The warning shots have reached a crescendo. The surging cost of energy -- a common denominator in all industrial operations -- is bedevling manufacturers across the country and around the globe. In its wake, many companies have been forced to make undesirable and irreversible business decisions. The impact of these price hikes on jobs is notoriously difficult to measure, since layoffs typically owe to a confluence of factors. But neither can the contributing effect be denied. The National Association of Manufacturers (NAM) counts two million lost jobs in the manufacturing sector since 2000, and attributes at least some of those to unmanageable energy costs. A survey of manufacturers released last November by the NAM found that 45% of respondents planned either layoffs or wage freezes or reductions to keep pace with cost pressures. In that same survey, Phil Raimondo, president & COO of Behlen Mfg. Co. and a NAM board member, said that the cost to fire his company's production ovens was double what it had been the previous winter. Likewise, James Marshall, president of Sur-Flo Plastics & Engineering, Inc., which makes automotive components, said energy price hikes had driven the cost of materials as much as 93% higher than early 2004 levels. Marshall cited reduced headcount, wage freezes, and benefits cuts as his company's only recourse. Other manufacturers have moved production to areas outside the U.S. where the power supply is cheaper. Yet, for those who sell their products in the U.S., distant shores produce longer supply chains -- far from ideal when trying to escape soaring fuel costs. Indeed, 77% of senior manufacturing executives surveyed in late 2005 by analyst firm Industry Directions said their company had been forced to reassess its supply chain strategy because of higher energy costs. In nearly all cases, manufacturers agree that something must be done. A Tumultuous Ride Price hikes have caused their fair share of pain recently, but the history of the industrial sector's energy woes traces back much further. After World War II, coal's reign as the world's favored energy source waned, and oil took over as the fuel of choice in the manufacturing sector. Adjusted for inflation, prices for oil actually declined from the mid-20th century to the early 1970s. That tranquility was shattered when various sources of unrest in the Middle East during that decade drove prices to record highs. They eventually stabilized and, but for a spike associated with the first Gulf War in 1991, remained steady through 2000. Immediately following September 11, 2001, prices fell on speculation of a world recession and lower demand. Subsequent OPEC-induced production cuts led to another ramp up, and recent natural disasters coupled with political tensions have compounded the rise. The adoption of natural gas as an industrial fuel source came in response to oil's excitability, and grew to rival its popularity -- in 2004 natural gas accounted for 39% of industry's energy use, compared to oil's 43%, according to the Department of Energy's Energy Information Admintration. But the intervening years in the natural gas sector have served up much the same recipe. "Back in the 1990s, prices averaged $2.20 per million BTUs. Now they're roughly about $7.70," says Keith Swift, chief economist at the American Chemistry Council, an advocacy group for chemicals manufacturers. To put that in perspective, Swift notes that every increase of $1.00 in the price of natural gas costs the chemical industry alone $3.5 billion. In essence, industrial customers had turned to natural gas as an alternative to the volatility in the oil market, and now found themselves fighting a similar battle on different turf. And yet in today's demand-driven manufacturing environment, companies don't have the luxury of waiting out price hikes. The cost pressures are immediate and the options for shifting them few. At the end of the supply chain, customers expect the same goods for the same prices. Witness Marc Brown, vice president and CIO of Del Monte, who noted at last fall's AMR Executive Leadership Conference that the price of a can of tuna hasn't changed since the 1950s, even as the production costs have risen dramatically. PricewaterhouseCoopers' quarterly Manufacturing Barometer bears out his point. This year's first-quarter survey found that two-thirds of U.S. industrial manufacturers are only able to shift to consumers some, very little, or none of their growing energy costs. Some groups are lobbying for better solutions. "We can't conserve our way out of an energy crisis," says Kat Snodgrass, a spokesperson for the NAM. Under that rallying cry, the association has been waging a mostly uphill battle to persuade Congress to allow development of oil reserves in the Arctic National Wildlife Refuge and oil and natural gas deposits along the Outer Continental Shelf. In the meantime, manufacturers scramble for relief. Toyota Takes the Lead As usual, automation is taking up the challenge. On a basic level, the landscape of energy management involves three components: hardware to monitor energy consumption; software to render the metrics of that consumption; and human ingenuity to devise methods for reducing use. For most manufacturers, the first stumbling block is visibility. "You can't control what you don't measure," says Mark Rucker, power systems specialist at Toyota Motor Manufacturing Kentucky (TMMK). When it comes to trimming unnecessary costs from operations, Toyota has set an example that countless manufacturers over the past few decades have followed. At TMMK in Georgetown, KY, Rucker