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Rocket clouds
1 by Mind Map: 1

1. Market for NaClO3

1.1. market share

1.1.1. 85% to paper & pulp

1.1.2. 15% to other chemicals

1.2. sales during 1970s

1.2.1. Exhibit 3

1.2.1.1. 1970: 220,000tons

1.2.1.2. 1970~1974: g≈8.6%

1.2.1.3. 1975: -12%

1.2.1.4. 1975~1979: g>10%

1.2.1.5. 1979: 435,000

1.3. demand

1.3.1. pulp

1.3.1.1. expected: g∈(8%~10%)

1.3.1.2. projected: g∈(3%~4%)

1.3.2. other

1.3.2.1. expected: g∈(8%~10%)

1.4. capacity

1.4.1. Exhibit 3

1.4.1.1. 1970~1979: <70%

1.4.1.1.1. tight market+cost↑ → price↑ → profit margin↑

2. Market Competition

2.1. late 1979 existing

2.1.1. 55% domestic capacity & 59% southeastern market

2.1.1.1. 4 dominant chemical companies

2.1.1.2. paper & pulp companies

2.1.1.3. 2 specialized companies

2.1.2. Exhibit4、5

2.2. 1980 planned

2.2.1. Union: 40,000-ton plant

2.2.1.1. expected selling price in 1979: $420 (15% on return)

2.2.2. Lou: 35,000-ton plant

2.2.3. when balanced, price+margin expected to ↑

3. American's Plant

3.1. operating profit

3.1.1. Exhibit6

3.1.1.1. 1974~1979 profitable

3.2. capacity: 4000 tons per year

3.3. manufacturing cost

3.3.1. electric power: 55%~60%

3.3.1.1. increase from $.019 in 1977 to $.025 per KWH in 1979

3.3.2. variable materials: 20%

3.3.3. labor and maintenance: 20%

3.3.3.1. capital expenditures increase from ($200,000,$500,000) between 1973 and 1979 to ($475,000,$600,000) in future due to env. regu.

3.4. equipment: graphite electrodes

3.4.1. consume graphite

3.5. research & development

3.5.1. use metal electrodes

3.5.1.1. reduce power needs by ≈30%

3.5.1.2. eliminate graphite use

3.5.2. use laminate metal

3.5.2.1. reduce power needs by (15%,20%)

3.5.2.2. eliminate graphite use

3.5.3. 40% complete

3.5.4. pilot plant scheduled for March 1980

3.5.4.1. one-time cost of about $2.25 million

3.5.4.2. depreciate for 10 years

3.5.5. installation scheduled for December 1980

3.6. proposed sale

3.6.1. profitable: Exhibit7

3.6.2. evaluate American's plant: Exhibit8

3.6.2.1. prices: increase 8% per year

3.6.2.2. power costs: increase 12% per year

3.6.2.3. selling expenses: reduce by marketing through existing sales force

3.6.2.4. depreciation charges increase

3.6.2.5. technical support provided

3.6.2.5.1. pay costs

3.6.3. fund the $12 million entirely with debt capital

3.6.3.1. $8 million in 15-year bonds

3.6.3.1.1. 11.25% interest rate

3.6.3.1.2. $800,000 a year since the sixth year

3.6.3.2. $4 million notes payable

3.6.3.2.1. 11.25% interest rate

3.6.3.2.2. equal amounts over 5 years