Document NawBbnnrY8ZjbDEZov712BeE
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Texas City, Texas
March 8, 1966
Consequences o Shutting Down Existing VCM Plant
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Vi. H. Lam V. H. Slager/R . Rosenberg F. R. falser Central Files
J. W. Kocg&hle
JRDENTIAL
introduction
The purpose of this study Is to establish a basis for comparing our VCM manu facturing cost against the cost of buying all of buying all of our monomer from other manufacturers*
i SUMMARY At least one company has reportedly offered to sell VCM to Monsanto at a price
substantially below our current manufacturing cost.. We htre estimated the
operating costs which would either continue or Increase if we shut down the
existing VCM plant aad simply purchased the monomer. The estimate Is based
on the follewlag'assumptioos:
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1. All ether xexas CUy process uniis wiU operate at the nies wire u*
Bracket 2 of the Inventory standards {1st quarter. I964)lr --77'-
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2. The existing VCM plant will be dismantled. It will not be replacedwith a* /!
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3. ' Other usee of equal value can he found fur chlorine and ethylene.
4. Manpower associated with the manufacture of VCM will be dismissed except where retention can be Justified by other product lines.
5* Monsanto will purchase 138 12 lbs VCM per year for use at Springfield. '<
This estimate Includee the Increased cost of purchasing EDC, muriatic acid, and anhydrous HCl need by other Texas CUy plants as well as the share of fixed costs
fay VCM* These costs are shown In Table 1*
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The coots shown for mariatic acld sad Anhydrous HCiamthe difference between ^ ^7
their current market prleesahdthslr chlorine waltm-v^t^
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meet sayeaeld will eoet,aipeatd23.l>r ton andnnhydrou'ia^L;^il'coet'dd3 per-J;. '..*7 -
-'ton, -'delivered in trucka.^iacideatolly, JDow Chemk^re^resm year.a*yaace',V'7--
notice If we wish to purchase anhydrous HCl. We asstunrthntEDC* wtdeh la'7 i r.''H need to makeEMA* cn be purchased for l.Of/lbTmoire tbaa^^'present manual*
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- V factoring eost.7we also assume tkat tke relatively small
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CBY 1116349
RSV0032583
J. W. Kongable
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March a, 1946
used for water treating will be shipped to Texas City by tank car, which will increase its coat by $l/ton. The costa shown in Table I are based on a chlorine selling price of $35/ton.
Fred Walser says that division and corporate SAKE allocations to VCM total about $1.0 13/year. We have arbitrarily assumed that these expenses could be reduced by 25%. We have also assumed no change In the cost of delivering monomer to Springfield.
The five Monsanto*designed overseas VCM plants often call upon Texas City for technical assistance, and some of their key men have been trained in oar plant. We could no longer provide training facilities or technical assistance to these customers. This may also adversely affect future sales of our process by
Scientific Design. We have not attempted to determine the effect of a shutdown on Income from royalties.
CONCLUSIONS
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1. A minimam of 40 hourly and 13'technical people would here to be. X'S&t'L'" *^' a.'
reassigned or dismissed if Monsanto ceases ts produce VCM.
.2 The following costs would continue If VCM production ceased:
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Paw Materials
544 0.41
Direct Expenses
542 0.42
lad recta
275 0.20
SAKE
750 0.54
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2,173
1.57
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3. We would have to sell an additional 57, 000 aaa of chlorine per year. The
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price we receive will determine the maximum price we can afford to pay
for VCM. as shown in Table H.
4 Acetylene purchases from Carbide would be unnecessary unless either V&M
or AN production were expanded, we doubt that the present VCM acetylene
purification unit would be satisfactory for parifylbgs VAM*s feed. :
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5 We ceuld not continue to famish effective technical support for onr overseas
VCM plants
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TABLE I
CONTINUING OPERATING COSTS BiU; 138 & Ibs/yr VCM Purchased
Raw Materials Chlorine Muriatic Acid Anhydrous HCl EDC
Quantity
1800 ton/yr 7700 ton/yr 9800 ton/yr 1.2 II lbs/yr
Direct Expenses Utilities
Repairs x Instrument Shop -
Laboratory Waste Disposal V ineri Gas - Plant Tracks Technical Service
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Indirect Expenses
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*/lb VCM
1.6 92.0 480.6 12.0 55676
0.410
133.7 326.0
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0.200 0.545
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Total Continuing Costs
2.173.1
1.577
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TABLE H
BREAK-EVEN VCM PURCHASE PRICE Basts: 136 %A lbs/yr VCM Purchased
Chlorine Sailing Price $/Ton
VCM Purchase Price </Lb
- 46.40 43.0
- 40.0
4.25 4. 11 3.93 -
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. 3.79
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CBY 1116353 RSV0032587
