A11103 Qbbbe3

NBS SPECIAL PUBLICATION 511-2

U.S. DEPARTMENT OF COMMERCE / National Bureau of Standards

rnpRn^JiON IN THE UNITED STATES

(Appendix B)

A Report to NBS

by

3ttpMA CotMmhii«; laboratories

^1
ECONOMIC EFFECTS OF METALLIC

CORROSION IN THE UNITED STATES

- - - A Three Part Study for Congress - - -

NBS Special Publication 511-1. Economic Effects of Metallic Corrosion in the

United States. A Report to Congress by the National Bureau of Standards. (Including Appendix A, Estimate of Uncertainty). SD Stock No. SN-003-003-0 1926-7.

Price $2.30.

NBS Special Publication 511-2. Economic Effects of Metallic Corrosion in the

United States. Appendix B. A Report to NBS by Battelle Columbus Laboratories.

SD Stock No. SN-003-003-01927-5. Price $4.25.

Order these two publications by SD Stock No. from U.S. Government

Printing Office, Superintendent of Documents, Washington, DC 20402

NBS GCR78-122. Battelle Columbus Laboratories Input/Output Tables. Appendix C of "Economic Effects of Metallic Corrosion in the United States".

Order this report by PB-279 430 from the National Technical

Information Service, 5285 Port Royal Road, Springfield, VA 22161,

Price $21.50.
OV STANDARDS

hlBRA RY

viUL 1 q 1978

ECONOMIC EFFECTS OF METALLIC .u^, ^ CORROSION IN THE UNITED STATES-Appendix B

Part II

A Report to NBS by

Battelle Columbus Laboratories

J.H. Payer, D.G. Dippold, W.K. Boyd,

W.E. Berry, E.W. Brooman,

A.R. Buhr, and W.H. Fisher

Battelle Columbus Laboratories

505 King Avenue

Columbus, Ohio 43201

U.S. DEPARTMENT OF COMMERCE, Juanita M. Kreps, Secretary

Dr. Sidney Harman, Under Secretary

Jordan J. Baruch, Assistant Secretary for Science and Technology

U NATIONAL BUREAU OF STANDARDS, Ernest Ambler, Director

• • . Issued May 1978
Library of Congress Catalog Card Number: 78-600033

National Bureau of Standards Special Publication 511-2

Nat. Bur. Stand. (U.S.), Spec. Publ. 5li-2, 249 pages (May 1978) CODEN; XNBSAV

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1978

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 SD Stock No. 003-003-01927-5 Price $4.25 (Add 25 percent additional for other than U.S. mailing).
FOREWORD

From the beginning of formal discussions on this study in the fall

of 1976, many people and organizations were contacted. Through them

the information necessary to estimate effects of corrosion was

gathered. The cooperation from industry, government, professional

societies, and trade organizations was excellent.

All corrosion effects were expressed as changes to coefficients

and elements in the Corrosion Input/Output Model. Supportive material

for cost estimates reported here, i.e.. Input /Output Tables, and a compilation of all adjustments for corrosion effects with their cause,

are on file at Battelle's Columbus Laboratories and copies were sent

to the National Bureau of Standards.

An advisory Panel participated throughout the study:

Dr. Seymour L. Blum

The MITRE Corporation

Mr. C. P. Dillon

C.P. Dillon and Associates

Dr. Mars G. Fontana

Materials Technology Institute of the Chemical

Process Industries, Inc.

Dr. E. W. Haycock

Shell Development Corporation

Mr. Howard Jelinek/Dr. Richard Priest

Sears, Roebuck and Company

Mr. Tom F. Kearns

Naval Air Systems Command

Dr. Tom Passell/Dr. Ed Zebroski

Electric Power Research Institute

Dr. E. H. Phelps

U.S. Steel Corporation

Mr . L . C . Rowe

General Motors Corporation

Their valuable contributions, review, and guidance are gratefully

acknowledged

.

Significant contributions were made by Dr . E. B. Berman of the

MITRE Corporation, who was an economic consultant to National Bureau

of Standards for this study.

iii
The National Bureau of Standards staff actively participated in

many aspects of the study, including the preliminary planning,

definitions, and the data gathering efforts. Dr. L. H. Bennett, Dr. J.

Kruger, Dr. E. Passaglia, and Dr. H. Yakowitz are specifically

acknowledged for their worthy contributions. Also contributing from

NBS were J. Ambrose, Y. Bertocci, J. Carroll, B. Christ, E. Escalante,

W. Gerhold, A. Melmed, F. Ogburn, R. Parker, C. Reimeinn, A. Ruff, G.

Ugiansky and J. Young.

iv
TABLE OF CONTENTS

Page

SUMMARY 1

1 INTRODUCTION 4

2 BACKGROUND 6

2.1 Impact of Corrosion on U.S. Economy 6 2.2 Approach to Determination of Costs of Corrosion 7 2.3 Principal Concepts 8 2.3.1 Definition of Cost of Corrosion 8

2.3.2 Elements of the Cost of Corrosion 9 2.3.2.1 Replacement of Equipment and Buildings 9 2.3.2.2 Loss of Product 10

2.3.2.3 Maintenance and Repair 10

2.3.2.4 Excess Capacity 10

2.3.2.5 Redundant Equipment 10

2.3.2.6 Corrosion Control 10

2.3.2.7 Technical Report 10

2.3.2.8 Design 10

2.3.2.9 Insurance 11

2.3.2.10 Parts and Equipment Inventory 11

2.3.3 Avoidable and Unavoidable Costs 11

2.3.4 Best Corrosion Control Practice 12

2.3.5 Input/Output Analysis 12

2.3.6 Direct and Indirect Costs 13

2.3.7 World I, World II, and World III 13

2.3.8 Ex-Ante Approach for Estimation 13

3 METHODOLOGY 14

3.1 Introduction 14

3.2 Assumptions 16

3.2.1 Linearity Assumption 16

3.2.2 Homogeneous Product Assumption . . . . 16

3.2.3 Inelasticity of Substitution Assumption 17

3.2.4 Steady Growth Assumption 17

3.2.5 Average Technology 17

3.2.6 Full Employment Assumption 17

3.3 The "A" Matrix 17

3.3.1 Value Added 18

3.3.2 Social Savings 18

3.3.3 Foreign Trade 19

3.3.4 Disaggregations 20

3.3.5 The Ex Ante Approach 21

3.4 Capital Matrix 22

3.4.1 The General Concept of the Capital Module 22

3.4.2 The B-Matrix 24

3.4.3 The Growth Matrix 25

3.4.4 The Replacement Matrix 26

V
TABLE OF CONTENTS

(Continued)

Page

3.4.5 The Modified Dynamic Inverse 27

3.4.6 The Final Capital Matrices 28

3.5 Final Demands 28

3.5.1 Generation of Stipulated Final Demands (FD) 29

3.5.1.1 Composition of GNP 29

3.5.1.2 The Consumption Module 29

3.5.1.3 Other Final Demands 31

3.5.1.4 Inventory Change 32

3.5.2 Disaggregations 32

3.5.3 Durable Goods 33

3.6 Specific Industry Cost Parameters 34

3.6.1 Direct Cost of Corrosion Per Unit of Output 35

3.6.1.1 Value-Added Adjustments 36

3.6.2 Total Direct Costs of Corrosion 37

3.6.3 Direct and Indirect per Unit Costs of Corrosion .... 38

3.6.4 Total Direct and Indirect Costs of Corrosion 39

4 DETERMINATION OF COSTS OF CORROSION . 40

4.1 Data Gathering Procedure 40

4.2 Procedure for Coefficient Determination 43

4.2.1 Replacement of Equipment or Buildings 43

4.2.2 Loss of Product 46

4.2.3 Maintenance and Repair 46

4.2.3.1 Maintenance and Repair Construction 49

4.2.3.2 Maintenance and Repair Equipment 50

4.2.4 Excess Capacity 53

4.2.5 Redundant Equipment 54

4.2.6 Corrosion Control 54

4.2.6.1 Corrosion Inhibitors and Water Treatment .... 54

4.2.6.2 Organic and Metallic Coatings and Platings ... 55

4.2.6.3 Cathodic Protection 56

4.2.7 Research and Development, Engineering and

Other Technical Support 58

4.2.8 Design 60

4.2.9 Insurance 61

4.2.10 Parts and Equipment Inventory 61

4.3 Avoidable Costs of Corrosion-Best Corrosion Control

Practice 62

4.3.1 Approach Adopted for Avoidable Costs 63

4.3.2 Treatment of Avoidable Costs in I/O Model 63

4.4 Description of Industry by Industry Coefficient

Adjustments 67

4.4.1 Agriculture, Forestry, and Fishery 67

4.4.2 Extraction of Mineral Resources 68

4.4.2.1 Solid Minerals 68

4.4.2.2 Gas and Oil 69

4.4.3 Manufacture of Food, Leather, and Textile Products. . . 70

4.4.4 Wood and Paper Products 71

vi
TABLE OF CONTENTS

(Continued)

Page

4.4.5 Petroleum and Chemical Products 72

4.4.6 Stone, Clay, and Glass Products 75

4.4.7 Primary Ferrous Metals and Manufacturers 76

4.4.8 Primary Non-Ferrous Metals and Manufacturers 78

4.4.9 Fabricated Metal Products 79

4.4.10 General Machinery and Components 80

4.4.11 Specialized Machinery 81

4.4.12 Motor Vehicles and Miscellaneous Transportation

Equipment 82

4.4.13 Aircraft and Air Transportation 84

4.4.14 Water Transportation Services and Equipment 86

4.4.15 Railroad and Equipment Related Services 88

4.4.16 General Electrical Apparatus 90

4.4.17 Special Electrical Apparatus 91

4.4.18 Scientific and Measuring Devices 92

4.4.19 Business Machines and Supplies 93

4.4.20 Miscellaneous Manufacturers 94

4.4.21 Highway Passenger Transport, Motor Freight and

Warehousing, and Transportation Services 95

4.4.22 Pipelines 96

4.4.23 Public Utilities 97

4.4.23.1 Telecommunication 97

4.4.23.2 Electric Power 98

4.4.23.3 Gas 98

4.4.23.4 Water and Sanitary Services 99

4.4.24 Construction 100

4.4.25 Trade and Business Services 103

4.4.26 Other Services 104

4.4.27 Government Enterprise-Post Office 104

4.4.28 Final Demands 105

4.4.28.1 Changes in Non-Durable Goods 105

4.4.28.2 Adjustments to Durable Goods 107

5 COSTS OF CORROSION: ANALYSES OF RESULTS 108

5.1 Quantification of Total Costs 108

5.2 Sectoral Attributions of Costs 109

5.2.1 Industry Indicators and Examples of Their Use 109

5.2.2 Analysis of Industry Indicators 115

5.2.3 Costs of Corrosion for Components of Final Demand . . . 127

5.3 Uncertainty 127

5.3.1 A Matrix Uncertainty 127

5.3.2 Capital Matrix Uncertainty 128

5.3.3 Stipulated Final Demand Uncertainty 129

5.3.4 Total Costs of Corrosion Uncertainty 129

5.4 Input/Output Model as a Means of Technology Assessment .... 131

vii
TABLE OF CONTENTS

(Continued)

Page

6 CONCLUSIONS . .- 133

7 GLOSSARY 135

8 CORROSION BIBLIOGRAPHY 139

APPENDIX A

CORROSION COSTS IN THE FEDERAL GOVERNMENT A-1

APPENDIX B

CORROSION COSTS IN THE ELECTRIC POWER INDUSTRY B-1

APPENDIX C

CORROSION COSTS FOR PERSONALLY OWNED AUTOMOBILES .... C-1

APPENDIX D

SECTOR TITLES AND CORRESPONDING STANDARD INDUSTRIAL CLASSIFICATIONS. . . D-1

LIST OF FIGURES

Figure 1. Consumer Profile — Income, Household Age-of-Head,

Family Size Matrix 30

Figure 2. Procedure to Collect and Process Cost of Corrosion Data . . 42

Figure 3. Components of Industry Indicators for Corrosion Costs . . . 117

Figure 4. Breakdown of Direct Industry Indicator for Sector 1.01 - Livestock and Livestock Products 121

Figure 5. Breakdown of Direct Industry Indicator for Sector 5.3 - Industrial Chemicals 122

Figure 6. Breakdown of Direct Industry Indicator for Sector 8.05 - Fabricated Structural Metal 123

Figure 7. Breakdown of Direct Industry Indicator for Sector 19.03 - Public Utility Construction 124

Figure 8. Breakdown of Direct Industry Indicator for Sector 20.01 - Wholesale and Retail Trade 125

Figure A-1. Cost of Building Repair and Alteration as a Function of

Age A-25

Figure C-1. Some Trends in Use of Zinc for Corrosion Prevention in

Passenger Automobiles C-IO

viii
LIST OF TABLES

Page

Table 1. Elements of Cost of Corrosion and Method of Treatment .... 44

Table 2. Replacement Life Adjustments 47

Table 3. Estimates for Disaggregation of Sector 19.05 Maintenance

and Repair Construction Into 19A05 Corrosion Related and

19B05 Noncorrosion Related 51

Table 4. Estimates of Corrosion Portion (Percent) of Total

Maintenance Costs for Equipment 52

Table 5. Estimates of Percentage of Coatings Ascribed to

Corrosion Protection 57

Table 6. Corrosion Related Technical Support Costs Research and

Development, Engineering, and Testing 59

Table 7. Best Practice Ratings for Industrial Sectors 65

Table 8. Qualitative Ranking of Corrosion Parameters in Petroleum

and Chemical Products Industries 73

Table 9. Railroad Equipment in Service in 1976 89

Table 10. Industry Indicators of Cost of Corrosion Ill

Table 11. Sectors With Highest Industry Indicators for Total Cost . . . 118

Table 12. Sectors With Highest Industry Indicators for Avoidable

Costs 119

Table A-1. Calculated Inventory of Capital of the Federal Government . . A-3

Table A-2. Real Property, U.S. Government A-4

Table A-3. Personal Property A-4

Table A-4. Summary of Corrosion Costs - Navy Aircraft A-6

Table A-5. Portion of Maintenance Expenditures for Corrosion for

Different Types of Air Force Aircraft A-7

Table A-6. AF Aircraft Corrosion Maintenance Costs A-9

Table A-7. Coast Guard, Aircraft A-10

Table A-8. Comparison of Navy and AF Aircraft Corrosion Maintenance

Cost A-11

Table A-9. Aircraft, Corrosion Maintenance Cost A-11

ix
LIST OF TABLES

(Continued)

Page

Table A-10. Coast Guard Cutter - Depot A-13

Table A-11. Coast Guard Cutter - Field A-14

Table A-12. Sample Ships Maintenance Costs A-16

Table A-13. Maintenance and Repair A-17

Table A-14. Comparison of DOD and All Federal Bldgs.

(Not Including Postal Service) A-19

Table A-15 . Structures and Facilities A-20

Table A-16. DOD Real Property Corrosion Costs A-22

Table A-17. CG, Shore Units A-23

Table A-18. NASA Corrosion Costs; Real Property Maintenance A-24

Table A-19. NBS Corrosion Maintenance Costs A-27

Table A-20. Ratio, Yearly Corrosion Cost to Book Value,

Real Property A-28

Table A-21. Total Real Property Corrosion Maintenance Costs A-29

Table B-1. Representative Average Outage Duration and Partial Power

Reduction in Nuclear Units Through January 1, 1976 B-7

Table B-2. Malfunction Rate and Mean-Time-to-Repair (MTTR) Data for

Nuclear Plant Availability Estimation B-8

Table C-1. Automobile Related Corrosion Costs Found in the

Literature C-3

Table C-2. Possible Approaches to Controlling Automobile Corrosion . . C-5

Table C-3. Materials Breakdown for an Average 4000 lb, SixPassenger Autom.obile C-7

Table C-4 . Breakdown of Automotive Steel Consumption in the USA. . . . C-9

Table C-5. Estimated Costs of Corrosion for New

Automobile Production C-15

Table C-6. Total Numbers of Automobiles Registered in the USA C-15

Table C-7. Estimated Costs of Corrosion to Owners for Used

Automobiles C-16

Table C-8 . Summary of Total Costs of Corrosion for Privately

Owned Automobiles C-19

X
THE ECONOMIC EFFECT OF CORROSION

IN THE UNITED STATES

by

J. H. Payer, D. G. Dippold, W. K. Boyd,

W. E. Berry, E. W. Brooman,

A. R. Buhr, and W. H. Fisher

SUMMARY

The purpose of this study was to determine the economic effect of

corrosion in the United States. A valid estimate of the cost of corrosion is necessary if government and industry are to msike rational

choices of what resources and approaches should be used to reduce

wastage. The results provide a basis for development of technological,

legislative, and other initiatives to promote effective economic

savings

.

It was beyond the scope of the present study to develop or evaluate alternative proposals to reduce corroson costs, e.g., methods

to increase replacement lives of capital equipment or to reduce

maintenance and repair costs. Data gathered and procedures developed

to estimate corrosion costs are applicable, however, to the detailed

analysis required for evaluation of alternatives.

The working definition of cost of corrosion was the increment of

total costs incurred because corrosion exists. Corrosion costs include

both capital costs, e.g., costs of replacement of plant and equipment,

and operating costs, e.g., cost of maintenance, repair, and corrosion

control. The study was confined to corrosion of metals and did not

consider deterioration of other engineering materials, e.g., concrete,

plastics, glass, wood, and refractories.

Corrosion has a major impact on the economy of the U.S. Effort ex- pended for corrosion control and in production of goods for replacement or repair because of corrosion would be available for alternate

uses if corrosion losses were reduced. Of particular importance in

these times of materials/ energy shortages and need for conservation,

is the irrecoverable losses of expensive and strategic metals:

chromium, nickel, molybdenum, zinc, aluminum, etc. Dollar value of

technical expertise and labor losses are approximately ten times that

of material losses.
2

A modified form of Battelle's national Input/Output Model provided

the methodological framework for estimation of corrosion costs. The

Corrosion Input /Output Model permitted analysis of interindustry

relationships in the national economy and attribution of relative

costs to specific segments of the conomy.

Each industrial sector is viewed as a user and as a producer of

goods and services. Analysis was performed by a team of economic and

corrosion experts. The application of Input/Output analysis resulted

in more comprehensive and detailed treatment of national corrosion

costs than for any previous estimates.

