COMPOUNDING AND PROCESSING PVC:

GENERAL PRINCIPLES OF PLANT OPERATION FOR OPTIMUM PROFITABILITY

(Edited, August 2001)

George A. (Skip)Thacker
PVC Technical Services
P.O. Box 1377
Silver City, New Mexico 88062
e-mail: [email protected] [email protected]
Web: www.gilarangers.com/pvctech.htm

ENCYCLOPEDIA of PVC - VOLUME IV

CHAPTER 8
I INTRODUCTION
II HISTORIC PERSPECTIVE
III PVC’S PROCESSING OPTIONS
IV RIGID PVC EXTRUSION SELECTION - WHY?
V SITE SELECTION - GENERAL PRINCIPLES
VI PLANT LAYOUT - GENERAL PRINCIPLES
VII GENERAL PLANT OPERATIONS
VIII SPECIFICS OF A PVC EXTRUSION PLANT
A. Site Selection
B. Plant Layout:
1. Materials Handling
2. Production Year
3. Blending
4. Extrusion
5. Plant Startups and Shutdowns
6. Scrap Handling
7. Downstream
8. Capital Costs
IX ESSENTIAL FACTORS FOR QUALITY & PROFITABLE PVC EXTRUSION
A. Quality Control Laboratory
B. Plant Maintenance
C. Accurate Production Records
D. “Pound-Volume” Pricing
E. Plant Safety, OSHA./EPA Compliance
X REGULATORY CODES, AGENCIES

XI PLANT OPERATION - ECONOMICS AND PROFITABILITY

A. Plant Staff & Labor Costs
B. Building Costs
C. Equipment Costs
D. Annual Operating, Conversion Costs
E. Material Costs
F. Sales Revenue
G. Plant Profit Potential
H. Increased Productivity - Profit

XII CONCLUSION: MANAGEMENTS’ ROLE

XIII REFERENCES
I. INTRODUCTION:

Other chapters of the Encyclopedia of PVC that discuss the compounding,

processing, and testing of PVC products have as a common goal an optimized scenario
which directly affects production efficiency, product quality and therefore plant
profitability.
The entrepreneur, owner, general manager, purchasing manager, sales manager,
production manager, quality control supervisor, shift foreman, and yes, even the operators
and technicians on the third shift - all must be concerned with achieving the best possible
results within their areas of responsibility in order to insure that the PVC plant meets or
exceeds its goals in customer satisfaction. No matter what the finished product is,
consistent, on-time delivery of a high quality, uniform product at a low cost and fair price
will insure any plant’s competitive stance in its market arena, and many happy customers.
Satisfying a customer’s needs promptly and competitively is, after all, the main reason the
PVC processing plant exists!
The purpose of this chapter, therefore, is to address those factors that will enable
any PVC processing facility to operate at its most efficient and profitable level.

II. HISTORIC PERSPECTIVE:

A reflection over the past 50 years’ growth of the PVC processing industry is
instructive, especially as the industry moves into the next century with new products and
new markets continually evolving.
Growing from just a few hundred million pounds in the late 1940’s and
early 1950’s to over 13 billion pounds in 2000 (U.S. Domestic), the vinyl processing
industry has demonstrated over and over again its imagination, innovation and grit in
weathering many challenging periods, successfully resolving a host of problems such as:
* The vinyl chloride monomer (angiosarcoma) crisis.
* The phthalate ester “crisis”.
* The attacks of the cast iron and ductile iron pipe industry on PVC pipe.
* Fire, smoke, HCl emission issues arising from the Beverly Hills Nightclub, MGM
Hotel and Air Canada fires - PVC in wire, cable and plenum products under attack, in fact,
even on trial in court.
* Increasing pressures to remove toxic and heavy metals (cadmium, lead) from PVC
compounds.
* The “chlorine issue” - specifically Greenpeace attacks on PVC’s production and
use as a major source of dioxin, based upon non scientific or pseudo scientific “evidence”.
* Increasing regulatory constraints of OSHA, EPA, state ‘right to know’ laws.
Reflect for a moment on what has transpired with PVC over the last 50 years: A polymer
that by itself is brittle and horny, has very high melt viscosity, easily degrades under heat
and shear to evolve corrosive HCl, tends to stick to hot metal surfaces, nevertheless, has
exhibited remarkable growth in a wide variety of flexible and rigid products that cut across
virtually all sectors of our society:
Transportation: Auto, aircraft and mass transit interiors, seating, dashboards, auto body-
side moldings, sealants, wiring harness, foamed gaskets.
Building and Construction: Piping and fittings, siding, window profiles, flooring, roofing
membranes, wall covering, fencing and marine docking.
Electronics and Communications: Wire and cable insulation, rigid conduit, fiber-optic
cable conduit, molded computer and instrument housings.
Packaging: Film for meat and produce packaging, bottles, clear sheet (thermoformed).
Medical: Blood bags, tubing, surgical gloves, etc.
Personal and Leisure: Footwear, hose, fishing worms, dipped tool handles, refrigerator
gaskets, pool liners, foamed flotation gear, powder coated racks and shelving, outdoor
furniture.
From the above incomplete listing we see polyvinyl chloride products encompassing
properties as diverse as a wiggly fishing worm and a rigid, high impact strength computer
housing, or window profile. Why? The versatility of PVC - its ability to respond so well to
a host of additive ingredients (plasticizers, modifying resins, process aids, lubricants,
stabilizers, fillers, blowing agents, and so on) to achieve such a wide range of attractive
physical and visual properties at reasonable cost - this versatility is unmatched among the
large volume, if not all thermoplastic polymers.

Vinyl’s growth has been healthy, at times vigorous, and occasionally controversial,
but never dull!! There always has been room for honest differences of opinion, such as:
Pellet vs powder blends (for extrusion, injection and blow molding,
Vented, long L/D vs non vented shorter L/D extruders,
Single screw vs multi screw extrusion,
Parallel vs conical twin vs four screw extrusion,
Lead vs tin stabilization of pipe,
“One pack” additive system vs separate components,
Lubrication theories and practice: internal-external ratios for single and twin
extrusion; is calcium stearate internal, external, or something else?
Extrusion blow vs injection blow molding,
Octyl/methyl tin vs calcium-zinc stabilization of food grade vinyl,
High intensity power blending: single, double or triple batching
vs ribbon blending cold-mix,
Profile vs post-formed siding extrusion,
Weathering: laboratory results vs outdoors, best test sites?
 Industry agreement on minimal acceptable standards?
Use of TiO2 : U.S. vs European formulation practices.
Impact testing: best methods?
Torque Rheometer: correlation with real-world processing or not ?
Smoke and flame testing: real world correlation or not?
Many of the differing opinions cited above have been resolved....some may never be
resolved! However, the unique versatility of PVC, combined with the fact that only 43%
of its composition relies on petroleum feed stocks, and its excellent cost-property profile,
will insure PVC’s continued growth well into the 21st century...not only with expanded
current uses, but as new products and markets, yet unimagined evolve, Greenpeace
notwithstanding.

