Xxxx Australia Lubricant Management Program To provide superior service, product technology, application expertise, process knowledge, chemical monitoring techniques, and overall process cost reduction to assist XXXX AUSTRALIA succeed in their mission to be a world class Automotive manufacturer. ___________________________________________________________________________ We will provide XXXX AUSTRALIA a dedicated Lubrication Management Programme (LUP) consists of technical staff, special support and management staff and research / applications personnel. Our Senior Applications Engineer who is also the XXXX AUSTRALIA Account Manager will head the team. He is a respected lubrication expert with many years experience. Both the on-site and off-site team will work towards providing XXXX AUSTRALIA with our Lubrication Management Program initially covering the following products: Body Shop Hydraulic Systems Body Shop Machining Centres It is our plan to expand this list to include other specialist lubricants in other XXXX AUSTRALIA Centres. This Program will provide technical services support for XXXX AUSTRALIA in addition to material supply. We will find better ways to exceed XXXX AUSTRALIA's expectation regarding the benefits we provide to XXXX AUSTRALIA. The intent is to develop an active working relationship in which the supplier becomes part of the floor operations in a manner which will result in open communications, progressive thinking, and serve as basis for ongoing improvements. Critical to the success is the acceptance and co-operation of all parties involved especially the users. Prior to the start of the contract, employees must understand and share the goals and benefits of the program. A "hot-line" for questions and answers will be set up. Information exchanges will take place throughout the life of the program. MANAGEMENT: The Program will provide the following management personnel Lubrication Program Manager - A lubrication expert with three or more years experience at Foreman level, technical service engineer or plant engineering experience. - Excellent personal computer skills. - Excellent Communication skills. - The ability to influence various personnel levels. - Excellent problem solving and conflict resolution ability. - High level of self-confidence and accountability. The Program Manager will administer the Lubrication Management Contract as described in the contract, its specification and any modification and addition to either. Our Senior Applications Engineer will be responsible for this position. All Team Members are to be trained in the following areas before coming on-site: - Plant Safety Rules and Regulations General and Specific to XXXX AUSTRALIA. - Environmental Regulations - On-Site Familiarisation Procedure - Product Familiarisation - Contract Requirements - Lab Procedures - Test Requirements - Data Interpretation and Response. - Computer Systems - Mechanical Systems - Inventory The Program Manager will identify and describe the qualifications of any on-site employees, their responsibilities and their working hours and / or location. XXXX AUSTRALIA reserves the right to interview and approve personnel coming on-site initially and throughout the life of the program. Job performance of personnel on-site must meet with the approval of the XXXX AUSTRALIA management. Off -Site Support In addition to the on-site support team, Oiltech Australia will provide the following resources and expertise: - Product selection, testing and analysis. - Problem Resolution Support. - Specification Lab Facilities / Capabilities - Training of Lubrication Management Employees. - Expertise to support Continuous Improvement Through Product and Process Development. - Second Tier Supplier Development - Data Processing and Clerical Support All Oiltech staff going on-site shall conform to XXXX AUSTRALIA Safety & Health Requirements and all Statutory Regulations of the plant. This includes the mandatory wearing of PPE (Personal Protection Equipment). The LUP Team will work with XXXX AUSTRALIA to pursue a dedicated effort to reduce the annual cost of treatment, transportation, and disposal of all waste generated at the facility. OVERALL PROGRAM OBJECTIVES: - The main objective of this program is to participate with XXXX AUSTRALIA towards achieving the goal of world best practise at reduced cost in all areas. - To provide quality assurance / quality control on all incoming material supplied. - To provide total Lubrication Management Program. - To work with XXXX AUSTRALIA personnel to develop and implement SPC control where appropriate. - To work with XXXX AUSTRALIA personnel to consolidate products and reduce usage. - To assist current operations and provide innovative products and technologies to maintain continuous improvement. - To assist in training of plant personnel as required. LUBRICATION TEAM OBJECTIVES: Health and Safety - To follow Oiltech Health and Safety Program. - To adhere to XXXX AUSTRALIA Health and Safety Program and Procedure. - To provide appropriate, consistent and proper labelling of all