Total costs for corrosion were separated into avoidable and un- avoidable costs. The former was defined as those costs amenable to

reduction by the most economically effective use of presently

available corrosion control technology. Reduction of the latter re- quires technological advance.

For 1975 as the base year, total costs of corrosion were estimated

to be 4.9 percent of Gross National Product (GNP). Approximately 40

percent of total costs (2.9 percent GNP) were estimated to be

avoidable, i.e., eunenable to reduction by presently available corrosion control technology. Dollar value of resources (materials, labor,

energy, and technical capabilities) ascribed to corrosion-related ac- tivities were:

Total Costs to U.S. $82 Billion

Avoidable Costs $33 Billion

Unavoidable Costs $49 Billion.

The significance of these estimates is that they provide a reference

point for the impact on corrosion against which the relative impact of

other factors affecting the economy can be compared.

Total costs were allocated to segments of the economy. A series of

indicators express corrosion costs on a dollar basis and as percent of

sales for total and avoidable costs.

The importance of identifying the source of costs and the wide

variation from industry to industry of the predominant elements of

corrosion costs are illustrated by results of analysis for several industrial sectors. For the livestock industry, approximately 95 percent

of total costs ($1100M) were the result of adjusting the average

replacement life of capital from 14 years to 21 years if corrosion

were not a factor, and less than 5 percent of total costs were the

result of corrosion-related maintenance. For the Fabricated Structural

Metal industry, greater than 95 percent of total corrosion costs

($1150M) resulted from costs for providing corrosion protection to the

industry's product, i.e., metallic coatings, corrosion resistant

metals, cathodic protection, and organic coatings. For the Industrial

Chemical Industry approximately 65 percent of total costs ($690M) were
3

ascribed to operating costs and 35 percent to capital. Operating costs

resulted from corrosion-related maintenance and repair and purchases

of corrosion inhibitor, whereas capital costs resulted from corrosion

effects on replacement lives of equipment and on production capacity.

Input/Output analysis, which provided the methodological framework

for this study, permitted detailed and comprehensive treatment of all

elements of the costs of corrosion. Production costs, capital costs,

changes in replacement lives, etc. were treated in a coordinated and

systematic manner. The methodology applied and developed in this study

can be used to study the effects of other forms of wastage to the

economy

.

Data gathered and procedures developed in this study provide a sound basis for technological assessments. The principal attribute of

Input /Output analysis is the determination of indirect, as well as

direct consequences of technological change. The corrosion I/O Model

can be used to assess proposed means to reduce costs.
4

1 INTRODUCTION

The potential savings to the United States economy by improved

corrosion prevention and control are well recognized. The economic

effect of corrosion is that labor, materials, technical expertise, and

energy are used which would be available for alternative uses were it

not for corrosion. The National Commission on Materials Policy con- cluded that one of the ''most obvious opportunities for material

economy is control of corrosion' '

.

While several estimates were made over the years, there has been

no focused and concentrated effort directed to determine the cost of

corrosion to the U.S. based on a sound technical-economic method. Some

of these studies were the work of individuals who had little or no background in economics or econometrics and who made no serious

attempt to gather extensive amounts of data. Other studies, for example, the Hoar Report on Cost of Corrosion for the U.K., have involved

committees set up by governmental agencies and have used voluntary

workers unable to devote concentrated efforts. These past efforts have

suffered from some or all of the following: (1) a limited data base,

(b) a loosely structured definition of the cost of corrosion, and (c)

limited use of economic analysis techniques.

A valid estimate of the cost of corrosion is necessary if government and industry are to make rational choices of what resources and

approaches should be brought to bear to reduce losses. This information provides a basis for developing technological, legislative, and

other initiatives to promote effective economic savings. Battelle's

Columbus Laboratories conducted this study to determine the economic

effect of corrosion in the U.S. The Study, sponsored by The National

Bureau of Standards (NBS), was a joint effort of economists suid corrosion specialists from the two laboratories. Congress initiated the

study by directive to NBS.

The working definition of cost of corrosion for this study was the

increment of total costs incurred by the user because of corrosion.

This definition, discussed in detail later, includes both capital

costs, e.g., costs of replacement of plant and equipment, and

operating costs, e.g., costs of maintenance, repair, and corrosion control. The study was confined to corrosion of metals and did not con- sider deterioration of other engineering materials, e.g., concrete,

plastics, glass, wood, and refractories.

Total costs of corrosion were divided into avoidable and un- avoidable costs. The former is defined as those costs which can be

avoided by the most economically effective use of presently available

corrosion prevention and control technology. The latter require

technological advances prior to realization of cost reductions.
5

In estimating corrosion costs, a modified form of Battelle's

national Input/Output model provides the methodological fraunework for

the study. This model permits analysis of interindustry relationships

in the national economy. A total of 130 industrial sectors were included, e.g., petroleum refining, engines and turbines, water

transportation, and electric power. Each sector was viewed as a user

and as a producer of goods or services. This methodology allowed the

determination of relative costs of corrosion in each sector as well as cost of corrosion for the entire economy.

Results and procedures of the study are presented in this report.

In Section 2, the impact of corrosion on the U.S. economy, the approach taken in this study, and several principal concepts used

throughout the study are presented and discussed. A description of Input/Output analysis and the specific features, used in the application

to the determination of the costs of corrosion are discussed in Section 3. Data gathering procedure, treatment of each element of costs

of corrosion, and description of estimates of corrosion costs are presented in Section 4. In Section 5, results of the study are reported. Total costs of corrosion were divided into avoidable and un- avoidable portions and relative costs attributed to each sector of the

economy. The results section also includes a discussion of uncertainty

in estimates, and uses of Input/Output analysis for technological

assessment

.

Three areas were identified for more detailed analysis: Federal

government, electric power generation, and personally owned

automobiles. Costs of corrosion in these areas are discussed in Appendices A, B, and C, respectively. A glossary of terms is presented in

Section 7, and a list of industrial sector titles for the I/O model is

presented in Appendix D

.
6

2 BACKGROUND

2.1 Impact of Corrosion on U.S. Economy

Corrosion has a major impact on the economy of the U.S. Efforts

expended for corrosion control and in the production of goods for

replacement or repair because of corrosion would be available for

alternative uses if corrosion losses were reduced. Of particular importance, in these times of materials/energy shortages and need for

conservation, are the irrecoverable losses of expensive and strategic

metals, e.g., chromium, nickel, molybdenum, zinc, and aluminum. The

dollar value of technical expertise and labor losses are approximately

ten times that of material losses.

The magnitude of corrosion cost is astonishing. In 1949, the an- nual cost of corrosion to the U.S. was estimated by.Uhlig'^'* to be $5.5

billion. A more recent estimate in 1972, by a task group of The

Federation of Materials Societies estimated the U.S. losses because of

corrosion to be on the order of $15 Billion per year. It was further

estimated that approximately $5 Billion of the total loss was recoverable through application of corrosion control techniques

already developed and available for use.

A survey of corrosion costs to the United Kingdom* estimated an annual cost equal to 3.5% of the gross national product. It was es- timated that a saving of approximately one quarter of these costs

could be achieved with better use of current knowledge axid techniques.

The impact of corrosion is more, however, than that measured in

dollars alone. Materials limitations are among the pacing constraints

to further technological advance in key segments of the economy:

fossil energy production, electric power generation, aerospace,

transportation, and construction. Present technology is limited

because materials are not available for more severe service or costs

of suitable materials are prohibitive. Increased corrosion resistance

is at or near the top of lists for desired materials' properties.

In a broader sense, corrosion is a form of wastage. Materials are depleted by degradation modes such as corrosion, in the same manner as illness affects people, and inefficiency affects energy. The use of

resources (materials, labor, technical expertise, and energy) is

necessary to the economy just as food and oxygen are necessary to

sustain life.

Report of the Committee on Corrosion and Protection; T. P. Hoar, Chairman; Department of Trade and Industry; Her Majesty's Stationery Office; London; 1971.
7

It is the wasteful and inefficient use of resources that is

deplorable and must be reduced, and corrosion is a principal con- tributor to the wasteful use of resources. The forms of waste can be

separated into those which are amenable to reduction by presently

available technology (avoidable) and those which are not

(unavoidable). Reduction of avoidable wastage requires technology

transfer and implementation, while reduction of unavoidable wastage

requires technological advance.

In order to implement effective cost reduction programs on a rational basis, valid estimates of the magnitude of corrosion costs

and the relative distribution of those costs among segments of the

economy are essential. The purpose of this study was to develop this

informat ion

.

2.2 Approach to Determination of Costs of Corrosion

The approach to determine the economic effect of corrosion in the

U.S. was first, to determine an inventory of items which corrode. The

inventory comprised two categories: (1) Producer capital, i.e., plants

and equipment for production of goods and services for sale and (2)

Social capital and infrastructure, which includes all items not included in producer capital, e.g., defense material, highways and

related structures, personal passenger cars, personal houses and

appliances, and public buildings.

Secondly, a definition of cost of corrosion was developed that

contained elements of cost which were measurable and amenable to

study. Some elements included were maintenance and repair, corrosion

prevention and control, replacement life, and excess capacity for

scheduled downtime. Thirdly, the inventory of corrodibles was analyzed

for each element of corrosion cost. Fourthly, the economic effect of

corrosion, defined as use of capital, materials, energy, labor, and

technical expertise that would be available for alternative uses if

corrosion was not a factor, was determined.

Total corrosion costs were separated into avoidable and un- avoidable costs. The former was defined as those costs amenable to

reduction by presently available corrosion control technology. Reduction of the latter requires technological advance. In addition, the

portion of total costs attributed to each segment of the economy was

determined

.

A modified form of Battelle's National Input/Output Model provided

the methodological framework for the study. This model describes interindustry relationships in the national economy. A total of 130 industrial sectors were included, e.g., petroleum refining, engines and

turbines manufacturing, water transport ion, and electric power generation. Each sector was treated as both a user und a producer.
8

In order to determine the portion of economic activity ascribed to

corrosion, three scenarios were investivated by Input/Output analysis:

World I—The economy as it exists. World II—The economy with all ac- tivity ascribed to corrosion removed, and World III—The economy with

universal use of best corrosion control practice. The difference

between World I and World II provided an estimate of total cost of

corrosion, and the difference between World I and World III provided

an estimate of avoidable costs of corrosion. Indicators were developed

using input/output analysis to attribute relative costs to segments of

the economy.

Analysis was performed by a team of economic and corrosion ex- perts. Estimates of effects of corrosion were based on available' data

and technical judgment. Information was gathered from open literature,

technical reports, and interviews with technical experts. An Advisory

Panel, a peer group of corrosion experts, was established to provide

guidance throughout the study.

2.3 Principal Concepts

A number of principal concepts were developed and/or adopted for

use in the determination of the cost of corrosion. These are presented

below

.

2.3.1 Definition of Cost of Corrosion

Although a broader definition is often chosen, for this study cor- rosion was restricted to metals only. Environmental degradation of

other non-metallic engineering materials was excluded, e.g., concrete,

wood, refractories, plastic, and glass. Corrosion was defined as degradation of metals where the environment, aqueous or gaseous, con- tributed to the mode of degradation. In addition to general or local

metal wastage by dissolution, other processes included were stresscorrosion cracking, corrosion fatigue, erosion-corrosion, oxidation,

sulfidation, etc. Degradation processes in which the environment was

not a factor were excluded, e.g., creep, mechanical damage, and stress

rupture

.

The cost of corrosion was defined as that increment of total cost

incurred because corrosion exists. Conversely, what costs would not be

incurred if corrosion did not exist? Each segment of the economy was viewed as a producer and as a user of goods and services

.

For a manufacturer, corrosion costs are incurred in the manufacturing process in several ways. First, the inputs required for his

product (materials, energy, labor, and technical expertise) are affected by corrosion. For example, a product is painted for corrosion

protection, a corrosion resistant metal is chosen in place of carbon
9

steel for corrosion protection, technical service is required to

design and install cathodic protection on a product, or additional

heat treatment is required to relieve stresses for protection against

stress-corrosion cracking.

Secondly, other operating costs are affected by corrosion. For ex- ample, corrosion inhibitors and water treatment costs are incurred to

control corrosion of the plant and equipment, portions of maintenance

and repair costs are attributed to corrosion, and corrosion

specialists are employed to implement a corrosion control program.

Thirdly, capital costs are incurred because of corrosion. The

replacement life of equipment required in the matnufacturing process is

decreased by corrosion. For an operation which runs continuously, ex- cess capacity is required to allow for scheduled downtime for cor- rosion-related maintenance. In other instances, redundaxit equipment is

kept to allow maintenance on one unit while processing continues with

another unit in service

.

For an end-user, e.g., a private citizen, corrosion costs are incurred for purchases of corrosion prevention and control products,

maintenance and repair, and premature replacement.

Elements of the cost of corrosion were identified to provide a convenient check-list for consistent treatment of costs in all

segments of the economy. These elements are presented and described in

the following section. While in many instances costs were clearly and

exclusively ascribed to corrosion, certain costs were incurred for

multiple reasons and technical judgment was used to allocate costs for

corrosion and non-corrosion. Examples of the former are costs for

coatings on buried, steel pipelines and costs for cathodic protection

on ships' hulls; both are corrosion costs exclusively. An example of

the latter is the cost of painting exposed surfaces on automobiles.

Fenders, hoods, etc., are painted for corrosion protection and

aesthetics. In this instance, one-half of the painting costs were

ascribed to corrosion. Similar judgments were made in other areas

where multi-purpose operations were encountered.

2.3.2 Elements of the Cost of Corrosion

Ten elements of the cost of corrosion were identified. Estimating

procedures for each is presented in Section 4.2. All segments of the

economy were analyzed for the following elements:

2.5.2.1 Replacement of Equipment and Buildings. Equipment and

buildings are replaced because of corrosion, wear, obsolescence, etc.

Corrosion contributed to cost when the replacement life was less than

it would have been if corrosion did not exist. Conceptually, the value
10

of replacement life is the average number of years an item is used

prior to replacement in a given segment of the economy. The replacement life of similar items in similar service can vary from industry

to industry.

£.3.2.2 Loss of Product. This element of cost includes loss of

valuable product because of leaks in equipment, contamination by cor- rosion products of solutions requiring high purity, and scrap losses

during storage or shipping of items which corrode.

2.3.2.3 Maintenance and Repair. The portion of maintenance and

repair costs ascribed to corrosion are included in this* element. Both

scheduled and unscheduled activities are included.

2.5.2.4 Excess Capacity. Excess plant capacity is considered a cost only for operations which are scheduled for continuous operation

where portions of scheduled downtime could be ascribed to corrosion.

For non-continuous operations, lost production because of corrosion

was not considered as a cost of corrosion since the production could

be recovered in normal off periods. This element accounts for additional plant capacity (capital stock) because of corrosion.

2.3.2.6 Redundant Equipment,

accounts for additional plant

because of corrosion. Specific i backed-up by identical redundant

while one is being maintained.

This element, like excess capacity,

equipment (capital stock) required

iems, e.g., large fans and pumps, are items to allow processing to continue

2.3.2.6 Corrosion Control. Costs for corrosion control and prevention included costs for corrosion inhibitors, orgetnic coatings,

metallic coatings and platings, and cathodic protection.

2.3.2.7 Technical Support. Costs for corrosion-related research

and development, engineering, and other technical support were included in this element.

2.3.2.8 Design. The incremental increase in costs of materials of

construction selected (for corrosion resistance or protection against

product contamination by corrosion products) over the costs of

materials if corrosion was not a factor, was included in this element.

In addition, costs ascribed to incorporation of a corrosion allowance

and costs for special processing, e.g., stress relief or shot peening,

were included.
11

£.5.3.9 Insurance. Of costs for insurance premiums to protect

against losses ascribed to corrosion only those costs for writing and

administering the policy were included. Charges which are to build a reserve to cover claims are not included because these costs are balanced by claims and there is no net cost.

£.3.2.10 Parts and Equipment Inventory. The costs of parts or equipment for a corrosion inventory are not included in this element.

Only costs for handling and storage of the inventory are included.

£.3.3 Avoidable and Unavoidable Costs

Total costs of corrosion are defined as all costs above those incurred if corrosion did not exist. Although this definition has a hypothetical and unachievable basis, i.e., corrosion does exist, it is a well defined, static base against which the state of the real world

can be measured. An analogy is the comparison of engines with the maximum efficiency, Carnot cycle engine.

It is also useful to separate total costs into avoidable and un- avoidable portions. Procedures to estimate avoidable costs of corrosion are described in Section 4.3. Costs which are amenable to reduction by the most economically efficient use of presently available

corrosion control technology are defined as avoidable costs. Those

which are not amenable to reduction by presently available technology

are unavoidable.

For example, consider the costs of a corrugated-steel roof on a warehouse. If corrosion did not exist, an uncoated steel roof would be

selected and last for the life of the warehouse. Any corrosion-related

costs incurred over the construction costs for the no corrosion base

case are included in the total cost of corrosion: increased cost of

roofing material and installation, maintenance costs, or premature

replacement costs. Assume that a galvanized steel roof provides sufficient corrosion resistance so the roof lasts for the life of the

building and requires no additional maintenance. Then this would be

the best corrosion control alternative, and incremental costs of

galvanized steel over uncoated steel are the unavoidable costs. If an uncoated roof was installed, high maintenance and replacement costs

would be realized over the life of the building. All costs above that

of original construction would be included in total costs. Avoidable

costs would be those above the cost of a galvanized steel roof.

This concept is important because different approaches are re- quired to reduce the two types of costs. Unavoidable costs require

technological advance before reduction can be realized. In the above

example, this would be a more cost effective alternative to steel than

galvanized steel. A program to develop a less expensive coating would

be one way to proceed. For avoidable costs, reduction is achieved by
12

technology transfer and implementation. First, determine why a galvanized steel roof was not selected, and secondly, take necessary

action to encourage its selection for future warehouses.

2.3.4 Best Corrosion Control Practice

Best corrosion control practice is defined as the most economically effective and efficient use of resources to control corrosion with

presently available technology. This practice defines the division

between avoidable and unavoidable costs. It does not imply that corrosion is stopped at all costs or that all equipment is gold-plated.

2.3.5 Input /Oup tut Analysis

Input /Output analysis provided the methodological framework for

this study. The methodology is described in detail in Section 3.

Battelle's National Input /Output Model describes interindustry

transactions in the economy. For each of 130 industrial sectors, the

I/O Model quantitatively describes:

(1) Resources (material, labor, energy, value added) required

to produce its product or service. The dollar value of inputs required from each industrial sector are given.

