EPA 23(yi-73-007
SEPTEMBER, 1973
ECONOMIC ANALYSIS
OF
PROPOSED EFFLUENT GUIDELINES
i
THE ELECTROPLATING INDUSTRY
(COPPER, NICKEL, CHROMIUM, and ZINC)
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Planning and Evaluation
Washington, D.C. 20460
-------
This document is available in limited
quantities through the U.S. Environmental
Protection Agency, Information Center, Room
W-327 Waterside Mall, Washington, D.C. 20460.
The document will subsequently be avail-
able through the National Technical Information
Service, Springfield, Virginia 22151.
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EPA - 230/1-73-007
ECONOMIC ANALYSIS
OF
THE PROPOSED EFFLUENT GUIDELINES
FOR THE ELECTROPIATING INDUSTRY
(Copper, Nickel, Chromium and Zinc)
SEPTEMBER, 1973
OFFICE OF PLANNING AND EVALUATION
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
CONTRACT NO. 68-01-1545
U.S. Environmental Protection Agency
Region 5, Library (PL-12J)
?7 West Jackson Boulevard, 12th Fta*
CMcago, IL 60604-3590
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EPA REVIEW NOTICE
This report has been reviewed by the Office of Planning
and Evaluation of EPA and approved for publication. Approval
does not signify that the contents necessarily reflect the views
and policies of the Environmental Protection Agency, nor does
mention of trade names or commercial products constitute
endorsement or recommendation for use.
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PREFACE
The attached document is a contractors' study prepared for
the Office of Planning and Evaluation of the Environmental Pro-
tection Agency ("EPA"). The purpose of the study is to analyze
the economic impact which could result from the application of
alternative effluent limitation guidelines and standards of per-
formance to be established under sections 304(b) and 306 of the
Federal Water Pollution Control Act, as amended.
The study supplements the technical study ("EPA Development
Document") supporting the issuance of proposed regulations under
sections 304(b) and 306. The Development Document surveys exist-
ing and potential waste treatment control methods and technology
within particular industrial source categories and supports pro-
mulgation of certain effluent limitation guidelines and standards
of performance based upon an analysis of the feasibility of these
guidelines and standards in accordance with the requirements of
sections 304(b) and 306 of the Act. Presented in the Development
Document are the investment and operating costs associated with
various alternative control and treatment technologies. The
attached document supplements this analysis by estimating the
broader economic effects which might result from the required
application of various control methods and technologies. This
study investigates the effect of alternative approaches in terms
of product price increases, effects upon employment and the con-
tinued viability of affected plants, effects upon foreign trade
and other competitive effects.
The study has been prepared with the supervision and review
of the Office of Planning and Evaluation of EPA. This report was
submitted in fulfillment of Contract No. 68-01-1545 by A. T.
Kearney, Inc. Work was completed as of September, 1973.
This report is being released and circulated at approximately
the same time as publication in the Federal Register of a notice
of proposed rule making under sections 304(b) and 306 of the Act
for the subject point source category. The study has not been
reviewed by EPA and is not an official EPA publication. The
study will be considered along with the information contained
in the Development Document and any comments received by EPA
on either document before or during proposed rule making proceed-
ings necessary to establish final regulations. Prior to final
promulgation of regulations, the accompanying study shall have
standing in any EPA proceeding or court proceeding only to the
extent that it represents the views of the contractor who studied
the subject industry. It cannot be cited, referenced, or repre-
sented in any respect in any such proceeding as a statement of
EPA's views regarding the subject industry.
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ENVIRONMENTAL PROTECTION AGENCY
ECONOMIC ANALYSIS OF THE PROPOSED
EFFLUENT GUIDELINES FOR THE ELECTROPLATING INDUSTRY
TABLE OF CONTENTS
Section Title Page
EPA Review Notice
Preface
Executive Summary
INTRODUCTION
Statement of the Problem I - 1
Scope of Work 1-2
Method of Approach 1-3
II GENERAL INDUSTRY DESCRIPTION
Demand Characteristics for
Electroplating II - 1
Description of the Plating Process II - 3
Sources of Water Pollution II - 5
III PHYSICAL CHARACTERISTICS OF THE
INDUSTRY
Primary Industry Segments III - 1
Types of Firms III - 2
Size of the Industry III - 4
Industry Survey III - 7
Expected Impact by Industry Segments III - 9
Location of Impacted Shops III - 10
Industry Segment Not Considered III - 11
Scope of Impact Analysis III - 11
IV FINANCIAL PROFILE
General Industry Financial
Statistics IV - 1
Operating Revenues IV - 2
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-ii-
Section Title
IV Profitability IV - 3
Profit Margin Constraints IV - 6
Value of Assets IV - 7
Cost Structure IV - 8
Financing Additional Capital
Requirement IV - 8
Alternative Method of 'Financing IV - 9
V POLLUTION CONTROL REQUIREMENTS
Proposed Effluent Limitations V -"1
Effluent Limitations Used for
this Study V - 3
Industry Segmentations and
Effluent Limitations V - 5
Water Pollution Abatement Costs V - 6
VI PRICE EFFECTS
Background VI - 1
Pricing in Job Shops VI - 1
Costing in Captive Shops VI - 4
Other Factors of Consideration VI - 5
Model Plant Parameters VI - 7
Profit Commitment for Pollution
Control VI - 7
VII IMPACT ANALYSIS
Estimated Plant Closings VII - 3
Employment Effects .VII -11
Community Effects VII -15
Production Effects VII -16
VIII LIMITS OF THE ANALYSIS
Accuracy VIII - 1
Critical Assumptions in Analysis VIII - 4
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-111-
LIST OF EXHIBITS
Exhibit
Number Title
1-1 List of Reference Sources
II-l End Uses of Electroplating by Industry Segments
II-2 Electroplating Operations by Industry Segments
III-l Industry Survey Summary
III-2 Employment in Independent Shop Segment
III-3 Employment in Captive Shop Segment
III-4 Electroplating Operations in Metalworking Industry
III-5 Employment in large Captive Shops
III-6 Location at Independent Electroplaters
IV-1 General Industry Financial Statistics
IV-2 Industry Sales
IV-3 Financial Statements and Operating Rates
IV-4 Summary of Profitability of Independent
Electroplating Shops
IV-5 Bank Interview Summary
V-l Number of Plants by Employment and Rectifier
Capacity
V-2 Alternate A - Investment Costs for Level I
Pollution Abatement Equipment
V-3 Alternate B - Investment Costs for Level I
Pollution Abatement Equipment
V-4 Alternate A - Annual Amortization Costs of
Investments for Level I
V-5 Alternate B - Annual Amortization Costs of
Investments for Level I
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-tv-
LIST OF EXHIBITS
Exhibit
Number Title
V-6 Alternate A - Level I Investment Costs as
a Percent of Annual Sales for Rural and
Urban Plants
V-7 Alternate B - Level I Investment Costs as
a Percent of Annual Sales for Rural and
Urban Plants
V-8 Investment Costs for Level II Pollution
Abatement Equipment
V-9 Annual Amortization Cost of Investments for
Level II Pollution Abatement Equipment
VI-1 Income Statement Profile
VI-2 Estimated Capitalization of Metal
Finishing Firms
VI-3 Estimated Return on Investment of Metal
Finishing Firms
VI-4 Description of Model Plants
VI-5 Average Pre-Tax Profit of Model Plants
VI-6 Years of Profit Commitment with no
Price Increase
VI-7 Alternate A - Estimated Price Increases for
Treatment Levels
VI-8 Alternate B - Estimated Price Increases for
Treatment Levels
VI-9 Alternate A -Potential Cost Increase for Urban
Plants for Level I Pollution Abatement
VI-10 Alternate B - Potential Cost Increase for Urban
Plants for Level I Pollution Abatement
VI-11 Alternate A and B - Potential Cost Increase for
Rural Plants for Level I Pollution Abatement
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-v-
LIST OF EXHIBITS
Exhibit
Number Title
VI-12 Alternate A and B - Potential Cost Increase for
Rural Plants for Level II Pollution Abatement
VI-13 Alternate A and B - Annual Operating Costs for
Level I Pollution Abatement Equipment
VI-14 Alternate A and B - Annual Operating Costs for
Level II Pollution Abatement Equipment
VII-1 Alternate A - Potential Closures of Number of
Urban Plants for Level I Pollution Abatement
VII-2 Alternate B - Potential Closures of Number of
Urban Plants for Level I Pollution Abatement
VII-3 Alternate A and B - Potential Closures of
Number of Rural Plants for Level I Pollution
Abatement
VII-4 Alternate A - Potential Closures of Number of
Urban and Rural Plants for Level I Pollution
Abatement
VII-5 Alternate B - Potential Closures of Number of
Urban and Rural Plants for Level I Pollution
Abatement
VII-6 Alternate A and B - Potential Closures of Number
of Rural Plants for Level II Pollution Abatement
VII-7 Alternate A - Potential Closures of Number of
Total Plants for Level I and Level II Pollution
Abatement
VII-8 Alternate B - Potential Closures of Number of
Total Plants for Level I and Level II Pollution
Abatement
VII-9 Alternate A - Estimated Number of Employees Affected
by Potential Closures of Urban Plants for Level I
Pollution Abatement
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-VL-
LIST OF EXHIBITS
Exhibit
Number Title
VII-10 Alternate A and B - Estimated Number of Employees
Affected by Potential Closures of Urban Plants
for Level I Pollution Abatement
VII-11 Alternate A and B - Estimated Number of Employees
Affected by Potential Closures of Rural Plants
for Level I Pollution Abatement
VII-12 Alternate A - Estimated Number of Employees
Affected by Potential Closures of Plants (Rural
and Urban) for Level I Pollution Abatement
VII-13 Alternate B - Estimated Number of Employees Affected by
Potential Closures of Plants (Rural and Urban) for
Level I Pollution Abatement
VII-14 Alternate A and B - Estimated Number of Employees
Affected by Potential Closures of Rural Plants for
Level II Pollution Abatement
VII-15 Alternate A - Estimated Number of Employees Affected
by Potential Closures of Plants for Level I and
Level II Pollution Abatement
VII-16 Alternate B - Estimated Number of Employees Affected
by Potential Closures of Plants for Level I and
Level II Pollution Abatement
VII-17 Alternate A - Estimated Dollar Sales Affected by
Potential Closures of Urban Plants for Level I
Pollution Abatement
VII-18 Alternate B - Estimated Dollar Sales Affected by
Potential Closures of Urban Plants for Level I
Pollution Abatement
VII-19 Alternate A and B - Estimated Dollar Sales Affected
by Potential Closures of Rural Plants for Level I
Pollution Abatement
VII-20 Alternate A - Estimated Dollar Sales Affected by
Potential Closures (Urban and Rural) for Level I
Pollution Abatement
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-vii-
LIST OF EXHIBITS
Exhibit
Number Title
VII-21 Alternate B - Estimated Dollar Sales Affected
by Potential Closures (Urban and Rural) for
Level I Pollution Abatement
VII-22 Alternate A and B - Estimated Dollar Sales Affected
by Potential Closures or Rural Plants for Level II
Pollution Abatement
VII-23 Alternate A - Estimated Dollar Sales Affected by
Potential Closures of Plants for Level I and
Level II Pollution Abatement
VII-24 Alternate B - Estimated Dollar Sales Affected
by Potential Closures of Plants for Level I and
Level II Pollution Abatement
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ENVIRONMENTAL PROTECTION AGENCY
ECONOMIC ANALYSIS OF THE PROPOSED EFFLUENT
GUIDELINES FOR THE ELECTROPLATING INDUSTRY
EXECUTIVE SUMMARY
INTRODUCTION
It was the objective of this study to determine the impact
of the costs of water pollution abatement on the Electroplating
Industry. The study was restricted in scope to an analysis of
four metals: Copper, Nickel, Chromium and Zinc, used in
electroplating and the effluents resulting from the use of these
metals. This study covered those plants included in the four
digit SIC Code 3471.
We would like to acknowledge the participation of Fred
Gurnham Associates amd Mr. Scott Modjeska in the technical
aspects of this study, as well as the cooperation of the National
Association of Metal Finishers in the supply of data and
information relevant to the study.
THE INDUSTRY
(a) Number of Industry
Establishments
Due to the nature of the Electroplating Industry and the
relative ease of entry into, or withdrawal from, the market
place, it is difficult to determine the actual number of electro-
plating shops operating within the United States.
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- 2 -
Based on the best available information from the Bureau
of Census, the number of electroplating establishments is as
shown in the following table:
TABLE 1
Number of Electroplating Establishments
Industry Segment Establishments
Captive Installations 2,389
Independent Shops 3.241
Total 5.630
(b) Employment
Size
Similar to data on establishment size, data on employment
size is also difficult to determine. The following table shows
reported employment by type of electroplating installation:
TABLE 2
Industry Employment
Industry Segment Employment
Captive Installations 23,000
Independent Shops 55.000
Total 78.000
Source: Bureau of Census
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- 3 -
(c) Types of
Firms
It was determined that segmenetaion of the industry based
upon level of integration, number of plants, number of products
*
and level of diversification, is not valid or necessary at this point
(d) Expected Impact
by Industry Segments
It is expected that the impact on the industry will be
more significant in the independent shop segment rather than the
captive shop segment because of the following:
1. Greater number of small independent shops exist.
2. Employment in the independent segment is
greater in small shops than in small captive shops.
3. Captive shops generally have a larger organization
capable of supporting additional operating costs of pollution
control.
4. Ability to raise necessary capital requirements
for equipment is greater in the broader based captive shop
environment.
It is expected that within the independent segment, large
shops will be impacted but not as severly as the small shops,
particularly at the lower employment levels. Information
collected during the study indicated the following:
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- 4 -
1. Low sales volumes for small shops, thus
indicating insufficient cash flow for purchasing expensive
control equipment.
2. Constraint on physical plant space thus adding
to the capital requirements, particularly if additional land
is required to maintain the same volume.
3. Diversification is high in the small shops in
order to hold customers. For reasons mentioned, several
treatment systems will probably be required as degree of
diversification increases.
(c) Scope of the
Study
As a result of the expected impact, the scope of the study
was limited to the independent (job) shop segment. Although
some small captive shops (1-5 employees) are expected to close,
the work performed in these shops will probably be transferred
to larger independent shops and the employees relocated into
other captor industry operations.
The scope was further limited to independent shops of
less than 100 employeess. This segment contains the majority
of the industry work force. Larger shops in this segment are
also expected to be impacted, but few, if any, closures should
result from pollution abatement requirements.
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- 5 -
METHODOLOGY OF
IMPACT ASSESSMENT
The following methodology was used in assessing the
economic impact of the cost of water pollution control on the
Electroplating Industry:
1. The independent shops were segmented basedon
numbers of employees, dollars of sales and location of
plants, rural or urban.
2. The financial impact on the industry as a whole
was measured in terms of the effect on the industry's average
profit before taxes as a percent of sales.
3. The impact on prices of electroplating was
determined based on the projected maintenance of the industry's
average level of profitability before taxes.
4. The impact of ability to raise the necessary
capital for pollution abatement equipment was analysed for
each segment.
5. The impact on production curtailment, plant
closing, etc., was based on:
(a) Judgemental assessment of
the expected financial impact.
(b) Interviews with industry sources.
(c) Interviews with technical
consultants.
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- 6 -
SEGMENTATION
Segments of the industry were analyzed in considerable
detail in Section III and IV of the report. In the independent
shop segment, model plant size groups were established. The
basic parameters of these groups are shown in the table below:
TABLE 3
Model
Plant
Code
A
B
C
D
E
Model Plant Parameters
Number
Urban*
952
439
446
477
132
2,446
of Plants
Rural**
285
131
133
143
39
731
Total
1,237
570
579
620
171
3^.177
Average No.
of Employees
Per Plant
2
7
14
30
67
Average Dollar
Sales Per Plant
($.000 )
$ 40.3
135.0
262.9
594.3
1,345.5
* Plants discharging effluents to municipal sewer systems
** Plants discharging effluents to navigable waters.
The impact due to water pollution abatement costs on
the above plants are discussed in the paragraph, Impact Analysis.
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EFFLUENT LIMITATIONS
USED FOR THIS STUDY
In order to evaluate the economic impact of pollution
abatement requirements on the Electroplating Industry, it was
necessary to establish effluent limitations on the model plant
groups. In conjunction with the Environmental Protection
Agency, two alternates were established for levels of treatment
for rural and urban plants. The alternates are shown in the
following table:
TABLE 4
Alternate Effluent Limitations
Alternate
A Level I (1) Pretreatment (2) Level II (3)
B Level I Level I Level II
(1) Best Practicable Technology
(2) Pretreatment standards are based on local regulations
and are not a requirement of the federal guidelines.
(3) Best Available Technology
COST OF WATER
POLLUTION CONTROL
Rural
1977
Urban
1983
Rural
The cost data were supplied by Battelle Memorial Institute
Costs regarding investment requirements were developed based on
the number of square feet per hour plated per employee and the
number of gallons of water used per hour. Operating costs
were based upon the square feet plated per hour per employee
and man-hours worked per employee per year.
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The investment and operating cost data for 1977 and 1983
for Alternates A and B are summarized in Tables 5 and 6 on
the following pages.
FINANCIAL PROFILE
(a) Sales and
Profits
A limited amount of information is available within the
Electroplating Industry relative to the financial condition of
individual firms. However, the limited published data, industry
studies and direct contact with individual firms, were used to
develop a financial profile of the industry segments.
Five model plant sizes were established with the following
financial data:
TABLE 7
Financial Data
Model
Plant
Code
A
B
C
D
E
Employee
Range
1
5
10
20
50
- 4
- 9
- 19
- 49
- 99
Average
Average Pre-tax Profit
Sales Dollars ($000) on Sales (%)
$ 40
135
262
594
1,345
.3
.0
.9
.3
.5
9
6
4
7
4
.0 %>
.5
.9
.2
.2
For the entire group of plants a pre-tax profit of
5.970 was calculated.
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TABLE 5
ALTERNATE A
COST OF POLLUTION ABATEMENT
EQUIPMENT FOR ELECTROPIATING INDUSTRY
1977 Standards ^
Model
Plant
Code
A
B
C
D
E
Urban
Investment
(.000)
25.0
29.4
58.8
126.0
281.0
Area (3)
Annual
Operating
Costs
$ 795
2,785
5,565
11,925
26,630
Rural
Investment
(.000)
50.0
58.8
117.6
252.0
562.0
1983 Standards (2^
Area (4)
Annual
Operating
Costs
$ 1,590
5,565
11,130
23,850
53,265
Rural Area
Investment
(.000)
20.0
20.0
73.0
133.5
288.8
(4)
Annual
Operating
Costs
$ 825
2,895
5,790
12,405
27,705
(1) Best practicable technology
(2) Best available technology
(3) Plants discharging to municipal sewer systems
(4) Plants discharging to streams
Source; Battelle Memorial Institute
Environmental Protection Agency
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TABLE 6
COST
EQUIPMENT
ALTERNATE B
OF POLLUTION ABATEMENT
FOR ELECTROPLATING INDUSTRY
1977 Standards ^
Model
Plant
Code
A
B
C
D
E
Urban
Investment
(.000)
50.0
58.8
117.6
252.0
562.0
Area (3)
Annual
Operating
Costs
$ 1,590
5,565
11,130
23,850
53,265
Rural
Investment
(.000)
50.0
58.8
117.6
252.0
562.0
1983 Standards (2)
Area (4)
Annual
Operating
Costs
$ 1,590
5,565
11,130
23,850
53,265
Rural Area
Investment
(.000)
20.0
20.0
73.0
133.5
288.8
(3)
Annual
Operating
Costs
$ 825
2,895
5,790
12,405
27,705
(1) Best practicable technology
(2) Best available technology
(3) Plants discharging to municipal sewer systems
(4) Plants discharging to streams
Source: Battelle Memorial Institute
Environmental Protection Agency
o
i
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(b) Value of Assets
The Electroplating Industry is characterized by relatively
low capital investment in equipment, land and buildings. Once
purchased and installed, the market value of electroplating
equipment decreases rapidly. It is estimated that the market
value of used equipment is worth about 1570 to 20% of the purchase
price after two years of operation.
(c) Financing Capital
Requirements
The following are the methods employed by the electro-
plating firms to obtain financing for initial or additional
capital requirements.
1. Commercial Banks, in general, are the primary
source of financing for firms in the Electroplating Industry.
However, companies experience some difficulty in obtaining
financing for both productive and nonproductive assets.
Companies often have to pledge assets of value equal to or
greater than the amount of the loan. Since most companies
are small with low capital investment, the asset security is
a problem.
The Bank's important consideration is the ability to service
the debt and the personal reputation of the business owners.
2. SEA Loans are typically available and used by
some of the small platers. Although a viable source for small
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- 12 .-
business, these loans require a considerable amount of detailed
information for qualification.
3. Public Financing - Most of the companies in the
industry are either closely held corporations or partnerships.
There are few public corporations. For this reason, the normal
method of outside financing is by bank loan. Very little
financing is done by issuance of stock.
4. Private Sources - Since many of the companies
are owned and operated as a family business, another source of
financing is the family itself. The private resources of
the family are drawn upon when necessary.
5. Government Assistance - A source of financing
which is available, but is not often used, is government
assisted financing. Several people interviewed in the A. T.
Kearney industry survey expressed a desire for some form of
government assisted financing of pollution control equipment.
6. Industrial Revenue Bonds have been used to
finance pollution abatement equipment. The value of bonds
issued has increased from $85 million in 1971 to $1 billion
in 1973. These bonds generally carry a rate of 670. Due to
the high cost of issuing these bonds, the value issued is
generally in excess of one-half million dollars. Presently,
only the very largest of the electroplating shops would be
able to avail themselves of this type of financing. This
type of financing presently will not assist the small independent
shops to finance pollution abatement equipment.
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IMPACT ANALYSIS
The impact analysis was based on previously described
model plant parameters, costs of pollution abatement equipment,
average profits for each segment, availability of capital
to finance abatement equipment, interviews with consultants
and industry sources, and Kearney's assessment of all
mentioned factors.
(a) 1977 Standards
The total investment costs required for the Electroplating
Industry to meet the 1977 standards are approximately $255 million
for Alternate A and approximately $415 million for Alternate B.
The annual operating cost increase is expected to amount to
$22 million for Alternate A and $36 million for Alternate B.
The following are the projected price increases for each of
the model plant groups:
TABLE 8
Projected Price Increases
Plant
Code
A
B .
C
D
E
Weighted
Average
Alternate
A
Percent Increase
Urban
18.4%
7.8
8.0
7.6
7.5
8.3%
Rural
36 . 7%
15.5
16.0
15.2
15.0
16 . 5%
Alternate B
Percent Increase
Urban and Rural
36.7%
15.5
16.0
15.2
15.0
16 . 5%
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(b) 1983 Standards
The industry is projected to require an additional
investment of $43 million in order to meet proposed 1983
standards. The additional annual operating costs of operation
are estimated to be $4 million.
