By Robert Glover
Parker Hannifin FNS Division
There are typically two ways to increase profit. First,
you can increase your price. The second is to reduce your cost.
Increasing your price is necessary at times but comes with it some inherent potential of lost business to competition or uncomfortable
conversations with your best customers. Reducing cost is a great option, when it’s available. Your suppliers aren’t eager to reduce their profit so getting price concessions isn’t easy. That is, unless you could change the rules of the game and produce what others would sell you at a premium.
High pressure cylinder rental can be expensive and difficult to mange.
If a supply of nitrogen is in your cost profile, then you may be able to do just that with the simple addition of a nitrogen generator. A nitrogen generator simply uses a supply of compressed air and, through time tested and simple technology separates out the N2 you need.
Is a nitrogen generator right for you?
It’s common for a gas company to charge their customers per 100 cubic feet of nitrogen delivered. The price for each 100 cubic feet of gas is usually between 35 cents and 60 or 70 cents but can be more than $1.00 or $2.00 depending on the delivery method. The operational cost to produce your
own nitrogen is typically between 12 cents and 18 cents. The majority of this figure is made up of the electrical cost to run the compressed air system so will vary with your price per kw/h.
Having your own Nitrogen Generation System gives you complete control over your purity, meeting your demand and your costs.
It’s this difference (20 cents or more per 100 cubic feet of N2 used) that pays back the capitol and, eventually, provides for the
savings mentioned above. The more consistently you use your nitrogen supply the faster the payback and better the long term savings. Sites using nitrogen 40 hours a week will usually see a 2 to 3 year payback on the capitol while those using it 24/7/365 can see a 6 to 8 month return on their investment. A well-made generator will not require a major overhaul for 10 to 15 years. There are several specifics to each site which will increase or decrease the speed of ROI. These specifics can be quickly reviewed and discussed with a qualified N2 generator specialist.
The next time you have to choose between reduced profit and a price increase, have a look at your nitrogen bill and then contact Lewis Systems. After a free, initial consultation you’ll know if you can reduce your operating cost and keep your profit in house where it belongs.