(2) Plant and equipment requirements to produce its product or service. The capital stock required from each capital

producing sector is given.

(3) Replacement rates for each type of capital stock (plant and

equipment) required in the production process. Replacement

lives are determined for the capital stock in each industry

sector

Economic activity of private consumers, the Federal Government,

State and Local Government and other components of final demand are also described.

The I/O Model provided the detail and comprehensiveness for treatment of all the elements of the cost of corrosion. Production costs,

capital costs, change in replacement lives, etc. could be treated in a coordinated and systematic manner. The analysis provided a measure of

total costs of corrosion separated into avoidable and unavoidable

costs and a relative measure of the allocation of costs among the industrial sectors.
13

2.3.6 Direct and Indirect Costs

Direct costs are costs an industrial sector acrues as it purchases

inputs and produces its products, while indirect costs are those ac- crued in producing the inputs to a particular production process, and

the costs of producing inputs to the inputs, etc., until additional

costs become negligible.

£.3.7 World I, World II, and World III

To determine total, avoidable, and unavoidable costs of corrosion,

three scenarios were constructed. First, the economy as it exists

(World I); Secondly, the economy as it would exist if corrosion did

not exist (World II); and Thirdly, the economy as it would exist if

all segments of the economy used best corrosion-control practice

(World III). An Input/Output Model was constructed to describe each

economy. Costs of corrosion were determined by differences between the

three worlds

.

Starting with a modification of Battelle's National Input/Output

Model as a description of World I, adjustments were made to account

for all economic activity associated with corrosion and World II was

constructed. Similarly, adjustments were made to account for all ac- tivity associated with best corrosion control practice and World III

was constructed. Procedures for determination of costs of corrosion

and adjustments for World II and World III are presented in Section 4.

Differences between World I (existing economy) and World II

(economy with no corrosion) determined the total cost of corrosion,

while differences between World I and World III (economy with best

corrosion-control practice) determined avoidable costs of corrosion.

Unavoidable costs were calculated from total costs minus avoidable

costs

.

2.3.8 Ex-Ante Approach for Estimation

The ex-ante approach was used both in determination of World I and

in estimation of paratmeters for World II and World III. The essence of

this procedure for estimation is that the process relies upon expert

knowledge and judgment rather than data surveys and statistical

analyses. Through adoption of this approach, all available data can be

assimilated and applied to determine necessary parameters. The

procedure is discussed in Section 5.5.5.

I
14

3 METHODOLOGY

3.1 Introduction

The many cost elements, both capital and operating, associated

with the existence of corrosion affect the economy in complex ways.

The purpose of the Input/Output model is to put those costs into a logical structure so that their implications may be traced. For

example, the fact that the replacement life of a piece of capital

equipment is less in the present environment than it would be in a corrosion-free environment indicates that annual replacement of that

equipment potentially may be reduced. A reduction in the annual

replacement, or purchase, of certain capital equipment would result in

both direct and indirect reductions in the requirements for labor,

material, energy, and other capital. Those reductions would then

result in subsequent reductions of their own.

In order to capture all of these effects, we have chosen to

utilize a modification of Battelle's existing national input-output

model. At the beginning of this study, Battelle already had an ex- isting 127 sector input-output model. Several modifications and expansions of that model were made in the course of the study. A nximber of

industrial sectors were disaggregated into more detailed sectors. A

replacement life matrix indicating the range of replacement lives for

each kind of capital used by each industrial sector was added. A

special mechanism, called the social savings row, was added, and

special algorithms for allocating the cost of corrosion to specific

industrial sectors were devised.

Input-output analysis, pioneered by Leontief, and the modified

Battelle model are ideally suited for use in estimating the total

direct and indirect costs of corrosion for a number of reasons. The

model is quite detailed. In the form used in this study, it consists

of 130 economic sectors, each of which is represented by a production

function consisting of the respective inputs from each of the 130 sec- tors plus value added. As a result, relatively detailed industry cor- rosion cost data may be incorporated into the model for simulation

purposes

.

The model is comprehensive. It has sufficient components to allow

all the aspects of corrosion costs (e.g., production costs, capital

costs, reductions in replacement lives, excess capital capacity, etc.)

to be considered in the analysis. Because of the model's structure,

all of these aspects may be considered in a highly coordinated and

systematic manner.

The model is simultaneous so that it is able to account for both

direct and indirect effects of certain changes in the economy. This

ability to account for direct and indirect effects is critical if one

is to estimate the total costs of corrosion to the society.
15

Because the model simultaneously determines equilibrium values,

comparative static analysis is an obvious application. And the corrosion problem is one very amenable to comparative static analysis. The

costs of corrosion in the existing world are compared to corrosion

costs in each of two hypothetical worlds: one in which no corrosion

exists and thus the costs are zero; and one in which ''best practice''

corrosion control methods are used.

And finally, since the model consists of process sectors described

in terms of * ' ex ante'' parameters, it is well suited to ''ex ante''

changes describing worlds II and III.* The process orientation is important since it allows technical experts to concentrate on specific

production processes necessary to produce a given output. The ex ante

derivation of parameters frees these experts from the burden of

statistical analysis for which little or no data exists.

The input-output model used in this study can be separated into

three basic components: the direct technical coefficient matrix, the

capital-to-output coefficient matrix, and the final demands. The

relationship which ties all three components together is

where

X = AX + BGX + BRX + FD (1)

X is a vector of total output

A is a matrix of direct technical coefficients

B is a matrix of capital/output coefficients

G is a diagonal matrix of industry growth rates

R is a matrix of capital replacement rates

FD is stipulated final demand (excludes gross private

domestic investment)

Equation (1) states that an industry's total output is distributed

among intermediate consumers, purchasers of capital (for both growth

and replacement), and final consumers. The term AX is the output con- sumed by intermediate users, BGX is the output which is allocated to

growth capital, BRX is the output allocated to replacement of worn out

capital, and FD is the output accruing to final consumers. Equation

(1) may be solved for total output, X, by the following:

X = [l-A-B(G+R)]~^ FD (2)

where

[l-A-B(G+R)] ^ is an inverse matrix.

*Ex ante refers to a process for estimating model parameters. The process relies upon

expert knowledge and judgment rather than data surveys and statistical analyses as

in the ex post approach. The ex ante approach is discussed in more detail in Section

3.3.6.

i
16

Equation (2) is basic to the input-output formulation used in this

study and is often termed a ''dynamic inverse''. The dynamic inverse

combines the capital coefficients (BG&BR) with the direct technical

coefficients (A); it treats the capital coefficients, actually stock

coefficients, as if they are flow coefficients, and thus as if capital

purchases are a function of stipulated final demand. This formulation

causes no problems as long as the economy is assumed to be growing at

its long term rate of change, as was assumed in this study. If,

however, one is simulating other than a constant, long term rate of

growth, the formulation will cause faulty estimates of capital

formation

3.2 Assumptions

Certain assumptions are implicit in the model and they should be

identified. They include

• Linearity assumption

• Homogeneous product assumption

• Inelasticity

• Steady growth assumption

• Average technology assumption

• Full employment trend

3.2.1 Linearity Assumption

The linearity assumption states that an industry's inputs are directly proportional to its output. In other words there are no economies or diseconomies of scale; input requirements are not related

to the size of the firm, volume of output, etc.

3.2.2 Homogeneous Product Assumption

Each sector in the input-output model is assumed to produce one homogeneous product bundle. A lack of homogeneity would imply that a sector's product mix may change in that very diverse products requiring diverse production technologies are produced by the same sector.

Although changing product mixes and different production processes may

exist in reality, they are difficult to deal with in the input-output

model . As a result we assume that each sector produces a slowly

changing average product mix.
17

3.2.3 Inelasticity of Substitution Assumption

It is assumed in the model that there is no substitution among inputs by any given producing sector. This assumption is necessary

primarily because price changes are difficult to measure and cross

elasticities of substitution do not exist for the many items in the

input-output model

.

3.2.4 Steady Growth Assumption

We assume in the model that any goods or services demanded can be

and have been supplied, and that all of the model sectors have been

changing at their long term rate of change for a long time.

3.2.6 Average Technology

Implicit in the model is the assumption that an industry's production function may be represented by average 1975 technology. This

assumption is embodied in the fact that the 1975, ex ante direct

technical coefficient matrix reflects the average technology con- sidered to be in effect in that year.

3.2.6 Full Employment Assumption

In estimating the model's stipulated final demands we assumed that

1975 was a full employment year, using the term * * full employment'' to

mean full employment of all resources . As a result the final demands

and output levels are somewhat higher than those actually experienced

during 1975. The essence of this assumption is that it allows us to

measure the full potential capacity of the economy and thus the full

costs of corrosion. The dollar costs of corrosion, as measured by the

input-output model, therefore, are those which would occur if the

economy were operating at full capacity. In percentage terms (costs as percent of GNP ) , however, the costs of corrosion should differ very

little between the two situations.

The three components of the model, the A matrix, the capital

matrix, and the final demands may now be described in turn.

5.3 The ' 'A' ' Matrix

The ' 'A' ' matrix is sometimes called the matrix of direct

technical coefficients. The cells in this matrix indicate the dollars

worth of inputs required from the row sector in order for the column

sector to produce one dollar's worth of output. Three rows (value

added, social savings, and imports, all discussed at a later time) are outside the matrix and as a result are not involved directly in the

inversion of the A matrix.
18 1

Since the coefficients are in terms of proportions, the column sum

of the A matrix plus the sxim of value added, imports and social

savings is equal to one. The sum of the column coefficients in the A

matrix is equal to the column sector's use of domestic intermediate

inputs per dollar of its own output. In world I if the cells of the

matrix and the value added and import rows are filled with their

dollar, or transaction values, the column sums are equal to the column

industry's total input and also equal to the industry's total output.

3.3.1 Value Added

Value added refers to the value which a particular manufacturing

process adds to the inputs it purchases; this value is included in the

final product value of the process. Specifically value added includes

wages and salaries, profits, rent, taxes, interest, and depreciation

charges which accrue to a sector as it produces its goods or services

In the model, value added appears as an exogenous row of coefficients, one for each column sector in the A matrix and as a row of

dollar values in the transactions table. Each of the coefficients indicates the total dollars of value added which the column sector ac- crues for each dollar of final output it produces . The value added

values in the transaction table indicate the total dollars of value

which the respective column sectors add in producing their total

output

3.3.E Social Savings

The cost to the economy of corrosion was measured in terms of the

reduction in GNP that would take place if our world were corrosion

free. This is to say that labor and resources are being used to overcome the effects of corrosion which would not be used — and therefore

could be directed toward some other purpose — in the absence of

corrosion

One important factor which must be taken into account is that,

given the absence of corrosion or given the application of optimal

ant icorrosion practices (however defined), industrial technologies

would be different from those currently employed in the real world. If

these differences in technology are entered into the model in the

usual manner (alteration of the proportionate structure of the subject

sector's direct technical coefficients, followed by renormalizat ion of

the entire column) the simulation would automatically reallocate GNP,

but it would not measure the amount by which it would be reduced or increased .

In order, therefore, to have a better indication of the impacts of

technological changes implicit in moving from the real world to a no- corrosion world or to an optimal-corrosion-control world , an innovation has been undertaken. A new row has been added to the transactions
19

table and to the A-matrix that is called ''Social Savings''. In the

tables this row is outside the intermediate matrix (like Value Added)

so that it only enters the inverse through its indirect influence on

the sizes of all the intermediate direct coefficients. In the World I (real world) tables, this row is always empty. In going from World I to either of the other two (hypothetical) worlds, any changes made in

specific cells in a column of coefficients are balanced by the entry

added into this row.

For instance, if a move from World I to World II causes a reduction in one material input (coefficient) and a smaller increase in

another, the positive entry into Social Savings exactly equals the net

change. Thus the column sum still equals unity without renormalization

.

As a result of this feature, when the transactions table has been

derived, the net row sum of Social Savings will indicate the amount of

GNP which has (if positive) been made available for other use, or (if

negative) the amount by which GNP in other uses has been reduced,

3.3.3 Foreign Trade

Imports of goods and services include both the importation of intermediate and final demand goods and services. Typically these imports have been incorporated in the input-output model as a double row

across the intermediate matrix (''A'' matrix) and final demand sector,

with exports as a final demand subvector . In this typical formulation

one import row consolidates all imports required as inputs to the

respective column sector and not directly subst itutable for U.S. outputs. The second (or ''transferred'') imports row shows all imports

essentially subst itutable for the column sector's output; these latter

imports are treated as being purchased as inputs by the column sector,

which then distributes them with its output across its own output row. This transferred import, like secondary transfers among producing sectors, destroys the technological integrity of the A-matrix.

In the Battelle model, only noncompetitive imports were included

as a row across the table. Competitive imports were placed as a negative column of final demand entries. Thus, competitive imports

were treated as reducing the final demands for similar U.S. output;

and all the noncompetitive imports of inputs to each producing sector

were consolidated into an intermediate row (with a corresponding row

across final demand). While theoretically simple and correct, es- pecially in a country in which imports constitute relatively small

proportions of total supply, the convention introduces the danger of a serious anomaly. Where imports for intermediate use (e.g., crude

petroleum) were large relative to total final demand, there was a danger that total final demand (net after imports) would become heavily negative and lead to extremely low or negative total outputs.
20

In order to preclude this danger, we have modified the above con- vention. All imports are carried as a row outside the intermediate and

inverted matrices. Total input thus becomes:

XI = TDI+DVA+IM (3)

where

TI is total input

TDI is total domestic intermediate input

DVA is domestic value added

IM is imports

Every direct coefficient in the A-matrix is thereby made

technologically correct, regardless of whether or not the inputs are domestic or imported. After solving for total output, an import column

can be calculated for information purposes by multiplying each sec- tor's output by the sector's import coefficient. These calculated

values can then be added as a column to the table so that

TDO = TIO+TFD-IM (4)

and

TDO = TDI=TI-IM (5)

where

TDO is total domestic output

TIO is total intermediate output

TFD is total final demand

TI is total inputs.

3.3.4 Disaggregations

Certain sectors of the model have been specially disaggregated for

this study. Since the corrosion of concern is that which affects only

metals, the metal sectors are one group of particular interest. As a result the original four metal sectors have been disaggregated into

fourteen more detailed sectors. In addition, it was felt important to

be able to separate paints and allied products; coatings and plating;

and maintenance and repair construction into corrosion prevention and

noncorrosion prevention components. The original three sectors were

thus disaggregated into seven more detailed sectors (the original sector which contained coatings and platings also contained another group

of sundry outputs so that three new sectors resulted from the

original )

The model disaggregations have been derived through an ex ante as opposed to £Ln ex post approach. The ex ante approach, discussed in

detail below, is well suited to the particular problem at hand because

of the lack of formal data in many cases.
21

3.3.5 The Ex Ante Approach

The ex ante approach to the determination of input-output coefficients has been designed for the explicit purpose of taking fullest

account of the impacts of technological change on interindustry

relationships

.

The analysis in this study has been performed for the year 1975.

The latest national survey table is for the year 1967.* An alternative way of estimating the 1975 input-output model coefficients was thus necessary.

There are several ways of establishing a matrix of direct

technical coefficients that presumably reflect target-year

technologies

.

• A matrix from a past year can be assumed to describe a future

year with no further change

• A matrix for a past year can be assumed to describe the

future year after adjustments for relative price changes

• For a selected group of coefficients assumed likely to undergo technological change, technological forecasts can be

made, and all other coefficients conformed to them

•Estimates can be made of the marginal dollar totals (total

intermediate output, and total intermediate input) for every

productive sector. Then the dollar flows can be adjusted by

means of a double proportionally method (RAS) to conform to

the new marginal values; and new coefficients can be derived.

• An extrapolation into the future can be made by standard

econometric methods, if comparable coefficients matrices are available for two or more past years

• A technological forecast to one or more target years can be

made for each sector in the I/O table and converted into

coefficient form.

All of the above methods have been used in making coefficient

forecasts. The first three are probably used most often. The coefficients used in this study have been derived using the last method,

the ''ex ante'' approach. In general the method consists of generating

a preliminary matrix of direct technical coefficients for each target

year through use of whatever method or combination of methods (from

the first five on the list) is feasible. The preliminary coefficients

are then subject to intensive cell-by-cell review by members of a group of experts, the selection of whom is crucial to the effectiveness of the approach. Then the final coefficient forms are es- tablished and normalized.

U.S. Department of Commerce, Bureau of Economic Analysis, Input-Output Structure of the U.S. Economy: 1967, U.S. Government Printing Office, Washington, D.C., 1974.
22

The above process was used both in disaggregating existing sectors

in the model and in estimating parameters for worlds II and III, two

hypothetical environments in which no corrosion exists (II) and in

which best corrosion control practices are used (III).

3.4 Capital Matrix

Private capital, plant and equipment used in the production of

goods and services, must meet the following conditions: it must not be

transformed during the production process; it must last in excess of

one year. In the input-output model it is estimated through use of the

capital matrix.

The capital matrix, as is true for the flow matrix, is a 130 by

130 matrix of ''ex ante'' coefficients measuring a relationship to

output. Where the flow coefficients measure dollars worth of inputs

per dollar of output, the capital coefficients measure dollars worth

of capital per dollar of output. Sectors listed across the top of the

matrix indicate capital users; sectors listed down the side of the

matrix indicate capital producers. Since all sectors are users but not

producers of capital, a great many zero rows exist in the matrix.

In brief, the capital matrix is used to indicate the amount and

type of capital (measured in terms of current cost) necessary to support various levels of production. It is explained in greater detail

below

3.4.1 The General Concept of the Capital Module

Private fixed capital formation (PFCF) is one of the standard com- ponents of GNP and provides one of the seven subvectors of final demand in the I/O context. PFCF is the private demand from the entire

economy for the structures and machinery used in production and for

the structures (residential) used by consumers.

