Document e5KQb299DLQDZo1Nyn3J36Og9
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Request For Capital Expenditures/Retirements
DIVISION OR COMPANY
Organic Chemicals Division
LOCATION
J.O, CONTROL POINT
Chicaso, Illinois
j o s t it l e
INSTALL SEMI-BULK HANDLING SYSTEM FOR LEAD STABILIZERS
n s Cl a s s i f i c a t i o n
DATE APPROVED
JOB ORDER NO.
D-l 3/9/81 OC-5300
SUMMARY OF AMOUNTS
DESCRIPTION
. l o c a l ... c u r r e n c y
ESTIMATED PROJECT COST
:u .s . :o l .
150,000
d is ma n t l e me n t e x p e n s e
t r a n s f e r e q u ip me n t
LESS TR^N^FER^.EQ^IPME^T'''
':k S S; Sa Il V A g : O R
E-! N 'jfiitLO W AN C E :
i;";';' :Wi:ET'':5d:!i*.^iM 1 :|RieiciU./RfeiD1.::1 r1 3fia7r
150.000 1^0.000 :
RETIREMENT DATA
DISMANTLEMENT LESS SALVAGE
TOTAL - CHARGE RESERVE DESCRIPTION AND REASONS REQUIRED
ECONOMICS os colled for in Genero! Procedure Memo #3
Attachment C. (Attach cclcjlctions*
ECONOMICS PERIOD
REV.#
1
REVISION DETAIL CPO SS AVvvN Tit.-
DATE
IcuM. ALT-C P 2A* ON
r
NAT [PRO in T/SAVIN5 S! TOTAL INVESTMENT
ROI (o n t o t a l in v e s t . 1 INTERNAL RATE OF RETURN PAYOUT OF NEW FI XED CAPITAL
/OS
72-
t.Z-
See Attachments.
SUMMARY OF ESTIMATED COST - Detoils on GOF-3027
ITEM n o .
DESCRIPTION
Per estimate attached Tax
[ST.MATE n o .
J-0'ABTIk & DATE
1 Upon approval
1 vATEr-IAL
L A BO A
j129,500 ; 7,000
10,500
COMPLETION c a t e
Four months after aooroval.
(ENGINEERING }
T C~AL
I 3,000 i 143,000 j 7,000
ITEM NO.
Dr Dr
NET CASH REQUIRED
136.500 i10.500
i
ACCOUNTING TREATMENT
j APPROVALS
D E PR. RATE !
NAME
Ip ROJE C T SPONSOR
$73,000 to PP&E Containers(2A700)
$70,000 to PP&E (2A320)
j
20% IhX
`s
3.000 i 150.00n DATE
! "M/^
ACCOUNTING TREATMENT / CCCNOM C 5 AV* ROjllCi BY O... Cfc N T-RO i..L R t^ECK BO*IE^/'1
X ....0
La t t h Oic.1^-
3/W^/
POST AUDIT PERIOD
fJCST AJLSiT DUE DATE
/ '/
Dt STRI SUTIOW; v
m3 W
"
|T~*--------------1.
* _________________________ J________________
i i-
|______________________________________________________ J________
j C.VlSiON e P E s, t. EN T 'E ! RE CTO
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CORPO'R A T L_0 FF< C E R
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!--------------
N14646
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5.77
NA 3006 REV 5
in - ut. inr.j . r./r.s
DETAIL SHEET
SHEET NO.
'1
c o mp a n y
JOB ORDER NO.
ITEM OR
`CODE NO.
DESCRIPTION
Air Pallets 200 x $320 Average load of 1,500 lbs.; capacity 1.2 M lbs.
2 Conveyor
3 Filling System
A Ventilation
5 Unloading System
6 Freight
7 Semi-bulk Bag Unloading
8 Semi-bulk Bags 40 x $225 Average load 1,500 lbs.; capacity 2A k lbs.
9 Engineering
10 Contingencies
11 Tax
LOCATION
EQUIPMENT
or
MATERIALS
64.000
DATE LABOR
3.500 20.000
1.500 11,000
1,500 5.000 9.000
1,500 A, 000 1.500 3.500
14,000 7,000
136,500
3,000 13,500
OC-5300 3/9/81 Page 2 of 5
**.** -
CYWI 25--0007385
Page 1
OC-5300 3/9/81 Page 3 of 5
Proposed Work and Cost
This order requests $150,000 for the installation of a semi-bulk filling/ handling system and an initial supply of Air Pallet and semi-bulk bag containers.
Overview
Lead Stabilizers is a M$6 business with NAT profitability of 7-10%. It is a quadrant IV business being managed for cash. The U.S. market for lead stabilizers is shared equally among Cyanamid and two major competitors -- Associated Lead and Hammond Lead. The industry and its customers are under environmental pressures to reduce lead dust exposure to comply with current QSHA regulations.