materials brought on site. - To maintain a current MSDS file for material used by the supplier. This will be kept current as changes are made and will also be updated annually. - Follow chemical safety criteria. - To provide end-user training on all supplied products consistent with hazardous programme. Environment & Waste Management - To work with waste management department to develop a long-term strategy to reduce and eliminate waste. Equipment - To work with XXXX AUSTRALIA to see to it that all equipment is maintained in optimum condition. - To work with XXXX AUSTRALIA personnel to implement cost saving improvements for utilities. - To develop and implement SPC programme for all lubrication systems. Logistics - To optimise bulk transportation. - To Minimise on-site quantities of all products. - Co-ordinate shipping and receiving schedules. DATA COLLECTION: Method: - Use standard report sheets to allow easy trend analysis and data correlation. - Routine analysis to flag negative trends and take timely and appropriate corrective action. - Process control limits to be established and improved upon with XXXX AUSTRALIA approvals. - To recommend and make changes to the reporting system with XXXX AUSTRALIA approvals. Charting: - Statistical Charting data will be collected and maintained on a daily basis for each major system or as required. - Charts from this data will be reported monthly or as required. INTERPRETATION OF DATA AND RECOMMENDATIONS: - Trend Analysis - Oiltech Lubrication Manager will be responsible for maintaining all systems within prescribed control limits. This is to b accomplished by analysing available data, monitoring trends and taking necessary actions. - Immediate corrective action is to be recommended when systems are out of specifications. These recommendations are to be communicated, in writing, to the necessary people for a timely response. - The monthly report shall be submitted by the second week of each month. SAMPLE REQUIREMENTS: - A sampling schedule must be implemented to ensure testing and analysis is complete in a timely manner, ensuring effective system control. - The Lubrication Manager will co-ordinate sampling, testing, analysis and general addition work order when required. RECORD KEEPING AND RETENTION REQUIREMENTS: - The Lubrication Manager will maintain a list of all products and materials supplied at XXXX AUSTRALIA. - He will maintain the following types of records on computer: Record Type Examples: - Monthly System Control Charts - Logistic Records - Test data - Certificate of Analysis These records should be maintained in an orderly manner, to allow for immediate access for audit. On an annual basis, these records are to be surrendered to head office for long term storage. Monthly control charts will be made available for distribution. Monthly system control chart data is to be stored on computer. PRODUCT APPROVAL PROCESS: Health / Safety / Environmental: 9 step product approval procedure: 1. Discuss with key plant personnel to fully understand requirements. Provide one page written document of how proposed change will meet these requirements. The proposal must include a cost - benefit analysis. 2. Discuss with key plant personnel MSDS information that would directly or indirectly affect the downstream process. 3. Submit MSDS 4. Complete request for trial or request for purchase. 5. Initiate a training meeting to discuss safe use practices, instructions, handling techniques, etc. 6. Prove to ourselves, the new product meets or exceeds step 1, and begin with trail of the product. 7. Document results with plant personnel involved. 8. Posting of visual displays, such as process specifications etc. 9. Full implementation, manage for continuous improvement. A properly completed Material Safety Data Sheet (MSDS) and a Material Usage Form must be submitted to in-house Hazardous Material Control Committee (HMCC) for approval. This committee will review the products for Health & Safety, Medical, Fire Protection, and Environmental impact on the plant employees. The Lubrication Manager will be a member of this committee and will provide technical support. Changes to chemical applications, formulations, or product name must be submitted for full approval prior to in-plant use or testing. Performance Criteria: Before a new product can be considered for use in any area at XXXX AUSTRALIA, the following data must be provided: - Cost Effectiveness - Supply Consistency - Performance Benefits - System Compatibility - Biological Stability The data submitted must meet with XXXX AUSTRALIA approval before being used in any applications. LOGISTIC MANAGEMENT - Minimum operating supplies are to be maintained on site. - Delivery times are to be arranged with XXXX AUSTRALIA and must be approved in advance. - New and better packaging alternatives are to be incorporated into the process whenever possible. - All containers delivered to XXXX AUSTRALIA must be identified with paint or permanent markings on the container regarding the contents, XXXX AUSTRALIA spec. or product name, and safety