III. PVC’S PROCESSING OPTIONS:

With PVC’s unmatched versatility, as described in Section II above, its processing
can encompass one or more of the following operations, all of which are discussed in other
chapters of this encyclopedia:
Compound Production: (Vol. III, Chapter 1-4)
Flexibles and rigids, powder blends, pellets, plastisols, organo-sols, latex.
Calendering: (Vol. IV, Chapter 3)
Flexibles and rigids, film, sheet, foam, coated fabric or paper.
Plastisol Processing: (Vol. IV, Chapter 4-6)
Coating, casting, roto and slush molding, dipping, foaming.
Blow Molding: (Vol. IV - Chapter 1-2)
Extrusion or Injection blow molding.
Compression Molding: (Vol. IV, Chapter 2)
Extrusion: (Vol. IV - Chapter 1)
Pipe, profile, sheet, flexibles and rigids, direct powder extrusion, pellet
extrusion, single screw, twin screw, co-extrusion, foaming and foamcore.
Injection Molding: (Vol. IV - Chapter 2)
Flexibles and rigids, pellet or powder injection molding.
Direct Powder processes: (Vol. IV - Chapter6)
Fluid-bed, roto or slush powder molding, electrostatic spray.
Secondary Processing/Finishing:( Vol. IV - Chapter 7)
Post-expansion of foam, printing, laminating, embossing, thermo-forming,
vacuum forming, fabricating (solvent welding, heat sealing, etc.).
IV. RIGID PVC EXTRUSION SELECTION:
It would not be possible to cover all of the above processing options in this single
chapter on operating a PVC plant for profit.
Therefore, for purposes of illustration, further discussions of optimum plant
operations will use a typical rigid PVC twin screw extrusion (from powder dry blend)
plant scenario. Why extrusion? Why rigid PVC? Of the over 13 billion 2000 pounds of
domestic U.S. PVC consumption, over 70%, over 9 billion pounds were squeezed through
extrusion lines to produce the following rigid vinyl products:
Potable water pipe (pressure rated)
Drain, waste,& vent pipe
Sewer pipe (both storm and sanitary)
Large diameter spiral wound piping
Irrigation pipe
Electrical conduit
Fiber-optic cable conduit
Livestock (hog) slats
Foam-core pipe
Siding
Foam sheet
Solid and clear sheet (for vacuum and thermo-forming)
Window profile
Solid and foamed profile
Fencing and Marine Docking , Furniture
Wood flour-filled profiles - just emerging in new markets.

As the discussion of our hypothetical rigid PVC extrusion plant progresses, please
keep in mind that the factors found necessary to achieve optimum production efficiency
and product quality in extrusion are also essential - without exception - in all other PVC
production operations. Terminology, equipment, and formulations may differ, but the
essence of what is necessary at each stage of any process is strikingly similar. Thus, as we
reference the rigid vinyl extrusion operation, keep in mind that parallel factors also exist
for calendaring, injection molding, coating, and all other vinyl compounding and
processing operations. It is crucial to note that decisions taken at each stage of developing
a PVC processing plant will have ultimate bottom line effects upon profitability… but
fortunately most of these decisions, while perhaps costly, are reversible if they prove
wrong. Let’s examine some of the factors, posed as key questions that affect the decisions
in setting up and profitably running any PVC processing operation. With extrusion used as
our example, some answers to these questions then follow. You, the potential entrepreneur
will eventually develop your own answers.
V. SITE SELECTION-GENERAL PRINCIPLES:
The entrepreneur or owner must ask and answer a number of basic questions which will
affect where the new plant will locate. Depending on funding, do you want a new plant, or
an existing facility? What are you going to produce? Why? For whom? Where are your
customers? Where are your raw material suppliers? Who and where is the competition?
How will you sell and distribute your products? A commissioned market survey should
help provide these answers. Are there any incentives (i.e. tax abatements) to locate here?
Will any local restrictions, zoning laws or regulations play a role in selecting this location?
What are the costs and availability of utilities; water, power, and waste disposal? Is there a
good supply of skilled labor available? Union or non-union? Does the site have access to
rail siding and trucking? Will this location be able to attract professional production and
laboratory personnel? Availability of commercial trucks, machine shops, and spare parts
outlets also needs to be considered.
What will the scope of operations be at this site? Production and quality control
only? Production, quality control and a product development laboratory? Will this site also
contain administrative, sales and marketing functions, or corporate headquarters?

VI. PLANT LAYOUT-GENERAL PRINCIPLES:

A:- What plant design should one use? It is obvious that a rational, smooth production
flow pattern or sequence will contribute significantly to plant efficiency: Incoming raw
materials stored at one end of the plant;
Material movement to weighing and blending areas;
Compound transport to processing lines;
Processed products downstream moved to post-finishing operations if
needed, or packaged, bundled and moved to finished goods inventory;
Shipment to customers...’in one end and out the other’ would be the ideal, if
site topography will permit.

A myriad of questions still remain to be answered to arrive at a finished plant layout

blueprint.

B:- How basic (vertically integrated) will this plant be? Will ‘store bought’ compounds
be processed? Or will in-house blending and compounding, or even formulation
development take place? What is the break-even point in production volume that will
justify in-house compounding? (Currently for rigid PVC extrusion, it’s about 8-10 million
pounds per year. This volume can vary and is dependent upon costs of blending equipment
vs. the differential between PVC resin pricing and merchant compound pricing.) After
primary processing, will any secondary post-finishing or fabrication steps be performed?
C:- How big will this plant be? How many production lines are needed initially, and will
provisions for future expansion be included in the initial design?

VII. GENERAL PLANT OPERATIONS:

A:- If in-house blending is planned, how will in-coming raw materials (resin, plasticizers,
fillers, micro-ingredients) be handled? Is the proposed production volume large enough to
justify bulk rail or truck shipments of PVC resin, plasticizers, fillers, even stabilizers? Or
will super sacks, totes, drums, bags, and gaylord boxes be used for the major ingredients as
well as the micro ingredients?

B:- Whether ‘store-bought’ or blended in-house, how will compound be handled prior to
primary processing? Will powder blends or pellets be stored in silos for transport to
processing lines, or moved directly to production in gaylord boxes? Will liquid plastisols
or organosols be stored in bulk tanks or in drums? Will a multi-stage compounding
operation be required? i.e.: powder blend---->banbury----->mill/extruder--->to calender.
Or: powder-blend--->extrusion/pelletizing---->to injection molders or to product extrusion
lines.

C:- When compound is delivered to the primary processing lines (whether pelletizer,
extruder, injection or blow molder, calendar, spread coater, rotor molder, etc.) a basic
production decision must be made. Will the plant operate on a round-the-clock, three
shifts, and seven day/week basis? Customer or market needs as well as economics of the
product and competitive strategies will affect this decision. Obviously, the more pounds,
feet, or widgets per hour, shift, month, year, the lower the fixed cost allocation per product
unit will be… which will translate directly to enhanced profit margins, provided a market
need exists to justify this production level.

