Economic Solutions of Ownership
By Timothy Park, Vice President – Merkle International
What is the right material for this application? Who should be responsible for this portion or that portion? Where should we set the limits of the scope of supply? How can we lower the installed cost? How can we reduce the delivered cost? These are all questions that project teams must evaluate for each project. At Merkle International, we develop designs that result in increased customer value and we have multiple designs that we employ to realize that value, depending on the project. We always look at the question of value from our customers’ point of view. We ask ourselves, “What is the best value for the project?” This question moves us to evaluate the balance between capital costs, installation costs, operational costs and maintenance costs. We can supply low-cost materials without insulation, which will give low capital costs, but sacrifice longevity, operational efficiency and cost more to maintain. Likewise, we can supply long-lasting materials with low thermal conductivity, which will be much more capital intensive, while saving energy and requiring little or no maintenance for the full campaign. When we can best match our supply to the customer’s needs, this delivers value to them.
An efficient installation helps lower the project cost. While this is not part of Merkle’s scope, we still try to bring value by lowering installation costs wherever we can. A recent example of this was when one of our technicians was struggling to match new Merkle refractory materials to the existing steel structure. The existing steel structure had been used for several campaigns and was no longer straight. Despite the amount of time it took to install with field modifications to the steel, the installation was a success. Our technician came back to the office and asked, “Can we develop supports that will allow greater field flexibility?” He developed a unique design, which costs only slightly more than the standard design; samples were fabricated; a project engineer tested the design in the shop and the testing showed that it would work. It has since been successfully installed with customers and it is working well. The installation with the new supports saved time versus field modification of the existing steel. For a new plant, we will still use the standard pieces. For a rebuild however, we will supply the new design. In either case, we are confident that our customer will ultimately benefit from lower installation and total costs.
The scope of supply is another area where we look to optimize project costs. Most often, it makes sense for Merkle to supply everything, to ensure that all components fit together and that the installation will go smoothly. Additionally, Merkle purchases materials in large quantities, especially proprietary parts, which allows us to deliver parts to the project at a lower cost by leveraging our purchasing efficiencies. In other cases, it makes more sense to have a few items sourced locally. In our tin bath roof designs, we use 50mm or 2” structural steel pipes. These pipes can be supplied by Merkle or can be supplied from Merkle specifications. These pipes are installed early in the project, so even if there is a problem, it will not delay the project. With other Merkle products, backwall or batch charger components must be installed just before heat-up, so a delay caused by locally supplied parts might prove costly, through a delayed heat-up. Merkle leverages many years’ experience to give customers recommendations for optimizing the scope of supply.
We investigate the use of new materials whilst reviewing the old, to find the best blend of cost and performance. Can we use a lower-cost material for a shorter planned campaign? Do we need to upgrade because the conditions will be harsh? Are we looking for the longest campaign without repair? These are all questions we review with our customers to make sure that we are supplying materials that meet their project requirements.
When we consider the total cost to the project, we consider the materials, installation and even the freight cost. For large products such as a tin bath roof, freight costs can be significant. While we are flexible and work under many different Incoterms, we more often than not supply on either an FCA or CIF freight term basis. We have found through the years that our freight costs are lowest for these two sets of terms. If we must supply FOB-Port of Export, our costs can be 80% of the cost to deliver to the country of destination, or CIF. For only a little more, we can deliver to the port of destination, saving the project money.
The superiority of Merkle suspended refractory systems is known worldwide, providing on-site installation and ongoing support for all products and services offered. Merkle International leverages their depth of expert experience to develop custom solutions that fit their customers’ process and budget; partnering with them every step of the way, from initial review of project requirements and material options, to exchange of technical details and project management. Here is a quick look at some of the products Merkle International can provide.
The Merkle veneer backwall is the longest-lasting wall, successfully completing 20+ year campaigns. A veneer backwall featuring a silica vertical section lowers capital cost while still delivering 15+ year campaigns (Figure 1).
The Merkle backwall is made of bonded AZS nose adding thermal shock resistance to a low-cost silica wall for high-capacity container furnaces with long campaigns (Figure 2).
Merkle can lower total the installed cost on their tin bath roof by using local supply of structural steel (Figure 3).
The decisions regarding the materials, the scope of supply, assembly costs and freight all must be weighed by our customer’s purchasing and project staff. By offering the most economical solution to our customer, we hope that they always view us as a skillful partner and we can continue to earn their valued business.