rowse- the development of an industry
TRANSCRIPT
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THE DEVELOPMENT OF ANINDUSTRY
using nylon as an example
E S Rowse
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TWO APPROACHES
MAKE A PRODUCT TOFIT THE NEED
Example: Nylon
Wallace H. Carothers1935 DuPont
knew what properties hewanted and developed apolymer to meet thatneed
MAKE A PRODUCT ANDFIND A NEED
Example: Teflon
Roy J. Plunkett-1938DuPont
was looking for acompletely differentproduct and came uponthis one by accident
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NYLONPolyamide Polymers begin with coal
COAL1 TON
COAL TAR
120 LB
1000 1400 Co
COKING PROCESS
COKE-used in ironproduction, then
COKE OVENGAS*
There are 18 cokeplants in the USA
Thermal cracking,indirect heat
steel
*51%H2, 30%CH4,7%N2,H2S,12%other HCs
Low sulfur ~1%
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The distillation of coal tar
COAL TAR 2 LB BENZENEboils at 80Co
0.5 LB TOLUENE
0.1 LB XYLENE
0.5 LB PHENOL
2.0 LB CRESOL
5.0 LB NAPTHALENE
Distillation process120 lbs
Volatile, flammable, toxic,carcinogen
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The hydrogenation of benzene
3H2
BENZENE
C6H6
CYCLOHEXANE
C6H12
+
Boiling point=81C, toxic, highlyflammable, irritant
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Oxidation of cyclohexane tocyclohexanol and cyclohexanone
O2
OH O
cyclohexanonecyclohexane
2 H2
cyclohexanol
heat++
KETONE-ALCOHOL BLEND
Boils at 160C, flammable,irritant, reactive, low toxic
Boils at 156C, flammable,irritant, low toxic
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Formation of adipic acidby nitric acid oxidation
HNO3HOOC-(CH2)4-COOH
heat
OH
CYCLOHEXANOLand/or the ketone-alcohol combination
ADIPIC ACID
Melts at 152 Co
Difficult to handle solid
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Amidization step and nitrile step
HOOC-(CH2)4-COOH + 2NH3
H2NCO-(CH2)4-OCNH2 + 2H2O
H2NCO-(CH2)4-CONH2 NC-(CH2)4-CN
ADIPAMIDE ADIPONITRILE
2 H2O
HEAT
ADIPAMIDE
HEAT
ADIPIC ACID AMMONIA
+
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Nitrile reduction step
N=C-(CH2)4-C=N + 4H2 H2N-(CH2)6NH2Ni
ADIPONITRILE HEXAMETHYLENE DIAMINE
Melts at 42 Co
Caustic, irritant
Must keep it warm to pump it
Tends to plug the pipes, valves
Turns yellow with air contact
HYDROGEN+
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Salt Strike and Salt Storagea much safer method!
Hexamethylene diamine + adipic acid +water+ agitation
H2N-(CH2)6-NH2 + HOOC-(CH2)4-COOH
H2N-(CH2)6-NH- +OC(CH2)4COOH +H2O
Hexamethylene adipamate salt in water at just above roomtemperature, easy to store and pump
Caustic diamine liquid Blocky, hard to move adipic acid
H2O
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Condensation Polymerization ofnylon 6,6
Hexamethylene diamine + adipic acid
Poly(hexamethyleneadipamide)+water
H2N-(CH2)6-NH2 + HOOC-(CH2)4-COOH
H2N-[(CH2)6NH-CO-(CH2)4]n-COOH + nH2O
280 Co
H+Ac-
3-4hrs
An endothermic, polycondensation reaction, in equilibriumwith the two monomers. Molecular weight is about 10,000,measured by relative viscosity (RV) and end groupsconcentration.
250psi
1 kg 1.26 kg
2.10 kg 0.16 kg
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The Orientation of polymer molecules
UNORIENTED MOLECULES
Low strength
ORIENTED MOLECULES
Very high strength
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Characteristics of nylon polymer
Waxy solid
White
Tough
High melting (270 Co)
Hygroscopic
Crystalline
Sharp melting point
Can form gels
Can oxidize-yellow
Can be reworked
Can be oriented
Can be used with otherplastics, rubbers
Can be colored
Can be used with manyadditives
Safe to use
Non-polluting
Does not biodegrade
Recyclable
Versatile
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INGREDIENT COSTS
Benzene-growth at 2.2%/yr
3,235,000,000 gallons capacity in US alone
cost: $1.28/gallon or about $0.02/lb or RMB 0.143/lb
Hexamethylene diamine-growth at 8%/yr.
