Applichem

Group 2
PRANAV PGP07034
MANDEEP PGP07129
SUNNY PGP07099
VARUN PGP07102
VIKAS PGP07153
 Company Background
Founded in Chicago just before World War II
Provides customized chemicals to its customers
Had a strong functional orientation
In 1982, Joe Spadaro was VP and Director of Plastics Business
 Business Background
Release-Ease:-
Developed in 1952 to easily remove molded parts from the mold
Applichem had patent for release-ease
Specs of Release-ease varied slightly with regions
Release-ease demand expected to increase in next 5 years
Sold at an average price of $1.01/pound
Competitor large US based chemical company with plant for Release-ease like
product in Luxemborg
 Performance of Release-ease in plants

Mexico Frankfurt Gary Sunchem

Direct Labour Cost ($/100pounds) 2.38 5.78 8.46 12.82
Packaging ($/100pounds) 2.38 3.35 13.78 4.56
Total Cost ($/100pounds) 91.13 72.26 99.42 146.98
Utility ($/million pounds) 12012 11116 19365 36675
Average Yield on A 94.7% 98.9% 90.4% 98.8%
Capacity Utilization 63.7% 80.8% 53.8% 80%
Reasons for difference in performance
Designed for large no. of product formulations and
packaging types
Gary Plant Obsolescence of the production process with market change
Designed for a batch operation of research and specialty
products

Focus only on production of 2 formulations and one 50Kilo

package type
Frankfurt Computer control of first process step
Extensive solids recovery and waste treatment
Ari Pappas worked on yield improvement and reliability
 Contd.

Mexico Only one 50Kilo packaging

6 product families in addition to release-ease

50% Japanese JV, founded in 1957

Automation and waste recovery system introduced in 1969
Volume constrained by dryer capacity
Sunchem

Technically excellent, employees did more development work
Only Applichem plant with scrubbers for gaseous wastes
Mostly kilo and 1kilo packages
High electricity costs in Japan
 Some other factors
Some of the differences can be attributed to some factors beyond managements
control
Higher no. of packaging types at Gary
Higher energy costs in Japan
Higher labor costs in Japan because of severe regulations
Factors due to differences in management
Poor yield for a medium volume plant at Gary
Ari Pappas worked hard to improve Yield and reliability at Frankfurt
 Recommendations
Keep producing Release-ease in Gary, but with some changes
Old equipment at Gary plant could be replaced
Reduce number of package sizes
Introduce computer control and waste reduction
Reduce production in Mexicocan produce Release-ease at lower cost in other locations
Stop producing Release-ease in Japan. High costs and low productivity outweigh plants
technologically advanced status
Let Japan focus on R&D and producing other products
Employee training and rotations across plants to increase efficiency
Adjust production volumes of plants to maximize capacity and reduce transportation costs
Thank You