Prepublication issue for EPA libraries
and State Solid Waste Management Agencies
ECONOMIC IMPACT ANALYSIS OF ANTICIPATED
HAZARDOUS WASTE MANAGEMENT REGULATIONS
ON THE BATTERIES, ELECTRONICS, AND SPECIAL MACHINERY INDUSTRIES
This report (SW-l60c) describes work performed
for the Office of Solid Waste under contract no. 68-01-4714
and is reproduced as received from the contractor.
The findings should be attributed to the contractor
and not to the Office of Solid Waste.
The reader is advised to utilize the information
and data herein with caution and judgement.
L
Copies will be available from the
National Technical Information Service
U.S. Department of Commerce
Springfield, Virginia 22161
U.S. ENVIRONMENTAL PROTECTION AGENCY
1978
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This report was prepared by Kearney: Management Consultants,
under contract No. 68-01-4714.
Publication does not signify that the contents necessarily
reflect the views and policies of the U.S. Environmental
Protection Agency, nor does mention of commercial products
constitute endorsement by the U.S. Government.
An environmental protection publication (SW^160c) in the
solid waste:tnanagement series.
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TABLE OF CONTENTS
Section Title
EXECUTIVE SUMMARY
Introduction 1
Industry Characterizations 1
Cost of Compliance 4
Economic Impacts 7
II GENERAL INTRODUCTION
Background 9
Industries Under Investigation 9
Contents of the Report 10
III INDUSTRY CHARACTERIZATIONS
Storage and Primary Batteries 11
Special Industry Machinery 25
Office, Computing, and Accounting 30
Machines
Electronic Components 35
IV COST OF COMPLIANCE WITH HAZARDOUS
WASTE REGULATIONS
Introduction 40
Storage and Primary Batteries 41
Special Industry Machinery 49
Office, Computing, and Accounting 58
Machines
Electronic Components 65
V ASSESSMENT OF ECONOMIC IMPACTS
Methodology 71
Aggregate Impacts 71
Differential Impacts Within 72
the Industry
Special Impact Considerations 75
VI REFERENCES 77
111
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TABLE OF CONTENTS
List of Tables
Number Title Page
1 Total National Costs for Hazardous 5
Waste Treatment and Disposal:
Storage and Primary Batteries
2 Total National Costs for Hazardous 6
Waste Disposal in 1977 - SIC 355
3 Total National Costs for Hazardous 6
Waste Disposal - SIC 357
4 Total National Costs for Hazardous 7
Waste Disposal in the Electronic
Components Industry
5 Aggregate Hazardous Treatment and ' 8
Disposal Costs Associated with a
Shift From Level I to Level III
Technology
6 Leading Battery Manufacturers by 12
Product Type and Shipments Value
7 Battery Industry Value of Shipments 13
8 Battery Industry Concentration . 16
j
9 Annualized Costs of Compliance with 18
Environmental Regulatory Requirements
for Typical New Lead-Acid Battery
Manufacturing Plants
10 1975 Battery Sales by Publicly-Owned 19
Firms Manufacturing Batteries
11 Profitability of Major Battery 20
Manufacturers, 1974-1975
12 Battery Industry Imports and 23
Exports, 1965-1974
13 Estimated Annual Real Growth in 24
Shipments - Battery Industry,
1975-1985
iv
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TABLE OF CONTENTS
List of Tables
Number Title Pac
14 SIC 355 Industry Shipment Values, 26
Employment and Productivity: 1972
15 SIC 355 Industry Shipment Values, 27
Employment and Productivity: 1967
16 Concentration Ratios for Major 29
Segments of the Special Industry
Machinery Manufacturing Industry
17 SIC 357 Industry Shipment Values, 31
Employment and Productivity: 1972
18 SIC 357 Industry Shipment Values, 32
Employment and Productivity: 1967
19 Concentration Ratios for Major 34
Segments of the Office, Computing,
and Accounting Machines Industry
20 Electronic Components Industry Shipment 36
Values, Employment and Productivity:
1967-1977
21 Concentration Ratios for Major 38
Segments of the Electronic
Components Industry
22 Hazardous Waste Streams: Storage 42
and Primary Batteries \
23 Typical Manufacturing Plants: 43
Storage and Primary Batteries
24 Hazardous Wastes Generation by 44
Segment in the Manufacture of
Storage and Primary Batteries
25 Level III Waste Management 46
Technology: Storage and
Primary Batteries
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TABLE OF CONTENTS
List of Tables
Number Title Page
26 Total National Costs for Hazardous 47
Waste Treatment and Disposal:
Storage and Primary Batteries
27 Treatment Costs vs Sales Values 48
by Industry Segment: Storage
and Primary Batteries
28 Manufacturing Processes in SIC 355 50
1972
29 Hazardous Waste Generation in 54
SIC 355 - 1977
30 Level III Waste Disposal Technology 56
for SIC 355
31 Hazardous Waste Treatment and 56
Disposal Costs for the Special
Machinery Manufacturing Industry
32 Total National Costs for Hazardous 58
Waste Disposal in 1977 - SIC 355
33 Manufacturing Processes in SIC 357 59
1972
34 Hazardous Waste Generation in SIC 357 63
1977
35 Total National Costs for Hazardous 65
Waste Disposal - SIC 357
36 Hazardous Waste Generation in SIC 367 66
1977
37 Treatment and Disposal of Hazardous 68
Wastes in the Electronic Components
Industry
38 Hazardous Waste Treatment and Disposal 69
Costs in the Electronic Components
Industry - 1977
vi
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TABLE OF CONTENTS
List of Tables
Number Title
39 Total National Costs for Hazardous 70
Waste Disposal in the Electronic
Components Industry
40 Hazardous Waste Treatment and Disposal 70
Costs for an Average Electronic
Components Manufacturing Plant
41 Aggregate Hazardous Waste Treatment 72
and Disposal Costs Associated with
' a Shift from Level I to Level III
Technology
vi 1
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TABLE OF CONTENTS
List of Figures
Number Title Page
1 Typical Manufacturing Establishment 51
in SIC 355
2 Size Distribution of SIC 355 52
Manufacturing Establishments
3 Typical Manufacturing Establishment 60
in SIC 357
4 Size Distribution of SIC 357 61
Manufacturing Establishments
viii
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I - EXECUTIVE SUMMARY
INTRODUCTION
The U.S. Environmental Protection Agency (EPA) is responsible
for developing hazardous waste management regulations under the
Resource Conservation and Recovery Act of 1976 (PL 94-580).t Haz-
ardous waste management regulations applicable to industrial waste
generators are now being formulated by EPA's Office of Solid Waste,
Hazardous Waste Management Division. In developing waste manage-
ment cost estimates for affected industries, EPA engaged A. T.
Kearney, Inc. to assess the economic impacts associated with these
costs for the following manufacturing industry groups:
o Storage and Primary Batteries
(SIC 3691 and 3692)
« Electronic Components (SIC 367)
o Special Machinery Manufacturing
(SIC 355 and 357)
It is expected that the results of this economic impact anal-
ysis will.be incorporated into another study report entitled,
"Integrated Economic Impact of Hazardous Waste Management Regula-
tions," being coordinated by another private contractor.
At the outset of this study, it was determined that the three
industry groups listed above would fall into a "secondary impacts"
category. This .category was defined as an industry group for which
incremental hazardous waste management costs are less than 0.5 per-
cent of product sales. The main objectives of this study were to
review and verify the overall economic impacts for each of the
three groups and to determine the extent of any special differ-
ential impacts which might be explained within these groups;
1 • . s
INDUSTRY
CHARACTERIZATIONS
(a) Storage and
Primary Batteries
Battery manufacturing is usually segmented between the two
major end products: storage (secondary) batteries and primary
batteries. There are about 170 companies operating close to 250
manufacturing plants, although ten major firms dominate the in-
dustry. The value of shipments from battery plants was $1.764
billion in 1975, 74 percent of which was accounted for by storage
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batteries. During the period 1958-1975, sales for both primary
and secondary batteries rose at a compound annual rate of ap-
proximately 7.5 percent. The estimated: annual real growth in
shipments during 1975-1985 is 3.5 percent and 2.3 percent for
storage and primary batteries, respectively.
Industry employment is estimated at 30,000 persons, 73'per-
cent of whom are employed in the manufacture of storage batteries.
Primary battery plants are concentrated in the North Central region
of the country, while storage battery manufacturing facilities are
evenly distributed throughout the United States.
The automotive market accounted for more than half of the
total value of storage battery shipments in 1973, while the consumer
market accounted for roughly 75 percent of the total value of pri-
mary battery shipments. . • '
(b) Special Industry
; Machinery ' ;
The special machinery industry is segmented by the Bureau of
the Census into food products machinery, textile machinery, wood-
working machinery, paper industries machinery, printing trades
machinery, and miscellaneous special industry machinery. Shipment
values for these segments ranged from $448 million to $2.604
billion in 1972. About 190,000 people were employed in special
machinery manufacturing in 1972, two-thirds of whom were production
workers. Plants are concentrated within the major manufacturing
regions of the country like the Northeast, the Midwest, and the
West Coast.
The value of shipments is projected to increase at an average
annual compound rate of 9 percent between 1977 and 1985 in the food
products machinery segment. During the same period, growth rates
of 7.5 percent are anticipated for the printing machinery and tex-
tile machinery segments, respectively.
(c) Office, Computing, and
Accounting Machines
!
Office, computing, and accounting machines manufacturing en-
compasses these industry segments: typewriters; electronic com-
puting equipment; calculating and accounting machines, except
electronic computing equipment; scales and balances, except labor-
atory; and miscellaneous office machines, not elsewhere classified.
Industry data for typewriters and miscellaneous office machines
were combined by the Bureau of the Census, thus requiring that
these segments be analyzed as one in this study.
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The major industry segments are rapidly changing as a result
of major innovations in production technologies, increasingly
sophisticated electronic applications, and accelerating import
competition from Japanese manufacturers. Shipment values for the
computer segment of the industry increased 70 percent between
1967 and 1972 and were expected to increase by another 88 percent
between 1972 and 1977, reaching $12 billion. The other major
segments contrast sharply, with both experiencing declines in
the real value of shipments during this period.
Computer segment employment has grown rapidly since 1967,
reaching about 175,000 in 1976. Employment in the manufacture
of calculating and accounting machines, typewriters, and miscel-
laneous office machines declined since 1967. The computer segment
is highly regionalized, with 55 percent of the manufacturing plants
located in California, Massachusetts, New York, and New Jersey.
The other segments are more evenly distributed across the country
with the more industrialized states having higher concentrations
of manufacturing plants.
Rapid growth is expected to continue in the computer segment
of the industry between 1977 and 1985, averaging eight percent
at compound annual rates. Calculators and accounting machines
sales are projected to increase by five percent over this period,
while growth rates for the typewriters and miscellaneous office
machines sector cannot be realistically estimated.
(d) Electronic
Components
The electronic components industry is complex and rapidly
changing. It covers the manufacture of the following components:
electron tubes; semiconductors; capacitors, resistors, and in-
ductors; and integrated circuit packages. The structure of the
industry is complicated due to the range of product markets, the
volatile nature of demand, the frequency of technological inno-
vation, and the interrelationships between component markets.
The value of electronic components shipments increased by
70 percent during the past ten years to $12.6 billion in 1977.
Total industry employment declined by 8 percent from 293,000
workers during this same period, partially as a result of pro-
duction employment being shifted to overseas facilities owned
by American firms. Other contributing factors were advances in
production technology, market-related trends toward more capital-
intensive production processes, and a more highly-skilled mix of
production workers in the United States.
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- 4 -
Electronic components manufacture is concentrated in the major
manufacturing regions along the East and West Coasts and the Great
Lakes. In 1972, there were approximately 2,855 electronic compo-
nents manufacturing plants in the United States.
Real growth in the value of electronic components shipments is
expected to average 6-7 percent during the next eight years.
COST OF
COMPLIANCE
\
The costs of compliance with the proposed hazardous waste
regulations were derived from secondary data sources. These were
comprised of contractor assessments of industrial hazardous waste
practices in the three major industry groups plus a recent draft
report by Battelle Columbus Laboratories entitled, Cost of Com-
plying with Hazardous Waste Management Regulations.
The cost data were based on three different levels of tech-
nology for the treatment and disposal of each hazardous waste
stream generated by manufacturing establishments. These technology
'levels, as defined by the EPA Office of Solid Waste, are based .on
the most prevalent industry-wide practice (Level I); the best tech-
nology presently used which is amenable to more widespread use
(Level II); and the technology required to provide adequate health
and environmental protection (Level III).
i
For the purposes of this study, it was assumed that Level III
technology will be required to comply with the new hazardous waste
regulations. In evaluating economic impacts, Level III technology
was compared to Level I practices. (Specified in Battellels Cost
Of Complying with Hazardous Waste Management Regulations as Pathways
Level III Technology.)
Level I treatment and disposal for the hazardous wastes of
the three major industry groups generally consists of on-site or
off-site landfilling. Level III technology, based on the Battelle
draft report, was usually assumed to be either secured landfilling
or incineration.
The total national costs for the treatment and disposal of
hazardous wastes of each industry group are shown in Tables 1-4.
In each industry group the cost of Level III technology implemen-
tation is roughly twice that of Level I technology.
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TABLE 1
TOTAL NATIONAL COSTS FOR HAZARDOUS
WASTE TREATMENT AND DISPOSAL:
STORAGE AND PRIMARY BATTERIES
(thousand dollars/year)
Industry
Segment Level I Level II Level III
Lead-Acid Storage $1,570.0(1)
(lime sludges) $ 460 $739 665.3(2)
Lead-Acid Storage
(caustic sludges) 89 31 63.0
Nickel-Cadmium and
Magnesium-Carbon (sludges) 17.8 0 14.5
All Segments
(manufacturing scrap) 133 160 195.0
Total $599.8 $830 $937.8(3)
Key to alternatives;
(1) Chemical fixation of lime sludges and simple landfill.
(2) Secured landfill.
(3) Total assumes secured landfill for lime sludges.
Source: Battelle Columbus Laboratories, Cost of Complying
with Hazardous Waste Management Regulations
(Draft Report).
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TABLE 2
TOTAL NATIONAL COSTS FOR
HAZARDOUS WASTE DISPOSAL IN 1977 - SIC 355
(thousand dollars/year)
Process Waste Level I Level II Level III
Machine Shop $4,359 $7,582 $ 9,319
Paint Shop 71 75 238
Heat Treating 378 658 809
Electroplating 25 29 139
T°tal $4.833 $8.344 $10.505
Sources: Table 29 and Table 31.
TABLE 3
TOTAL NATIONAL COSTS FOR
HAZARDOUS WASTE DISPOSAL - SIC 357
Process Waste
Machine Shop
Paint Shop
Heat Treating
Electroplating
Total
(thousand dollars/year)
Level I Level II
$1,156 $2,011
192 203
378 658
134 152
$1,860 $3,024
Level III
$2,472
645
809
741
__ $4,667
Sources: Table 31 and Table 34.
