PETpla.net Insider 10 / 2016

CAPPING / CLOSURES 44 PET planet Insider Vol. 17 No. 10/16 www.petpla.net 4.7 Economic Guidelines There are so many different cavita- tion systems in production today, with different vintage machines and a variety of mould and closure designs, that it is very difficult to give concrete economic advice for just any con- figuration. We will therefore only spell out several key components that are important to closure production and point out the importance of cycle time on profitability. The first data sheet compiles capi- tal costs as a percentage of the total. The numbers are meant for a high-end machine with closed-loop injection parameter controls, fast movements, and a carefully designed and optimised mould with 64 cavities. Similar data can be compiled for a CM machine. Injection machine costs 29.2% Chiller 2.1% Closure conveyor 0.3% Resin vacuum loader and mixer 0.3% Air compressor 0.5% Wiring piping start-up machine 1.6% Import tax machine 1.7% Total costs machine 35.7% Injection mould costs 52.9% Temperature controller costs 2.3% Additional equipment costs 0.8% Additional logo inserts 0.0% Spare parts 2.4% Installation costs – mould 1.6% Import tax mould 3.0% Total cost mould 63.1% The most striking observation may be that the machine cost is only 29.2% of the total, whereas the mould weighs in with 52.9%, a reflection of the highly advanced mould technology available today. It is also an indication of how important it is for any prospective pro- cessor to cooperate with knowledge- able and skilled mould makers. Adding these two percentages we can see that auxiliaries make up about 18%. If a dehumidification system is required, this would have to be added to the list. Next we look at operating expenses. We have broken them out for three different cycle times: 5, 7, and 9s. Raw materials including colour- ant contribute between 60% and 70% to the overall cost. It also becomes clear that running a faster cycle in turn reduces the cost impacts of labor, energy, and especially amortisation. This has of course a great impact on profitability. Although sales prices are subject to regional and other differ- ences, we have charted a graph com- paring them for a typical European moulder. The increase in cycle time from 5 to 9s results in a cost increase of about 15%. This does not seem Typical operation cost schedule for injection moulded caps to have a drastic impact. However, assuming that the moulder can sell all caps in a year and paid the same amount for the equipment, the result- ing difference in profit per year paints a different picture. The increase in cycle time from 5 to 9s results in a drop of profit of over 60%, increasing simple payback time from 1.4 to 3.9 years! In essence, a fast IM machine with precise controls and a well-designed mould is paramount to make money in the closure business. Operating Costs 5s cycle 7s cycle 9s cycle Cost of raw material per kilogram $1.30 $1.30 $1.30 Colour Red Red Red Percentage of colourant in raw material 1% 1% 1% Cost of colourant per kilogram $14 $14 $14 Number of caps per box 4,000 4,000 4,000 Running costs for the factory per 1,000 caps 0.8% 0.8% 0.7% Cost of 1 operator per 4 machines per year 1.8% 2.3% 2.8% Packaging material per box 5.2% 4.9% 4.6% Energy costs 4.3% 5.6% 6.8% Rejects 0.7% 0.7% 0.6% Repair costs per year 0.5% 0.6% 0.7% Total costs of raw material 63.8% 59.6% 56.0% Total costs of colourant 6.7% 6.3% 5.9% Total direct costs per year 83.7% 80.7% 78.1% Sales/admin costs (6% of production costs) 5.0% 4.8% 4.7% Building and land costs 1.5% 1.9% 2.3% Interest on working capital 0.8% 0.8% 0.8% Amortisation of mould 5.8% 7.6% 9.2% Amortisation of machine 3.1% 4.1% 4.9% Total indirect costs per year 16.3% 19.3% 21.9% Total cost 100.0% 100.0% 100.0%