The real economics of extrusion

People sometimes look at extrusion as an investment, like pork bellies or medtech. It is that, of course, but also much more. If I’m asked to advise in this arena, I make sure the investors know a few basic rules.

  • Extrusion is usually a 24-hour continuous operation. You can run 24/7 or 24/5 or even 24/4, but if you don’t run around the clock you are idling equipment, paying for frequent starts and stops and, therefore, greatly increasing production costs. There are a few specialty applications where you can get away with this, but the product has to be worth a lot, like multi-lumen medical catheters. For the rest of us, if we don’t run around the clock, our competitors will.
  • Equipment is a minor component of manufacturing cost. Keep it running and look at the cost as a charge per pound or kilogram of resin, not machine-hours, as is sometimes used in molding. Include a factor for installation as a fixed cost and maintenance as a variable, but expect that to be moderate at the start, lowest after a break-in period (six months) and increasing again as the system gets older. Don’t forget to line up people to go to when something goes wrong—either your own staff, local service people or OEMs.
  • The largest cost by far is the material. The purchasing agents are sometimes the chief technical people, too—what they buy we have to run. Materials vary even when they are promoted as “drop-in” replacements, and there is significant variation in flow even within a particular product number. This flow range should be part of a purchase spec, but seldom is. With some resins—notably, but not exclusively, PVC—the selection and amount of additives and blend components are very important, and may control the whole economic proposition.
  • If material is the big factor, what else is there? Here is where the 6-1-2-1 rule comes in: 60% materials, 10% equipment cost, 20% direct labor and 10% everything else, including power, packaging and insurance. It’s easy to criticize these numbers, as there are very expensive resins, and real big lines cost less per pound than little ones. But it’s a place to start and avoids the gross distortions that are appealing but not economically supported—notably, things that save energy.
Griff 1808 6-1-2-1 rule 650 pixels
  • The extruder and its drive are not always the biggest part of the equipment cost. The die and sizing equipment has its costs, as well as services like air and water that may be used downstream more than at the extruder end. Also, the equipment needs to handle trim and scrap cleanly, add materials like colorants and functional additives at closely controlled rates, and do inline operations like drying, feeding and thickness measurement/display/feedback.
  • Choose your supplier(s) with care and caution. Prices from far-overseas suppliers are unbelievably low, but the quality and service are uncertain. There must be some good ones out there, as the local industries use them and survive, but I don’t know how to find them and be confident in my selection. Besides, needs in countries with higher labor costs are different, requiring more automation, feedback control and recording. Technology for these things all exist now, and the real limit is devoting enough hours at our end to look at the numbers that are crunched. Past history is a good guide, so that if you have 10 lines from supplier X and they have served you well, it will probably pay to stay with supplier X. If you’re just starting, you are free-er to choose.
  • Pumpkin pie chart
    A different kind of pie chart illustrating the 6-1-2-1 rule, courtesy Allan Griff.

    Buying used equipment is another option, with the advantage of having it now being sometimes more important than the apparent money saved. I say apparent because it will cost something to bring used equipment up to new-level productivity; the Rule of Thirds says that a used line should cost one-third of a new one of the same quality, with another third added to restore it. If the line is sold “restored,” find out what was done and factor this in. The remaining third is the monetary advantage of buying used, but even this is time-dependent, as the line will age faster if it is older to start. Analogies to cars and trucks are useful here, but not people. And as with cars, leasing is growing as an option to owning outright.

  •  Do you really need more equipment? Can you upgrade existing lines rather than buy a new one? Remember that speed isn’t the only metric—product performance has to be as good as before, and should not cost you more in material because of wider thickness tolerances. Most important: Are you sure you can use/sell the increased production? Maybe you are better off buying from outside if you can’t meet a sudden increase in orders. This strategy isn’t only for small companies; a major beer producer used it for can manufacture and maybe still does.

I left my plastophobia comments for the end, as there is too much to say about the recent movements to ban straws (see my June 2018 column) and reduce plastics’ use in so many other ways. If it saves us consumers money, or reduces our addiction to waste, I’m for it, as expressed in my acronym ULS-FOS-TANA (Use Less Stuff, Fix Old Stuff, Throw Almost Nothing Away). But if it singles out plastics as toxic (which they’re not) or if it fans the fears of “chemicals” (which get in the news almost every day), I will call it out as expression of the denial of science based on the need to believe the impossible.

Allan Griff is a veteran extrusion engineer, starting out in tech service for a major resin supplier, and working on his own now for many years as a consultant, expert witness in law cases and especially as an educator via webinars and seminars, both public and in-house. He wrote the first practical extrusion book back in the 1960s as well as the Plastics Extrusion Operating Manual, updated almost every year, and available in Spanish and French as well as English. Find out more on his website, www.griffex.com, or e-mail him at [email protected].

Griff will present live seminars in Houston on Sept. 27 and Chicago on Nov. 8. Seminars in your plant are also available. If you can’t attend his live events, he offers a Virtual Seminar, which can be seen at anytime, anywhere. E-mail Griff at the address listed above for more information.

 

PLASTEC Minneapolis 2018 held October 31-November 1 is part of the Midwest’s largest advanced design and manufacturing event that also includes MinnPack brings you the latest in materials and additives, injection molding, rapid prototyping, coatings, automation, packaging and more. For details, visit PLASTEC Minneapolis.

 

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