It is believed that these costs will, in the majority
of cases, be passed on in the form of price increases. If
this happens, an average price increase of 8.470 will be incurred
for those plants in the rural segment.
(c) Plant Closings
Based on the data analyzed and interviews with the
Electroplating Industry and bank representatives, it is
believed that the proposed water pollution control standards
will have the effect on potential plant closures for Alternates
A and B as shown in the following tables.
TABLE 9
Area
Urban
Rural
Total
Potential
1977
Plant
Number
Number Percent
324
193
517
13.2 70
26.4
16.3 70
Closures -
of Plants
Alternate A
1983
Number Percent
25
25
- 70
4.6
4.6%
Total
Number Percent
324
218
542
13.2 %
29.8
17.1 7o
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TABLE 10
Potential Plant Closures - Alternate B
Number of Plants
1977 1983 Total
Area
Urban
Rural
Total
Number
649
193
842
Percent
26 . 5%
26.4
26 . 5%
Number
-
25.
25
Percent
-
4.6%
4.6%
Number
649
218
867
Percent
26 . 570
29.8
27.3%
It should be noted that of the 542 total potential plant
closures for Alternate A, or 867 total potential plant closures
for Alterante B, 324 in both alternates are estimated to be the
resultant of pretreatment standards which are considered to be
the responsibility of the local municipal systems handling
plant effluents and not the Environmental Protection Agency
Guidelines. It is understood that not all municipalities will
have the same regulations. However, for purposes of this
analysis, effluent standards were assumed to be equal for all
areas and municipalities.
(d) Employment Effects
Based on the estimated potential plant closings and the
average number of employees per model plant size, the employment
effects for Alternates A and B are shown in the following
tables.
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- 16 -
Area
Urban
Rural
Total
TABLE 11
Alternate A
Employment Effects
1977 1983
Total
Area
Urban
Rural
Total
Number
1,513
844
2,397
Percent
4.7%
8.6
5.4%
Number
-
248
248
Percent
-
2.6%
2.6%
Number
Percent
1,513 4.7%
1,132 11.0
2,645 5.9%
TABLE 12
Alternate B
Employment Effects
1977 1983
Total
Number
3,040
884
3,924
Percent
8.8%
8.6
8.8%
NumberPercent
Number
Percent
248
248
2.6%
2.6%
3,040 8.8%
1,132 11.0
4,172 9.3%
Of the approximately 2,650 or 4,200 employees estimated to
be affected by the potential plant closures, it is estimated that
about 50 percent will be re-employed in the remaining firms in
the Electroplating Industry. The net effect is, therefore, a
displacement of 1,325 or 2,100 employees.
(e) Community Effects
It is believed that little or no impact on local
communities will result from plant closings due to pollution
abatement requirements.
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(f) Production Effects
Based on the estimated potential plant closings and the
average dollar sales per model plant size, the production
for Alternates A and B effects are shown in the following tables.
TABLE 13
Production Effects - Alternate A
1977
1983
Total
Area
Urban
Rural
Total
SMillion
$29.7
17.3
$47.0
Percent
4.4%
8.6
5.4%
$Million
-
$4.9,
$4.9
Percent
-
2.6%
2.6%
$Million
$29.7
22.2
$51.9
Percent
4.4%
11.1
5 . 9%
Area
Urban
Rural
Total
TABLE 14
Production Effects - Alternate B
1977
1983
$76.9
Percent
gMlTIion
$59.6 8.8%
17.3 8.6
Percent
8.8%
?Million
$ -
$4.9 2.6%
$4.9 2.6%
Total
?Million
$59.6
22.2
Percent
8.8%
11.0
$81.8 9.3%
It is believed that the majority of this potential lost
sales volume will be shifted to the remaining plants.
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- 18 -
LIMITS OF
THE ANALYSIS
(a) The accuracy of this study depends upon the
accuracy of:
1. Published industry data.
2. Unpublished information supplied by knowledgeable
industry personnel.
3. Cost data developed separately from this analysis
by Battelle Memorial Institute for the Environmental
Protection Agency.
4. Estimates by A. T. Kearney consultants.
The published data consisted of industry sales, number of
companies and employees and limited financial data. While
conflicts were present in the various data sources, these data
were judged to be reasonably accurate for a study of this nature
The information supplied by members of the Electroplating
Industry was assumed to be accurate, and the cost data provided
by Battelle were used as supplied.
(b) Critical Assumptions
The assumptions which directly affect the findings and
conclusions of this study are :
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- 19 -
1. The industry has been assumed to be similar in
each segment according to size. Sales, employment and
production are assumed to be relevant units of measurement for
the plants in the industry.
2. The majority of the small shops were assumed
to handle similar waste streams and operate in approximately
the same manner according to size, as stated in the above
paragraph.
3. In the absence of more accurate data the water
discharged into streams versus that discharged into municipal
sewers, was assumed to represent the distribution of the plants
by geographical location, i.e., rural versus urban areas.
4. The plants in the industry affected by pollution
abatement have either zero current investment in water
treatment equipment or the estimated costs to meet guidelines
are additive for those plants already using some type
of treatment.
5. Profitability and costs for the plants located
within urban and rural areas was assumed to be similar.
6. It was assumed that all shop owners will attempt
to maximize profits. It was also assumed that five years
profits would be the maximum amount of investment a shop
owner would be willing to forego before going out of business.
-------
I - INTRODUCTION
STATEMENT OF
THE PROBLEM
The 1972 Amendments to the Federal Water Pollution Control
Act have required the Environmental Protection Agency to estab-
lish effluent limitations for most major industries which are
sources of water pollution. Studies are now under way to es-
tablish these limitations in some 28 industries. These efflu-
ent limitations will apply to existing and new plants, and at
legislated dates progressively more restrictive limitations
will be imposed. Specifically by July, 1977, effluent require-
ments will be in effect that require application of the best
practical control technology currently available. By July,
1983, a more restrictive set of limitations will be enacted that
require the application of the best available technology econom-
ically achievable; and by 1985, if possible, techniques and
systems that enable the industries to effect zero level of dis-
charge will come into effect.
The tremendous effort which has been expended by the EPA
and its predecessor agencies in the technical development of the
nature of the pollution problem, and its solutions, has resulted
in a multiplicity of programs which have begun to bring the
pollution problem under control. The establishment of timetables
has put time parameters on these control efforts, requiring the
expenditure of vast sums of money by all types and levels of in-
dustry to meet these deadlines by installation of pollution con-
trols.
-------
1-2
In recent years, a recognition of the potential economic
problems facing industry in meeting the control requirements has
resulted in study programs in which the economic impact of the
costs of pollution control on American industry and on the econ-
omy in general have been analyzed. These culminated in the
Economic Impact Studies sponsored by the Council for Environ-
mental Quality and the EPA in 1971 and 1972, in which 11 indus-
tries were studied.
The EPA has now increased the number of industries which
are being studied, and expanded the scope of previous studies,
by authorizing a series of Economic Impact Studies which are
specifically aimed at analyzing the economic impact of the costs
of water pollution abatement requirements under the Federal
Water Pollution Control Amendments of 1972.
SCOPE
OF WORK
The Electroplating Industry included in SIC code 3471 is
covered by this study. SIC Code 3471 includes many processes
generally found in plating shops including electroplating,
other types of plating, polishing, anodizing, and coloring of
metallic manufactured end products. Although a wide variety
of platings and coatings are in use in shops listed under SIC
Code 3471 which include non-metallic coatings, precious metals,
and non-precious metals, the study scope has been limited by
EPA to copper, nickel, chromium and zinc electroplating.
-------
1-3
METHOD OF APPROACH
This study was conducted in three phases. Phase I developed
a physical and financial profile of the Electroplating Industry.
Phase II analyzed the economic impact of water pollution control
costs on the industry, and Phase III was the preparation of
the final report.
The method used in conducting this study is discussed in
the following paragraphs.
(a) Phase I
1. Collected and reviewed all published data and
information which could be found in trade journals, government
sources and A. T. Kearney files.
2. Met with representatives of the following agencies
and organizations to gather additional information:
(a) Environmental Protection Agency
(b) National Association of Metal Finishers
(c) Chicago Electroplaters Institute
(d) Battelle Memorial Institute
(e) U. S. Department of Commerce
3. Conducted approximately 30 telephone interviews of
both job shop and captive electroplaters, located in areas of
the United States to gather financial and operating data.
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1-4
4. Analyzed all of the data collected. A list of
reference sources used in this study is given in Exhibit 1-1.*
5. Prepared a draft report covering the findings
of Phase I.
6. Reviewed Phase I findings and conclusions with
the EPA. The results reported in Phase I indicated that the
economic impact of water pollution control costs would be greatest
on the independent electroplaters employing less than 100 personnel,
It was therefore decided by A. T. Kearney and the Environmental
Protection Agency that the scope of the analysis of the
Electroplating Industry would be narrowed and the assessment of
the impact of water pollution control on the Electroplating
Industry for independent shops employing less than 100 personnel
would be provided.
(b) Phase II
1. Analyzed the data developed by Battelle Memorial
Institute with respect to the projected costs of water pollution
control.
2. Visited approximately 25 Chicago area electroplaters
and re-interviewed by telephone previously contacted electroplaters
located in other areas of the United States, based upon segmented
groups, to gather additional information.
*A11 exhibits are located at the end of the section in
which they are discussed.
-------
1-5
3. Interviewed five Chicago area banks to assess the
ability of electroplating shops to obtain financing for
pollution abatement equipment.
4. Revised some of the data collected in Phase I
due to the availability of additional information.
5. Analyzed all data collected and developed
conclusions based on this analysis.
6. Prepared a draft report covering the findings and
conclusions of Phase II.
(c) Phase III
The draft reports covering the results of Phase I and
Phase II were combined into a single report, finalized and
submitted to the Environmental Protection Agency.
-------
EXHIBIT I - 1
Page 1 of 2
ENVIRONMENTAL PROTECTION AGENCY
LIST OF REFERENCE SOURCES
SECONDARY SOURCES
Annual Statement Studies, Robert Morris Associates
Annual Survey of Manufacturers - 1971,
U.S. Department of Commerce
Business and Economic Evaluation of the Metal
Finishing Industry, Michigan Business Reports
No.52, Graduate School of Business Administration,
University of Michigan
Census Bureau-Electroplating Engineering Handbook,
U.S. Department of Commerce
Census of Manufacturers - 1967, U.S. Department
of Commerce
Cost of Clean Water - Industrial Waste Profile
Study Motor Vehicle and Parts, November 1967,
U.S. Department of Interior
Development Document for Effluent Limitations
Guidelines and Standards of Performance - Electroplating
Industry (Copper. Nickel, Chromium and Zinc) ,1973,
Battelle Memorial Institute, Draft
Dun & Bradstreet Reports
Enterprise Statistics - 1967
EPA Technology Transfer Seminar Publication - #1
In-Process Pollution Abatement. July 1973 -- #2
Waste Treatment July 1973, Environmental Protection
Agency
Finishers Management - National Association of
Metal Finishers
Industrial Water Engineering
Metal Working Market Guide 1973, Iron Age
-------
EXHIBIT I - 1
Page 2 of 2
Moody's Industrial Manual
Predicast, Market Forecasts
PERSONAL INTERVIEWS
(a) Electroplaters
A. T. Kearney industry survey of 41 independent and
captive electroplaters.
(b) Banks
A. T. Kearney survey of five Chicago area banks
(c) Others
American Electroplaters Society
East Orange, New Jersey
Dr. Fred Gurnham, Consultant, Chicago,
Chicago, Illinois
Mr. Scott Modjeska, Consultant
Chicago, Illinois
National Association of Metal Finishers (NAMF)
Upper Montclair, New Jersey
- Also 15 local chapters
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II - GENERAL INDUSTRY DESCRIPTION
This section of the report provides a general insight into
the operations of the Electroplating Industry. Included is
a broad description of the nature of the demand for electro-
plating and how other industry segments affect the viability
of the electroplating industry. A general description of the
processes involved and the sources of water pollution are also
discussed. The major headings of this section are:
Demand Characteristics for Electroplating
Description of the Plating Process
Sources of Water Pollution
DEMAND CHARACTERISTICS
FOR ELECTROPLATING
Electroplating is an electrochemical process performed on
manufactured parts when the original surface characteristic of
the base metal, used to form or manufacture the product, does
not possess the desired surface characteristic. Some examples
of the desired finishes would include corrosion protection,
hard or durable finishes, bright or decorative characteristics,
electrical conductivity and others of a similar nature.
The primary demand for the electroplating process is
governed largely by the technical requirements of the industry
segments which manufacture the end products. For example,
tool makers require a hard chrome finish to provide durability
to the finished product. Manufacturers of household products
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II - 2
require a soft chrome finish to provide a decorative finish.
Zinc or cadmium finishes can be specified for corrosion
resistance.
Although it is exceptionally difficult to provide accurate
estimates of the total demand for electroplating, it is possible
to provide a general indication of the extent of usage of elec-
troplating in other industry segments. By understanding this
broad industry dependence on electroplating, it is then possible
to understand some of the factors which can affect the demand
for the electroplating service.
Exhibit II-l depicts the types of finishes required by 9
industry segments. These SIC code 2 digit classifications
represent 86 separate industry groupings and well over 20,000
establishments which are potential users of electroplating.
A significant number of the identified industry segments
perform their own services in captive electroplating installations
However, a large number purchase their requirements from
outside sources, i.e., independent job shop platers. Exhibit
II-2 shows approximately 4,800 identified plants which perform
some electroplating within their primary operation.
Assuming a relative degree of accuracy of the data, some
15,000 additional plants are potential demand sources for
non-captive electroplating services.
-------
II - 3
A limited number of studies have been conducted to predict
the future demand for electroplating. However, Predicast, a
market forecasting publication, estimates the consumption of
chromic acid to grow at approximately 2.570 per year until 1975 .
It is also estimated that the consumption of nickel for nickel
plating will increase from 47 million pounds per year to 66
million pounds by 1976. Sales of nickel plating are predicted
to increase at an annual growth of 6% during the same period.
Clearly the demand for electroplating is broad and used
in a wide range of industries. It is also expected that the
industry demand is expected to continue growing probably con-
sistent with the growth of those segments which are major users
of the service.
DESCRIPTION OF THE
PLATING PROCESS
(a) Equipment
Used
The equipment requirements in the electroplating process
depend upon the physical dimensions of the workpieces being
plated. Barrel and still plating are the two primary methods
in heavy commercial use.
Many types of barrel finishing equipment are used. Each
type essentially consists of a cylinder or barrel which con-
tains the parts being plated and a tank filled with the plating
-------
II - 4
solution. The barrel is placed in the plating tank and the parts
are rotated in the solution. An electrical current is discharged
either through the plating solution or directly to the parts
to complete the electroplating process.
Typically, still plating methods involve the use of special
frames or racks which hold the parts in place while the plating
is being performed. The racks serve the function of carrying
electrical current to the pieces in the plating tanks.
(b) Materials
Used
Raw material needs for the simple electroplating operation
are relatively minimum. Acid dips, water, or special cleaning
solutions are used for any preliminary treatment that might be
required before the actual plating is done. While hundreds of
different plating solutions are available commercially, cyanide,
alkaline and acid sulfate solutions are among those in popular
use. Water is used in great quantities in the rinsing cycles
of the electroplating process.
Differences in the plating of various metals are explained
to a large extent by the specific properties of each metal,
personal knowledge of a particular series of operations and
preference for one method over another when a choice is avail-
able. For example, sulfuric acid pickling alone is generally
considered unsatisfactory for oxide removal from stainless
steels and corrosion-resistant alloys because black smut is
-------
II - 5
left on the workpiece and/or the pickling time required is
relatively longer. Sulfuric acid, however, is a good pickling
agent for the removal of copper oxide from the copper-rich
alloys. Similar situations exist in other plating processes.
(c) Process
Flow
A simple electroplating process includes, essentially,
four sequential operations -- cleaning, plating, rinsing and
drying.
The objective of the initial operation is to prepare the
piece for plating by removing all foreign matter such as oil,
grease, dirt and oxide that could retard or prevent actual
plating of the workpiece surface. If any abrading, pickling,
or other preliminary treatment is necessary, rinse tanks may
be needed to remove pre-treatment solutions, to provide good
surface adhesion and to avoid contamination of plating solutions,
Whatever method is employed, still or barrel plating, all
workpieces are rinsed between each step in the process and
finally, at the end of the process, before being allowed to
dry.
SOURCES OF WATER
POLLUTION
Rinsing solutions are the major sources of water pollution
in the electroplating process. These toxic substances find
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II - 6
their way to sewage systems and streams by a variety of means:
1. Accidental spillage or tank leaks.
2. Intentional dumpings.
3. Drag-out to rinses.
4. Losses due to the periodic cleaning and
repacking of filters.
5. Vapor sprays or mists drawn off by the
ventilation system.
Closer supervision over the electroplating process serves
to reduce cumulative effects of accidental spillage and leaks,
toxic vapors, and the cleaning of filters. Drag-out., however,
is a more difficult and continuous problem resulting from the
transfer of racks or barrels from one solution to another and
is the major source of pollution. Intermediate rinsing solu-
tions become contaminated with solutions from previous tanks,
necessitating periodic dumpings. Although volume of plating
and the type of process used are important elements in deter-
mining the amount of pollution, all electroplating shops con-
tribute to the problem of water pollution.
-------
ENVIRONMENTAL PROTECTION AGENCY
Economic Impact of Pollution Abatement
On The Electroplating Industry
End Uses of Electroplating by Industry Segments
SIC
Code
19
25
33
34
35
36
37
38
39
Source
Type of Finish
Corrosion
Industry Classification Durability Decorative Conductivity Protection
Ordnance
X X
Furniture and Fixtures X X
Primary Metal Industries XXX
Fabricated Meta
1 Products X X X X
Machinery Except Electrical XX X
Electrical and
Transportation
Instruments and
Electronic Equipment XXX
Equipment X X X X
Related Parts X X X X
Miscellaneous Manufacturing Industries X X X X
: Metal Working
Guide
EXHIBIT II-l
-------
EXHIBIT II-2
ENVIRONMENTAL PROTECTION AGENCY
Economic Impact of Pollution Abatement
On Electroplating Industry
Electroplating Operations by Industry Segments
SIC
Code Industry Plants
25 Furniture and Fixtures 119
33 Primary Metal Industries 232
34 Fabricated Metal Products 1,093
35 Machinery Except Electrical 922
36 Electrical and Electronic Equipment .1»115
37 Transportation Equipment 357
38 Instruments and Related Parts 574
39 Miscellaneous Manufacturing Industries 364
Total 4,776
Source: Metal Working Guide
-------
Ill - PHYSICAL CHARACTERISTICS OF THE INDUSTRY
In this section of the report physical characteristics of
the electroplating industry are discussed in order to determine
the major market segments expected to be significantly impacted
by pollution control standards. These are discussed under the
following major topic headings.
Primary industry segments
Types of firms
Size of the industry
Industry survey
Expected impact by industry segments
Location of impacted shops
Industry segment not considered
Scope of Impact Analysis
PRIMARY INDUSTRY
SEGMENTS
The electroplating industry can be primarily segmented
into two major categories.
1. Independent (job) shops which sell their services
to an extensive listing of metal working industries as indicated
in Exhibit II-l and discussed in Section II, page 2.
2. Captive installations owned and operated by the
specific industry requiring the service.
-------
Ill - 2
TYPES OF
FIRMS
Electroplating shops in the job shop segment can be further
defined in the following categories:
Integrated firms
Multi-plant firms
Single or multiple product firms
Highly diversified firms
Specialists
The relevance of segmenting firms by these sub-categories
is discussed.
(a) Level of
Integration
Electroplating is an end product in the job shop segment
and a secondary operation in the captive segment. If a shop
performed manufacturing, electroplating and polishing and
buffing to complete a product, it would be considered an inte-
grated plant within the primary manufactured product group.
The electroplating operation would be considered captive.
Where the primary function is electroplating and other
secondary operations are performed, i.e., buffing and polish-
ing, this could be defined as an integrated electroplating
operation. According to this definition, the independent shops,
where secondary operations are required, are for the must part
integrated.
-------
Ill - 3
Segmenting the industry by level of integration does not
appear relevant for either captive or independent shops since
level of shop integration would not change as a result of new
pollution controls. Since electroplating is the primary oper-
ation and the main source of water pollution in both segments,
other related operations in the electroplating shops are gen-
erally support functions and would not exist in the absence of
the primary operation.
(b) Number of
Plants
A relatively few independent electroplaters operate as
multi-plant firms, and these tend to be the larger shops. Con-
sequently segmenting by size of employment separates the large
shops, which results in the multi-plant firms also being
segmented. Since the larger shops are not as severely impacted
as other segments, sub-segmentation of large shops into single
versus multi-plant firms is not considered necessary.
The larger shops, in terms of employee size, represent
approximately 8% to 1070 of the independent shops and approxi-
mately 15% of the captive shops.
(c) Number of
Products
Industry sources indicate little relationship exists be-
tween the number of products and the extent of pollution prob-
lems. A more relevant measure would be the physical shape of
-------
Ill - 4
the product since products which drain poorly create greater
drag-out problems. Consequently, they are greater sources for
pollution. It would certainly be desirable to identify shops
which have the major drag-out problems caused by the product
design. However, industry data are not compiled in this manner.
(d) Level of
Diversification
Many electroplating shops operate as specialists in one
or more areas. For example, it is not unusual to find a shop
which performs a single plating operation, i.e., hard chrome.
However, it is usual for shops to specialize in one product
and maintain other types of plating operations to maintain a
balanced operation.
It is recognized that single purpose operations have fewer
control problems than highly diversified operations. From an
economic impact point of view, it would be highly desirable
to segment the industry accordingly. However, as previously
indicated this method of segmentation is not practical at this
time because of the lack of industry data.
SIZE OF THE
INDUSTRY
Considerable difficulty exists in determining the actual
number of electroplating shops operating within the United
States. This is due to the nature of the industry and relative
-------
Ill - 5
ease of entry into the market place. A single plating product
line requires low initial capital investment and an independent
or captive shop can easily be established. When these opera-
tions are small, it is understandable that they go undetected
and are not included in industry statistical data. This is
particularly true with the captive segment since they rarely
market services outside the captive environment. Conversely,
independent shops seeking stronger market positions tend to be
listed in industry directories and other marketing publications;
consequently the data are probably more accurate. In addition
census enumeration methods are different, and the data more
complete in the independent segment.
(a) Number of Industry
Establishments
The table below summarizes the number of establishments
reported in the electroplating industry.
Table III - 1
Electroplating Establishments
Industry Segment Establishments
Captive Installations 2,389
Independent Shops 3,241
Total 5,630
Sources: U.S. Department of Commerce.