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TABLE 4
TOTAL NATIONAL COSTS FOR HAZARDOUS WASTE DISPOSAL
IN THE ELECTRONIC COMPONENTS INDUSTRY
(thousand dollars/year)
Waste Stream Level I Level II Level III
Halogenated Solvents $ 948 $ 962 $1,487
Nonhalogenated Solvents 1,262 1,280 1,980
Wastewater Treatment 232 263 1,284
Sludges
Lubricating and 157 ' 159 246
Hydraulic Oils -
Paint Wastes 3 4 12
Total $2.602 $2.668 $5.009
Source: Table 36 and Table 38.
ECONOMIC
IMPACTS
The aggregate economic impacts associated with a shift from
Level I technology to Level III will be negligible for each in-
dustry group as shown in Table 5. Aggregate industry costs as
a percent of industry shipment values .range from 0.02 to 0.06
percent. It is expected that these costs would constitute less
than one percent of industry profits.
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TABLE 5
AGGREGATE HAZARDOUS WASTE TREATMENT
AND DISPOSAL COSTS ASSOCIATED WITH A SHIFT
FROM LEVEL I TO LEVEL III TECHNOLOGY
- 8 -
Industry
Storage and Primary
Batteries
Special Industry
Machinery
Office, Computing, and
Accounting Machines
Electronic Components
Estimated 1975
Value of Shipments
(million dollars)
$ 1,764.5
8,932.4
11,568.4
10,024.4
Incremental
Hazardous Waste
Treatment Costs
(million dollars)
$0.3
5.7
3.8
2.4
Cost as a
Percent of
Shipment
Values
0.02
0.06
0.03
0.02
Sources: Annual Survey of Manufactures; and Battelle Columbus
Laboratories, Cost of Complying with Hazardous Waste
Management Regulations (Draft Report).
The possibility of differential impacts affecting particular
plant sizes, industry segments, or regional locations was also
evaluated. With the exception of a small number of the largest
lead-acid battery plants (plants which are now using lime for
acid neutralization and precipitation in their wastewater treat-
ment systems), no such differential impacts were found. Although
a few lead-acid battery plants will incur disproportionately high
hazardous waste management costs, these costs are considered neg-
ligible for the large-scale operations involved.
Due to the limited nature of capital requirements associated
with prospective hazardous waste management practices, no financing
difficulties are anticipated within any of the industries studied.
Price and employment effects attributable jto more stringent manage-
ment practices will be negligible, if not nonexistent. The possi-
bility of plant closures directly or indirectly attributable to
incremental hazardous waste management costs is considered ex-
tremely remote, and the costs will not affect import and export
patterns within the industry groups.
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II - GENERAL INTRODUCTION
BACKGROUND
The Resource Conservation and Recovery Act of 1976 (PL 94-580)
charged the Environmental Protection Agency with responsibility
for evaluating the economic consequences of various provisions of
the Act, including hazardous waste management regulations. Having
developed waste management cost estimates for industries affected
by prospective hazardous waste management regulations, EPA engaged
Kearney Management Consultants to assess the economic impacts
associated with these costs for three specific industry groups.
INDUSTRIES UNDER
INVESTIGATION
Kearney was assigned responsibility for these industry groups:
e Storage and Primary Batteries (SIC 3691
and 3692)
0 Electronic Components (SIC 367)
• Special Machinery Manufacturing (SIC 355
and 357)
The special machinery manufacturing group was subdivided by
Kearney for purposes of analysis. Thus, this report focuses upon
four industry groups, designated as follows:
o Storage and Primary Batteries (SIC 3691
and 3692)
9 Electronic Components (SIC 367)
9 Special Industry Machinery (SIC 355)
« Office, Computing and Accounting
Machines (SIC 357)
The results of Kearney's assessment will be used in the pre-
paration of a report entitled, "Integrated Economic Impact of
Hazardous Waste Management Regulations," being coordinated by
Arthur D. Little, Inc.
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Prior to conducting this study, EPA expected that the industry
groups identified above would fall into a "secondary impacts"
category. This category was defined as an industry segment for
which incremental hazardous waste management costs are expected
to be less than 0.5 percent of product selling price.(1) For this
reason, the economic impact assessments for the batteries, elec-
tronics, and special machinery industries (three unrelated industry
groups) were organized together to review the overall economic
impacts and to determine the extent of any special differential
impacts which might be experienced by particular industry groups.
CONTENTS OF
THE REPORT
Kearney's report is organized into three major sections
(Sections III through V). Section III contains industry charac-
terizations for each of the four industry groups identified above.
These descriptions are for use in Section VI. B. of the proposed
A. D. Little report outline.
Section IV includes a review of hazardous waste streams
generated by each of the four industry groups, together with
estimates of compliance costs associated with alternative manage-
ment technologies. These descriptions correspond to those spec-
ified as IX. B. n. Secondary Segments, a. Cost of Compliance,
in the integrated report outline.
Section V provides Kearney's assessment of economic impacts
associated with incremental hazardous waste management costs for
the four industry groups. The four industry groups have been
handled jointly for purposes of discussion, rather than treated
separately, as in Sections III and IV. The consistency of the
analytical process and the nature of findings which resulted
warranted a more comprehensive presentation for this section.
Section V satisfies the integrated report outline requirements
for IX. B. n. Secondary Segments, b. Economic Impacts.
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III - INDUSTRY CHARACTERIZATIONS
STORAGE AND
PRIMARY BATTERIES
(a) Industry
Segments
The battery manufacturing industry is typically segmented
by distinguishing between the two major end products: storage
(secondary) batteries and primary batteries. Storage batteries
are rechargeable by connection to a source of direct current to
reverse the chemical reaction that provides the electrical cur-
rent. Primary batteries are not usually rechargeable and are,
therefore, expendable after their charge has been depleted.
Batteries range in size from lead-acid storage batteries weigh-
ing several tons to "button-cells" weighing a fraction of an
ounce. A common example of each battery type is the automobile
battery (storage) and the flashlight battery (primary).
The industry can be further subdivided by battery type.
The two most widely used types of storage batteries are lead-
acid and nickel-cadmium. Starting, lighting, and ignition (SLI)
batteries are the best example of lead-acid storage batteries,
and are basic equipment in automobiles, trucks, buses, airplanes,
boats, and motorcycles. Nickel-cadmium storage batteries are
commonly used for emergency and stand-by power, cordless appli-
ances, hand calculators, and hearing aids.
The two principal primary battery types are carbon-zinc and
alkaline-manganese. Carbon-zinc batteries are used in flashlights,
toys, lanterns, transistor radios and hand calculators. Alkaline-
manganese batteries are also used in flashlights, toys, photo-
graphic products, transistor radios, and hand calculators.
(b) Firms in
the Industry
The battery industry consists of approximately 170 companies
which operate close to 250 manufacturing plants. Despite the
relatively large number of firms in the industry, ten major, firms
dominate the field. Many of these firms are diversified in other
products. The firms include some of the nation's largest companies,
including General Motors, General Electric, Union Carbide and In-
ternational Nickel. The leading battery manufacturers are identi-
fied in Table 6.
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TABLE 6
LEADING BATTERY MANUFACTURERS BY
PRODUCT TYPE AND SHIPMENTS VALUE - 1973
Storage Batteries Only Estimated Shipments
(million dollars)
Globe-Union, Inc. $195
Delco-Remy (Division of General
Motors Corp.) 190
Eltra, Inc. 125
General Battery (Division of
Northwest Industries, Inc.) 90
General Electric 18
Eagle-Picher 17
Storage & Primary Batteries
ESB, Inc. (Division of International
Nickel Company) 360
Gould, Inc. 233
Primary Batteries Only
Union Carbide 185
P. R. Mallory and Company 60
Source: Annual Reports; Thomas Register, 1976; IBMA,
"Starting, Lighting, Ignition and Generating
Systems," 4th Edition Buyers* Guide, 1975.
There are approximately 250 manufacturing plants in the in-
dustry. Of these, 200 manufacture lead-acid storage batteries;
10 manufacture nickel-cadmium storage batteries; 12 manufacture
carbon-zinc primary batteries; and 4 manufacture alkaline-manga-
nese primary batteries.(2) Since many plants manufacture multiple
battery types, particularly in the primary battery industry, these
figures overlap to some extent.
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(c) Industry Sales
and Output
Industry sales in terms of value of shipments (Table 7) more
than tripled in the period 1958-1975. Sales grew at a compound
average annual rate of over 7.5 percent during this period.
Increases were comparable for both storage and primary batteries,
which exhibited compound average annual sales growth of 7.7 and
7.4 percent, respectively. During this same period, the Wholesale
Price indices for storage and primary batteries increased at compound
average annual rates between 1.5 and 2.5 percent.(3)
TABLE 7
BATTERY INDUSTRY VALUE OF SHIPMENTS
(million dollars)
Battery Type 1958 1963 1967 1972 1975
Storage 369.0 516.5 577.5 971.3 1,302.3
Primary 138.2 195.3 | 307.6 348.1 462.2
Total 507.2 711^8 ! 885.1 1.319.4 1.764.5
Sources: 1972 Census of Manufactures: Industry Statistics;
and Annual Survey of Manufactures; 1975.
Value added by manufacturing provides a measure of industry
output. Nominal output increased over three times in the period
1958 to 1972, equivalent to a compound average annual increase
of 8.4 percent. Growth in output was similar for both battery
industry segments: storage was 8.6 percent; and primary was 8.0
percent. Real output growth, adjusted for increases in wholesale
prices during this period, was somewhat more rapid for storage
batteries than for primary batteries.
(d) Industry ;
Employment
Approximately 30,000 persons are employed in the manufacture
of batteries. Seventy-three percent of these persons are employed
in the manufacture of storage batteries, which are comparatively
more labor-intensive in terms of production requirements. Storage
battery manufacturing employment is highest in Pennsylvania, Cali-
fornia, and Texas. Primary battery manufacturing employment is
concentrated most heavily in the north central region of the country.
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Although there are many plants which employ less than 100
employees, close to 90 percent of the:total value of battery ship-
ments originates from plants which employ 100 or more.
(e) Distribution
of Establishments
Storage battery plants are evenly distributed throughout the
United States. Plant locations tend to be clustered near motor
vehicle assembly plants or battery distribution points. Primary
battery plants are concentrated in the north central United States.
(f) Product
Markets
The automotive market (including trucks and buses) accounted
for over half of the total value of storage battery shipments in
1973. According to the Census of Manufactures, over 75 percent of
the value of automotive battery shipments were attributed to the
replacement market, with the balance of shipments devoted to the
original equipment market. Together, the automotive and industrial
markets accounted for over 80 percent of the total value of storage
battery shipments in 1973. The consumer market accounted for al-
most three-fourths of the total value of primary battery shipments
in 1973. End-use market shares displayed relative stability between
1963 and 1973 in all major categories.
(g) Channels of
Distribution
Battery plants may be classified as:
© Captive plants of major original equipment
manufacturers;
o Plants owned by one of the major, publicly-
owned companies; and I
® Plants owned by small, independent, privately-
owned firms.
Captive plants produce primarily for use in original equipment,
but may also distribute to other users.
The replacement market is served directly by many small plants.
However, a variety of distributors are active in the market, includ-
ing large retailers, parts dealers, service stations, and dealer
service departments. Drugstores, discount stores, toy stores and
other retailers handling battery-operated products are also active
in the replacement market for primary .batteries. Eighty percent of
the SLI batteries are sold to replacement distribution channels.
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- 15 -
Due to the seasonal demand and limited shelf-life which characterize
storage batteries, companies strive for a balanced mix of sales
to original equipment and replacement markets. Industrial and
speciality batteries are typically sold directly to industry or
government purchasers.
(h) Pricing
Patterns
Pricing patterns for SLI batteries are complex, reflecting the
number and variety of distribution channels available. Typically,
SLI batteries are sold by the manufacturer at 10 to 15 percent
($1 to $2 per battery) above cbst. According to industry sources,
margins are smallest in sales to original equipment manufacturers
and small wholesalers. The markup for the retailer to SLI batteries
is on the order of 100 percent. A typical battery is estimated to
cost between $8 and $15 to manufacture. The finished product is sold
to the retailer for $10 to $20, and is eventually retailed at a price
ranging from $18 to $35. Prices vary directly as a function of
cranking performance and reserve power capacity.
' !
Primary batteries are generally much smaller physically and
much lower in price than storage batteries. Estimated sales margins
for primary battery manufacturers are comparable to those obtained
by storage battery manufacturers (i.e., 10 to 15 percent above manu-
facturing costs). Observed variations in prices between small retail-
ers, discount outlets, and military exchange outlets suggest markups
of as much as 100 percent at the.retail level. >
j
Batteries sold in the industrial and military markets tend to
be manufactured pursuant to custom specifications, and are not gener-
ally inventoried. The manufacturer tends to realize larger per-unit
profits in these markets, but production volumes are much smaller
relative to the consumer market.
; (i) Price
History
Price increases for storage batteries averaged 2.2 percent per
year from 1963 to 1974. Primary battery prices increased by 3.8 per-
cent per year during the same period. Price increases in both in-
dustries were considerably lower than the average for all commodities,
which increased at a rate of 5.5 percent per year. Two factors
contributing to the relatively small price increases were auto-
mation in the industry, particularly among the major firms, and
long-term price stability in the cost of raw materials until the
very end of the period.
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(j) Competitive
Environment
The majority of battery shipments originate from a relatively
small number of major publicly owned companies: 92 percent of
the total value of primary battery shipments from the four leading
firms, and 85 percent of storage battery shipments from the leading
eight firms. Industry concentration is depicted in Table 8.
TABLE 8
BATTERY INDUSTRY CONCENTRATION
Primary Batteries
Union Carbide
ESB, Inc. 92% total value of
P.R. Mallory & Co. shipments
Gould, Inc.
Storage Batteries
ESB, Inc. !
Gould, Inc. I
Globe-Union, Inc. 85% total value of
Delco-Remy shipments
Eltra, Inc.
General Battery Corp.
General Electric
Eagle-Picher
Source: 1974 and 1975 Annual Reports. Predicasts, Inc.
Batteries & Electric Vehicles E36, Cleveland, Ohio,
1974.
The concentration ratios reported in the Census of Manufactures
for storage batteries have varied little from 1947 to 1972. Value
of shipments accounted for by the eight leading firms increased from
78 percent to 85 percent of total shipments, while corresponding
shares for the four leading firms declined from 62 percent to 57
percent. Value of primary battery shipments accounted for by the
eight leading firms remained virtually constant during this period,
beginning at 95 percent and closing at ,97 percent. Primary battery
shipments attributed to the four leading firms increased from 76
percent to 92 percent of total shipments value, however.