The formation of new plant-and-equipment capital by industry can be thought of as triggered by need for growth, by need for replacement

(of wornout or obsolete capital), or by government requirements (e.g.,

for environmental protection). By growth, we refer primarily to the

growth of demand for an industry's output, regardless of whether the

demand be final or intermediate, foreign or domestic. By replacement

we refer both to replacements due to technological change — usually

almost impossible to isolate, as will be shown — and to replacements

which arise because of the age structure of existing capital. Capital

changes that result from governmental regulations probably are best

estimated with reference to policy directives and added to our modular

estimates. We will not discuss them further in this report.
23

In order to estimate the amounts of new capital which each

capital-using sector will purchase from each capital-producing sector

(aside from the response to government regulations) during a given

year, we need to have five bodies of data:

• The stipulated ^(noncapital) final demands which each sector

must satisfy (FD) • The capacity growth rate matrix (G) • The capital replacement rate matrix (R) • The matrix of direct technical coefficients (A)

•The matrix of capital coefficients (B).

To the extent required for understanding, each of these will be

discussed at greater length, below; at this point, we will take each

as defined and indicate the general computational program of the

capital module.

In standard matrix notation, the Leontief I/O system of equations

can be written

X - XA = FD (6)

where

X = total output

A = the direct coefficients matrix

FD = total final demand.

f We can rephrase this statement to read: total output must always

exactly cover both intermediate input requirements and final demands.

This is a truism, primarily because net increases in inventories of

unsold output are treated as final demand.

In the steady growth case, when we wish to account for investment

demand separately. Equation (6) can be rewritten

X-XA-XB=FD (7)

where

B = total capital coefficients matrix

FD = total stipulated (noncapital) final demand.

and

B = B(G + R)

with

B = the standard capital coefficient matrix (expressed in the

form of ratios of capital stock to output)

G = matrix of annual growth rates of total capacity (capital)

R = matrix of annual replacement rates of capital.
24

This allows us to rewrite Equation (7)

X - XA - XBG - XBR = FD (8)

Given exogenous means of determining g and r (the individual

growth and replacements rates), this is the modified form of the Leontief equation from which the dynamic inverse is derived. It is this

relationship that provides the logic of the capital module. Before

going into the actual derivations and relationships of the module,

however, we need to review the concept of capital that underlies the

original derivation of the B-matrix.

3.4.2 The B-Matrix

The capital coefficients used in this exercise differ from the

usual statistical coefficients in that they are stock, rather than

flow, coefficients.

In this context, all capital coefficients may be described as a set of ratios that sum to the capital output ratio of the capital-using

industry — i.e., the dollars-worth of capital required to produce

$1.00 per year of industry output. The structure of the set of ratios

is determined by the proportionate parts of that total capital which

are provided by the several capital-producing industries. What we term

capital-flow ratios are derived from statistics of capital sales and

purchases in a given calendar year. They need never relate meaningfully to the technologically required structure of productive plant

and equipment. In contrast, capital-stock ratios are derived in terms

of the proportionate composition of a meaningful productive unit. They

describe engineering necessities.

A capital stock matrix, however, can be defined in several

different ways. It can be an accumulated stock matrix, structured in

terms of the kinds of capital (regardless of age and/or relative

degrees of obsolescence) currently in use in a real situation. Or it can be a best-practice stock matrix, structured in terms of optimal

engineering requirements. The B-matrix used in this case is a bestpractice, balanced-expansion, stock matrix in that it assumes optimal

engineering requirements but no excess capacities.* In order to increase an industry's output by one percent, every capital input must

*The concept of best practice in the capital stock matrix and average technology in

the flow, or A matrix, are not necessarily incompatible, although certain inconsistencies should be pointed out. Since the values in the capital matrix are really

marginal values, they could well reflect a best practice technological distribution

and cost of growth capital and not contradict an average practice flow matrix. In computing replacement capital, however, the marginal coefficients are used as stock

coefficients. Thus if the actual distribution of capital has changed over time, the

marginal, best practice coefficients will result in an incorrect distribution of

replacement capital.
25

increase by one percent. This means that when we use the associated

capital-output ratios to convert total outputs to ''total capital

already in place'', we implicitly assume that all plant and equipment

is optimal from an engineering point of view. Another way of stating

this is that we express capacity in terms of its current replacement

cost rather than either its original cost or its current book value.

The B-matrix used in this study is defined in terms of 130 Sector

detail. It defines complete process-related capital structures, including necessary infrastructures (e.g., the transmission lines of

electrical utilities); and it contains allowances for capital re- quirements of effluent control of major pollutants but not necessarily

that called for by governmental regulations.

In the I/O sense, the capital matrix (B-matrix) shows how much

capital the column sector (capital-using) will purchase from each row

sector (capital-producing) in order to create new capacity to produce

one dollar's worth of output per year. It is expressed in 1975 dollars

and price relationships; it reflects 1970-75 best-practices.

3.4.3 The Growth Matrix

In order to determine how much new capacity must be formed in

order to keep up with the growth demands we derive the ratio g from

first approximation growth rates of total output (X) . If K = capacity, g may be derived for a given sector as

g

= (9)

If we substitute a comparable ratio based on X (defined as the

total output of the sector in an economy in which capital formation is

approximated) we allow changes in K to be approximated in terms of the

direct plus indirect growths of general demand. Therefore

^1 - ^0

g = —_ (10)

X

0

In our actual program, X is taken from our full employment trend

tables. Also, since we are working with 5-year interval estimates, we have reformulated g to use estimates for the two successive quinquennial years:

'75 X75

^70

-.1/5

(11)
26

If a given value of g is negative — that is, if total output

declines — we compare the value of g with the corresponding value of r (see below). If, ignoring signs, g^r, the sum g+r will be positive or zero; and neither value is changed. But if, again ignoring signs,

g>r, the sum (g+r) will be negative. This implies that the sector is

disinvesting and is supplying capital to other sectors — a very un- likely situation. Therefore, in such cases, g is set equal to r, so that the sum (g+r) is arbitrarily forced to zero. The values of g for

each sector are then entered as the diagonal row in the g matrix; all

off diagonal elements are zero.

In estimating capital formations in 1975, for example, FD75

(estimated Tioucapital final demand in 1975) is used, along with the

modified dynamic inverse, to calculate the final values of total

output

3.4.4 The Replacement Matrix

Since we have no precise vintage composition of total capital, we assume that the age-structure of each capital-using industry's existent stock of capital results from its steady growth at rate g.

Replacement rates would therefore be a function of the growth rate and

the replacement life of that stock. We have used the Internal Revenue

Service's Bulletin F as our source of the replacement life expectancies

of each sector's plant and equipment.

The replacement rate (r) for each sector is taken as a joint function of both replacement life expectancy and sector growth. The R

matrix is a full matrix, like the B matrix. It is derived in turn from

a corresponding matrix of replacement lives (U) by the following

procedure

Working from entries of depreciation life Bulletin F, every cell U^j

corresponding with a nonzero cell in B is assigned a replacement life

expentancy value. The assigned value may take the form of a given

number of years or of a range of years . Average annual growth rates

for each column sector, gj , are derived in the above manner and used

to describe the entire cycle of replacement lives.

Assuming smooth growth, the current stock of worn-out capital

would be that which was formed for reasons of both growth and replacement in the first year of a period u years long. If we let K-^^ represent capital stock value in year t, we can designate the value in the

first year of the period as Kq . The total value of the current capital

stock can be designated as 2K, defined as

ZK = K- + + K- + K T (12)

0 12 u-1

where Kq, K^, ... is the growth and replacement capital purchased in

year 0, 1, 2, . . . respectively and U is the life to first replacement of the capital stock.
27

Then by definition, the annual replacement rate of capital, r, for

a given sector becomes r = Kq/XK.

If we calculate Kj, Kg, through K^—i in terms of Kg, given the

annual growth rate of the sector, g, they become

= >v (1 + g)l

^2 = >v (1 + g)2

\-l = >v (1 + g)^-l

(13)

Since Kq is common to all terms

r = K^^^=—_ L- _ (14)

1 + (1 + g) + (1 + g) + + (1 + g)

This can be transformed, for ease of calculation, into

r = S (15)

(1 + g)"" - 1 In setting up the replacement matrix, R, we establish a value of

r^ j for each corresponding value of u^ j . If a given cell has a single

replacement life (e.g., 5 years) there will be only a single replacement rate. However, if a particular cell is shown as having a range of

replacement lives (e.g., 5-10 years) there will be a range of replacement rates (one for 5 years, one for 6 years, and so on); and the cor- responding single value entered in the R-matrix will be the simple

mean of these replacement rates.

3.4.5 The Modified Dynamic Inverse

It will be recalled that our capital equation was stated

X - XA - XBG - XBR = FD (16)

This can be rephrased

X = [l - (A + B(G + R))]"-^ * FD (17)

In this form, given the constraints mentioned in a previous sec- tion (i.e., the economy growing at its long term rates of change), the

equation permits the computation of total output (X) from the data

sources which have been discussed.
28

3.4.6 The Final Capital Matrices

After total outputs (X) have been computed via the dynamic inverse

and the stipulated final demand, the detailed capital transactions

matrices are computed from the following relationships

Growth capital = XBG

Replacement capital = XBR

Total capital = Growth capital + Replacement capital.

In matrix form, these tables provide capital market data that show

how much capital goods must be purchased by each capital -using sector

from each capital-producing sector, if the capacity of the economy is

to satisfy all final demands.

The column of row sums of the total capital matrix enters the PFCF

column in the final demand vector of the I/O transactions table. When

the total capital matrix is added, cell-by-cell, to the intermediate

and other final transactions matrix of the I/O table, this provides us with a complete market profile for every row sector, regardless of the

nature of its output

3.5 Final Demands

Final demands account for the third major component of the inputoutput model. They represent the final disposition of goods and ser- vices produced by the economy.

Specifically, the stipulated final demands used in this study may

be separated into expenditures for:

• Personal Consumption

•Government (federal, state, local) purchases

• Exports

• Net inventory change

Normally, the sum of the final demands is equivalent to GNP . In

this study, however, the stipulated final demands must be adjusted in

order to achieve a sum equivalent to GNP; the adjustments include

adding gross private domestic investment to and subtracting imports

from the sum of the above categories.
29

3.5.1 Generation of Stipulated Final Demands (FD)

The optimal potential path of the stipulated final demands (FD) —

that associated with the term ''full employment'' — is assumed a function of two main determinants, the working-age population and the

average technology with which it works.* The working age population

has been defined as all persons between the ages of 18 and 65 — regardless of whether employed or even whether in the ''labor force'',

as usually defined.

The other determinant of FD in this module is the trend in productivity, measured as real (1975 dollar) GNP per person 18-64.

In order to reflect conditions of full employment: The forecasting

trend-line for GNP per person 18-64 has been fitted to the peak series

values of 1950-70. Thus, the fitted line represents the best performance of the U.S. economy during the post war decades. Projected

values from this trend have been multiplie'd by projections of the 18-

64 year old population to obtain tentative estimates of aggregate GNP

in constant 1975 dollars. The population projections are produced

within the model via a cohort-survival projection technique.

3.5.1.1 Composition of GNP. Total GNP by itself is of little use

in the model. It must be separated into the specific components included in FD before_it can be used in any detailed analysis. Each of

the components of FD, personal consumption, government purchases, ex- ports, and net inventory change is discussed below.

3.5.1.2 The Consumption Module. It will be recalled that total

population by age is projected with a cohort-survival technique. Based

upon historical and forecast family formation statistics, the numbers

of families of given sizes by age of head of household were then

forecast. These data then were combined with information on income

characteristics** to provide a three-dimensional matrix of feunilies by

income by age of head and by size. This matrix is shown conceptually

in Figure 1.

Since 1975 is now history, it is no longer a forecast year. However, the 1976

values for stipulated final demand used in the model are forecast values in the sense that they are valued which were forecasted to have occurred if the economy

had experienced full employment of resources and a long term, steady rate of

growth

.

**For forecasting purposes, spending behavior relative to income is estimated in

terms of eight ''income behavior'' classes, the mean family incomes of which vary

over time. For instance, in 1970 the average income of two person Class 1 families

was 15,493; it is expected to rise to $6,920 (in 1970 dollars) by 1985. For Class

8, corresponding averages are $29,764 adn $37,499.
30
31

A separate analysis was made of how families with different income

and size characteristics spend their income on each of 42 major

categories of consumption goods and services. The estimates are ex- pressed as regression equations which show how much the average family

in a given income class and of a given size will spend in a year on a specific expenditure category. After being aggregated across all

family size categories, the 42 categories have been disaggregated into

180 detailed classes of consumer expenditures for each of the eight

income behavior classes of family. At this point, the total consumption expenditure of all families has been calculated in detail. It

must then be converted from a consumption framework to a producersector framework for incorporation into the I/O table.

In order to enter the PCE column of the I/O table's final demand

sector, total consumer expenditures on the 180 items must undergo con- siderable transformation. First, it must be converted from consumer

market terms into producer-prices. This is done by removing from what

the consumer pays the transportation and trade margins that have been

added in calculating retail prices. Then, the producer-values of the

goods consumed must be ascribed to the industry in which they were

produced, while the transportation and trade margins must be ac- cumulated and ascribed to the transportation industry and to wholesale

retail trade.

3.5.1.5 Other Final Demands. In order to deal with these other

final demands in an expeditious and reasonably precise manner, we had

to make many assumptions about the characteristics of the target

years. For instance, the assumption of peacetime full employment meant

that governmental expenditures (especially at the federal level) would

not be complicated by emergency programs, either those required by a wartime situation or those required for the relief of unemployment.

What constitutes a ''normal'' foreign trade situation in a world

currently characterized by international inflation and recurrent

problems in foreign exchanges? For model purposes, we have assumed a very small U.S. trade surplus in each of the target years. The general

composition of exports has been assumed to follow recent historical

patterns with some exception.

In general, the computations of this module have been quite simple. Total GNP has been distributed according to historical structures

derived either from the corresponding final demand subvectors of the

1958 and 1963 U.S. I/O tables or from the detailed time series of the

National Income and Product Accounts. This procedure was followed for

government expenditures and gross exports. Imports, as discussed in a previous section, have been entered as a row in the ' 'A Matrix' ' so that they appear in final demand only in an information sense.
32

3.5.1.4 Inventory Change. Inventory change is an item which poses

some conceptual problems. As a result, the item is discussed separately. Official statistics on net inventory changes show the amounts by

which inventories grew or declined in a given past period, regardless

of the kinds of inventory or the reason for the change . Generally

speaking, industry inventory statistics are reported in terms of the

industry that holds the inventory. If they are to be useful for I/O

analysis, however, they must be stated in terms of the industry that

produced the goods held in inventory, regardless of held in inventory,

regardless of by whom.

Inventories held by an industry can rise (or fall) because its

decision makers expect an increase (decrease) in the demands for its

output; or they can do so because previous output decisions were mistakenly too big (low) becavise of excessive and unrealistic optimism

(pessimism). In other words, a change in inventories can come about

either because of changed expectations about the future or because of

a past ''goof' by management. The first is theoretically acceptable

and should be incorporated into our model, if possible; the second is

not and should not be

Since official statistics cannot distinguish these two sources of

inventory change and so must include them both, there is no valid way

of econometr ically forecasting future inventory changes, by industry,

through their use. Instead, we have estimated aggregate inventory

change as a function of average changes in noninventory final demands.

In order to obtain a distribution of this total over the 130 industrial sectors of our table, we have applied the same general approach to each row sector, and then normalized the results to the es- timated total.

3.5.2 Disaggregations

As was the case with the direct technical coefficient matrix, cer- tain of the previously existing cells within the final demeind vectors

were disaggregated. The original four metal sectors which intersected

final demand were separated into fourteen sectors; the paints and

allied products sector was disaggregated into a corrosion prevention

and noncorrosion prevention component; the coatings and plating sector

was disaggregated into corrosion prevention, noncorrosion related, and

all other sectors; the maintenance and repair construction sector was disaggregated into a corrosion control and noncorrosion related

sectors

As in the previous cases, the disaggregations were performed using

expert knowledge and judgment and any available data.*

*An example of the data used is the 1967 national input-output table published by the

Bureau of Economic Analysis. This table is more detailed than the Battelle model

(367 sectors compared to 130) and thus offered data allowing us to disaggregate some

of our more aggre ated sectors.
33

3.5.3 Durable Goods

Social capital/ infrastructure is defined as consisting of final

demand durable goods lasting in excess of one year and which do not

change form during their use, e.g., automobiles, battleships, airplanes, etc. The annual purchase of these items by individuals and

government is shown in each of three final demand vectors: personal

consumption, federal government expenditures, and state and local

government expenditures.

Originally social capital and infrastructure were to be inventoried, actually counted physically, and multiplied by axi average unit

price in order to arrive at a dollar value for the total existing

stock. Upon investigation, however, it was discovered that an actual

inventory was impractical for a number of reasons. For one, very little data are available which indicate the numbers of various social

capital items in existence at any particular time. The data which do

exist (primarily government inventories) are not centrally collected

and thus presented a severe time and cost problem. Finally, average

price data, if they existed at all, were suspect. For example, government inventories reflect an average unit price but not necessarily a replacement price; and often, because of the degree of sector aggregation, it was impractical to derive an average sector unit price.

As a result of the difficulties involved, an alternative approach

was taken to the problem of estimating the value of the social capital

infrastructure stock. This approach is based on the fact that the an- nual purchase of social capital/ infrastructure items is a function of

the item's replacement life and the historical rate at which demand

for those items has changed.

The estimation begins with the identity that the purchase from a social capital producing sector (the annual purchase is the value

falling in the appropriate cell in FD) in year t is equivalent to

purchases for replacement plus purchases for the growth occurring

between year t-1 and t.

The purchases for growth are equal to the stock of capital in year

t-1, SK-t—1, multiplied by the rate of growth, g, from t-1 to t.

Annual Purchase of _ Replacement Purchases.^ +

Social Capital-t; Growth Purchases-^—^ ^ -j, (18)

Growth Purchases

t-l,t (19)

Since we are interested in the present stock of social capital,

SK-^, (19) may be transformed by using the following equivalent for

the variable SK-^,— ^

:
34

SK^ = (1 + g) SK^_^ (20)

and

SK^_^ = SK^/(1 + g) (21)

Then Equation (19) may be rewritten as

Growth Purchases ^ - -z——- (22)

L J- 5 L ^

As has already been described in the section of the capital

matrix, the annual replacement rate of a durable good, the production

of which has been growing at its long term rate of g per year and

which has a replacement life of u years, may be represented as:

(1 . 8)" - 1

The annual replacement of social capital in year t is then equal

to the stock of capital in year t multiplied by the replacement rate

Replacement Purchases^ = SK^

(]^ + g)u - i ~ (SK^)(r) (24)

Substituting equations (22) and (24) into (18) we then get

(g)(SK ) Annual Purchase of Social Capital = 7-^ r— + (SK^)(r) (25)

(1 + g) t

Since we are interested in the value of capital stock in year t,

SK-i , and since the annual purchase of said capital is known (the

values are those occurring in the appropriate find demand cells),

we may solve for SK-^,

_ Annual Purchase of Social Capital) (1 + g) (26)

t r(l + g) + g The use of (26) allowed us to estimate the stocks of social

capital held by individuals, federal government, and state/local

governments

.