Bureau of Census.
-------
Ill -6
This data indicates that of the total identified
establishments, approximately 60 percent are in the indepen-
dent shop category.
(b) Size of
Employment
Similar to data on establishment size, data on employment
size is recognized to be understated because of three factors:
1. Aggregate census data for the captive segment ex-
cludes specific information which would disclose the actual size
of a single firm when that firm is the only one in the group.
2. All captive installations do not respond to
census inquiries.
3. Captive shops within industries having less than
10 total employees, including electroplating employees, are
not included in the reported number.
The following table shows reported employment by type of
electroplating installation.
Table III - 2
Industry Employment
Industry Segment Employment
Captive Installations 23,000
Job Shops 55,000
Total 78,000
Sources: U.S. Department of Commerce.
Bureau of Census.
-------
Ill - 7
INDUSTRY
SURVEY
The limited scope of coverage provided by census data re-
quired additional information to be compiled for use in the
impact analysis phase of the study. These data were obtained
in an industry survey.
Exhibit III-l is a summary of information gathered from
38 independent and 3 captive shops. The data provide a basis
for many assumptions used in the analysis of the industry and
the effects which pollution controls are expected to have on
the independent segment. Particular emphasis on characteris-
tics such as size, diversification, plant location, sales
volume and production constraints were of concern to determine
the relative degree of impact on the two primary segments of
the industry.
(a) Sales
Annual sales range from $60,000 to $8,000,000; however,
most of the shops surveyed reported sales of less than one
million dollars. Although no definite conclusions can be drawn
from the small sample, the independent shops are typically
small businesses, operating on relatively small annual sales
volumes.
(b) Survey and Industry
Employment
Electroplating shops, in the independent segment particu-
larly, are small in terms of employment as indicated by the
-------
Ill - 8
survey data. Most of the shops reported employment of less
than 50 persons.
Industry employment data are shown on Exhibit III-2 for
the independent shops. Approximately 60 percent of independent
segment electroplating employees work in shops where total
employment is less than 50 persons. These shops, with less than
50 persons, represent 92 percent of the total number of estab-
lishments in the independent shop segment.
Exhibit III-3 reflects a total employment for the captive
shop segment. Clearly, a large number of the captive shops are
small and approximately 80 percent of the total establishments
have fewer than 20 people. However, the majority, approximately
70 percent, of electroplating employment occurs in the larger shops
Exhibit III-A lists 86 industries which have captive shops
and classifies the shops by sizes of employment. According to
these data, the average employment in a small shop is two
persons. In the large shop approximately 50 persons are employed.
Exhibit III-5 is a listing of 12 of the major industries
selected on the basis of total numbers of establishments.
The average employment in these shops is also equal to
approximately 50 persons. Compared to independent shops, this
would be considered a large installation since in many instances,
these shops do not require the same level of management and
-------
Ill - 9
overhead personnel. They are shared with other operations in
the captive industry. This is not true in the independent shop.
Assuming the extent of automation is also greater in a cap-
tive installation, because of the similarity of the product and
the repetitive nature of the operations, a fifty-man shop is a
major installation by comparison to a fifty-employee independent
shop.
EXPECTED IMPACT BY
INDUSTRY SEGMENTS
Based on the above discussion, we believe the impact of
pollution abatement will be significant in two segments of the
industry. Small shops will be impacted for both independent
and captive segments. However, the major effect will be in the
independent segment for the following reasons:
1. A greater number of small independent shops exist.
2. Employment in the independent segment is greater
in small shops than in small captive shops.
3. Captive shops generally have a larger organization
capable of supporting additional operating costs for pollution
control.
4. Ability to raise necessary capital requirements
for equipment is greater in the broader based captive shop
environment.
It is expected that within the independent segment, large
shops will be impacted but not as severely as the small shops,
particularly at the lower employment levels. The survey data
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Ill - 10
in Exhibit III-l indicated:
1. Low sales volumes for small shops, thus indicating
insufficient cash flows for purchasing expensive control equip-
ment.
2. Constraint on physical plan space possibly neces-
sitating additional land and building to house control equipment.
This will add to the capital requirements.
3. Diversification is high in the small shops in order
to hold customers. Therefore, several treatment systems will
probably be required as degree of diversification increases.
LOCATION OF
IMPACTED SHOPS
Electroplating shops are located in nearly all fifty states;
however, the major concentration is in the principal industrial
areas in the Midwest, Northeast and the Western Seaboard.
Exhibit III-6 displays the location of independent shops.
The location of captive shops is estimated to be identical to
job shops since both segments service the same industries.
Geographical segmentation is important to consider, espe-
cially in areas where relatively few shops exist. The impact
of pollution control requirements on the electroplating segment
can be relatively minor in areas where shops and direct employ-
ment are not significant. However, industries dependent upon
-------
Ill - 11
these smaller shops for their services can be indirectly impacted
as a result of controls, because of expected price increases.
INDUSTRY SEGMENT
NOT CONSIDERED
While the study is concerned with electroplating work on
manufactured and assembly products using zinc, nickel, chromium
and copper as the plating metal, it is recognized that basic
industries such as steel and aluminum have sizeable electro-
plating facilities using these metals and also perform other
types of plating. It is our understanding for the purpose of
this study that plating in these basic industries (steel and
aluminum) will be covered in separate studies of these indus-
tries.
SCOPE OF
IMPACT ANALYSIS
The impact analysis discussed in Section VII has been
limited to cover independent electroplating shops employing
fewer than 100 employees. This range of size and industry
segment has been selected for the following reasons:
1. Independent shops can be more easily identified
in relation to size and location.
2. Cost data are more readily obtainable from the
independent segment. Captive installations, particularly the
small ones, consider the cost of operating the plating line as
overhead. Consequently, extensive plant cost analysis would
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Ill - 12
be required to gather the required cost information from
these shops.
3. Independent shops with a small amount of employment
are more likely to be restricted in capital requirements than
larger independent shops.
-------
ENVIRONMENTAL PROTECTION AGENCY
ELECTROPLATING INDUSTRY
INDUSTRY SURVEY SUMMARY
Data Item:
Urban or Rural Location
Job Shop or Captive Shop
Corporation or Other
Company /Owner
Total Square Feet/Plating
Square Feet
Total Employees/Plating Employees
Plating Lines (Percent of Sales )-
Nickel
Chrome
Zinc
Copper
Cadmium
Other
Still Plating or Barrel Plating
Major Plant Capacity Constraints
Pollution Equipment - Type
Percent Effluent Treated
Water Usage - Gallons per Day
Dispose Into - Sewer or Stream
Sludge Removal - Method
Pollution Control Equipment -
Installation Date
Operational Date
Cost (Actual or Estimate)
Estimated Total Cost to Complete
Operating Cost of Pollution
Control Equipment
Results Achieved
Capitalization-- Total
Financing Capability
Sales Per Year
Profit Before Taxes
Profit After Taxes
Company Identification Number
1
Urban
Job Shop
Corporation
18/40
17.000/
8,000
25/18
57.
957.
Still
Space
Hauling
Service;
No dumping
07,
-
-
Pick-Up
Service
No Equip-
ment
No Equip-
ment
$100,000-
$150,000
-
-
-
-
-
$300,000-
$400,000
-
6-107.
2
Urban
Job Shop
Corporation
11-
10.000/
6,000
10-12/8
1007.
Both
Space
Now = Pre-
cipitation
and Filtra-
tion;
Future =
Batch
Process
407.+
7,000
Sewer
Negligible
12 Months
Ago
3 Months
Ago
$20,000-
$50,000
$75,000
$5,000-
$10,000
per year
OK
-
-
$500,000
107.
-
3
Urban
Job Shop
Corporation
33/25
35.000/
30,000
30/15
57.
707.
207.
57.
Brass, Tin,
Silver
Both
Old build-
ing
Semi Con-
t inuous ;
Gas Chlori-
nation.Only
on Cyanide
1007.
167,000
Sewer
Pick-Up
and Sewer
-
-
$150,000-
$200,000
-
$400-5600
per month
Cyanide
Only
$400,000
Good
$786,000
$22,000
$17,000
4
Urban
Job Shop
and Some
Captive
Corporation
13/-
18.000/
8,000
35-40/8
-
Barrel
Space
None except
for Cyanide
conversion
-
-
-
-
-
-
$50,000
-
-
-
-
-
-
-
-
5
Urban
Job Shop
Corporation
13/20
7.000/
6,000
7/4
507.
Minor
Gold,
Silver 507.;
Tin
Both
Space
Bath De-
struction;
Chemical
337.
600
Both
Pick-Up
1969
1969
$7,000-
$8,000
-
$25 per
week
Good Shape
$100,000
Minor
Problems
$300,000
Lost $ Last
3 Years
-
6
Urban
Job Shop
Corporation
9/30
8.500/
10,000
8/6
Silver
Both
-
Destruction
1007.
48,000
Sewer
Pick-Up
February
1973
Not
Operating
$9,000
$9,000
-
Problems
$100,000
Minor Loans
$200,000
$20,000
-
7
Urban
Job Shop
Corporation
13/-
18.000/
17,000
37/29
75-807.
Still
-
Neutrali-
zation and
Destruction
1007.
-
Sewer
Pick-Up
Began 13
Years Ago
-
-
-
-
Good
$250,000
Available
$800,000
-
-
5
Urban
Job Shop
Corporation
20/30
8.000/
5,500
55/33
20%
5%
257.
Tin- 507.
Both
Space
Destruction
Chlorina-
tion,
Settling,
Centrifuge
10%
200,000
Sewer
Pick-Up
1971
6 Months
Ago
$70,000
$70,000
$700+ per
month
Good-907.
of the Time
$550,000
Good
$1,200,000
-
3.87.
EXHIBIT III-l
Page 1 of 4
5 "
Urban
Job Shop
Corporation
20/-
10,0001
8,000
30/22
337.
Aluminum
337.
-
Space
None
07.
-
Sewer
Pick-Up
N/A
N/A
-
-
-
Doing
Nothing
$100,000
-
$500,000
-
-
1U
Urban
Job Shop
Corporation
30/-
3.300/
500
25/19
957.
Tin 57.
Barrel
Space
Integrated
Cyanide
1007.
6,000
Sewer
Pick-Up
1953
1953
$50,000
-
-
Meeting
Guidelines
-
-
$500,000-
$700,000
-
-
-------
Data Item:
Urban or Rural Location
Job Shop or Captive Shop
Corporation or Other
Number of Years in Business -
Company/Owner
Total Square Feet/Plating
Square Feet
Total Employees /Plating Employees
Plating Lines (Percent of Sales) -
Nickel
Chrome
Zinc
Copper
Cadmium
Other
Still Plating or Barrel Plating
Major Plant Capacity Constraints
Pollution Equipment - Type
Percent Effluent Treated
Water Usage - Gallons per Day
Dispose Into - Sewer or Stream
Sludge Removal - Method
Pollution Control Equipment -
Installation Date
Operational Date
Cost (Actual or Estimate)
Estimated Total Cost to Complete
Operating Cost of Pollution
Control Equipment
Results Achieved
Capitalization - Total
Financing Capability
Sales per Year
Profit Before Taxes
Profit After Taxes
ELECTROPLATING INDUSTRY SURVEY SUMMARY (CONTINUED)
Company Identification Number
11
Urban
Job Shop
Corporation
1.21-
15.000/
4,000
28/20
99%
Both
Space
CleariCier
100%
60
Sewer
Pick-Up
1961
-
-
-
-
Cyanide
Only
$60,000
$60,000
-
-
12
Urban
Job Shop
Corporation
13/13
30.000/
21,000
70/50-60
{20%
55%
X
Solder
conversion
coating
Both
-
Evaporate;
Destruct;
Ph control
60%
120,000
Sewer
Pick-Up
12 Months
Ago
3 Months
Ago
$125,000
$205,000-
$210,000
$5.10 per
Hour
Good
$620 ,000
Pretty
Good
$1,500,000
$172,500
$97,500
13
Urban
Captive
Shop
Corporation
-
-/
3,000
-/5
-
Barrel
-
Atmospheric
Evaporators
Most
-
Sewer
No Sludge
2 Years
Ago
6-12 Months
Ago
$3,000
$3,000
-
Good
-
-
-
-
14
Urban
Job Shop
Corporation
-/44
40.000/
16,000
69/45
X
Anodizing,
etc.
Still
Space
None
-
-
Sewer
Pick-Up
None
None
$30,000-
$40,000
-
-
Not Being
Checked
$300,000
Good for
$25,000-
$100,000
$1,250,000
$1,500,000
-
$20,000
15
Urban
Job Shop
Corporation
201-
13.000/
11,000
18/15
90%
Still
-
None as
such
0
-
Sewer
None
N/A
N/A
$75,000
$75,000
-
Prob lem
$83,000
Pretty
Good for
Small Plant
$275,000
-
5%
16
Urban
Job Shop
Corporation
27/8
75.000/
45,000
43/34
20%
9%
Anodizing
and
Painting
Still
-
Cleari-
fiers;
Rinses
20%
200,000
Sewer
Pick-Up
-
-
$50,000-
$250,000
$50,000-
$250,000
-
Problem
$680,000
Bad
$850,000
-
-$25,000
17
Rural
Job Shop
Corporation
36/-
15.000/
14,000
25/23
100%
Still
-
Dillution
100%
5,000
Stream
Stream
1970
1971
-
-
-
Good
-
Available
$600,000
-
$20,000
18
Urban
Job Shop
Corporation
40/-
30.000/
50/40
45%
30%
Gold and
Silver
Both
-
Dillution
100%
-
Sewer
None
June 1968
January
1969
-
-
-
Minor
Problems
$700,000
$150,000
Available
$1,014,000
10%
-
EXHIBIT I1I-1
P
19
Urban
Job Shop
Corporation
30+/-
36.000/
28,000
59/40-45
*>50%
Both
-
20
Urban
Job Shop
Corporation
39/-
60.000/
30-35,000
120/100
10%
Precious
Metal
Both
Space
Electro- Water Conser-
Chemical vation;
Ph Control
100%
-
Stream
None
April 1,
1971
December
1973
-
$400,000
-
Minor
Problems
-
*
$1,000,000
-
.
100%
133,000
Sewer
Pick-Up
-
-
-
5350,000-
$375,000
-
Problems
$1,760,000
Near
Capacity
$1,600,000
$1,975,000
-
_
-------
EXHIBIT III-l
Data Item:
Urban or Rural Location
Job Shop or Captive Shop
Corporation or Other
Number of Years in Business -
Company /Owner
Total Square Feet/Plating
Square Feet
Total Employees/Plating Employees
Plating Lines (Percent of Sales)-
Nickel
Chrome
Zinc
Copper
Cadmium
Other
Still Plating or Barrel Plating
Major Plant Capacity Constraints
Pollution Equipment - Type
Percent Effluent Treated
Water Usage - Gallons per Day
Dispose Into - Sewer or Stream
Sludge Removal - Method
Pollution Control Equipment -
Installation Date
Operational Date
Cost (Actual or Estimate)
Estimated Total Cost to Complete
Operating Cost of Pollution
Control Equipment
Results Achieved
Capitalization - Total
Financing Capability
ELECTROPLATING INDUSTRY SURVEY SUMMARY (CONTINUED)
Company Identification Number
21
Urban
Job Shop
Corporation
62/-
140, OOO/
50,000
425/375
707.
Still
-
Conserva-
tion;
Clearifi-
c at ion
1007.
-
Sewer
-
-
-
$50,000
-
-
Problems
$2,000,000
Good
22
Urban
Job Shop
Corporation
40/-
60, OOO/
35,000
125/60
707.
Both
-
Ph Control
-
200,000
Sewer
None
-
-
$300,000
$300,000
-
Not Being
Checked
-
Good
23
Urban
Job Shop
Corporation
40+/-
100, OOO/
90,000
140/125
fr°*
Rust
Proofing
Both
-
Chemical
Destruc-
tion;
Experi-
mental
507.
-
Sewer
Pick-Up
April 1973
2 Months ago
$75,000
-
-
Minor
Problems
$450,000
Good
24
Urban
Job Shop
Corporation
21/-
21, OOO/
17,500
28/23
907.
Both
-
Cyanide to
Cyanate
Conversion
507.
-
Sewer
-
-
-
$29,000
-
-
-
$61,000
Good
25
Urban
Captive
Shop
Corporation
30/-
:'
-/ISO
107.
57.
57. (
Brass 707.
Both
-
Cyanide
Treatment
77.
3,000,000
Sewer
Pick-Up
-
-
$80,000
$120,000
$34,000
per Year
-
-
-
26
Urban
Job Shop
Corporation
25/-
28.000/
14,000
75/50
*
257.
*
* - 507.)
Anodizing
257.
Both
-
Cyanide to
Cyanate
Convers ion
507.
340,000
Sewer
None
Cyanide-
3 years ;
Chrome -
6 months ago
Chrome-
August 1973
$12,000
-
-
Good
$750,000
Pretty
Good
27
Urban
Job Shop
Corporation
23/-
35, OOO/
25,000
70/35
257.
x). ,
x)25/.
Precious
Metal 507.
Both
-
Clearifiers
1007.
4,000
Sewer
Pick-Up
-
-
$30,000
-
-
Problems
$240,000
Very Tight
28
Urban
Job Shop
Corporation
15/13
7.500/
2,400
8/4
X
X
X
Anodizing
407.
Both
Space
None
-
100,000
Sewer
-
-
-
$45,000-
$85,000
$45,000-
$85,000
-
-
-
Bad
Problem
f:
29
Rural
Job Shop
Partnership
10/9
1,200/
800
2/2
fro%
X
Brass,
Bronze,
Silver
Both
Space
Cascade
1007.
1,500
Stream
City Dump
-
-
-
-
-
-
-
-
age 3 of 4
30
Urban
Job Shop
Partnership
58/38
22, OOO/
18,000
40/34
207.
207.
157.
157.
157.
Others 157.
Both
Space , Labor
Ph Control
Rinse Tanks
1007.
81,000
Sewer
-
May 1972
June 1973
$70,000
-
$500 per
Month
Good
$600,000
Good
Sales per Year
Profit Before Taxes
Profit After Taxes
$8,000,000 $2,000,000 $2,700,000 $373,600
$19,400
Lost $ - $13,500
$1,500,000 $1,250,000 $260,000 $30,000
-$20,000 $21,600
$800,000
-------
ELECTROPLATING INDUSTRY SURVEY SUMMARY (CONTINUED)
Data Item:
Urban or Rural Location
Job Shop or Captive Shop
Corporation or Other
Number of Years in Business -
Company /Owner
Total Square Feet/Plating
Square Feet
Total Employees/Plating Employees
Plating Lines (Percent of Sales)-
Nickel
Chrome
Zinc
Copper
Cadmium
Other
Still Plating or Barrel Plating
Major Plant Capacity Constraints
Pollution Equipment - Type
Percent Effluent Treated
Water Usage-Gallons per Day
Dispose Into - Sewer or Stream
Sludge Removal - Method
Pollution Control Equipment-
Installation Date
Operational Date
Cost (Actual or Estimate)
Estimated Total Cost to Complete
Operating Cost of Pollution Control Equipment
Results Achieved
Capitalization - Total
Financing Capability
Sales per Year
Profit Before Taxes
Profit After Taxes
(31)
Urban
Job Shop
Corporation
26/26
17.000/
13,000
15/9
100%
Still
Space
Now=»None ;
Future-
Finalizer
with PH
Control
07,
-
Sewer
No Equipment
No Equipment
$44,000-
55,000
-
-
Meeting
Guidelines
$320,000
Good
$400,000
$32,000
$24,000
(32)
Urban
Job Shop
Corporation
1/9
40.000/
18,000
12/11
x) 1007.
x'
Still
-
Now»None;
Future=
Nickel
Filter
07.
-
Sewer
-
No Equipment
No Equipment
-
-
-
Problems
$80,000
Pretty Poor
-
-
(33)
Urban
Job Shop
Corporation
11-
5.000/
15/15
257.
207.
407.
Bronze-157.
Both
Space, Labor
Cyanide
Converston
107.
385,000
Sewer
-
-
$40,000
60,000
-
-
Meeting
Guidelines
$95,000
Loans
Available
$400,000
$25,000
$18,000
Company
(34)
Urban
Job Shop
Corporation
ll/-
4.900/
3,000
13/11
407.
27.
407.
Phosphating-
67.
Both
Space
Cyanide
Conversion
57.
30,000
Sewer
Pick-Up
1971
$60,000
70,000
-
-
Meeting
Guidelines
$54,000
Loans
Available
$218,000
$3,000
$2,400
EXHIBIT III-l
Page 4 of 4
Identification Number
(35)
Urban
Job Shop
Corporation
31/31
15.000/
7,500
30/28
x) Major
x)
Minor
Gold
Still
-
Now=Autoroat-
ic Foggers ;
Future*Re-
verse Osmo-
sis and
Evaporator
07.
182,000
Sewer
No Sludge
;
-
$295,000
-
Good
$336,000
Problems
$550,000
-
$12,000
(36)
Urban
Job Shop
Corporation
20/55
10.000/
9,000
11/9
x
507.
x
Black
Oxide-307.
Barrel
-
Now=Neutrali-
zation and
Setting;
Future=Water
Conserva-
tion
1007.
5,000
Sewer
Pick-Up
1968
$40,000
$86,000+
$16,000
Problems
$360,000
Funds
Available
$180,000
$12,600
$9,000
(37)
Urban
Job Shop
Corporation
25/-
7.000/
4,000
34/25
207.
107.
507.
107.
57.
57.
Both
Space
Precipita-
tion and
Cyanide
Destruction
-
114,000
Other
Pick-Up
:
$35,000
$85,000
-
Good
$75,000+
-
-
-
-
(38)
Urban
Job Shop
Corporation
12/12
8,000/
6,500
15/10
557.
137.
157.
177.
Both
Space
Drag-out
Tank; PH
07.
-
Sewer
Pick-Up
1969
$35,000
-
-
Good-807.
o£ Time
$165,000
Problems
$307,000
$27,000
-
(39)
Urban
Job Shop
Corporation
40/25
30.000/
18,000
60/50
307.
x
301
307.
Black
Oxide
Both
Space
Dillution
-
500,000
Sewer
-
:
$100,000
-
-
Meeting
Guidelines
$1,125,000
No
Problem
$1,500,000
$225,000
$75,000
(40)
Urban
Job Shop
Corporation
50+/43
15.000/
7,000
31/28
157.
207.
107.
187.
Brass-207.:
Phosphate
Coating and
Others -177.
Both
Space
Now=None
Future*
Settling
-
80,000
Sewer
Pick-Up
No Equipment
No Equipment
$50,000
-
-
-
$521,000+
Loans
Available
$768,000
$150,250
$100,100
(41)
Urban
Job Shop
Proprietorship
15/40
10,000/
9,500
18/17
207.
807.
x
Both
Space
Cyanide
Destruction ;
Conservation
1007.
