I/EC SPECIAL FEATURE
A General View of European Costs These cost distribution methods and price structures may help influence your decision on foreign investment A Staff
Feature
Editor's Note The resurgent a n d r a p i d l y e x p a n d i n g European chemical industry presents a challenge t o and a n opportunity f o r American chemical manufacturers. A challenge in that e x p o r t markets m a y d i s a p p e a r when European industry reaches its p o t e n t i a l ; an opportunity in that American c a p i t a l a n d technical know-how can b e a partner in this r e surgence a n d expansion through direct acquisition, investment in new plants, a n d joint ventures. As a g u i d e f o r interested manufacturers, l/EC's editors present here a n internal v i e w o f equipment costs as they exit in some European countries. Included also is a general rund o w n on distribution o f burden o r f r i n g e benefits as p e r cent o f b a s e - w a g e r a t e . By a n d l a r g e there a p p e a r s to b e close correlation b e t w e e n European practice a n d U. S. experience in handling these costs. Equipment prices q u o t e d a r e a v e r a g e f o r the item shown.
C U R O P A , or Western free Europe, is experiencing a boom in chemical plant investment. It is forecast that expansion in the period 1957 to 1960 will be approximately 1.2 billion U. S. dollars. In comparison, all of West European industry is expected to expand 7 8 % during the same period. Under construction currently are the following types of chemical plants: styrene, butadiene for synthetic rubbers, ethylene, fibers, polyethylene, polypropylene, polyolefins, materials for plasticizers, ethylene glycol, ethylene oxides, ethyl alcohol, butyl alcohol, acetylene, dodecylbenzene, isopropyl alcohol, tetramers, synthetic fertilizers, and polybutylene. Leaders in this accelerated growth are the United Kingdom, Western Germany, France, Italy, and the Netherlands. The following tables show the growth of petrochemical plant capacity in these countries. Tons per Annum" 1956 1957 340 0 0 0 United Kingdom 4 5 0 000 225 0 0 0 250 0 0 0 Western Germany 85 0 0 0 110 0 0 0 France 75 0 0 0 100 0 0 0 Italy 40 0 0 0 60 0 0 0 Netherlands Not available for 1958, 1959, and 1960.
The annual production of styrenebutadiene rubber in tons per annum for 1960 is: Tons United Kingdom Western Germany France Italy Netherlands
70,000 70,000 40,000 60,000 50,000
In contrast, the total annual production of synthetic rubber in the United States is estimated at 1,500,000 tons. Investments in new petrochemical plants to 1960 are estimated : Million $ United Kingdom Western Germany France Italy
181 120 210 110
As a matter of interest total national income per capita in equivalent American dollars is shown for five European countries compared with the United States and Canada during 1957: United States Canada United Kingdom Denmark Norway France Italy VOL. 52, NO. 3 ·
S 1864 1296 778 744 740 730 306 MARCH 1960
39 A
S P E C I A L FEATURE Average hourly wages for the five Western European nations are: Social Charges (Fringe Benefits) % of Base-Labor Rate
Hour-Rate Including Social Charges, $
Base Labor Rate, 9
10 35 40 60 30
1.00 0.80 0.95 0.80 0.65
0.91 0.68 0.68 0.50 0.50
United Kingdom Western Germany France Italy Netherlands
Rates are shown including social charges or fringe benefits and for each the per cent of total hourly charge for fringe benefits. When compared with the United States hourly rate of approximately $2.50 before fringe benefits, European wages are considerably lower than in the United States. Living stand ards in Europe are also much lower. This has an adverse effect on European labor efficiency. High wages result in higher production and production depends on efficiency plus job satisfaction. Wages in Europe are low in comparison with the cost of living making it necessary for many to work at night and on weekends. Of course, the extra hours the average worker puts in has an adverse effect on his efficiency in his base employment. Efficiency, higher production, and profit go hand in hand. Therefore, upgrad ing of personnel is of major impor tance and one of the most urgent responsibilities of management. At present a considerable number of people work overtime on their own company jobs. In most Euro pean countries the work week is 48 hours. Labor unions are now attempting to reduce this to 40 hours. By and large wages of the United Kingdom are higher than on the Continent. However, labor efficiency is not higher than in the rest of Europe. Productivity is also affected in the United Kingdom by many strikes and work slowdowns. A contractor in Britain reported the following wage rates for construction workers expressed in equivalent American dollars. These wage rates are exclusive of fringe benefits.