3.6 Specific Industry Cost Parameters

The methodology for describing the aggregate costs of corrosion to

the U.S. has already been described. Operating technology, capital

plant and equipment requirements, replacement lives, and stipulated

final demands are estimated for each sector of the model in the present environment and hypothesized environments in which no corrosion

and best corrosion control practices exist respectively. The values
35

are then used with the model to determine the aggregate costs of cor- rosion to the society (these costs, the sum of the values accumulated

in the social savings row, reflect that portion of GNP being consumed

as a result of corrosion)

.

It is important, however, that we carry the analysis further and

devise an indicator of how the total cost is allocated among the individual sectors of the economy. A methodology was developed which

provides four different sector cost parameters: the direct cost of

corrosion per unit of output; the total direct costs of corrosion per

sector; the direct and indirect cost of corrosion per \anit of output;

and the total direct and indirect cost of corrosion for each sector.*

3.6.1 Direct Cost of Corrosion Per Unit of Output

Each sector's direct per unit cost of corrosion is obtained by

comparing production requirements per unit of output between worlds I and II and I and III.

Production requirements per unit of output are defined as the sum

of the intermediate requirements of production (direct technical coefficients including value added) per unit of the producing sector's

output; capital requirements per unit of the producing sectors output

multiplied by the sector's growth rate; and the annual replacement of

capital per unit of production. The sum of these components represents

a total requirement necessary to produce a unit of a given sector's

output. The difference between the world I, II, and III sums then

provides an indication of the direct, per unit production costs of

corrosion for each sector. The process may be represented

mathematically by the following steps.

Step 1. Calculate the direct requirements per unit of production

T . = 1 + g. C . + p . - SS .; (w = 1,2,3) (27)

WJ WJ WJ w,j

where

gj is the annual rate of growth of sector j's output

SSyf^j is the social savings entry for sector j in world w

(SSj is zero for world I)

C^j is the total capital /output ratio for sector j in world w

p^j is the total annual replacement of capital required

to produce one unit of section j's output in world w.

In this formulation, l-SS^^j is equal to the sum of direct technical

coefficients plus value added, and is a more convenient way of obtaining that sum.

*The methodology described in this section is primarily the contribution of Edward B, Herman, of the Mitre Corporation.
315

Step 2. Calculate total direct per unit costs

Step 3. Calculate reducible direct per unit costs

The value SS^j is a specially devised account for keeping track

of various corrosion related expenses. It includes any reductions in

operating costs. Those reductions relate both to intermediate inputs

and value added. The input changes are determined through industry

surveys, the value added adjustments are estimated as is explained in

the following discussion.

5.6.1.1 Value-Added Adjustments. A number of adjustments to each

industry's value added coefficient may be necessary in moving from

World I to II and III . Those adjustments have all been grouped into a common term Z^j . The value Z^j is to be subtracted from sector j world

I value-added in order to obtain sector j. World W (W=£,3) value added. After the value added is subtracted from World I value added, it

is added to row sector, SS, world w, sector j. SS is the cumulation of

net corrosion savings in the column of direct technical coefficients.

Zy,j is defined as: Z.=A.+A.;(w=2,3)

WJ WJ WJ (28)

A . = (C^ . - C .)n; (w = 2,3) (29)

WJ Ij wj

The average prime interest rate in 1975 approximates n, perhaps

adjusted upwards to reflect the , fact that some firms cannot obtain

capital at the prime interest rate. A^j represents the reduction in

the cost of holding capital for the fact that the total capital re- quirement is reduced.

= ^^Ij - ^wj^ - (Plj - Pwj)' = 2,3). (30)

This represents the reduction in net accumulation of the depreciation account. D measures the gross use of capital and also the gross

acciimulat ion in the depreciation account, and p measures the value of

replacement accounted for in final demand. The difference D-p thus

represents the net accumulation in the depreciation account, and A

represents the reduction in that net accumulation in going from world

1 to world 2 and 3.

The annual replacement of capital used by sector j in world w,

p^j , is defined as p.=Er..c.. (31)

WJ ^ WIJ WIJ
37

where

r^ij is the world w annual replacement rate of capital

produced by sector i and used by sector j

c^ij is the world w capital produced by sector i and

required to produce a unit of sector j's output.

Since the average replacement rate RR, applicable to sector j's

total capital is equal to

RR . = p ./C .

where

C^j is the total capital /output ratio of sector j

and since, as shown in The Replacement Matrix section.

RR .= WJ

ii

where

(32:

(33)

g is the growth rate of sector j U is the world w average replacement life of capital used

by sector j

.

We may combine Equations (32) and (33) and solve for U^j , the

average replacement life of all capital used by sector j.

U . = In

WJ

"gC . + p

." WJ WJ

r [ln(l + g)] (34)

It is now possible to calculate D^^j , the straight life depreciation of capital owned by sector j

D . WJ

WJ U (35)

WJ

3.6.2 Total Direct Costs of Corrosion

Since the sector sums obtained in the preceding section represent

the direct per unit requirements, all that is necessary to obtain

total requirements for each sector is to multiply the respective sums by the sector's World I total output. World I total output is used as the multiplicand for each of the World I, II, and III sums of per unit

of production requirements in order to insure results which are con- sistent and comparable. As described in the previous section, the

differences between World I and II and World I and III are then

calculated. These differences reflect the total direct costs of

corrosion

.
38

3.6.3 Direct and Indirect per Unit Costs of Corrosion

The direct and indirect costs are obtained by calculating the

total direct and indirect requirements needed to produce the vectors

of direct requirements discussed in the preceding sections. The

calculation involves multiplying the vectors of direct requirements

associated with each sector by the appropriate World I, II, or III inverse.* The resulting vectors are then summed and for each sector the

World II sum is subtracted from the World I sum and the World III sum subtracted from the World I sum. Mathematically the procedure may be

represented by the following steps:

Step 1 . Form a column vector V^j of which the ith row is defined

as follows:

where

V..=a..+g. c..+r..c..;(w=l,2,3) (36)

WIJ WIJ j WIJ WIJ WIJ

V . . is the ith row of vector V .

,

WIJ WJ

a . . is the direct technical coefficient, world w, WIJ row i , column j

g_. is the growth rate for sector j

c . . is the capital supplied by sector i to sector i WIJ f re- J J per unit of j's output in world w

r^^ . is annual replacement by j of capital supplied by

i (capital per unit if j's output) in world w

Step 2: Form the matrix product

where

[I - A] ^ V . = X . (37)

W WJ WJ

[I - A] '' is the inverse matrix for world w

w

X . is the resulting output vector corresponding to

WJ

sector j

Step 3: Sum columns X^^j :

X . = Z X . . (38)

WJ ^ WIJ

where

X . . is the ith row of X , WIJ WJ

The inverse referred to here is the (I-A) inverse not the dynamic inverse, (I-A-BRBG)"'.
39

Step 4: Calculate total direct and indirect per unit cost

X. . - X

Step 5: Calculate reducible direct and indirect per unit cost

a. '\j X - X

3.6.4 Total Direct and Indirect Costs of Corrosion

The total direct and indirect costs are calculated in a way

analogous to the calculation of total direct costs. The outputs of

steps 4 and 5 are multiplied by the corresponding world I sector

output

.
40

4 DETERMINATION OF COSTS OF CORROSION

In this section the procedures and methodology for determination

of costs of corrosion are presented. First a general description of

the data gathering is presented. Secondly, procedures for determining

coefficients to account for the various elements of corrosion are presented. Thirdly, the procedure for determining avoidable cost of

corrosion are discussed, and fourthly all coefficient adjustments made

are discussed on an industry by industry basis.

4.1 Data Gathering Procedure

In order to determine the cost of corrosion, data were required in

four specific areas:

(1) Inputs required to produce a product

(2) Capital equipment required to produce a product

(3) Replacement lives of the capital equipment

(4) Final demands for the product.

These areas are described for each sector in a portion of the I/O

Model: the ''A'' matrix or flow matrix, the ''B'' matrix or capital/outnut matrix, the replacement lives matrix, and the final demand vector, respectively. More specifically, data were required to

guide adjustments of values in each of the above four parts of the

model of the economy as it presently exists (World I) for each of two

conditions: the economy if corrosion was not a factor (World II) and

the economy if best corrosion practice were universally applied (World

III).

Information required is identified by the principal questions

which were asked.

The flow matrix (''A'' matrix) is a matrix of coefficients which

describes the inputs necessary to produce a product. The dollars worth

of each row industry's product necessary to produce $1 worth of the

column industry's output is described by the coefficients. Principal

questions here were: What inputs are affected by corrosion?. How would

the inputs change if corrosion were not a factor?, and How would the

inputs change if ''best corrosion practice'' were used?

The capital /output ma.i^ ' ^ (''B'' matrix) describes the capital re- quired by an industry to produce its products. The coefficients

describe the dollars worth of capital stock which must be provided by

the row industry for the column industry to produce $1 worth of output

per year. Principal questions here were: Is there excess capacity

within the industry because of corrosion? and Is there any redundant

capital because of corrosion? and if so, how would the amounts of ex- cess capacity and/or redundant equipment be affected if ''best corrosion practice'' were used?
41

For replacement lives two principal questions were asked: How

would the replacement lives of capital produced or used by your industry change if corrosion were not a factor? and How would the

replacement lives of capital used or produced by your industry change

if ' 'best corrosion practice'' were used?

For final demand, the two principal questions were: Does corrosion

affect the final demand of your product? and How would final purchases

of your product change if 'best corrosion practice' were used? The

above questions were central to the entire data gathering operation.

Ultimately, all the information was reduced to coefficient and

range changes. In their final form. World II and World III flow coefficient adjustments were stated as percentages of the corresponding

World I coefficient. Capital /output coefficient adjustments were ex- pressed as a percentage excess capacity for an entire industry or as percentage of specific World I coefficient for redundant equipment adjustments. Replacement life adjustments were expressed as a change in

the range of years, i.e., 10 to 30 years for World I could be changed

to 20 to 30 years for World II. Final demand changes were expressed as percentage change of World I values.

In general, analysis was done on an industry by industry basis,

viewing each industry both as a user of goods and as a producer of

goods . Like sectors were grouped and an individual assigned the

responsibility of coordinating data gathering for the group. A flow

diagram for the procedure to collect and process cost of corrosion

data is presented in Figure 2. In the initial analysis stage, a general description of the industrial sector was determined from the

list of Standard Industrial Classifications (SIC) and a priority

assigned to the sector based on the effect of corrosion on the product

and the production process. A sector plan was then prepared identifying likely sources of information and contacts to be made. During

the preliminary stages, the World I matrices were reviewed to identify

coefficients significantly affected by corrosion. Data gathering was carried out through interviewing knowledgeable individuals associated

with the industry, reviewing the literature, and consulting technical

experts. Finally, data were reduced to the required model format by

review with BCL economists and necessary follow-up.

In most instances data were not readily available in the required

format of percentage changes. Directly applicable information would

indicate corrosion related costs as a percentage of the industries

total output (total sales) and the origins and relative magnitudes of

that cost, for example:

Corrosion Cost = 10% Total Sales

50% Corrosion Cost — Paints

30% Corrosion Cost — Stainless Steel

20% Corrosion Cost — Maintenance and Repair
42
43

With this information, adjustments could be made to the appropriate

sector inputs. When only a total cost was available, technical judgment based on experience from similar sectors or a knowledge of corrosion processes active in the industry was used to distribute total

cost among the appropriate sectors.

Several meetings were held throughout the study to provide con- tinuity and consistency of data processing. Information from individual sectors was reviewed and methods to handle various elements

of costs of corrosion were developed through interaction of corrosion

and economics experts. For consistency, all final coefficient adjustments were made by the same team of corrosion and economic experts

based on input from all data gatherers.

4.2 Procedure for Coefficient Determination

The working definition for cost of corrosion was; That increment of

total cost incurred by the Lzser because of corrosion. The test question was ''What portions of the elements of total cost are incurred

because corrosion exists?''. Portions of ten elements of cost were

identified as being affected by corrosion. These elements are presented in Table 1 with a summary of procedure of treatment in the

I/O Model. Each is discussed further in the remainder of this section.

Several items were excluded from the cost of corrosion in this

study. Loss of life and loss of goodwill were not considered because

they involved value judgment which cannot be defined rigorously in an economic sense. Catastrophic, one-time costs were not treated in the

study except as these costs influence the overall industry behavior.

Processes where oxidation of metals is favorable were not considered

costs of corrosion, e.g., pickling of hot-rolled steel. Environmental

deterioration of nonmetallics were not considered in the cost of cor- rosion, except where they are used as corrosion protection for metals,

e.g., paint on steel. Subsequent costs as a consequence of corrosion

failure or product loss, e.g., oil spill cleanup, fire damage, or air

pollution, were not treated in this study. Finally, advertising and

marketing costs for corrosion were not counted because no change in

costs was anticipated. If corrosion resistance were not used in

marketing, another attribute of the product would be chosen.

4.2.1 Replacement of Equipment or Buildings

The first element of cost of corrosion to be discussed is replacement of equipment or buildings. An example of this cost is the

premature replacement of a pressure vessel containing corrosive fluids
44

TABLE 1. ELEMENTS OF COST OF CORROSION AND METHOD OF TREATMENT

Element of Cost Example

Portion

for Corrosion Treatment in Model

1,0 Replacement of Equipment or Buildings

2.0 Loss of Product

3,0 Maintenance and Repair

4,0 Excess Capacity

5,0 Redundant Equ ipment

6.0 Corrosion Control

6 . 1 Inhibitors

6.2 Organic Coatings

6,3 Metallic Coatings

6

.

h Cached ic Pro tec t ion

7,0 Engineering, Research and Development Testing

8.0 Design

3,1 Material of Construction

for structural integritv

.2 Material of Construction for Product Purity

.3 Corrosion Allowance

.4 Special Processing for Corrosion Resistance

Corroded Pressure Vessel

Corrosion Leak Corrosion Contamination of

Product Corrosion During Storage

Repair Corroded Corrugated

Metal Roof Weld Overlay of Chemical Reaction Tank

Repair Pump Handling Corrosive

Slurry - Erosion and Corrosion

Scheduled Downtime for Plant

in Continuous Operation, e.g.. Petroleum Refinery Installation of Three Large

Fans, Where Two are Required During Operation

Injection of Oil Wells

Coal Tar on Exterior of Underground Pipeline

Paint on Wooden Furniture

Topcoat on Automobile -- Aesthetics and Corrosion

Zinc-Rich Paint on Automobile

Galvanized Steel Siding Chrome Plated Faucets Aesthetic and Corrosion CP. of Underground Pipelines

Corrosion Resistant Alloy Development

Materials Selection Corrosion Monitoring and Control

Stainless Steel for Corrosive Application

Stainless Steel for High Temperature Mechanical

Propert ies High Alloy to Prevent Corrosio

Products Contamination, e.g.. Drug Industry Thicker Wall for Corrosion

Stress Relief, Shot Peening,

Special Heat Treatment (e.g., Al Alloys) for Corrosion

All

All

All

All

Partial

Partial

All

All

None Partial

All

All Partial

All

Partial

All

Increase replacement life to next limiting

factor, e.g., wear, obsolescense

Excess capacity, reduce capital requirements

For producer plant: excess capacity, reduce

capital requirements

For user: adjust input of producing sector

For items supplied by construction sectors

(19,01 to 19,04), separate input of 19.05 into corrosion and noncorrosion portions

For equipment not supplied by construction,

adjust input of producing sector, e.g. , fabricated structural metal products Reduce capital require: ascribed to corrosion

nts by percent downtime

All

All

Reduce dollar amount of capital item required

by portion of redundancy ascribed to corrosion,

e.g., corrosion portion of 33 percent

Reduce input by amount of inhibitors

Separate 5.12 points and allied products into corrosion and noncorrosion

Separate coatings and platings into 8A07 corrosion and 8B07 noncorrosion

Adjust input of 20.05, other business and professional services into sector constructing

item (DTC)

Adjust input of user sector for input from sector supplying service, or user value added

for self- supplied service

For producer of item reduce input of SS and increase input of mild steel, reflecting

material substitution

No Change

For producer of item reduce input of alloy and increase input of mild steel

Reduce input of metal to producer of item Adjust inputs of producing sector for inputs required

9,0 INSURANCE

10.0 PARTS AND EQUIPMENT INVENTORY

Portion of Premiums on Policy All

to Protect Against Loss Because

of Corrosion

(To cover charge of writing and administering policy not protection amount)

Pumps Kept on Hand for Maintenance, Partial

e.g., Chemical Plant Inventory

Adjust input of insurance to using sector

Parts and equipment are accounted for

in replacement life and input of producer to user Cost of storage -- adjusted value added of

indust ry storing

Excluded F rom Cost of Cor ros ion

1.0 Loss of Life

2,0 Loss of Good Will

3.0 Catastrophic - One Time Costa

4.0 Processes Where Oxidation of Metal is Favorable, e.g.. Pickling Hot-Rolled Steel

5.0 Environmental Deterioration of Nonmetallica

6,0 Costs as Consequence of Corrosion Failure or Product Loss, e.g.. Oil Spill Clean-up,

Fire Damage, Air Pollution

7.U Advertising and Marketing for Corrosion
45

because of corrosion. Corrosion costs of this type were treated in the

I/O Model by adjusting the replacement life of the corroded capital to

the next limiting factor. It was recognized that capital is replaced

for reasons other than corrosion, e.g., wear and obsolescence, and adjustments were only made where corrosion was judged to result in

premature replacement

.

While the concept of premature failure because of corrosion is

clearly defined, it proved to be one of the most difficult elements to

treat quantitatively. Difficulties arose from the facts that there was

a paucity of data on replacement lives of capital equipment and that

each capital producing sector in the I/O Model produces a bundle of

goods. A consequence of the latter is that even with the detail

provided by separating the productive economy into 130 sectors, each

capital producing sector produces a number of products which in some

cases were quite diverse with respect to the effects of corrosion.