11,400
Sewer
Neligible
1971
1972
$15,000
-
-
Meeting All
Guidelines
$400,000
Loans
Available
$250,000
$45,000
$20,000+
-------
EXHIBIT III-2
ENVIRONMENTAL PROTECTION AGENCY
EMPLOYMENT IN INDEPENDENT SHOP SEGMENT
Shop Size
By Number Establishments Employment
of Employees
7-9
10-19
20-49
50-99
100-499
500 or More
Total 3.241 100% 55.100 100%
Note: (1) Information not available to protect
individual company.
Source: Census of Manufactures.
Number
1,807
579
620
171
63
1
Percent
56%
18
19
5
2
-
Number
6,100
8,100
18,900
11,400
10,600
(1)
Percent
11%
15
34
21
19
-
-------
EXHIBIT III-3
ENVIRONMENTAL PROTECTION AGENCY
TOTAL EMPLOYMENT IN CAPTIVE SHOP SEGMENT
Shop Size
by Number Establishments Employment
of Employees
20
1-4
5-19
or More
Total
Number
1,014
710
356
2,080
Percent
49%
34
17
100%
Number
1,772
5,490
15,692
22^954
Percent
870
24
68
1007o
Source: Census of Manufactures.
-------
ENVIRONMENTAL PROTECTION AGENCY
STUDY OF ECONOMIC IMPACT OF POLLUTION ABATEMENT
ON ELECTROPLATING INDUSTRY
ELECTROPLATING OPERATIONS IN METALWORKING INDUSTRY
Number of Establishments
SIC
Code
1925
1929
1931
1951
1961
1999
3421
3423
3425
3429
3431
3432
3433
3441
3442
3443
3444
3446
3449
3451
3452
3461
3492
3493
3494
3498
3499
3511
3519
3542
3544
3545
3548
3553
3559
3562
3564
3566
3569
3572
3573
3574
3576
Industry
Complete Guided Missiles
Ammunition
Tanks and Tank Components
Small Arms
Small Amis Ammunition
Guns, Howitzers and Ordnance Access.
Cutlery
Hand and Edge Tools
Hand Saws and Saw Blades
Hardware
Metal Sanitary Ware
Plunbing Fittings and Brass Goods
Heating Equipment
Fabricated Structural Steel
Metal Doors, Sash and Trim
Fabricated Plate Shop - Boiler Shops
Sheet Metalwork
Architectural Metalwork
Miscellaneous Metalwork
Screw Machine Products
Bolts, Kuts, Rivets and Washers
Metal Starpings
Safes and Vaults
Steel Springs
Valves and Pipe Fittings
Fabricated Pipe and Fitting
Fabricated Metal Products
Steam Engines and Turbines
Internal Combustion Engine
Machine Tools
Special Dies, Tools, Jigs and Fixtures
Machine Tool Accessories
Metal Working Machinery
Woodworking Machinery
Special Industry Machinery
Ball & Roller Bearing
Blowers and Fans
Power Transmission Equipment
General Industry
Typewriters
Electronic Computing Equipment
Calculating and Accounting Machinery
Scales and Balances
Electroplating and Other Plating
Number of
Establishments
12
11
4
7
4
9
15
57
8
137
4
39
7
3
20
7
12
3
3
20
84
119
2
2
34
11
42
2
14
5
29
32
16
10
23
11
4
16
10
7
25
11
1
Number
1 to 4
.
7
1
4
1
5
9
32
6
45
1
12
3
1
5
7
9
3
2
16
44
61
2
24
8
25
1
6
5
21
22
11
3
15
4
3
13
7
-
8
1
of Production V
5 to 19 20
6
3
3
2
2
3
4
21
2
56
1
13
3
1
7
.
3
4
28
37
2
9
2
10
1
4
7
10
5
4
8
6
1
1
2
3
12
7
1
Jorkers
or More
6
1
_
1
1
1
2
4
36
2
14
1
1
8
.
1
12
21
1
1
1
4
1
3
1
2
1
4
5
3
jloyment
Electroplating
Employees
417
78
A
86
53
82
112
357
31
3,120
A
681
52
29
511
9
30
5
A
74
856
1.230
A
A
163
93
194
A
253
11
139
115
66
129
114
69
17
82
44
279
372
416
A
Number
1 to 4
.
18
A
12
A
10
28
55
A
109
A
30
5
A
14
9
13
5
A
33
83
109
A
47
A
40
A
16
A
39
23
19
4
26
5
A
25
13
19
A
A
of Production Workers
5 to 19
62
A
A
A
A
A
A
188
A
• 510
A
143
A
A
58
17
41
256
322
A
_
A
A
A
A
40
A
92
47
32
88
A
A
A
A
36
148
A
A
20 or More
355
A
A
A
A
A
114
_
2.501
A
508
A
A
439
A
507
799
_
A
A
A
197
A
93
A
A
A
243
205
A
A
t
. »c
&
00
(t
h-
O
M
10
-------
STUDY OF ECONOMIC IMPACT OF TOLLUT10N ABATEMENT
J)N ELECTROPLATING INDUSTRY.
Industry
Office Machines
Automatic Merchandising Machines
Connercial Laundry Equipment
Refrigeration Machinery
Service Industry Machines
Miscellaneous Machinery
Electric Measuring Equipment
Switch Gear and Suitchboard Apparatus
Motors and Generators
Industrial Controls
Household Cooking Equipment
Household Refrigerators and Freezers
Household Laundry Equipment
Electric Housewares and Fans
Household Vacuum Cleaners
Seuinv, Machines
Household Appliances
Lighting Fixtures
Current Carrying Wiring Devices
Non-Current Carrying Wiring Devices
Radio and TV Receiving Sets
Telephone and Telegraph Apparatus
Radio and TV Communication Equipment
Electron Tubes Receiving Set
Cathode Ray Picture Tubes
Electron Tubes, Transmitting
Se~i Conductors
electronic Components
Engine Electrical Equipment
I-'otor Vehicles
Truck and Bus Bodies
Motor Vehicles Parts and Accessories
Aircraft
Aircraft Engines and Engine Parts
Aircraft Equipnent NEC
I-'.otorcycles, Bicycles and Parts
Trailer Coaches
Transportation Equipment
Engineering and Scientific Instruments
Mechanical Measuring Devices
Automatic Temperature Controls
Watches and Clocks
Vatchcases
£CTROPLATING OPERATIONS IN MKTALWORKING INDUSTRY
Number of Establishments
Electroplating and
Number of:
Establishments
9
8
5
14
7
107
37
80
29
17
8
3
6
36
4
5
2
75
40
13
14
25
114
3
2
14
38
184
24
10
1
98
23
37
73
9
1
H
22
35
17
17
12
2.389
Number of
1 to 4
2
6
4
7
7
73
21
52
20
6
4
1
12
3
1
35
21
6
7
5
51
1
7
18
107
11
3
1
40
6
17
35
1
1
i
{.
20
23
7
5
6
1,107
Other PJLatinj
Production V
3 to 19 20
6
2
1
7
27
11
22
9
6
2
3
12
2
30
13
4
5
8
38
2
1
6
15
56
10
4
32
9
7
23
5
A
1
2
7
8
8
6
704
;
Jorkers
or More
1
7
5
6
5
2
3
2
12
4
1
10
6
3
2
12
25
1
1
5 •
21
3
3
26
8
13
15
3
A
1
-
5
2
4
-
356
Electroplating
Employees
123
34
14
81
16
592
286
583
132
262
106
106
111
, 607
105
A
A
754
431
178
277
615
1,583
A
A
109
428
1,611
242
A
A
1,699
760
1,353
759
300
A
A
58
290
163
276
61
Employ
Number
1 to 4
A
A
A
14
16
122
39
102
39
10
11
A
28
.
A
A
62
141
17
17
11
92
A
21
39
201
23
A
A
78
10
38
70
A
A
4
A
36
18
7
10
rment
of Production Workers
5 to 19 20
A
A
A
67
218
85
224
93
54
A
A
133
-
A
282
133
55
D
73
360 1
A
A
A
. 152
540 1
93
39
288 1
96
59 1
201
A
A
A
69
A
84
51
or More
A
A
232
162
257
198
A
106
A
446
105
A
A
410
257
106
D
531
,131
A
A
237
,070
126
A
,333
654
,256
488
256
A
185
A
185
-
25,474
,085
1,529
15,692
N-,te:
• i -
Not Available - Information suppressed to protect specific plants in survey.
-------
EXHIBIT III-5
ENVIRONMENTAL PROTECTION AGENCY
EMPLOYMENT IN
Industry
Miscellaneous Machines
Bolts, Nuts, Rivets and
Washers
Plumbing Fixtures and
Brass Tools
Hand and Edge Tools
Hardware
Metal Stampings
Switchgear and Switch-
board Apparatus
Lighting Fixtures
Radio and Television
Communication
Electronic Components
Motor Vehicle Parts and
Accessories
Aircraft Equipment and
Engine Parts
Total
LARGE CAPTIVE SHOPS
Number of
Establishments
7
12
14
4
36
21
6
10
25
21
26
33
215
Employment
20 or More
232
507
508
114
2,501
799
257
410
1,131
1,070
1,333
1,744
10,606
Average
Number of
Employees
33
43
36
29
69
38
43
41
45
51
51
51
49
-------
ENVIRONMENTAL PROTECTION AQENCV
ECONOMIC IMPACT OF POLLUTION ABATEMENT QhJ
ELECTROPLATING
LOCATION OF INPEPEWENT
NORTH CENTRA
-------
IV - FINANCIAL PROFILE
A limited amount of information is available within the
Electroplating I.ndustry relative to the financial condition of
individual firms. The major reason for the limited amount of
financial information is that the majority of the firms are
relatively small, family-controlled businesses, and the finan-
cial conditions of these firms are considered to be confidential
in nature. Industry studies, which have been made available,
have been supplemented with direct contacts with individual
firms. This was done to cross-check the industry data, and to
develop a general profile of firms at varying sizes of employ-
ment and sales. Employment; and sales values have been further
used to develop five groups against which to assess the economic
impact of pollution abatement.
GENERAL INDUSTRY
FINANCIAL STATISTICS
Exhibit IV-1 page 1 contains general financial statistics
for SIC 3471 which includes electroplating.
Exhibit IV-1 page 2 contains some of the same statistics
as page 1 but presents a distribution of the data by the aver-
age number of employees per establishment.
These two exhibits can be analyzed to show the general trend
of the plating and polishing industry. However, it is not possi-
ble to isolate the electroplating industry portion of the entire
industry from these numbers. Careful analysis of these data
-------
IV - 2
in conjunction with the other data does allow general conclu-
sions to be made. Specific comments appear later in this
section af the report.
OPERATING
REVENUES
The 1967 Census of Manufacturing Data indicated that the
average value of shipments for independent electroplating shops
was approximately $15,500 per employee. Based on this informa-
tion, the small shops employing less than four people, had an
average annual sales of approximately $29,000. The larger shops
ranging between 250 and 500 employees had average annual sales
of approximately $6 million. These data have been summarized
in Exhibit IV-2.
In a recent study which covered approximately 45 independent
electroplating shops ranging from 2 to 65 employees, sales ranged
from $60,000 per year in the small shops to $1.5 million per year
in the larger shops. By adjusting the 1967 Census Data for 5
years at an annual increase of 6.970, a good correlation is found
between the sample studies and the 1967 adjusted Census Data.
This information is summarized below:
Table IV-1
Annual Sales Per Establishment
Employee Range
1- 4
5- 9
10-19
20-49
50-99
($000)
Adiusted 1967 Data
$ 40.3
135.0
262.9
594.3
1,345.5
Sample Data
$ 60.0
210.0
317.0
610.0
1,500.0
-------
IV - 3
PROFITABILITY
Because of the dissimilar nature of electroplating shops,
it is practically impossible to generalize about the industry.
Several studies have been conducted which provide a broad view
of profit ranges and general profit trends for the industry.
(a) Robert Morris
Annual Study
Exhibit IV-3 presents balance sheet, income statement, and
operating ratio data for SIC 3471. Whereas it is not possible
to isolate the electroplating portion of these data, it can be
used as a guide.
The following table summarizes the profit data in Exhibit
IV-3.
Table IV-2
Year
1971
1970
1969
Under $250M
2.970
.6
4.4
Asset Size
$250M to
l.OOOM
2.3%
4.1
2.3
$1,OOOM to
10,OOOM
2.5%
4.5
5.4
All
Sizes
2.7%
4.0
4.9
(b) National Association
of Metal Finishers
1970 Cost Survey
The 1970 operating cost survey conducted by the National
Association of Finishers (NAMF) indicated an average pretax
profit of 4%%. The details of this study are shown in Exhibit
IV-4. It appears that the very small and the very large firms
-------
IV - 4
are less profitable than those firms with sales in the mid-ranges,
The exception appears to be hard chrome platers where the very
small shop is the least profitable, and the larger shop the most
profitable.
It is noteworthy, however, that no specific pattern is
established with regard to profitability according to the type
of metal finishing done or by type of operation. Assuming that
profitability does not necessarily increase with specialization,
a plating shop manager confronted with the alternative of elim-
inating a small plating operation in order to reduce the pollu-
tion control requirement, might in fact not realize increased
profits as a result of specialization. Since many small shops
attempt to maintain diverse product lines to satisfy customer
requirements, it would seem unreasonable to reduce the number
of product lines in view of the fact that profits would not
necessarily increase. Consequently, the small shop owner would
probably maintain the present product lines and be confronted
with costs for treating multiple effluent streams as opposed to
greater specialization and fewer waste streams.
(c) Kearney Industry
Survey
The results of a more recent study conducted by the con-
tractor indicates that the profit position of the Electroplating
Industry has improved considerably as compared to the 1970 sur-
vey. Sixteen of the 30 respondents indicated their own 1972
pre-tax profit, or what they believed the industry pre-tax
-------
IV - 5
profit was. Nine stated this figure was between 5%-1070. The
other seven respondents were essentially evenly divided between
having losses and making a profit of 1070-2070.
Because random selection techniques were not used to survey
the industry in any of the three studies, and the sample sizes
are small, some inaccuracies are expected as the data are used
in the impact analyses.
(d) Overall Industry
Profitability
The profitability of electroplaters is directly related to
the general economic conditions of entire U.S. industry. Toward
the end of 1971 and continuing into 1972 the general profitabil-
ity of electroplaters improved as evidenced by the results of
the A. T. Kearney survey. This profit improvement is similar
to the general turnaround of the economy during the end of 1971
and in 1972.
A NAMF operating cost study for 1972 which is not yet
available for publication also indicates some profit margin im-
provements have occurred since the 1970 study.
A pre-tax profitability of 5.970 has been calculated for
the industry and adjusted to 1972 levels. This is based on
findings of the three studies mentioned above. While each study
indicated wide profitability ranges, some firms being highly
profitable, other firms within the industry having experienced
significant losses, the 5.9% is considered a reasonable repre-
sentation.
-------
IV - 6
PROFIT MARGIN
CONSTRAINTS
A major factor affecting profitability in many shops is
the level of production obtained. Although the quality of the
plating, and the ability of the shop to meet customer delivery
requirements and specifications are important considerations,
the demand for electroplating is not a function of industry
promotion or sales efforts. The Electroplating Industry is
highly dependent on other primary industries such as electronics,
automotive and housewares. In recent years as the economy has
had an upswing, many shops began operating at near fxill capa-
city.
An important consideration in assessing the economic impact
of pollution abatement is the extent to which shops remaining in
the industry will be able to absorb high demands created by shops
leaving the industry.
Industry sources indicated that closures could affect capa-
city. Shops remaining in the industry could absorb some of the
plating work by extending the working hours of the shop. This
alternative could, in fact also increase profitability as greater
utilization is made up of existing fixed assets. However, in-
dustry sources further indicate that a labor shortage exists,
particularly within -the metropolitan areas where a large major-
ity of the shops are located. The environment of the electro-
plating shop is not conducive to attracting a large number of
employees. Consequently, rather than to operate two shifts,
-------
IV - 7
many shops extend shifts to nine to ten hours per day, and oper-
ate on a six-day basis.
In addition to labor constraints, it should be noted that
shops located within metropolitan areas generally have limited
expansion space and are, therefore, restricted as to physical
plant size expansion at the same location. This element was
emphasized in interviews with shop owners. Extended operating
hours can create additional storage problems, particularly where
products are bulky or where shipments cannot be done during the
off-hours.
VALUE OF
ASSETS
As has been indicated earlier, the plating industry and
electroplating in particular is characterized by relatively low
capital investment in the form of plating tanks, material hand-
ling and solution handling equipment, and buildings.
Exhibit IV-1 presents the capital expenditures for the years
1958 through 1970. A study published by the University of Michigan
in 1967 on the metal finishing industry presented the following
capital investment data:
Table IV-3
Average Capital Investment per Firm
Type of Operation • N.A.M.F. Members' Total Industry
Chrome Platers $224,700 $47,700
General Platers 300,010 63,100
-------
IV - 8
Once purchased and installed, the market value of the equip-
ment used in electroplating decreases rapidly. One respondent
in the Kearney survey indicated, and others supported his state-
ment, that the market value of used equipment is worth about
15%-20% of the purchase price after only two years of opera-
tion. The corrosive materials used in electroplating are very
hard on the tanks and other equipment.
Little can be assumed about the capitalization of firms
in the industry. For example, a highly mechanized firm can
have a capital to sales ratio of over 80% while the manual shop
would be somewhere around 10%-2570. In the Kearney study the
overall average for 20 firms reporting sales and capitalization
equalled 44%. In another industry study the ratio approached
83%. Obviously the two studies would require isolating the
factors which cause the wide variation in the results. It is
believed that cost of building and/or land which is included in
the data and the degree of automation and type of product.line are
contributing factors. It would be necessary to identify all of
the factors in order to understand the capitalization require-
ments for electroplating shops.
COST STRUCTURE
Information on%the cost structure of the Electroplating
Industry is included in the "Price Effects" section of this
report.
FINANCING ADDITIONAL
CAPITAL REQUIREMENT
(
In general, companies in the Electroplating Industry
-------
IV - 9
experience some difficulty in obtaining financing for both
productive and nonproductive assets. Companies often have to
pledge assets of value equal to or greater than the amount of
the loan. Since most companies are small with low capital in-
vestment, the asset security is a problem.
Exhibit IV-5 summarizes interviews with 5 banks in the
Chicago area. While all the banks did not have specific exper-
ience with the electroplating industry, this was not deemed a
criteria for obtaining financing. The important consideration
is the ability to service the debt and the personal reputation
of the business owners.
ALTERNATIVE METHOD
OF FINANCING
Several methods of financing present capital requirements
have been used by the industry.
1. SEA Loans are typically available and used by some
of the small platers. Although a viable source for small busi-
ness, these loans require a considerable amount of detailed in-
formation for qualification.
2. Public Financing - Most of the companies in the
industry are either closely held corporations or partnerships.
There are few public corporations. For this reason, the normal
method of outside financing is by bank loan. Very little fi-
nancing is done by issuance of stock.
3. Private Sources - Since many of the companies are
owned and operated as a family business, another source of fi-
nancing is the family itself. The private resources of the
-------
IV - 10
family are drawn upon when necessary.
4. Government Assistance.- A source of financing
which is available but is not often used is government assisted
financing. Several people interviewed in the A. T. Kearney
industry survey expressed a desire for some form of government
assisted financing of pollution control equipment.
Some sections of the country have more difficulty in ob-
taining financing than other sections because of the general
economy of the area. Electroplaters on the west coast, who ljdo
a lot of work in the aerospace industry, for example, expressed
their particular problems because of their geographic location
and the economic condition of their main source of business.
Captive platers, especially those which are a part of a
large company, find financing easier. They can rely on the
credit rating and reputation of the total company. Many times
the company is a public corporation which can obtain funding by
means of a stock issue.
In recent years, Industrial Revenue Bonds have been used
to finance pollution abatement equipment. The value of bonds
issued has increased from $85 million in 1971 to an estimated
$1 billion in 1972. These bonds generally carry a rate of 6%.
Due to the high cost of issuing these bonds, the minimum value
issued is usually in excess of one-half million dollars.
Presently, only the very largest of the electroplating shops would
be able to avail themselves of this type of financing. This
type of financing presently will not assist the small independent
shops to finance pollution abatement equipment.
-------
ENVIRONMENTAL PROTECTION AGENCY
ELECTROPLATING INDUSTRY
GENERAL INDUSTRY FINANCIAL STATIST1CS
3471 PLATIhG t POLISHING
MJHBER Of ESTABLISHMENTS! 1967)1 3,241 80CK VALUE Of ASSETS PER EMPLOYEE 119681: 15,937
SPECIALIZATION RATIO (1967): NAI COVERAGE RATIO (1967):NAt CONCENTRATION RATIO (1967): 4 LARGE 5< 8 LARGE 91
ALL EMPLOYEES
YkAR
1958
•1959
I960
1961
1962
1963
1964
1965
1956
1967
1968
19S9
IV70
t CHANGE
1)69-70
AVb.RATE
1958-70
YEAk
1V58
1959
1940
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
< CHiNtC
U69-70
tvt,. RATE
19M-70
NUMBER
1000)
36.
43.
44.
43.
49.
45.
45.
48.
51.
55.
59.
62.
57.
-8.7
3.8
RATIO
OF VALUE
AOOEO TO
SHIPMENTS
.707
.722
.725
.721
.731
.715
.707
.705
.708
.727
.720
.72)
.718.
-0.1
0.1
PAYROLL
IIMIL.I
156.3
189.5
2CO.O
iOO.S
2)1.5
223.5
239.1
261.9
29S.2
323.2
363.8
399.7
372.5
-6.8
7.5
RATIO OF
INVENTORIES
TO
SH[PNt>TS
.065
.047
.C44
.044
.038
.043
.044
.C41
.046
.047
.053
.053
.053
1.5
-1.7
PRODUCTION WORKERS
NUMBER
(000)
30.
37.
1*.
37.
41.
17.
37.
40. .
4).
46.
45 .
51.
46.
-10.4
3.6
RATIO OF
PAYROLL
ro
VALUE »DDED
.616
. 582
.59
.60
.57
.60
.60
.5*
.59
.562
.566
.541
.3)7
-0.8
-I.I
HAN-HOURS
IHIL.I
59. I
72.0
72.6
71.
80.
74.
75.
83.
91.
92.5
97.6
101.2
93.4
-7.7
3.9
VALUE OF
SHIPMENTS
PER PROO.
W01KER
( iOOOt
11.8
12.1
12.2
12.4
13.2
13.7
14.8
15.6
16.6
16.9
18.1
19.7
20.1
5.7
4.9
WAGES
((MIL.)