D:- Down-stream from the primary processing step, questions of secondary or post-
finishing operations are addressed. What else must be done to complete the manufacturing
process at this plant? Or will these operations be completed off site, at another location, or
by the customer? Continuous processes (extrusion, calendaring, coating, casting) require
marking, cutting to length or roll diameter, and also may require embossing, printing, post-
foam expansion, laminating, thermoforming, vacuum forming, solvent welding, or heat
sealing. Intermittent processes (injection molding, blow molding, roto or slush molding,
powder molding, dipping) may require trimming of excess flash (which hopefully can be
reground and reprocessed.) Further fabrication or assembly may then be needed.
E:- Whatever the end-products of this plant, how will they be packaged for shipment? If
the outgoing products are pellets, powder blends or liquid plastisol compounds, will bulk
rail or trucks be used? Or will totes, gaylord boxes or drums be the packages of choice?
Depending on their shape and size, the other vinyl products may be inspected, bundled,
wrapped, boxed, weighed and tagged. At this point, the question of inventory is addressed.
Will production inventory remain on-site? Indoors? Outdoors? Or will ‘just-in-time’
shipment to customers be required?

F:- A very important question to be answered, particularly from a bottom-line profit point
of view is: how will scrap or regrind be handled? The ability to reprocess usable scrap into
“on-spec” production may mean the difference between profit and loss in the plant
operation. Some processes like laminates, coated fabric or fused plastisol products cannot
utilize their scrap back into the same process. However, most flexible and rigid PVC
processes will generate a certain percentage of their total output as re-usable scrap...from
sprues, edge trim, flash, start-up material and off-sized production. How will this material
be segregated, chopped or pulverized and re-used?
Edge trim from calendared, flexible vinyl can be fed directly back to the calender.
Chopped or pulverized regrind (flexible and rigid) can be blended to a certain
percent (usually 10%-50%) with virgin compound for processing, depending on finished
product specifications.
Pulverized regrind is gaining favor in rigid PVC extrusion plants, either blended
with virgin powder-blend, or sometimes run as 100% re-grind in low-end specification
products, like sewer pipe or ‘J’ channels for siding systems.
A certain (hopefully very low) amount of scrap can be generated by burn-ups,
caused by power failures or malfunctioning of blending or processing operations.
Obviously this material should not be allowed to contaminate the normal ‘clean’ scrap.
Whether by power failure or equipment malfunction, no coffee breaks should be taken
with static, molten PVC in the mixer or extruder! If a burn-up should occur, there is no
reason to panic. Evolved HCL is corrosive and very irritating, but not highly toxic. Good
ventilation is a must, as well as quenching the burning PVC in cold water. Long term PVC
operators are known to have clear sinus cavities due to occasional whiffs of HCL!

G:- Any discussion of general principles of profitable PVC processing would be

incomplete without considering the importance of monitoring the materials balance of the
plant. Whether daily, weekly or monthly (a quarter or a year is too long without knowing),
an owner or general manager should be able to equate total pounds of raw materials
received, plus material in-process (compounded), plus usable re-grind, plus product
inventory with total pounds shipped out the door... any difference being spillage, floor
sweepings and unusable scrap.
VIII. SPECIFICS OF A PVC EXTRUSION PLANT:
Using a prototypical rigid PVC extrusion facility as our example, let’s explore a little more
closely the specific factors that will contribute to a profitable operation.
This plant will extrude rigid PVC products from in-house mixed dry-blend PVC
compounds. The products could be pipe (2 to 20” diameter), spiral wound pipe, fence posts
and rails, siding and accessories, or window profiles or custom profiles, or sheet.

A. Site Location: Where is the plant located? Large to medium pipe producers tend to
have several smaller (4-8 extrusion lines) plants located to serve a majority of their
customers within a 500-700 mile radius, since shipping a truckload of pipe is mostly air,
thus very freight sensitive. They also tend to concentrate their business on either pressure
pipe , sewer, drain-waste-vent, irrigation, or conduit markets. Profit margins also can be
very thin in the pipe business!
Siding and window or custom profile extruders tend to have much larger plants (15-
40+ extrusion lines) due to the wider variety of sizes, shapes and colors they must offer in
their line. These plants also need to be tied closely with their distribution channels, thus are
often found in or near major metropolitan areas.
In any case, the plant preferably will have access to a rail siding and also have bulk
truck and truck docking facilities. Water and power availability and reliability will have
been checked out thoroughly. If power outages occur more than rarely, an in-plant
generator should be factored into the capital budget!
How big will the plant be? Our design will call for a 100,000 sq. ft. (200 X 500 ft.)
facility to house the equipment as described below, in addition to offices, laboratory,
shower and lunch areas.

B. Plant Layout:
1. Materials Handling: Our extrusion plant will have a PVC resin silo for bulk rail resin
delivery, and three silos for filler(calcium carbonate) and powder-blended compound
storage. Space is allocated for future addition of two more silos. Liquid organotin
stabilizers will arrive in metal tote tanks, and other micro ingredients (fillers, TiO2,
modifier resins, lubricants, and pigments) will be in bags or gaylord boxes. All will be
stored indoors near the blending area. Astute purchasing will strive to develop a strong
relationship with primary suppliers and second sourcing as well. Bulk and full truckload
shipments, especially if augmented by a long term contract where possible; offer the
promise of lower material costs and more importantly, a measure of price stability.
Control of raw material inventory is an important component of a profitable,
efficient production operation. On-time delivery from suppliers is certainly key, but it is
wise to have at least a week’s ‘cushion’ of materials on hand in case the scheduled
deliveries are delayed unexpectedly. Inventory rotation should be on a FIFO (first in - first
out) basis as it moves to the blending area. Bulk silos operate in this manner anyway and
micro-ingredients should be used likewise. There is no good technical reason to use a
LIFO (last in - first out) basis inventory method, but it is an option if financial reasons
dictate. Above all, avoid the FISH (first in - still here) method!

2. The Production Year: Current practice among some extrusion operations is to achieve a
maximum “year” of 350 days (@24hrs./3 shifts= 8400 hrs.) Our estimates will be more
conservative.
For a continuous operation like extrusion to run efficiently, plant shutdowns and
start-ups should be minimized. Therefore, this plant will run on three shifts, 24 hours per
day, seven days a week for 50 weeks, (with a two week shut-down for major maintenance).
However, up to two shifts per week, (16 hours) will be made available for routine
maintenance, die changes or possible power outages. Thus, our production year becomes:
24 hours per day X 7 days = 168 hours per week; 168 hours - 16 hours = 152 hours per
week X 50 weeks = 7,600 hours per year, which we will label the ideal, full production
year. However, real world economics and weather may dictate slow-downs (2 or 1 shifts),
or even occasional plant shut-downs. Therefore, we will base production outputs, costs,
and profit projections on an “80% of ideal” rate, or 6,080 hours per year, a conservative
worst-case scenario.

