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Rust costs companies billions of dollars a year. It can be prevented.
Esther Shein, CFO Magazine
December 1, 2007
Sadly, the horrific collapse of the Interstate 35W bridge in Minneapolis in August did not surprise longtime critics of the nation's transportation system. The truth is, civil engineers, trucking CEOs, even media types (see "Delayed in the USA," September 2006) have been carping about America's rotting infrastructure for years.
Few officials have listened. Last year, state and federal agencies spent an estimated $8.3 billion making repairs on corroded bridges — the financial equivalent of sticking a finger in a dike. Indeed, the American Society of Civil Engineers reckons it will cost close to $100 billion annually (over the next five years) to maintain America's highways and bridges.
Oxidation is an equal-opportunity destroyer, corroding public and private metal alike. Business assets like railcars, storage tanks, and outdoor equipment are not immune from rust. While numbers are hard to come by, the most recent study on the subject (released by the Federal Highway Administration in 2002) found that corrosion costs U.S. production companies and manufacturers more than $17 billion a year. Utilities were even harder hit, with a nearly $50 billion annual rust bill. That's a substantial tab. What's more, companies that delay repairs do so at their own risk.
Scientists say that rust can be held in check. One of the most common types of corrosion prevention, cathodic protection, was first used on the hulls of ships in the 1820s. Although the technology has evolved since then, the idea is essentially the same: use an electrical charge to alter the electrochemical potential of a metallic object, thus thwarting corrosion.
Still, some corporate executives pay scant attention to rust prevention. This has more to do with human nature than with lack of interest in sacrificial anodes. Oxidation of large, well-coated metal objects tends to be a gradual process, one that occurs over a span of 5 to 10 years. A business's capital tends to go to more immediate needs — like buying new machinery or purchasing software. "We're conditioned as automobile owners to take our car in and have the oil changed every 3,000 miles," says Cliff Johnson, director of public affairs for the National Association of Corrosion Engineers. "But if we don't have the time or money, we put it off. The same thing occurs with [corrosion] protection."
Making the Casing
Congress is trying to get corporations to scrape the rust off such thinking. Legislation introduced in the House of Representatives in March would provide a tax offset for 50 percent of net expenditures on corrosion prevention. The credit would apply to depreciable property comprised primarily of metals susceptible to oxidation.
Even without a tax break, rust prevention can be a money-saver. Pioneer Natural Resources USA Inc., an independent oil-and-gas exploration and production company, has been systematically installing cathodic protection systems on production casings on its largest producing wells over the past five years. Without the corrosion-prevention program, Pioneer estimates it would have had more than 70 corrosion-related well failures in 2002. That number would have risen, too, as the company's 4,600 wells got older.
The cost of the corrosion? Fixing a corroded casing costs around $100,000, which would have left Pioneer with roughly a $7 million repair bill in 2002 alone. "That would consume much of our lease-operating-expense budget," says Jim Uhelski, an energy manager at Pioneer. "And it would cause our production to be lost temporarily or permanently." In contrast, the company says it is spending about $3.5 million this year on corrosion-prevention systems. Says Uhelski: "Now, I don't have management asking me what we can do to stop the epidemic failure rate of casings."
The payoff from rust prevention can be seen in more modest projects as well. At Blue Surf Condominiums in Daytona Beach, Florida, the condo's governing board has hired contractors to repair corrosion and cracks on balconies and railings twice in the past 10 years or so. Now the cracks are reappearing.
Duncan Dowling, a construction lawyer who is president of the association, says the company could have saved nearly $2.4 million by simply installing corrosion-prevention systems in the first place. "We were treating the symptoms," fumes Dowling, "and not the cause."
Esther Shein writes frequently about business technology and office automation.
Under the Corrosion Prevention Act of 2007, corporations would be able to claim a 50 percent tax credit for investments in:
Source: Library of Congress