🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeClass Notes1,200,000AU40,000

700038 Lecture Notes - Washing Machine, Kitchen Stove, Cold Days

55 views4 pages
cerisepug446
5 Aug 2013
School
UWS
Department
University of Western Sydney
Course
700038
Professor
Graham Bishop

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

On this document is a few notes on some alternatives for an efficient household and a bit of a summary on them, these can help on assignments or just a simple write up. Solar panels are used to light energy, or scientifically called (photons) to a solar grid in which it is converted using an inverter to electrical energy. The only costly thing to the solar panels is that they are expensive to install and buy however for the long term it"s a vital instrument for the efficiency of the household. The location of the hot water unit must be installed in a situated area where there can be a lot of sunlight at some point of the day. As the sun rises from the east and the sun sets from the west it is mature to install the hot water system either on the east or the west side of the house.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

ENVIRON 102 Lecture Notes - Lecture 17: Alternative Energy, Passive Solar Building Design, Active Solar
ultramarinereindeer141
ENERGY 303 Lecture Notes - Lecture 17: Solar Thermal Energy, Barstow, California, Photovoltaics
beigewhale811
BIOL 111
Final Exam
Study Guide
BIOL 111 Study Guide - Final Guide: Energy Conversion Devices, Straw, Passive Solar Building Design
limecockroach99

Related Questions

Explain it briefly?

Please read the article and answer these questions:


1. How did a government loan guarantee contribute to Solyndra's bankruptcy?

2. How did capital budgeting decisions contribute to Solyndra's bankruptcy?

3. How did changes in the industry contribute to Solyndra's bankruptcy?

4. Does the Solyndra bankruptcy indicate that government loan guarantees for private businesses are a bad idea?

___________

Solyndra Inc. was supposed to be a marquee example of how private and public capital, brought together, could vault innovative companies to commercial success.

Instead, the $535 million government loan guarantee so prized by the solar-panel maker may have ultimately contributed to the company's undoing, say investors with knowledge of the company's operations.

The new factory built with Department of Energy funds foisted fixed costs on a company already struggling through an industry shake-out, they say. What's more, the debt paradoxically made raising more money difficult. Once the government demanded priority in the event of failure, private investors were less likely to prop up the company.

One Solyndra investor said that, in retrospect, "the worst thing that happened to Solyndra was the loan."

The Fremont, Calif.-based company is now in Chapter 11 bankruptcy protection. It is now the target of federal inquiries, including a congressional probe and a criminal investigation by the Justice Department centering on whether the company misled the government in applying for the loans. Republicans, citing emails, say the White House pushed to get the loan approved for political reasons, which the White House denies. Solyndra didn't return calls for comment on that point but has said previously it was cooperating with the investigation.

Behind the political firestorm lies a company with a business case that never quite added up, owing to a fundamental cost problem that quickly got worse after the infusion of taxpayers' money that began in 2009, according to investors, analysts and people familiar with the company.

The company, founded in 2005, was blessed early on with influential backers. They would ultimately pump nearly $1 billion into the company.

Solyndra's largest backer was the family foundation of George Kaiser, a billionaire whose family had made a fortune from natural gas. Other venture-capital luminaries piled in, attracted with the help of Goldman Sachs Group Inc., GS 0.13% Solyndra's financial adviser. Investors included Madrone Capital Partners, which manages money for the Walton family of Wal-Mart Stores Inc. and the Virgin Green Fund, which includes investments from Richard Branson.

The start-up's lure was a clever technology. Solyndra's name, with the play on "cylinder," illustrated its product—not a flat panel but multiple long and thin tubes covered in material to absorb the sun's rays. Other panels relied on a heavy, then-expensive material called polysilicon to turn the sunlight into electricity. Solyndra's product was lighter and potentially easier and cheaper to install.

As subsidies in Europe fueled demand and oil prices soared during 2008, the solar industry seemed poised to take off. But by 2009, the industry was undergoing severe growing pains, and Solyndra was hit hard. Polysilicon prices were in the midst of an 80% dive. That made Solyndra's product less competitive with rivals that used polysilicon.

Solyndra's costs stayed relatively high because of the tricky manufacturing process. In late 2009, Solyndra's tubes cost $4 for every watt of power output to produce, according to company securities filings. The problem was the company could sell them for only $3.24 per watt. One reason for the losses: the company often had to throw out defective or test panels, according to one former production executive.

