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Economic advantages of 1200-mm spinning cans

Feb 01, 2016
Economic advantages of 1200-mm spinning cans

Cans with a diameter of 1,000 mm are well-established, but at ITMA Milan, Trützschler GmbH & Co. KG, Mönchengladbach presented spinning cans with a diameter of 1,200 mm.

The diameter of spinning cans significantly increased during the last decade. Cans with a diameter of 1,000 mm are well-established today. At the International Exhibition of Textile Machinery (ITMA) in Milan, Trützschler GmbH & Co. KG, Mönchengladbach, Germany presented spinning cans with a diameter of 1,200 mm. These cans are exclusively available for the T-Move can filling station, which performs can changes at a significantly higher production speed in comparison to existing rotary can changers.

The Institut für Textiltechnik der RWTH Aachen University (ITA) investigated the cost efficiency of this innovation. The study was made on two sample processes for a new investment in a spinning mill.

Studied processes

To ensure a realistic calculation of the cost efficiency, the process chains being analysed are calculated for the installation sites Turkey (Ne 30 ring spun yarn, carded) and India (Ne 30 ring spun yarn, combed). Based on the conventional cans with a diameter of 1,000 mm, the cost efficiency of the additional investment in cans with a diameter of 1,200 mm is studied.

In order to eliminate the effect of volatility of exchange rates, all calculations are made in US Dollar. The costs for staff, production area, capital interest rates and annual operating hours are based on the “International Production Cost Comparison 2014” by the International Textile Manufacturers Federation, Zürich/Switzerland.

Thus the capital interest rate amounts to 9.3 per cent in Turkey and to 12.8 per cent in India. A complete list of the economic assumptions taken into account in this study is available at the Institut für Textiltechnik der RWTH Aachen University.

Cost efficiency of the additional investment

The net present value and the payoff time of the additional investments were calculated for the representative spinning mills. The net present value of an investment is the sum of all present day values of all cash flows, discounted using the capital interest rate. If the net present value is positive the additional investments are generally cost efficient.

The payoff time is the duration it takes for the net present value of all cash flows to add up to zero (or a positive value). In other words the payoff time specifies how quickly the additionally invested money is regained. The shorter the payoff time the lower the economic risk by unforeseeable effects like the volatility of the cotton price. In economic practice a maximum payoff time of three years is often used to make investment decisions. Basis for the calculation of all cash flows of the additional investments are the initial investments (additional costs for machines and cans) and the additional monthly earnings (increased productivity caused by higher efficiency). Additional investments in spinning cans with a diameter of 1,200 mm have the following effects on the productivity of the analysed spinning mills. The effect may seem small, but over a 10 year operating time of a spinning mill a significant effect arises.

The longer payoff time of the combed process originates from the higher initial investment compared to the carded process. The 18 combing machines that are equipped with 1,200 mm can filling stations are critical for that. Nevertheless the higher payoff time of 11 months is lower than the maximum payoff time of 36 months which is used in economic practice. Therefore the cost-efficiency of the additional investment in a spinning mill that uses cans with a diameter of 1,200 mm is hereby assigned.

Summary

The advantages of the investment in spinning cans with a diameter of 1,200 mm and modern can filling station have been studied. The cost efficiency of the additional investment is shown as follows:

1) The net present value of the additional investment amounts to $1,776 million (carded yarn) and $1,353 million (combed yarn)
2) The payoff time amounts to five months (carded yarn) and 11 months (combed yarn). The higher payoff time of the combed process originates from the necessary equipment of the combing machines with 1,200 mm can filling stations.