Foreman Erectors and fitters Welders Laborers, helpers, and chippers 40 A
5 0.90 0.80 0.85 0.75
Labor Rates Including Fringe Benefits, Taxes, and Supervision, $ West Germany European U. S. Gulf Rates Coast Rates α Fitters and erectors 1. SO Welders 1.80 4.75-5.156 Construction α workers 1.70 Boiler-makers 2.25 4.75 Carpenters 1.35 4.45 Instrumentists 2.00 4.75 • No comparable XJ. S. craft craft group. group. h Dependent on craft category.
Equipment quotations provided by West Europe manufacturers appear to be less than those proposed by U. S. manufacturers. This table shows the range of quotations on a recent bid for three 60,000-kw. turbo generator sets. Manufacturer United States British Swiss Western Germany
Millior 3.2 3.1 2.6 2.5
From an analysis of the three years expansion forecast it is expected that France will show a larger percentage of growth in the chemical area than the other European countries. De spite this fact France is hindered by a shortage of skilled labor. She is still attempting to organize for a higher level of efficiency and produc tivity in industry. Overhead costs are generally high in France. Con tributing to high overhead is the high cost of transport due to geographical locations between industrial plants and customers. Western Germany by comparison has a highly in tegrated industrial organization operating at very good efficiency. At present only 1.1% of her total population is unemployed. Labor efficiency in Italy is reason able. Many indigenous building materials are obtainable at low costs. Construction methods are relatively simple. All are favorable factors for lower costs and good
INDUSTRIAL AND ENGINEERING CHEMISTRY
productivity. The Netherlands are experiencing high investment activ ity. The lower costs for installed plants have attracted investment capital from many American firms. The Netherlands have a large popu lation and it is still increasing. To support the growing population the government does its utmost to invest on a large scale. There is little trouble with labor unions and good skilled laborers are readily available. The excellent Netherland waterways help make it the center of the European market. The com mon European market is making Europe an increasingly attractive market area for new plant invest ments. The Organization for Euro pean Economic Cooperation has done a splendid job in minimizing duties among these nations. Many American companies have and are continuing to invest in Europe. Many more are consider ing future investments. In addition to investment capital the U. S. companies have provided construc tion supervision. United States con tractors maintain cost engineering staffs in Europe to gather cost in formation for use in arriving at decisions whether or not to build in Europe. To guide American firms interested in West European capital costs typical costs for equipment and materials are given in Tables I through V I I I . These costs cover such equipment as heat exchangers, pumps, motors, air compressors, towers, and such materials as valves and insulating coatings. These prices are F.O.B. West Germany unless otherwise stated. They are expressed in U. S. dollars. Cork is not standard insulation in the United States for elevated tem peratures and there are good sub stitutes for subfreezing temperatures. European prices are based on 100% pure expanded cork in seg ments 2 feet long, termite, and rotproofed. Note: For additional information on European Economics references are : (1) Office European Economics Coopera tion, Washington, D . C , "Industrial Statistics, 1900-57." (2) Ibid., "The Chemical Industry in Europe." (3) U . S. Bureau of Mines, Washington 25, D. C , "World Petroleum Statistics." (4) U. S. Department of Commerce, Washington 25, D . C.
Table I.
Table
Costs of Heat Exchangers United States Costs, United states uosts, $ » 16 feet X »/« inch X 16 gage 1 inch square pitch 150 P.S.I.G. packed floating head Removable bundle
European Costs, S $ European Uosts, '/« inch X 16 gage 1 inch square pitch 150 P.S.I.G. floating head Removable bundle Surface, Sq. Ft.
Admiralty Tubes
C. S. Tubes
Admiralty Tubes
C. S. Tubes
200 400 600 800 1000 1500 2000 2500
2,300 3,000 3,500 4,200 4,800 6,500 8,000 9,500
1,700 2,150 2,650 3,100 3,600 4,800 6,000 7,200
2,300 3,300 4,100 5,300 6,200 8,400 11,000 15,000
1,900 2,600 3,200 4,000 4,700 6,300 8,000 9,600
Table III.
5 10 20 50 100 200 300
37 75 150 375 750 1 ,500 2 ,250
Capacity, Bbls.