117.7
142.3
161.5
161.3
182.0
169.6
177.5
193.7
219.5
239.1
270.6
294.4
270.0
-8.3
7.2
HANHOURS
PER
PRODUCT ICH
WORKER
1000)
1.9)8
1.9)5
1.906
1.S30
1.9)3
1.984
2.000
2.057
2.106
1.976
1.976
1.954
2.01)
1.0
«.)
VALUE
AODEO
ItMIL. 1
253. 8
325.8
337.0
3)0.9
01.2
70.2
95.4
44.6
09.9
74.8
42.6
738.4
693.6
-6.1
8.7
WAGE PER
PRODUCT ION
WORKER
PANHOUR
111
1.992
1,976
2.225
2.25)
2.264
2.267
2.348
Z.325
2.402
2.585
2.77)
2.909
2.891
-0.4
3.2
COST OF
MATERIALS
OHIL.I
(06. t
127.3
128.3
128,3
147.9
148.3
165.8
173.2
199,5
218.1
251.9
282.4
275.0
-2.6
8.)
VALUE AOOED
PER
PRO. WORKER
M4NHOUR
It)
.29
.52
.64
• 62
.99
.95
.23
.34
.58
.21
.58
7,30
7.4)
1.8
4.7
VALUE OF
SHIPMENTS
(SMIL.)
359.1
451.3
465.1
458.7
549.1
517.6
559.6
630.9
719.8
791.1
892.5
1,020.7
966.6
-5.)
8.6
INDEX
OF
EMPLOYMENT
(1967-1001
66.24
78.58
60.22
79.67
89.29
81.67
82.40
87.11
92.74
100. 00
107.44
114.16
104.17
-8.7
3.8
CAPITAL
EXPENDITURES
(toll. I
15.9
15.2
19.1
16. 2»
25.5
20.0
24.1«
26.8
40.2
33.1
45.0
47.0»
58. l»
23.6
11.4
INDEX
OF
VALUE ADDED
(1967-1001
44.15
56.68
58.63
57.57
69.80
64.41
68.79
77.33
88.71
100.00
111.80
128.46
120.67
-6.1
8.7
END-CF-YEAR
INVENTORIES
OMIL.)
23.5
21.3
20.5
20.4
20.9
22.1
24.4
26.1
33.3
36.9
47.7
53.8
51.7
-3.9
6.8
INDEX
Cf
SHIPMENTS
(1967-100)
45.39.
57.05
58.79
57.98
69.41
65.43
70.74
79.75
90.99
100.00
112.81
129.02
122.11
-5.3
8.4
5s
03
OQ
(D
Source: Annual Survey of Manufacturers - 1970. U.S. Department of Commerce,
o
HI
<
I
-------
ENVIRONMENTAL PROTECTION AGENCY
ELECTROPLATING INDUSTRY
GENERAL INDUSTRY FINANCIAL STATISTICS
Year; 1967
Item
f
3471 — PLATING AND POLISHING
ESTABLISHMENTS »ITH AN AVERAGE OF-
Eslablish-
ments
(number)
I 237
579
9
All employees
Number
(1,000)
2.3
8.1
3.4
Payroll
(million
dollars)
12.0
47.3
19.4
PfOdtciion workers
Number
(1.000)
2.2
6.8
Man-hours
(Billions)
3.8
13.4
5.5
laps
(million
dollars)
9.8
35.6
43.5
added by
manutac-
(million
dollars)
26.8
81.2
38.5
Cost of
materials
(•illion
dollars)
6.9
27.8
*
12.6
Value of
shipments
(million
dollars)
35.7
109.0
50.7
Capital
eipendi-
bires,
new
(million
dollars)
.5
4.0
3*2
E*d*f-
inven-
tories
(•Him
dollars)
4.1
2.4
Source: Census of Manufacturers-1967
OQ
CO
tOH
O
HUH
rN>
-------
ENVIRONMENTAL PROTECTION AGENCY
INDUSTRY SALES
Etnp loyment
Range
1- 4
5- 9
10- 19
20- 49
50- 99
100-249
250-499
Totals
Total
Employees
2,300
3,800
8,100
18,900
11,400
7,200
3,400
55,100
Number of
Establishments
1,237
S?0
5/9
620
171
54
9
3,240
Average
Employees per
Establishment
2
7
14
30
67
133
378
Sources: Census of Manufacturing, 1967,
A. T. Kearney.
Value of
Shipments
Dollar
Million
$35.7
55.1
109.0
264.0
164.8
111.9
50.7
$791.1
Average
Sales
(?000)
$
28.9
96.7
188.3
425.7
963.8
2,072.1
5,633.1
244.1
s
H
to
-------
ENVIRONMENTAL PROTECTION AGENCY
'ELECTROPLATING INDUSTRY
FINANCIAL STATEMENTS AND OPERATING RATIOS
SIC 3471:
ASSET SIZE
NUMBER Of STATEMENTS
ASSETS
Cain
Marketab'e Securiliet
Receivables Net
Inventory Not
All O'her Current
Total Current
Fixed Assets Nel
At! Otner Non Current
Total
LIABILITIES
Due To flanks— Short Ttrm
Due To Trade
Income Takes
All Other Current
Total Current Debt
Non Current Debt Unlub
ratal Uniuborg.nated Debt
Subordinated Debt
Tangib'e Net Wort*
Total
INCOME DAT*
Net Satcl
Coil Of Sain
GrGII Profit
Atl 0:fce- Eipenie Ntt
fro'rt Before Tern
RATIOS
Quick
Current
Find/Worth
Debt/Wen*
Uneub Debt/Cepital FetMje
Salee/ltocetvtbiol
Coil Selel/lnventorv
Sitel/Werking Ctpul
SeleiAVonh
* *Mn let Tun/Wont,
» Oe«H M Taioi/Tol Anm
•tt §«*e»
Tejul Ata«tl
41 STATEMENTS
ENDED Oil OR ABOUT JUNE 30. 1971
59 STATEMENTS
ENDED ON OR ABOUT DECEMBER 31. in
rikinte »""M & *n"' * IIPMM ft
•»»» ""«»*" "Km" "," iiU" ' ASSEI SIZE
M 41 24 1" M'MTI nt STATEMENTS
* * * % ASSETS
IS 79 19 '- Caih
(It 1,1 MartxabieSeciinlioi
309 114 138 ?i 7 Receivable! Net
111 91 21 8 13 5 Inventory Nel
11 13 S3 3« All Othfjr Current
ill 389 !«< 918 Total Current
40 5 <98 388 421 Fired Asset! Net
67 112 50 58 All Other Non Current
1000 1000 1000 1000 Totil
LIABILITIES
10} 41 <7 <3 Due To Bank, -Short Term
14 5 110 '<• 132 Due To Trade
28 13 18 14 Income Ta>ef
123 94 59 «e All Cine' Current
453 301 291 2)1 Total Current Debt
62 21 6 11 Subo-d *ated Debt
325 444 J79 519 Tanjit'e '.el Worth
1000 1000 1000 10CO To'al
INCOME DATA
1000 1000 1000 1000 NetSalel
635 740 62 > 7,8 Coil 01 Selei
365 260 171 20, Oroil Prol.t
335 237 150 IM All Other Eipenie Nil
26 23 25 27 rrotit Before Ta.el
RATIOS
15 14 14 It
1111 9 Quick
478 6
21 17 22 2t
13 14 16 IS' Current
6614 9
674 6
1010 6 6 Fried/Worth
75 21 10 25
753 6
16 12 6 11 Debt/Worth
136 28 13 32
753 6
12 10 6 10 Unaub Debt/Clprtal Funds
76 26 13 29
17 132 39 93 36 101 35 104 ,
39 > 3 4« 7 5 47 7 7 46 7 8 Salei/Reconibloa
66 6 4 69 9 1 61 6 9 M 6 4
14 264 15 235 H 10 5 16 22 1
M 11 9 It 129 41 60 34 106 Colt Sitei/lnventory
715141736456 62 56
95 166 105 122
52 76 11 66 Sllei Working Clpital
• 100 553 4] ill
71 47 45 59
32 32 32 38 SatetWonh
31 24 24 15
(11 251 232 27 1
98 95 63 66 % Profit 8ef Tenet/Worth
0 22 22 7
171 104 119 130
69 30 47 1 1 » Piofil Bel Teiel/Tol Aieeu
•22 31 14 6
4110I2M 435S45M I125007M I1SVJ--4 NetSalel
4JXM4 11212M 65I31O llXjtCe) Total Aiieti
42 STATEMENTS
ENDED ON Od ABOUT JUNE 90. 1970
66 STATEMENTS
ENJEO ON OR ABOUT DECEMBER 31. 1970
uuncp IISOM 1 I1MM* I10MM4 ...
""?" tISStH.r, USStM.tl IESS™«« S*;'(LS
I2SW I1MM I10MM IISMM 5h"S
!6 41 30 108
81 94 53 68
4174 B
171 227 257 244
127 121 220 11 4
11 35 19 20
464 194 552 554
394 409 394 382
113 97 53 64
1000 1000 1000 1000
97 4» 66 62
116 ll« 132 124
26 32 27 26
91 90 51 59
360 31 1 314 30 1
120 144 1)0 120
46 1 455 424 42 1
52 14 35 16
467 532 541 551
1000 1000 1000 1000
1000 1000 1000 1000'
515 74S 773 760
415 25 5 217 ' 140
408 114 161 200
8 41 45 40
17 17 14 16
12 11 10 11
617 6
22 22 25 23
16 19 17 It
11 10 13 11
t 5 4 6
167 6
i : 11 11 12
664 t
1010 6 9
17 14 13 16
S 5 4 t
(86 6
II 14 12 13
30 12 t 32 11 3 36 101 32 1 1 4
a 9 S 43 t 3 49 7 3 4167
46 7 J 52 S 9 M « 2 53 6 B
It 24 C 10 36 1 34 105 14 25 1
27 13 J 31 11 6 «7 76 13 106
II 65 46 75 71 51 61 59
14 (i 116 109 130
84 (6 14 70
I 69 1 46 31
7! 66 4« 59
43 37 34 37
jr 26 15 26
212 111 278 129
tf 152 139 133
lit 42 39 II
106 111 119 113
30 19 76 49
• 111 13 26 6
1 IIJOI.M M1033M l1«1S7eM 4213732*
, M6 M 21202M J3SJ5M 1102571V
ASSET SIZE
KUMIER OF STATEMENTS
ASSETS
Cash
Markelab e Securities
Receivables Set
All Other Current
Total Current
Fi»ed Assets Net
All Other Non Current
Total
LIABILITIES
Out To Banks — Short Term
Due To Trade
Income Takes
AH Other Current
Total Current Debt
Non Current Debt linsub
Total Unsubordinated Debt
Subordinate!] Debt
Tangible Net Worth
Total
IKCOME DATA
Net Sales
Cost 01 Sales
Gross Profit
All Gtnti Expense tiei
Profit Before Tales
IATIOS
Quick
Current
Fned/Worth
Debt/Worth
Unsub Debt/Capital Funds
Sales/Receivables
Cost Sales/Inventory
Sales/Woikm[ Capital
Sales^rVorth
\ Prolrt Bel Taies/Worlti
•. Profjl Bet Taies/Tol Assets
Nel Sales
Total Asseli
40 STATf I.'ENTS
ENDED ON OR ABOUT JUNE 10. ltd
(0 STATEMENTS
ENDED ON OR AIOUT DECEMBEI 11. 1M
llunrn SHOW i Slwub I10MM 1 .
iJOllI IIBSTMN ItSITHIN USS !«!« *ij.
S750M |)MM HCVM USMM S1'IS
31 37 30 100
X
104 76 46 69
013 6
319 2i6 292 273
125 160 195 110
10 9 21 19
559 SO 4 557 S7E
355 413 365 354
17 83 78 70
1000 1000 1000 1000
96 69 47 49
135 165 125 149
27 30 43 36
126 105 57 • 62
421 413 295 31 B
125 173 110 119
60 30 17 33
393 365 S76 S3 1
1000 1000 1000 1000
1000 1000 1000 100.0
668 756 755 712
332 242 245 211
2! 9 21 s :;; 17»
44 23 54 49
11 14 14 18
11 9 10 10
661 7
2! 20 23 22
14 13 17 15
10 8 14 10
365 S
5 9 6 7
17 15 10 11
5 5 e s
189 1
38 19 16 16
333 3
444 1
1410 1 B
IS 103 36 100 40 19 36 100
44 1243 8 3 49 73 41 7 B
13 6 8 56 6 4 (4 56 56 64
14 266 16 198 25 143 IS 234
16 138 32 11 3 46 79 35 10 3
U 6 0 43 6 3 61 52 59 61
156 136 115 137
65 67 BO II
50 77 50 13
110 52 46 II
55 39 36 41
31 27 27 21
266 239 305 112
ItO 161 212 1M
39 77 103 J4
179 95 1(2 111
105 79 114 II
31 22 51 41
SI205III 13990IM II371S1M UM141M
4610M II964M 71206M I1UMH
M
Coprrrght 197) Roejeri Uejertt A l
CopfiiiM 1970 Robrtl Horns Assocxlel
Source: The Robert Morris Annual Statement Studies.
-------
EXHIBIT IV-4
ENVIRONMENTAL PROTECTION AGENCY
SUMMARY OF PROFITABILITY OF
INDEPENDENT ELECTROPLATING SHOPS
Type of Operation By Sales Dollars
Automatic General Metal Finishing
$ 250-$ 499
500- 749
1,000- 1,999
>2,000
Manual General Metal Finishing
$<100,000
100-$ 249
250- 499
500- 749
1,000- 1,999
Automatic Barrel Plating
$ 250-$ 499
500- 749
1,000- 1,999
Manual Barrel Plating
$ 100-$ 749
1,000- 1,999
Hand Chrome Plating
Profitability Percentage
Average High Low
$ 100-$
250-
>1,000
249
749
,97%
3.39
4,56
•10.40
1.30
3.38
1.42
2.22
.15
-2.02
4.76
4.8
5.25
4.00
-1.14
3.28
5.71
4.00%
5.85
14.4
4.0
11.20
10.6
5.98
6.20
3.80
5.48
11.64
5.0
6.80
5.50
12.50
9.53
22.40
-5.80%
1.20
-1.32
-24.40
-16.21
-12.00
-8.90
-4.42
-9,00
-11.44
-1.10
4.8
3.70
2.50
-30,00
-4.91
-4.89
Source: National Association of Metal Finishers -
1970 Survey.
-------
V - POLLUTION CONTROL REQUIREMENTS
Effluent limitations proposed by the Environmental Protection
Agency (EPA) were developed on the basis of "best practicable
control technology currently available" and best practicable
control technology economically achievable." In this report,
best practicable technology (BPT) is referred to as Level I and
best available technology (BAT) is referred to as Level II. These
limitations and the cost of attaining them are discussed in
this section.
PROPOSED EFFLUENT
LIMITATIONS
Guidelines for the Electroplating Industry are proposed at
three levels to cover all industry segments. Plants discharging
effluents to navigable waters and those disposing waste waters
to municipal sewer systems will all be affected by the proposed
guidelines. However, the extent of control to be exercised by
the different segments of the industry remains somewhat unclear.
In this report, plants discharging effluents to navigable
waters are referred to as rural plants and plants disposing of
waste waters to municipal sewer systems are referred to as
urban plants.
(a) Pretreatment
Standards
Pretreatment standards, which are not defined by EPA, are
currently considered the responsibility of the local municipal
-------
V - 2
systems handling plant effluents. Authorities responsible for
establishing local effluent limitations recognize the need to
reflect federal limitations in their standards, but are not
certain of what effects the proposed EPA Level I and Level II
limitations will have on the local systems.
(b) Level I Effluent
Limits
Proposed Level I limitations based on "best control
technology currently available," reflects use of chemical
destruction technology. The application of the standard is
based upon the "average weight of waste water constituent per
unit of production." Three equivalent units of production are
proposed as follows:
1. Plated Area. Unit of production as defined by
Faraday's Law of Electrolysis using the ampere hours for
plating, the average thickness of deposit and typical cathodic
current efficiencies.
2. Coulombic Equivalent. Unit of production as
defined by the volume of waste discharged per unit of time per
unit of current capacity installed are used for the minimum
plate thickness and typical current efficiencies.
3. BPCTCA Effluent Equivalent. Unit of production
based on use of Best Practicable Control Technology Currently
Available (BPCTCA) to conserve water usage and the reduction
of effluents discharged at the recommended water usage rate.
-------
V - 3
(c) Level II
Effluent Limits
The proposed Level II effluent limits, based on "best
available technology economically achievable," requires
recovery, treatment and reuse of process waters to effect zero
discharge of pollutants.
(d) New Source
Performance Standards
New sources in the Electroplating Industry, defined as
electroplating plant construction begun after publication of
proposed regulations, are required to adhere to Level II effluent
limits and achieve zero discharge of pollutants.
Although pretreatment standards are directed to existing
plants discharging to municipal sewer systems, new sources
discharging to municipal systems are required to meet Level II
standards.
EFFLUENT LIMITATIONS
USED FOR THIS STUDY
In order to evaluate the economic impact of pollution
abatement requirements on the Electroplating Industry, it was
necessary to establish effluent limitations on the model plant
groups. In conjunction with the Environmental Protection
Agency, two alternates were established for levels of treatment
for rural and urban plants.
-------
V - 4
(a) Alternate A -
Effluent Limitations
The following levels of treatment were established for
Alternate A.
TABLE V-l
Level I and Level II - Rural and Urban Plants
Group
A
B
C
D
E
Le ve 1 I
Rural Urban
Level I Pretreatment
Level I Pretreatment
Level I Pretreatment
Level I Pretreatment
Level I Pretreatment
Level II
Rural
Level II
Level II
Level II
Level II
Level II
Pretreatement standards are based on local regulations and
are not a requirement of the federal guidelines (see Section V, pg.l)
(b) Alternate B -
Effluent Limitations
The following levels of treatment were established
for Alternate B.
TABLE V-2
Level
Group
A
B
C
D
E
I and Level
Level
Rural
Level I
Level I
Level I
Level I
Level I
II - Rural and
I
Urban
Level I
Level I
Level I
Level I
Level I
Urban Plants
Level II
Rural
Level II
Level II
Level II
Level II
Level II
The required costs for each Level and Plant Group are
discussed later in this section.
-------
V - 5
INDUSTRY SEGMENTATIONS
AND EFFLUENT LIMITATIONS
In establishing standards of performance and assessing the
capability to meet "best control technology current available,"
electroplating shops were segmented according to production
capacity in terms of installed rectifier capacity in amperes.
Five plant sizes were established as follows:
TABLE V - 3
Rectifier Capacity by Size of Shop
Size Rectifier Capacity in Amperes
Very large > 20,000
Large 50,000 - 20,000
Medium 10,000 - -50,000
Small 1,000 - 10,000
Very small ^ 1,000
Although pollutants can be related to production in terms
of amount of plating, and this factor related to rectifier
capacity, industry data is not published in this manner.
Consequently, segmentation of the industry is not possible by
productive capacity.
-------
V - 6
As previously discussed in Section I, available information
on the electroplating shops provide a means of segmenting shops
according to employment. However, as shown on Exhibit V-l,
some relationship does exist between the installed rectifier
capacity and the employment within shops. With some exception,
very small shops would tend to have smaller capacitites. The
correlations however, would never approach perfection. For
example, a highly automatic shop could have a high rectifier
capacity and thus be classified large, yet have low employment
because of the degree of automation.
Since effluent limitations are proposed applicable to all
segments without regard to capacity, the economic analysis
covered in this report does not consider plants on basis of
size of installed capacity. However, because the relationship
between employment and capacity exists, segmentation by these
criteria is not deemed necessary.
WATER POLLUTION
ABATEMENT COSTS
The costs for capital equipment to meet the proposed
effluent guidelines were developed from information supplied by
the Environmental Protection Agency. These investment costs
were developed for the EPA by another contractor, Battelle
Memorial Institute.
-------
V - 7
(a) Level I
Investment Costs
Exhibit V-2 shows the investment costs for Alternate A
Level I pollution abatement equipment for rural and urban plants.
These costs are based upon the model plant parameters defined in
Section IV. This exhibit indicates that Level I pollution abate-
ment equipment investment costs range from a minimum of $50,000
for small plants, Group A 1 to 4 personnel, to $562,000 for
large Plants, Group E 50 to 99 personnel in the rural plants.
For urban plants the costs range from $25,000 to $281,000.
Exhibit V-3 shows the investment costs for Alternate B
Level I pollution abatement equipment for rural and urban
plants, and indicate that the investment costs for this alternate
are the same as for rural plants in Alternate A.
In the following table the investment costs for rural and
urban plants to meet Level I Alternat A and B are summarized:
TABLE V-4
Summary of Level I Investment Costs
Alternate A Alternate B
Plant Group RuralUrban Rural and Urban
A $ 50,000 $ 25,000 $ 50,000
B 58,800 29,400 58,800
C 117,600 58,800 117,600
D 252,000 126,000 252,000
E 562,000 281,000 562,000
-------
V - 8
Exhibit V-4 shows the annual amortization costs for
Alternate A Level I pollution abatement equipment for both
rural and urban plants. Exhibit V-5 shows the annual amortization
costs for Alternate B Level I pollution abatement equipment.
These amortization costs are based on the assumption of a pay
back period of five yeras and a cost of capital of ten percent.
Exhibit V-6 shows Alternate A Level I investment costs for
pollution abatement equipment for rural and urban plantss as a
percentage of annual sales. Exhibit V-7 shows the same infor-
mation for Alternate B. As can be seem from these exhibits,
due to the minimum investment costs for Level I in both
Alternates A and B, the investment costs as a percent of annual
sales for the very small plant, Group A 1 to 4 personnel, is
very high.
For rural and urban plants in Alternate A, the investment
costs as a percent of sales are 62 percent and for rural plants
124 percent. In Alternate B, the investment costs as a percent
of sales for Group A is also 12470.
In Alternate A rural plants and Alternate B both rural and
urban plants, the investment costs as a percent of sales range
from 40 to 45 percent. However, in Alternate A urban plants,
due to the lower investment costs, the range is from 21 to
22 percent.
-------
V - 9
In the following table the investment costs as a percent
of annual sales for Alternates A and B for Level I are summarized
TABLE V-5
Plant
A
B
C
D
E
(b)
Summary of Level
as a Percent
I Investment
of Annual Sa
Alternate A
Group Rural Urban
124 . 17«
43.0
44.7
42.4
41.8
Level II
Investment Costs
62.070
21.5
22.4
21.2
20.9
Costs
les
Alternate
B
Rural and Urban
124.17.
43.0
44.7
42.4
41.8
Exhibit V-8 shows the capital investment costs to meet
Level II pollution abatement equipment requirements for both
Alternate A and B. This exhibit shows that for Level II invest-
ment costs range from approximately $20,000 for Groups A and B
to $289,000 for Group E.
Exhibit V-9 shows the annual amortization costs for
Level II. These amortization costs are again based on a five
year pay-back period and a cost of capital of ten percent.