-------
- 17 -
The primary batteries sector is more concentrated than the
storage batteries manufacturing sector for several reasons. First,
storage batteries are heavy and, thus relatively expensive to
transport. This helps to economically justify building storage
ba:ttery manufacturing plants close to their market areas. Primary
batteries are generally much smaller and the shipping costs from
centralized plants are more reasonable. Second, a higher level
of technology exists in primary battery development and manufac-
ture, thus restricting participation in the industry. Finally,
primary batteries manufacturing plants require higher capital
investments than storage battery plants.
Despite the high level of economic concentration in the battery
industry, battery manufacturing operations appear to be supplied on
a relatively competitive basis. Economic analysis of the industry
suggests that, over the long-term at least, supply should remain
competitive. For example, no single storage batteries manufac-
turing firm accounts for over 20 percent of the total market. Bat-
tery manufacturing accounts for less than half of total corporate
revenues from seven of the ten major companies. The distributors
of replacement batteries (which account for over three-fourths of
automobile battery sales) constitute a large and diverse market,
where long-term supplier relationships are difficult to maintain,
and price differentials are important. Moreover, firms operating
battery plants include auto manufacturers, lead refiners, and gen-
eral electrical equipment manufacturers. Other such firms are
believed capable of establishing battery manufacturing operations
in response to favorable movements in prices and earnings. Storage
battery plant capital requirements, in particular, tend to be low
relative to plant capital requirements in related industries, and
the requisite production technology (with a few specified excep-
tions) is old, stable, and relatively unsophisticated.
I
The role of smaller plants and firms in the industry appears
to be declining in response to competitive and regulatory pressures
which favor larger-scale operations. The number of storage and
primary battery manufacturing plants with 20 or more employees is
reported by the Census of Manufactures to have increased from 135
to 152 between 1958 and 1972. During the same period, the number
of establishments with less than 20 employees decreased from 183
to 109. Industry contacts, especially at surviving small plants,
believe the attrition rate of such plants has accelerated since
1972. Expenditures required to achieve compliance with various
government regulatory actions affecting the industry are frequently
volunteered as a major precipitator of small plant closures. In-
ability to maintain a competitive posture with respect to larger
manufacturers is also frequently cited ;as a factor influencing
small plant closures. ''
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- 18 -
Industry contacts have claimed that the combination of Federal
regulations dealing with water pollution control, air pollution
control, Occupational Safety and Health Act compliance, and solid
waste disposal will prove expensive for battery manufacturers.
An analysis of this point was made in a study for EPA of the
lead-acid storage battery industry. This analysis showed that
the combination of these regulations would result in annualized
compliance costs of roughly $1 million for a 6,500 battery/day
(bpd) plant and about $200,000 for a 500 bpd plant. These costs
are provided in Table 9.(4)
TABLE 9
ANNUALIZED COSTS OF COMPLIANCE WITH
ENVIRONMENTAL REGULATORY REQUIREMENTS FOR
TYPICAL NEW LEAD-ACID BATTERY
MANUFACTURING PLANTS
Environmental
Regulatory Requirements
Water Pollution Control(1)
Solid Waste Disposal(2)
OSHA
Air Pollution Control
SIP(3)
NSPS(4)
Total
Annualized Cost by Plant Size
(thousand dollars)
500 bpd
106
21.5
22.5
15.3
37.3
2,000 bpd
240
62.1
72.9
202
468
6,500 bpd
466
162
223
' 33.5
1^022
Notes: (1) Based on BAT controls.
(2) Assumes lime neutralization of waste and on-site
land storage with leachate collection and treatment
system.
(3) State implementation plans.
(4) New source performance standards.
Source: Standards Support and Environmental Impact Statement;
Control of Emissions from the Manufacture of Lead-Acid
Storage Batteries.
-------
- 19 -
(k) Industry
Profile
The 10 major publicly-owned firms engaged in battery manufac-
turing operations are identified in Table 10. Most of these firms
are diversified, with batteries accounting for only a portion
of total sales. Total sales and estimated battery sales together
provide an indication of the importance of battery sales to the
firms' total operations.
TABLE 10
1975 BATTERY SALES BY PUBLICLY-OWNED
FIRMS MANUFACTURING BATTERIES Y
(million dollars)
Batteries as
a Percent
Firm Total Sales Battery Sales of Sales
ESB, Inc. (1) $ 550.0 $ 456.6 83%
Globe-Union 262.0 208.9 80
Gould 770.0 215.6 28
P. R. Mallory 248.0 67.0 27
Eltra(l) 763.0 91.6 12
Northwest Industries 1,200.0 120.0 10
Union Carbide 5,700.0 285.0 5
Eagl'e-Picher Industries 347.1 17.4 5
General Motors(2) 35,700.0 190.0 1
General Electric 13,400.0 20.0 1
Note: (1) 1974 Annual Reports.
(2) Includes intra-company shipments valued at
market prices.
Source: 1974 and 1975 Annual Reports.
The ten major firms can generally be characterized as profit-
able ventures, as illustrated in Table 11. Profit margins on bat-
tery sales are reputed to be somewhat lower than margins on other
product lines. However, this may reflect relatively low levels of
net capital invested per dollar of sales. In any case, confidence
in the battery portion of these firms' battery operations is evi-
denced by substantial investments made or underway in new plant
construction or expansion of existing facilities.
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- 20 -
While the industry tends to be dominated by a few large firms,
the majority of the plants are owned by small, private companies
which have established positions by catering to particular facets
of the market. Little public information is available on these
companies. However, those contacted during the course of the
study indicated apprehension over their future position in the
market. In particular, these companies are concerned about the
capital costs for new equipment to remain competitive with the
major companies, as well as capital and overall cost requirements
to meet various government regulations. Estimates of plant costs
to deal with these regulations were given in Table 9.
TABLE 11
PROFITABILITY OF MAJOR
BATTERY MANUFACTURERS: 1974-75
Before Tax Profits
After Tax Profits
Firm
ESB, Inc.(l)
Globe-Union
Gould
P. R. Mallory
Eltra(l)
Northwest Industries
Union Carbide
Eagle-Picher
General Motors
General Electric
Million
Dollars
J 24.8
13.1
60.1
3.6
67.4
177.4
745.5
26.3
2,371.2
949.6
Percent
of Sales
5.7%
5.0
7.8
1.5
8.8
14.9
13.2
7.6
6.6
7.1
Million
Dollars
1
19
6
37
2
35
101
387
18
,253
581
.3
.7
.1
.0
.4
.1-
.7,
.7*
.1
.0'
Percent
of Sales
4.4%
2.6
4.8
0.9
4.6
8.5 •
6.7
5.4
3.5
4.3
Note: (1) 1974 Annual Reports. Figures for remaining firms
drawn from 1975 Annual Reports.
Sources: 1974 and 1975 Annual Reports.
There is no evidence to indicate that these small companies
are presently any less profitable than the major companies. They
do appear to be less flexible when faced with unanticipated new
costs of doing business. Many of these companies, finding their
manufacturing operations to be less profitable, have chosen to
abandon these operations and simply to distribute and service bat-
teries purchased from major manufacturers. Industry contacts
revealed that approximately 50 percent of those plants which have
discontinued manufacturing operations during the past 10 years have
done so in favor of distributing and servicing standard products,
usually automotive batteries.
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- 21 -
(1) Availability of
Substitutes
There are no substitutes for batteries as a source of elec-
trical power in most cases. In some cases, batteries of another
type can be substituted for particular applications. For example,
alkaline-manganese batteries have supplanted carbon-zinc batteries
in many uses.
Among storage batteries, the major product type is the stan-
dard automotive battery. There are no apparent substitutes for SLI
batteries as a group, although there are quality alternatives among
batteries of this type, such as rebuilt batteries, used batteries,
short-lived batteries or top-of-the-line units. SLI battery con-
sumption is directly related to automobile usage and new car pro-
duction. Sales are affected by the number and age of automobiles
in service, and are inversely related to battery service life.
Storage battery costs constitute a relatively small percentage of
total vehicle costs, whether measured by the initial purchase price
or by the overall annual cost of ownership. The average automobile
consumes one standard battery every 2.5 years(5). Although higher
battery prices may have some effect on the consumer's efforts at
maintenance, and therefore on the frequency with which most bat-
teries must be replaced, a new battery will ultimately be required
unless the vehicle is scrapped. The lack of substitutes and the
low proportion of battery costs to overall auto costs suggests that
demand for SLI batteries is relatively inelastic.
Primary batteries are used in a wide variety of consumer pro-
ducts, and the total purchase and ownership costs of these products
vary over a considerable range. In many applications, primary bat-
tery costs represent a considerable proportion of the totaL, cost
of the end-use product, especially when battery replacement- is re-
lated to "operating" costs of owning the product. A sharp increase
in primary battery prices might reduce consumption of some, inexpen-
sive end products. In general, however, there are no substitutes
for battery usage in these applications. Moreover, primary battery
life cannot be extended through improved maintenance, so that ex-
tending battery life requires reduced usage of the end-product.
Considering these factors, demand for primary batteries is inelastic,
but probably less inelastic (i.e., relatively more elastich than
demand for storage batteries.
(m) Imports
and Exports
Historically, imports and exports have played a minor role in
the market for storage batteries. The problem of shipping a heavy
battery filled with corrosive electrolyte (sulfuric acid), coupled
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- 22 -
with the tendency for the battery to self-discharge, encourage the
location of battery manufacturing plants near end-product assembly
plants or distributors. With the advent of dry-charge batteries
and, more recently "maintenance-free" batteries, transportation
costs are somewhat less critical a locational determinant. However,
they remain sufficiently high to limit the potential importance of
imports for domestic consumption.
Storage battery imports constitute about 2 percent of the
domestic consumption of batteries. This may represent a conserv-
ative estimate. Batteries imported as part of a finished product,
particularly automobiles, often are not counted in published sta-
tistics. However, since annual imports of cars have never exce-
eded 1.6 million and annual SLI storage battery shipments exceed
50 million, the proportion of imported batteries to domestic con-
sumption would total barely more than 5 percent, even with a maxi-
mum adjustment for those contained in imported automobiles.(6)
The major direct SLI import at present is the motorcycle
battery. However, foreign motorcycle battery producers are begin-
ning to find it advantageous to manufacture their products in the
United States. In the future, the majority of motorcycle batteries
for domestic use are expected to be made in this country.
Canada receives the major share of SLI battery exports from
the U.S., although there are significant exports of battery, com-
ponents to Mexico and other countries. Exports account for about
4 percent of the value of battery shipments, but the growth rate
in dollar volume for exports has been less than for imports.
i
In contrast to the market for storage batteries, imports and
exports have played a more significant role in the market for pri-
mary batteries. For example, Japan and Taiwan have provided a
source for domestic consumption of flashlight and transistor radio
batteries. However, rising material and labor costs overseas have
narrowed the competitive advantage of imports. In recent years,
U.S. technology has developed diverse sizes and varieties of min-
iature batteries and end-products using these batteries which have
successfully penetrated export markets.(7)
Annual import and export statistics from 1965 to 1974 are sum-
marized in Table 12 on the following page. The table shows the
steady growth of battery imports, reaching $52.7 million in 1974.
-------
TABLE 12
BATTERY INDUSTRY IMPORTS AND
1965 - 1974
EXPORTS
(million dollars)
Imports
1965
1966
1967
1968
1969
1970
1971
1974
Note:
Sources:
Storage
6.2
7.5
7.8
8.9
11.7
13.2
12.8
31.2
Percent of
Domestic
Consumption(l)
1.0
1.2
1.4
1.4
1.7
1.7
1.6
2.6
Primary
7.4
10.
8.
11.
12.
11.
12.
21.
(1) Domestic consumption estimates
U.S. General
Exports and
Imports, December
Imports as Related
1974
4
5
2
2
1
2
5
Percent of
Domestic
Consumption(l)
3.2
3.8
2.8
3.4
3.6
3.4
3.5
5.6
do not include changes
; U.S
to Output
. Exports, December
Storage
9.6
17.8
16.0
18.2
19.5
22.7
21.6
32.9
in stock.
1974; and
, 1970 and 1971; Bureau of the
Exports
Percent of
Domestic
Production
1.6
2.9
2.8
2.9
2.8
3.0
2.6
2.7
Primary
12.1
11
10
12
12
14
15
29
.6
.3
.0
.6
.7
.1
.6
Percent of
Domestic
Production
5.2
4.2
3.4
3.6
3.7
4.5
4.3
7.5
U.S. Commodity
Census :
Foreign Trade Division.
NJ
U)
-------
- 24 -
(n) Projected
Growth
The value of battery shipments is projected to grow at an
average annual rate of 3 percent during the next 5 to 10 years.
Based on the previous history of the SLI battery segment, cyclical
declines in total battery sales of as much 10-15 percent may be
experienced periodically. However, the longer-term trend is for
continued solid increases, provided the technical and market
development of the maintenance-free battery is not significantly
more rapid and dramatic than presently anticipated by most industry
analysts.
While the battery industry is expected to grow at about 3 per-
cent annually, some segments will exhibit significantly different
growth rates. Alkaline-manganese batteries are capturing an in-
creasing share of the dry cell market at the expense of carbon-
zinc batteries, primarily due to the longer life and greater power
available for comparable batteries. Sales of carbon-zinc batteries
are expected to decline moderately, while sales of alkaline-manga-
nese batteries increase at a rate of 5 percent annually. Estimated
annual growth rates in the value of shipments for major battery .
types are outlined in Table 13.
TABLE 13
ESTIMATED ANNUAL REAL GROWTH IN SHIPMENTS
BATTERY INDUSTRY 1975-1985
Storage Batteries = 3.5%
Annual
Battery Type Growth
Lead-Acid 2.5%
Nickel-Cadmium 3.2%
Silver Oxide-Zinc and 16.4%
Other Storage
Primary Batteries = 2.3%
Annual
Growth
Battery Type
Carbon-Zinc
I
Alkaline-Manganese
Mercury
Other primary
-1.4%
5.1%
1.0%
6.8%
Source: Kearney estimates based on a regression analysis of
census data, and estimates of market shares based
on past trends.
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- 25 -
Total employment in the battery industry is estimated at
30,000 in 1975. This is expected to increase to 38,000 by 1985,
or by approximately 2.7 percent per year, provided shipments
increase at projected rates. Most of the growth in employment
will be in the SLI battery segment, which is labor intensive.
Total employment in primary battery plants is expected to in-
crease only slightly. Output increases in that segment have
largely been achieved by process and equipment improvements and
not by increased manpower. Some minor employment increases are
expected as new plants and plant expansions are completed to
meet increased future demand for batteries.
