Maximizing Lubrication Program Investments – Compounding Your Returns

Drew Troyer
Tags: industrial lubricants

“An investment of knowledge
always pays the best interest.”
- Benjamin Franklin

Recently, I was discussing a consulting opportunity with one of Noria’s senior technical consultants. While discussing the proposed lubrication program design project at a new plant, the client commented that the project might not be necessary because the plant had not experienced any lubrication-related problems … yet. This got me thinking about the remarkable similarities between investments in equipment reliability and investments one makes in his or her retirement account; in particular, the phenomenon financial advisors refer to as the power of compound interest, and investments one makes in health management.

Time Is On Your Side
Simple compound interest, of course, is simply the power time has on the growth of an initial investment. An investment of $1,000 made at the age of 25 is worth about $15,000 at age 65 assuming a seven percent annual return and reinvestment of the proceeds. The same $1,000 invested at age 50, on the other hand, is worth only about $2,750. Starting to invest in your retirement at age 50 simply does not provide sufficient time for the power of compounding interest to work its magic. To yield the same $15,000 at age 65, a 55-year old must invest approximately $5,450 - more than five times the investment made by the 25-year old. When one understands the mechanism by which compound interest works, the decision to invest heavily at a young age is clear. The longer one waits, the harder it is to build the retirement nest egg.

Likewise, investments in one’s health follow a similar tact. Proper diet, exercise and weight control at a young age produce much greater returns in terms of quality of life during retirement than similar “lifestyle investments” made later in life, particularly those that are made following a life-threatening event, such as a heart attack or a stroke.

Invest Early
Despite the obvious wisdom in making early investments in one’s future - both financial and lifestyle - a great number of people elect to postpone financial and lifestyle investments. This almost guarantees a poor and painful (and often short) old age, transforming the golden years into iron pyrite (fool’s gold)! Reflecting back, they may attribute their lot in life to poor luck. While luck does play into the equation, we generally reap in our retirement what we sow during our lives. The decisions we make early have the greatest influence on the outcome.

Managing equipment reliability is similar to managing your health and your finances. A comfortable retirement is the outcome of astute fiscal decisions made during one’s working life. A healthy and useful body is the outcome of health and lifestyle decisions made during one’s younger years. Reliability is the outcome of investments made to design and maintain equipment effectively. If we are myopic in our management of the inputs, we’re likely to be dissatisfied with the results.

Don’t Wait
In his “As I See It” column in the November 2003 issue of Machinery Lubrication, Jim Fitch discussed the importance of accessorizing new equipment for Lubrication Excellence. We must carry this same broadminded view to the management of the equipment in operation once it’s properly accessorized. Waiting until you see lubrication problems to make and act upon important lubrication maintenance program decisions is as dangerous as waiting until your first heart attack before making a decision to control cholesterol and blood pressure, or waiting until you turn 60 to begin to plan for a comfortable retirement at 65 – it is too late to maximize your returns.

Improvements made to assure proper lubrication of your equipment will yield benefit, regardless of its age. However, early, reliability-focused investments to build a lubrication program that works and to accessorize equipment for lubrication excellence will compound over time and maximize your returns. Don’t wait for failure – manage against it with a sound, optimized lubrication program. This is my Viewpoint. As always, I’m interested in yours.