Energy savings are small and unimpactful … except they go directly to profit.
How much a company has to produce, sell and ship to make the same profit?
With a typical profit margin in manufacturing hovering around 5%, to generate $100K profit a company must sell $100K/5%=$2 mln worth of product. It’s 2 weeks of work for a $50 mln company.
How much profit can saving energy create at your plant? Find out by taking a brief Energy Management Score (TM) assessment.
An accountant would most certainly notice that I use net profit margin for calculation, while energy savings increase gross profit and therefore increase taxes due. True. However, an investment required to create energy savings will also create tax deduction that will eliminate tax increase. So the claim stands. Besides, generating sales requires lot more investments into materials, labour and so on and so forth.
[…] the same profit plant must ship $2-4mln worth of products – an output of 2-4 weeks of work. Here is a more detailed explanation of why $1 of energy saving is equal to $20 in […]