-------
EXHIBIT V-l
ENVIRONMENTAL PROTECTION AGENCY
Number of Plants by Employment
and Rectifier Capacity
Size of Plant
by Number
of Employees
1 - 10
11 - 20
21 - 50
Under 50
Number
of Plants
Rectifier Capacity
Very Small
1
-
-
_
Small
1,000 to
10,000
7
7
1
.
Medium
10,000 to
50,000
2
6
10
5
Large
50,000
20,000
-
1
3
7
Very
tO:
200
-
1
-
1
Large
,000
Source: Battelle Memorial Institute
Environmental Protection Agency
-------
EXHIBIT V - 2
Plant
Group
A
B
C
D
E
ENVIRONMENTAL PROTECTION AGENCY
Alternate A
Investment Costs for Level I
Pollution Abatement Equipment
Rural and Urban Plants
Employment
Range
1-4
5-9
10 - 19
20 - 49
50 - 99
Average Number of
Employees Per Group
2
7
14
30
67
Investment
Rural
$ 50,000
58,800
117,600
252,000
562,000
Costs
Urban
$ 25,000
29,400
58,800
126,000
281,000
Assumptions;
Plating - 60 sq. ft./hour/employee
Water Usage - 2.5 gallons/sq.ft. plated
Investment Cost - $56,000/1,000 gallons/hour - Minimum
Cost $50,000 for rural plants.
- $28,000/1,000 gallons/hour - Minimum
Cost $25,000 for urban plants.
Source: Environmental Protection Agency
Formula:
Investment Cost = 60 sq. ft./hour/employee x 2.5 gallons/
sq. ft. x $56,000 or $28,000/1,000 gallons/hour x Number
of Employees
-------
EXHIBIT V - 3
ENVIRONMENTAL PROTECTION AGENCY
Alternate B
Investment Costs for Level I
Pollution Abatement Equipment
Rural and Urban Plants
Plant
Group
A
B
C
D
E
Employment
Range
1
5
10
20
50
- 4
- 9
- 19
- 49
- 99
Average Number of Investment
Employees Per Group Costs
2
7
14
30
67
$ 50,000
58,800
117,600
252,000
562,000
Assumptions;
Plating - 60 sq. ft./hour/employee
Water Usage - 2.5 gallons/sq. ft. plated
Investment Cost - $56,000/1,000 gallons/hour - Minimum
Cost of $50,000
Source: Environmental Protection Agency
Formula ;
Investment Cost = 60 sq. ft./hour/employee x 2.5 gallons/
sq. ft. x $56,000/1,000 gallons/hour x Number of Employees
-------
EXHIBIT V - 4
Group
A
B
C
D
E
Assumptions
ENVIRONMENTAL PROTECTION AGENCY
Alternate A
Annual Amortization Costs
of Investments for Level I
Urban Rural
Costs Costs
Investment Amortization Investment
$ 25,000 $ 6,595 $ 50,000
29,400 7,650 58,800
58,800 15,511 117,600
126,000 33,238 252,000
281,000 74,127 562,000
.
Amortization
$ 13,190
15,300
31,023
66,477
148,254
Cost of Capital - 10%
Payback Period - 5 years
-------
EXHIBIT V - 5
ENVIRONMENTAL PROTECTION AGENCY
Group
A
B
C
D
E
Assumptions
Alternate B
Annual Amortization Costs
of Investments for Level I
Rural and Urban Plants
Investment
$ 50,000
58,800
117,600
252,000
562,000
*
Costs
Amortization
$ 13,190
15,300
31,023
66,477
148,254
Cost of Capital - 10%
Payback Period - 5 years
-------
EXHIBIT V - 6
ENVIRONMENTAL PROTECTION AGENCY
Alternate A
Level I Investment Costs as
a Percent of Annual Sales
for Rural and Urban Plants
Plant
Group ,
A
B
C
D
E
Average
.$ .000
40.
135.
263.
594.
1,345.
Sales
3
0
0
0
5
Per
$ 50
58
117
252
562
Plant
,000
,800
,600
,000
,000
Rural
Investment
(1) % of
124
43
44
42
41
Sales
.1%
.0
.7
.4
.8
Per Plant
$ 25
29
58
126
281
,000
,400
,800
,000
,000
Urban
Investment
(1) % of
62
21
22
21
20
Sales
.0
.5
.4
.2
.9
7
10
(1) From Exhibit V-2
-------
EXHIBIT V - 7
ENVIRONMENTAL PROTECTION AGENCY
Alternate B
Level I Investment Costs as
a Percent of Annual Sales
for Rural and Urban Plants
Plant
Group
A
B
C
D
E
Average Sales
$ .000
40.
135.
263.
594.
1,345.
3
0
0
0
5
Investment
Per Plant (1)
$ 50,
58,
117,
252,
562,
000
000
600
000
000
% of
124
43
44
42
41
Sales
.1
.0
.7
.4
.8
7
/o
(1) From Exhibit V-3
-------
ENVIRONMENTAL PROTECTION AGENCY
Investment Costs for Level
Abatement Equipment
Average Number of Number of
Group Employees Per Group Gallons/Hour
A
B
C
D
E
2
7
14
30
67
300
1,050
2,100
4,500
10,050
II Pollution
Investment Cost
Evaporative
Reverse Osmosis Recovery Total
-
-
$ 48,000
96,000
205,000
$ 20,000
20,000
25,000 73,000
37,500 133,500
83,800 288,800
Assumptions :
Reverse Osmosis Costs based on - minimum
for 275 gallon/hour shop and $125,000
$8,000 for
gallon/hour
Evaporative Recovery Costs based on - minimum of $25
Evaporative Recovery Unit handles 1070 of gallons
- For Groups A
and B assume $20,
000 cost for
125 gallon/hour shop - $14,000
shop
,000 for 300 gallons -
per hour of reverse osmosis.
water conservation methods.
Source: Environmental Protection Agency
X
PC
M
w
i-3
CO
-------
EXHIBIT V - 9
ENVIRONMENTAL PROTECTION AGENCY
Annual Amortization Cost of Investments
for Level II Pollution Abatement Equipment
Plant
Group
A
B
C
D
E
Costs
Investment
$ 20,000
20,000
73,000
133,500
288,800
Amortization
$ 5,280
5,280
19,260
35,224
76,200
-------
VI - PRICE EFFECTS
In order to determine the potential changes in prices
attributable to the cost of pollution equipment and its main-
tenance, it is necessary to examine the various methods of
costing used in both job and captive shops. In addition, the
economics of various alternatives facing the purchasers of
plating services will be examined. By combining the costing
methods in supplying plating services along with the demand
for such services, a viable direction of cost influence may
be identified.
BACKGROUND
Because of the relatively low capitalization of firms in
the plating industry, there is the tendency to price according
to the most significant variable cost components. In some cases,
this is not possible because of the competitive environment in
which certain services are required. Firms competing in such
areas as zinc plating of nuts and bolts find the margin signi-
ficantly less than in some of the specialized areas of finishing
for electronic components and other high quality plating.
PRICING IN
JOB SHOPS
There are basically three methods used in the pricing of
services in the plating job shops:
1. Labor based costing is the most frequently used
method in determining the price of services. Deriving multiples
of labor costs for the different sections of plating services
-------
VI - 2
and then aggregating them is used predominantly in the labor
intensive job shops. For instance, in Exhibit VI-1, it is
noted that the direct labor of an average firm (which is a
member of the NAMF) is about 28% of the sales dollar. This
company would price its jobs at appropriately 3.6 times the
direct variable labor rate of: the different people used in the
plating process, This multiple of labor will vary with the Lypr
of service that is required.
2. Equipment based pricing is used in automatic
plating and the plating of hard chrome. In these cases, the
equipment is a significant portion of the cost expenditures.
Since there is a high investment in automatic equipment, the time
per equipment hour is charged in addition to that of the labor
used in preparation of this equipment and the parts to be plated.
When plating with hard chrome, jobs remain in the plating tankfs
for extended lengths of time (sometimes days) and the costs are
based on the use of the tanks for the time the parts are in the
tanks and the labor time of preparation of the parts.
3. Square inches of surface plated is the least used
method of pricing plating services. This method is used primarily
in the pricing of plating precious metals. Plating of gold,
silver, platinum, and other precious metals are frequently
evaluated on the basis of square inches plated. Again, the price
of the plated part is based on the most significant cost
variable factor.
-------
VI - 3
According to industry averages, a pre-tax profit on sales
of about 5.9% is traditionally sought, and its derivation is
presented in Exhibit VI-1. However, a more relevant measure
of financial achievement is the return on invested capital
sought by the various firms in the industry. As a rough guide
approximately 83% of annual sales is the amount of invested
capital in the firms represented by the National Association of
Metal Finishers study which is presented in Exhibit VI-2. If
this figure is true for the industry as a whole, an overall
pre-tax return on investment of approximately 7.0% is desired
(Exhibit VI-3). As the amount of capital investment increases,
prices would increase proportionately. Increased capital invest-
ment of 507> would require price increases of 507, in order to
maintain the same level of return on investment. Accordingly,
for a firm capitalized at $300,000, the expenditure of $100,000
for capital equipment to abate pollution would require prices
to be increased by 307,. If the money were borrowed from a bank
rather than invested by the owners, prices would have to be
increased to cover interest as well as a return on investment
criteria. However, there is reluctance among the banking
community to lend money for the purpose of investing in non-
productive assets. The question then becomes is it a good
investment in the various pollution equipment for the total
service lines of a plating company or should only pollution
abatement be sought for plating of selected service lines which
are more profitable and could justify a return investment through
higher prices?
-------
VI - 4
COSTING IN
CAPTIVE SHOPS
The cost of plating in a captive shop is traditionally
lower than that of a job shop. The reason for this is the
economies of scale in operating a manufacturing concern with a
plating department. The captive plating department does not
have to justify the entire capital expenditure of land, equip-
ment, supervision, and any other factors which have to be com-
pletely covered by the job shop. Frequently a captive shop
has a very low level of production and is sometimes manned
using part-time personnel. Also, the captive plating department
is usually not a profit center for the firm but rather an
adjunct to a manufacturing line.
There has been a trend in recent years to eliminate the
captive shop because of the cost of the required pollution
equipment which often cannot be justified from the corporate
standpoint on a strict investment basis. However, firms
with extensive captive shops and high dependence upon them
will and have made these commitments.
Because of the trend away from captive shops, there is
becoming a greater dependency upon the job shop plater.
-------
VI - 5
OTHER FACTORS
OF CONSIDERATION
It has been previously mentioned that the price of plating
services is a function of the significant variable cost. As
the cost of capital goes up, prices also will have to increase.
However, of even greater significance than the cost aspect of
plating is what will happen to competition in the plating
industry with the advent of increased pollution controls.
Currently there is a double standard in most areas of pollution
requirements, i.e., existing facilities operate under one kind
of restriction while new facilities are required to operate
under another. This has had the effect of restricting entrance
into the industry because of the higher capital investment
required to begin a plating business. In addition, many firms
are unwilling to make the capital investment and thus are
electing to leave the industry. The exact quantity of firms
leaving the industry and the absence of re-entry is not known
at this time.
There will be a substitution effect when prices of plating
services are increased. Other types of plating will be sought;
for example, changing from nickel and chrome plating to a more
economical but less desirable process of plating. Other types of
finishes will be sought such as painting or galvanizing. In
addition, new materials which do not require plating may also
be used (such as the case of stainless steel).
-------
VI - 6
Many plating firms are eliminating plating services that
are highly polluting. Lead and cadmium plating have been re-
duced or eliminated in numerous job plating shops as well as
captive facilities.
Aside from the effects of restricted competition, the
higher cost of operations would potentially yield significantly
higher costs for plating, in some cases upwards of 50% to 10070.
However, such increases may not be tolerated by the customers
of plating services and other finishes or materials may be
substituted in place of plating. At this point the substi-
tution effect is an indeterminate factor. Knowledge of the
supply and demand curves for each plating service, and plated
product is necessary to determine what the substitution effect
would be.
-------
VI - 7
MODEL PLANT
PARAMETERS
In order to assess the price effects of pollution abate-
ment on electroplating job shops, a model plant approach has
been used. Five plant configurations were developed based
on size and sales parameters found to be reasonably correlated
in several industry studies.
Exhibit VI-4 describes the model plants and the parameters
used to differentiate between plants. These factors are also
used to segment the industry in the impact analysis.
Profit margins which were previously determined were
applied for each segment of the industry to the model plant
sizes as shown in Exhibit VI-5.
This exhibit also details the average sales and the number
of plants according to U.S. census of manufacturing statistics
for 1967. The sales reported in the census records were ad-
justed to reflect price levels in 1972. Average pretax profits
for each segment were derived from an industry survey which
was described in Section IV, page 3.
PROFIT COMMITMENT
FOR POLLUTION CONTROL
In order to meet the cost of capital investment in control
equipment, firms will either maintain current prices and pay
for equipment from existing profits or raise prices to offset
the added costs. The decision will be based on many factors
-------
VI - 8
including competition, customer reaction, and level of present
profitability.
(a) Maintaining
Present Prices
The ability to maintain present prices depends on the
ability and willingness of firms to commit future profits to
pollution abatement equipment. It is a general rule in the
industry that investments are made for plating equipment if
the investment represents approximately 1.5 years profits.
While this decision rule is used for normal production
equipment which is expected to provide increased profits, it
is probably not applicable to pollution abatement equipment.
The decision to provide additional production equipment does
not normally affect the actual survival of the business. How-
ever, the decision to install or not install pollution abate-
ment equipment may affect the survival of the business. Con-
sequently, it is reasonable to assume that the industry's
investment in pollution abatement equipment will represent a
greater number of years of profits. This period has been es-
timated to be about five years.
Exhibit VI-6 shows the number of years of profits which
would have to be committed by firms in each of the plant size
segments given no price increases for the industry for Level I
Alternates A and B.
-------
VI - 9
The years are based on the cost of the pollution control
equipment at the relevant plant size and the average profit
on sales for those plants. At a cost of capital of approxi-
mately 107o per annum which has not been included, the time
periods would be somewhat longer.
Based on the above, a large number of the model plants
would exercise the option to close rather than sacrifice
profits. Should this occur, the industry supply would be
reduced by the amount of sales these plants generate and
employment would also be affected to the same degree.
It is difficult to determine the direct effects of this
supply reduction on pricing since there is an insufficient
knowledge of the demand function. However, it is safe to
assume any or several of the following will occur.
Substitution of other coating for electroplating
Absorption by captive shops
Absorption by remaining job shops
Price increases
It is not practical to assume the zero price increase
and high resultant enclosures. These shops would, in fact,
increase prices to meet the cost of pollution control
equipment at a rate that would maintain their present
-------
VI - 10
profitability or some level below present profits before elect-
ing to go out of business. The amount of these increases would
depend on the market, decision of the owner and other variable
factors.
Since perfect information is not available in the market
place and electroplating products and services are so immensely
different it is expected that some number of the prospective
firms could increase prices without suffering major competitive
disadvantages.
(b) Price Increases To Meet
Capital Equipment Requirements
The following price increases will be required to offset
the capital equipment costs for firms which are willing to
commit to five years payoff for the equipment and maintain the
current profit margins.
TABLE VI-1
Price Increases - Level I and Level II
Alternate A Alternate B
Level RuralUrban RuralUrban
Level I 16.5 8.3 16.5 16.5
Level II 8.4 -- 8.4
-------
VI - 11
The amount of increases has been based on financing at
a cost of capital of 10 percent. The five year period is based
on the loan period which several banks, contacted during the
study, indicated is typical for equipment purchases.
In estimating the overall price increases expected for
the industry, the implicit assumption is that highly profitable
firms and those with low profits would offset each other on
the whole. This is not the absolute effect since cost of
control equipment differs at the five firm sizes and profit-
ability also varies by size.
Exhibit VI-7 and Exhibit VI-8 have been prepared to indicate
the extent of the increases for firms in each model plant size
group for Alterantes A and B. The exhibit breaks down the
increases for Level I and Level II. Exhibits VI-9, VI-10,
VI-11 and VI-12 show the calculations used to arrive at the
estimated increases.
The implied price changes required at the different plant
size configurations is important to understand. The very small
plants, one to four people, appear to be confronted with very large
price increases approximately two to three times the larger plants.
If this occurs, it can be expected that some competitive advan-
tage will exist for the larger plants which could have a long-
term negative effect on the viability of the very small shops.
-------
VI - 12
(c) Increases for
Operating Cost
Very few plants in the industry are presently meeting the
pretreatment limitations and practically none are meeting
Level I and Level II standards expected to be applied in 1977
and 1983. For these reasons, operating costs for pollution
abatement equipment have not been compiled on an industry-wide
basis. Some plants are, however, meeting local standards and
do have cost data for their operations.
For the purposes of this study, the annual operating costs
for Level I and Level II pollution abatement equipment are
based upon information furnished by the Environmental Protection
Agency. These operating costs are summarized in Exhibits VI-13,
and VI-14. These exhibits show that for Level I, annual
operating costs range from approximately $1,600 for the small
plant, 1 to 4 personnel, to $53,300 for the large plant, 50
to 99 personnel for Alternate A rural plants and Alternate B.
For Alternate A urban plants the operating costs are approximately
one-half of rural plants for the same size plants. For Level II
annual operating costs range from approximately $800 to $27,700
for the same size plants.
As previously mentioned, some plants in Kearney's survey
have compiled data for operating costs of pretreatment equipment.
An average cost of 1.7 percent of annual sales has been found to
be required for these annual operating costs. If we are to assume
-------
VI - 13
that annual operating costs of Level I abatement equipment are
approximately twice that of pretreatment equipment, a reasonable
correlation is found between calculated and experienced costs.
This comparison is shown in the following table.
Table VI-2
Plant
Group
C
D
E
Comparison of Survey and Calculated
Annual Operating Costs
Average Sales
Dollars Per Group
40.3
135.0
263.0
594.0
1,345.5
Operating Costs
& 1.7% of Sales
$ 685
2,295
4,470
10,100
22,875
Operating Costs
@ 50% of Level I
$ 795
2,790
5,565
11,925
26,635
-------
EXHIBIT VI-1
ENVIRONMENTAL PROTECTION AGENCY
INCOME STATEMENT PROFILE
(1)
Cost Elements
Production Expense
Labor - Direct
Labor - Indirect
Materials
Rent
Utilities
Repair and Maintenance
Delivery Expense
Other Production Expense
Total Production Expense
Sales Expense
Salaries
Other Sales Expense
Total Sales Expense
General and Administrative Expense
Owner/Officer's Salary
Office Salary
Office General and Administrative
Total General
Total Expenses
Profit Before Taxes
Profit After Taxes
Percent
of Sales
27.7
4.7
16.4
2.6
5.2
2.8
2.0
9.0
70.4
1.8
1.8
3.6
9.4
3.3
7.3
20.0
94.1
5.9
3.0
Notes: (1) Source:
National Association of Metal Finishers
Cost Survey 1970, adjusted to reflect
plating firms only.
-------
EXHIBIT VI-2
ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED CAPITALIZATION OF METAL
FINISHING FIRMS (1)
Capitalization
Type of Metal Finishing NAMF Industry
Precious metals 217,000 46,100
Buffing and polishing 141,300 28,800
Chrome 224,700 47,700
General platters 300,000 63,100
Average capitalization at
(2)
chrome and general platters^' 262,350 55,400
Average yearly sales of NAMF
members(3) 317,000
Capitalization as a percent
of sales (4) 83%
Notes: (1) Based on 1966 University of Michigan Study
(2) Derived as follows: (224,700 -I- 300,000)/2 =
262,350
(3) Derived from University of Michigan Study:
18% industry members at NAMF
77% of industry sales from NAMF
Gross industry billings of $200,000,000
2700 firms in industry
(200,000,000 x 77%)7(18% x 2700) = $317,000
(4) Derived by dividing average capitalization
by average sales.
-------
EXHIBIT VI-3
ENVIRONMENTAL PROTECTION AGENCY
ELECTROPLATING INDUSTRY
ESTIMATED RETURN ON INVESTMENT OF
METAL FINISHING FIRMS
Element Measure
Index of Average Yearly Sales (3) 100.00
Index of Capitalization (1) 83.00
Margin on Sales (pre tax) (2) 5.9%
Return on Capitalization (3) 7.170
Notes: (1) See Exhibit V-2
(2) See Exhibit V-l
(3) Derived by dividing pre tax profit
margin by capitalization: 5.9/83.00 = 7.1%
-------
EXHIBIT VI-4
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-------
EXHIBIT VI-5
ENVIRONMENTAL PROTECTION AGENCY
Model
Plant
Code
A
B
C
D
E
AVERAGE PRE-TAX
Average
Sales Per
Establishment(l)
(? Thousand)
40.3
135.0
263.0
594.0
1,345.5
PROFIT OF MODEL PLANTS
Number of
Establishments
1,237
570
579
620
171
3^,177
Average (2)
Pre-Tax
Profit
(Percent)
9.0%
6.5
4.9
7.2
4.2
5.9
Notes: (1) Average sales derived from
U.S. Census of Manufacturing Data
and adjusted to reflect 1972 price levels
(2) Based on Kearney study of industry.
Sources: National Association of Metal Finishers
Census o£ Manufacturing
A. T. Kearney, Inc.
-------
EXHIBIT VI-6
ENVIRONMENTAL PROTECTION AGENCY
YEARS OF PROFIT COMMITMENT
WITH NO PRICE INCREASE
LEVEL I
Plant Size
A
B
C
D
E
Weighted Average
Alternate
Rural
13.8%
6.7
9.1
5.9
9.9
7.2%
A
Urban
6.9%
3.4
4.6
2.9
5.0
3.6%
Alternate B
Rural and Urban
13.8%
6.7
9.1
5.9
9.9
7.2%
-------
EXHIBIT VI-7
Plant Code
A
B
C
D
E
ENVIRONMENTAL PROTECTION AGENCY
Alternate A
ESTIMATED PRICE INCREASES
FOR TREATMENT LEVELS
Level I
Rural Urban
36.7% 18.4%
15.5 7.8
16.0 8.0
15.2 7.6
15.0 7.5
.ge 16 .5% 8 . 3%
Level II
Rural
15 . 2%
6.1
9.5
8.0
7.7
8.4%
-------
EXHIBIT VI-8
ENVIRONMENTAL PROTECTION AGENCY
Plant
Code
A
B
C
D
E
Weighted
Alternate B
ESTIMATED PRICE INCREASES
FOR TREATMENT LEVELS
Level I
Rural and Urban
36 . 7%
15.5
16.0
15.2
15.0
Average 16.5%
Level
Rura
15.
6.
9.
8.
7.
8.
