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Kiln Connection: Used Kiln Economics

March 1, 2006
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Many used kilns are on the market today, due to the number of plant closings that have occurred in the past few years, and their selling prices often seem very low. Whether it is a wise choice to purchase a used kiln depends, like all things, on the specific details pertaining to how the new-to-you kiln will fit and perform in your facility.
The used option can be a great buy, but sometimes it's a poor investment. Here's how to evaluate the value of this possibility for periodic kilns.

Many used kilns are on the market today, due to the number of plant closings that have occurred in the past few years, and their selling prices often seem very low. Whether it is a wise choice to purchase a used kiln depends, like all things, on the specific details pertaining to how the new-to-you kiln will fit and perform in your facility. Here's how to evaluate the value of this possibility for periodic kilns (next time, we'll take a look at tunnel kilns).

The Basics

Let's use a concrete example for this analysis. Imagine that company X is selling a 10-year-old, 3000-cubic-foot shuttle kiln to fire ceramic products with a use temperature of 2300 degrees F. It is a fiber-lined kiln consisting of three setting decks per car, with a total of six cars in the kiln and six cars outside of the kiln. The current owner is asking $100,000 but will accept $75,000. You have checked the pricing of new kilns with similar furniture, and the new cost (turnkey installed) is $700,000. Both the temperature rating and capacity of the used kiln are ideal for your production needs, and you have checked to make sure that it has sufficient BTU input to meet your firing curve requirements.

Installation of either kiln will involve around $50,000 for site preparation in the form of foundations and utilities. Moving the old kiln, however, is an expensive proposition. The used kiln must be disassembled expertly, carefully packed and shipped to your new location. A kiln of this size would normally cost around $150,000 to move and re-install. Adding all of the numbers together will lead you to think that the new kiln will cost $800,000 installed, while the used kiln will cost $275,000, so it looks like a simple decision to make the used kiln purchase. Here's where you need to do some additional homework by evaluating a number of other key criteria.



Kiln Condition

A new kiln is obviously new, but a used kiln can be very used. The kiln refractory lining, kiln car refractories and kiln furniture, etc. all have a finite life. Be sure to examine the refractories very closely to detect shrinkage cracks in the fiber lining or signs of poor maintenance. Keep in mind that if you have to reline the used kiln in the near future, you may have to spend upwards of $200,000, as well as disposal costs of used fiber containing cristobalite. If the used kiln is in good condition, though, you're well on your way.

Instrumentation

If the used kiln has 10-year-old controls and instrumentation, spare parts may be difficult or impossible to find, forcing you to renew the instruments at a cost that could approach $30,000 or more for a modern, PLC-based system with a good HMI/SCADA system. Of course, many older kilns have already had updated instrumentation added-if that's the case, this cost can be eliminated.

Risk

With a new kiln, if you have negotiated intelligently, you have original equipment guarantees for fuel consumption, quality of product, and workmanship and materials. With the old kiln, you usually will take possession with no security at all. It doesn't hurt to discuss possible guarantees with the seller of the used kiln-at the very least, you should discuss the performance of the used kiln with the seller to have some idea of what to expect.

Compliance Upgrades

The National Fire Protection Association (NFPA) and FM Global changed compliance requirements recently for fuel safety. The changes include redundancy in the individual burner solenoid valving, plus proof of closure for one of the valves. Depending on burner size, this can easily amount to $600/burner, plus another $5000 for electrical engineering, for the entire installation package. For a 30-burner kiln, the tariff is another $23,000. Again, evaluate the used kiln carefully, and discuss compliance issues with your insurer.

Fuel Costs

The old kiln will likely consume around 5500 BTUs/lb of ware, while the new kiln, with modern furniture and pulse combustion, will use 3600 BTUs/lb. Assuming 300 cycles per year, the additional annual fuel costs will be around $160,000 (with $10/MCF fuel costs). If the life of the kiln is only five years, the net present value (cost) associated with the used kiln will be nearly $640,000 at 8% interest. This is a big number! Many manufacturers have seen spiraling fuel costs erode-or even eliminate-their profits because of fuel inefficiencies.

The Bottom Line

In our example, the used kiln "bargain" is no bargain. After just five years of running, the numbers suggest that it will cost significantly more than a new kiln. The case gets even worse in the event that the used kiln doesn't quite fit your application.

Make sure you analyze all of the costs when evaluating a used kiln purchase, and make sure the used kiln you're considering can cost-effectively do what you need it to do. A little extra homework could save you some serious money.



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