Low-skilled jobs are going and high-skilled workers are leaving. Where does that leave the cement industry?
There are two key things going on in the manufacturing workforce at the moment. First, a lot of the low-skilled jobs are disappearing. The ‘Robot Revolution’ is sweeping across the world, taking hundreds of thousands of jobs with it. In the cement industry, a plant that was once staffed by many hundreds of people could now be run by less than a hundred and perform more efficiently than ever before.

At the same time, manufacturing is plagued by a major skills shortage. The cement industry has failed to attract talent over a number of years and now the combination of the ‘silver tsunami’ (as Baby Boomers age out of the workforce) and job losses related to M&A activity have left the industry up the proverbial creek. They’ve got the paddle, but not enough people understand how it works.

In all this time, the cement industry hasn’t magically become less complicated. In fact, advances in manufacturing, the increased use of alternative fuels and raw materials, and the ability to cater specifically to customer demand, has made everything significantly more complex. Add to that the greater demand for profitability amidst the global economic downturn and ever-increasing emissions regulation and you begin to have a picture of the quality of engineer needed to get the job done. It begs the question: what happens to the plant as the number of those engineers falls?

Has the ‘Robot Revolution’ dulled our intelligence?
The rise of automation has led to a kind of complacency, whereby there is an impression that this lack of skills can be mitigated by machines. While there is no doubt that intelligent automation has enabled great advances in manufacturing, we are not yet at the point where a cement plant could be left to run itself.

Part of the problem is that automation doesn’t encourage free thinking. It presents operators with reams of data, but data without knowledge and understanding is not worth much.

Data, in turn, encourages the mindset that everything can be standardised – processes, targets, both within the plant and within the company, wherever in the world you happen to be. What you end up with, largely, is more data for data’s sake and, without knowhow and experience, it does nothing to help operators develop skills or further insights into the process. It becomes a vicious circle.

How can you bridge the skills gap?
Many cement companies have begun programmes to encourage talent into the workforce, but obviously there is going to be a time lag while this new generation of workers builds their experience. For some global conglomerates, this deficit can be managed by utilising the resources of the corporate technical centre, although these resources are being rapidly depleted. And what about the smaller players?

Our experience at JAMCEM is actually that innovation often thrives at smaller companies that are not bound by the restrictive standardisation of processes and targets that takes place in multinational companies. However, while these smaller companies have the appetite and the freedom to be innovative, they don’t always have the expertise to make it happen. With that in mind, JAMCEM launched the Virtual Technical Centre – an unbiased source of expert advice available to all. This service performs essentially the same function as a traditional technical centre, advising on technical and operational queries as they arise on the plant. It’s an affordable first point of contact for troubleshooting as well as being a great resource to bounce ideas around that might otherwise be lost for lack of a sounding board. We hope that it will bridge the gap left by the skills shortage and promote greater innovation in the cement industry. For more information about the VTC, visit our website.

Understanding how to balance the cement production process for lower cost mode of operation  
Cutting costs doesn’t have to involve a huge system overhaul and it shouldn’t only be a directive from above. The responsibility for seeking out and implementing opportunities to reduce cost per tonne generally lies with the Process Engineer and the Production department. Here, I look at one of my preferred approaches to establishing the lowest cost mode of operation.

Do you know what efficient operation looks like?
Before you start on such a project, it’s worth reflecting on the basic parameters at the core of efficient operation. These are too often forgotten over time, as equipment ages and personnel get used to working around under-performance. Changes in the raw materials, fuels and final product specification also have an impact that needs to be borne in mind.

If you can answer the question ‘why isn’t this equipment operating efficiently’, you’re halfway to a solution, but in order to do this you need to first establish what efficient operation looks like for your plant. Read my previous post about performance analysis for more on this.

Balancing every stage of the process
Cement production is a delicate operation. Everything in this linear process needs to work well for the whole process to be truly efficient. Therefore, a good approach to identifying the lowest cost mode of operation is to ensure that the process parameters between each stage of the process are in balance.

Output: from quarry to kiln
This is the first parameter that most plants will have balanced. The quarry, crusher and raw mill output needs to produce sufficient feed at the right chemical and physical specification for the kiln to keep running at its optimum level. The balance between the kiln and cement mill is less important, since the clinker store acts as the natural buffer through seasonal variations in cement demand. However, the kiln must be capable of producing sufficient clinker to see the plant through the peak sales months or customers will be lost.

In new plants that have been well designed, the output should be balanced at the desired chemical and physical target parameters. But what happens as the plant ages? Or the raw materials change? Or the fuels change? The process becomes unbalanced.

Case study: ball mill
Let’s look at an example from a real plant. Over time, the ball mill output had been steadily decreasing, due to a lack of attention to the media grading and inleaking air around the circuit, which resulted in inadequate mill ventilation. The plant got to the stage where there was no overtaking capacity in the mill and therefore, to achieve the required mill output, the raw meal 90 micron residue was increased.
As the 90-micron residue was siliceous, the fuel consumption of the kiln increased, the kiln output dropped and the clinker was much harder burnt, which resulted in a knock-on effect in the cement quality.