II
1
2%
1
5
0
7
4%
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
POTENTIAL COST INCREASE FOR URBAN PLANTS
FOR LEVEL I POLLUTION ABATEMENT
Number
Plant Number of of
Code Employees Plants
Annual
Amortization Costs
Annual
Operating Costs
A
B
C
D
E
Total
1-4
5-9
10-19
20-49
50-99
952
439
446
477
132
Per
Plant
$ 6,595
7,650
15,512
33,238
74,127
Per
All Plants Plant
All Plants
~I$~.000)
$ 756.8
1,221.5
2,482.0
5,688.2
3.515.2
Per
Plant
Sales ($ .000)
All Plants
Total
Annual
Costs
~T? .000)
$ 7,035.2 $ 40.3 $ 38,365.6
4,579.9 135.0 59,265.0
262.9
594.3
1,345.5
9,400.1
21,542.7
13,300.0
$55.857.9
117,253.4
283,481.1
177.606.0
$675.97LJ.
Cost Increase
as Percent
of Sales
18.3%
7.7
8.0
7.6
7.5
8.3
X
X
CO
I— I
H
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE B
POTENTIAL COST INCREASE FOR URBAN PLANTS
FOR LEVEL I POLLUTION ABATEMENT
Plant
Code
A
B
C
D
E
Total
Number of
Employees
5-9
10-19
20-49
50-99
Annual
Number Amortization Costs
of
Per
Plants Plant
Per
All Plants Plant
($ .000)
952 $ 13,190 $12,556.9 $ 1,590
439 15,300 6,716.7 5,565
Annual
Operating Costs
446
477
132
31,023 13,836.3 11,130
66,477 31,709.5 23,850
148,254 19,569.5 53,265
$84.388.9
Total
Annual
All Plants Costs
($ .000)
Sales ($ .000)
Per
Plant
All Plants
($ .000)
$ 1,513.7 $ 14,070.6 $ 40.3 $ 38,365.6
2,443.0 9,159.7 135.0 59,265.0
4,964.0 18,800.3
11,376.5 43,086.0
7,031.0 26.600.5 1,345.5
$27.328.2 $111.717.1
262.9 117,253.4
594.3 283,481.1
177.606.0
$675.971.1
Cost Increase
as Percent
of Sales
36.7%
15.5
16.0
15.2
15.0
16.5
n
x
t-i
co
i— i
H
I
5
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A AND B
POTENTIAL COST INCREASE FOR RURAL PLANTS
FOR LEVEL I POLLUTION ABATEMENT
Plant
Code
A
B
C
D
E
Total
Number of
Employees
1-4
5-9
10-19
20-49
50-99
Number
of
Plants
285
131
133
143
39
131
Annual
Amortization Costs
Per
Plant
$ 13,190
15,300
31,023
66,477
148,254
All Plants
($ .000)
$ 3,759.2
2,004.3
4,126.1
9,506.2
5,781.9
$25.177.7
Annual
Operating Costs
Per
Plant
$ 1,590
5,565
11,130
23,850
53,265
All Plants
($ .000)
$ 453.2
729.0
1,480.3
3,410.6
2,077.3
$8.150.4
Total
Annual
Costs
($ .000)
$ 4,212.4
2,733.3
5,606.4
12,916.8
7,859.2
$33.328.1
Sales ($
Per
Plant
$ 40.3
135.0
262.9
594.3
1,345.5
All
$ U
17
34
84
52
$101
.000)
Plants
,485.5
,685.0
,965.7
,984.9
,474.5
.595.6
Cost Increase
as Percent
of Sales
36.77o
15.5
16.0
15.2
15.0
16.5
w
X
w
M
H
-------
ENVIRONMENTAL PROTECTION AGENCY
Plant
Code
A
B
C
D
E
Total
Number of
Employees
1-4
5-9
10-19
20-49
50-99
Number
of
Plants
285
131
133
143
_39
731
ALTERNATE A AND B
POTENTIAL COST INCREASE FOR RURAL PLANTS
FOR LEVEL II POLLUTION ABATEMENT
Annual
Amortization Costs
Per
Plant All Plants
$ 5,280
5,280
19,260
35,244
76,200
($ .000)
$ 1,504.8
691.7
2,561.8
5,037.0
2.971.8
$12.767.1
Annual
Operating Costs
Per
Plant
$ 825
2,895
5,790
12,405
27,705
All Plants
($ .000)
$ 235.1
379.2
770.1
1,773.9
1.080.5
$4.238.8
Total
Annual
Costs
($ .000)
$ 1,739.9
1,070.9
3,331.9
6,810.9
4.052.3
$17.005.9
Sales C$ .000)
Per
Plant
$ 40.3
135.0
262.9
594.3
1,345.5
All Plants
$ 11,485.5
17,685.0
34,965.7
84,986.0
52.476.5
$201._595_._6_
Cost Increase
as Percent
of Sales
15.27.
6.1
9.5
8.0
7.7
8.4%
03
1—I
H
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
ANNUAL OPERATING COSTS FOR LEVEL I
Employment Average Number of
Group Range Employees Per Group
A 1-4 2
B 5-9 7
C 10-19 14
D 20-49 30
E 50-99 67
Assumptions ;
& B
POLLUTION ABATEMENT EQUIPMENT
Alternate A Alternate B
Rural Urban Rural and Urban
$ 1,590 $ 795 $ 1,590
5,565 2,790 5,565
11,130 5,565 11,130
23,850 11,925 23,850
53,265 26,635 53,265
Plating - 60 sq. ft . /hour/employee
Operating Cost - $5.30/1000 sq. ft. plated
Annual Hours - 2500 hours/year/employee
Alternate A Urban assumed to be one half of rural costs
Source: Environmental Protection Agency
Formula:
Annual Operating Costs = 60 sq. f t . /hour/empl
of employees x 2500 hours/yr . /empl.
. x $5.30/1000 sq. ft. x number
M
X
X
M
w
-------
EXHIBIT VI-14
ENVIRONMENTAL PROTECTION AGENCY
Alternates A & B
ANNUAL OPERATING COSTS FOR
LEVEL II POLLUTION ABATEMENT EQUIPMENT
Employment Average Number of Annual
Operating Costs
$ 825
2,895
5,790
12,405
27,705
Group
A
B
C
D
E
Range Employees Per Group
1 -
5 -
10
20
50
4
9
- 19
- 49
- 99
2
7
14
30
67
Assumptions;
$0.0474 per man-hour for reverse osmosis
$0.1180 per man-hour for evaporator
2500 man-hours per year per employee
Source: Environmental Protection Agency
Formula:
Operating Costs = ($0.0474 + 0.1180) X 2500 man-hours/yr,
X number of employees.
-------
VII - IMPACT ANALYSIS
The impact analysis for closings and employment effects
is based on how the effluent limitation standards are to be
applied and the costs of the pollution abatement equipment to
meet the effluent limitation standards. The effluent limitation
standards used in this analysis are those discussed in Section V.
They are:
(a) Alternate A
1. Plants, Model groups A through E, located in
urban areas: i.e., plants discharging to municipal sewer
systems, will be required to meet pretreatment standards in 1977.
Pretreatment standards (Section V, Page 1) are based on local
regulations and are not a requirement of the federal guidelines.
2. Plants, Model groups A through E, located in
rural areas: i.e., plants discharging to streams will be
required to meet Level I standards in 1977.
3. Plants, Model groups A and B located in rural
areas will be required to meet modified (water conservation)
Level II standards in 1983.
4. Plants, Model groups C, D and E located in rural
areas will be required to meet Level II standards in 1983.
(b) Alternate B
1. Plants, Model groups A through E, located in urban
areas: i.e., plants discharging to municipal sewer systems will
be required to meet Level I in 1977.
-------
VII - 2
2. Plants, Model groups A through E located in rural
areas: i.e., plants discharging to streams will be required to
meet Level I standards in 1977.
3. Plants, Model groups A and B located in rural
areas will be required to meet modified (water conservation)
Level II standards in 1983.
4. Plants, Model groups C, D and E, located in
rural areas will be required to meet Level II standards in 1983.
Based on census data and other studies, 77 percent; of the
plants are located in urban areas where municipal sewer plants
handle the waste water. The other 23 percent of the plants
are located in rural areas where discharge of effluents is
direct to streams or to storm sewers discharging to streams.
Implicit in the assumption for all plants discharging to
municipal systems is that pretreatment standards will be
sufficient in all areas. This, of course, may not apply in
small municipalities where the waste treatement plants cannot
accept industrial wastes without severe disruption to the
system. In these cases the estimated closures in the following
analysis may be higher.
-------
VII - 3
ESTIMATED
PLANT CLOSINGS
(a) Zero Price
Increases
It is assumed that the industry will adjust prices upward
to meet the cost of pollution control. Consequently there will
probably be few closures resulting from failure or inability to
raise prices.
(b) Prices Increased to
Meet Cost of Equipment -
Level I - 1977
As previously discussed in Section V, the price increases
required by model plant groups for Alternate A and B for urban
and rural plants for 1977 are shown in the following table:
TABLE VII-1
Price Increases - Level
7
1C,
Alternate
Rural
Increase %
36.7%
15.5
16.0
15.2
15.0
A
Urban
Increase
18.4%
7.8
8.0
7.6
7.5
I - 1977
Alternate B
Rural and Urban
7, Increase
36 . 7%
15.5
16.0
15.2
15.0
Plant
Code
A
B
C
D
E
Weighted
Average 16.570 8.3% 16.57o
-------
VII - 4
Since electroplating products and services are so
immensely different, and each size plant meets certain needs
of the market place and the amount of substitution to other
methods or processes is limited, it is expected that the
majority of firms could raise prices without suffering major
competitive disadvantages. The exception being the very small
plants, Group A 1 to 4 personnel, where the required price
increase is over twice the average industry price increase.
In order to analyze the impact of pollution abatement
equipment on the Electroplating Industry, an attempt was made
to relate price increases, profits and the standard deviation
of profit assuming a normal distribution, to a closure rate.
However, due to the relatively small sample size and deviation
inherent in the data, it was determined that this method did
not provide the necessary accuracy.
It is expected that the greatest effect on plant: closures
rather than price increases or profits, will be the inability
of the very small plants to raise the necessary capital to
purchase the pollution abatement equipment. There are firms
today that are unprofitable, lack capital and will have difficulty
remaining as a viable firm. These types of firms under normal
circumstances probably will not remain in business and pollution
control will not cause these failures.
-------
VII - 5
There are, however, firms that are today making a profit,
although below the group average, will be able to raise prices
to a limited extent but will not be able to raise the
necessary capital to finance the pollution abatement equipment
These firms, we believe, will be impacted by the water
pollution controls.
Based upon previously discussed profits, price increases,
the A. T. Kearney survey and discussions with our consultants,
and members of the Electroplating Industry, it is expected
that the closure rates for the effluent limitations previously
mentioned for 1977, would be as shown in the following table:
Model Plant
Group
A
B
C
D
E
TABLE VII-2
Potential Closure Rate
1977
Alternate A
Alternate B
Percent
Rural
50%
25
10
3
3
Closures
Urban
25 %
12.5
5
1.5
1.5
Percent
Closures
Rura 1 and Urban
50%
25
10
3
3
-------
VII - 6
Exhivit VII-1 shows the potential number of plants
expected to be closed in the urban areas for Alternate A. This
exhibit shows of the 2,446 urban plants that 13.2 percent, or
324, are potential closures.
Exhibit VII-2 shows the potential number of plants expected
to be closed in the urban areas for Alternate B. This exhibit
shows of the 2,446 urban plants that 26.5 percent, or 649, are
potential closures.
Exhibit VII-3 shows the potential number of plants expected
to be closed in the rural areas for both Alterantes A and B.
In the rural area, 26.4 percent or 193 of a total of 731 are
classified as potential closures.
Exhibit VII-4 shows the total potential plant closures,
both urban and rural for Alternate A. This is summarized in the
following table.
TABLE VII-3
Alternate A
Summary of Total Potential Plant Closures
Plant
Code
A
B
C
D
E
Total
1977
Total Number
of Plants
1,237
570
579
620
171
3,177
Potential
Number
380
88
35
11
3
TTT
Closures
Percent
30.7%
15.4
6.0
1.8
1.8
16 . 3%
-------
VII - 7
Exhibit VII-5 shows the total potential plant closures,
both urban and rural for Alternate B. This is summarized in
the following table:
TABLE VII-4
Summary
Plant
Code
A
B
C
D
E
Total
Alternate
of Total Potent
1977
Total Number
Of Plants
1,237
570
579
620
171
3,177
B
Tal Plant
Closures
Potential Closures
Number
618
143
58
18
5
842
Percent
50 . 0%
25.0
10.0
3.0
3.0
26 . 5%
It is important to emphasize the non-financial decision
and other mitigating circumstances are certainly expected to
occur that should prevent some closings. However, it is not
possible to determine what each of these circumstances are.
Rather, it is important that the order of magnitude be
emphasized as opposed to the preciseness of the actual numbers.
It should be noted that of the 542 total potential plant
closures for Alternate A, or 862 total potential plant closures
for Alternate B, 324 in both Alternates are estimated to be the
-------
VII - 8
resultant of pretreatment standards which are considered to be
the responsibility of the local municipal systems handling
plant effluents, and not the Environmental Protection Agency
Guidelines. It is understood that not all municipalities will
have the same regulations. However, for purposes of this
analysis, effluent standards were assumed to be equal for all
areas and municipalities.
(c) Prices Increased to
Meet Cost of Level II - 1983
As discussed in Section. V, the price increases required
by the model plant groups for rural plants for 1983 are as
follows:
TABLE VII-5
Price Increases - Rural Plants-1983
Plant Percent
Code Increase
A 15.0 %
B 6.0
C 9.5
D 8.0
E 7.7
Weighted Average 8.4 70
-------
VII - 9
As was noted in the discussion of price increases for
Level 1-1977, the very small plants again will require a price
increase approximately twice that of the industry average.
In assessing the economic impact of Level II pollution
abatement requirements on the rural plants, it is believed that
those remaining after Level I will probably be the more
efficiently run plants and that in the majority they will,
because of their locations, be able to get the necessary price
increases to meet the cost of Level II equipment costs.
Therefore, the potential percent closure rate for the
rural plants in 1983 will be as shown below:
TABLE VII-6
Plant
Code
A
B
C
D
E
Potential Closure Rate
1983-Rural
Percent
Closures
10 %
5
2
2
2
Based on these closure rates the potential plant
closures are 25 or 4.6% of the remaining 538 plants (Exhibit
VII-6) in the rural area for both Alternates A and B.
-------
VII - 10
(d) Summary of Plant
Closures - 1977 and 1983
Exhibit VII-7 summarizes the total number of potential
plant closures as a result of Level I and Level II pollution
abatement for both urban and rural plants for Alternate A.
This exhibit shows potential closures of 542 of 3,177 plants or
17.1 percent. The potential closures are the greatest in the
very small plants, estimated to be 31.9 percent of the total
1,237 plants, and decrease to 2.3 percent of the large plants.
The table below summarizes the estimated plant closures
as a result of Level I and Level II for the urban and rural
plants .
TABLE VII-7
Alternate A
Summary of Plant Closures
1977-1983
1977 1983 Total
Area
Urban
Rural
Total
Number
324
193
517
Percent
13 . 2%
26.4
16 . 3%
Number
-
25
25
Percent
-
4 . 67,
4 . 67,
Number
324
218
542
Percent
13.27o
29.8
17 . IT.
Exhibit VII-8 summarizes the total number of potential
plant closures as a result of Level I and Level II pollution
abatement for Alternate B, rural and urban plants. This exhibit
indicates potential closures of 27.3 percent or 867 out of the
3,177 plants.
-------
VII - 11
The following table summarizes the estimated plant
closures for Alternate B.
TABLE VII-8
Alternate B
Summary of Plant Closures
1977-1983
1977 1983 Total
Area
Urban
Rural
Total
Number
649
193
842
Percent
26 . 57o
26.4
26 . 57o
Number
-
25
25
Percent
-
4.6%
4.6%
Number
649
218
867
Percent
26 . 57o
29.8
27.370
EMPLOYMENT
EFFECTS
The majority of employees is in the large plant segment.
Consequently a high closure rate for the affected smaller plants
does not necessarily mean that the total unemployment rates will
be the same as the total plant closure rates.
The total number of personnel in the plant size groups
used in this analysis is 44,627. This number is arrived at by
extending the average number of employees per firm times the
number of firms in each group. The number of personnel in these
groups of 44,627 compares to the 44,500 personnel found in the
Census of Manufactures data for 1967. The difference is
the effect of the rounding used for the average employees
per firm.
-------
VII - 12
(a) Level I - 1977
The estimated number-of employees affected by the potential
plant closures of urban plants for Alternate A is shown in
Exhibit VII-9. This shows an estimated number of employees
of 1,513 or 4.7 percent of a total employment of 34,375.
For Alternate B the estimated number of employees affected
by the potential plant closures of urban plants is shown in
Exhibit VII-10. This exhibit shows 8.8 percent, or 3,040
of 34,375 employees are estimated to be affected by the plant
closures.
Exhibit VII-11 shows the estimated number of employees
affected by potential closures of rural plants for both
Alterantes A and B. It is estimated that 8.6 percent of the
total of 10,252 employees, or 874 employees, will be affected.
For Alternate A the total estimated number of employees
affected by the potential plant closures in urban and rural
areas is estimated to be 5.4 percent or 2,397 employees of
a total of 44,627 employees. This is shown on Exhibit VII-12.
For Alternate B the total estimated number of employees
affected by the potential plant closures in urban and rural
areas is estimated to be 8.8 percent, or 3,924 of a total of
44,627 employees. This is shown in Exhibit VII-13.
-------
VII - 13
It should be noted that whereas the total potential plant
closures for Alternate A, as shown in Exhibit VII-4, is 16.3%
for Level I, the estimated total number of employees affected
by Level I is only 5.4%. For Alternate B the plant closure
rate is 26.5% (Exhibit VII-5) as compared to the employee
rate of 8.8 percent.
(b) Level II - 1983
Exhibit VII-14 shows the estimated employees affected by
Level II potential plant closures for rural areas for both
Alternates A and B. It is estimated that 248 out of 9,368
employees or 2.6% will be affected.
(c) Summary 1977-1983
For Alternate A the estimated number of employees affected
by potential closures due to Level I and Level II pollution
abatement is shown in Exhibi): VII-15. This exhibit shows that
a total of approximately 2,650 out of a total of 44,627
employees, or 5.9%, would be affected by potential plant closures
For Alternate A the following table summarizes the estimated
number of employees affected by potential plant closures due
to pollution controls for 1977 and 1983 levels:
-------
VII - 14
TABLE VII-8
Alternate A
Summary of Estimated Number of
Employees Affected
Area 1977 1983 Total
Urban
Rural
Total
Number
1,513
884
2,397
Percent
4.7 7o
8.6
5.4 70
Number
-
248
248
Percent
- 70
2.6
2.6 %
Number
1,513
1,132
2,645
Percent
4 . 7 70
11.0
5.9 I
For Alternate B the estimated number of employees affected
by potential closures due to Level I and Level II pollution
abatement is shown in Exhibit VII-16. This exhibit indicates
that a total of approximately 4,200 out of a total of 44,627
employees, or 9.3 percent, would be affected by potential
plant closures.
The following table summarizes for Alternate B the estimated
number of employees affected by potential plant closures due
to pollution controls for 1977 and 1983 Levels.
TABLE VII-9
Alternate B
Summary of Estimated Number of Employees Affected
1977 1983 Total
Area Number Percent Number Percent Numbe r Percent
Urban 3,040 8.870 - - 3,040 8.87o
Rural 884 8.6 248 2.670 1,132 11.0
Total 3,924 8.870 248 2.670 4,172 9.37o
-------
VII - 15
COMMUNITY EFFECTS
Electroplating shops are generally not major employers
in any particular community. Consequently, although a number
of shops and employees could be affected, it is not believed
that a single community will be severely impacted.
In our survey and in later discussions with our consultants,
and other members of the Electroplating Industry, it was noted
that there is at present a shortage of experienced personnel
in the Electroplating Industry. This coupled with increased
production volumes to shops that remain, will, we estimate ,
re-employ approximately 50% of the personnel affected by the
potential plant closures. This will not, of course, be an
average re-employment across all communities and areas, but is
is not possible to predict what region or areas will be more
affected. It is expected that the re-employment will probably
occur primarily in the urban areas. The net effect, we believe,
will be that only 1,325 out of the estimated 2,650 employees
for Alternate A will be displaced. For Alternate B these
figures would be 2,100 out of the estimated 4,200 affected
employees.
-------
VII - 16
PRODUCTION EFFECTS
(a) Level I - 1977
For Alternate A Exhibits VII-17, VII-19 and VII-20 show the
estimated production effects or estimated dollars of sales affected
by potential closures of plants due to Level I pollution abate-
ment. These are summarized below:
TABLE VII-9
Alternate A
Estimated Dollar Sales Affected
by Potential Plant Closures
Area
Urban
Rural
Total
Estimated Volume
Dollars ($.000)
$29,651.3
17,318.0
346,969.3
Percent
4.4%
8.6
5.4%
For Alternate B Exhibits VII-18, VII-19, and VII-21 show
the estimated dollars of sales affected by potential closures
of plants due to Level I pollution controls. These exhibits
are summarized in the table on the following page.
-------
VII - 17
TABLE VII-10
Alternate B
Estimated Dollar Sales Affected
by Potential Plant Closures
Estimated Volume
Area Dollars (9.000)Percent
Urban $59,565.5 8.8%
Rural 17.318.0 8.6
Total $76.883.5 8.8%
(b) Level II - 1983
Exhibit VII-22 shows the estimated production effects of
potential closures of rural plants for Level II pollution
abatement for both Alternates A and B. This exhibit shows
that approximately 2.6% or 5 million dollars of electroplating
services will be reduced.
(c) Summary Level I
and Level II
The estimated sales volume that will be reduced by potential
closures of plants for Level I and Level II pollution abatement
Alternates A and B, is shown in Exhibits VII-23 and VII-24.
These are summarized in the table on the following page.
-------
VII - 18
TABLE VII-11
Alternate A and B
Total Estimated Dollar Sales Affected
by Potential Plant Closures 1977-1983
Level
Level I
Level II
Alternate
A
Dollars Percent
($.000)
$46,969.3
4,893.4
5.4%
2.6
Alternate B
Dollars Percent
($.000)
$76,883.5 8.8%
4,893.4 2.6
Total $51,862.7 5.9% $81,776.9 9.3%
Several possibilities exist to offset the estimated supply
reduction. The larger shops should be able to absorb a substan-
tial portion of the demand. Captive shops may also be potential
sources of supply. We believe the estimated reduced electro-
plating services will be shifted to, or absorbed by, the
remaining plants in the industry.
