarwith the corporate energy management policy.The EnMS garnered wide support from employeesearly on because it was portrayed as a costcontainment initiative. This aspect appealed toemployees because they enjoy a profit-sharingarrangement at Lincoln Electric. “Our profit-sharingplan includes everyone from the assemblers to theCEO. When everyone reaps the profits of energymanagement, it makes integration of energymanagement into the corporate culture that mucheasier,” Mir says.The company also operates on a piece-work model.This model further supported the EnMS becauseemployees understand that energy efficiency equalsproduction efficiency. So the more efficiently they canproduce products, the more they earn.The high volume of employee suggestions speaksto the popularity of the EnMS. The energy team alsoworks hard to see that employee ideas are treatedwith respect and acted on wherever possible.“Ninety percent of the suggestions are accepted,although the ones with a long payback period andhigh investment may take longer to execute,” Mir says.Typically, projects must have a two-year paybackperiod. But Mir says longer payback periods can beaccepted if the project offers compelling value andaligns with longer-term business goals.Energy-efficient suppliersLincoln Electric encourages its suppliers to incorporateenergy-efficient alternatives into their operations andto offer energy-efficient products and services. Thisattitude is significant because a large portion of theplant’s environmental footprint is directly related tothe supply chain. Lincoln Electric has added anenvironmental section to its supplier report cards.This new section highlights suppliers that share thecompany’s vision of energy efficiency.Third-party contractors must familiarize themselveswith the company’s energy management policy.Special awareness of the policy must be demonstratedby contractors that do work relating to significantenergy use at the plant. They can also use theemployee energy efficiency suggestion program.Purchasing for energy efficiencyThe plant has modified its purchasing forms to includelifecycle cost analysis. This feature helps the financedepartment evaluate the energy efficiency characteristics of new capital equipment and replacementparts.Customer involvement helps build acorporate energy cultureLincoln Electric’s Green Initiative Awareness Programpromotes the company’s initiatives to reduce theenvironmental impact of its manufacturing processesand products. The continued investment in technological advancement for its welding products,which has resulted in lower energy use and reducedenvironmental impacts for its customers, underlinesthe company’s commitment to creating products that5

ISO 50001 Case Study: Lincoln Electrichelp customers reduce welding costs and adhere toenvironmental standards. To help customers easilyidentify the products connected to these initiatives,Lincoln Electric is labelling them with a new “GreenInitiative” logo that clearly states the product’s greenadvantage.SubmeteringThe plant’s three divisions have different energy needs.The two divisions that produce flux cored & MIGwelding wire run 24/7. The third division makesindustrial welding machines and operates duringregular business hours, Monday to Friday. Installingsubmeters allowed the energy team to get a clearpicture of each division’s energy needs.Maximize energy conservationLincoln Electric relied on a network of agencies fromgovernment and provincial utilities to help make thejourney to ISO 50001 possible.Natural Resources Canada (NRCan), through the Officeof Energy Efficiency, provided 25,000 in cost-sharingto help with ISO 50001 certification. NRCan’s CanadianIndustry Program for Energy Conservation (CIPEC) alsohelped Lincoln Electric with access to energyconservation tools and services.BarriersHaving already attained MSE 2000 and ISO 14001certification simplified Lincoln Electric’s journey to ISO50001 certification. However, there were still barriers toovercome.Having submetering installed was essential becausethe plant is housed in a 1940s-era building. Its olderelectricity and natural gas meters do not provide thedata necessary to proceed with ISO 50001certification.Although Lincoln Electric senior executives understandthe value of energy conservation, funds to invest inenergy efficiency projects are limited. Energy projectsmust compete against other business priorities forfunding. Management support is a key driver in thesuccess of ISO 50001, and the belief in the value ofenergy management needs to come from the top.Company managers and executives played an activerole in supporting energy conservation, includingparticipating in energy management events such asemployee meetings and NRCan’s Dollars to enseEnergy Management workshops.As a member of CIPEC, Lincoln Electric has become aCIPEC Leader that gives back to its industry peers.The energy team members from Lincoln Electric wereamong approximately 100 people from industrial firmsacross Canada that participated in a January 2013webinar hosted by NRCan’s Industry andTransportation Division. Participants learned about theISO 50001 Energy Management Systems standard andits implementation in Canada.The Ontario Power Authority’s Conservation Fundcovered the cost of the pilot project delivered byconsulting engineers at Hatch to help Lincoln Electricwork toward meeting the requirements of the ISO50001 standard. Toronto Hydro and Enbridge Gashelped defray the costs of submetering.6Photo: Lincoln Electric. Lincoln Electric’s welders can survivethe harshest environments from the desert to coldtemperatures. Pictured here are pipeline welders joining apipe. This picture hangs on the wall of the factory to remindthe employees where our products are used.

ISO 50001 Case Study: Lincoln ElectricNext stepsLessons learnedMir and his team learned several lessonsthat other energy management teams canbenefit from:The Toronto plant is upgrading its aging compressedair system. An employee contest to spot the air leaks,“Catch the Energy Thief, ” is the first step in optimizingthe entire system.§§ The amount of paperwork associatedwith ISO 50001 certification ismanageable.§§ Build a corporate culture whereeveryone – not just the energy team– thinks about conserving energy.§§ Establish energy efficiency as animportant driver of cost control.§§ Establish detailed baseline energydata.ResultsThe bake oven used in wire production was discoveredto be the biggest single user of energy. Changes weremade to the production schedule to reduce the peakdemand costs for electricity. The bake oven was alsooptimized, which reduced its electricity consumptionby 6 percent.Keys to successThe company developed a structuredapproach to embed energy managementin all facets of the organization – frompurchasing to maintenance andengineering. The system also allows forcontinual improvement as the companybuilds a self-sustaining culture of energymanagement.All Lincoln Electric employees must befamiliar with the corporate energymanagement policy. The EnMS garneredwide support from employees early onbecause it was portrayed as a costcontainment initiative. This aspectappealed to employees because theyenjoy a profit-sharing arrangement atLincoln Electric.The wire drawing line was also optimized becausesubmeters gave a better picture of the drawing line’senergy consumption. Drawing is the metalworking process used to shape a wire by pulling itthrough a forming die.“Our profit-sharing plan includes everyonefrom the assemblers to the CEO. Wheneveryone reaps the profits of energymanagement, it makes integration ofenergy management into the corporateculture that much easier,” Mir says.The plant installed a fume extraction system that keepsheated air in the plant by filtering it inside rather thanwasting heat by venting air directly outside. The EnMSalso established aggressive limits and reductiontargets for water use.For more details on incentive management,see “Lincoln Electric” by Jordan I. Siegel(Harvard Business School Case 707-445,2008). See also Spark by Frank Koller(Public Affairs Books, February 2010).Other energy projects included converting old steamboilers to more efficient natural gas heating for plantheating, changing DC motors to AC, and retrofittinglighting.For information regarding reproduction rights, contact NaturalResources Canada at Her Majesty the Queen in Right of Canada, as represented by theMinister of Natural Resources, 2015Aussi disponible en français sous le titre :Norme ISO 50001 sur les systèmesde gestion de l’énergie - Lincoln ElectricCat. No. M134-32/5-2014E-PDF (Online)ISBN 978-1-100-25179-07

ISO 50001 certification were provided. The plant had already started complying with the U.S. Management System for Energy (MSE 2000) standard . before developing an EnMS. MSE 2000 is widely seen as the forerunner of ISO 50001. “Starting with MSE 2000 meant moving to ISO 50001 certific

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