SPECIAL INDUSTRY
MACHINERY
(a) Industry Segments
, Special industry machinery manufacturing (SIC 355) encompasses
the following industry segments:
• Food products machinery (SIC 3551)
• Textile machinery (SIC 3552)
• Woodworking machinery (SIC 3553)
• Paper industries machinery (SIC 3554)
• Printing trades machinery and equipment
(SIC 3555)
• Miscellaneous special industry machinery
(SIC 3559)
The different industry segments are essentially independent
of one another, with manufacturing plants specializing in machinery
for a single purchasing industry.
The economic background discussion for special industry
machinery will focus upon the five industry segments specifically
identified above. The miscellaneous category will be largely
ignored, in spite of the fact that special industry machinery "not
elsewhere classified" accounts for over 40 percent of total ship-
ments in this industry. The miscellaneous category consists of a
diverse and unrelated conglomeration of individual segments which
are not of sufficient consequence to be designated separately at
the 4-digit SIC classification level. Discussion of data for the
miscellaneous category of smaller industry segments, as if these
-------
- 26 -
data encompassed an integrated segment of the industry, is unwar-
ranted. This segmentation of smaller, unrelated industry
groups has been excluded from the discussion which follows.
(b) Industry Output
Shipment values for the five special machinery industry
segments (excluding SIC 3559 manufacturers) ranged from under
$500 million to over $1 billion in 1972 (see Table 14). Ranking
industry segments by shipment values provides the following
hierarchy: food products ($1.0 billion); printing trades ($824
million); and paper industries ($448 million). Among these seg-
ments, woodworking, food products, and textile machinery experi-
enced significant growth in shipment values between 1967 and 1972
(see Tables 14 and 15). In contrast, printing trades machinery
exhibited moderate growth (less than 10 percent), while paper
industry machinery shipment values actually declined by 20 percent,
TABLE 14
SIC 355 INDUSTRY SHIPMENT VALUES, EMPLOYMENT
AND PRODUCTIVITY: 1972
SIC SIC SIC SIC SIC SIC
3551 3552 3553 3554 3555 3559
Value of Shipments
(million dollars) 1,001.1 822.8 488.0 447.8 823.5 2,603.9
Number of
Establishments 688 578 241 218 574 1,382
Total Employment '.
(thousands) 31.9 32.7 13.5 15.3 23.9 72.2
Production Workers ,
(thousands) 20.6 23.3 9.3 9.0 15.3 44.9
Value Added
(million dollars) 605.2 487.6 280.3 254.0 503.6 1,587.1
Value Added per
Worker Production
Hour ($) 14.87 10.29 14.75 13.58 16.62 17.42
Source: 1972 Census of Manufactures; Industry Statistics.
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- 29 -
TABLE 16
CONCENTRATION RATIOS FOR MAJOR SEGMENTS OF THE
SPECIAL INDUSTRY MACHINERY MANUFACTURING INDUSTRY
.Industry Segment
1 .
Value of Shipments
(million dollars)
Percent Accounted for by;
4 8 20 50
Largest Largest Largest' Largest
Firms Firms Firms Firms
Food Products Machinery 1,000.1
Textile Machinery 822.8
Woodworking Machinery 488.0
Paper Industries Machinery 447.8
Printing Trades Machinery 823.5
18
31
40
32
42
27
46
53
46
51
42
61
70
65
66
62
75
87
85
82
Source: Concentration Ratios in Manufacturing, 1972 Census
of Manufactures; Special Reports.
(g) Foreign
Trade
With the exception of the textile machinery segment, the
major segments of this industry have consistently generated trade
surpluses during the past 5-10 years, imports are of negligible
importance in the woodworking machinery segment, while exports
account for roughly 10 percent of domestic production.(12) Import
and export values are of comparable magnitude in the paper indus-
tries machinery segment.(13) Export markets constitute major
sources of demand for food products and printing trades machinery>
accounting for 30 to 40 percent of domestic production. Although
export markets have also accounted for as much as 30 percent of
domestic production for textile machinery, imports have captured
close to 40 percent of domestic consumption in recent years (14)
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- 30 -
(h) Projected
Growth
Expected increases in shipment values between 1977 and 1985
have been obtained for the three segments of this industry gen-
nerating output values on the order of $1 billion or more. Ship-
ments value are projected to increase at a compound average an-
nual rate of 9 percent between 1977 and.1985 in the food products
machinery segment. Growth rates of 7.5 and 5.0 percent are .
expected for the printing machinery and textile machinery segments,
respectively.(15)
OFFICE, COMPUTING, AND
ACCOUNTING MACHINES
(a) Industry Segments ;
Office, computing, and accounting machines manufacturing
(SIC 357) encompasses the following industry segments:
• Typewriters (SIC 3572)
« Electronic computing equipment (SIC 3573)
• Calculating and accounting! machines, except
electronic computing equipment (SIC 3574)
• Scales and balances, except laboratory (SIC 3576)
e Miscellaneous office machines, not elsewhere
classified (SIC 3579)
Data for typewriters and miscellaneous office machines (SIC
3572 and SIC 3579) were presented jointly in the 1972 Census of
Manufactures, and will be handled accordingly. The resulting
four industry segments are highly specialized, and are essentially
independent of one another. It is therefore reasonable to consider
each segment separately.
Scales and balances account for only two percent of aggregate
industry shipment values, and have been excluded from further con-
sideration in this study. The economic background discussion will
be concerned with the three major industry segments: electronic
computing equipment; calculating and accounting machines; and
typewriters and miscellaneous office machines.
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- 31 -
(b) Industry Output
All three major industry segments are rapidly changing in
character due to major innovations in production technologies,
increasingly sophisticated electronic applications, and accel-
erating import competition from Japanese manufacturers. These
conditions are dramatized by the calculating and accounting
machines segment, in which many established firms have been
displaced by entrants from the semiconductor and computer
industries. (16)
Shipment values have increased dramatically in the com-
puter segment of the industry. Between 1967 and 1972, value
of shipments increased by 70 percent (see Tables 17 and 18),
equivalent to an 11 percent compound average annual rate of
growth. By 1977, the value of computer shipments is expected
to reach $12 billion (17), an increase of 88 percent above 1972
values.
TABLE 17
SIC 357 INDUSTRY SHIPMENT
EMPLOYMENT AND PRODUCTIVITY
Value of Shipments
(million dollars)
Number of Establishments
Total Employment (thousands)
Production Workers (thousands)
Value Added (million dollars)
SIC 3573
6,387.0
601
144.6
64.5
3,410.7
VALUES ,
: 1972
SIC 3574
637.2
79 ,-
22.6
17.8
407.1 ,
SIC 3572/3579
1,296.1
217
34.4
20.8
: ' 867.4
Value Added Per Worker
Production Hour ($) 26.22 , 12.23 =21.69
Source: 1972 Census of Manufactures; Industry Statistics.;
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- 32 -
TABLE 18
SIC 357 INDUSTRY SHIPMENT VALUES,
EMPLOYMENT AND PRODUCTIVITY; 1967
SIC 3573 SIC 3574 SIC 3572/3579
Value of Shipments 3,770.9 707.8 1,112.10
(million dollars)
Number of Establishments 178 138 202
Total Employment (thousands) 98.9 38.4 46.7
Production Workers (thousands) 50.7 31.3 33.4
Value Added (million dollars) 1,926.4 518.2 797.2
Value Added Per Worker 18;.49 8.85 12.19
Production Hour ($)
Source: 1972 Census of Manufactures; Industry Statistics. '
The other two industry segments contrast sharply, with both
experiencing declines in the real value of shipments (adjusted
for increases in wholesale price indices) during this period.
In the calculating and accounting machines segment, nominal ship-
ment values (unadjusted) actually declined between 1967 and 1972
(see Tables 17 and 18), and again between 1974 and 1976. Calcu-
lator and accounting machine sales are expected to approach $900
million in 1977, however, resulting in an increase of eight per-
cent over 1976 shipment values.(18)
(c) Employment
Employment in the computer segment of the industry increased
by 46 percent between 1967 and 1972, and by an additional 21 per-
cent between 1972 and 1976. During this nine-year period, the
number of production workers increased by only 49 percent, indi-
cating a relative increase in capital-intensity.(19)
Total employment in the manufacture of calculating and ac-
counting machines declined precipitously between 1967 and 1972,
and has alternately increased and declined in moderate propor-
tions since 1972. Employment in the typewriter and miscellaneous
office machines segment also decreased substantially between 1967
and 1972, due to reductions in production employment induced by a
shift toward greater capital-intensity in the production process.
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- 33 -
(d) Productivity
Rapid innovation in production technologies and the accom-
panying increase in capital investment per production worker have
generated major increases in worker productivity in both the com-
puter and the typewriter and miscellaneous office machines segments
of the industry. Increases in productivity have been somewhat less
significant in the manufacture of calculators and and accounting
machines. Furthermore, worker productivity in this segment is well
below the levels achieved in the other two industry segments (see
Tables 17 and 18). Increased reliance upon electronic applications
in the manufacture of calculators and accounting machines may
reduce this disparity in future years.
(e) Location of
Establishments
The computer industry is highly regionalized. Among 595 manu-
facturing plants identified in the 1972 Census, 170 were located in
California. Three northeastern states - Massachusetts, New York,
and New Jersey - accounted for 159 establishments. Together, these
four states contain 55 percent of theiplants in the industry.(20)
Both the calculating and accounting machines and the type-
writers and miscellaneous office machines segments conform to the
more generalized distribution of establishments common to aggregate
manufacturing activity in the U.S. Manufacturing activity tends to
be most highly concentrated in the Northeast (New York, New Jersey,
Massachusetts, Pennsylvania); the Midwest (Illinois); and the West
Coast (California). In addition to these regional concentrations
of activity, Texas is an area of importance in the production of
calculators.
(f) Industry
Concentration
Economic concentration, measured)in terms of the percent of
industry shipment values attributed to the largest firms in the
industry, is pronounced in all three major industry segments.
Concentration ratios range from 51 to 73 percent for the four
largest firms within each segment (see Table 19). Surprisingly,
the computer segment of the industry is comparatively less con-
centrated than either the calculating and accounting machines or
the typewriters and miscellaneous office machines segments. Al-
though concentration ratios for the latter two industry segments
remained relatively stable between 1967 and 1972, concentration
ratios for computer manufacturing have diminished substantially
since 1967. Competitive pressures intensified in this segment
during the period in question, as evidenced by a four-fold in-
crease in the number of competitors.
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- 34 -
TABLE 19
•
CONCENTRATION RATIOS FOR MAJOR SEGMENTS OF THE OFFICE,
COMPUTING, AND ACCOUNTING MACHINES INDUSTRY
Percent Accounted for by;
Industry Value of
Segment Shipments
(million $)
Electronic 3,418.9(1)
Computing
Equipment
Calculating 637.2
and Accounting
Machines
Typewriters 1,296.1
and Misc.
Office Machines
4 Largest 8 Largest 20 Largest 50 Largest
Firms Firms Firms Firms
51
73
60
63
89
75
78
98
88
90
100
96
Note: (1) Value added by manufacture is shown for this industry
rather than value of shipments because the latter
contains a substantial and unmeasurable amount of
duplication.
Source: Concentration Ratios in Manufacturing, 1972 Census,of
Manufactures; Special Report Series.
(g)
Foreign
Trade
American manufacturers have dominated the international com-
puter market for 25 years. Despite increased competition from
Japanese manufacturers, the U.S. is expected to retain a major
share of this expanding world-wide market. Computer exports are
expected to total approximately $3 billion in 1977, against imports
of $190 million. A trade surplus of $2.8 billion is therefore
anticipated.(21)
Imported calculating and accounting machines are expected to
account for 44 percent of domestic consumption in 1'977. Under
these circumstances, this industry segment will generate a trade
deficit of $550 million.(22) Competition from Japanese manufac-
turers is already a major factor in the domestic market, and com-
petitive pressure from these manufacturers appears to be acceler-
ating.
-------
- 35 -
(h) Projected
Growth
Real shipment values in the computer segment of the industry
are expected to exhibit continued rapid growth between 1977 and
1985, averaging eight percent at compound annual rates. Sales of
calculators and accounting machines are projected to increase at
a compound annual rate of five percent.(23) If these growth rates
are sustained, respective product shipment values of $21 billion
and $1.3 billion (in current dollars) would be attained.
ELECTRONIC
COMPONENTS
(a) Introduction
The electronic components industry is a complex and rapidly
changing industry. The industry encompasses manufacturers of the
following components: electron tubes; semiconductors; capacitors,
resistors, and inductors; and integrated circuit packages. Com-
ponent demand is derived from consumer, commercial, and industrial
demand for electronic equipment and service. Electronic components
are integral elements in the production of a vast array of final
products, including computers, automotive electronic systems,
industrial controls, communications and navigation systems,
television sets, radios, and calculators.
The structure of the electronic components industry is com-
plicated by the range of product markets, the volatile nature of
demand, the frequency of technological innovation, and the inter-
relationships between component markets. For example, integrated
circuits have displaced resistors, capacitors, and discreteitran-
sistors in many conventional applications. At the same time,
technology transfers have engendered new applications of these
components in products such as calculators and automotive elec-
tronic systems. Shifting product markets are characteristic
of the industry.
(b) Industry
Output
The value of electronic components industry shipments increased
70 percent during the past ten years (see Table 20). Real shipment
values (adjusted for increases in the wholesale price index for
electronic components) increased at a compound average rate of 3.3
percent per year between 1967 and 1976.
-------
- 36 -
TABLE 20
ELECTRONIC COMPONENTS INDUSTRY SHIPMENT
VALUES, EMPLOYMENT AND
PRODUCTIVITY: 1967 - 1977
Value of Shipments
: (million dollars)
3
Number of
Establishments
i
Total Employment
• (thousands)
i
Production Workers
(thousands)
Value Added .
(million dollars)
Value Added Per
Worker Production
Hour ($)
1967 1972 1973 1974 1975(1) 1976(1) 1977(1)
7,453 8,798 10,783 11,192 10,215 11,575 12i,560
587 2,855
403 335 395 382 340 355 370
293 232 283 ,266 205 215 230
4,359 5,290 6,598 6,900 n/a n/a n/a
7.57 11.43 11.86 13.27 —
Note: (1) Estimated by Bureau of Domestic Commerce (BDC).
Source: U.S. Industrial Outlook 1977.
(c) Employment
Total employment in electronic components declined by 8 per-
cent over the past 10 years. Substantial increases in non-produc-
tion employment have been outweighed by a 22 percent decrease in
production employment during this period. Major domestic manu-
facturers are increasingly relying upon overseas production faci-
lities to take advantage of lower wage rates for operations requir-
ing less highly-skilled laborers. Production employment has thus
been partially shifted to overseas facilities owned by American
firms.
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- 37 -
(d) Productivity
Worker productivity increased 75 percent from 1967 to 1974.
This increase can be attributed to advances in production tech-
nology, market-related trends toward more capital-intensive, pro-
duction processes, and a more highly-skilled mix of production
workers in the United States, resulting from the transfer of less
skilled production employment overseas.
