Should you cut costs on maintenance to save cash?
Should you cut costs on maintenance to save cash?
The issue of whether to cut maintenance costs is a question that many businesses will be asking themselves. At the time of writing 2021 has just started, we’re in the 3rd national lockdown in 12 months and this one could drag on. 2020 will not go down as a year to remember for the right reasons. Therefore, many businesses have suffered and are in survival mode. The need to cut costs is real and where to cut costs is the question.
So, should you cut costs on maintenance to save cash then?
To answer the question let us presume that a considerable amount of cash is needed to be cut to stave off more serious implications. For example, these serious implications could be a large swathe of redundancies or even going out of business altogether.
What are your options of how to do this?
The first things companies look to cut costs on are areas that have the least impact to the business. This typically includes marketing, bonuses, scheduled pay rises, new hiring campaigns and any costs associated with unnecessary luxuries.
Once this stage of the cost reduction program has taken place, you are then looking at redundancies and/or halting new hires.
Problem Jobs
When it comes to redundancies you have got to factor a few things in to the equation. There are the redundancy payments for starters. However, you’d be paying that money out in wages any way if you kept those people.
You then have to consider the impact on existing employees’ retention and motivation if you cut maintenance costs. If existing employees who’ve you’ve calculated to stay end up leaving through fear of being made redundant themselves then you’re even more stretched. Simply because you make people redundant it doesn’t mean your productivity requirements drop with that. And you need to keep these people motivated as they’ll be effectively doing not only their jobs but those of their colleagues who you’ve made redundant.
The Maintenance Problem
It is one thing letting production staff, admin or non-skilled staff go. I mean this in the nicest way, but those skills are relatively straight forward to replace or at least replicate. But making a skilled Maintenance Engineer redundant or even a Maintenance Manager, that is another story.
Maintenance for plants, manufacturing and FMCG sites is a key component. Excuse the pun, but it’s the cog in the wheel that makes things work.
Typically, Maintenance teams are small in comparison to other departments. Therefore, losing one will be a larger % of the workload that will need to be shared amongst the remaining engineers than in most other departments in a company.
Why cutting Maintenance is the last place to cut staff from
When boards of directors assess a company’s departments to make redundancies from, Maintenance should be the last one in line.
If you asked a board to gauge what department they felt made the most contribution to their business then sales, marketing and production capacity often come out on top. Yet, there is a problem with this theory.
Your Sales Team could be outstanding and generate business even when the chips are down. Those sales might have been helped by a solid marketing campaign. However, you’ll still need the production team to deliver the orders on time and to budget without hiccups. And that could be a problem if your equipment is unreliable or out of action because Maintenance do not have what they need to keep things running.
But we need sales coming in?
Yes, you do. But you could outsource sales. We need marketing. Yes, you do. But you could outsource marketing. But outsourcing maintenance to cut costs is a bit more of a challenge.
You need people who know the equipment, know the maintenance schedule and have a balance of skills that allow everything to run smoothly. If you cut costs here you could be cutting personnel, equipment, tooling and essential costs that keep the wheels rolling.
So yes, you need other departments but without an effective maintenance team you could be in big trouble.
Sum Up
Let us take an Airline. This is an industry that is struggling right now. To be successful they need to put bums on seats to make money. They’ll need destinations. And they’ll need a crew to pilot and serve passenger. But if they cut on Maintenance what will happen?
If they’ve sold all the seats but the planes keep failing to take off, you’re going to be issuing refunds. And much worse, if they fail in the sky, you’re going to be responsible for hundreds of deaths. No airline is going to cut corners on Maintenance as it comes first. It keeps the planes in the sky.
So why cut costs on Maintenance if it keeps the wheels of your business turning?