As it was losing money, competition was getting worse. China's solar panels were dropping in price. U.S. rival First Solar Inc., FSLR 1.86% was making panels at less than a quarter of Solyndra's cost then and today produces panels at about 75 cents per watt. In 2009, Solyndra lost $172.5 million on revenue of $100.5 million.

"The change in expectations was pretty dramatic," said David Miller, spokesman for Solyndra, about the pricing of its panels. He said analysis of what went wrong and what should have been done is easier in retrospect.

The company still exuded optimism. In a July 2009 press release, it said it had a "contractual backlog of more than $2 billion" in orders. The figure was based not on firm orders, however, but largely on "framework agreements" that allowed customers to walk away or renegotiate, according to a filing for an initial public offering from 2010. Its main customer, Phoenix Solar AG, renegotiated in its favor in early 2009, according to Murray Cameron, chief operating officer at the German installer.

In mid-2009, Solyndra had a choice: It could hunker down with its existing factory and try to slash costs to meet competition, drawing on additional private capital as needed, according to the people familiar with the company. Or, with a loan from Uncle Sam, it could gamble and build a brand-new, bigger factory in a bid to gain economies of scale and dominate the market.

The Obama administration was eager to help. The loan-guarantee program dated to the George W. Bush administration—it was created in a 2005 energy law—and now was swimming in funds from the economic-stimulus package.

Solyndra's founder and chief executive at the time, Chris Gronet, decided to go for the gamble. "Chris was really a hard driver," said the former executive involved in the production of the solar panels. "The faster you solve problems, the faster you build your infrastructure, the quicker you are to market. You spend money to solve problems."

There was another motivator—Solyndra's management and investors had an eye on an initial public offering.

"There was a perceived halo around the loan," said an investor with knowledge of the company. "If we get the loan, then we can definitely go public and cash out."

In December 2009, Solyndra made its initial IPO filing, with Goldman Sachs and Morgan Stanley MS -0.47% as lead underwriters.

The company brought in 3,000 workers to build the factory taxpayers had funded, but it quickly realized it had far too much capacity. The old factory alone could be outfitted to produce each year panels with power output of 110 megawatts each year. And the new factory would add another 500 megawatts. Yet sales for 2010 ultimately reached only 65 megawatts.

"The mindset of the management was if we make it, people will buy it," said the former executive. But the new factory added heavy fixed costs such as payroll, lease payments, and utility bills. At the same time, projected revenue wasn't coming in, magnifying the monthly drain of cash, the former executive said.

In June 2010, only weeks after President Barack Obama visited the company, the Solyndra board gave up the IPO plans. The following month Mr. Gronet left his CEO post and became chairman. The new CEO, Brian Harrison, shut down the old factory.

Unruly Campaign Tag : WSJ : Chase INK - Jan 2017

That didn't work either, as the tricky cylinder manufacturing equipment continued to keep costs high. Messrs. Gronet and Harrison couldn't be reached for comment.

And Solyndra realized, too late, that it was a mistake to sell its product mainly through distributors, according to one of the investors and the executive. They say Solyndra could have better pitched its product's advantages, such as a lower installation cost, by speaking directly to customers.

In March, Mr. Harrison said the company made a mistake of not focusing enough on market development. He said it was important to communicate directly to customers, rather than to just resell through distributors.

The new panels also were harder to finance because their performance was difficult to forecast accurately, said Arno Harris, chief executive of solar-project developer Recurrent Energy. He said his team considered purchasing Solyndra panels several times but decided that neither the economics nor the technical design made sense for his company.

Earlier this year, private backers advanced another $75 million in a loan to Solyndra, and, unusually, got ahead of the federal government in the event of a liquidation. This August, Solyndra needed still more money. The government was in talks to restructure its loan but eventually declined.

With no options in sight, the company pulled the plug, filing for bankruptcy and laying off about 1,100 employees—leaving investors to rue what might have been.

"We had a perfectly good factory," said one of the investors. "That would have been a better size for the market."

General Instrumentation Corporation manufactures dashboard instruments for heavy construction equipment. The firm is based in Baltimore, but operates several divisions in the United States, Canada, and Europe. The Hudson Bay Division manufactures complex electrical panels that are used in a variety of the firm's instruments. There are two basic types of panels. The high-density panel (HDP) is capable of many functions and is used in the most sophisticated instruments, such as tachometers and pressure gauges. The low-density panel (LDP) is much simpler and is used in less complicated instruments. Although there are minor differences among the different high-density panels, the basic manufacturing process and production costs are the same. The high-density panels require considerably more skilled labor than the low-density panels, but the unskilled labor needs are about the same. Moreover, the direct materials in the high-density panel run substantially more than the cost of materials in the low-density panels. Production costs are summarized as follows:

LDP

HDP

Unskilled labor (.5 hour @ $10) …………………………………..........................