Tanks
Tanks, S United States European (Gulf Coast) 5,000 6,800 8,000 9,000 17,500 30,000 40,000 49,000 60,000 72,000 91,000
4,000 5,000 6,000 8,500 13,000 22,000 30,000 40,000 50,000 65,000 80,000
1,000 2,000 3,000 5,000 10,000 20,000 30,000 40,000 60,000 80,000 100,000
Centrifugal Pumps (C. S. Housing—C. I. Impeller) Differential Head in P.S.I. 200 p.s.i. (462 ft.) 300 p.s.i. (692 ft.) Cost, $ European European U.S. U.S.
100 p.s.i. (230 ft.) Capacity C.F.M G.P.M.
II. Cone Roof Steel (Atmospheric)—Erected
European
U. S.
750 1,050 1,250 1,700 2,050 2,550 2,900
770° 800° 900° 1,450° 2,400° 5,175c 7,380
1,350 1,650 2,000 2,500 2,900 3,600 4,150
1,200° 1,500° 1,900° S.OOO6 5,700* 10,365" 19,000
2,000 2,550 2,700 3,250 4,150 4,850 5,500
400 p.s.i. (923 ft.) European
U. S.
2,750 4,500 3,500 4,500 5,200 6,500 7,000
2,100* 2,500 3,700 5,850
1,400* Ι,δΟΟ 6 2,350° 1 s.eoo ' 7,90ο6
...
...
° Basis for 1 or 2 stage closed impeller v o l u t e centrifugal p u m p (Worthington) is all iron with channel steel base plate, flexible coupling, and mechanical seal. M o t o r is T . E . F . C . 2 2 0 / 4 4 0 volt, 3 phase, 60 cycle, at 3600 r.p.m. b A 2-stage horizontally split case with opposed impellers (Goulds) and all iron. Motors are T . E . F . C , 2 2 0 / 4 4 0 volt, 3 phase, 60 cycle, at 3600 r.p.m. (except over 100 hp. and 2300 or 4 1 6 0 volts). c (Ingorsoll-Rand) Single or 2-stage horizontally split case and all iron. M o t o r s are T . E . F . C . , 2300 volts, 3 phase, 60 cycle.
Table IV.
Electric Motors
Table V.
Explosion Proofed—50 C.Y. 1500 R.P.M European, $ u.
Hp.
300 675 1,000 1,600 1,900 2,250
10 25 50 100 150 200
Table VI.
3000 R.P.M European, $ u.
s., $
425 760 1,560 2,640 4,520 5,840
270 570 950 1,350 1,700 2,100
Table VII.
G a t e Valves
Cast Steel B o d y — 1 3 % Chrome Stem and Trim
Size, Inches 2 3 4 5 (Not std. in U . S.) 6 8 10
150 lb. Class, $ Euro pean TJ. S.
300 lb. Class, $ Euro pean U . S.
65 85 105
102 139 175
85 105 130
144 200 257
130 160 200 250
285 415 625
160 210 260 320
465 625 965
Pipe Dia., Inches 2 4 6 8 10 12 16 20
Drivers Costs, $ per H p . European U . S .
s., $
355 720 1,520 2,750 4,680 6,780
Diesel 75-85 Gas turbines 90-100 Gas e n g i n e s 100-130 Mechanical driver s t e a m turbines Noncondensing 30-40 Condensing 40-50
80-100 60-100 90-120 20-40 25-45
Cork Insulation of 27 2 -lnch Thickness
Table VIII. Cost of Standard Hori zontal Two-Stage Air Compressors
U. S. Cost/Ft., $ Materials Material Cost/Ft., $ Only 85% United Magnesia European States Insulation
(Opposed steam-driven—discharge pressure about 100 p.s.i.g.; steam conditions 250 p.s.t.g. at 4 5 0 ° F.; simple duplex steam-engine includ ing inter and after cooler and ancillaries)
0.80 1.00 1.25 1.50 1.70 1.90 2.25 2.80
1.46 2.15 2.65 3.75 4.63 6.18 6.95 8.15
1.25 1.80 2.25 2.55 3.05 3.40 4.20 5.00
Capacity, C.F.M.
European Cost
1,000 1,500 2,000 3,000 4,000 5,000 8,000
17,500 25,000 32,000 45,000 60,000 75,000 100,000
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