As a starting base, in World I, a range or single value for

replacement life in years was assigned to each capital producing sector based upon Internal Revenue Service data for depreciation rates

from Bulletin F. These replacement lives do not represent actual lives

in service.

The following procedure was used to estimate changes in replacement lives from the base range because of corrosion. First, industrial

sectors which produce goods affected by corrosion were identified.

Thus, several capital j-roducing sectors were eliminated from further

consideration, e.g., the industry producing wooden furniture. Secondly, the effect of corrosion on replacement life was estimated to be

minor, moderate, or major; Similarly, estimates were made for effect

of best corrosion practice on replacement life. Thirdly, the base

range for replacement lives (World I) was changed to reflect the

relative impact of corrosion (World II) and best corrosion practice

(World III)

.

The procedure allowed changes to be made in a consistent manner

with identification of relative magnitude of corrosion effects, when

no service life information was available. Judgments of magnitude of

corrosion effects were made based on general knowledge of types of

capital equipment, their materials of construction, and severity of

corrosion in service.

Capital producing sectors whose products were affected by corrosion could be divided roughly into two groups. Sectors in one group

produced capital which was exposed to similar service and environments

regardless of the sector in which it was used, e.g., automobiles. The

other group comprised sectors whose capital was exposed to widely

varying service conditions depending upon the sector in which it was

used, e.g., pumps. For the former, a general guideline could be es- tablished describing the extent to which useful lives were affected by

corrosion, and these guidelines could be applied to all column sectors
46

using the capital. The latter required a column by column analysis

where useful lives were based upon the severity of corrosion in the

colxamn industry.

A compilation of all sectors in which replacement life adjustments

were made is presented in Table 2. The capital producing sector is

identified by numer with the type of items affected by corrosion. The

extent of corrosion effect, the impact of best corrosion practice, and

typical replacement life adjustments are presented. For example. Sector 8.04 produces heating equipment (except electrical) which includes

boilers, furnaces, incinerators, and radiators. The effect of corrosion and impact of best corrosion practice on replacement lives of

this equipment was judged to be major. A typical base replacement life

range of 15 to 20 years in World I was adjusted to 25 to 30 years in

World II and to 20 to 25 years in World III. Adjustments listed in the

table are typical; changes for a particular column industry may be

different

.

The ranges of replacement lives and changes from World I and World

II or World III do not reflect actual service lives but rather

magnitudes of the effects of corrosion. Because of the lack of quantitative data for replacement lives and the effect of corrosion on replacement lives, estimates of costs associated with this element

have a greater degree of uncertainty than that of other elements.

4.2.2 Loss of Product

Examples of this cost of corrosion are loss of valuable product

through a corrosion leak, contamination by corrosion products of

solutions requiring high purity, and corrosion damage to products during storage or shipping. Where loss of product affected a producing

sector the cost was treated as lost capacity and all capital output

coefficients were reduced by the precentage to which corrosion

affected overall capacity. When a user industry was affected, these

costs were treated by reducing the input from the industry providing

the lost goods by the percentage of total input lost because of

corrosion

.

4.2.3 Maintenance and Repair

Examples of this element of the cost of corrosion are repair of

a corroded corrugated metal roof, weld overlay of a chemical reaction

tank, and the repair of a pump handling corrosive slurries. Only the

portion of costs attributable to corrosion were of interest and where

more than one effect was contributing to maintenance and repair, e.g.,

corrosion and wear, only a portion of the cost was ascribed to

corrosion

.
47

TABLE 1. REPLACEMENT LIFE ADJUSTMENTS

Capital Extent Replacement Life Range, Years Producing

Sector

Types of Items Affected

By Corrosion Corrosion

Affect

Best Practice

Impact Base* With No Corrosion

With Best Practice

8.02 Metal Barrels, Drums, and Pails Minor Minor 4-10 6-10 5-10

8.04 Heating, Equipment (except electric)

- Boilers, Furnaces Incinerators

Radiators

Major Major 15-20 25-30 20-25

8.05 Fabricated Structural Metal-Steel

Joist, Expansion Joints, Transmission Towers, Condensers,

Culvert, Pressure Vessels, Siding,

Bins

Major Major 3-25

15-30

20-25

20-35

12-25

20-30

8C07 General Hardware, Wire Products,

Springs, Valves, Pipe Fittings, Fabricated Pipe

Major Moderate 10-20

18-25

20-20

25-25

12-20

20-25

9.01 Engines and Turbines - Gas And Steam Turbines, Turbine Generator

Set Units, Diesel Engines, Interior Combustion, Excludes

Auto and Aircraft

Minor/ Moderate

Minor

17-25

20-25

25-25

25-25

20-25

22-25

9.02 General Industrial Machinery And Equipment - Mechanical Power Transmission, Process Furnaces

And Ovens, Pumps, Compressors,

Blowers, and Fans

Major Major 10-25 20-25 15-25

10.01 Farm Machinery Moderate Minor 5-15 12-15 8-15

10.02 Construction Machinery Minor Minor 2-30

2-20

6-30

6-20

4-30

4-20

10.03 Mining Machinery Minor Minor 8-50

8-25

15-50

12-25

10-50

10-25

10.04 Oil Field Machinery Moderate Minor 3-25 15-25 7-25

10.05 Material Handling Equipment Minor Minor 7-30 12-30 9-30

10.08 Special Industry Machinery Major Major 15-25 20-30 20-25

llAOl Automobiles Moderate Moderate 3-5 6-8 4-7

llBOl Trucks, Buses Moderate/ Minor

Minor 4-8 6-8 5-8

11.02 Aircraft, Aircraft Engines,

Auxilliary Equipment Minor Minor 5 5-5 —

11.03 Ship Building And Repair Major Moderate 20-33 30-33 25-33

11.04 Railroad Equipment Major Major 17-25 25-35 25-30

12.03 Industrial Controls, Transformers,

Bus Bars, Switch Gear Minor Minor 10-20

15-20 12-20

18-20 16-20

12.04 Electric Lamps and Fixtures, Conduits a.id Fittings

Minor Minor 15-25 17-25 16-25

13.01 Service Industry Machinery - Air Conditioning Units, Refrigeration Units, Dehumidif iers

Major Moderate 10-25 15-25 12-25

13.02 Household Appliances- Washing

Machines, Water Heaters, Refrigerators, Fans, Dishwashing

Machines

Moderate Minor 10-25 12-25

13.03 Radio, TV, and Communication

Equipment - Antenna, Radar

Minor Minor 25 26

14.01 Scientific Instruments, Measures, Minor Minor 15-30 17-30 And Controls

* Base replacement life range taken from allowable IRS depreciation lives report in B actual service lives. Similarly, changes reflect magnitude of corrosion effect and life changes.
48

In the I/O Model maintenance and repair costs are treated as inputs to the using industry from the industry supplying maintenance and

repair. For items supplied by the construction sectors (19.01 to

19.04), maintenance and repair is supplied by sector 19.05 Maintenance

and Repair Construction. For equipment not supplied by construction

sectors, the sector which produces the goods supplies the maintenance

and repair. For example, maintenance on buildings is supplied by sector 19.05 and maintenance on engines and turbines is supplied by sector 9.01.

To determine maintenance and repair construction, corrosion costs

sector 19.05 inputs to column industries were disaggregated into 19A05 — Corrosion Related Maintenance and Repair Construction and 19B05—Noncorrosion Related Maintenance and Repair Construction. This disaggregation was carried out in the World I

' 'A' ' matrix. For equipment

not supplied by construction, adjustments were made in the A matrix

for World II and World III to account for the percentage of input from

the producing sector ascribed to corrosion related maintenance and

repair. Methods used to estimate these costs are discussed below.

As a starting basis, estimates of total maintenance costs for

various industrial sectors were available from several sources. Compilations of maintenance costs described as percentage of total

operating costs or as percentage of total sales were found in both

technical and trade journals. For example, a report in Chemical Week,

July 9, 1975, reported maintenance cost for chemical process industries. The cost data were taken from Form 10-K that public cor- porations file annually with the Securities and Exchange Commission.

Maintenance costs for 34 major companies total 5.9 billion dollars in

1974 and were presented as total maintenance dollars spent, percent of

sales, percent of net income, and percent of fixed assets both at cost

and after depreciation. Another source, Aries and Newton in Chemical

Engineering Cost Estimation , McGraw Hill, 1955, reported that

maintenance costs for the chemical industries expressed as percent of

fixed capital costs range from 2 to 4 percent for simple light use industries up to 8 to 10 percent for complicated severe chemical usage.

In addition to sources of this type, individual companies when interviewed often had reliable estimates of total maintenance costs and

their distribution.

The principal needs for this study were to determine the portion

of total maintenance costs ascribed to corrosion and the distribution

of these corrosion costs among industrial sectors providing inputs.

Data for the portion of maint

were available for several industri

fice of Pipeline Safety statistics

percent of the leaks in gas transmi

rosion, and 46 percent of leaks in

rosion related. A survey of operate

enance costs because of corrosion

es . For example, compilation of Offer 1970 to 1975, indicated that 15

ssion pipelines were caused by cor- gas distribution systems were corrs of offshore platforms in the oil
49

and gas industry conducted by NACE ascribed 1 to 2 percent of installed platform costs for corrosion maintenance. Another study con- ducted by NACE ascribed 90 percent of well casing replacements to cor- rosion. Results reported in 1973 by DuPont on 4 years of failures

recorded by cause found 55.2 percent of piping and equipment failures

to be due to corrosion. Similar data of corrosion maintenance costs

were found in other sectors

.

Where corrosion costs were not considered to be significant, most

industries estimated corrosion related maintenance to be 1, 2, or 5

percent of total maintenance. In many cases these estimates were

''best guess with little or no substantiating evidence'', however, in

instances where data were available 1 to 5 percent of total maintenance for corrosion was substantiated as being quite reasonable as a lower bound.

4.2.3.1 Maintenance and Repair Construction. Sector 19.05 Maintenance and Repair Construction was disaggregated into corrosion and

non-corrosion activities. The procedure to estimate the portion of

19.05 which was corrosion related was to begin by ranking the 130 industrial sectors as to the impact of corrosion on their maintenance.

The rankings were determined by technical experts based upon a general

knowledge of the processes within each industrial sector and the ex- tent to which plant and equipment were affected by corrosion in those

processes. For example, a chemical processing plant handling highly

corrosive fluids has higher corrosion related maintenance costs than a small manufacturing facility. Similarly, plants and equipment exposed

to highly corrosive industrial or marine atmospheres require more cor- rosion related maintenance than those exposed to a more benign, rural

atmosphere

.

Next, estimates were made for the percentage corrosion in each

rank. These latter estimates were keyed to particular industries where

information was available. Based on information gathered from interviews with industrial experts and published information, the following

set of percentages for corrosion were estimated:

2A05 - Crude petroleum 30 percent

2B05 - Natural gas 30 percent

4.07 - Pulp and paper 50 percent

5.01 - Petroleum refining 40 percent

6.01 - Glass and glass Products 6 percent

6.04 - Other nonmetallic mineral products 6 percent

17.06 - Pipelines 20 percent

20.05 •- Other business and professional

services

10 percent
50

Using these estimates as a guide percentages were assigned to the

other industries.

Estimates for each group of industrial sectors are presented in

Table 3. The coefficient in the World I ''A'' matrix for input of

maintenance and repair construction (Sector 19.05) to the column industry was separated into corrosion and non-corrosion portions using

these estimates.

4 . 2 . 3 .£ Maintenance and Repair Equipment . Maintenemce and repair of

equipment for corrosion, which is handled in the I/O Model as inputs

from the sector which produces the equipment, was estimated by three

alternative methods: (1) Total maintenance supplied by the producing

sector was estimated and then the percentage of total maintenance for

corrosion was estimated, (2) An estimate was made of total percent

corrosion maintenance for a sector and then distributed among the appropriate sectors supplying maintenance, and (3) An estimate of dollar

value of corrosion maintenance for an entire sector or specific equipment in a sector was used to make coefficients adjustments. The alternatives are listed in their order of preference for this study, but

all were used depending upon data available.

For sectors which produced no corrodible products, inputs for

maintenance were readily identified, e.g., input from sector

9 . 02—General Industrial Machinery and Equipment to the chemical industry must be all for maintenance of equipment because machinery and

equipment are not found in products of the chemical industry. For sec- tors which produce corrodible products, inputs can be either for

maintenance or for inclusion in products produced, e.g., inputs of

Sector 9.02— General Industrial Machinery and Equipment to the ship

and boat building industry can either be for maintenance or part of

the ship produced.

When distribution of a total cost among appropriate sectors was required, the distribution was made based on knowledge of the corrosion maintenance required for specific types of equipment and the

dollar value of that type of equipment in the capital of the particular industry.

Information on percent corrosion related maintenance for items of

equipment in various industries was obtained through published data,

interviews with industrial experts responsible for corrosion

maintenance and control, and interviews with producers of equipment.

In many cases data from detailed studies and careful analysis were

available while in others estimates were made based on experience and

general knowledge without specific data. Table 4 presents some of the

data on corrosion related cost for maintenance of equipment. Estimates

of percentage for corrosion are listed for various types of equipment

in petroleum refineries, steel plants, and chemical process plants.

Similar data were gathered for other industries or specific equipment

in other industries.
51

TABLE 3. ESTIMATES FOR DISAGGREGATION OF SECTOR 19.05

MAINTENANCE AND REPAIR CONSTRUCTION INTO

19A05 CORROSION RELATED AND 19B05 NONCORROSION

RELATED

Sector Group

Percent Maintenance and

Repair Construction for Corrosion

1. 0 Agriculture, Forestry and

Fishery

5% Agriculture, 10% Fishery

2

.

0 Extraction of Mineral Resources 10% Mining, 30% Gas and Oil

3, 0 M^n 1 1 "f r 1 1 iT"P nf Fond T.eafhpr

and Textile Products

10% Food, 5% Textile

4. 0 Wood and Paper Products 50% Pulp and Paper, 5% Lumber and

Furniture

5. 0 Petroleum and Chemical Products 40% Petroleum Refining, 30% Industrail Chemicals, 20% Drugs, 10%

Tires

6. 0 Stone, Clay, and Glass Products 6% Glass, 5% Stone

7,.0 Primary Metals and Manufacturers 25% Ferrous, 20 to 40% Nonferrous

8. 0 Fabricated Metal Products 20% Coating and Plating, 5% all

other

9. 0 General Machinery and Components 5% All Sectors

10,,0 Specialized Machinery 10% Oil Field, 5% all other

11

.

, 0 Transportation Ec^uipment 20% Ships, 10 all other

12 . 0 5% All Sectors

13,. 0 Special Electrical Apparatus 5% All Sectors

14

,

. 0 Scientific and Measuring Devices 10% Photographic, 5% all others

15 . 0 Business Machines and Supplies 5% All Sectors

16 .0 Miscellaneous Manufacturers 5% All Sectors

17 .0 Transportation 15% Water, 10% Air, 5% Railroad

18 .0 Public Utilities 20% Gas, 10% all others

19,.0 Construction 10% All Sectors

20,.0 Trade and Business Services 5% Wholesale/Retail Trade

21 .0 Other Services 15% Personal Auto, 10% Hotels and

Lodging, 5% Printing

22 .0 Government Enterprises 10% Post Office
52

TABLE 4. ESTIMATES OF CORROSION PORTION (PERCENT) OF TOTAL MAINTENANCE COSTS FOR EQUIPMENT

Item

Crude Distillation

Unit of

CI) Refinery^ ' Steel

Industry ^^-^ Chemica

1

Plant(3)

Chemica

1

Plant(^)

Refinery

Complex(5)

Industrial Controls

Electrical

Pumps

1525

20

20

90

15

5

Reactors /Vessels

Tanks

Heat Exchangers

Furnaces

45

90

80

- 15

i

i

i

I 80

Piping 100 85

55.'27o 95

Valves

Mechanical Equipment 5

85

10

Piping

^ and Equipment

Failures

50

5

Engines and Turbines 15 i 2

General 40

(1) N. J. Landis, Corrosion, 479C, 1960.

(2) Estimate of Mechanical Foreman and Engineering Department of Integrated Steel Plant,

(3) Estimate of Head of Department with responsibility for materials selection and re- lated problems for variety of chemical plants,

(4) -J. A, Collins and M. L. Monack; Materials Protection and Performance; 12_, 11, 1973.

(5) Concensus of group responsible for maintenance and repair at a large refinery

comp lex

.
53

Where no data were available for a particular industry estimates

were made based on a general knowledge of the severity of corrosion in

the industry and experience from sectors with similar service where

data were available.

This procedure which comprised gathering specific data in selected

industries and generalizing the estimates to industries where no other

data were available is illustrated in two examples presented below.

First, treatment of maintenance costs in the ship building industry provide an example of the procedure for estimating total costs

of corrosion and distributing it among the appropriate sectors. In

this industry data were available from a major ship building yard

which indicated that total maintenance was 3 percent of sales.

Further, 10 percent of total plant and equipment maintenance was

ascribed to corrosion. Additional information was provided which broke

down total maintenance by types of equipment maintained. Thus all the

information necessary to estimate and distribute costs was available.

In the second example, only a total dollar estimate for corrosion

maintenance was available. For Sector 21.05—Auto Repair and Services,

$5.1 Billion per year was ascribed to corrosion maintenance. When com- pared to the total output of Sector 21.05, this dollar value indicated that approximately 25 percent of the sector activities were cor- rosion related. This factor was applied to estimate corrosion related

maintenance from Sector 21.05 in all industries.

4.2.4 Excess Capacity

Excess capacity was considered as a cost of corrosion only in

those instances where plants and equipment were run on a continuous

basis with scheduled downtime. Lost production time on facilities

which were not scheduled for continuous service was not considered as

a cost of corrosion. Sector 5 . 01—Petroleum Refining provides an example where a portion of excess capacity was ascribed to corrosion.

Petroleum refineries are designed and operated at 95 percent of plant

capacity with 5 percent scheduled downtime. Analysis of the re- quirements for and operations carried out during scheduled downtime

indicated that downtime could be reduced approximately 50 percent were

corrosion not a factor. Consequently, an excess capacity of 2 percent

in the Petroleum Refinery Industry was ascribed to corrosion, and

capital coefficients for the entire industry were reduced by this factor in World II. In other words, if corrosion were not a factor the

entire capital in place in petroleum refineries could be reduced by 2

percent

.
54

4.2.5 Redundant Equipment

When processes are designed to rxan continuously, it is standard

design practice to install redundant equipment on large ancillary

items which require regular maintenance. This practice allows the

processing to continue while one of the redundant items is out of ser- vice for maintenance. Three large fans, motors, or pumps are typically

installed in a plant where two are required for continual operation.