instructions. - All labelling must comply with all relevant regulations. - All container deliveries will be properly secured. TRANSPORTATION - Delivery of material to XXXX AUSTRALIA is the responsibility of the Lubrication Manager. - A mutually acceptable transportation policy is to be agreed between Oiltech and XXXX AUSTRALIA. - The agreement should consider cost, scheduling emergency shipments, returns, documentation and procedures. - This agreement is to be reached and submitted to the buyer in a timely manner, and revised annually. EQUIPMENT: - Laboratory supplies necessary for testing, are the responsibility of Oiltech and must be properly labelled. FACILITIES OPERATIONS: Inspection: Mill safety and performance improvements involve understanding of all related equipment operations and system conditions. Any abnormal conditions should be recorded on control sheets for corrective action report. All monthly testing / inspection reporting should be made and any discrepancies resolved or reported to XXXX AUSTRALIA Management. Lubricants: The Lubricant Manager shall provide technical support to include product recommendations and process improvements Waste Management: The Lubrication Manager shall provide expertise in Waste Management Options. He shall make recommendation and provide an overall Waste Oil Management Program. It will ensure reliable operation and 100% compliance with all XXXX AUSTRALIA requirements. Machine Coolant System Control Parameters: The Machine Coolant System must be monitored and documented to provide consistent performance. It will be the responsibility of the Lubrication Manager to perform and identify the necessary tests and testing frequencies. USAGE REPORT AND CONTROL: - Quarterly audit of this inventory is to be conducted with XXXX AUSTRALIA. - Submission of invoice for each month is to be made by the second week of each month. COMMUNICATION: - A half-yearly report will be generated and distributed by the Lubrication Manager, updating resolved and unresolved problems. Information for the report will be generated from notices referred above. - Lubrication Manager will make himself available to attend department meetings upon request to discuss concerns of the employees. - An emergency communication phone list is to be published and kept on file with Purchasing. QUARTERLY REVIEW: - Quarterly review meetings are to be mutually conducted between Oiltech and XXXX AUSTRALIA to discuss the status of the Lubrication Management Program. Meeting minutes are the responsibility of the Lubrication Manager, and are distributed to the participants within two weeks after each review. TRAINING PROGRAM: - The Lubrication Manager will be responsible for conducting training classes for his assigned personnel. The training will include but not be limited to the following: - Lubrication Management Overview This will be given on an annual basis for all employees and will provide a general process review, covering both the suppliers and XXXX AUSTRALIA responsibilities. - Chemical awareness This is required for all employees as an ongoing process to train the employees on chemicals used in their areas. Changes to the chemicals used must be communicated and training conducted prior to the implementation of the new product. This training will include the safe handling procedures of the chemicals the employees come into contact with. - The Lubrication Manager will implement specific training programs including: Product Review System and process control Troubleshooting Evaluation and feedback. AUDIT: An audit procedure will be jointly developed by XXXX AUSTRALIA and the Lubrication Manager to ensure adherence to the contract and its specifications. GOALS: Total cost reduction Reduce consumption Improve safety Improve consistency Reduce downtime Reduce waste management cost Minimise environmental hazard Method SPC QC Accounting Administration & Co-ordination Training Communication Safety Plan Waste Management Plan Staffing Material Logistic Continuous Improvement Goal Setting Equipment Waste Management Storage Laboratory Computers Vehicles Material (Product) Superglycol Clearcut Hydrofluid HFR Fyrquel 220 Other products PHASE 1- Start up Introduction and Familiarization Safety Plan implementation Audit MSDS Labelling Storage On-site training for XXXX AUSTRALIA staff with respect to Oiltech Products Condition Monitoring Hydraulic Systems - various products in use Machining Centres Consistency (SPC) Monthly Testing and monitoring. Communication and Reporting - internal & external STAGE 2 - System Implementation Formalise planning, staffing, implementing, co-ordinating, control, communication and reporting of the above. Safety Auditing Action Programme Training House keeping Product Recommendation Audit machines involved in the project and the products being used. Recommend the products to be used and the benefits according to procedure set out above. Logistics Agree on the logistic arrangement regarding drum sizes, packaging type, labelling etc. STAGE 3 - Continuous Improvement XXXX OIL ANALYSIS MAINTENANCE MANAGEMENT