## ROI: Super Air Knife vs. Drilled Pipe

Return on Investment, or ROI, is the ratio of profit over total investment.  Many people use it to check investment stocks, financial markets, capital equipment, etc.  It is a quantitative way in determining the validity for an investment or project.   You can use this ROI value to give a measurable rate in looking at your investment, no matter how big or small.  In this blog, I will compare the ROI between an EXAIR Super Air Knife to a home-made drilled pipe.  Let’s start by looking at Equation 1 to calculate the Return on Investment.  For a positive ROI value, the project will pay for itself in less than one year.  Any negative values would represent a high-risk investment.

Equation 1:  ROI = (Total Annual Savings – Total Project Cost) / Total Project Cost * 100

The Total Project Cost is the cost of the product with the labor to install.  In our example, we will use a 36” (914mm) blow-off device to cover the width of a conveyor.  One device will be an inexpensive drilled pipe and the other will be a high-efficiency EXAIR Super Air Knife.  The drilled pipe had (72) 1/16” (1.6mm) diameter holes spaced ½” (13mm) apart.  EXAIR manufactures the model 110036 36” Aluminum Super Air Knife with a .002” (.05mm) shim along the entire length.  The model 110036 has a retail price of \$802.00 each.  The cost of the home-made drilled pipe was around \$70.00 for material and labor.  What a difference in price!  It seems like the ROI should be in the negative, but is it?

Let’s continue on with the Return on Investment.  The amount of time required to install the Super Air Knife across the conveyor only took a maintenance staff about one hour to mount.  The labor rate that I will use in this example is \$80.00 per hour (you can change this to your current labor rate).  The labor cost to install the knife is \$80.00.   The Total Project Cost can be calculated as follows: \$802 + \$80.00 = \$882.00.  The next part of the equation, Total Annual Savings, is a bit more in-depth, but the calculation is below.

To calculate the Total Annual Savings, the amount of compressed air used by the drilled pipe is around 261 SCFM (7,389 SLPM) at 60 PSIG (4.1 Bar).  The model 110036 Super Air Knife has an air consumption of 82.8 SCFM (2,344 SLPM) at 60 PSIG (4.1 Bar).  With an electrical rate of \$0.08 per Kilowatt-hour, the electrical cost is near \$0.25 per 1000 standard cubic feet or compressed air, or \$0.25/1000SCF.  To calculate an annual savings, let’s use a blow-off operation of 8 hours/day for 250 days a year.   Replacing the drilled pipe with the model 110036 Super Air Knife, it will save you (261 SCFM – 82.8 SCFM) = 178.2 SCFM of compressed air.  To put this into a monetary value, the annual savings will be 178.2 SCFM *\$0.25/1000SCF * 60 Min/hr * 8hr/day * 250 day/yr = \$5,346.00 per year.

With the Total Annual Cost and the Project Cost known, we can insert these values into Equation 1 to calculate the ROI:

ROI = (Total annual savings – Total Project Cost) / Project Cost * 100

ROI = (\$5,346.00 – \$882.00) / \$882.00 * 100

ROI = 506%

With a percentage value that high, we are looking at a payback period of only 40 days.  You may look at the initial cost and be discouraged; but in a little over a month, the model 110036 will have paid for itself.  And after using it for one year, it will save your company \$5,346.00.

In my experience, a loud blowing noise from your equipment is generally coming from an inefficient and safety-concerned product.  With these “cheap” ways to blow compressed air, it will cost your company a lot of money to use as shown in the example above.  EXAIR has an Air Savings Calculator on our website to calculate the savings by replacing your inefficient blow-off devices. And, if you would like to team up with EXAIR to find ways to increase savings, improve productivity, and promote safety, you can contact an Application Engineer.  We can help you get started by defining your Return on Investment with EXAIR products.