In many instances a portion of the redundant equipment can be

ascribed to corrosion. These costs were treated in the I/O Model by

first, identifying redundant equipment in an industry; secondly, es- timating the percentage of capital of that type in the industry; and

thirdly, estimating the percentage of redundancy which could be'

ascribed to corrosion. This procedure supplied the necessary information for adjustment of the capital /output coefficient for the row industry producing the capital in the column industry using the redundant capital.

4.2.6 Corrosion Control

4.2.6.1. Corrosion Inhibitors and Water Treatment . Corrosion inhibitors are used extensively for the control of corrosion in many industries. Identification of industries using inhibitors, the major

applications of ihnibitors, and some cost information were found in

Corrosion Inhibitors published by National Association Corrosion

Engineers. Cost associated with the purchase of inhibitors were

treated in this study by making adjustments to the inputs from

Chemical Sectors 5.03 and 5.06 to the industry using inhibitors.

In many cases, where inhibitors were a large portion of the

chemicals purchased by an industry a direct estimate could be made of

the percentage of total chemical purchases accounted for by corrosion

inhibitors. For example, technical experts in their respective industries estimated the percentage of corrosion inhibitor purchases of

total chemical purchases were

Inputs from sections 5.03 and 5.06 were adjusted by these percentages.

40 percent in Sector 2A05

20 percent in Sector 2B05

40 percent in Sector 5.01

50 percent in Sector 17.06

Crude Petroleum Production

Natural Gas Production

Petroleum Refining

Pipeline

In other cases a direct estimate was not available, or corrosion

inhibitors made up only a small portion of the total purchases of
66

chemicals. Then, direct estimate of the purchases of corrosion inhibitors was made. Basis for these estimates was an estimated value of

total water treatment purchases in 1975 and a breakdown of the total

by general industrial classifications. These dollar estimates were

distributed among the appropriate industrial sectors. For example, it

was estimated that the primary metals industries purchased $80M of

corrosion inhibitors and water treatment, and that 60 percent of these

purchases were by the ferrous metals industries. Thus, $48M was distributed among the five ferrous metals sectors, 7A01 through 7E01

.

Distribution was made based upon the ratio of the sector's total output. This procedure was used to estimate the cost of inhibitors in

Sectors 4.07 - Pulp and Paper, 3X01 - Food and Kindred Products, 3X04 — Fabricated Textile Products, all chemical sectors, and all primary

metal sectors.

4.2.6.2. Organic and Metallic Coatings and Platings. Corrosion

costs associated with protective coatings were treated by disaggregating Sector 5.12 — Paints and Allied Products into Sector 5A12 — corrosion related and 5B12 — non-corrosion related and disaggregating Sector 8.07 — Metallic Coatings and Platings into Sector

8A07 — corrosion related and 8B07 — non-corrosion related. These disaggregations were carried out in the World I flow matrix.

A distinction is made in the treatment of coatings in the I/O

Model for coatings which are applied to the product of an industry and

for coatings used for maintenance within the industry. Coatings

applied to a product are treated as direct input to the sector

manufacturing the product, while maintenance coatings are supplied by

the sector that produced the capital item being maintained. The latter

are treated as an input from the capital producing sector to the user

column.

The treatment of coatings in the auto industry illustrates the

distinction. The auto industry applies organic coatings to its

product, automobiles, and it was estimated that 50 percent of the

organic coatings applied to automobiles was for corrosion protection.

In the flow matrix the column industry. Sector llAOl—Automobiles , has

an input from the row industry, Sector 5A12—Paints and Allied

Products. Equal inputs from both disaggregated sectors, 5A12—Corrosion

and 5B12—Non-corrosion, constitute the entire purchases of paints and

allied products by the auto industry.

Maintenance painting is treated as follows. The buildings of an auto plant are painted (along with other maintenance) by Sector

19 . 05—Maintenance axid Repair Construction. Similarly, machinery in the

auto plant is painted (and otherwise maintained) by the producing industry, e.g., 9.02—General Industrial Machinery. The cost of painting

is included in the input from the respective capital producing sector.
56

Determination of the portion of coatings to be ascribed to corrosion is straightforward in many instances, e.g., external coating on buried pipelines is all for corrosion protection, and painting of

wooden furniture is all non-corrosion related. Other instances were

encountered where ascribing portions for corrosion and non-corrosion

was not as straightforward, e.g., the painting of automobiles where

visible sheet metal is primed and top coated both for corrosion

protection and aesthetics. In the latter case judgment was required

to disaggregate painting costs.

The procedure used to disaggregate coatings into corrosion and

non-corrosion was to have technical experts knowledgeable in coatings

and corrosion review the capital producing sectors which had inputs

from either organic or metallic coating and plating sectors. Based on examination of Standard Industrial Classifications for the capital

producing sectors a determination was made of the products being

coated. From a knowledge of (1) the products being coated, (SIC information), (2) types of coatings being applied (combined experience of

experts), and (3) need for corrosion protection of the products (combined experience of experts) a judgment of the percentage of coating

to be ascribed to corrosion was made. Corroborative statistics were

used where available, for example, ''The Compilation of Industrial or Chemical Coatings by End Use in 1974''. The percentage of coating

ascribed to corrosion protection used for the disaggregation of

organic coatings and metallic coatings are listed in Table 5.

4.2.6.3. Cathodic Protection. Cathodic protection services,

materials, and equipment were treated as part of Sector 20.05—Other

Business and Professional Services. Magnesium, zinc, aluminum, other

materials, and equipment required for cathodic protection were treated

as inputs to Sector 20.05, and in turn Sector 20.05 provided cathodic

protection service to industries constructing or producing the item to

be protected. For example, it was estimated that 6500 tons of zinc are used annually for sacrificial anodes in cathodic protection systems.

This zinc appears as an input to Sector 20.05. Cathodic protection is

applied by the ship building industry to protect ships hulls and internal tank surfaces from corrosion. Cost of this cathodic protection

are treated as inputs from Sector 20.05 to the ship building industries Sector 11.03. Cost for cathodic protection of municipal water

storage tanks are treated as an input from Sector 20.05 to the industry constructing water storage tanks, namely Sector 19.03—New Construction, Public Utilities.

With the above procedure nearly all cathodic protection is treated

in the construction sectors. Public Utilities are the largest users of

cathodic protection with other users including transportation sectors,

gas and oil, chemical process industries, and ships. To treat these

costs, an estimate of total sales (output) of the cathodic protection

industry was made, and this amount was distributed among the construction sectors. Distribution was made based upon the proportion of
57

oooo^ooooooooooSoooooooooooooo § S 3
58

capital produced by each construction sector for the sectors using

cathodic protection, e.g., all chemical plant production is done by

Sector 19.02, and greater than 95 percent of construction of public

utilities is done by Sector 19.03. Following thi3 procedure an es- timated $145 M was distributed:

20 percent to

75 percent to

5 percent to

Sector 19.02

Sector 19.03

Sector 19.04.

In cases such as ship building, a direct estimate of the percentage of constructed costs for cathodic protection could be made.

Published data reported that sacrificial cathodic protection on a $20

Million tanker cost approximately $10,000 while impressed current

cathodic protection systems cost approximately $50,000. Thus, cathodic

protection cost represents from 0.05 percent to 0.25 percent of tanker

cost. The lower number in this i^ange was chosen as all ships and boats

do not have cathodic protection installed. On this basis, cathodic

protection costs to the ship building industry were estimated to be

0.05 percent of the total output of the Ship and Boat Building Industry, and input from Sector 20.05 was adjusted accordingly.

4.3.7 Research and Development, Engineering

and Other Technical Support

Corrosion costs are incurred for technical support to improve cor- rosion resistance of products and to carry out corrosion maintenance

and control programs. The corrosion related technical support can be

in the form of research and development, engineering, testing, inspection, consulting, and other services. These corrosion costs are treated in the I/O Model by adjustments of inputs to the sector

receiving the technical support from Sector 20 . 05—Other Business and

Professional Services or Row 25 . 00—Value Added.

Estimates were available for research and development costs by

various industries expressed as percent of total sales {Business Week,

''Where Private Industry Puts Its Research Money'', June 28, 1976).

These data were used to estimate Research and Development expenditures

for all industrial sectors in the I/O Model. Next, the percentage of

Research and Development cost for corrosion was estimated. These es- timates are listed in Table 6; only sectors where a portion of

Research and Development cost was ascribed to corrosion are listed. A

multiplier was assigned to each industry to account for other

technical support for corrosion in addition to Research and

Development
59

TABLE 6. CORROSION RELATED TECHNICAL SUPPORT COSTS RESEARCH

AND DEVELOPMENT, ENGINEERING, AND TESTING

Percent Sales Sector f^"^ RfiiD Percent R&D

for Corrosion

other Technical

Support CoefficientAdjustment

2.01 Iron and Ferroalloys Ores 0.012 0.1 2 0.000024

2.02 Copper Ores 0.012 0 . 000024

2 .03 Nonferrous Ores, Except Copper 0.012 0 1 2 0 . 000024

2 AO 5 Crude Petroleum 0 . 004 5 2 0.0004

2B05 Natural Gas 0.004 5 2 0.0004

4.07 Pulp , Paper and Paper Products

,

Except Containers

0.008 0.1 2 0.000016

Petroleum Refining and Related Products 0.013 u . uuu jy

5.03 Industrial Inorganic and Organic Chemicals

0.026 1 3 0.00078

Pert ilizers 0.026 1 3 0.00078

5.05 Agricultural Chemicals , Except

P'ert ilizers 0.026 1 3 0.00078

5.06 Miscellaneous Chemical Products 0.026 1 3 0.00078

5A12 Paints and Allied Products, Corr 0.012 50 2 0.012

7A01 Mild Steel - Carbon Steel 0.006 10 2 0.0012

7B01 Low Alloy Steel 0.006 10 2 0.0012

Alloy Steel 0.006 0.0012

7D01 Stainless Steel 0.006 60 2 0 .0072

7E01 Cone 0.006 2 0 . 00012

7 .02 Primary Copper 0.012 20 2 0 . 0048

7 .03 Primary Aluminum 0.012 2 0.0024

NI, Ni Alloys, CO 0.012 20 0 . 0048

7 BOA Zinc 0.012 1 2 0.00024

7C04 Magnesium 0.012 0.1 2 0.000024

7D0A Lead 0.012 0.1 2 0.000024

7E0A TI, TA. ZR 0.012 0.1 2 0.000024

7F04 AU, AG, PT, P*l 0.012 0.1 2 0.000024

7G04 All Others 0.012 0.1 2 0.000024

8.0i Metal Cans O.OU 10 1 O.OOll Metal Barrels, Drums and Pails 0.011 0 . 0011 Metal Sanitary Ware and Piumbing Fittings

0.012

8.04 Nonelectric Heating Equipment 0.012 0.1 3 0.000036

8.05 Fabricated Structural Metal Produc

Produc ts 0.012 0.1 3 0.000036

SAO 7 Coating and Plating, Corr 50 2 0.026

9.01 Engines and Turbines 0 017 1 3 0.00051

9.02

and Equipment

1 3 0.00051

9 .03 0.017 i 2 0.000034

10.01 Farm Machinery 0.024 0.1 3 0.000072

10.02 Construction Machinery 0.024 0.1 3 0 . 000072

10.03 Mining Machinery 0.017 0.1 3 0.000051

10.04 Oil Field Machinery 0.017 0.1 3 0.000051

10.08 Special Industry Machinery 0.024 0.5 3 0.00036 Automobiles 0.027 0 .000054 UBOl Trucks, Buses, etc. 0.027 0.1 2 0.000054

11.02 Aircraft and Parts 0.032 1 2 0.00064

11.03 Ship and Boat Bui Iding and Repair0.01 0.1 2 0.00002

11.04 Locomotives and Rail and 0.01 0 .

1

2 0 . 00002

11 . 05 Mltlrcyllls Bicycles Trailer

Coaches, etc. 0.01 0 .

1

0 . 00002

13.02 Household Appliances 0.012 0.1 2 0.000024

14.02 Medical, Surgical, Dental Instruments and Supplies0.054 0.1 1 0.000054

15.01 Computing and Related Machines 0.056 0.1 2 0.00011

16.01 Ordnance and Accessories 0.02 -0.1 3 0.00006

17.01 Railroads and Related Services 0.003 0.1 2 0.000006

17.02 Local and Other Highway Passenger

Transport

0.003 0.1 2 0.000006

17.03 Motor Freight 0.003 0.1 2 0.000006

17.04 Water Transportation 0.003 0.1 2 0.000006

17.05 Air Transport 0.003 0.1 2 0.000006

17.06 Pipelines 0.003 0.1 2 0.000006

17.07 Transportation Services 0.003 0.1 2 o.ooono6

18.01 TelecomiDunicacion 0.019 1 2 0.00038

18.02 Electric Power 0.003 0.1 2 0.000006

18.03 Gas 0.003 0.1 2 0.000006

(1) Business Week, "Where Private Industry Puts Its Research Money", June 28, 1976.
60

The multiplication product of these three estimates yielded the

final net coefficient adjustment to be made for the sector to account

for corrosion related technical support. For example. Sector 7 . OSPrimary Copper was estimated to spend 1.2 percent of every sales

dollar for research and development of which 20 percent was ascribed

to corrosion. A multiplier of 2 was assigned to this sector meaning

that it was estimated that research and development cost accounted for

50 percent of the technical support for corrosion. The net coefficient

adjustment resulting from these estimates was 0.0048. Therefore, the

overall estimate was that for every sales dollar of the Primary Copper

industry 0.0048 dollars are used for corrosion technical support. This

coefficient multiplied by the total output of the sector provides the

total cost of corrosion technical support.

4.2.8 Design

Four aspects are considered in this element of corrosion: material

of construction for corrosion resistance, material of construction for

product purity, corrosion allowance, and special processing for corrosion resistance. Selecting a more corrosion resistant metal is a basic

method of corrosion control. The incremental cost of corrosion resistant metal over that of the metal which would be chosen were corrosion

not a factor, typically mild steel, is a cost of corrosion.

These costs were treated in the sector of the producer of the item

by shifting dollar purchases from the input of corrosion resistant

metal to the input of the lower priced alternative metal. For example,

consider a chemical process industry which uses stainless steel

pressure vessels when mild steel pressure vessels would be chosen if

corrosion were not a factor. The cost of corrosion is treated as if

the Fabricated Structural Metal Sector, producers of pressure vessels,

purchased mild steel to construct a vessel and not stainless steel.

Thus, dollar purchases by the Fabricated Structural Metal Sector of

stainless steel are reduced, purchases of mild steel are increased,

and the cost differential is transferred to the social savings row in

the flow matrix.

A dollar per pound conversion ratio was used to make all metal

shifts for corrosion purposes, i.e., the dollars worth of stainless

steel no longer purchased was converted to pounds of stainless steel

and an equal weight of mild steel was purchased. The dollar difference

between the two purchases was treated as the cost of corrosion. These

are simplifing assumptions used for this study and for specific items

should not be used in practice. The price ratio used for metal conversions were mild steel 1.00, low alloy steel 1.35, alloy steel 2.50,

stainless steel 7.50, copper 8.65, aluminum 5.36, and nickel and

nickel alloys 19.00.
61

Consequences of this conversion procedure are that differences in

design thicknesses using different metals, differences in densities of

different metals, and differences in fabrication costs are not

considered

.

Mild steel was considered to be the basic material of construction

with corrosion resistant materials selected in place of mild steel

where required. For sectors producing metallic items, metal inputs

were examined, and conversions from purchase of corrosion resistant

metals to mild steel were made where warranted. The portion of metal

inputs ascribed to corrosion was estimated based upon analysis of the

products manufactured by a sector and the service in which products

would be used. Estimates were based on experience, information from

materials producers, and information from equipment manufacturers.

It is standard design practice to incorporate a corrosion

allowance for many applications. These costs were treated in the I/O

Model by a reduction of metal input to the sector producing the item

to account for metal used for corrosion allowance. For example, in the

ship building industry it was estimated that 20 percent of steel usage

was for specified corrosion allowance of steel plate and structual

members. Thus, if corrosion were not a factor, steel purchases by the

ship building industry would be reduced by 20 percent.

Special processing of metal and alloys is often required to

provide corrosion resistance. Included under the heading of special

processing are stress relief treatments, shot peening, and special

heat treatment such as used for aluminum alloys. Incremental costs for

special processing were considered to be a cost of corrosion . Treatment in the I/O Model was to reduce inputs to the metal producing sec- tor for special processing and reduce capital coefficients of the

metal producing sector to account for equipment required for special

processing

.

4.2.9 Insurance

Portions of insurance premiums to protect against loss because of

corrosion are a legitimate cost of corrosion. The costs of corrosion

are those to cover the expenses of writing and administering the

policy and do not include those charges which go to covering claims.

These costs are treated in the I/O Model by reducing the input of the

insurance sector to the purchasing sector.

4.2.10 Parts and Equipment Inventory

The cost of maintaining an inventory of spare parts and equipment

for corrosion is considered a cost of corrosion. Only the cost of

handling and storing the items are considered here, because costs of
62

the inventory itself are handled by replacement and flow matrix coefficients. Costs for maintaining the inventory are treated by

transferring the cost from the industry's value added to social

savings

.

4.3 Avoidable Costs of Corrosion—Best Corrosion Control Practice

Determination of the avoidable and unavoidable portions of the

total cost of corrosion is of primary interest in evaluating the present state of circumstances and in developing programs to reduce corrosion cost. Avoidable costs are those amenable to reduction by presently available corrosion prevention and control technology. In this context, the definition of best corrosion-control practice does not imply

a gold-plated world, but rather a world in which resources are used

economically and efficiently to control corrosion.

The division of total corrosion costs into avoidable and un- avoidable makes an important distinction and can provide guidance in

the assignment of priorities to educational or research and development efforts. Avoidable costs are amenable to reduction by present

technology and are impacted upon by increased technology transfer, increased awareness, and incentives to save. For example, high

maintenance costs and early replacement of a steel marine structure

because of inadequate cathodic protection is an avoidable cost of cor- rosion. Unavoidable costs are not amenable to present technology and

require technological advance for reductions to be realized. The costs

for a sound, maintenance painting program to protect structures from

atmospheric corrosion are presently unavoidable. Development of improved coating systems is a potential means for savings to be

realized.