PROGRAM OIL ANALYSIS PROGRAM GOALS ? Reduced Unscheduled Downtime ? Extend Equipment Life ? Extend Oil Change Intervals ? Evaluate Lubricant Condition ? Reduce Maintenance Expense ? Determine Proper Maintenance Intervals ? Verify Abnormal Conditions ? Increase Maintenance Production ? Reduce Repair Parts Inventories ? Reduce Equipment Replacement Costs ? Identify Corrections/Repairs Needed in Equipment ? Support Warranty Claims ? Enhance Scheduling of Repairs ? Identify Maintenance Discrepancies and Operator Abuse ? Increase Equipment Reliability HOW TO USE OIL ANALYSIS EFFECTIVELY Used oil analysis is very effective when used as part of your maintenance management program. However, never rely on oil analysis test results alone when making maintenance decisions. Obtain information form all sources before making your final maintenance decision. Typical sources of information to consider are: ? Diagnostic Test Information ? Operation Conditions/Environment ? Visual Inspection ? Lubricant Suppliers ? Evaluation of impact of recent maintenance repair ? Equipment Manufacturer ? Equipment Maintenance History ? Compare Current Sample Results with Previous Samples ? Age of Equipment Oil analysis is a reliable and effective maintenance management tool and the information provided by the laboratory can assist you in making more informed maintenance decisions. The laboratory, lubricant supplier and equipment manufacturer are an important part of your team and should be involved in your program. KEYS TO EFFECTIVE OIL ANALYSIS RESULTS ? Determine Goals and Objectives ? Verify Lab Capabilities and Responsiveness ? Ensure Samples are Taken Correctly ? Take Samples on a Regular Basis ? Fill Out Laboratory Sample Information Forms Completely ? Do Not Hold Samples, Send to Laboratory ASAP ? Tell the Lab of Recent Maintenance or Unusual Problems ? Use Manufacturers Guidelines ? Involve Your Lubricant Supplier ? Ensure Good Communications Between Laboratory, Maintenance Personnel ? and Maintenance Managers ? Train Maintenance Personnel About Using Oil Analysis Effectively ? Use Oil Analysis as a part of your maintenance Planning and Practices ? Evaluate Cause and Effect Relationships in Test Results and Determine ? Possible solutions OIL ANALYSIS Analysis of used oil is very important tool used by the lubrication engineer. The objectives can be summarised as follows: 1. New Lubricants a. whether there is degradation due to storage b. whether there is water/ particulate contamination. c. Whether there is inter-grade contamination 1. Used Lubricants a. whether the product is still suitable for further use b. the extent of degradation due to usage c. assessment of equipment condition by interpretation of test data d. assessment of abnormal operating conditions of equipment by interpretation of test data e. diagnosis of failure It is very important that samples of oil sent for analysis are representative of the oil in the system, otherwise completely misleading results may be obtained - which is worse than no result. When assessing the results of used oil analysis it is essential that the operating conditions of the machine, from which it is drawn, should be considered. The interpretation of analysis results on used oils, especially from machines in which component failure has occurred, requires considerable experience. It is sometimes difficult to ascertain if component failure has been due to oil deterioration, or if oil deterioration (such as oxidation) has occurred as result of a failed component running hot. When assessing analysis results on used oils it is necessary to consider all the tests carried out in relation to each other. LUBRICANT MONITORING AND CONTROL Oiltech Lubricant Monitoring and Control service generally provides a 48 hour response time, but in emergencies, a test may be performed within an hour. TEST PRICE REASON FOR PERFORMING TEST Viscosity, $ Fluid polymerisation caused by overheating cSt @ 40oC may cause a rise in viscosity. Dilution with water or contamination with the wrong oil for the application will also vary the viscosity. Off-specification supplier oil can also be picked up occasionally. Acid Number, $ Acid number can rise due to overheating, MgKOH/g contamination with water or particulate and ultimately lead to corrosive levels of acid radicles and/or gums and tars in the system. Water Content $ High water content in mineral oils can allow growth % weight of bacteria and fungi in the water phase, rust promotion for ferric components, filter blockages, reduced operating viscosity. Low water content in water glycols and HWBF will reduce fire resistance properties and cause an increase in viscosity and conversely an ingress of water will reduce viscosity and lubricity in a system. (All the above 3 tests for $) Microbiological $ Bacteria, fungi and yeast are all capable of growing in Tests the water phase of a lubricant system. Once the type of growth is identified, then the correct dosage and type of biocide can be recommended in order to kill the offending organism/s - 2 - 2 - Particle Count $ Particulate contamination is reported as NAS 1638 or ISO gradings. High particulate contamination of any type can cause component wear, filter blockages, premature fluid ageing, reduced fluid performance, increased maintenance. Measures particles from 5 micron in size upwards (0.0001 cm) to several mm. S.O.A.P. $ Measures elements such as Iron, Aluminium, Manganese, Copper (generated as wear metals) for particles sizes less than 5-10 microns This test was very popular in the past, but it is now known that particles generally larger than 10 micron cause more wear damage than small particles. Filtergram $ Looks microscopically at particles present in the oil, and can predict where they have arisen, e.g. dust entry, wear particles, additive breakdown An approximate size is also given to particles identified. A recommendation for corrective action can be taken from this test. Gas $ Gives a "fingerprint" of the oil, compared with new Chromatography oil and can establish additive depletion, contamination, chemical breakdown etc. pH $ Tests for pH are performed on water-based fluids and can indicate additive depletion, microbiological activity etc. if the pH falls markedly. Specific $ Every oil type has a Specific Gravity (SG) Gravity measurement. Contamination with material of a different SG can be detected or an oil type identified using this test. - 3 - 3 - Millipore $ A fine (1?m) mesh paper pad is used to filter an oil Microscopy and trap suspended particles onto the pad, which is then examined microscopically. Trapped particles can give an indication of the oils' cleanliness and the source of contamination. Filterability $ A filtration procedure to filter a given volume of oil, under certain conditions, which can indicate the oils' ability to flow through in-use filters. This will indicate the presence of contaminants which, although able to pass through the filters, may cause system failure (e.g. high molecular weight hydrocarbon molecules). The prices above do not apply for fluid maintenance contract customers. 22 June, 1998 The following table is intended to give an indication of the routine tests carried out in different type of lubricating oils. Some of the tests aim at analysing the fluid condition while others analyse the condition of the system. The tests that analyse fluid condition are viscosity, flash point, and total acid number. The tests that analyse system condition are water content, sediment insoluble, particle Count, S.O.A.P, Filtergram. ROUIINE TESTING OF LUBRICATING OILS Type of USUAL TESTS Lubricating Viscosity Flash Water Sediment Total Acid Oils Point Insoluble Number Mineral x x x Hydraulic Oil Water x x pH Glycols Polyol x x x Esters Phosphate x x x Esters Gear Oils x x x Insulating Oils x x Compressor Oils x x Turbine Oils x x x Cutting Fluids - pH, Microbiological Tests, Fluid Concentration Process Oils - depends on process Based on the above, we would recommend the following testing frequencise: Product Test Frequency Hydraulic Fluid - Viscosity two months (mineral oil) Acid Number Water Content Water-Glycol Viscosity two months (Superglycol) pH Water Content polyol Esters Viscosity two months (Quintolubric) Acid Number (Hydrofluid HFR) Water Content Gear Oil Viscosity two months (mineral oil) Acid Number Water Content Compressor Oil Viscosity two months (mineral oil) Acid Number Water Content Cutting Oil Microbiological Test two months pH Concentration COSTS TRAINING - $500 per session of 2 hours for up to 10 person of various topics including: Fire Resistant Hydraulic Fluids - Types and Selection Criteria Oil Analysis as Maintenance Management Tool Elementary Statistical Process Control Method for Lubricating Systems Preventive and Predictive Maintenance to Improve Industrial Hydraulic System Performance and Extending Component Life Machining Coolant selection and management Part of the above and other topics can be compile to suit. The session will include training material for participants. It does not include audio visual aids. Hiring of any equipment will be charged to the customer at cost. xTESTINGS - Based on the above price list with 20% discount for 10 samples or more in one batch. If more than 10 sample tested in a month there will be 10% discount. VISITS - The cost of 6 sampling visit by a qualified technician is $ per year. The cost of 12 sampling visit by a qualified technician is $ per year. Any additional visit above 12 will be $ per visit. REPORT - The cost of the report is included in the price of testing. A trend graph will be generated after 6 tests have been performed on the same machine fluid. Based on the above, if there are 10 hydraulic fluid samples to be tested 6 times a year will cost $ if samples are sent to the lab. If the samples are to be taken by Oiltech qualified technician, the cost of testing 10 hydraulic fluid samples 6 times a year will cost $. In addition, if two training sessions are conducted per year the cost per year will be $. All together the total cost will be $ per year. Xxxxx Australia Oilcare Program Oiltech Australia 1 23 June, 1998