(e) Location of
Establishments
Production of electronic components is concentrated in the
major manufacturing regions along the East and West Coasts and the
Great Lakes. Largest numbers of manufacturing plants are found
in California, New York, New Jersey, Illinois, Massachusetts,
and Pennsylvania. According to Table 20, there were a total of
2,855 electronic components manufacturing plants in the United
States in 1972.
(f) Industry
Concentration
Economic concentration within the electronic components
industry varies considerably (see Table 21). Segments of the
industry producing electron tubes and integrated microcircuits
are highly concentrated, with eight firms controlling approx-
imately 90 and 80 percent of these markets, respectively. Those
segments producing semiconductors, capacitors, resistors, and
inductors appear to be much more competitive, with eight-firm
concentration ratios ranging from two-thirds to as little as
one-quarter of the respective product markets. Key variables
influencing high concentration within segments of the electronic
components industry include:
9 The sophistication and relative capital-
intensiveness of production technologies;
9 The comparative level and frequency of
technological innovation, requiring major
investments in research and development.
-------
- 38 -
TABLE 21
CONCENTRATION RATIOS FOR MAJOR SEGMENTS OP THE
ELECTRONIC COMPONENTS INDUSTRY
Percent Accounted for By;
Industry
Segment
Value of
Shipments
(million dollars)
Electron Tubes 1,187.9
Semiconductors(l) 1,088.1
Integrated 1,273.9
Microcircuits
Capacitors 454.4
Resistors 438.5
Inductors(2) 391.8
4 Largest 8
Firms
73
34
69
38
40
14
Largest
Firms
88
51
79
56
60
25
20 Largest
Firms
98
63
91
80 '
83
46
50 Larges
Firms
99+
83
98
94
96
70
Notes: (1) Excluding semiconductor networks (integrated
microcircuits).
(2) Coils, transformers, and chokes for electronic
applications could not be disaggregated from Census
figures in order to isolate inductors. Although
concentration ratios apply to all four products,
inductors account for approximately 75 percent
of total shipments in this category. t
Source: Concentration Ratios in Manufacturing, 1972 Census of
Manufactures; Special Report Series.
(g) Foreign
Trade
The electronic components industry has generated trade sur-
pluses which have increased almost continuously during the past
ten years. Net exports of electronic components increased from
1/4 million dollars in 1967 to over $1 billion in 1976. A trade
surplus on the order of $1.2 billion is expected in 1977. The
only major industry segment to run a trade deficit in recent years
-------
- 39 -
has been the integrated circuit segment. This deficit is attrib-
utable to heavy imports from American-owned production facilities
overseas, resulting in net imports valued at over $400 million
in 1976.(24)
(h) Projected
Growth
Real growth in electronic components shipments value is
expected to average from 6 to 7 percent during the next eight
years.(25) Advances in semiconductor technology and increased
demand for electronic products in both consumer and industrial
markets should more than offset increased import penetration
for certain products and the transfer of labor-intensive produc-
tion operations overseas.
-------
- 40 -
IV - COST OF COMPLIANCE WITH
HAZARDOUS WASTE REGULATIONS
INTRODUCTION
The EPA Office of Solid Waste has set forth three levels of
technology for the treatment and disposal of each hazardous waste
stream generated by manufacturing establishments. These levels of
technology are based on the most prevalent industry-wide practice
(Level I); the best technology presently used which is amenable
to more widespread use (Level II); and the disposal practice
required to provide adequate health and environmental protection
(Level III).
Level I and Level II technologies have been taken from the
various Assessment Reports, but the Cost Report was used in
specifying Level III technology (specified there as Pathways
Level III technology). All cost data used in this report were
derived from the Battelie Cost Report.
For the purposes of this study, it is assumed that Level III
technology will be required to comply with the new hazardous waste
regulations. In evaluating economic impacts, Level III technology
will be compared to Level I practices. This should allow the
determination of economic impacts on a "worst-case" basis since
the Battelie Cost Report generally specifies incineration or
secured landfill as Level III technology. These practices are
usually more expensive than certain waste reclamation and reuse
technologies which may be implemented to some extent for the
various hazardous waste streams.
For example, the Battelie Cost Report specifies incineration
as Level III technology for waste lubricating and hydraulic oils
at a cost of $107/kkg. However, the Assessment Report on elec-
tronics industry hazardous wastes specifies oil reclamation and
claims that this would cost only $27/kkg. Thus, if oil reclam-
ation services were generally available, industrial plants* could
save roughly $80/kkg by reclaiming rather than disposing of their
waste oils.
The general availability of environmentally adequate "off-
site" hazardous waste disposal facilities has not been addressed
in'this report. This is an important consideration, however, since
many of the industrial hazardous wastes considered in this study
will be amenable to off-site hazardous waste management practices.
-------
- 41 -
As noted earlier, Level III technology generally entails
incineration or secured landfill for the industries studied.
These operations would normally be conducted off-site from the
industrial plants generating the hazardous wastes due to the rel-
atively small quantities generated per plant for the industries
as a whole. Thus, it is not expected that the industries covered
in this study will incur significant capital expenditure require-
ments for incinerators or land disposal operations to comply with
fch§.proposed hazardous waste management regulations. Plants
within one of the industrial sectors which may choose to make
capital investments are certain lead-acid storage battery manufac-
turing plants which may convert from wastewater treatment using
lime systems to caustic systems which generate substantially
less sludge.
STORAGE AND
PRIMARY BATTERIES
(a) Hazardous Waste
Characteristics
i
Eight industry segments produce hazardous waste streams. These
waste streams vary in magnitude from lead-acid storage battery plants
using lime neutralization and precipitation for wastewater treatment,
which generate about 1260 kg per kkg of product output, to the
carbon-zinc and alkaline-manganese dioxide primary battery plants,
with 1 kg per kkg of product (see Table 22).
-------
TABLE 22
HAZARDOUS WASTE STREAMS:
STORAGE AND PRIMARY BATTERIES
- 42 -
Industry Segment
Lead-Acid Storage
Nickel-Cadmium
Carbon-Zinc
Carbon-Zinc (air)
Potential Hazardous
Waste
(1) lime neutralization sludge
(2) caustic neutralization sludge
(1) caustic wastewater treatment
sludges
(2) solid scrap and reject cells
rejected and scrap cells
rejected and scrap cells
Quantity/
kkg Output
(kg/kkg)
1260
0.6
20
12
1
1
Alkaline-Manganese
Mercury-Ruben
Magnesium-Carbon
Lead-Acid Reserve
rejected and scrap cells
scrap cells and furnace residue
wastewater treatment sludge
(1) scrap and reject cells
(2) wastewater treatment sludges
1
8
27.6
330
8.2
Sources: Versar, Inc., Assessment of Industrial Hazardous Waste
Practices; Storage and Primary Batteries Industries;
and Battelle Columbus Laboratories, Cost of Complying
with Hazardous Waste Management Regulations (Draft Report).
Output per plant, estimated in terms of product weight,
varies from the typical lead-acid battery producing plant
with 8,200 kkg per year, to the nickel-cadmium storage battery
plant producing 447 kkg per year (see Table 23).
-------
- 43 -
TABLE 23
TYPICAL MANUFACTURING PLANTS:
STORAGE AND PRIMARY BATTERIES
Industry Typical Production
Segment Output
(kkg/year)~
Lead-Acid Storage 8,200
Nickel-Cadmium 447
Carbon-Zinc 2,270
Carbon-Zinc (air) 1,500
Alkaline-Manganese 2,000
Mercury-Ruben 450
Magnesium-Carbon 1,350
Lead-Acid Reserve 454
Source: Versar, Inc., Assessment of Industrial Hazardous Waste
Practices; Storage and Primary Batteries Industries.
Estimates derived from Versar and Battelle data show that
lead-acid battery plants using lime neutralization and precipita-
tion of process wastewater generate the greatest volume (by
weight) of hazardous waste per metric ton of product and the
largest total volume per year. Of the 200 plants manufacturing
lead-acid batteries, an estimated ten or less use lime neutral-
ization. At least one larger plant, which is classified by EPA
as a direct discharger of wastewater to a navigable waterway,
must use lime neutralization by the terms of its NPDES discharge
permit.
Storage and primary battery manufacturing generates an esti-
mated 543,033 kkg per year hazardous wastes on a net basis.
Hazardous wastes generated by each industry segment are estimated
in Table 24.(26, 27)
-------
- 44 •-
TABLE 24
HAZARDOUS WASTES GENERATION BY
SEGMENT IN THE MANUFACTURE OF STORAGE
AND PRIMARY BATTERIES
Industry
Segment
Lead-Acid Storage (2)
(3)
Nickel-Cadmium
Carbon-Zinc
Carbon-Zinc (air)
Alkaline-Manganese
Mercury-Ruben
Magnesium-Carbon
Lead Acid Reserve
Quantity of
P.H.W. (l)/Product
Dry
(kg of waste/kkg
0.5
440
32
10
10
10
8
28
341
Wet
product)
0.6
1260
68.9
10
10
10
8
56
356
Total
P.H
Dry
(kk
412
189,000
19.3
410
1.6
28
5.3
47.8
21.4
Volume of
.W./Year
Wet
g/year)
: 515
541,000
49.8
1,121
55.2
164.7
7.5
119.4
25.3
189.945
Notes: (1) P.H.W. = Potentially Hazardous Wastes
(2) Plants using caustic neutralization of process
wastewater. ]
(3) Plants using lime neutralization of process waste-
water.
Sources: Kearney estimates from Versar, Inc., Assessment of Indus-
trial Hazardous Waste Practices; Storage and Primary
Batteries Industries; and Battelle Columbia Laboratories,
Cost of Complying with Hazardous Waste Management
Regulations, (Draft Report).
-------
- 45 -
(b) Waste Treatment and
Disposal Practices
The most prevalent (Level I-) treatment and disposal tech-
nology for all battery industry wastes is some type of on-site
landfilling. Level II technology consists of sanitary land-
filling and the sale of metal scrap to reclaimers.
Three types of Level III disposal technology .are applicable
to the industries in general. With those segments which generate
sludges, the sludges may be chemically treated and landfilled,
disposed of by. secured landfill off-site, or sold to a reclaimer
for resource recovery. For those using lime neutralization,
only the first two alternatives are available. For those gener-
ating manufacturing scrap, alternatives are sale for scrap
reclamation, in-plant reclamation, or disposal off-site in a
secured landfill. The .Level-'III alternatives for individual
industry segments are enumerated in Table 25.
-------
- 46 -
TABLE 25
LEVEL III WASTE MANAGEMENT TECHNOLOGY:
STORAGE AND PRIMARY BATTERIES
Industry
Segment
Lead-Acid Storage
Nickel-Cadmium
Carbon-Zinc and
Carbon-Zinc (air)
Alkaline-Manganese
Mercury-Ruben
Magnesium-Carbon
Lead-Acid Reserve
Level III
Technology
(1) Chemical fixation and landfill
(lime sludges only)
(2) Secured landfill
(3) Reclamation of lead
(caustic sludges only)
(1) Secured landfill
(2) Sale to scrap reclaimer
(3) Chemical fixation and landfill
(sludges only)
(1) Secured landfill
(2) In-plant reclamation
(1) Secured landfill
(2) In-plant reclamation
Secured landfill
(1) Chemical fixation and landfill
(2) Secured landfill
Secured landfill
Source: Versar, Inc., Asessment of Industrial Hazardous Waste
Practices; Storage and Primary Batteries Industries.
Total national costs for the disposal of storage and primary
battery hazardous waste streams at Level III are estimated at
$937,800 (see Table 26). The largest costs will be borne by the
lead-acid storage battery plants using lime neutralization.
-------
- 47 -
TABLE 26
TOTAL NATIONAL COSTS FOR HAZARDOUS
WASTE TREATMENT AND DISPOSAL:
STORAGE AND PRIMARY BATTERIES
(thousand dollars/year)
Industry
Segment Level I Level II Level III
Lead-Acid Storage $1,570.0(1)
(lime sludges) $460 $739 665.3(2)
Lead-Acid Storage
(caustic sludges) 89 31 63.0
Nickel-Cadmium and
Magnesium-Carbon (sludges) 17.8 0 114.5
All Segments
(manufacturing scrap) 133 160 195.0
Total $599.8 $830 $ 937.8(3)
Key to alternatives;
(1) Chemical fixation of lime sludges and simple landfill.
(2) Secured landfill.
(3) Total assumes secured landfill for lime sludges.
Source: Battelle Columbus Laboratories, Cost of Complying
with Hazardous Waste Management Regulations
(Draft Report).
All battery industry segments exhibit Level III hazardous
waste management costs equivalent to less than one percent of
product sales value (see Table 27). Incremental costs varyi
from 0.3 percent for lead-acid reserve plants to less than
0.01 percent for nickel-cadmium and mercury-ruben plants.
The lead-acid reserve segment will incur the largest cost
impact of any segment of the battery industry with Level III costs
at 0.7 percent of sales value and incremental costs at 0.3 percent
of sales value. However, this segment should not have difficulty
in recovering incremental hazardous waste management costs because
the single known lead-acid reserve plant in the country manufactures
specialty batteries for military uses.(28)
-------
- 48 -
TABLE 27
TREATMENT COSTS VS. SALES VALUES
BY INDUSTRY SEGMENT: STORAGE AND PRIMARY BATTERIES
Incremental
Industry
Segment
(
Lead-Acid Storage
Nickel-Cadmium
Carbon-zinc
Carbon-Zinc (air)
Alkaline-Manganese
Mercury-Ruben
Magnesium-Carbon
Lead-Acid Reserve
Sales
Value
;$/kkg of product)
950(1) .
950(2)
21,000
1,500
1,700
1,500
25,000
8,000
11,000
Level III Costs
as a Percent of
Sales Value
(%)
0.01
0.5
0.1
0.1
0.1
0.1
0.01
0.04
0.7
Costs as
a
Percent of
Sales Value
(%)
— (3
0.1
0.01
0.03
0.01
0.03
0.01
0.02
0.3
'
Notes: (1) Costs for plants using caustic neutralization.
(2) Costs for plants using lime neutralization.
(3) Negative incremental cost.
Sources: Kearney estimate from data reported in Versar, Inc.,
Assessment of Industrial Hazardous Waste Practices';
Storage and Primary Batteries Industries; and
Battelle Columbus Laboratories, Cost of Complying
with Hazardous Waste Mangement Regulations
(Draft Report).
-------
- 49 -
SPECIAL INDUSTRY
MACHINERY
(a) Typical Manufacturing
Establishments
The processes listed in Table 28 must generally be used in
the manufacture of special industrial machinery. However, a
prior industry survey(29) and the data shown in Table 28 clearly
indicate that all these processes, from foundry to product painting
operation, are rarely, if ever, found in a single manufacturing
establishment.