China Shenma Group 150,000 tpa capacity
cost: RMB 25,000 / ton, or RMB1.75/lb
Adipic acid-growth at 2.6%/yr
2,450,000,000 lb capacity in US alone
cost: $0.75/lb or RMB 5.35 /lb
5/6/2008 15
Business assumption
You are working within an existing businessenterprise to which this proposal is added
You will comply with all the companys existingcodes of ethics, visions, core values (ie. Safety,environmental protection, etc)
This business will add to and not take away fromthe overall company effort. It may however, draincash from the company for a time period.
It will provide a place in which employees cansee a future for themselves professionally, andwhere talented new employees are attracted.
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Business Questions
Where shall the plant be located?
What capacity should it be designed for?
Has a good decision & risk analysis been done?
Where and who will be the customers?
Is your entire management in agreement?
Can you enter into this business at the right levelregarding basic feedstock?
Does our company have the expertise to enterthis venture?
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Decision & Risk Analysis
Develop the 10-50-90 analyses for Sales volume by grade (after deciding how many grades) Selling price by grade Growth with time by grade Cost factors (what if raw materials escalate?)
Investment factors Competitive forceswho are they, where are they, what new ones
could enter the market? What other factors are there? Patents? Which factors would stop you? Does our company have the expertise, or must we hire it from the
outside? Have we done enough research & development?
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Decision and Risk Analysis, contd
Are we going into a sustainable business?
Will we devote R&D to:
making a better nylon 66?
making other nylons, like 610, 612, 6?
making better plastics?
Dont spend millions building canals!!!
Dont become a carburetor expert!!!
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Choosing a D&RA team
A lead project engineer
Marketing Sales
Research and Development
Production
A financial person
A consultant from outside the company
May want a branding person
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Choosing a location
Is this site close to raw materials?
Is this site close to customers?
Does this site offer a good labor force, of the right kind?
Does this site have reliable utilities?
Will the locals accept this plant?
Are competitors close or far away?
How good is the infrastructure?
What are the tax costs, and other government costs?
Can the plant operate here without polluting theenvironment?
Choose the best 3 and then decide on the best one.
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Typical D&RA curves
90% chance
50% chance
10% chance
Operating years 1 thru 10
SalesVolume,
Lb/yr
This is acceptable
1 105/6/2008 22
Where does our product fit in with otherplastics?
Properties nylon ABS PP stl
Tensile strength 11,200 5,100 4,900 85
Impact strength 2.1 4.2 1.2
Modulus 175K 300K 210K
HDT, Fo 455 218 225
Sp Grav 1.14 1.02 0.90 8
Price, $/lb 1.60 0.95 0.93 3
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Customer applications
Injection molded parts
Profiles
Tubes
Automotive
Thin film and packaging
Filaments
Do we understand our customers well? Canwe help them use our products?
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Polymerization areadesign basis: 250,000,000 lb/yr, 365 day/yr
HMD liquid
Adipicsolid
Saltstrike
Batchautoclaves
Underwaterpelletizers
silos
H2O
Melt
280Co
H2O
Rail deliveries
cooler
Pellets at100Co
process waterelectricitysteam
compressed airnitrogen
H2O 200 Co
additives
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AutoclaveSalt solution,limited additives
Typical 2 ton batch
Dowtherm heat jacket
Steam extracted
To scrubber then atm
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Railcar UnloadingAdipic acid and HMD are very difficult to handle!
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Finishing areaDesign basis: 300,000,000 lb/yr, 365 day/yr
Twin screw compounder
Weigh feeders
Feed
silos
vacuum
Underwaterpelletizer
Fluid bed
Finished productblending and silos
packaging
Inventory
MTO or MTI
Qualitycontrol lab air
Several additives*
*Antioxidants
Colorants
Stabilizers
Lubricants
Minerals
Fiberglass Utilities-> 5/6/2008 28
Gravimetric Feeders
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Gravimetric Feeder Arrangement
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Twin screw compounders
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Twin screw extruder
Leistritz, GmbH co-rotating, intermeshing, self-wiping 5/6/2008 32
Twin screw compounders
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Screw elements
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Underwater Pelletizer
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Fluid Bed Cooler
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Fluid bed cooler
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Silo blenders and storage silos
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Process Hazards Survey
Failure mode & Effect method
Examine each and every component, asking:How could this component fail?
If it did fail, what would happen?
What is the probability of a failure?
How should we protect ourselves?
Why is our safety important to our customers?