John Ball
Application Engineer
Email: johnball@exair.com

## EXAIR’s Return on Investment For One Engineered Air Nozzle is Amazing!

Return on Investment (ROI) is a measure of the gain (preferably) or loss generated relative to the amount of money that was invested.  ROI is typically expressed as a percentage and is generally used for financial decisions, examining the profitability of a company, or comparing different investments.  It can also be used to evaluate a project or process improvement to decide whether spending money on a project makes sense.  The formula is shown below-

• A negative ROI says the project would result in an overall loss of money
• An ROI at zero is neither a loss or gain scenario
• A positive ROI is a beneficial result, and the larger the value the greater the gain

Example – installing a Super Air Nozzles (14 SCFM compressed air consumption) in place of 1/4″ open pipe (33 SCFM of air consumption consumption) .  Using the Cost Savings Calculator on the EXAIR website, model 1100 nozzle will save \$1,710 in energy costs. The model 1100 nozzle costs \$42, assuming a \$5 compression fitting and \$45 in labor to install, the result is a Cost of Investment of \$92.00. The ROI calculation for Year one is-

ROI = 1,759% – a very large and positive value.  Payback time is only 13 working days!

If you have questions regarding ROI and need help in determining the gain and cost from invest values for a project that includes an EXAIR Intelligent Compressed Air® Product, feel free to contact EXAIR and myself or one of our Application Engineers can help you determine the best solution.

Jordan Shouse
Application Engineer

Send me an email
Find us on the Web

## Return on Investment: A Calculation to Support Using EXAIR Products

Return on Investment, or ROI, is the ratio of profit over total investment.  Many people use it to evaluate stocks, financial markets, capital equipment, etc.  It is a quantitative way in determining the validity of an investment or project.   Recently, there has been a big push by power companies for energy efficiency within the manufacturing sectors.  EXAIR, in partnership with Energy Star, has been manufacturing safe and efficient products since 1983.  An ROI will give a measurable value to communicate more thoroughly with your financial decision-makers.

Equation 1:  ROI = (Total annual savings – Total Project Cost) / Project Cost * 100

In an earlier blog, I wrote about a project with a company in calculating compressed air savings; “EXAIR Super Air Nozzles: 38 Day ROI Saves Money”.  In this blog, I determined the total compressed air savings and the payback period by switching to EXAIR Super Air Nozzles.  The payback period is the amount of time it will take for the project to pay for itself; and for the above manufacturer, it was calculated at 38 days.  To associate this to a Return on Investment, I will use that information from the blog to calculate the ROI.  Equation 1 shows that for any positive ROI value means that the payback period is less than one year.  The larger the ROI value, the quicker the investment that you made will start earning money for your company.

The first part of the equation, Total Annual Savings, is calculated by amount of compressed air savings when using EXAIR Super Air Nozzles in a blow-off application.  When this customer switched from copper tubes, which uses an excessive amount of compressed air, to the model 1110SS Super Air Nozzles, the compressed air consumption dropped by 80%.  Compressed air is considered a fourth utility in manufacturing plants because the amount of electricity to make compressed air is very large.  At a rate of \$0.08/KWh, each Super Air Nozzle saved this company \$306.00 per year.  As described in the blog, the facility used four nozzles per machine, and they had 25 machines in their facility.  The total annual savings is calculated as follows:

Equation 2: Total Annual Savings = \$306 * 4 * 25 = \$30,600 per year.

The second part of the equation, Total Project Cost, is the cost of the nozzles plus the labor to install them onto the machines.  The model 1110SS Super Air Nozzle has a price of \$46.00 each.  These engineered nozzles are designed to use less compressed air by entraining the “free” ambient air, making them very efficient for blow-off applications.  The amount of time required to install four nozzles to each machine was 1 hour.  This time included tapping, fixturing, and testing each setup.  The labor rate that I will use in this example is \$75.00 per hour (you can modify this to your current labor rate).  The labor cost to install four nozzles is \$75.00 per machine.   The Total Project Cost can be calculated as follows:

Equation 3: Total Project Cost = (\$46 * 100 nozzles) + (\$75 * 25 machines) = \$6,475

With the Total Annual Cost and the Project Cost known, we can insert these values into Equation 1 to calculate the ROI:

ROI = (Total annual savings – Total Project Cost) / Project Cost * 100

ROI = (\$30,600 – \$6,475)/\$6,475 * 100

ROI = 373%

When a decision maker sees this large of a value for a Return on Investment, it makes it very easy to proceed with an energy-saving project to install EXAIR Super Air Nozzles on their machines.