uses a Square D PowerLogic software package from Schneider Electric to track energy use across the facility's 7.5 million square feet of automotive plants. The PowerLogic system, and others like it, acts as a business intelligence tool for power consumption, delivering to plant engineers and facilities managers detailed information on where, when, and how energy is being used. In concert with the company's vaunted Toyota Production System, the PowerLogic products have worked wonders, Rucker says. "Ten years ago this plant peaked at about 105 megawatts in the summer" -- equivalent to the amount of energy needed to power 105,000 homes. "We peak at 95 now," he says. "But we're making at least 10% more vehicles." Pivotal to that success, Rucker says, has been Toyota's tenacity in metering its plants. "For most of my areas," he says, "I can tell you on a line-by-line basis how much energy it uses, when it uses it, when it's wasting it." With more than a dozen manufacturing facilities in North America, Toyota's meters and power-monitoring systems run the gamut of brands, even within each plant. Rucker says that among others, the lineup includes Honeywell International Inc., Schneider Electric (Square D), GE Fanuc Automation, Rockwell Automation (Allen-Bradley), and a Siemens Energy and Automation Inc. (Siemens)/Cutler Hammer hybrid. "The key thing about cost allocation is that you need to have a meter that is capable of picking up parameters that are most useful, like kwh and also kilowatt demand," says Lou Mane of GE Consumer & Industrial's sales development team. Mane also points out that the meter should be capable of storing the information it gleans from the system. "The data integrity must begin with the meter," he says. Rucker notes that as Toyota refurbishes its facilities, the company is installing metering hardware that runs on open protocols, enabling an even higher level of information collection and exchange. Through the data collected by those meters, TMMK is focused on minimizing non-production energy -- energy used when the line is not producing vehicles -- whenever and wherever possible. That, he says, is where PowerLogic and other systems prove invaluable. The energy management tools provide the details on where energy is being used as well as where it is being wasted. As for return on investment, Rucker says the system can be measured just by the information it provides on the facility's power factor and utility tariffs. That ability alone, he says, "has probably paid for the PowerLogic system multiple times in the savings off our bill." The Demand Builds While Toyota's conservation efforts may have been ahead of the curve when they began in earnest in the early 1990s, the manufacturing world is catching up. "We're seeing a lot of companies that perhaps didn't manage energy that closely... starting to look more closely at what can they do to control that cost," says Colin Masson, research director for chemicals and process at AMR Research (Boston). Now, under duress, many are looking to energy cost management tools for assistance. Rockwell Automation's Power and Energy Management Systems division offers numerous products -- including RSEnergyMetrix management software -- for monitoring consumption. Al Hamdan, the group's product marketing manager, says Rockwell's power monitoring products experienced a 25% increase in sales last year in a market that averages growth of 10% to 11%. For Rockwell and other vendors, that means a much more attentive audience. Columbian Chemicals Company was a member of that audience a few years back. In 2003, the maker of carbon black, a raw material used in rubbers, inks, and other materials, found itself bridled with ballooning costs and process inefficiencies that local plant managers were ill-equipped to resolve. Columbian officials knew they needed to mount a full-scale assault on energy use at their 11 processing plants worldwide. The company turned to the PlantTriage performance supervision system from ExperTune Inc., which provides business-process software to the process industries. The system allowed Columbian to identify poorly tuned loops, excessive DCS filtration, oversized and undersized valves, and, in the words of Michael Kennedy, Columbian's global manager of process control engineering, "far too many operator-induced modifications." According to Kennedy, the pilot deployment of PlantTriage produced savings in energy usage and capital that far exceeded the company's expectations. That initial success inspired additional deployments. Columbian currently runs PlantTriage in four locations, and plans to extend the system to all of its plants in the near future. Factory-Wide Remedies Users of energy management products say that having a report card on their energy use quickly leads them to the areas where they can improve their scores. Mark Rucker at Toyota attributes a large portion of his company's success in energy reduction to "really simple, logical stuff." Things like reducing non-production energy can be a starting point for other companies looking to save on energy, but the methods of cutting power consumption are as varied as the types of plants using it. Remedies range from the relatively simple -- turning off the lights -- to the profound, such as reengineering a production line for more efficiency. Some manufacturers have shifted production to off times to avoid the premiums on peak-time energy use. Others have created novel methods of converting the byproducts of their operations into energy. Virtually every step along the path to manufactured goods presents