Machine shops, plate or structural fabrication, and painting
operations are the most prevalent manufacturing processes found in
SIC 355 establishments. A crude process flow diagram for a typical
SIC 355 plant is shown in Figure 1. It consists of a machine shop
followed by a plate or structural fabrication shop and a paint
shop. The typical plant employs only 17 people and is generally
located in an urban area within industrialized states such as
California, New York, or Illinois.
Since the typical plant in this industry has only 17 employ-
ees, it is not surprising that there are relatively few manufac-
turing processes per plant. In fact, only about 11 percent of
the plants have more than 100 employees, as indicated on Figure 2,
which shows the size distribution of SIC 355 manufacturing estab-
lishments. It is thus expected that processes which are relatively
scarce in the special industrial machinery industry are predomi-
nantly operated in the.larger plants. Such processes are found
in less than 10 percent of the SIC 355 industry plants. Thus, a
substantial portion of the metal processing required to produce
special industry machinery is conducted in plants classified in
other SIC categories, such as electroplating job shops (SICi3471).
-------
- 50 -
TABLE 28
MANUFACTURING PROCESSES IN SIC 355 - 1972
(facturing
»rocess
'ous Foundry
:rous Foundry
?b'nferrous Die Casting
Forging-Presses
Electroplating and
Other Plating
Galvanizing and Other
•Hot-Dip Coating
Heat Treating
Automatic Screw
. Machine Dept.
Machine Shop
Tool and Die Shop
Foundry Pattern Shop
Plate or Structural
Fabrication
Stamping, Blanking
and Forming
Painting, Lacquering,
and Enameling
Number of Plants
Using Process
63
31
3
6
28
4
137
119
2,511
220
110
(1)
1,940 (1)
259
2,085 (1)
Percent of Total Plants
in SIC 355 Using Process
1.7
0.9
0.1
0.2
0.8
0.1
3.8
3.3
69.0
6.0
3.0
53.3
7.1
57.3
Note: (1) Kearney estimates. Establishments with less than
ten employees were typically excused from filing
special metalworking reports by the Bureau of the
Census. Thus, data on such plants, comprising
about 45 percent of the industry, are not gen-
erally included. Census normally relies on the
Social Security Administration and the Internal
Revenue Service for data on small plants. Kearney
estimates that establishments with less than ten
employees typically consist of a small machine
shop, a fabrication department, and some type
of painting operation.
Sources: 1972 Census of Manufactures; Industry Statistics.
-------
FIGURE 1
TYPICAL MANUFACTURING ESTABLISHMENT IN SIC 355
(16 employees)
(1 employee)
MACHINE
SHOP
•
PLATE OR
STRUCTURAL
FABRICATION
| PAINT
r >* SHOP
i
FINISHED
•^ PRODUCT
I
(M
-------
FIGURE 2
SIZE DISTRIBUTION OF SIC 355
MANUFACTURING ESTABLISHMENTS
ents
CO
•H
iH
ja
(0
4J
en
w
<4-l
o
1,100
1,083
1,000 --
900 --
800 --
700 --
600 -'
500 --
400 --
300 --
200 --
100 ._
672
617
544
344
247
98
1
Total Establishments - 3,681
Total Establishments of
20 or More Employees - 1,427
1
U
5-9
10-19 | 20-49 I 50-99 1100-2491250-4991500-99911,000 - |2,500 +|
I I I I '2,499 ' '
Number of Employees Per Establishment
Sourqe: U.S-
of
r>. — -
-------
- 53 -
(b) Hazardous Waste
Characteristics
Process wastes from typical SIC 355 establishments are
considered hazardous, and have the following characteristics:
Quantity of
Hazardous Waste Generated
Process/Waste Stream Constituents (kkg/employee-yr.)
Machine Shop Flammable Solvents, 3.35
(including Heavy Metals, Oils :
fabrication)
Paint Shop Flammable Solvents, 1.05
Heavy Metals, Oils
These wastes primarily consist of lubricating and grinding
oils, cleaning solvents, paint residues, sweepings, and metal
grindings. Typically, these wastes are combined in some type
of heavy trash container within the plant.
Other manufacturing processes used in special industrial
machines manufacturing which generate hazardous wastes are elec-
troplating and heat treating. However, these processes will not
be discussed in this study (except to include their waste quantities
and disposal costs in aggregate totals for the industry) because
it is estimated that less than four percent of the plants in
SIC 355 actually use these processes.
(c) Hazardous Waste
Generation '
Using the waste generation factors derived in the Assessment
Report(30) along with Kearney's revised estimates of production
employees per process and number of plants from the 1972 Metal-
working Directory(31), the total 1977 hazardous waste generation
rates from SIC 355 are provided in Table 29.
-------
- 54 -
TABLE 29
, HAZARDOUS WASTE GENERATION IN SIC 355
Manufacturing
Process (1)
Machine Shop
Paint Shop
Heat Treating
Electroplating
Waste Generation
Per Process Employee
( kkg/yr-employee )
Dry wet
2.14 3.35
0.78 1.05
0.86 1.99
1.02 2.52
Employees
Per Process
18(2)
1.7(3)
26
44
- 1977
Total Waste
Generation
(thousand kkg/yr)
Dry Wet
106.6 167.0
3.1 4.1
6.3 14;5
1.7 4.2
117.7
189.8
Notes: (1) Manufacturing processes in SIC 355 generating
insignificant quantities of hazardous waste
include foundries, forging, die casting, and
galvanizing.
(2) Kearney estimates.
(3) Kearney estimates.
Sources: WAPORA, Inc., Assessment of Industrial Hazardous Waste
Practice - Special Machinery Manufacturing Industries;
and Battelle Columbus Laboratories, Cost of Complying
with Hazardous Waste Management Regulations.
(Draft Report).
The total machine shop hazardous waste generation was approxi-
mately 167,000 kkg/yr on a wef.-weight basis. This was comprised
of spent coolants (65,000 kkg/yr), sweepings and metal grindings
(62,000 kkg/yr), and spent cleaning solvents (40,000 kkg/yr).
Paint shop wastes in 1977 were 4,100 kkg/yr, consisting of almost
equal portions of paint sludge and cleaning solvent.
The typical SIC 355 establishment, described earlier, generates
about 40 kkg/yr of machine shop wastes plus one kkg/yr of paint
shop waste, using the factors from Table 29.
-------
- 55 -
(d) Waste Treatment and
Disposal Practices
The Office of Solid Waste has set forth three levels of tech-
nology for the treatment and disposal of each hazardous waste
stream generated by SIC 355 manufacturing establishments as noted
at the beginning of this section. These levels of technology are
based on the most prevalent industry-wide practice (Level I); the
best technology presently used which is amenable to more widespread
use (Level II); and the disposal practice required to provide ade-
quate health and environmental protection (Level III).
- For the purposes of this study, it is assumed that Level III
technology will be required to comply with the new hazardous waste
regulations. In evaluating economic impacts, Level III technology
will be compared to Level I practices.
In addition, only the wastes from typical plants will be
covered in this analysis (see Figure 1), since less than seven
percent of the industry's establishments use any other.processes
which generate hazardous wastes.
i
- 1. Level I Technology. The most prevalent technology
for treating and disposing of SIC 355 establishment process
waste consists of collection in a 15-cubic meter (20-cubic yard)
trash container for hauling by a private contractor on a weekly
to monthly basis. The wastes are taken by the contractor to an
off-site sanitary landfill for disposal. The landfill disposal
site is typically not owned by the SIC 355 establishment.
i
This technology is used for both machine shop wastes
and paint shop wastes. Approximately 70 percent of the special
machinery manufacturing plants are estimated to be using these
practices. In addition, it is estimated that roughly 90 percent
of the hazardous wastes generated within SIC 355 received some
form of off-site disposal in 1975.(32)
2. Level II Technology. According to the Assessment
Report(33), the best technology currently used which is amenable
to more widespread use (Level II) begins with waste segregation.
Oils are recovered at off-site re-refining operations, and sol-
vents are reclaimed at off-site reprocessing facilities. The
residues generated in the reclaiming operations are incinerated,
with ash disposal in sanitary landfills.
Paint wastes are incinerated by a private contractor,
with ash disposal in sanitary landfills.
-------
Only about 50 plants in SIC 355 and 357 combined,
representing less than one percent of the industry, were expected
to be using Level II technology for machinery waste in 1975.
Roughly 100 plants were thought to be using Level II technology
for paint waste.
3. Level III Technology. The technology that assures
adequate health and environmental protection (Level III) consists
of practices outlined in Table 30.(34)
TABLE 30
LEVEL III WASTE DISPOSAL TECHNOLOGY FOR SIC 355
Process Waste Stream Description
Machine Shop Secured Landfill
Paint Shop Incineration
Heat Treating Secured Landfill
Electroplating Secured Landfill
These methods differ from those described in the Assess-
ment Report, which were more oriented toward resource recovery
and the Level II technology describediabove.
, i
(e) Treatment and
Disposal Costs
The total costs to treat and dispose of hazardous wastes
generated by SIC 355 plants are shown in Table 31.
TABLE 31
HAZARDOUS WASTE TREATMENT AND DISPOSAL COSTS
FOR THE SPECIAL MACHINERY MANUFACTURING INDUSTRY
Cost ($/kkg)
Process Waste Level I Level II Level III(l)
Machine Shop 26.1 45.4 55.8
Paint Shop 17.3 18.3 58.1
Heat Treating 26.1 45.4 55.8
Electroplating 6.0 6.8 33.1|
Note: (1) Applies to Pathways Level III technology.
Source: Battelle Columbus Laboratories, Cost of Complying
with Hazardous Waste Management Regulations
(Draft Report).
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- 57 -
These costs are principally based on treatment - and disposal
off-site by private contractors. No capital costs are included
in these data, since it is not envisioned that SIC 355 plants
will be required to make significant capital investments to
achieve Level III technology, and thus to comply with hazardous
waste management regulations.
t
Only the very largest plants in this industry are expected
to practice any degree of on-site treatment and disposal of
hazardous wastes (less than 12 percent of the establishments
employ more than 100 people). Such plants could incur capital
costs for the installation of oil re-refining incineration,;and
solvent reprocessing equipment and the construction of secured
landfill sites. Neither the Assessment Report nor the Battelle
Cost Report data provided any basis for capital cost estimations.
The cost data provided in Table 31 are representative of the
costs expected to be incurred by special industry machinery manu-
facturers in disposing of their wastes through private contractors.
No significant differences are expected between the costs to be
incurred by small plants (i.e., those having less than 20 employees)
vs. larger plants. i
The typical SIC 355 manufacturing establishment (generating
40 kkg/yr of paint waste) spends approximately $1060/yr to dispose
of its hazardous wastes using Level I technology. The implementa-
tion of Level II technology would require that the typical estab-
lishment increase its disposal expenses by 73 percent to about
$1830/yr. Level III technology is 25 percent higher in estimated
cost than Level II, at $2,290/yr.
Total hazardous waste treatment and disposal costs at each
level of technology for the special machinery manufacturing in-
dustry are presented in Table 32. Current industry costs for
Level I technology are approximately $4.8 million per year. If
Level III technology were adopted for all the industry's wastes
(including heat treating and electroplating wastes), treatment
and disposal costs would more than double to $10.5 million per
year. Implementation of Level III technology by the special
industry machines manufacturing industry will thus result in
increased annual expenditures of approximately $5.7 million.
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- 58 -
TABLE 32
TOTAL NATIONAL COSTS FOR
HAZARDOUS WASTE DISPOSAL IN 1977 - SIC 355
(thousand dollars/year)
Process Waste Level I Level II Level III
Machine Shop $4,359 $7,582 $ 9,319
Paint Shop 71 75 238
Heat Treating 378 r 658 809
Electroplating 25 29 139
Total $4.833 $8.344 $10.505
Sources: Table 29 and Table 31.
OFFICE, COMPUTING AND
ACCOUNTING MACHINES
(a) Typical Manufacturing
Establishments
The processes listed in Table 33 must be used in t-.he manufac-
ture of office, computing, and accounting machines. However, all
these processes are seldom, if ever, employed at a single plant
based on the results of the Assessment Report(35) and the data
in Table 33.
The manufacturing processes most often encountered in
SIC 357 establishments are machine shops and product assembly
operations.(36) A process flow diagram for a typical SIC 357
plant is shown in Figure 3. The typical plant has 15 employees
and is located in an urban area, probably in California.
It is expected that roughly half the manufacturing establish-
ments implement only 2-3 manufacturing processes, based on the size
of the plants. Figure 4 shows the size distribution of plants in
the industry. One-quarter of the plants have less than five
employees, and half the plants have less than 20 erployees. About
nine percent of the plants employ more than 500 people.
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- 59 -
For the purposes of this study, only the typical plant
processes (machine shop and assembly operation) will be con-
sidered in any detail. Other hazardous waste generating
processes such as painting; stamping, blanking, and forming;
electroplating; and heat treating are normally not found in
SIC 357 establishments, and their total waste quantities are
small compared to machine shop wastes. Further, it is expected
that these other hazardous waste generating processes are
primarily found in the larger plants, where the cost impacts
of compliance with hazardous waste regulations will be smaller.
TABLE 33
MANUFACTURING PROCESSES IN SIC 357 - 1972
Manufacturing Number of Plants Percent of Total Plants
Process Using Process(11 in SIC 357 Using Process
Ferrous Foundry 3 <1
Nonferrous Foundry 2 <1
Forging 1 <1
Electroplating and
Other Plating 78 7.9
Galvanizing and Other
Hot-Dip Coating 1 <1
Heat Treating 45 4.5
Automatic Screw
Machine Dept. 42 4.2
Machine Shop 550 55.4
Tool and Die Shop 124 12.5
Plate and Structural
Fabrication 36 3.6
Stamping, Blanking,
and Forming 133 13.4
Painting, Lacquering,
and Enameling 124 12.5
Plastics Molding 34 3.4
Product Assembly 676 68.1
Note: (1) Establishments with less than ten employees were
excused from filing special metalworking reports
by the Bureau of the Census, which relies on In-
ternal Revenue Service and Social Security Admini-
stration records for data on small plants. Based
on the plant surveys conducted in the Assessment
Report, Kearney estimates that the smaller plants
typically consist of a machine shop and assembly
operation.
Source: 1972 Census of Manufactures; Industry Statistics.
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- 60 -
FIGURE 3
TYPICAL MANUFACTURING
ESTABLISHMENT IN SIC 357
MACHINE
SHOP
PRODUCT
ASSEMBLY
OPERATION
>
FINISHED
PRODUCT
-------
300
FIGURE 4
SIZE DISTRIBUTION OF SIC 357
MANUFACTURING ESTABLISHMENTS
252
250
200
150-
100-
50-
148
108
109
121
104
63
45
Total Establishments - 993
Total Establishments of
20 or More Employees - 524
30
13
j ^9 j 10-19 | 20-49 150-99 1100-249 [250-499 1500-9" i)9 11,000 -\2 500 +
1 '2,499 '
Number of Employees Per Establishment
Source: U.S. Department of Commerce, Bureau of the Census.
