Return on Investment, or ROI, is the ratio of profit over total investment. Many people use it to check stocks, financial markets, capital equipment, etc. It is a quantitative way in determining the validity for an investment or project. You can use the ROI value to give a measurable rate in looking at your 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. In this blog, I will compare the ROI between an EXAIR Super Air Knife to a common drilled pipe. Let’s start by looking at Equation 1 to calculate the Return on 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 24” (610mm) wide blow-off device. One device will be an inexpensive drilled pipe and the other will be a high-efficiency EXAIR Super Air Knife. The drilled pipe had (48) 1/16” (1.6mm) diameter holes spaced ½” (13mm) apart. EXAIR manufactures the model 110024 Super Air Knife with a .002” (.05mm) slot along the entire length. Both have a blowing width of 24” to cover the conveyor. The model 110024 has a retail price of $491.00 each. The cost of the drilled pipe was around $50.00. What a difference in price! But, how could EXAIR remain a leader in this industry for over 35 years?
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 $75.00 per hour (you can change this to your current labor rate). The labor cost to install the knife is $75.00. The Total Project Cost can be calculated as follows: ($491 – $50) + $75.00 = $516.00. The next part of the equation, Total annual savings, is a bit more in-depth, but the calculation is shown below.
EXAIR manufactures engineered products to be efficient and safe. The Super Air Knife has a 40:1 amplification ratio which means that 40 parts of “free” ambient air is entrained for every 1 part of compressed air. For comparison, the Super Air Knives are to compressed air systems as LED lightbulbs are to electricity. In that same way, the drilled pipe would represent an incandescent lightbulb. The reason for this analogy is because of the amount of energy that the EXAIR Super Air Knives can save. While LED lightbulbs are a bit more expensive than the incandescent lightbulbs, the value for the Return on Investment is at a higher percentage, or in other words, a short payback period. On the other hand, the drilled pipe is less expensive to make, but the overall cost for using it in your compressed air system is much higher. I will explain how below.
To calculate the Total Annual Savings, we will use the same blow-off scenario as above. The amount of compressed air used by the drilled pipe is around 174 SCFM (4,924 SLPM) at 60 PSIG (4.1 Bar). The model 110024 Super Air Knife has an air consumption of 55.2 SCFM (1,563 SLPM) at 60 PSIG (4.1 Bar). At an electrical rate of $0.08 per Kilowatt-hour, we can figure the cost to make compressed air. Based on 4 SCFM per horsepower of air compressor, the electrical cost is $0.25 per 1000 standard cubic feet, 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 110024 Super Air Knife, it will save you (174 SCFM – 55.2 SCFM) = 121.8 SCFM of compressed air. To put this into a monetary value, the annual savings will be 121.8 SCFM *$0.25/1000SCF * 60 Min/hr * 8hr/day * 250 day/yr = $3,654 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 = ($3,654 – $516.00) / $516.00 * 100
ROI = 608%
With a percentage value that high, we are looking at a payback period of only 52 days. You may look at the initial cost and be discouraged; but in a little over a month, the model 110024 will have paid for itself. And after using it for one year, it will save your company $3,654.00. Some things that may be overlooked are safety issues. With some inexpensive blow-off devices, the noise levels are over the OSHA limits. The drilled pipe had a noise level of 91 dBA while the Super Air Knife only had a noise level of 65 dBA.
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. If you would like to team up with EXAIR to set up ways to increase savings, improve productivity, and promote safety, an Application Engineer can help you to get started.