Unplanned downtime adds up to an estimated $50 billion annually for industrial manufacturers, making proactive service strategies like annual maintenance contracts (AMCs) essential for operational resilience. An AMC is more than a convenience; it’s a strategic tool that ensures consistent operational performance, cost control and long-term asset reliability.
Why is maintenance — proven to be a key factor in extending equipment life, reducing downtime and lowering overall costs — so often overlooked in many operations until it becomes an emergency? There are several possible reasons:
- Lack of available resources — time or personnel
- Inconvenient timing
- Disorganization or lack of planning
- Misunderstanding of the benefits and importance of maintenance
In many cases, several of these factors will exist at once. They create a maintenance deficit that, if not addressed, can add up to a significant sum of avoidable costs in operations, emergency repairs, part defects and facility safety. These maintenance issues do not arise on account of purposeful negligence by facility management. They result from resource shortfalls and prioritization decisions that naturally place core production processes at the top.
How do manufacturers address the maintenance gap?
In order to solve these problems and ensure that maintenance is performed as intended and required, many manufacturers work with outsourced providers and sign an annual maintenance contract.
More than just a service arrangement, this type of agreement supports a model of partnership-based maintenance — one built on ongoing collaboration, shared goals and proactive communication. Rather than treating maintenance as a transactional, vendor-managed task, manufacturers benefit most when their AMC provider acts as a strategic partner embedded in plant operations.
This shift toward partnership-based maintenance allows organizations to improve accountability, streamline decision-making and continuously optimize performance across equipment lifecycles.
What is an annual maintenance contract?
An annual maintenance contract, or contract maintenance agreement, is a business arrangement for ongoing maintenance, agreed on by the manufacturing facility and a service provider. This ensures optimal performance throughout the year.
As opposed to ad-hoc or emergency maintenance services, industrial contract maintenance covers all aspects of maintenance on a plant’s critical assets, including:
- Scheduled preventive maintenance
- Regular checkups and diagnostics
- Emergency repairs
- A dedicated workforce of skilled, certified technicians
- Documentation and process development
- MRO asset management, including inventory optimization and storeroom management
In addition, a comprehensive annual maintenance contract can include smart technology implementation, training of the existing workforce, safety training, procedure implementation and more.
The benefits of annual maintenance contracts
An annual maintenance contract offers numerous benefits applicable across many manufacturing industries, especially aerospace, automotive, building products, heavy equipment, consumer packaged goods, paper/pulp and tire/rubber fields.
Many manufacturers choose an AMC service model to achieve reliable, long-term outcomes. These agreements often include routine maintenance tasks like inspections and adjustments, as well as regular maintenance schedules tailored to plant-specific needs. In fact, companies that embrace a data-driven approach can see measurable predictive maintenance cost savings that help justify the upfront investment.
A comprehensive AMC not only provides coverage for breakdowns but also includes priority service response agreements and defined maintenance activity protocols. This helps facilities ensure compliance through regular inspections and condition-based maintenance strategies supported by remote reliability monitoring and machine health monitoring. Organizations that are new to smart maintenance approaches can also consider running a predictive maintenance pilot program to test effectiveness before full implementation.
When your business chooses an annual maintenance contract, the benefits can include:
- Predictable maintenance, costs: As-needed maintenance planning can quickly spiral into unforeseen costs that significantly affect the entire budget. With a comprehensive annual maintenance contract, you can control and account for all maintenance costs on a long-term, fixed basis. By reducing variability in your maintenance budget, you can reliably allocate funds throughout the rest of the business without fear of overruns in maintenance or shortfalls elsewhere. CFOs and facility managers can use AMCs to improve financial forecasting and reduce budget volatility.
- 24/7 maintenance support & coverage: An old cliché holds true for maintenance: the only thing you can predict about it is that it will be unpredictable (unless you’re using predictive maintenance technology, of course)! Maintenance contracts ensure that, no matter what the time or the situation, you will have an expert available to resolve the problem. This provides a safeguard that in-house staff may not be able to offer, since it is often not cost effective to maintain round-the-clock expertise for every issue that arises. However, it is the job of a contracted partner to provide multi-craft, experienced maintenance technicians that will solve any and all maintenance-related problems. ATS maintenance technicians are skilled in mechanical, electrical and PLC systems — ensuring comprehensive coverage around the clock.
