Tootsie Roll can make a major capital investment in new, energy efficient equipment. According to the tax assessor’s office, the average life of candy making machinery and equipment is fifteen years (Personal Property Manual, 2010). Taking a look at the depreciation taken by the company, it can be assumed that most of the equipment is much older than this. Energy is the biggest expense for a company outside of raw resources. As the price of energy increases, it becomes more important for a company to reduce energy usage. Every dollar saved by energy conservation is cost avoided. This can result in a more profitable business in the long term. Retrofitting plants with more energy efficient technology will help Tootsie Roll to stay profitable even with high energy cost peaks. The return on investment is around ten years depending on the price of energy. Software technologies can enhance the energy efficiency and reduce waste of raw products that could reduce this below ten years. Process controls give the operators the ability to increase production yield without wasting energy or resources. Asian company reduced the energy consumption of their site by twenty percent by retrofitting with energy improvement taken into consideration (Evans, 2003, p. 117). Tootsie Roll can benefit from process optimization which will propel the company into the future.
References
Evans, D. B. (2003). Saving Energy in Manufacturing with Smart Technology. Energy World, 6(2), 112-118.
Personal Property Manual. (2010, May 26). Retrieved from