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Corrosion Costs

Paul Dillonís fax, 8/21/99

About the cost of corrosion, I became aware very early on that I could only persuade a Department Head or Area Supervisor at my plant to change to a more expensive material if I could show the cost effectiveness of my recommendation. Many tend to consider repetitive retubing of a heat exchanger or a valve or pump replacement as routine maintenance. Only when production losses were involved did some panic develop. (In fact, "lost production" is not a valid cost unless sales are lost because of inadequate inventory!)

I followed the calculations of Dr. F.C. Jelen ("Next Time Use Capitalized Costs", circa 1951) but found they didn't jibe with UCC procedures re maintenance vs. capital expenditures. The Discounted Cash Flow (DCF) analysis was quite tedious when done by hand. When I was involved in the complexity of corrosion control (internal and external) for our first chemical tanker, I had to come up with some basic procedures1. I developed a "Perpetual Cost Index" which, while it didn't work out exactly right for the Capitalized Cost or Equivalent Uniform Annual Cost of a specific selection, gave a very close approximation of the difference (i.e. the savings) between alternative choices. When NACE formed T3C in the 1960s, I was asked to work with them and also reconcile UCC accounting procedures with my DCF2,3. wrote the initial RP for NACE and later applied the technique in a couple of coating areas4,5. (Although not my forte, I was supervising the effort.)

Somewhere in the '60s, I was involved in the first study (after Uhlig's estimates) of the national cost. We ultimately decided that the cost of corrosion was about 4% of the Gross National Product and a similar figure was arrived at in the UK in a separate study. We concluded (I don't remember how, heck, I can hardly remember what I ate for breakfast) that one could effect about a 25% reduction in that annual cost to the USA by applying proper technology. I think our reasoning was predicated on the concept that the difficult problems encountered in the chemical, oil, gas, pulp & paper and such industries were much less than the overall national costs (e.g. automobile, railroads, military, utilities, infrastructure and appliances or other artifacts). All of the latter have a finite life and, barring technology breakthroughs, once the cost/life ratio is optimized, no further savings can accrue. Their corrosion costs are simply the cost of doing business. Of course, automobile design is much improved today, with hot-dipped frames alloy and plastic components and vastly improved paint systems. Still, they get traded in and ultimately sold to third-world countries (or scrapped).

In my perception, the problem is further complicated by the definition of "corrosion". When I represented both ASTM and NACE at the first ISO meeting in Riga, Latvia, USSR in the 1970s (I think), there was no international agreement on the definition. As I recall, the French would not use the term except in the context of the electrochemical attack on metals. Most of the rest of us preferred to define it as the deterioration of a material of construction by its environment. This should be understandable. Anyone put down in a chemical plant or refinery, for example, is faced not only with corrosion of metals but with deterioration of plastics and thermosetting materials (FRP), rubber and elastomers, ceramics, carbon products, concrete, wood, etc. Consequently, for us, the costs of "corrosion" are higher than for those who think only of metallic artefacts.

Sincerely,  

Paul



References

1.       "Some Considerations in the Economics of Tanker Corrosion"; Corrosion, Vol. 12 (September 1956) (back)

2.       "Economic Evaluation of Corrosion Control Measures"; Materials Protection, Vol. 4 (1965) (back)

3.       "Economic Comparisons-Calculation of Net Present Value and Equivalent Uniform Annual Costs"; Materials Protection, Vol. 7, No 9 (1968) (back)

4.       "The Economic Advantage of Deferred Topcoat Zinc-Based Painting Systems"; Materials Protection, Vol. 14, No. 5 (1974) (back)

5.       "Galvanized Steel Added Cost or Capital Investment?"; Materials Performance, Vol. 14, No. 10 ( 1975) (back)