DEBOURGH
Company Profile
Capital Investments Are the following investments justified: The powder coating system installed by DeBourgh is a feature-enhanced, custom designed, semiautomatic system with oscillating spray guns and three manual stations. The system is used for roughly 75% of DeBourgh's production (the remaining 25% of products require liquid paint). The new electrostatic system doubles DeBourgh's painting capacity and reduces the number of rejects by almost 50% with absolutely no hazardous emissions to the outside environment. The total cost of the powder coating system, including installation, delivery, associated upgrades to the fire system, and purchasing expenses, is $289,029.
A variety of annual cost savings are associated with the conversion from liquid (solvent-based) paint to powder paint. First-although the costs per unit of powder paint and liquid paint are similar-less powder paint is wasted because it has a higher transfer efficiency, thus less is purchased. Powder paint's higher transfer efficiency also allows DeBourgh to replace the paint booth air filters less often. DeBourgh expects no change in raw material storage costs or in paint equipment electricity use. Powder paint equipment can be cleaned with compressed air, so DeBourgh reduces its purchases of xylene, which is used as a cleaning solvent for the liquid paint equipment. DeBourgh has an in-house solvent recycling unit that allows xylene to be reused, but the recycling process produces a hazardous sludge waste. This waste is regulated under RCRA, and is expensive to dispose. The reduction in solvent use allows DeBourgh to save on these disposal costs, regulatory paperwork, storage, and liability -- as well as on the electricity and labor required by the recycling unit. Other labor cost savings result from increased painting automation and reduced paint booth cleanup. Worker health and productivity should also improve, because there will be fewer hazardous air emissions from the liquid paint and cleaning solvent (powder paint has no air emissions). In addition, the reduction in air emissions allows DeBourgh to save on annual air emissions fees, air quality monitoring, regulatory paperwork, and plant air ventilation (which includes heating the make-up air). In total, DeBourgh is able to quantify $132,463 of savings associated with the powder coating system. However, this figure does not include unquantified savings such as improved throughput, quality, and productivity; reduced liability, storage costs, and regulatory paperwork; and reduced worker exposure to VOC emissions. The oven insulation reduces DeBourgh's reliance on natural gas by $10,210 annually. Financial Parameters The analysis uses a project lifetime of 10 years, real cost of capital of 9%, a net tax rate of 39%. Capital costs are depreciated over 10 years using the straight line method. Financial Results The 10-year NPV is $264,865; the 10-year IRR is 26.8%; the discounted payback period is 4.17 years. Contact Deborah Savage, Tellus Institute, (617) 266-5400. Colorado State University Industrial Assessment Center, Energy Conservation & Pollution Prevention Assessment Report No. CO0332. March 1995. DISCLAIMER: This database presents a number of case studies developed in recent years by a diverse group of organizations. The concepts, terms, and approaches represented throughout the database represent many different philosophies and means of applying environmental accounting principles and don't necessarily reflect the position or views of the US Environmental Protection Agency. Through production of this database, the EPA is presenting many different possible approaches to environmental accounting without intending to endorse any one. |