This example shows how a lack of attention to process engineering and maintenance issues in the raw milling department created a chain of events that affected the whole process, including the final product quality. Examples like this are numerous and often include upratings, where parts of the process have been modified without considering all of the plant. Such actions will create imbalance in the process.

Understanding your process is key to cost-cutting success
At each stage of the process, there are both chemical and physical parameters that will impact the operation and productivity of the following stage and therefore affect the cost of production. The chemistry of the raw meal affects kiln operation and clinker quality; fuel properties influence the flame characteristics, again impacting on clinker quality and kiln operations; clinker quality affects the chemical and physical targets of the cement mill operation, and the quantity of materials such as limestone and pozzolan than can be used in the cement. In an intricate process, everything is interconnected. Knowing where cost reductions can be made really comes down to understanding your production process.

Sadly, due to staff cuts during mergers and acquisitions, and a lack of new talent entering the industry, many cement plants lack the skilled staff capable of this level of understanding. Fortunately, however, performance analysis can easily be outsourced with tools such as JAMCEM Consulting’s Performance Analysis and Diagnostics System and Virtual Technical Centre. If you’d be interested in learning where your efficiency is dropping out, get in touch.

Traditional benchmarking doesn’t work

Benchmarking is an important part of performance analysis, but traditional models offering league table comparisons do nothing to inherently improve performance. Knowing that your cement plant comes fifth on a list of 50 cement plants does not tell you what plants 1 – 4 are doing differently to you, or even where you’re succeeding and others are failing. These anonymous reports just give you yet more data to work with – or, more likely, file and forget.

In an industry with so many variables – raw material chemistry, the fuels and alternative raw materials used, labour costs, the age of the equipment, local regulations, to name just a few – there is no benefit to shoe-horning data into a generic model that doesn’t speak to your unique process.

Put your process at the centre

None of this is to say that there isn’t a place for benchmarking – there absolutely is. But the information that’s really relevant to you is that which shows what your plant could achieve compared to its current output. What is your rated kiln output and what is your daily production rate? How does your kcal/kg compare with the target that is appropriate for your raw materials and fuel mix? What should be the power consumption for the different cements that you produce which are no longer the same as when the plant was built? These are the questions that are worth asking – the questions that reveal where specifically your plant is falling short. Knowing the optimum and actual performance of your entire plant gives you a framework from which you can develop real-world solutions.

"Plants change with time - alternative fuels change the target output and fuel consumption; cement surface areas keep increasing to deliver higher strengths - what is required is up to date targets for todays production circumstances"

It’s not the data; it’s what you do with it

With so much reporting built into a modern cement plant, it’s easy to feel like you’re a slave to data. Don’t be. Data works for you. It is the first step on the path to process optimisation – what comes next is the good stuff.

Once you’ve performed a gap analysis based on your plant data (potential vs. actual), the next step is to diagnose the real problem areas and develop solutions. Most of the solutions go back to basic engineering and good practice. Can the raw materials variability be improved? How can the by-pass level be optimised? What technology exists to reduce the number of kiln stops? Having the data to support your decisions is empowering. Knowing the numbers you are reaching for makes success more easily quantifiable – and more easily achievable.

A fresh perspective

Maybe you’re reading this and thinking, ‘Sounds great, but I don’t know what my plant could achieve’, or ‘I know where my plant is falling short, but I don’t know how to fix it’. Time to bring in a fresh pair of eyes. We all know what it’s like to be so close to something that we’ve lost our objectivity. Bringing in a consultant who has worked in the industry at plant level gives you the benefit of both a new perspective and a whole new range of experience.

JAMCEM Consulting developed its Performance Analysis and Diagnostics System (PADS) to address exactly the need outlined in this article. Plants submit their data through a web-based input system, so no site visit is required, which is a significant cost-saving. That data is analysed against the technical standards we have developed based on our many years of operational experience in the cement industry, and we examine the performance gaps and the possible actions that could be taken to improve operating outcomes. It’s a mini plant assessment that could be a step towards a full audit, or could be all the information you need to make improvements in-house. It’s exactly as simple as it sounds and it could provide you with valuable information to improve your process. View sample PADS pages here, or contact us for more information.



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The new competitive era.....

A new era has arrived in the Saudi Arabian Cement industry - one where the existing players will face challenges that they have never faced before. Since the inception of the original companies that produced cement in the Kingdom - companies such as Arabian Cement, Eastern Province, Saudi Cement, Yamama Cement and Yanbu Cement - through to the arrival of the newer players, one thing has been consistent: year on year increases in demand for cement.

Based on this demand, the original producers continued to increase their capacity and licenses were issued for the new entrants. But even with the new kiln lines being installed, demand was still outstripping supply and in 2013 the government mandated cement producers to import both clinker and cement to ensure that sufficient stocks were held in the Kingdom to avoid shortages. A number of producers questioned this rationale, with many of them already carrying inventories that would be considered to be excessive in the Western world. However, the edict was followed and this security stock put in place.