- Efficiency & documentation: A comprehensive maintenance contract takes a holistic approach to all aspects of your maintenance practice. This approach yields fundamental logistical benefits that are designed to improve your bottom line. These logistics often integrate with CMMS and IIoT platforms, supporting more intelligent, data-informed planning.
- Longer equipment lifespan: All too often, maintenance is treated as the practice of addressing breakdowns when they arise – when it should actually be an ongoing process with the primary intent of keeping equipment running in top shape for as long as possible. By providing the resources to consistently adhere to an effective scheduled or predictive maintenance strategy, a long-term maintenance contract is designed to improve equipment operation, ultimately resulting in greater production efficiency.
- Reduced downtime through scheduled maintenance: Building on the benefits of adhering to scheduled maintenance, maintenance partners aim to minimize or eliminate downtime caused by equipment malfunctions. The long-term, holistic approach of an annual maintenance contract can allow for downtime planning, ensuring scheduled maintenance occurs at the least disruptive times in the production schedule.
- Data-driven maintenance planning: With predictive maintenance technologies empowered by Industry 4.0, you can gain data-driven manufacturing decision making. You’ll have a clearer picture of the health of your equipment and be able to plan ahead for your maintenance needs. This can help prevent unexpected downtime and provide you with better productivity. ATS’s Reliability 360® technology platform delivers real-time dashboard visibility to help your team act with greater agility and confidence.
- Technician training & knowledge transfer: When you have an AMC contract, your technicians can learn more about your systems thanks to the software-generated insights and diagnostics you may receive. With the information they receive from any smart technology implemented throughout your facility as part of the arrangement, they can learn to troubleshoot common problems more effectively and help your processes become more efficient. Learn more about our technician training.
- Safer facilities & regulatory compliance: It should go without saying, better maintenance leads to safer workplaces. Equipment that breaks down unexpectedly or doesn’t perform at optimal levels may present a safety risk to employees. Being able to stay in front of smaller issues before they have a chance to develop into more-serious concerns that could jeopardize workers is another critical benefit that AMC contracts can provide to your operations. AMCs also support OSHA, ISO and NFPA safety compliance, aligning with ATS’s safety-first culture to protect your workforce. For more guidance, visit our guide to industrial maintenance safety.
- Optimized spare parts inventory management: Maintaining your spare components can be a delicate balancing act. You don’t want to be left empty-handed when your equipment fails, but carrying too much inventory creates issues with organization, space and spending. However, because an annual maintenance contract can include predictive analytics, this can be less of a problem. This software can provide advanced inventory forecasting so you won’t have to worry about overstocking or shortages of critical parts. ATS offers storeroom optimization strategies enhanced by predictive analytics for leaner, more accurate parts inventory.
- Focus on core operations: In a scenario where management is unable to prioritize maintenance, there is a constant sense of unease and scramble to complete critical maintenance tasks, resulting in negative effects on other parts of the operation. A maintenance contract eliminates this unrest by providing management, operators and other technical personnel — giving plant leadership the peace of mind to focus on core tasks, as well as on other bottom-line drivers such as innovation and customer service. Before partnering with an AMC provider, teams may spend hours firefighting equipment issues. After implementation, maintenance is planned and proactive — freeing up resources for strategic growth.
What to look for in a maintenance contract partner
A trusted annual maintenance contract provider should offer more than basic service delivery. Look for a partner with proven technical expertise across equipment types, real-time monitoring and analytics capabilities like ATS’s Reliability 360® platform, flexible coverage options and a track record of measurable results — such as increased uptime and demonstrated cost savings. The right AMC provider should act as an extension of your team, not just a vendor.
ATS is a leader in the contract maintenance field, offering decades of expertise as a pioneer in comprehensive plant maintenance services. We can provide your facility with all the benefits mentioned above and more. If you would like to discuss your operation’s maintenance needs and goals, contact an ATS representative today.
References
The Wall Street Journal. (n.d.). How manufacturers can achieve top quartile performance. The Wall Street Journal – Emerson. Retrieved from https://partners.wsj.com/emerson/unlocking-performance/how-manufacturers-can-achieve-top-quartile-performance/
Foust, N., & Steenstrup, K. (n.d.). Market guide for asset performance management software. Gartner. Retrieved from https://www.gartner.com/en/documents/3983409
National Fire Protection Association. (2023). NFPA 70B: Standard for electrical equipment maintenance (2023 ed.). NFPA. Retrieved from https://www.nfpa.org/codes-and-standards/all-codes-and-standards/list-of-codes-and-standards/detail?code=70B