3. Blending: A 1,200 liter high intensity mixer and 3,600 liter cooling mixer will be used
to make 1,000 pound single-mix batches of PVC dry-blend, or 2,000 pound double- mixed
batches if needed.
Space is also available for a second blender/cooler set up to be added. The blender
will be fed by automated weigh-hoppers for PVC resin and filler from the silos, and a
metering pump for liquid tin stabilizer from totes. All other micro ingredients may be
hand-weighed or automated, and added in the appropriate sequence, and the batch dumped
to the cooling mixer when it reaches the chosen ‘drop temperature’.
The cooler may contain an equal amount of PVC resin, or resin plus an amount of
pulverized re-grind, if ‘double-batching’ is necessary to increase compound production
capacity. The cooled batch is then conveyed to the compound silo for later transport to
extrusion lines.
The capacity of this blending facility, based on 1,000 pound batches, 6 batches per
hour, (conservative 10 minute cycle used...actual cycle closer to six minutes), and a 7,600
hour year is: 6,000 pounds per hour X 7,600 hours per year = 45.6 MM pounds per year of
compound; at 80% use, this becomes 36.5 MM lbs. . If double-batch mixes were used
(2,000 lbs. batches), capacity would jump to 91.2 MM lbs.(or 73MMlbs.at 80%).
4. Extrusion: The plant will initially contain eight twin screw extrusion lines, with space
available for four more extrusion lines. Rigid PVC extrusion from powder blends is tailor-
made for the counter rotating conical or parallel twin screw extruder. That choice was
made years ago vs. single screw extruders (early 1970’s), based upon several factors:
* Single screw extruders deliver an average 10% overweight factor (to maintain
minimum wall thickness or other dimensions) due to melt pulsations with each screw
revolution.
* Twin Screw (conical or parallel) extruders act like gear pumps, with little
variation in melt delivery, resulting in an average 5% overweight factor.
* That 5% difference in overweight (material given away) would amount to
3,000,000 pounds in a plant extruding 60 MM pounds per year! At a typical material cost
of $.40/lb., $1.2 MM would be lost per year!
* Twin screw extruders consume much less power than single screw extruders to
deliver the same output rates:
1,000 lbs./hr. on an 86mm conical twin @ 75 HP
1,000 lbs./hr. on a 6” single @ 200 HP
The eight conical twin screw extrusion lines chosen for our plant, and their
production capacity based upon a 7,600 hour per year: (see figures):

H.P. Drive Each output, lbs/hr. Combined MM lbs

2 - 92mm conical twins 125 1,800 27.4 MM Lbs
3 - 86mm conical twins 75 1,000 22.8 “
3 - 65mm conical twins 40 500 11.4 “

Annual Capacity 61.6 MM Lbs/yr. (or 49.3 MM lbs. at 80% usage)

It is evident that with our blending capacity at 45.6 MM lbs./yr. on single batching,
some ‘double-batching’ will need to occur to keep up with extrusion capacity. Although
double-batching represents a compromise at best, by this process blending capacity can be
increased to 91.2 MM lbs, enough to handle three or four additional extrusion lines.
Ideally, utilization of the maximum output rate, or production capacity of each
extrusion line is the goal, providing the extruded product can be properly sized, cooled,
handled down-stream, and sold. If the powder compound is properly formulated to the
extruder (lubricant and stabilizer balance) so that the extruder screws, at near maximum
RPM, can be flood-fed by the dosing hopper, and extruder amps (compound torque) and
back pressure (compound melt viscosity) are within the ‘safe zone’, high output rates will
result.
Twin screw extrusion is very sensitive to compound bulk density variations. As a
‘quasi-positive displacement gear pump’, a twin screw extruder will deliver a given
weight-per-volume-per-screw revolution of the incoming powder blend. Therefore, a
higher bulk density powder will yield a higher output rate, at the same screw RPM. This is
why some PVC resin producers are now introducing higher bulk density PVC resins, and
also why-in the past-hopper ‘pre-heaters’ were used to increase powder blend bulk density.
Extrusion of regrind (see later) can be accomplished with a given level blended into
virgin powder. Since regrind is already fused, it will not perform quite the same as virgin
powder in the extruder barrel. Pulverized regrind certainly can be mixed with virgin
powder, and extruded with no real problem. An alternate option, however, is to dedicate
one or two extrusion lines to running 100% pulverized regrind into low-end specification
products.

5. Plant Startup and Shutdown:

At times, it will be necessary to shut down the extrusion lines deliberately. As
compound exits the extruder, a purge compound is fed in, which will totally displace
production compound in the barrel, and then the die. All heat zones can then be turned off,
and the die will contain the purge, which can be re-heated and pushed out upon a re-start.
A recommended purge compound for rigid extrusion:
PVC - (K-65).......................................... 100
CACO3 (1-2 micron)............................. 100
Calcium Stearate...................................... 4.0
165 Paraffin Wax..................................... 3.5
Organotin mercaptide stabilizer............... 10.0
Indicator pigment...................................... as desired

6. Scrap Handling:
Modern PVC extrusion technology includes use of co-extrusion in a growing
number of products:
* Dual durometer - flexible portions on a rigid profile
* Weatherable capstock on lower cost siding or window profile substrate.
* Foamcore pipe with solid I.D. and O.D. skins.
Typically, two extruders feed a common die-block with flow channels designed to
obtain equivalent linear exit speeds from the die. Often a larger extruder will be fitted with
a smaller ‘piggyback’ extruder (capstock or dual durometer), but co-extrusion may also
consist of two similar sized extruders situated at right angles to feed a common die block.
The question of handling co-extruded regrind must be addressed, especially with
dual durometer or foamcore products. Rigid vinyl diluted slightly with flexible vinyl, or
foamed vinyl/skin blends can be pulverized and re-extruded, perhaps into low-end
specification products.
To regrind, or pulverize, PVC scrap for in-plant re-extrusion is perhaps the largest
recycling usage of PVC that exists. As stated earlier, PVC processing will generate a
certain scrap rate ...with extrusion it’s due to start-up material and off-dimension
production. Average scrap rates can be in the 6-8% range for extrusion....if over 10%,
serious steps need to be taken to reduce this rate in order to minimize bottom-line profit
evaporation.
A good target would be to strive to achieve a 5% or lower scrap rate. Regardless of
the amount of scrap, it needs to be handled in the most cost efficient manner. Older
technology utilized scrap as chopped and screened regrind (about 1/4” average particle
size). Pulverizes are now used, which further reduces the 1/4” chunks to a particle size
close to that of virgin PVC powder blends. Thus, pulverized regrind easily can be blended
with ‘virgin’ powder, or more likely, extruded as 100% regrind in low-specification
products.