opportunities for energy reduction. A growing area of attention involves the motors that power HVAC fans, conveyors, compressors, and many other machines in production facilities. With their numbers sometimes reaching into the hundreds, motors consume a substantial portion of the energy in a factory, so any increase in their efficiency can yield attractive savings. Toyota, for instance, is partnering with GE to replace older motors and drives with newer, more energy-efficient models. The more efficient models draw on variable frequency drives, which synchronize their output with the power needs of the associated motor. Although they have been available commercially for more than 20 years, variable frequency drives have seen broader adoption lately as energy concerns have risen and prices of the drives have fallen. "The demand for variable frequency drives as compared to other motor-starting mechanisms is probably two to three times the growth," says Brian Taylor, business manager of electronic power components at Rockwell Automation, which markets the Allen-Bradley PowerFlex brand of motors. He says the variable-speed drives can have payback periods from months to a few years. On an engineering level, things like synchronous condensers, AC power versus DC, and internal/external harmonics all play a role in a plant's power factor, the measure of how efficiently it uses energy. These can be employed and/or optimized to eliminate power factor penalties from the supplier utility. Ironically, the utility companies themselves can be valuable partners in reducing energy costs, and many large power consumers have found that squeezing the company dollar at the procurement level can do wonders for the bottom line. One example is Constellation NewEnergy, a subsidiary of Constellation Energy, a major supplier to large industrial and commercial customers. Constellation's i2i service offers predictive analysis for financial decision-makers at large NewEnergy customers, including some manufacturers, who buy energy on the open market. "We've basically gone from the director of energy and procurement's office up to the treasurer and CFO's office, because suddenly they're starting to look at this as something that can be managed," says Andrew Singer, vice president of North American sales at Constellation NewEnergy. Other resources for power management and reduction can be found in the Department of Energy's BestPractices program, which offers hands-on advice for manufacturers. In addition, the NAM has published a number of resources for best practices in energy efficiency. (See sidebar.) Of course, energy consultants are always willing to deploy a team to your plant to do the legwork for you, and many manufacturers have realized sizable savings by taking advantage of their services. Cooling the Data It's worth noting that part of the growing burden of energy costs is self-imposed, not to mention something of a Catch-22. As manufacturers have sought to automate their businesses for cost efficiencies, they have added more and more hardware, often in the form of servers that run enterprise systems and store voluminous amounts of product data. The information-hungry modern manufacturer has data centers bulging with hardware such as blade servers and cooling units, and the increased load demand boosts energy bills. A survey conducted this spring by Continuity Insights magazine and Emerson Network Power found that 42% of business continuity executives, those responsible for a company's disaster preparedness, had plans to add blade servers, while 69% planned to add other high-density systems. "Energy is becoming a major equation in running a data center, a major part of the operating budget," says Steve Madara, vice president and general manager for environmental business at Liebert Corp., an Emerson Network Power company. In data centers, Madara says, power management technology plays a decided role, but controlling power consumption begins with the physical layout of the center. Self-contained rack systems that group the servers and the cooling technology in the same unit have become the system of choice for some companies. Others are starting with the servers themselves -- Sun Microsystems Inc., for example, has created a more energy-efficient processor chip, the UltraSPARC T1, and is using it in its Sun Fire servers. According to Sun's research, the new processor uses less than 70 watts of power, compared to similar CPUs, with average demand of 150 watts. Liebert and other vendors can offer valuable advice for companies planning or reconfiguring their data centers. For instance, American Power Conversion (APC), a maker of power reliability products, has created the Data Center University, an online, on-demand training resource that features courses such as, "Going Green, Energy Efficiency in the Data Center," and, "Optimizing Cooling Layouts for the Data Center." A Powerful Vision There is no one secret to achieving a more disciplined use of energy, but there are many tools. The old mantra that knowledge is power applies in this case, and it extends to profits, as well. Once manufacturers can see their power consumption in living color -- by way of the metering and software technologies that surface the metrics of use -- the avenues of redress are often obvious. Whether the motivation is financial well-being, environmental friendliness, or a combination of both, manufacturers understand that sound energy management can yield sizable rewards. With help from the latest energy management products, most won't be stuck waiting for price cuts that may never come.