Tech Talk
What’s the real cost of that cylinder of gas?
Have you looked at your industrial cylinder gas consumption lately? With the cost of fills,
rental, delivery charges, hazmat fees, fuel charges, etc., you may just be passing over one
for the best places to find a significant savings. How about the time it takes the welder, or
machine operator, to exchange an empty cylinder? The labor to exchange the cylinder may
actually cost you more than the cylinder content.
What is a Centralized Gas Distribution System (CGDS)?
A CGDS is the piping and storage of industrial gases to a centralized location. This is
accomplished through either manifolding high pressure cylinders or converting to a liquid
storage vessel.
with Art Waskey
How does a Centralized Gas Distribution System (CGDS) save you money?
Since the biggest eye-opener in monthly gas cost is replacing an empty cylinder,
let’s start there. Let’s assume your average shop wage rate is $25.00 per hour
and you estimate your employee benefits to be 22% (Congressional Budget report
1998). That means your burdened shop rate is actually $32.05 per hour. In a recent
case, a customer was using 67 cylinders per month of nitrogen for blanketing
(shield the environment from atmospheric contamination). A quick time study
yielded a minimum cylinder exchange time of 20 minutes (this did not include
any other extracurricular activities: smoking, visiting with others, assistance in
moving items in the pathway, etc.). Bottom line, to roll those 67 cylinders, the
customer agreed it cost them a minimum of … labor, $716 per month, or $8,590
per year!
In addition to labor savings, it is important
to know your real monthly cost of gas. This
customer was getting weekly deliveries: $25
delivery charge, $10 hazmat fee, and $2.50
fuel charge … $150, delivery charges. The
monthly rental charge was $9.50 per cylinder…
$292.50, rental charges. The actual gas cost
for 67 per fill per month at $12.00 each…
$1,842.50, fill cost. The real monthly cost for
their nitrogen requirements was $2,285, or
$34.10 per cylinder.
Labor Cost
Time to
Exchange
Burdened a Cylinder
Shop Rate
(min)
Gas Type
67 cylinders nitrogen
$32.05
20
Total Labor
Monthly
Savings
Annual Savings
$715.81
$8,589.74
$715.81
$8,589.74
Current Method
Rental
Information
Delivery Information
Deliveries per Month
Cost per
Delivery
Monthly
Delivery
Cylinders On
Rental
NF nitrogen, 230 cf
4
$25.00
$100.00
30
hazmat
4
$10.00
$40.00
fuel charge
4
$2.50
$10.00
Gas Type
Total
Delivery
$150.00
Gas
Monthly
Monthly
Rental Rate Rental
$9.75
Total Rental
$292.50
Volume
(cyls/mo)
Cylinder Size
(ft3)
Volume
(ft3/mo)
Gas Cost (per
hcf)
Monthly
Gas Cost
67
230
15,410
$11.96
$1,842.50
Total Gas $1,842.50
$292.50
Total
System
Cost
(Monthly)
$2,285.00
continued on page 3...
www.generalair.com
Gas Products|Welding Equipment|Cryogenics
877.782.8434
Tech Talk: What’s the real cost of that cylinder of gas?
...continued from page 2
Using the spreadsheets above, we calculated the actual cost per year of gas and labor for this nitrogen gas blanketing
application to be $36,010.
What are the benefits of a Centralized Gas Distribution System (CGDS)?
General Air was able to bring to the customer a solution that would reduce their gas cost to less than $900 per month,
an annual savings of over $25,000. The typical return on investment for this type of cost reduction is less than 2 years.
In the example described above, it was less than one year.
In summary, here are some of the other benefits of a Centralized Gas Distribution System (CGDS):
•
•
•
•
•
•
•
Improve plant safety- no more back and foot injuries from rolling cylinder during replacement
Lower product cost- supplier’s cylinder filling costs are passed on as a savings
No more labor costs- rolling cylinders is a thing of the past
Reduced time placing orders- a CDSC comes with telemetry (automatic notification of product levels)
24/7 inventory levels- with telemetry you can look at your usage on-line, anytime
Simplified Billing System- product and rental billings once per month
No “down time”- with a CDSC you have product-on-demand
Under our current economic climate, when sales and margins are off, everyone one should be focused on reducing
expenses. The next time you watch an employee rolling a cylinder, remember, this might be the next place you should
look for a major improvement to your bottom line. So, stop and ask yourself, “What’s the real cost of that cylinder of
gas?”
Did you know?General
Air can
save you
implementing
industrial
gas solutions that
Did you know?
General
Airmoney
offers by
on-site
demos of
our products.
increase output by reducing
and labor costs.to
Contact
our your
Productivity
Call usgas
at 877-782-8434
schedule
demo! Enhancement Team
at 303.892.7003.
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Gas Products|Welding Equipment|Cryogenics
877.782.8434