7. Downstream: Whatever products emerge from our extruder dies - pipe, siding and
profile, sheet- all must be sized, calibrated, cooled, and cut to length in the downstream
operation.
Efficient cooling is essential, especially at today’s high output rates. Spray or mist
cooling with chilled re-circulating water is preferred in most cases.
Maintaining precise control of product dimensions - size, wall thickness or gauge-
lies with the puller. Proper puller selection (single or multi-caterpillars, tire types) depends
on size and shape of the profile. Chilled rolls are used for sheet. Ideally, puller controls
should be duplicated on the extruder control panel, so an operator can match accurately the
puller speed to the exit speed of PVC from the die. PVC’s melt ‘draw-down’ should be
kept at a minimum so as to minimize built-in stress or memory upon cooling. Otherwise,
subsequent heat exposure will trigger stress relaxation and product distortion or shrinkage.
Rigid profiles and smaller pipes are normally cut to length with a circular saw (chop
cut). A larger radial travel saw with chamfer cut is used for larger pipes, above 4” diameter.
Sheet lines typically utilize a guillotine knife cutter.
Once the products are cut to length and bundled, boxed or stacked, it is vitally
important to keep accurate, up-to-date records of the weights and product codes of all on-
spec production coming off each line. Whether for inventory or immediate shipment out
the door, the exact amount and type of products is a key input to the ‘materials balance’
equation discussed earlier.

8. Capital Cost Estimate for Production Equipment

The PVC extrusion plant as described above, with bulk handling, blending, regrind,
extrusion and downstream equipment as indicated, carries an approximate price tag as
follows:
ITEM M$/Each (est.’ 01 ) No. of Units Total, M$(’01)
Silos 75 4 300
1200 L. Mixer/cooler 200 1 200
systems, all controls
Auto.- Weight/ Blending 100 1 100
System
Regrinder & Pulverizer 80 1 80
Pre-Total $680
Extrusion Lines - Complete
For Pipe:
92mm conical 700 (8”-24”) 2 1,400
86mm conical 375 (4”-12”) 3 1,225
65mm conical 240 (1”-4”) 3 720
Pipe $3,245
Total $3,925
Or Siding & Profile:
92mm conical 965 2 1,930
86mm conical 820 3 2,460
65mm conical 640 3 1,920
Siding $6,310
Total $6,990
Or Sheet:
92mm conical 1,100 2 2,200
86mm conical 875 3 2,625
65mm conical 530 3 1,590
Sheet $6,415
Total $7,095

IX. ESSENTIAL FACTORS FOR QUALITY & PROFITABLE PVC EXTRUSION:

A: Quality Control Laboratory: A well equipped quality control and development lab is
essential to insure continuing production of top-quality products, continued satisfied
customers, and continued profit growth. Such an investment in laboratory facilities will
pay for itself in a short time by preventing a questionable raw materials’ use in production,
improving dry blend quality, enhancing extruder output rates, and assuring shipments of
quality controlled product to customers.
At the very least, certificates of analyses should accompany each lot of each raw
material received. In-house lab tests on PVC resin might include:
 Bulk density
Moisture/static/flow properties
Heat Stability (Metrastat Oven, Torque Rheometer)
Fusion (Torque Rheometer)

Spot checks on stabilizers and lubricants also would include heat stability and fusion
testing. A rejected and returned material shipment, with specific data documenting causes
for rejection, should get prompt attention from the supplier!
A regular schedule of spot-checks on in-process dry blend , particularly bulk density
and fusion/heat stability testing and color match checks, (before batch goes to silo), will
help prevent any surprises on the extrusion lines.

In addition to raw material and compound quality control, the ability to improve or
enhance the formulations used in production can translate directly to higher extrusion
output rates and improved quality or lower costs. In order to run twin screw extrusion lines
at optimum rates, the formulation (particularly the lubricant system) must be balanced to
the particular extruder type. Also, attempts to lower material costs with higher filler levels
need to be figured on a “pound-volume” basis since production is sold by volume (length)
and needs to be priced by volume as well.

During extrusion processing, the quality control lab (and operators) have a major
responsibility to monitor product quality, and take corrective action when needed. Such
product properties as dimensional (wall thickness, size), physical (drop-weight impact,
heat distortion, crushing, quick burst), appearance (smoothness, gloss, color), and chemical
(dry acetone or methylene chloride fusion test, hot oil immersion) are monitored around
the clock on all three shifts-----usually at least every hour, or more often if problems occur.
At 500 to 2,000 pounds per hour, quite a lot of off grade production can accumulate
rapidly, for later regrind use. Time spent producing non-saleable products cannot be
recovered and contributes to diminished profitability.
The importance of a good quality control function thus cannot be overstated. A well
equipped quality control and development laboratory is not inexpensive. How much or
how little to spend is dependent on management’s commitment to the complete quality
control process, and also to the extent that product or compound development will occur,
For our rigid PVC extrusion business, the following typical lab equipment and estimated
costs are given:
LAB EQUIPMENT ESTIMATED COST (’01)
Computerized Torque Rheometer
withType 6 mixing bowl & roller blades............................... 50,000
Lab. Extruder, Conical Twin Screw for Torque Rheo........... 33,000
Heat Stability Convection Ovens.(3) Circulating Air.............. 15,000
Colorimeter and Glossmeter.................................................... 12,000
VHIT or Drop-dart Impact Apparatus...................................... 2,500
Vicat Softening or Heat Distortion Equipment........................ 2,500
Quick Burst Pressure Test (Pipe)............................................. 3,000
QUV Indoor Light Stability Test............................................. 7,500
High Speed Lab Mixers and Scales......................................... 5,000
Bulk Density, Moisture, Dry Flow Test Equipment................. 1,000
P.C. for Storage and Retrieval of Q.C.,
Compound, and Production Data................................... 5,000
TOTAL....................... $136,500

B: Plant Maintenance:
As with the family car, all plant equipment should have a regular schedule of
routine, preventative maintenance checks to assure a trouble-free, efficient plant operation.
Cost of such a program is minimal compared to the alternatives. The adage, ‘pay me now
or pay me later’ is as true for the PVC plant as the family car!
In addition to routine lubrication of bearings or gears, the following list of check
points (probably incomplete) should be monitored on a regular daily, weekly or at least
monthly basis. Malfunction of any one item on this list, if left unattended, will yield
negative effects upon productivity, product quality, and ultimately the bottom line profit:
1. Blender--mixer--cooler:
* Calibration of all automatic and manual weigh scales.
* Mixer-blades and bowl wear.
2. Regrinder- pulverizer:
* Sharpen blades.
3. Extruders and dies:
* Build-up on hopper feed screw.
* Clean drive motor air filters.
* Clean vacuum traps. Good vacuum seals?
* Zone temperature controllers - heat-cool cycles okay?
* Heater bands working.
* Proper screw-barrel alignment and clearance.
* Screw and barrel wear - 10 and 2 o’clock positions.
(wear points on barrel in counter-rotating twins)
 * Chrome plating on screws and dies intact.
* Screw oil-cooling unit functioning.
4. Downstream:
* Water chiller functioning.
* Water spray nozzles: clogged?
* Vacuum or plug sizing tanks okay?
* Sizing plugs worn?
* Caterpillar puller slipping. Oil-contaminated?
* Saw blades sharp.