$ 5

$ 5

Skilled labor:

LDP (.25 hour @ $20) ………………………………………………………….

5

HDP (1.5 hours @ $20) ………………………………………………………...

30

Raw material ………………………………………………....................................

3

8

Purchased components ……………………………………………………………

5

15

Variable overhead …………………………………………....................................

4

12

Total variable cost …………………………………………...................................

$22

$70

The annual fixed overhead in the Hudson Bay Division is $1,000,000. There is a limited supply of skilled labor available in the area, and the division must constrain its production to 40,000 hours of skilled labor each year. This has been a troublesome problem for Jacqueline Ducharme, the division manager. Ducharme has successfully increased demand for the LDP line to the point where it is essentially unlimited. Each LDP sells for $28. Business also has increased in recent years for the HDP, and Ducharme estimates the division could now sell anywhere up to 6,000 units per year at a price of $115.

On the other side of the Atlantic, General Instrumentation operates its Volkmar Tachometer Division in Berlin. A recent acquisition of General Instrumentation, the division was formerly a German company known as Volkmar Construction Instruments. The division's main product is a sophisticated tachometer used in heavy-duty cranes, bulldozers, and backhoes. The instrument, designated as a TCH–320, has the following production costs.

TCH-320

Unskilled labor (.5 hour @ $9) ……………………………………………………………..

$ 4.50

Skilled labor (3 hour @ $17) ……………………………………………………………….

51.00

Raw material ………………………………………………..................................................

10.50

Purchased components ……………………………………………………………………...

150.00

Variable overhead …………………………………………..................................................

12.00

Total variable cost …………………………………………..................................................

$228.00

The cost of purchased components includes a $145 control pack currently imported from an Asian electronics company. Fixed overhead in the Volkmar Tachometer Division runs about $800,000 per year. Both skilled and unskilled labor are in abundant supply. The TCH–320 sells for $275.

Bertram Mueller, the division manager of the Volkmar Tachometer Division, recently attended a high-level corporate meeting in Baltimore. In a conversation with Jacqueline Ducharme, it was apparent that Hudson Bay's high-density panel might be a viable substitute for the control pack currently imported from Asia and used in Volkmar's TCH–320. Upon returning to Berlin, Mueller asked his chief engineer to look into the matter. Hans Schmidt obtained several HDP units from Hudson Bay, and a minor R&D project was mounted to determine if the HDP could replace the imported control pack. Several weeks later, the following conversation occurred in Mueller's office:

Schmidt: There's no question that Hudson Bay's HDP unit will work in our TCH–320. In fact, it could save us some money.

Mueller: That's good news. If we can buy our components within the company, we'll help Baltimore's bottom line without hurting ours. Also, it will look good to the brass at corporate if they see us working hard to integrate our division into General Instrumentation's overall production program.

Schmidt: I've also been worried about the reliability of supply of the imported control pack. I don't like being dependent on such a critical supplier that way.

Mueller: I agree. Let's look at your figures on the HDP replacement.

Schmidt: I got together with the controller's people, and we worked up some numbers. If we replace the imported control pack with the HDP from Canada, we'll avoid the $145 control pack cost we're now incurring. In addition, I figure we'll save $5.50 on the basic raw materials. There is one catch, though. The HDP will require some adjustments in order to use it in the TCH–320. We can make the adjustments here in Berlin. I'm guessing it will require an additional two hours of skilled labor to make the necessary modifications. I don't think variable overhead would be any different. Then there is the cost of transporting the HDPs to Berlin. Let's figure on $4.50 per unit.

Mueller: Sounds good. I'll give Jacqueline Ducharme a call and talk this over. We can use up to 10,000 of the HDP units per year given the demand for the TCH–320. I wonder what kind of a transfer price Hudson Bay will want.

1. From the perspective of General Instrumentation's top management, should any of the TCH–320 units be produced using the high-density panel? If so, how many?

2. Suppose Hudson Bay transfers 10,000 HDP units per year to Volkmar. From the perspective of General Instrumentation's top management, what effect will the transfer price have on the company's income?

3. What is the minimum transfer price that the Hudson Bay Division would find acceptable for the HDP?

4. What is the maximum transfer price that the Volkmar Tachometer Division would find acceptable for the HDP?