Industrial capital investments

Major industrial capital investment decisions are strongly influenced by factors beyond those of simple profit maximization, although rate of return is the single most important element in a capital investment decision. A company will not risk shutdown or less of market position for the sake of small gains in expected profit. Investments which favor growth such as new product development are normally preferred over those which lower operating costs even if both offer the same opportunity to generate profits. 

The proportion of UK chemical industry capital investment which is directly related to environmental protection has risen to 14% and is forecast to rise to 20% by 1996 [7]. 

This reaction is the basis for the Fluff detergent process (26). The heat evolved coupled with the hydration of the STP is sufficient to dry the reaction mass to yield a light density laundry detergent. Requiring a low capital investment, the Fluff process has found use in less-industrialized countries. 

Alternative Processes for Aluminum Production. In spite of its industrial dominance, the HaH-HAroult process has several inherent disadvantages. The most serious is the large capital investment requited resulting from the multiplicity of units (250 —1000 cells in a typical plant), the cost of the Bayer aluniina-puriftcation plant, and the cost of the carbon—anode plant (or paste plant for Soderberg anodes). Additionally, HaH-HAroult cells requite expensive electrical power rather than thermal energy, most producing countries must import alumina or bauxite, and petroleum coke for anodes is in limited supply. 

In the United States, the Clean Air Act of 1990 requires plants to reduce emissions of 189 toxic and carcinogenic substances such as chlorine, chloroform, and 2,3,7,8-TCDD (dioxin) by 90% over the 1990s. The U.S. Environmental Protection Agency is working to develop standards based on maximum achievable control technologies and the industry has invested bUHons of doUars in capital investments to retrofit or rebuUd plant equipment to meet these measures. 

Capital Investment. Erom the viewpoint of a project, all of the capital that must be raised is external capital. Equity capital is the ownership capital, eg, common and preferred stocks or retained cash, whereas debt capital consists of bonds, mortgages, debentures, and loans. Nearly all investment involves a mixture of both types so as to maximize the return on investment (21). The debt ratio (debt/total capital) for the chemical industry is typically over 30%. Because financial details are not well known during the preliminary phases of project analysis, the investment is viewed simply as the total capital that must be expended to design and build the project. 

Working capital may vaty from a very small fraction of the total capital cost to almost the whole of the invested capital, depending on the process and the industiy For example, in jewelry-store operations, the Fixed capital is veiy small in comparison with the working capital. On the other hand, in the chemical-process industries, the working capital is hkely to be in the region or 10 to 20 percent of the value of the fixed-capital investment. 

The installed capit investment is about 375 per pallet for a 5000-paUet system. A characteristic of drive-in, drive-through, and flow racks is that, at any one point in time, only one product can occupy a given storage lane. Products are not mixed because of the complications that this practice presents in inventoiy management. In any event, there is seldom any need to mix products in the chemical industry because products are made in lots, blends, etc., and a storage lane is ordinarily designed to accommodate either a complete lot or some fraction of a lot. The result is that the total storage space available rarely is completely used. This is a problem that aisle racks... 

Furthermore, although the U.S. EPA argues that the cost of compliance for all environmental regulations is small in comparison to overall industry expenditures, there are many hidden costs that oftentimes are not considered, and go beyond the capital investment for a piece of equipment. These so-called other costs are not necessarily incremental, depending upon the size of a company and the magnitude of its environmental management issues. They include, but are not limited to ... 

The increased availability of energy fueled the Industrial Revolution. The United States became the world s largest oil producer, and the new fossil fuels were abundant and modestly priced. A technology s energy efficiency was not a key part of capital investment decisions. Energy-efficient technology as a priority ranked well behind improved performance. 