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- 62 -
(b) Hazardous Waste
Characteristics
The process wastes generated by the typical SIC 357 manufac-
turing operation are considered hazardous, and are generated almost
entirely within the machine shop area. These wastes consist of
lubricating and grinding oils, cleaning solvents, paint residues,
and metal grindings. They are considered hazardous due to the
inherent presence of flammable solvents, heavy metals, and oils.
It has been determined that these wastes are generated at the
rate of 3.35 kkg/yr.-dept. employee.(37)
These wastes are normally collected manually and stored
in some type of heavy trash container within the plant.
(c) Hazardous Waste
Generation
Hazardous waste generation rates for SIC 357 in 1977 are shown
in Table 34. Using the waste generation rate of 3.35 kkg/yr.-dept.
employee along with revised estimates of production employees per
machine shop from the 1972 Metaiworkingi Directory (38), the total
hazardous waste generation rates for SIC 357 machine shops were
revised slightly upward to 44,300 kkg/yr. on a wet-weight basis.
The typical manufacturing plant in SIC ;357 generates about 50
kkg/yr. of hazardous wastes.
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- 63 -
TABLE 34
HAZARDOUS WASTE GENERATION IN SIC 357 - 1977
Manufacturing
Process (1)
Waste Generation
Per Process Employee
( kkg^r-employee )
Machine Shop
Paint Shop
Heat Treating
Electroplating
Total
Dry
2.14
0.78
0.86
1.02
3: (1) Manufacturing
Wet
3.35
1.05
1.99
2.52
processes
Employees Total Waste
Per Process Generation
(thousand
Dry
13(2) 28.3
33 8.6
74 6.1
118 8.6
51.6
in SIC 357 generating
kkg/yr)
Wet
44.3
11.1
l'4.5
22.4
92.3
Notes:
insignificant quantities of hazardous waste include
foundries, forging, die casting, and galvanizing.
(2) Kearney estimates.
Sources: WAPORA, Inc., Assessment of Industrial Hazardous Waste
.Practice - Special Machinery Manufacturing Industries;
and Battelle Columbus Laboratories, Cost of Complying
with Hazardous Waste Management Regulations (Draft Report)
(d) Waste Treatment and
Disposal Practices ;
Hazardous waste management practices will be discussed in
terms of the three levels of technology which were defined earlier
in the presentations of waste treatment and disposal in the bat-
teries and special industry machinery groups.
1. Level I Technology. The most common method for
treating and disposing of SIC 357 wastes consists of collection
in a trash container with periodic hauling by a private contractor
to an off-site sanitary landfill.
According to the Assessment Report, about 90 percent of
the SIC 357 hazardous wastes received some form of off-site disposal
ip 1975.(39) ;
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- 64 -
2. Level II Technology. Based on the findings of the
Assessment Report, the best technology currently used which is
amenable to more widespread use begins with waste segregation.
Oils are recovered at offsite re-refining operations, and solvents
are reclaimed at off-site reprocessing facilities. The residues
generated in the reclaiming operations are incinerated, with ash
disposal in sanitary landfills. ' . '
\
Only about 50 plants in SIC 355 and 357 combined, repre-
senting less than one percent of the industry, were expected to be
using Level II technology in 1975.(40)
3. Level III Technology. The Battelle Cost Report
suggests that the technology for adequate health and environmental
protection is as previously shown in Table 30. These practices
differed from those in the Assessment Report.
(e) Treatment and
Disposal Costs
j
The total costs for treatment and disposal of the waste found
in SIC 357 plants were presented earlier in Table 31. These costs
are based on waste treatment and disposal by private contractors.
It is estimated that only the largest' plants in the industry will
elect to treat and/or dispose of any of their wastes on-site.
About nine percent of the SIC 357 plants, employing more than
500 people each, would be in a size range that could warrant the
consideration of on-site treatment.
The typical SIC 357 plant, which generates .50 kkg/yr of haz-
ardous waste, spends approximately $1300/yr to dispose of its
wastes using Level I technology. The implementation of Level II
or Lev£l III technology would require that the typical establish-
ment increase its disposal expenses by $2,300/yr or $2,800/yr,
respectively.
Estimated total hazardous waste treatment and disposal costs
are shown in Table 35 for each level of technology. Current in-
dustry costs for Level I technology are approximately $l,8.60,000/yr,
If Level III technology were implemented for all the industry's
wastes (including heat treating, electroplating, and painting),
treatment and disposal costs would more than double to $4.67
million/yr. \
-------
TABLE 35
TOTAL NATIONAL COSTS FOR
HAZARDOUS WASTE DISPOSAL - SIC 357
(thousand dollars/year)
process Waste
Machine Shop
Paint Shop
Heat Treating
Electroplating
Total
Level I
$1,156
192
378
134
$1.860
Level II
$2,011
203
658
152
$1^024
Level III
$2,472
645
809
741
Sources: Table 31 and Table 34.
ELECTRONIC
COMPONENTS
(a) Hazardous Waste
Characteristics
Manufacturing establishments within the electronic compo-
nents industry are highly diverse. They produce a variety of
products and components, using varying combinations of manufac-
turing processes, and a broad range of raw materials. The
Assessment Report(41) did not attempt to define a typical plant
in the industry, except in terms of the quantities of wastes
generated.
The hazardous wastes generated in SIC 367 plants may be
categorized as follows:
o Halogenated solvents (i.e., trichloroeth-
ylene, carbon tetrachloride, Freon, methylene
chloride, etc.)
o Nonhalogenated solvents (i.e., methyl ethyl
ketone, methanol, acetone, xylene, etc.)
o Wastewater treatment sludges
o Lubricating and hydraulic oils
o Paint wastes
-------
- 66 -
These wastes were judged by the assessment contractor to
be potentially hazardous based in general on the flammability,
corrosivity, toxicity, or bioconcentration characteristics
of the waste constituents.(42)
(b) Hazardous Waste
Generation
Using the waste generation factors from the Assessment
Report(43) and the Cost Report(44), hazardous waste generation
rates for SIC 367 plants in 1977 have been estimated in Table 36.
Approximately 73,700 kkg/yr and 40,500 kkg/yr of hazardous wastes
are generated on a wet-weight basis and dry-weight basis, respec-
tively. About half the wet-weight total is comprised of wastewater
treatment sludge, with most of the remainder halogenated and non-
halogenated solvents. Paint wastes and oils account for only about
three percent of the total industry hazardous waste stream on a
wet-weight basis.
TABLE 36
HAZARDOUS WASTE GENERATION IN SIC 367 ~ 1977
Waste Generation
per Output Unit
(kkg/million $ shipments)
Total Waste
Generation
(thousand kkg/yr)
Waste Stream
Halogenated Solvents
Nonhalogenated Solvents
Wastewater Treatment
Sludges
Lubricating and
Hydraulic Oils
Paint Wastes
Total
Dry
1.02
1.47
0.52
0.013
0.019
Wet
1.02
1.47
2.64
O'.l 5
0.019
Dry
13.9
18.5
7.7
0.2
0.2
40.5
Wet
13.9
18.5
38.8
2.3
0.2
73.7
Source: Battelle Columbus Laboratories, Cost of Complying with
Hazardous Waste Management Regulations (Draft Report).
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- 67 -
(c) Treatment and
Disposal Practices
The industry practices for the treatment and disposal of
electronic component industry manufacturing wastes are shown in
Table 37. In general, Level I technology entails oil and solvent
wastes reclamation with residues from the reclaiming operation
going to an unspecified type of landfill operation (probably either
a sanitary landfill or an open dump). Wastewater treatment sludges
and paint wastes receive some form of land disposal.
Level II technology for oils and solvents involves reclamation
with residue disposal in secured landfills. Wastewater treatment
sludges are dewatered and placed in secured landfills while paint
wastes are incinerated, with ash going to off-site landfills. Level
I and Level II technology were originally specified in the Assess-
ment Report.
Level III technology is taken from the Cost Report.(45) Thus,
the cost data used in the next sub-section are consistent with the
technologies involved. Oils, solvents, and paint wastes are incin-
erated (it is assumed that residual ash is deposited in secured
landfills), while wastewater treatment sludges are sent directly
to secured landfills.
Although both the Assessment Report and the Cost Report recog-
nize that waste reclamation and reuse are viable, cost-effective
measures for many types of oils and solvents, and that such measures
will be practiced by the industry to some extent , this study has
assumed that all hazardous wastes will be disposed of cather than
reclaimed. This is to allow the evaluation of i conomi: impacts
on a "worst-case" basis.
(d) Treatment and
Disposal Costs
The costs per metric ton (kkg) to treat and dispose of haz-
ardous wastes in the electronic components industry ar ; shown
in Table 38. These costs do not account for an} waste reclamation
by the industry (which could normally be done at lower costs), in
order to evaluate economic impacts on a "worst case" b isis. In
addition, the cost data generally do not reflect capit il costs,
since most of the waste treatment and disposal is conducted off-
site by private contractors.
-------
TABLE 37
TREATMENT AND DISPOSAL OF HAZARDOUS WASTES IN THE
ELECTRONIC COMPONENTS INDUSTRY
Waste Stream
Halogenated Solvents
Nonhalogenated Solvents
Level 1(1)
Wastewater Treatment
Sludges
Lubricating and
Hydraulic Oils
Paint Waste
On and off-site reclamation?
drummed unreclaimable
residue disposal in landfill,
Off-site reclamation by dis-
tillation with still bot-
toms to landfill; drummed
unreclaimable residue
disposal in landfill.
Off-site landfill.
Level 11(2)
Off-site landfill.
Mixed with plant trash.
Off-site disposal.
Same as Level I with
disposal in secured
landfill.
Same as Level I
with disposal in
secured landfill.
On-site sludge
dewatering with
secured landfill
disposal.
On- and off-site
reclamation with
landfill disposal
of sludge.
Segregation from
plant trash.
Incineration with
ash to off-site
landfill.
Level 111(3)
Incineration.
Incineration.
Secured
landfill.
Incineration.
Incineration.
Sources: (1)
WAPORA, Inc., Assessment of Industrial Hazardous Waste Practices
Electronic Components Manufacturing Industry.
(2) ibid.
(3) Battelle Columbus Laboratories/ Cost of Complying with Hazardous
War' 'Ma jmc ' Re~ "-iti (T~-ft **—>rtx
00
I
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- 69 -
TABLE 38
HAZARDOUS WASTE TREATMENT AND DISPOSAL COSTS
IN THE ELECTRONIC COMPONENTS INDUSTRY — 1977
Cost ($/kkg)
Waste Stream Level I Level II Level 1x1(3.)
Halogenated Solvents 68.2 69.2 107
Nonhalogenated Solvents 68.2 69.2 107
Wastewater Treatment 5.99 6.77 33.1
Sludges
Lubricating and 68.2 69.2 107
Hydraulic Oils
Paint Wastes 17.3 18.3 58.1
Note: (1) Refers to Pathways Level1III Technology.
Source: Battelle Columbus Laboratories, Cost of Complying with
Hazardous Waste Management Regulations (Draft Report).
Total SIC 367 hazardous waste treatment and disposal costs for
1977 are shown in Table 39. These costs were calculated from the
data in Tables 36 and 38. It was assumed that all wastes would be
treated and disposed of using the prescribed technologies at the
unit costs shown in Table 38.
Level I disposal technology currently costs the industry
approximately $2.6 million/year. These costs would roughly double
to $5.0 million/year if Level III technology (compliance with the
proposed hazardous waste regulations) were implemented. These
costs could be expected to decline as waste reclamation practices
are adopted by the industry. The major cost factor is expected to
be incurred in treating and, disposing of solvent wastes.
i
The Assessment Report(46) estimates that an average plant in
the industry generates 22.2 kkg/yr of hazardous wastes. Using the
cost data from Table 38, the costs for Levels I, II, and III treat-
ment and disposal technology are $824;|$845; and $1,559 per year,
respectively. These costs are developed in Table 40. Although
the Assessment Report does not describe the characteristics of an
average plant, it is estimated that such a plant would employ less
than 50 people and have a value of shipments less than $1.3 million
per year.
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- 70 -
TABLE 39
TOTAL NATIONAL COSTS FOR HAZARDOUS WASTE DISPOSAL
IN THE ELECTRONIC COMPONENTS INDUSTRY
(thousand dollars/year)
Waste Stream Level I Level II Level III
Halogenaf-ed Sctlvents $ 948 $ 962 $1,487
Nonhalogenated Solvents 1,262 1,280 1,980
Wastewater Treatment 232 263 1,284
Sludges
Lubricating and , 157 159 246
Hydraulic Oils
Paint Wastes 3 4 • 12
Total $2.602 $2.668 $5-009
•III Jnpl|_jfcl • ' t I - * M - . .1 li .£
Source: Table 36 and Taole 38.
•TABLE 40
HAZARDOUS WASTE TREATMENT AND DISPOSAL COSTS FOR AN
AVERAGE ELECTRONIC COMPONENTS MANUFACTURING PLANT
Waste
Waste Stream Rate
Halogenated Solvents
Nonhaolgenated Solvents
Wastewater Treatment
Sludges
Lubricating and
Hydraulic Oils
Paint Wastes
Total
Generation
(kkg/yr)
4.3
6.2
11.1
•
0.6
0.08
22^3 !
Plant
Per
I
293
423
66
41
1
$824
Cost (
Level
il
298
429
75
42
1
$845
$/yr)
ITI
460
663
367
64
5
$1.55j)
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- 71 -
V - ASSESSMENT OF ECONOMIC IMPACTS
METHODOLOGY
Economic impacts were assessed first by screening aggregate
costs for each industry, followed by a closv- examinaticn of
possible differential costs within each industry. Consistent
with accompanying economic impact assessments for other industry
groups, a threshold of 0.5 percent of shipment values was utilized
to distinguish between negligible and non-negligible aggregate
incremental hazardous waste oosts. Aggregate costs were found to
be negligible for each industry here reviewed.
Each industry was analyzed for possible differenti.nl cost
impacts by segment, production scale, or geographic location. For
industry segments, production levels, or regional concentrations,
costs in the range of 0 to 2 percent were considered insignificant
in the absence of strong competitive pressures or demonstrated
impact sensitivity (elasticity). Additional impact considerations
included financing (access to capital), price effects and cost in-
cidence, employment effects, the likelihood of induced plant clo-
sures, and balance of trade effects.
AGGREGATE
IMPACTS
Aggregate economic impacts associated with a shift from
Level I to Level III hazardous waste management technology will be
negligible for the following industries: storage and primary bat-
teries; electronic components; special industry machinery; and
office, computing, and accounting machines. Aggregate industry
costs as a percent of industry shipment values range from 0.02 to
0.06 percent (see Table 41). These co|sts would constitute less
than one percent of industry profits. Costs of this magnitude
would be indistinguishable from impacts generated by random fluc-
tuations in other conditions affecting! the industry.