C: Accurate Production Records:

As discussed earlier, the concept of maintaining a “Materials Balance”
reporting system offers an excellent way to monitor overall plant production efficiency, as
well as the performance of each extrusion line. Typically, such records are compiled
monthly and include the following:
1. Total pounds of incoming raw materials (by type) and total costs of these
materials (whether paid yet or not.)
2. Total pounds of regrind made from scrap.
3. Total pounds of ‘on-spec’ product extruded (by extruder and by type).
4. Total pounds of unusable scrap (what percent of extrusion?)
5. Total pounds of product sold and shipped (by type) and sales value of
shipments (whether paid or not)
Knowing fixed costs, this system’s variable cost input, along with other (i.e., hourly
labor) variable costs should give the general manager a good picture of the monthly
viability of the extrusion plant.

D: “Pound-Volume Pricing “ of PVC Compounds:

As stated earlier, PVC extruded products often are sold by volume (or length X
cross-sectional area), while incoming raw materials are purchased by weight. Thus, it is
imperative to a profitable plant operation that the costs of extruded products are known on
a volume basis. This is accomplished by converting the pounds of each formulation
ingredient and total formulation pounds, into cubic feet units, using specific gravity and
density values for each ingredient. Such an exercise is described in detail below.
The starting point is water, having a specific gravity of 1.00 and a density of 62.4
pounds per cubic foot. Thus, each formulation ingredient, using its reported specific
gravity, times the 62.4 lbs/cubic feet of water, can be converted to a pounds/cubic foot
density value.
For rigid PVC extrusion, some typical formulation ingredients, their specific gravity
and density would be:
 Specific Gravity Density, lbs/cu.ft.
Reference - water 1.0 62.4
PVC Resin 1.4 87.4
Acrylic process aid 1.18 73.6
Acrylic impact modifier 1.20 74.9
TiO2 4.20 262.1
Calcium carbonate 2.71 169.1
Calcium Stearate 1.03 64.3
Paraffin wax, 165 degree M.P. 0.92 57.4
Oxidized polyethylene wax 0.93 58.0
Organotin stabilizer 1.02 - 1.17 63.6 - 73. 0
To further illustrate, the ‘pound-volume’ calculations for three typical extrusion
formulations would be:
Lbs/cu.ft. Cubic Cost Total $
Type I PVC pipe Phr(lbs) Density Feet $ /Lb Cost
PVC resin (K-65) 100.00 87.4 1.1442 0.30 30.00
TiO2 1.00 262.1 0.0038 1.00 1.00
Calcium Carbonate(1-2micron) 5.00 169.1 0.0296 0.10 0.50
Calcium Stearate 0.60 64.3 0.0093 0.54 0.324
165 Paraffin wax 1.20 57.4 0.0209 0.45 0.54
Oxidized polyethylene wax 0.15 58.0 0.0026 0.95 0.143
Organotin (pipe) stabilizer 0.40 63.6 0.0063 1.80 0.72
TOTALS 108.35 lbs 1.2167 $33.23
Compound Density = 89.0524 lbs/cu/ft.
Compound sp. gr. = 1.427
Cost/lb.= $0.3067/lb. ($0.31)
Cost/cu.ft. = $27.3124/cu.ft.
Lbs/cu.ft. Cubic Cost Total $
PVC Siding Substrate Phr(lbs) Density Feet $ /Lb Cost
PVC resin (K-65) 100.00 87.4 1.1442 0.30 30.00
Acrylic process aid 1.50 73.6 0.0204 1.10 1.55
Impact modifier 5.00 74.9 0.0668 1.45 7.25
Ti02 2.00 262.1 0.0076 1.00 2.00
Calcium Carbonate 10.00 169.1 0.0591 0.100 1.00
Calcium Stearate 1.20 64.3 0.0187 0.54 0.648
165 Paraffin wax 1.20 57.4 0.0209 0.45 0.54
Oxidized P E wax 0.15 58.0 0.0026 0.95 0.143
Organotin stabilizer 1.00 73.0 0.0137 3.00 3.00
TOTALS 122.05 lbs 1.3540 $46.13
Compound density = 90.1403 lbs/cu.ft.
Compound specific gravity. = 1.4445
$ cost/pound = $0.3780/lb. ($0.38)
$ cost/cu.ft. = $34.073/cu.ft.

Lbs/cu.ft. Cubic Cost Total $

PVC Capstock Phr(lbs) Density Feet $ /Lb Cost
PVC resin (K-65 100.00 87.4 1.1442 0.30 30.00
Acrylic Process Aid 1.50 73.6 0.0204 1.10 1.55
Impact Modifier 5.00 74.9 0.0668 1.45 7.25
Ti02 10.00 262.1 0.0382 1.00 10.00
Calcium Carbonate 2.00 169.1 0.0118 0.100 0.20
Calcium Stearate 1.20 64.3 0.0187 0.54 0.648
165 Paraffin wax 1.20 57.4 0.0209 0.45 0.54
Oxidized PE wax 0.15 58.0 0.0026 0.95 0.143
Organotin stabilizer 1.25 73.0 0.0171 3.00 3.00
TOTALS 122.30 1.3407 $54.08

Compound Density = 91.2210 Lbs/Cu.ft.

Compound Specific Gravity = 1.4619
Cost - $/LB =$ 0.4422 ($0.43)
Cost - $/Cu.ft. = $40.34/Cu.ft.

E. PLANT SAFETY: OSHA AND EPA COMPLIANCE

A workplace atmosphere that is safe, healthy, and congenial contributes to worker
morale, job satisfaction, and thus helps insure an efficient, profitable production operation.
This would be true even without the mandated regulations of OSHA. Today’s regulatory
climate mandates a host of in-plant safety regulations. This often requires that an
individual or committee be appointed to oversee and insure compliance with all applicable
safety and health regulations.