Reasons For Request
OSHA regulations and environmental concerns are forcing key customers to use semi-bulk handling systems. (20% of the lead stabilizer market has installed semi-bulk systems during the past 2 years. We estimate that another 10% will be converted by the end of 1981.) Both of our major competitors are offering semi-bulk packaging and we stand to lose significant market share if we do not offer semi-bulk shipments -- Hammond and Associated both offer Air Pallets; Hammond also offers Taicon semibulk bags.
Our sales volume estimates follow (k lbs.):
1980
1981
1982
1983
1984
.1985
1981-85 Business Plan
6,750
Current Estimate Without Semi-Bulk
6,750
6,400 6,200
7,700 6,000
7,800 5,800
8,000 5,600
8,100
*
5,500
Current Estimate With Semi-Bulk
6,750
7,000
7,900
8,100
8,200
8,300
Not offering semi-bulk packaging will reduce 1981 NBT by k$200 and 1985 NBT by k$700 due to sales volume declines.
Semi-bulk handling may also help reduce lead-in-air levels in our Chicago plant bag packing area as well as reduce handling and packaging costs. No consideration of these additional benefits has been included in the project economics.
Anticipated Financial Returns
This project offers less than a one-year payback (.75 years) and will generate more than M$1 in cash through 1985 by protecting market share and volume. The 1981forecastdata in the following table of financial results assumes installation of semi-bulk packaging by June 1981:
CYWI 25-0007386
Page 2
1979
1980
1981 Budget
0C-5300 3/9/81 1981 Page Forecast
Volume (k lbs.)
8,251
6,742
6,400
7,000
Net Sales (k$)
5,937
5,619
5,207
5,600
Marginal Income (k$)
2,241
2,451
2,870
3,080
Manufacturing Profit (k$)
1,553
1,782
1,512
1,700
. POS (%) NAT (k$)
NAT (%)
26 454
32 29 30
577 392 500
7.6 10.3 7.5 8.9
Details of Proposal
Manufacturing: We plan to install the semi-bulk filling and unloading system in Building 2A adjacent to the Nauta mixer, which will be tied into the semi-bulk loading system through a screw conveyor. The existing dust collector will provide sufficient ventilation.
The unloading system permits us to unload returned semi-bulk containers to drums for repackaging or rework if necessary.
We have included modifications to the Air Pallet filling/unloading systems to permit the handling of both semi-bulk bags and Air Pallets. Although most of our customers have installed or plan to install Air Pallet capability, there are a few major accounts that are using semi-bulk bags. Although we have requested funds to purchase some semi-bulk bags, they will be purchased only after obtaining a firm commitment from the customer.
Semi-bulk containers will not alter product quality or output. The semi-bulk system is expected to reduce airborne lead levels in the packaging areas; however, the magnitude of improvement cannot be estimated at this time.
We intend to color code and label the semi-bulk containers to avoid cross contamination of product types (carbonate, sulfate, phthalate). Containers will be shipped FOB Chicago and returned at Cyanamid expense.
Freight charges for return will run at most $15 per Air Pallet ($0.01 per pound of material shipped from California), and average under $10 per Air Pallpt ($0,007 per pound of material shipped). These freight charges will be more than offset by reduced packaging costs($0.Q09 per pound for bags and pallets) and a one cent price premium for semi-bulk shipments.
We have provided for 2.5 semi-bulk containers for each pallet of material to be shipped per month. This should be sufficient to service the average account.
of
i
CYWX 25-0007387
Page 3 Contingent Future Commitments
005300 3/9/81 Page 5 of 5
By 1985 we estimate another 1.2M pounds of semi-bulk business, requiring additional expenditures averaging k$35 per year after 1981 to increase the number of containers and to repair/replace containers. If the product mix changes, an additional k$25 may be needed to debottleneck the filling operation. In the event that returned containers are covered with dust and become a hygiene problem, k$25 may be needed to install an enclosed cleaning facilit Alternatives Considered
We -have attempted to meet customer requirements for reducing lead-in-air levels with other products and packaging forms including dustless grades, PVC bags, and waxed stabilizers. Although several of these offerings have had some success or interest, our large volume customers are rapidly switching to semi-bulk systems as the most practical solution readily available.
We have reviewed various semi-bulk systems over the last four years, but the Air Pallet system has appeared the most practical and this has been confirmed as customers and competitors have installed Air Pallet systems. We are providing the flexibility to handle semi-bulk bags for the few customers that require them.
Risks
Enough of our customers and competitors have successfully installed Air Pallet systems that we see little technical risk. Our Azo Pigments manufacturing facility in Bound Brook has been using an Air Pallet system successfully for about one year.
CYWI 25-0007388