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investment
Polymer plant equip. $150,000,000
Finishing plant equip. $ 50,000,000
Total equip. $200,000,000
Design cost (who?) $ 10,000,000
Testing costs, R&D $ 10,000,000
Building & Land $ 20,000,000
Site support investment $ 10,000,000
Total capitalized invest. $250,000,000
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Cost of manufacture estimatesingredients only
Raw Matls Lb/yr Unit cost, $/lb $/yr $/lb fin prod
Capacity 250,000,000
HMD 121,000,000 0.25 29,700,000 0.12
Adipic acid 153,000,000 0.75 114,800,000 0.46
Additives 1,020,000 4.00 4,080,000 0.02
Yield 0.98
Ingredneeded
274,000,000
Cost of
ingred.
148,580,000 0.60
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Cost of manufacture estimateRaw Materials,lb/yr and $/yr
274,000,000 148,580,000 $ 0.600 $/lb fin prod
Finished product,lb/yr
250,000,000
Opera ting labor 100
Day labor 50
Maintenancelabor 30
All other labor 25
Kw connected load 8000
Kw used 6500
Capital needed, $ 250,000,000
Interest on capital 0.06
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Cost of Manufacture Estimate, contd.
Interest expense 15,000,000 $/yr 0.0600 $/lb fin pro
Insurance & taxes 25,000 0.0001
Office expense 25,000 0.0001
Maintenance sup. 100,000 0.0004
Operating supply 50,000 0.0002
Analytical supply 50,000 0.0002
Waste handling 75,000 0.0003Electricity cost 1,081,600 0.0043
Water cost 30,000 0.0001
Nitrogen cost 50,000 0.0002
Allocate overhead 100,000 0.0004
Packaging matls 7,500,000 0.0280
Railroad usage 50,000 0.0002
TOTAL cost ex 24,136,600 0.1050
TOTAL cost of mfg 172,716,600 $/yr 0.6950 $/lb fin pro
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Total cost of salesVolume of sales 250,000,000 lb/yr 220,000,000 lb/yr 190,000,000 lb/yr
Ingredients, $/lb 0.6000 0.6000 0.6000
Cost of mfg, $/lb 0.1100 0.1200 0.1400Cost of marketing& advertising
0.1000 0.1000 0.1000
Cost of research &customer service
0.1000 0.1000 0.1000
Administrative 0.1000 0.1000 0.1000
Total cost ofgoods sold
1.11 $/lb 1.12$/lb 1.14$/lb
Selling price, $/lb 1.60$/lb 1.60$/lb 1.60$/lb
Before tax profit 0.49$/lb 0.48$/lb 0.46$/lb
After tax profit 0.29 $/lb 0.29$/lb 0.28$/lb
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What is the cumulative cash flow and thepayback year?
Full year operation 1 2 3 4 5 6 7 8
Volume sales, $/yr 190 220 250 250 250 250 250 250
Selling price, $/lb 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6
Total costs of sales 1.14 1.12 1.11 1.11 1.11 1.11 1.11 1.11
Net profit $/lb 0.28 0.29 0.29 0.29 0.29 0.29 0.29 0.29
Net profit MM$/yr 53.2 63.8 72.5 72.5 72.5 72.5 72.5 72.5
Investment MM$ 250
Net cash flow, MM$/yr -196.8 63.8 72.5 72.5 72.5 72.5 72.5 72.5
Cumulative cash flow -196.8 -133 -60.5 12 84.5 157 229.5 302
Payback 4 years
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Cash flow estimate
Cumulative cash flow
-300
-200
-100
0
100
200
300
400
0 2 4 6 8 10
Year of operation
cash
flow,
M
M
$
Break even in 4th year
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Where can we reduce costs?
R&D
6% Cust Serv
6%
Admin
12%
Sales/mkt
8%
Advertise
6%All Other Plant
Costs
8%
Labor
2%
Raw matls52%
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Managing the Business
Will our raw material supply go away?
Will our raw material supply go up in price?
What is the political security of our plan?
Is our customer base stable or will it change dramatically
in the years ahead? Do we have all of the right people in place to support this
venture?
Are our volume forecasts accurate?
Is our plant safe from catastrophe?
Can we guarantee our customers a reliable supply?
Do all of the employees understand the goals?
5/6/2008 48
Conclusions and recommendations for
students
80% of what you learned in school, you will never seeagain
Become a fast learner of new things Become the resident expert in whatever you are
assigned to do for your boss Speak well and write well Learn to debate and defend your ideas Learn from the operators and the vendors; they know
more than you do. Anything is possible if you dont care who gets the credit. Like other people! You cant do it alone. If you cant do it safely, dont do it!!