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- 72 -
TABLE 41
AGGREGATE HAZARDOUS WASTE TREATMENT
AND DISPOSAL COSTS ASSOCIATED
WITH A SHIFT FROM LEVEL I
TO LEVEL III TECHNOLOGY
Cost as a
Incremental Percent of
Estimated 1975 Hazardous Waste Shipment
Industry Value of Shipments Management Costs Values
(million dollars) (million dollars)
Storage and Primary
Batteries $ 1,764.5 $0.3 0.02
Special Industry
Machinery 8,932.4 5.7 0.06
Office, Computing, and
Accounting Machines 11,568.4 3.0 0.03
Electronic Components 10,024.4 2.4 0.02
Sources: Annual Survey of Manufactures; and Battelle Columbus
Laboratories, Cost of Complying with Hazardous Waste
Management Regulations (Draft Report).
DIFFERENTIAL IMPACTS
WITHIN T3E INDUSTRIES
(a) Size
Hazardous waste management costs for application of Level
III technology will vary directly with output. The usual econ-
omies of large-scale treatment typical of wastewater treatment
facilities will not be a factor for this technology. Costs are
largely restricted to contractor hauling for off-site disposal,
and accompanying capital costs are minimal. Since operating
costs tend to vary directly with output, smaller astablishments
will not be confronted with unit treatment costd significantly
above those experienced by larger manufacturers.
-------
jb) Segment
Hazardous waste-generating production processes are not dis-
tributed such that particular industry segments absorb a dispropor-
tionate share of aggregate industry costs. Furthermore, given the
magnitude of aggregate industry costs, individual segment costs
would have to be as much as 50 to 100 times higher than those
affecting the entire industry in order to warrant special concern.
Although no major industry segments will experience dis-
proportionately high hazardous waste, management costs, differen-
tially high costs may be a problem for those lead-acid storage
battery plants with wastewater treatment facilities dependent
upon lime for acid neutralization and solids precipitation.
Among 150 lead-acid battery plants neutralizing their wastewater
effluents in 1972 (another 50 plants were not treating their
wastewater), an estimated 14 were neutralizing and precipitating
with lime.(47) An estimated 46 plants were neutralizing and
precipitating with caustic soda. The remaining 90 plants were
using ammonia or caustic soda for simple neutralization and
discharging their effluent (without sludge sedimentation) into
municipal wastewater treatment facilities.
Neutralization and precipitation systems used in wastewater
treatment which utilize lime will generate substantially larger
quantities of sludge than systems which use caustic soda or
ammonia. The lime sludge is a hazardous waste and thus is covered
by the proposed hazardous waste management regulations. Lead-acid
battery plants using lime in their wastewater treatment facilities
will incur higher treatment and disposal costs for the resultant
lime sludge than plants with wastewater treatment systems built
to use caustic soda"or ammonia.
Versar's assessment of hazardous waste practices in the
storage and primary battery industries compared hazardous waste
management costs for a "typical" lead-acid battery plant (pro-
ducing 1,800 batteries per day) using lime vs. caustic soda in
wastewater treatment. According to these estimates, lime-depen-
dent plants were already incurring hazardous waste disposal costs
of $27,000 per year.(48) These plants would be faced with incre-
mental costs of either $10,000 or $65,000 per year in shifting
from Level I to Level III technology, depending upon whether
approved landfilling of sludge is acceptable or a requirement
for chemical fixation is imposed. Plants using caustic soda in
their wastewater treatment system were incurring annual hazardous
waste management costs of $1,400 for on-site disposal and less
than^ $500 for off-site, contractor disposal. Annual costs in ap-
plication of Level III technology were $1,000, based on outside
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- 74 -
contractor costs, and net zero, if lead were reclaimed,. (49) Neu-
tralization and precipitation using caustic soda generates a
wastewater treatment sludge with a much more highly concentrated
lead content, enhancing the feasibility of lead reclamation.
As previously noted, 14 lead-acid battery plants were esti-
mated to be using lime for acid neutralization and precipitation
in their wastewater treatment systems. According to the original
technical contractor for this study, several plants are known to
have.since converted their facilities from dependence upon lime
to caustic soda.(50) Therefore, there are probably no more than
10 lead-acid battery plants remaining with lime-dependent waste-
water treatment facilities. Working in conjunction with EPA,
Kearney has identified five of these plants.
Lime-dependent wastewater treatment systems are believed to
be restricted to the larger manufacturing plants.(51) Among the
five known plants in this lead-acid battery category, one produces
approximately 1,500 batteries per day, while the other four produce
in the range of 5,000 - 10,000 batteries per day.(52) One of the
five plant? does not segregate its lead-acid battery waste stream
from the waste streams originating from its battery cracking and
lead smelting operations. This plant is a direct discharger, and
is required under the terms of its discharge permit tp utilize a
lime-dependent wastewater treatment system. Two of the remaining
plants recycle ell process water and achieve full lead recovery.
These plants therefore incur no hazardous waste management costs,
and would be unaffected by more stringent hazardous waste manage-
ment requirements.
The remaining two plants are absorbing the costs of land-
filling their lime wastewater treatment sludges. These plants
may consider conversion to a caustic soda process if more strin-
gent hazardous waste management practices are required. The
capital costs associated with such a process conversion of this
nature are estimated to be no more than $30,000 for an establish-
ment in" this production range. By comparison, incremental costs
associated with a shift from Level I to Level III hazardous waste
management *-.echnology for plants using lime might range from
$30,000 to $60,000 per year in this output range. Incremental
costs would run considerably higher if chemical fixation of the
lime sludge is required. However, these differential hazardous
viaste management costs imposed upon lime-dependent lead-acid
battery plants with output capacities in the 5,000-10,000 battery
per day range are unlikely to amount to a competitive disadvantage
of more than 0.1 percent of gross revenues (less than one percent
of corresponding profit margins).
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- 75 -
Based on the preceding assessment, differential hazardous
waste management costs imposed upon a small number of the largest
lead-acid storage battery plants (those with lime-dependent waste-
water treatment facilities now in place) do not appear to warrant
further concern. Consideration of hazardous waste management re-
quirements should preclude future investments in wastewater treat-
ment facilities incorporating a lime neutralization/precipitation
process in all but a few special cases.
(c) Region or Locality
Hazardous waste management costs are considered negligible
regardless of output range or segment characteristics. Differ-
entially high cost requirements are therefore extremely unlikely
to be experienced by any particular region or locality, including
any which may exhibit unusual concentrations of industry activity
or plant characteristics.
SPECIAL IMPACT
CONSIDERATIONS
(a) Availability of
Facilities
Current technology cost calculations have been predicated
upon the availability of hazardous waste incinerators and secured
landfills meeting the requirements of Pathways Level III Technology
(see preceding section). Lack of access to facilities or inadequate
treatment capacity at available facilities could pose potentially
serious compliance problems for manufacturers legally required to
achieve prospective hazardous waste management regulations. These
concerns are beyond the scope of this study, however, and have been
addressed independently by EPA.
(b) Financing
As previously discussed, capital costs associated with Level
III hazardous waste management technology are minimal. No financing
difficulties are foreseen for industry participants.
(c) Prices
Associated hazardous waste management costs are considered
negligible both in aggregate and by individual plant, segment,
or geographic location within the industry. Price effects will
therefore be negligible.
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(d) Employment
There should be no change in industry employment directly or
indirectly attributable to the imposition of more stringent haz-
ardous waste management regulations. ;Consistent with the preceding
analysis, no special employment difficulties affecting particular
establishments, segments, or geographic locations are anticipated.
(e) Plant Closures
The magnitude of costs enumerated above does not warrant
concern about possible inducement of plant closures. Costs are
sufficiently small that it would be unreasonable to attribute
them with any potential for adverse cumulative impacts on the
industry, even in conjunction with other environmental or related
regulatory requirements.
(f) Balance of Trade
The proposed hazardous waste management regulations are
expected to result in negligible product price effects for the
industries considered in this study. Thus, the effects of the
proposed regulations on imports and exports will be insignificant.
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VI - REFERENCES
1. Personal communication. Outline and information
submitted by Richard Williams, Arthur D. Little, Inc., to
J. E. Levin, A. T. Kearney, Inc. October 17, 1977.
2. Versar, Inc. Development of Data for Proposed
Effluent Limitations and Standards of Performance Guidelines
for the Battery Point Source Category. February, 1977.
3. Wholesale Prices and Price Indices. U.S. Depart-
ment of Labor: Bureau of Labor Statistics. U.S. Government
Printing Office. Washington, D.C., 1976.
4. Kearney: Management Consultants. "Economic Impacts,"
in Standards Support and Environmental Impact Statement; Control
of Emissions From the Manufacture of Lead-Acid Storage Batteries.
Draft report. U.S. Environmental Protection Agency. Research
Triangle Park, North Carolina, 1977. p. 8-76.
5. Independent Battery Manufacturers' Association, Inc.
(IBMA); Motor Vehicle Manufacturer's Association (MBMA), Motor
Vehicle Facts & Figures' 76; Battery Council International (BCI).
6. U. S. Bureau of the Census. U. S. Imports for Con-
sumption and General Imports. U. S. Government Printing Office,
Washington, D. C., 1976.
7. U. S. Bureau of the Census. U. S. Exports -
Schedule B Commodity by Country. U. S. Government Printing
Office, Washington, D. C., 1976.
8. U. S. Bureau of the Census, Census of Manufactures,
Volume II; Industry Statistics; Part3; SIC Major Group
U.S. Government Printing Office, Washington, D. C;, 1976.
9. Ibid.
10. Ibid.
11. U. S. Bureau of the Census, Census of Manufacturers,
1972. Special Report Series; Concentration Ratios in Manufac-
turing, MC 72(SR)-2. U.S. Government:Printing Office, Washington,
D. C., 1975.
i
12. U.S. Exports and U.S. Imports for Consumption and
General Imports, Bureau of the Census: Foreign Trade Division.
U.S. Government Printing Office, Washington, D.C., 1976.
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- 78 -
13. Ibid.
14. U. S. Department of Commerce: Domestic and Inter-
national Business Administration. U. S. Industrial Outlook 1977;
With Projections to 1985. U. S. Government Printing Office,
Washington, D. C., 1977.
15. Ibid.
16. Ibid. p. 344.
17. Ibid.
18. Ibid.
19. Ibid.
20. U.S. Bureau of the Census, Census of Manufactures,
1972. Volume II; Industry Statistics; Part 3; SIC Major Group
35-39. U.S. Government Printing Office, Washington, D.C., 1976.
21. U.S. Department of Commerce: Domestic and Inter-
national Business Administration. U.S. Industrial Outlook 1977;
With Projections to 1985. U.S. Government Printing Office,
Washington, D.C., 1977. p. 341.
22. Ibid. pp. 343-344.
23. Ibid.
24. Ibid. pp. 334-336.
25. Ibid.
26. Kearney: Management Consultants. Economic Impact
Assessment of Proposed Effluent Limitation Guidelines for the
Battery Industry Point Source Category. Environmental Protection
Agency Contract No. 68-01-1940. Washington, D.C., draft report,
1977.
27. Battelle Columbus Laboratories. Cost of Complying
with Hazardous Waste Management Regulations. Environmental
Protection Agency Contract No. 68-01-4360. Washington, D.C.,
draft report, 1977.
28. Kearney: Management Consultants. Economic Impact
Assessment of Proposed Effluent Limitation Guidelines for the
Battery Industry Point Source Category. Environmental Protection
Agency Contract No. 68-01-1940. Washington, D.C., draft report,
1977.
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- 79 -
29. WAPORA, Inc., Assessment of Industrial Hazardous
Waste Practice - Special Machinery Manufacturing Industries.
Environmental Protection Agency Contract No. 68-01-3193.
Washington, D.C. , National Technical Information Service, 1977.
30. Ibid.
31. U.S. Bureau of the Census, Census of Manufactures,
1972. Volume II; Industry Statistics; Part 3; SIC Major Group
35-39. U.S. Government Printing Office, Washington, D.C., 1976.
32. WAPORA, Inc., Assessment of Industrial Hazardous
Waste Practice - Special Machinery Manufacturing Industries.
Environmental Protection Agency Contract No. 68-01-3193.
Washington, D.C., National Technical Information Service, 1977.
33. Ibid.
34. Battelle Columbus Laboratories. Cost of Complying
with Hazardous Waste Management Regulations. Environmental
Protection Agency Contract No. 68-01-4360. Washington, D.C.,
draft report, 1977.
35. WAPORA, Inc., Assessment of Industrial Hazardous
Waste Practice - Special Machinery Manufacturing Industries.
Environmental Protection Agency Contract No. 68-01-3193.
Washington, D.C., National Technical Information Service, 1977.
36. Ibid.
37. Ibid.
38. U.S. Bureau of the Census, Census of Manufactures,
1972. Volume II; Industry Statistics; Part 3; SIC Major Group
35-39. U.S. Government Printing Office, Washington, D.C., 1976.
39. WAPORA, Inc., Assessment of Industrial Hazardous
Waste Practice - Special Machinery Manufacturing Industries.
Environmental Protection Agency Contract No. 68-01-3193.
Washington, D.C., National Technical Information Service, 1977.
40. Ibid.
41. WAPORA, Inc., Assessment of Industrial Hazardous
Waste Practices - Electronic Components Manufacturing Industry.
Environmental Protection Agency Contract No. 68-01-3193.
Washington, D. C., National Technical Information Service, 1977.
42. Ibid.
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- 80 -
43. Ibid.
44. Battelle Columbus Laboratories. Cost of Complying
with Hazardous Waste Management Regulations. Environmental
Protection Agency Contract No. 68-01-4360,, Washington, D.C. ,
draft report, 1977.
45. Ibid.
46. WAPORA, Inc. , Assessment of Industrial Hazardous
Waste Practices - Electronic Components Manufacturing Industry.
Environmental Protection Agency Contract No. 68-013193.
Washington, D.C., National Technical Information Service, 1977.
47. Versar, Inc. Development of Data for Proposed
Effluent Limitations and Standards of Performance Guidelines
for the Battery Point Source Category. February, 1977.
48. Versar, Inc. Assessment of Industrial Hazardous
Waste Practices; Storage and Primary Batteries Industries.
Environmental Protection Agency Contract No. 68-01-2276.
Washington, D.C., 1975.
49. Ibid.
50. Personal communication. C. Saunders, A. T. Kearney,
Inc. and L. McCandless, Versar, Inc. October 25, 1977.
51. Ibid.
52. Confidential plant technology data on file with
Environmental Protection Agency Effluent'Guidelines Division,
Office of Water Planning and Standards.
ya 1661
SW-160P
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