Mohamed Bokhamseen
TI 303
February/08/09
Mini Research
Tire Shredding Machine Market

1-What percentage of the market can you get?

After searching, the cheapest shredding machine costs about $115,000 to purchase, which cuts the tire to 2 inch chips. However, our machine, which chops the tire to very small pieces (0.079 inch), costs about $17,000 to manufacture. As a result, we a have a competitive advantage in the market by a huge margin because of the high technology we use and the extreme cheap cost of manufacturing our machine.
(Source: http://www.ssiworld.com) ISS Company
(Sources:http://www.shredderhotline.com/?gclid=CLab1tLDzJgCFSEhDQodAwwT0w) Chinese Company

2- Information, if available, about the average COGS?

Unfortunately it was hard to find information about the COGS for our machine, but to give an assumption; there are some numbers for some competitors. For SSI Shredding Systems, inc. They are one of the biggest companies in the market that manufactures shredding machines for tires and other materials. They sell their machines at a range of $115,000 to $1,350,000. (Depending on the features of these machines).

Also, I found a Chinese company that sells its tire shredder machine for $250,000.

According to our case, the manufacturing costs are only $17,000.

3- When do you think that your company will start receiving profits?

Due to the high competitive advantage, our sales should sky rocketing, simply, because our costs of manufacturing are extremely low comparing with the market. As a result you should be able to maintain profits at the first your.

4- What is the total available market?
There are at least 275 million scrap tires in stockpiles in the U.S. In addition, approximately 290 million scrap tires were generated in 2003.
Markets now exist for about 80 percent of scrap tires - up from 17 percent in 1990. The states have played a major role in tackling this problem by regulating the hauling, processing, and storage of scrap tires; and by working with industry to recycle and beneficially use scrap tires, through developing markets for the collected scrap tires.
At the end of 2003, the U.S. generated approximately 290 million scrap tires. Historically, these scrap tires took up space in landfills or provided breeding grounds for mosquitoes and rodents when stockpiled or illegally dumped. Fortunately, markets now exist for 80.4% of these scrap tires-up from 17% in 1990. These markets-both recycling and beneficial use-continue to grow. The remaining scrap tires are still stockpiled or landfilled,.
In 2003, markets for scrap tires were consuming 80.4 %, of the 290 million annually generated scrap tires: • 130 million (44.7%) are used as fuel general • 56 million (19.4%) are recycled or used in civil engineering projects • 18 million (7.8%) are converted into ground rubber and recycled into products • 12 million (4.3%) are converted into ground rubber and used in rubber-modified asphalt • 9 million (3.1%) are exported. ( as a scrap tires) • 6.5 million (2.0 %) are recycled into cut/stamped/punched products • 3 million (1.7%) are used in agricultural and miscellaneous uses
Scrap tires are used in a number of productive and environmentally safe applications. From 1990 through 2003, the total number of scrap tires going to market increased from 11 million (24.5%) of the 223 million generated to 233 million (80.4%) of the 290 million generated.

The 3 largest scrap tire markets are: • Tire-derived fuel • Civil engineering applications • Ground rubber applications/rubberized asphalt In conclusion, over 75% of scrap tires are recycled or are beneficially used for fuel or other applications.
(Source: Rubber Manufacturers Association, 2004)

Approximately 280 million tires are discarded each year by American motorists, approximately one tire for every person in the United States. Around 30 million of these tires are retreaded or reused, leaving roughly 250 million scrap tires to be managed annually. About 85 percent of these scrap tires are automobile tires, the remainder being truck tires. Besides the need to manage these scrap tires, it has been estimated that there may be as many as 2 to 3 billion tires that have accumulated over the years and are contained in numerous stockpiles.(1)
Scrap tires can be managed as a whole tire, a slit tire, a shredded or chipped tire, as ground rubber, or as a crumb rubber product.
(Source: Scrap Tire Management Council,1400 K Street, N.W. Washington, D.C. 20005)

