How to Analyze the Economic Impact of Liquid Gaskets
In a recent blog we discussed the drive in the lighting industry toward more efficient manufacturing processes, designed to drive costs down and increase productivity.
One of the solutions identified was using LOCTITE liquid gaskets to replace cut or preformed gaskets.
The benefits of liquid gaskets (either form in place [FIP] or cure in place [CIP]) are obvious: they eliminate the need to maintain an inventory of custom preformed gaskets, thus reducing work in progress (WIP) as well as the lead time necessary to obtain new gaskets. In addition, there is no longer a need to invest in tooling for preformed gaskets every time there is an LED lighting fixture design change.
How Liquid Gaskets Work
CIP or FIP gaskets are initially liquid (gel) and are applied via dispensing equipment such as robots, pumps, valves, or nozzles. Designs are programmed into the equipment for rapid creation. This produces technologically advanced gasketing materials with high productivity and reliability, which can be implemented immediately upon completion.
Analyzing the Economic Impact
Can this new approach actually save money in the long run? To find out, you should conduct a financial analysis based on technical performance and economic impact.
Below is an example of what such an analysis might look like. We used a modified generic financial model, combining basic data from existing customer projects supplemented with some logical assumptions.
Our hypothetical customer is interested in converting to liquid gaskets from pre-cut rubber gaskets, having already successfully completed technical performance testing. Liquid gaskets exceeded performance requirements, so all that remains is to justify the investment from a financial perspective.
Here’s where we started:
For cut gaskets, a higher percentage of internal failure (scrap) was calculated to account for obsolete gaskets as changes in design are made. Also, some capital was allocated for cut gaskets to account for tooling costs associated with their manufacture. The capital expense for the liquid gaskets comes from dispense equipment.
From this model we can make the following calculations:
As you can see, the $45k in additional capital to implement liquid gaskets is more than offset by a substantial annual savings of $397k in reduced material, labor and quality costs.
Now let’s look at payback for the $45k project investment:
The cut gasket approach consumes more capital than the liquid gasket approach, but the liquid gasket approach saves $1,985k over the first 5 years after facility start up.
The switch to liquid gaskets can certainly be justified based on short- and long-term cost savings, as well as their quality and convenience.
Want to Perform Your Own Analysis?
If you are considering a similar transition, it’s always best to first conduct a technical evaluation to verify that FIP and CIP gasketing works in your application, and then crunch the numbers to show management why this is a project worth funding. We can help you perform the analysis and, if you choose to move forward, select the appropriate products.
If you’re exploring the feasibility of a switch to liquid gaskets in your facility, reach out to our technical service team at 1-800-LOCTITE or email@example.com.