Besides cost savings, there are some additional things that EXAIR products can provide.  It may be difficult to put a value on the savings, but these products can improve your process and save your company money.  First, they can reduce repair or replacement costs on maintenance items for the air compressors.  If you use less compressed air, then the running hours of the compressor is reduced.  Second, some things that can be easily overlooked is safety.  The Intelligent Compressed Air® products have a much lower sound level where expensive PPEs may not be required.  Another safety feature is dead-end pressure in which the operator could risk health in using open pipe or substandard nozzles.  Some other enhancements in using EXAIR products are improved system reliability, increased productivity, and reduced unscheduled downtimes (typically seen with broken plastic nozzles).  These added benefits plus the short ROI can validate a energy-savings project in your facility.

Power companies see the great value in using efficient engineered products in compressed air systems as they currently offer rebates.  If you need help to see if your local power company does offer rebates, EXAIR can research the programs for you.  The rebates will reduce the cost of each nozzle as well as cut the overall project cost.  EXAIR also offers an Efficiency Lab.  We will compare your current blowing device with an EXAIR product to find any compressed air savings.  It is simple to do.  Just fill out the form, Efficiency Lab, and ship your product to us.  We will test each product with calibrated equipment and report the results.  The comprehensive report will include compressed air savings which can be used for the ROI calculations above.  For the company above, they were able to save \$30,600 a year with a ROI at 373%.  If you would like to team up with EXAIR to establish annual savings, project improvements, and rebates, you can contact an Application Engineer to get started.  We will be happy to work with you.

John Ball
Application Engineer
Email: johnball@exair.com

## ROI – Return on Investment

Return on Investment (ROI) is a measure of the gain (preferably) or loss generated relative to the amount of money that was invested.  ROI is typically expressed as a percentage and is generally used for personal financial decisions, examining the profitability of a company, or comparing different investments.  It can also be used to evaluate a project or process improvement to decide whether spending money on a project makes sense.  The formula is shown below-

• A negative ROI says the project would result in an overall loss of money
• An ROI at zero is neither a loss or gain scenario
• A positive ROI is a beneficial result, and the larger the value the greater the gain

Gain from investment could include many factors, such as energy savings, reduced scrap savings, cost per part due to increased throughput savings, and many more.  It is important to analyze the full impact and to truly understand all of the savings that can be realized.

Cost of investment also could have many factors, including the capital cost, installation costs, downtime cost for installation, and others.  The same care should be taken to fully capture the cost of the investment.

Example – installing a Super Air Nozzles (14 SCFM compressed air consumption) in place of 1/4″ open pipe (33 SCFM of air consumption consumption) .  Using the Cost Savings Calculator on the EXAIR website, model 1100 nozzle will save \$1,710 in energy costs. The model 1100 nozzle costs \$37, assuming a \$5 compression fitting and \$50 in labor to install, the result is a Cost of Investment of \$92.00. The ROI calculation for Year 1 is-

ROI = 1,759% – a very large and positive value.  Payback time is only 13 working days.

Armed with the knowledge of a high ROI, it should be easier to get projects approved and funded.  Not proceeding with the project costs more than implementing it.

If you have questions regarding ROI and need help in determining the gain and cost from invest values for a project that includes an EXAIR Intelligent Compressed Air® Product, feel free to contact EXAIR and myself or one of our Application Engineers can help you determine the best solution.

Brian Bergmann
Application Engineer

Send me an email
Find us on the Web