A large-scale food processing company based in Philadelphia, Pennsylvania, operates a high-demand production facility requiring significant energy inputs, particularly natural gas, for daily operations such as cooking, refrigeration, and packaging. With energy expenses comprising a major portion of operating costs, the client was experiencing substantial charges on their natural gas supply, impacting profitability.
Natural Gas Costs Reduction Strategy
Challenge
The client approached Newmark Energy with concerns about the rising cost of their natural gas supply. Despite being a large-volume user, the client was locked into a pricing structure that did not reflect market opportunities or leverage their consumption volume for more competitive rates. Below are a list of objectives they wanted to achieve.
- Analyze the client's current natural gas procurement strategy and contract terms.
- Identify inefficiencies and areas for cost savings.
- Develop a strategy to reduce natural gas supply costs without disrupting operations.
Actions
Newmark’s Energy team conducted a comprehensive audit of the client's natural gas usage, supply contracts, and market conditions. Our approach included:
- Benchmarking the client’s rates against current wholesale market pricing.
- Reviewing historical consumption data to identify usage patterns.
- Engaging in supplier negotiations to explore better pricing structures.
- Advising on timing strategies to capitalize on favorable market conditions.
Through this in-depth analysis, Newmark Energy identified several cost-saving opportunities, including restructuring the supply agreement and aligning the procurement cycle with seasonal price trends.
Results
By renegotiating the supply agreement and optimizing procurement timing, Newmark Energy successfully reduced the client’s natural gas supply costs by 20%, resulting in significant annual savings. These savings directly improved the client’s operating margin and freed up capital for reinvestment into other areas of the business, such as production technology and quality assurance.
Newmark’s Energy services team helped a major food processing company in Philadelphia realize meaningful savings through strategic analysis and proactive market engagement. Our client continues to work with Newmark Energy to monitor energy market trends and identify future cost-saving opportunities.