Even when the time comes to make a purchasing decision, an energy-efficient motor purchase is not a certainty. Sometimes an energy-efficient motor will be the economically efficient choice at other times, not. The capital investment decision is based on the cost in relation to performance, efficiency and reliability. Moreover, the decision depends on the application and the amount of time the motor is in operation. It can be the major component of a product (drill or mixer), or a minor component (computer disk drive) it can be the major component cost of a product (fan), or it can be a minor component cost (stereo tape deck) it can run almost constantly (fan, pump, and machinery), or only a few minutes a day (vacuums and power tools). For example, contractors purchase circular saws almost solely based on performance and reliability. Time is money, and since the saw is operating only a few minutes a day and the contractor is often not responsible for the electricity costs to run the motor, energy efficiency is not a consideration performance and reliability are what matter most. On the other hand, an industrial user, who runs huge electric motors twenty-four hours a day to work pumps, machinery, and ventilation equipment, is very concerned tvitli energy efficiency as well as performance and reliability. 

Some industries, notably the fine chemicals and parts of the food processing industry, cannot tolerate the pick-up of even small quantities of metal ions in their products. To avoid corrosion, plants often have to incorporate lined pipework and reaction vessels, while in a slightly less demanding situation whole plants are made of an appropriate grade of stainless steel. The capital investment in these industries is thus considerably increased due to the necessity to avoid corrosion. 

The chemical and petrochemical industries are highly capital intensive and this has two important implications for the plant designer. Before the expenditure for any plant is approved, a discounted cash flow (DCF) return on capital invested is projected (Section 9.1). The capital cost of the plant is a key factor in deciding whether the DCF return is above or below the cut-off value used by a company to judge the viability of projects. Thus, there is always strong pressure on the materials engineer not to overspecify the materials of construction. 

The conversion to indirect-firing is costly both in capital investment and in increased fuel costs nevertheless, much of the U.S. malting industry is converting to indirect-firing because it ultimately may be the most effective method for reducing nitrosamine levels in malt and in beer. 

The principal considerations involved in design of a process-scale chromatographic purification include scalability, reproducibility, safety, and validatability. Cost factors, however, must by necessity enter into all industrial decisions. Due to the high value-added nature of most biopharmaceuticals, this cost factor is driven by throughput, rather than by capital investment cost. 

Historically, U.S. pulp and paper companies have invested heavily in capital improvements to their facilities. Capital investments in recent years, however, are well below historic levels due to the difficult market conditions. For the first time, industry capacity actually declined in 2001.1 2 3 Because few new mills are being built, most capital expenditures are for plant expansions, upgrades, and environmental protection initiatives at existing facilities. Throughout the time period 1985-1999, capital improvements related to environmental protection claimed from 4% to 22% of the total investments, with significant increases in the early and late 1990s.1... 

When the specified production capacities are low, processes based on batch reactors will usually have lower capital investment requirements than processes calling for continuous operation, so batch reactors are often preferred for new and untried processes during the initial stages of development. As production requirements increase in response to market demands, it may become more economic to shift to continuous processing but, even in these cases, there are many industrial situations where batch operation is preferable. This is particularly true when the operating expenses associated with the reactor are a minor fraction of total product cost. At low production capacities, construction and instrumentation requirements for batch reactors are usually cheaper than for continuous process equipment. Moreover, it is generally easier to start up, shut down, and control a batch reactor than a comparable capacity continuous flow reactor. 

The ionic liquid investment could be further reduced if future research enables the application of ammonium based alkylsulfate or arylsulfonate ionic liquids. For these systems bulk prices around 15 /kg are expected. Ammonium based alkylsulfate or arylsulfonate ionic liquids usually show melting points slightly above room temperature but clearly below the operating temperature of the hydroformylation reaction. Therefore these systems may be less suitable for the liquid-liquid biphasic process in which the ionic liquid may be involved in process steps at ambient temperature (e.g. phase separation or liquid storage). In contrast, for the SILP catalyst a room temperature ionic liquid is not necessarily required as long as the film becomes a liquid under the reaction conditions. Assuming an ammonium based SILP catalyst, the capital investment for the ionic liquid for the industrial SILP catalyst would add up to 105,000 . 

Probably the most exciting aspect of molecular farming from the industrial perspective is the low initial capital investment compared with mammalian cell culture production. The reduced capital input reflects the lower costs of laboratory equipment and materials for plant molecular biology. For example, the costs involved in establishing small, non-sterile greenhouse facilities are dwarfed by those required for a sealed pilot fermentation plant. 

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