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
POTENTIAL CLOSURES OF NUMBER OF URBAN PLANTS
FOR LEVEL I POLLUTION ABATEMENT
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Number
of Plants
952
439
446
477
132
Potential
Number
238
55
22
7
2
Closures
Percent
25 . 0%
12.5
5.0
1.5
1.5
Remaining
Number
714
384
424
470
130
Plants
Percent
75.0%
87.5
95.0
98.5
98.5
Plant
Code
A
B
C
D
E
Total 2.446 324 13.2% 2.122 86.5%
M
a
-------
ENVIRONMENTAL PROTECTION AGENCY
Plant
Code
A
B
C
D
E
ALTERNATE B
POTENTIAL CLOSURES OF NUMBER OF URBAN PLANTS
FOR LEVEL I POLLUTION ABATEMENT
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Number
of Plants
952
439
446
477
132
2^446
Potential
Number
476
110
45
14
4
649
Closures
Percent
50.0%
25.0
10.0
3.0
3.0
26.5%
Remaining
Number
476
329
401
463
128
1,797
Plants
Percent
50 . 0%
75.0
90.0
97.0
97.0
73.5%
w
s
Cd
M
H
<
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A AND B
POTENTIAL CLOSURES
FOR LEVEL I
Plant
Code
A
B
C
D
E
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Number
of Plants
285
131
133
143
39
OF NUMBER OF RURAL PLANTS
POLLUTION ABATEMENT
Potential
Number
142
33
13
4
1
Closures
Percent
50.07,
25.0
10.0
3.0
3.0
Remaining
Number
143
98
120
139
38
Plants
Percent
50.0%
75.0
90.0
97.0
97.0
Total
731
193
26.4%
538
cxi
M
H
U>
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
POTENTIAL CLOSURES OF NUMBER OF URBAN AND RURAL PLANTS
FOR LEVEL I POLLUTION ABATEMENT
Plant
Code
A
B
C
D
E
Total
Number of
Employees
1-4
5 -
10 -
20 -
50 -
9
19
49
99
Total
Number
of Plants
1,237
570
579
620
171
3,177
Potential
Number*
380
88
35
11
3
517
Closures
Percent
30 . 7%
15.4
6.0
1.8
1.8
16.3%
Remaining
Number
857
482
544
609
168
2,660
Plants
Percent
69.3%
84.6
94.0
98.2
98.2
83.7%
*From Exhibits VII-1 and VII-3
w
X
M
H
I
-P-
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE B
Plant
Code
A
B
C
D
E
POTENTIAL
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
CLOSURES OF
FOR LEVEL I
Total
Number
of Plants
1,237
570
579
620
171
NUMBER OF URBAN AND RURAL PIANTS
POLLUTION ABATEMENT
Potential
Number*
618
143
58
18
5
Closures
Percent
50,07,
25.0
10.0
2.9
2.9
Remaining
Number
619
427
521
602
166
Plants
Percent
50.0%
75.0
90.0
97.1
97.1
Total
3,177
842
26.5
2,335 73.5
*From Exhibits VII-2 and VII-3
w
X
PC
i
Ln
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A AND B
POTENTIAL CLOSURES OF NUMBER OF RURAL PLANTS
FOR LEVEL II POLLUTION ABATEMENT
Plant
Code
A
B
C
D
E
Total
Number of
Employees
1-4
5 -
10 -
20 -
50 -
9
19
49
99
Number
of Plants v1)
143
98
120
139
38
538
Potential
Number
14
5
2
3
_1
25
Closures
Percent
10.0%
5.0
2.0
2.0
2.0
4.6%
Remaining
Number
129
93
118
136
37
513
Plants
Percent
90.0%
95.0
98.0
98.0
98.0
95.4%
Note: (1) Plants remaining assuming
potential closures occur in 1977.
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
POTENTIAL CLOSURES OF NUMBER OF TOTAL PLANTS
FOR LEVEL I AND LEVEL II POLLUTION ABATEMENT
Plant
Code
A
B
C
D
E
Total
Number of
Employees
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
Number
of Plants
1,237
570
579
620
171
_3j_177
Potential
Number
394
93
37
14
4
542
Closures
Percent
31.9%
16.3
6.4
2.3
2.3
17.1%
Remaining
Nunber
843
477
542
606
167
2,631
Plants
Percent
68 . 1%
83.7
93.6
97.7
97.7
82.9%
M
X
SB
(—i
Cfl
M
H
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE B
POTENTIAL CLOSURES OF NUMBER OF TOTAL PLANTS
FOR LEVEL I AND LEVEL II POLLUTION ABATEMENT
Plant
Code
A
B
C
D
E
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Number
of Plants
1,237
570
579
620
171
Potential
Number
632
148
60
21
6
Closures
Percent
51.1%
26.0
10.4
3.4
3.5
Remaining
Number
605
422
519
599
165
Plants
Percent
49 . 9%
74.0
89.6
96.6
96.5
Total 3,177 867 27.3% 2.310 72.7%
w
M
H
I
oo
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
ESTIMATED NUMBER OF EMPLOYEES AFFECTED BY POTENTIAL CLOSURES
OF URBAN PLANTS FOR LEVEL I POLLUTION ABATEMENT
Number of Employees
Plant
Code
A
B
C
D
E
Average
All
Number of
Potential
Range per Plant Plants Plant Closures*
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
2
7
14
30
67
1,904
3,073
6,244
14,310
8.844
238
55
22
7
2
Estimated
Number of
Employees Affected
Number
476
385
208
210
134
Percent
25.0%
12.5
4.9
1.5
1.5
Total
34.375
324
1,513
4.7%
*From Exhibit VII-1
v£>
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A AND B
ESTIMATED NUMBER OF EMPLOYEES AFFECTED BY POTENTIAL CLOSURES
OF URBAiSf PLANTS FOR LEVEL I POLLUTION ABATEMENT
Number of Employees
Plant
Code
A
B
C
D
E
Range
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
Average
per Plant
2
7
14
30
67
All
Plants
1,904
3,073
6,244
14,310
8.844
Number of
Potential
Plant Closures*
476
110
45
14
4
Estimated
Employees
Number
952
770
630
420
268
Number of
Affected
Percent
50 . 0%
25.1
10.1
2.9
3.0
Total
34.375
649
3,040
8.8%
*From Exhibit VII-2
X
ffi
h-l
I
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A AND B
ESTIMATED NUMBER OF EMPLOYEES AFFECTED BY POTENTIAL CLOSURES
OF RURAL PLANTS FOR LEVEL I POLLUTION ABATEMENT
Number of Employees
Number of
Plant Average All Potential
Code Range per Plant Plants Plant Closures*
A 1-4 2
B 5-9 7
C 10-19 14
D 20-49 30
E 50-99 67
Total
570
917
1,862
4,290
2.613
10,252
142
33
13
4
1
193
Estimated Number of
Employees Affected
Number Percent
284
231
182
120
67
884
«HM«BBHi*
49.8%
25.2
9.8
2.8
2.6
8.6%
*From Exhibit VII-3
w
B
M
03
M
H
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
ESTIMATED NUMBER OF EMPLOYEES AFFECTED BY POTENTIAL CLOSURES
OF PLANTS (RURAL AND URBAN) FOR LEVEL I POLLUTION ABATEMENT
Number of Employees
Plant
Code
A
B
C
D
E
Range
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
Average
per Plant
2
7
14
30
67
All
Plarts
2,474
3,990
8,106
18,600
11,457
Number of
Potential
Plant Closures-1'
380
88
35
11
3
Estimated
EmplpYees
Number
760
616
490
330
201
Number of
Affected
Percent
30.7%
15.4
6.0
1.8
1.8
Total
44,627
517
2,397
5.4%
*From Exhibit VII-4
X
EC
M
td
N>
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE B
ESTIMATED NUMBER OF EMPLOYEES AFFECTED BY POTENTIAL CLOSURES
OF PLANTS (RURAL AND URBAN) FOR LEVEL I POLLUTION ABATEMENT
Number of Employees
Plant
Code
A
B
C
D
E
Total
Range
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
Average
per Plant
2
7
14
30
67
All
Plants
2,474
3,990
8,106
18,600
11.457
44.627
Number of
Potential
Plant Closures *
618
143
58
18
5
824
Estimated
^Employees
Number
1,236
1,001
812
540
336
3,924
Number of
Affected
Percent
50.0%
25.1
10.0
2.9
2.9
8.8%
X
* From Exhibit VII-5
I
t-*
U>
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATES A AND B
ESTIMATED NUMBER OF EMPLOYEES AFFECTED BY POTENTIAL CLOSURES
OF RURAL PLANTS FOR LEVEL II POLLUTION ABATEMENT
Number of Employees
Plant
Code
A
B
C
D
E
Average All
Range per Plant Plants
1
5
10
20
50
- 4
- 9
- 19
- 49
- 99
2
7
19
30
67
286
686
1,680
4,170
2,546
(1)
Number of
Potential
Estimated Number of
Employees Affected
Plant Closures*
14
5
2
3
1
Number
28
35
28
90
67
Percent
9.8%
5.1
1.7
2.2
2.6
Total
9,368
25
248
2.6
Note: (1) Plants remaining after
potential Level I closures,
* From Exhibit VII-6
•=
M
00
M
H
I—1
-P-
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
ESTIMATED NUMBER OF EMPLOYEES AFFECTED BY POTENTIAL CLOSURES
OF PLANTS FOR LEVEL I AND LEVEL II POLLUTION ABATEMENT
Number of Employees
Plant
Code
A
B
C
D
E
Average
All
Number of
Potential
Range per Plant Plants Plant Closures*
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
2
7
14
30
67
2,474
3,990
8,106
18,600
11,457
394
93
37
14
4
Estimated
Number of
Employees Affected
Number
788
651
518
420
268
Percent
31.9%
16.3
6.4
2.3
2.3
Total
44,627
642
2,645
5.9%
From Exhibit VII-7
x
a
I-H
w
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE B
ESTIMATED NUMBER OF EMPLOYEES AFFECTED BY POTENTIAL CLOSURES
OF PLANTS FOR LEVEL I AND LEVEL II POLLUTION ABATEMENT
Number of Employees
Plant
Code
A
B
C
D
E
Range
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
Average
per Plant
2
7
14
30
67
All
Plants
2,474
3,990
8,106
18,600
11,457
Number of
Potential
Plant Closures /v
632
148
60
21
6
Estimated
Employees
Number
1 264
•*- J *- W*"T
1,036
840
C. O A
D JU
402
Number of
Affected
Percent
51.1%
26.0
10.4
3.4
3.5
Total
44,627
867
4.172
9.3%
* From Exhibit VII-8
Hi
<
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
ESTIMATED DOLLAR SALES AFFECTED BY POTENTIAL CLOSURES
OF URBAN PLANTS FOR LEVEL I POLLUTION ABATEMENT
Plant
Code
A
B
C
D
E
Total
Annual Sales ($.000) Number of
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Average
per Plant
$ 40.3
135.0
262.9
594.3
1,345.5
All Potential
Estimated Sales Volume
Affected ($ 000)
Plants Plant Closures* Sales
$ 38,365.6
59,265.0
117,253.4 •
283,481.1
177,606.0
$675,971.1
238
55
22
7
I
324
$ 9,591.4
7,425.0
5,783.8
4,160.1
2,691.0
£_29_i_651.3
Percent
25.07o
12.5
4.9
1.5
1.5
4.4%
From Exhibit VII-1
w
I
h-'
-»J
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE B
ESTIMATED DOLLAR SALES AFFECTED BY POTENTIAL CLOSURES
OF URBAN PLANTS FOR LEVEL I POLLUTION ABATEMENT
Annual Sales C$.000)
Plant
Code
A
B
C
D
E
Total
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Average
per Plant
$ 40.3
135.0
262.9
594.3
1,345.5
All
Plants
$ 38,365.6
59,265.0
117,253.4
283,481.1
177,606.0
$675.971.1
Number of
Potential
Plant Closures '
476
110
45
14
4
649
Estimated Sales Volume
Affected ($ 000)
Sales
$19,182.8
14,850.0
11,830.5
8,320.2
5,382.0
$59,565.5
Percent
50.0%
25.0
10.1
3.0
3.0
8.8%
* From Exhibit VII-2
I
\->
00
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATES A AND B
ESTIMATED DOLLAR SALES AFFECTED BY POTENTIAL CLOSURES
OF RURAL PLANTS FOR LEVEL I POLLUTION ABATEMENT
Plant
Code
A
B
C
D
E
Number of
Employees
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
Annual
Sales ($
Average
per Plant
$ 40.
135.
262.
594.
1,345.
3
0
9
3
5
.000)
All
Plants
$ 11
17
34
84
52
,485
,685
,965
,984
,474
Number of
Potential
Estimated Sales Volume
Affected ($.000)
Plant Closures* Sales
.5
.0
.7
.9
.5
142
33
13
4
1
$ 5
4
3
2
1
,722.6
,455.0
,417.7
,377.2
,345.5
Percent
49.8%
25.2
9.8
2.8
2.6
Total
$201.595.6
193
$17.318.0 8.6
* From Exhibit VII-3
PC
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A
ESTIMATED DOLLAR SALES AFFECTED
(URBAN AND RURAL) FOR LEVEL I
Annual Sales ($.000)
Plant
Code
A
B
C
D
E
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Average
per Plant
$ 40.3
135.0
262.9
594.3
1,345.5
BY POTENTIAL CLOSURES
POLLUTION ABATEMENT
Number of
All Potential
Plants Plant Closures
$ 49,851.1
76,950.0
152,219.1
368,466.0
230,097.6
380
88
35
11
3
Estimated Sales Volume
Affected ($.000)
* Sales
$15,314.0
11,880.0
9,201.5
6,537.3
4,036.5
Percent
30.7%
15.4
6.0
1.8
1.8
Total
517
$846.969.3 5.4%
* From Exhibit VII-4
N>
o
-------
Plant
Code
A
B
C
D
E
Total
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE B
ESTIMATED DOLLAR SALES AFFECTED BY POTENTIAL CLOSURES
(URBAN AND RURAL) FOR LEVEL I POLLUTION ABATEMENT
Annual Sales ($.000)
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Average
per Plant
$ 40.3
135.0
262.9
594.3
1,345.5
All
Plants
$ 49,851.1
76,950.0
152,219.1
368,466.0
230.097.6
$877,583.8
Number of Estimated Sales Volume
Potential
Plant Closures *
618
143
58
18
5
842
Affected
Sales
$24,905.4
19,305.0
15,248.2
10,697.4
6,727.5
$76,883.5
($.000)
Percent
50.0%
25.1
10.0
2.9
2.9
8.8%
* From Exhibit VII-5
w
X
as
I—I
Cd
I—I
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-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATES A
AND B
ESTIMATED DOLLAR SALES AFFECTED BY POTENTIAL CLOSURES
OF RURAL PLANTS FOR LEVEL II POLLUTION ABATEMENT
Annual Sales ($.000)
Plant
Code
A
B
C
D
E
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Average
per Plant
$ 40.3
135.0
262.9
594.3
1,345.5
Plants U)
$ 5,762.9
13,230.0
31,548.0
82,607.7
51,129.0
Number of Estimated Sales Volume
Potential Affected ($.000)
Plant Closures*
14
5
2
3
1
Sales
$ 564.2
675.0
525.8
1,782.9
1.345.5
Percent
9.8%
5.1
1.7
2.2
2.6
Total
$184,277.6
25
2.6.
(1) Based upon plants remaining after
potential plant closures.
* From Exhibit VII-6
PC
M
W
M
H
to
-------
ENVIRONMENTAL PROTECTION AGENCY
Plant
Code
A
B
C
D
E
ALTERNATE A
ESTIMATED DOLLAR SALES AFFECTED BY POTENTIAL CLOSURES
OF PLANTS FOR LEVEL I AND LEVEL II POLLUTION ABATEMENT
Annual Sales ($.000)
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Average
per Plant
$ 40.3
135.0
262.9
594.3
1,345.5
All
Plants
$ 49,851.1
76,950.0
152,219.1
368,466.0
230,097.6
Number of
Potential
Plant Closures
394
93
37
14
4
Estimated Sales Volume
Affected
Sales
$15,878.2
12,555.0
9,727.3
8,320.2
5.382.0
($.000)
Percent
31.9%
16.3
6.4
2.3
2.3
Total
867
5.97o
w
x
S
H
w
M
H
ro
-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE B
ESTIMATED DOLLAR SALES AFFECTED
OF PLANTS FOR LEVEL I AND LEVEL
Annual Sales ($.000)
Plant
Code
A
B
C
D
E
Total
Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Average
per Plant
$ 40.3
135.0
262.9
594.3
1,345.5
All
BY POTENTIAL
II POLLUTION
Number of
Potential
CLOSURES
ABATEMENT
Estimated Sales Volume
Affected ($.000)
Plants Plant Closures* Sales
$ 49,851.1
76,950.0
152,219.1
368,466.0
230.097.6
$877,583.8
632
148
60
21
6
867
$25,469.6
19,980.0
15,774.0-
12,480.3
8.073.0
$81,776.9
Percent
15.1
26.0
10.4
3.4
3.5
9.3%
* From Exhibit VII-8
i
NJ
-------
VIII - LIMITS OF THE ANALYSIS
In this section the accuracy of the analysis and the
major assumptions inherent in the conclusions are discussed.
ACCURACY
In assessing the impact of pollution abatement on the
Electroplating Industry, a considerable amount of data had to
be gathered in a limited time frame. Much of the information
used was compiled from existing industry studies. These studies
were supplemented by direct analysis of specific plants in the
Midwest as a cross check of the industry studies. However,
because the sample size of the supplemental studies was small,
some range of error can be expected.
It is recognized that industry studies also represented
a small percent of the plants in the industry, consequently,
these studies also had some limitations. It is the opinion of
the contractor that while preciseness may not be present, the
order of magnitude of the effect of pollution control can be
derived from the information.
Specifically, the accuracy of this study depends upon the
accuracy of:
1. Published industry data.
2. Unpublished information supplied by knowledgeable
industry personnel.
-------
VIII - 2
3. Cost data developed separately from this
analysis by Battelle Memorial Institute and the Environmental
Protection Agency.
4. Estimates by A. T. Kearney consultants.
(a) Published
Data
1. Production and Size. The published data provided
by the Census of Manufactures - 1967. Annual Survey of
Manufacturers - 1971, Metal Working Guide - 1973, and that
collected from the National Association of Metal Finishers
have some areas of conflict. In general however, the data
were felt to be sufficiently accurate to be used as an indicator
of the relative size and growth of this industry.
2. Profitability. Little published financial data
were available regarding the profitability of the Electroplating
Industry except for Robert Morris Associates, Annual Statement
Studies. Therefore, much of the profitability data was calculated
based on industry average data published by the National Association
of Metal Finishers, and A. T. Kearney, Inc. survey and estimates.
(b) Unpublished Data
and Information
A. T. Kearney, Inc. conducted a survey in which members
of the Electroplating Industry were personally contacted or
interviewed by telephone to determine plant capacities, type
-------
VIII - 3
of water pollution control facilities in existence, operating
and cost data, and plans for future growth and development.
In addition, Kearney was privileged to be privy to some
unpublished data regarding sales and profit margins for a
sample of electroplating firms.
Kearney also personally interviewed five Chicago area
banks to determine criteria for making loans to electroplating
firms and the availability of funds for pollution control
equipment.
These data have been treated on a confidential basis and
are assumed to be accurate. However, not all respondents
would, or could, supply the desired information. Thus, some
data had to be estimated to provide a complete analysis. The
result is that total industry data, particularly that
regarding employment levels and sales volumes, are believed
to be more accurate than data from surveys.
(c) Cost Data
The cost data provided were used as supplied. No effort
was made to audit these data, but the order of magnitude of
costs seemed to be in line with industry expectations.
-------
VIII - 4
(d) A. T. Kearney, Inc.
Estimates
Since some data were treated as proprietary by industry
sources, or unavailable, it was occasionally necessary to
estimate some industry data. An example of such an estimate
would be the profit margins for each of the model plant sizes.
While some of these data were not specifically published
in the report, they were a necessary step in the analysis.
They were not presented due to the confidentiality of the data
CRITICAL ASSUMPTIONS
IN ANALYSIS
In assessing the impact on the industry, certain assumptions
have been made which have direct bearing on the results of the
study. The following major assumptions have been made.
(a) Plant Size
The industry has been assumed to be similar in each
segment according to size. Sales, employment and production
are assumed to be relevant units of measurement for the plants
in the industry.
(b) Operating Characteristics
of the Industry
The majority of the small shops were assumed to handle
similar waste streams and operate in approximately the same
manner according to size, as stated in the above paragraph.
-------
VIII - 5
(c) Plant Distribution
by Geographical
Location
In the absence of more accurate data, the water discharged
into streams versus that discharged into municipal sewers was
assumed to represent the distribution of the plants by
geographical location, i.e. rural versus urban areas.
(d) Present Level of
Pollution Control
Equipment Investment
The plants in the industry affected by pollution abatement
have either zero current investment in water treatment equipment
or the estimated costs to meet guidelines are additive for those
plants already using some type of treatment.
(e) Profitability
of Firms
Profitability and costs for the plants located within
urban and rural areas were assumed to be similar.
(f) Investment and Profit
Maximizing Decision
It was assumed that all shop owners will attempt to
maximize profits. It was also assumed that five years profits
would be the maximum amount of investment a shop owner would
be willing to forego before going out of business.
-------
BIBLIOGRAPHIC DATA I'• K-.p^rt No.
SHEET EPA-230/1-73-007
3. HkCipicnt'i Accession ,V>.
4. in ic-
Subtitle
Economic Analysis of the Proposed Effluent
Guidelines for the Electroplating Industry (copper,
5> Report
September, 1973
6.
i nm a r>H
7. Author(j)
&• Performing
No.
). Performing Organization Name and Address
A. T. Kearney, Inc.
100 South Wacker Drive
Chicago, Illinois 20460
10. Proicct/Tast/'Aorl: L'n.t N<.
11. Contract/Grant .No.
68-01-1545
12. Sponsoring Organization Name and Aadress
Office of Planning and Evaluation
Environmental Protection Agency
Washington, D. C. 20460
13. Type or Report it Periou
Covered
Final Report
14.
15. Supplementary Notes
16. Abstracts
The report summarizes the economic impact of water pollution
abatement on the Electroplating Industry (Copper, Nickel, Chromium
and Zinc). Discussed are the industry structure, financial profile,
sources of water pollution, projected costs and price increases,
and the effects on production, plant closings, and local communities.
17. Key 'i'ords and Document Analysis. 17o. Descriptors
Economic factors, Electroplating Industry, pollution, industrial
waste treatment, water pollution, ecology.
17b. Ucntifiers/Open-Ended Terms
Electroplating Industry, water pollution economics, economic impact
17e. COSAT1 FieU/Group (5C)
13, Av.ul.ibility >:.itLT.ii-nt
19. >ctuntv C-.iaiS (ihi-.
Report 1
I :\f i v -,ctrii M
21. No. .: .
177
22.
( H L_ V . J /_')
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