Moving forward a couple of years and the whole dynamic has changed. The effect of the drop in oil price has had a double effect on the cement industry in KSA. Firstly, the start of 2015 saw significant increases in the cost of both fuel and electricity. Whilst many may argue that the subsidised prices could not be maintained forever, the level of increase made significant dents in the margins all of the cement producers.

But the bigger effect has been seen on the demand side of the equation. Initially, the drop in oil price had little effect on sales; however, this is not unexpected as projects that are already underway have to be completed so a drop in sales would be expected to lag behind a drop in the economic outlook of a country. Cement producers are now seeing a drop in demand which is also compounded by the last of the new cement capacity coming on line, leading to significant drops in sales for most of the producers. This is a situation that many of the producers have never found themselves in before - fighting for sales in a contracting marketplace whilst facing higher costs. In addition, due to the scale of the plants as well as the security stock that was put in place, the drop in sales has lead to ever increasing clinker and cement stocks in the country. At the end of September the clinker stock for the Kingdom was over 25 million tonnes.

But such a scenario is not something new to the global cement industry - just something new for Saudi Arabia. Up until the 80s, cement in the UK was sold on a cost-plus basis, thereby giving the cement manufacturer no real incentive to produce cheaply. Plants were over-manned and there was a plentiful supply of British coal.  But then fuel costs increased, pricing regulation changed and all of the producers came under pressure to reduce costs - both variable and fixed. This resulted in major optimisation programmes, headcount reduction and the initial introduction of alternative fuels as just a few examples.

How cement companies address the challenges remain to be seen - and this in some ways will be influenced by the price of oil, although there will be a lag in demand picking up even if the price of oil returns to $100 tomorrow. History has shown us that the strategy of doing nothing, cutting all spending and trying to weather the storm leads to failure. Maintenance gets ignored and plant reliability decreases over a period of 2 - 3 years, and in the long term maintenance spending has to be increased. This drop in reliability often occurs when the market is picking up after a trough, leading to a lost opportunity in the market.

Cement producers should use this crisis as a catalyst for change - people become much more motivated when the challenge for survival is in front of them - and there are many opportunities to reduce costs and beat the competition. These could be internally facing programmes such a headcount reduction, maintenance cost reduction or alternative fuel or externally facing programmes such as product development and quality improvement.

The winners in this challenging market will be those who follow the path that has previously been taken to adapt to the new set of challenges by reducing costs - history has shown that those that fail to adapt generally end up with a new set of owners.



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So finally, after many months of low oil prices and many years of cheap, subsidised fuel and power, the cost of energy has risen in Saudi Arabia. Whilst this country was given the most attention in the media - perhaps as the percentage increases in energy costs were extremely high - many other countries in the MENA region have also increased the cost of fuel and power as well as other utilities. One of the cement producers in the region has estimated that the increase in prices will cost their business around 40 million SAR per annum - around £8 million per annum in lost profit.

The increases themselves shouldn't be unexpected - in part due to the low oil price in conjunction with the fact that the industry is now extremely well established within the country and therefore should be in a phase of adapting to the normal forces of market competition. However, it comes at a time when the Saudi cement industry is - perhaps for the first time ever - facing real competitive pressures. For many years the market has been sold out without any real requirement for the producers to compete with each other, but a number of factors have combined to produce the current situation:

  • The drop in oil prices has led to a slowdown in government backed construction projects leading to a drop in demand
  • High clinker stocks, which stem from the significant quantity of imports of clinker and cement that were mandated in 2013, which may not have truly been required.
  • New capacity coming on stream adding additional supply into the market

Whilst not identical, the industry finally seems to be reaching a stage similar to that which was reached 30 years ago in the developed countries within Europe. Increases in energy costs in the early 1990s lead to two changes within the industry:

  • The introduction of alternative fuels to reduce the fuel cost element of the overall production cost
  • An increased focus on fixed cost - primarily the cost of labour and the cost of maintenance, split down into spare parts cost and maintenance management systems.

Whilst energy prices have increased, they are still very low compared to the rest of the world. So Saudi Arabia may not yet be ready for full scale implementation of alternative fuels; however, manufacturers should be looking at potential sources with the aim of planning ahead for full scale implementation in the near future. With the cement market appearing to be saturated, focus may now move from building more capacity to reducing production costs to maximise profit.

Fixed cost reduction requires specialists who have cement industry experience to identify the required level of personnel and where savings can be made. Whilst many multinational consulting firms may make claim to being able to complete such studies, they bring generic models used in a multitude of industries without any focus on the real challenges of operating a cement plant on a day to day basis. In many cases, limited capital investment in technology and changes to working practices can lead to significant savings on manpower. Similarly, stores stock levels can be significantly reduced by a full assessment of the criticality of the parts stocked and purchasing practices and procedures of the company. This results in a short term reduction in spare parts spend and a long term lowering of overall spend.



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