Case Study Project Description
Imtek was studying what new market opportunities might be available for a crushed glass blasting application. The owner had a production plant to receive, sort and crush the glass. He could produce one ton per hour and estimated that this prototype plant could produce 2000-3000 tons per year. He had spent time researching the markets where silica sand, ice, nickel slag and CO2 was used for blasting.
Imtek needed to find a profitable market after all the research they had done to prove that recycled crushed glass could be an environmentally-benign substitute for sand-blasting and chemical stripping. However, the markets that these materials operate in are commodity oriented and well-populated where the average price was $60 to $80 per ton. At this price, Imtek needed a production plant that was able to produce 15,000 tons of crushed glass per year. The capital investment required to fund the plant development, market penetration and labor would be quite substantial in the face of a flat market where nickel slag was an abundant, cheap alternative source. While Imtek was considering this kind of operation, we pointed out that the challenge of managing production costs in a commodity market is a fine art and even the pulp and paper mills absorb losses when raw material costs go up. Imtek could not afford that strategy. The debt load that the company would have to carry to develop this level of production would be crippling in the event the cost of getting and processing glass went up.
We suggested to him that he grow slowly with the one plant and look for markets that had yet to use blasting as a form of stripping agent because the technology or source material wasnt fine enough to prevent surface damage. We determined that the market niche opportunity was to develop custom blends for different applications and to work with industries to help them make the transition from chemical stripping to crushed glass blasting while refining his screening process for their requirements. In this way, he could charge for his knowledge and services and capture supply contracts for the long term. We also suggested that he supply the services to recover the spent glass after use and re-generate it if possible.
We did some informal research with the aircraft maintenance industry and discovered what could be a very sizable market if Imtek was willing to work with companies in this industry to develop the right mix and provide training and support in its application.
Aircraft, under FAA guidelines must not fly unpainted and must be repainted every other year. Aircraft maintenance and modifying companies used a product called Porco. It is a chemical gel that is applied to the skin of the aircraft in a highly controlled environment. The aircraft hanger must be completely sealed. The people applying the gel must wear pressurized suits that are attached to compressed clean air supplies. The drainage system in the hangar must be sealed and the EPA has observers outside the hangar testing for any kind of toxic spill or release of toxic air. In the event that any mistake is made with the solvent, the company can be fined $10,000 or more per incident. This entire process is extremely expensive.
On average, one plane per day goes through this tedious paint removal process. It was so bad that some modifiers were looking at other kinds of technology such as crushed walnut shells run through a sand blasting machine, glass beads, plastic pellets and a very expensive computerized heat and pressure machine from Japan that absorbed surface paint. The walnut shells had been effective except that they could not be reused and were hard to obtain. Plastic pellets didnt work and glass beads were expensive.
Crushed glass in a blasting machine would be highly effective from a cost and time perspective. However, the crushed glass must be able to safely clean aluminum with copper additives, titanium and magnesium. It must not affect the aluminum seals that mask off the parts of the plane that they dont want cleaned.
We determined that the organizations that have the most to gain from testing crushed glass as an alternative were the airlines that perform their own maintenance that need to reduce their maintenance costs. The second target group was the modifiers that run the risk of EPA fines and a huge capital expense maintaining air tight hangars and pressurized suits.
We recommended they set up a testing environment with regulators observing and then video tape it. They prepared three metal surfaces covered with the same paint used in industrial and aircraft applications. Using the video cameras built in timer to clock the process of sand blasting, crush glass blasting and chemical application they were able to prove their concept. They documented the environmental damage during and after each process.
The tests were successful. We recommended they set up a new blasting system for the company under a contract for services and supply of the glass. This meant that Imtek would charge a set-up fee which would include custom blending, advice on working conditions, space set up, blasting machinery purchases, safety equipment required and training in how to handle and use the crushed glass. A purchase agreement for buying crushed glass at guaranteed rate for at least two years was to be part of this package. Imtek would do an analysis of the amount of blasting they do per week and help them determine the correct amount to order.
We suggested that the amount to charge should be based upon on hourly fee for the time it will take to do the entire setup and provide the training. The price of the crushed glass should include the processing costs for their custom blend, a margin on Imteks cost to acquire the glass which would provide enough room for cost increases over two years, the cost of delivery to the customers site, any special packaging associated with their order and the cost of recovering the spent crushed glass. At the time, no one else was providing this level of service with this material, Imtek was able to set the standard and the price without being compared to sand blasting which didnt represent the level of knowledge and value-added service these industrial customers needed.
The name Imtek isnt easy to remember or easy to associate with the product and service offering. We suggested rebranding to include the words consulting or services in it to ensure people viewed the company in a different light than just a glass recycler, glass crusher or other commodity oriented framework.
It was extremely important in defining and defending this new market niche to add value and service at every point of the client engagement. This meant that a quality customer service strategy from initial phone calls through to the pickup service for spent glass reflects and supports the customers needs. Credibility, consistency, integrity, honesty, cleanliness, flexibility and responsiveness would create customers and ensure their loyalty. Once the video tape was available, we suggested putting it on their website.
Imtek was able to find several demonstration sites and was awaiting EPA approval for use on airplanes. Today, using crushed recycled glass is standard for sand blasting and as a strong substitute for chemical peeling. Imtek pioneered this transition.