Likewise, EPA requires strict control and monitoring of all air-borne, water-borne
and solid effluent arising from any industrial manufacturing operation. Concerns in PVC
extrusion can include emissions of powder (PVC, compound) to the air, fumes, waste
water contamination and disposal of solid non-usable scrap. Again, an appointed
individual or committee assumes responsibility for compliance.
X. REGULATORY - CODE AGENCIES
Depending on the PVC extruded product, the plant may need to deal with one or
more of the regulatory or code agencies which exist to insure that industry or government
standards are met for products used within their particular sphere of influence:
A. National Sanitation Foundation (NSF), Ann Arbor, Michigan
Extraction, taste and odor testing of potable water in contact with PVC pipe
and fittings.
Formulations need N.S.F. approval, and in-plant inspections can occur.
B. Plastic Pipe Institute (PPI), Division of S.P.I., N.Y. City, N.Y.
Hydrostatic Design Stress Committee oversees and approves pipe compounds
for long term use with pressurized water systems.
Pressure testing: 10,000Hr. data must extra-polate to 100,000Hrs. satisfactorily.
C. Underwriters Laboratory (U.L.), Chicago, Illinois
Tests and approves PVC conduit for wire, cable and fiber-optic use.
D. U.S. Food and Drug Administration (USFDA), Washington, D.C.
Regulates both direct and indirect food contact uses of PVC products.

All sanctioned formulation components must be listed in the appropriate section of

the Code of Federal Register.

XI. PLANT OPERATION - ECONOMICS AND PROFITABILITY

Norman Perry’s chapter discussing plant operations in the first edition of this
Encyclopedia (1977) cited a small single screw extrusion plant (4 lines) as the example to
show costs and profitability. This discussion utilizes the same approach, but uses the
current costs (2001) of building, equipment, and labor to staff our illustrative PVC
extrusion plant.

A. Plant Staffing: One scenario we will use to staff our PVC extrusion plant and attendant
costs:

TABLE 1: LABOR COSTS

Position Hourly Wage Salary/yr. # people Total $K/yr.

Office: Gen. Mgr. 80K 1 80K
Purch./ Office Mgr. 45K 1 45K
Sect./Bk Keeping 12.00 25 3 75K
Total Office (fixed cost) $200K
Quality Control:
Q.C./Develop. Mgr. 55K 1 (fixed) 55K
Lab Technicians 12.00 25 3 (var.) 75K
(1 per shift)
Total Lab $130K
Blending/Mixing:
Lead Blender 16.50 35K 1 (var.) 35K
Blender Operators 12.00 25 3 (var.) 75K
(1 per shift)
Total Blend Area $110K
Production:
Production Mgr. 65K 1 (fixed) 65K
Shift Foreman 19.00 40 3 (var.) 120K
Extrusion Operators 16.50 35 6 (var.) 210K
Production Helpers 12.00 25 12 (var.) 300K
(1, 2 & 4 per shift, respectively)
Total production $695K

Number of People Total Wage/Salary

Plant Total Staff 35 $1,135K
Fixed Cost Salaries 7 320K
Variable Cost Wages 28 815K

Adjustment to salaries and wages will include:

Adding 30% to all wages for taxes, Social Security, Insurance.
Adding an additional 3.0% for overtime, 5.0% for cost of shift differentials to
all variable labor costs, or another 8.0%.
Thus: $320K X 1.30 = $416K in Fixed Costs (office/supervisory)
815K X 1.38 = $1,124.7K in variable costs (3 shifts, labor)
Total wages per year = $1,540.7K/year
Plus, assume selling costs (salary+travel) of $1000K per year, or 3.0- 3.5% of sales.

B. Building, Utilities, Maintenance Costs:

The plant of 100,000 square feet will carry a $6.50/sq. ft. cost per year to operate…
$650,000/yr.
We assume these other costs:
Utilities: Power and Water @ $250,000/yr.
Maintenance, Repairs @$250,000/yr.
C. Production and Laboratory Equipment - Annual costs
(See sections VIII- B-8, and IX-A)
Annualized costs for plant and lab equipment are as follows, using a 10 year amortization
schedule:
For Pipe - $3,925,000 and Lab…
$ 136,500 totaling $4,061,500 @ 10 yrs = $406,150/yr.
For Siding &Profile - $6,990,000 and Lab…
$136,500 totaling $7,126,500 @ 10 yrs = $712,650/yr.

D. Annual Operating Costs & Compound Conversion Costs:

The above information, coupled with yearly production based on our ‘full’ 7,600
hour year, or 80% year of 6,080 hours, will give total operating costs (overhead) and
compound conversion costs per pound. These are determined as follows:

TABLE II: PLANT OPERATING COSTS

AND COMPOUND CONVERSION COSTS:

Pipe Plant/yr. Siding/Profile Plant/yr.

Labor - 3 shifts (hourly) 1,124,700 1,124,700
Management, Supervisory, Office 416,000 416,000
Sales Costs 1,000,000 1,000,000
Building ($6.50/sq.ft./yr.) 650,000 650,000
Utilities (power & water) 250,000 250,000
Maintenance 250,000 250,000
Production & Lab Equipment/year 406,150 712,650
Annual Operating Costs $4,126,550/ yr. $4,433,050/yr.

Pipe Siding
7600 hour/year - cost $ 542.97/hr. $ 583.30/hr.
6080 hr./yr. (80% usage) 678.71/hr. 729.12/hr.
Standard Extrusion Output Rates (See VIII - B-4):
2 CM92HP’s @ 1800/hr. = 3,600 lbs.
3 CM80HP’s @ 1000/hr. = 3,000 lbs.
3 CM55HP’s @ 500/hr = 1,500 lbs.
Plant Standard Rate: 8100 lbs/hr. 8100 lbs/hr
At 7600 hr/yr. 61.6 MM lbs. 61.6 MMlbs
At 6080 hrs (80%)/yr. 49.3 MM lbs. 49.3 MMlbs
Conversion Cost/ LB. of Compound
At standard output, and 80% year $0.0837 /LB. $0.0899/LB.
E. Material or Compound Costs:
As discussed in Section IX - D, “Pound Volume” pricing, our pipe plant will use a
compound having a $0.31/ lb. cost, while our siding/ profile plant will use $0.38/lb.
substrate and $0.43/ lb. capstock compounds, at an 85%-15%respective use rate. Thus, for
profile, the average compound cost becomes $0.3875/lb.
From a “material-balance” viewpoint, we will assume both types of plants operate at
an overall 8% scrap rate, and 4% of that material is used as regrind in saleable products,
leaving 4% as unusable, or unaccounted lost material. Thus, we will assume that 96% of
our incoming raw material is converted to saleable product. The “base” compound costs
must then be converted to an “extended” compound cost (due to the 4% loss) as follows:
Base Cost/lb. Extended Cost/lb.
Pipe $0.3100/Lb./0.96 = $0.3229/Lb.
Siding Profile (Average cost) 0.3875/Lb/ 0.96 = 0.4036/Lb.

F. Total Sales Revenue:

Based upon our assumed total production year of 49,300,000 Lbs. (at 80% plant
usage), and a $0.46/Lb. average selling price for pipe, or a $0.60/ Lb. selling price for
siding/profile, we see the following total sales revenues potentially available:

Pipe: 49,300,000 Lbs @ $.0.46/Lb = Total Sales of $22,678,000.

Siding/profile: 49,300,000 Lbs @ $ 0.60/Lb = “ “ 29,580,000.