CURRENT MANAGEMENT OPTIONS

Recycling
About 7 percent of the 250 million scrap tires generated annually are exported to foreign countries, 8 percent are recycled into new products, and roughly 40 percent are used as tire-derived fuel, either in whole or chipped form.(1)
Currently, the largest single use for scrap tires is as a fuel in power plants, cement plants, pulp and paper mill boilers, utility boilers, and other industrial boilers. At least 100 million scrap tires were used in 1994 as an alternative fuel either in whole or chipped form.(1)
At least 9 million scrap tires are processed into ground rubber annually. Ground tire rubber is used in rubber products (such as floor mats, carpet padding, and vehicle mud guards), plastic products, and as a fine aggregate addition (dry process) in asphalt friction courses. Crumb rubber has been used as an asphalt binder modifier (wet process) in hot mix asphalt pavements.(1)
As previously noted, of the roughly 30 million tires that are not discarded each year, most go to retreaders, who retread about one-third of the tires received. Automobile and truck tires that are retreaded are sold and returned to the marketplace. Currently there are roughly 1,500 retreaders operating in the United States, but the number is shrinking because there is a decline in the market for passenger car retreads. The truck tire retread business is increasing and truck tires can be retreaded three to seven times before they have to be discarded.(1)
Disposal
Approximately 45 percent of the 250 million tires generated annually are disposed of in landfills, stockpiles, or illegal dumps.
As of 1994, at least 48 states have some type of legislation related to landfilling of tires, including 9 states that ban all tires from landfills. There are 16 states in which whole tires are banned from landfills. Thirteen other states require that tires be cut in order to be accepted at landfills.(6)

MARKET SOURCES

About 80 percent of all scrap tires are handled by retail tire vendors. The remaining 20 percent are handled by auto dismantlers. These two industrial groups, while not the generators of scrap tires, collect and store tires until they are picked up by transporters, sometimes referred to as "tire jockeys". These transporters take the tires to retreaders, reclaimers, and grinders or slitters or to tire disposal sites (landfills, tire stockpiles, or illegal dumps).(1)
Figure 16-1 presents a graphical overview of the scrap tire industry.
[pic]Figure 16-1. Overview of the scrap tire industry.

Since tires are combustible, tire storage sites can be potential fire hazards. Care must be taken to safeguard against carelessness or accidental ignition, which can occur at tire storage facilities.(7)
Tire shreds or chips would normally be available from tire shredder operators. Ground rubber or crumb rubber would normally be available from scrap tire processors There are probably 100 or more tire shredders in the United States, but there are only about 15 to 20 scrap tire processors.

HIGHWAY USES AND PROCESSING REQUIREMENTS
Embankment Construction - Shredded or Chipped Tires
Shredded or chipped tires have been used as a lightweight fill material for construction of embankments. However, recent combustion problems at three locations have prompted a reevaluation of design techniques when shredded or chipped tires are used in embankment construction.(7)
Aggregate Substitute - Ground Rubber
Ground rubber has been used as a fine aggregate substitute in asphalt pavements. In this process, ground rubber particles are added into the hot mix as a fine aggregate in a gap-graded friction course type of mixture. This process, commonly referred to as the dry process, typically uses ground rubber particles ranging from approximately 6.4 mm (1/4 in) down to 0.85 mm (No. 20 sieve).(4) Asphalt mixes in which ground rubber particles are added as a portion of the fine aggregate are referred to as rubberized asphalt.
Asphalt Modifier - Crumb Rubber
Crumb rubber can be used to modify the asphalt binder (e.g., increase its viscosity) in a process in which the rubber is blended with asphalt binder (usually in the range of 18 to 25 percent rubber). This process, commonly referred to as the wet process, blends and partially reacts crumb rubber with asphalt cement at high temperatures to produce a rubberized asphalt binder. Most of the wet processes require crumb rubber particles between 0.6 mm (No. 30 sieve) and 0.15 mm (No. 100 sieve) in size. The modified binder is commonly referred to as asphalt-rubber.
Asphalt-rubber binders are used primarily in hot mix asphalt paving, but are also used in seal coat applications as a stress absorbing membrane (SAM), a stress absorbing membrane interlayer (SAMI), or as a membrane sealant without any aggregate.