A word of caution regarding sales revenue must be inserted at this point. Using pipe
as an example, maximizing plant productivity does reduce unit costs, theoretically
enhancing profit margins. However, this is only true if all production can be sold at the
desired price to achieve the improved profit. In other words, a demand-- or market-- must
exist that will absorb this increased productivity. Otherwise, simply pushing more product
out the door, to inventory, will create a glut. This situation is then addressed by more
vigorous sales and marketing efforts, often with depressed pricing. Unfortunately, this
condition periodically develops in the PVC pipe industry, with selling prices depressed to
$0.11/lb. over base resin cost. Thus, a $0.30/lb. PVC resin price may only translate to a
$0.41/lb. pipe selling price. However, our example PVC pipe plant will use a $0.16/lb.
differential, or $0.46/lb. selling price, for analyses of plant profitability that follow.

Why does this situation occur? One reason may be that some of the larger PVC resin
producers also own their own pipe extrusion facilities. Large reactor PVC resin production
is difficult to turn off and on with short term ups and downs of the resin market. Thus,
during “slow” seasons (i.e. winter months), large numbers of “horizontal silos” (read:
railcars) of PVC resin wind up at their respective pipe plants. Production of pipe-to
inventory continues through the slack winter buying season. With the coming of spring,
the market then sees reduced pricing until excess pipe inventory is moved out and sold.
The investor or owner needs to recognize that not only high productivity, but
reasonably profitable sales of that product are necessary to the successful business. Excess
production dumped on a market will cause the downward pricing spiral, as competitors do
not willingly give up their share of that market. New markets must be created (i.e. fencing
and docking) in order to enjoy profitable growth. With the above cautions in mind, we now
examine the profit potential of our PVC extrusion plant.

G. Plant Profit Potential:

Gathering all of the cost data together, we can now determine the gross profit
potential for our PVC extrusion plants.

TABLE III: PROFIT POTENTIAL: ON FULL PLANT

Pipe Siding/profile
‘Real-world’ / Desired
Average Selling Price/Lb. 0.4100/lb 0.4600/lb 0.6000
Base Compound Cost/Lb. 0.3100/lb. 0.3875
ExtendedCompoundCost/Lb. @4%loss 0.3229/lb. 0.4036
Conversion Cost/Lb. 0.0837/lb. 0.0899
Potential Profit/Lb. 0.0034/lb. 0.0534lb. 0.1065
Annual Production, Lbs. (80% std.rate) 49,300,000 49,300,000
Profit Potential yearly $167,620 $2,632,620 $5,250,450
Percent of Profit on Sales..... 0.83% 11.6% 17.75%

H. EFFECTS OF INCREASED PRODUCTIVITY ON PROFIT:

The importance of continuing efforts to increase sales and production efficiency can
be seen in the tables IV and V below. An overall average 10% increase in extrusion output
rate will result in an even larger profit increase, using the same hour’s per year basis.

TABLE IV: Effect of a 10% Increase in Output Rates on Profit

Standard Extrusion Rate Pipe Siding/profile

---8 lines--- 8100 lbs/hr. 8100 lbs/hr.
10% output increase 810 lbs/hr 810 lbs/hr.
Improved extrusion rate 8910 lbs/hr. 8910 lbs/hr.
Annual Production
@80% use rate (6080 hrs) 54,172,800 lbs. 54,172,800 lbs.
New Conversion Cost/lb. $0.0762 /lb. $0.0818 /lb.
Extended Compound Cost/lb. $0.3229 /lb. $0.4036 /lb.
Average Selling Price/lb. $0.4600 /lb. $0.6000 /lb.
Potential Profit/lb @ 10% inc. $0.0609 /lb. $0.1146 /lb.
Annual Profit @ 10% increase $3,299,124/yr. $6,208,203
Profit percent increase +25.3% +18.24%
(over Table III)
New sales revenue $ 24,919,488/yr. $ 32,503,680/yr.
New profit margin (10% output incr.) 13.24% 19.1%

Further, if the plant’s equipment use can be increased to a 90% rate from 80% (6840
hours), by reducing “downtime”, an even greater leverage effect upon profit can be
realized (See Table V).

TABLE V: Effect on Profit by Increasing Equipment Use to 90%

Pipe Siding/Profile
New Standard Extrusion Rate
(8 Lines) 8910 lbs/hr. 8910 lbs/hr.
Annual Production @90% (6840 hrs.) 60,944,400 lbs. 60,944,400 lbs.
ConversionCost @ 90% Use $0.0677/lb. $0.0727/lb.
Extended Compound Cost $0.3229/lb. $0.4036/lb.
Average Selling Price $0.4600/lb. $0.6000/lb.
Potential Profit @ 90% Use $0.0694/lb. $0.1237/lb.
Annual Profit @ 90% Use $4,229,541/yr. $7,538,822/yr.
% Profit Increase(90% use
over 80% use-Table IV) +28.2% +21.4%
New Sales Revenue
(10% output increase +90% use) $28,034,424 $36,566,640
New Profit Margin 15.1% 20.6%

In summary, by boosting output rates 10% and utilizing 90% of equipment hours,
our example extrusion plant’s profit margins improve thus:
Pipe: 11.60%------>13.24%-------->15.1%
Siding/Profile: 17.75%------>19.10%-------->20.6%

Once again, although specific numbers will differ, all PVC processing
operations will have to deal in some way with the factors affecting profitability similar to
those discussed above.
XII. CONCLUSION: MANAGEMENT’S ROLE:

With site selection, plant construction, equipment purchase and staffing complete,
the most important attribute to a successful, profitable venture yet needs discussion.

The entrepreneur, owner, and general manager must SET THE TONE for our PVC
production operation. How will the company be perceived by its employees, by its
customers and by its neighbors in the community?

Apart from a clean, safe workplace with pleasant employee lunch and locker/shower
facilities, it is management’s basic philosophy in motivating, leading and managing their
work force that will affect “esprit d’corps” and morale most of all. An atmosphere that
invites and respects workers’ idea inputs, offers incentives for goals achieved, and
generally inspires overall “good vibes” among all, is an atmosphere that will spawn much
higher productivity and quality than its antithesis. Employees having pride in their work
and a feeling of individual contribution to overall performance will help ensure a happy
customer base, as well as help foster a positive company image in the community.
For the above scenario to occur, it must start at the top!

XIII. REFERENCES
(1)- Encyclopedia of PVC, First Edition: Volume 3, Chapter 29.
Marcel Dekker Inc., 1977.
(2)- Jim Ballard, General Manager, NAPCO, Inc. Mt. Vernon, Ind.
Personal Communication.
(3)- Lyle E. Miller, Gen. Mgr. Manufacturing, Contech Construction
Products
Middletown, OH., Personal Communication.
(4)- Richard Tinurelli, Director of Sales, Extrusion Systems, Cincinnati
Milacron, Inc., Cincinnati, OH., Personal Communication.