Determination of avoidable cost of corrosion was one of the more

difficult areas of this study for two reasons. First, a definition of

best practice readily measurable in economic terms was difficult to

develop. Secondly, data for avoidable costs of corrosion were very

limited. Except in isolated instances standards of best practice do

not exist. A decision on which is the '' best '' alternative is complex

and can vary widely within an industry or even within a company.

In addition to the many technical, material factors which impact

on best corrosion practice, a number of economic parameters must also

be considered as described in NACE publication RP-02-72, ' 'Direct

Calculation of Economic Appraisals of Corrosion Control Measures''.

The economic parameters include return on investment, discounted cash

flow, present worth of money, and future worth of money.
63

4.3.1 Approach Adopted for Avoidable Costs

Determination of avoidable cost of corrosion was achieved by the

construction of a third set of all components in the I/O Model (World

III). The treatment and general procedures were the same as those for

construct ing, World II, where corrosion was not a factor. Moreover, adjustments made to construct World II provided a basis for estimating

World III adjustments.

Avoidable costs of corrosion were considered to be significant in

only two areas: (1) Maintenance and repair and (£) Replacement. Other

changes in inputs for World II were considered to be best practice.

Therefore no changes from World I values were made in coatings,

platings, cathodic protection, corrosion resistant metals, etc. Also,

adjustment to capital/output coefficients in World II were made to ac- count for redundant equipment and excess capacity. These adjustments

were considered to be best practice and no changes were made for World

III .

It should be recognized that the above are simplifying assumptions

and changes in purchases such as paints and metallic coatings are likely to be affected by use of best practice. However, for a first

order approximation the assumptions are valid. Costs of corrosion con- trol materials and labor in many cases do not increase, but best practice is achieved at no additional costs through improved procedures

and implementation.

4.3.2 Treatment of Avoidable Costs in I/O Model

Adjustments for World III from World I values were confined

to two areas: the A matrix to account for corrosion related

maintenance and the replacement life matrix to account for reduction

in replacement lives because of avoidable corrosion.

Coefficient adjustments in the A matrix to account for total cor- rosion-related maintenance costs were made in World II. To estimate

avoidable corrosion maintenance costs, a best practice rating was determined for each industrial sector, £- percentage avoidable costs

factor assigned to each rating, and the resulting industry-specific

rating applied to corrosion maintenance costs of that industry.

Best practice ratings were determined by a qualitative comparison

of industrial sectors as to their incentive or pressure to use best

corrosion practice and their responsiveness or capacity to use best

corrosion practice. Each industrial sector was rated high, medium, or low in both categories. A best practice rating was determined by the

average of ranking in the two categories by assigning 1.0 to low

rating, 2.0 to moderate rating, and 3.0 to high rating. For example.

Sector 1 . 01—Livestock and Livestock Products was given rankings of

moderate incentive and low responsiveness for a best practice rating

of 1.5.
64

Qualitative ratings for incentive and responsiveness were based on the following considerations. Factors considered in the rating of industries for incentive or pressure to use best practice included

(1) Relationship of profits to corrosion cost— industries whose

profits are affected directly by corrosion costs or who in- cur large magnitude corrosion costs have a high incentive

to use best practice,

(2) Quality of product,

(3) Awareness of corrosion,

(4) Regulation,

(5) Safety,

(6) Personal responsibility, and

(7) Consequences of failure.

Factors considered in rating for responsiveness included

(1) Size of companies,

(2) Level of technology,

(3) Availability of corrosion expertise,

(4) Time frame over which cost are incurred,

(5) Complexity of the problem and

(6) Administrative system through which practices are imIn both categories, any one of the considerations could be

overriding in assignment of a rating. For example, industries handling

toxic gases have a high incentive to prevent corrosion related leaks

regardless of other consideration. Dominant considerations in incentive ratings were effect of corrosion on profits and accountability

for corrosion failures. Whereas, dominant consideration in responsiveness rating were size of the company and availability of corrosion

expertise. A complete list of best practice ratings for all industrial

sectors is presented in Table 7.

Percentage avoidable corrosion related maintenance costs cor- responding to best practice ratings were:

These arbitrary ratings are considered to be realistic based upon

maintenance cost savings achieved in specific instances on going to

plemented

.

3

2

2

11

.0-i

.5-:

.0-;

.5-:

.0-'

5 percent avoidable

15 percent avoidable

•25 percent avoidable

35 percent avoidable

45 percent avoidable
65

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improved corrosion-control procedures and estimates of technical ex- perts. The upper limit of 45 percent avoidable costs is probably con- servative. A 5 percent avoidable costs figure was ascribed to those

industries considered to be using best practice because even in these

industries best practice is not universally applied.

The procedure for adjustment of replacement lives was discussed

previously in the section on replacement of equipment or buildings.

The approach was to identify all sectors producing goods whose

replacement lives were affected by corrosion, and to make adjustments

in the replacement life range from World I to account for the impact

of best corrosion practice.

4.4 Description of Industry by Industry Coefficient Adjustments

In this section, adjustments made in Input/Output Model coefficients are described for cause for adjustments identified and each

segment of the economy.

4.4.1 Agriculture, Forestry, and Fishery

Four sectors are included in this group: 1 . 01—Livestock and

Livestock Products, 1.02—Field and Orchard Crops, 1 . 03—Forestry and

Fishery Products, and 1 . 04— Services to Agriculture, Forestry, and

Fishery. No items are produced which corrode and corrosion is not

generally recognized as a significant problem in the industry. The industries are quite diverse and depend primarily upon equipment and

structure suppliers for the introduction of new corrosion prevention

and control procedures. Major forms of corrosion encountered are atmospheric corrosion throughout the industries and marine corrosion in

the fishery industry.

No specific data were available for these industries and estimates

for coefficient adjustments in the I/O Model were based on data from

other industries and general knowledge of the forms of corrosion and

corrosion severity within these industries. Inputs to the industries

were adjusted for corrosion maintenance. Capital coefficients were un- changed as no evidence was found for either excess capacity or redundant equipment. Replacement lives of several types of equipment are affected by corrosion and adjustments were made accordingly.

All industries in this sector were given a best practice rating of

1.5 based on a moderate incentive and low responsiveness.
68

4.4.2 Extraction of Mineral Resources

The ten sectors included here were divided into a Solid Minerals

Group and Gas and Oil. Eight sectors are included in the first group:

3.01— Iron and Ferro-Alloys , Ores, 2.02—Copper Ores, 2 . 03—Nonferrous

Ores, Execpt Copper, 2A04—Underground Coal Mining, 2B04—Strip Coal

Mining, 2C04—Other Coal Mining, 2.06— Stone and Clays, and

2 . 07—Chemical and Fertilizer Minerals. Two sectors, 2A05—Crude

Petroleum and 2B05—Natural Gas comprise the second group.

4.4.2.1 Solid Minerals . No items which corrode are produced in

these sectors and corrosion is not generally recognized as a significant problem. Establishments are engaged primarily in mining, beneficiating, milling, and otherwise preparing ores, coal, stone and

clay, and chemical and fertilizer minerals. Many of the establishments

are quite diversified and primarily depend upon equipment suppliers

and contractors to provide corrosion protection for plant and

equipment

Corrosion problems are encountered in the benef iciat ion and

preparation of ores where aqueous processes are used. Acidic or brine

solutions encountered in these areas can be extremely corrosive. In

addition to corrosive aqueous solutions, atmospheric corrosion affects

maintenance and replacement lives of plant and equipment. Corrosionrelated maintenance costs are higher in iron and ferroalloy ores,

non-ferrous ores, chemical and fertilizer minerals, and underground

coal mining than in strip and other coal mining sectors and the stone

and clay sector because of the increased contact with aqueous

solutions in the prior sectors.

No specific data were available for maintenance costs in these industries and estimates for coefficient adjustments in the I/O Model

were based on data from other industries and general knowledge of the

forms of corrosion and corrosion severity in these industries. Inputs

to the industry were adjusted for corrosion maintenance in all sectors

and for corrosion-related grinding rod and ball replacements in the ore and chemical mineral sectors. Based on published information, 30

percent of the steel ball and rod usage in iron ore processing can be

attributed to corrosion (Reference: A. W. Lui and G. R. Hoey, Materials

Performance, 15, 9, September, 1976. This corrosion cost can be

eliminated by the use of inorganic inhibitors. This cost was generalized to other sectors with similar usage and adjustment made to input

of steel ball and rod. Capital coefficients were unchanged as no evidence was found for either excess capacity or redundant equipment.

Replacement lives of several types of equipment are affected by corrosion and adjustments were made accordingly.

All industries in this group were judged to have moderate incentive for best practice and low responsiveness except for 2 . 07—Chemical

and Fertilizer Minerals, which was judged to be moderate in both

categories. Best practice ratings were 1.5 for all industries except

2.07 which had a rating of 2.0.
69

4.4.2.2 Gas and Oil . Sectors 2A05-Crude Petroleum and 2B05-Natural

Gas include establishments primarily engaged in operating oil and gas

field properties. Such activities include exploration for petroleum

and natural gas; drilling, completing, and equipping wells; operations

of separators, emulsion breakers, desilting equipment; and all other

activities incident to making oil and gas marketable up to the point

of shipment from the producing property. Sector 2A05 also includes

produot^ion of oil through the mining and extraction of oil from oil

shale and oil sands. No items which corrode are produced by the industries; however, costs for corrosion maintenance and control are substantial. The industries are aware of corrosion costs and considerable

effort is expended to control corrosion. Primary materials of con- struction are mild steel, carbon steel, and low alloy steel. Protective coatings, inhibitors, and cathodic protection are used to control

corrosion

.

Corrosion costs in these industries are expected to rise

dramatically for two reasons. First, an increased proportion of

production will be coming from offshore sites where corrosion control

and corrosion maintenance costs increase substantially over those for

onshore production. Secondly, more gas and oil are being produced from

fields which contain high amounts of corrosives, principally hydrogen

sulfide, carbon dioxide, and brines. Both of these factors lead to an increased usage of higher quality coatings, cathodic protection, inhibitors, and more corrosion resistant alloys.

Estimates for costs of corrosion were developed from interviews

with industrial experts, results of surveys and studies by the industry, and interviews with suppliers of corrosion related materials

to the gas and oil industry. Considerable attention has been paid to

corrosion costs in these industries and several detailed studies of

costs were available in the open literature. Prime sources were the

results of a special study by the editorial staff of Petroleum Engineer

International on down-hole equipment repairs and replacement costs,***" a survey of oil and gas well corrosion costs by NACE Technical Unit Committee T-1H,'^°^' a review of well casing corrosion in the oil industry,'""' and a survey of practices and cost of corrosion control of

offshore platforms.'""*

Coefficient adjustments were made in the two sectors to account

for corrosion related inputs to each sector and changes in replacement

lives. No adjustments were made in the capital for the industries,

because no evidence was found for excess capacity or redundant

equipment

.

Corrosion inhibitors were estimated to comprise 40 percent of

total chemical purchases by the oil industry and 20 percent of

chemical purchases by the gas industry. The former estimate was based

on data from the surveys listed above, while the latter estimate was based on chemical purchases by a company judged to be typical of the

entire industry.
70

A major portion of corrosion costs in these industries was for

corrosion-related maintenance. Adjustment in maintenance coefficients

were made based on data from a survey of repair and equipment costs

which found 75 percent of maintenance to be related to corrosion and

wear. As no breakdown of this number was available, wear and corrosion

were estimated to make equal contributions. The resulting 37 percent

of maintenance costs ascribed to corrosion were consistent with es- timates made by industry experts. Adjustments for maintenajnce on electrical components and instruments were made based on experience from

the chemical industries.

Additional adjustments were made to coefficients for Sectors 30.05

and 25.00 to account for corrosion related research and development,

engineering, inspection and testing.

Replacement lives of several types of capital equipment are affected by corrosion and appropriate adjustments were made. Best

practice ratings for both industries were 3.0 based on high incentive

and high responsiveness.

4.4.3 Manufacture of Food, Leather, and Textile Products

This group includes five sectors:

3X01—Food and Kindred Products, Tobacco;

3 . 03—Leather Tanning and Industrial Leather Products;

3X04—Miscellaneous Leather and Fabricated Textile Products;

3 . 05—Fabrics , Yarns, and Threads; and

3.07—Tire Cord and Miscellaneous Textile Goods.

With the exception of Sector 3X01, no goods which corrode are produced

in these industries. Corrosion of metal food containers and contamination of product are of concern in Sector 3X01. Companies in 3X01 rely

primarily upon container suppliers to provide corrosion-resistant

materials. In the remaining sectors, corrosion is given a low

prior ity

No specific data were available for these sectors, and coefficient

adjustments were made based on data from other sectors and a general

knowledge of corrosion in these industries. Input to the industries

were adjusted for corrosion maintenance only. Capital was not affected

since no evidence for excess capacity or redundsmt equipment was

found. Replacement lives were adjusted based on information for other

sectors

Best practice rating for Sector 3X01 was 2.0 based on (1) High

incentive for corrosion control because of the importance of product

purity and shelf life and (2) Low responsiveness. Best practice

ratings in the remaining sectors were 1.0 based on low incentive and

low responsiveness.
71

4.4.4 Wood and Paper Products

Five sectors are included in this group: 4X01—Lumber Mills,

Plywood, Wood Containers; 4 . 03—Lumber and Wood Products, except con- tainers; 4X05—Furniture and Fixtures; 4.07—Pulp, Paper and Paper

Products, except containers; and 4.08— -Paperboard Containers and Boxes. The output of these industries is generally non-metallic, and con- sequently there is no corrosion of items produced. The only exception

is that metal furniture and fixtures are included as a portion of Sector 4X05. Corrosion of the latter, particularly in outdoor exposure,

is encountered.

Significant corrosion costs occur primarily in sectors where cor- rosive liquids or vapors are associated with the processing. Corrosive

liquids are limited to Sector 4.07—Pulp and Paper and corrosive vapors

are limited to 4X01—Kiln Drying of Lumber. The presence of corrosive

vapors increases corrosion costs in the kiln drying of lumber; fans are particularly susceptible. Discussions with industry experts con- firmed that corrosion costs were not a significant portion of plant

maintenance and operating costs, except in Sector 4 . 07—Pulp and Paper.

Thus, emphasis was on estimating costs of corrosion to the pulp

and paper industry. Data for the industry were collected from a plant

visit, a visit to TAPPI (The Technical Association of the Pulp and

Paper Industry), discussion with industry experts in the U.S. and

Canada, from the open literature and reports. An extensive study of

corrosion costs in the pulp and paper industry was carried out in

Canada in 1968, under the auspices of the Pulp and Paper Research Institute of Canada. This study is reported in ''Estimated Costs Due to

Corrosion in Canadian Pulp and Paper Mills'' by K. M. Thompson

(Technical Section Proceedings, Canadian Pulp and Paper Association,

D51, 1970). This study was combined with Worldwide 1971 Production

Data by M. F. Davy and W. A. Mueller in an article entitled ''Pulp and

Paper Industry Worldwide Corrosion Costs'' published in the NACE Book:

Pulp and Paper Industry Corrosion Problems, 1974. From all of the above

sources corrosion costs for the pulp and paper industry were estimated

to be $360 Million annually, based on 50 million tons of air-dried

pulp and paper product . Approximately 60 percent of this total was

ascribed to be operating cost with the remainder ascribed to capital

cost

.

Inputs to the industries for corrosion maintenance were adjusted

based on data from other sectors. For all sectors except 4.07 corrosion maintenance costs were judged to be low; a small increase was made in corrosion maintenance for 4X01 to account for corrosive fumes

in kiln drying of lumber. Sector 4.07 containing aqueous pulp and

paper processes was treated as an industrial chemical process.

In addition to corrosion-related maintenance adjustments, in Sector 4X05 the portion of paints ascribed to corrosion protection (50

percent of total) and the portion of corrosion protection platings and
7£

coatings (60 percent of total) were adjusted. Further, coefficient adjustments were made for the cost differential between corrosion-resistant metals, primarily aluminum, and mild steel. These latter coefficient adjustments accounted for corrosion protection costs in the

manufacture of metal furniture and fixtures.

In Sector 4.07—Pulp and Paper Products, 10 percent of the capital

stock, supplied by Sector 10 . 08—Special Industrial Machinery, was ascribed to be redundant equipment for corrosion purposes. This ac- counts for duplicate suction press rolls which are kept to allow con- tinual operation of the plant. No other redundant equipment or excess

capacity was noted in the sectors of this group.

Information gathered indicates that the replacement lives of

capital equipment supplied by Sector 9 . 02—General Industrial Machinery

and Equipment and Sector 10 . 08—Special Industrial Machinery are significantly affected by corrosion. Replacement lives of other equipment in this sector and other sectors of this group can also be

affected by corrosion and adjustments were made accordingly.

Sector 4.07 was given a best practice rating of 3.5 based on high

incentive and moderate responsiveness; all other sectors in the group

were given best practice ratings of 1.0 based on low incentive and low

responsiveness

4.4.5 Petroleum and Chemical Products

Fourteen sectors are included in the petroleum and chemical

products group. No items are produced which corrode. The impact of

corrosion costs on this group of industries covers a broad range from

minor to major. To better define this industry variation, a number of

corrosion parameters were determined for each industry. The

qualitative ranking in each of these areas are presented in Table 8.

Based on technical judgment, each industry was ranked high, medium, or low for

(1) Its incentive to account for and address corrosion costs

(2) Its ability to respond to corrosion costs

(3) The level of technology

(4) The overall corrosivity of the environment in the industry

(5) The percentage of corrosion related building and plant

maintenance from Sector 19A05

(6) The corrosion related maintenance costs on equipment.

The variation from high rankings in all categories for industrial

chemicals and petroleum refining to low rankings in nearly all

categories for paving products, rubber products, and manufactured

plastic products is apparent. This overall ranking was used in two
73

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74

ways: (1) To provide guidance for setting priorities for emphasis in

this study and (2) To provide guidance for coefficient adjustments

based on the severity of corrosion in each industry.

Corrosion costs in the industries are confined to costs of corrosion control and corrosion related maintenance, repair, and replacement. Forms of corrosion control used in the industries are coatings,

inhibitors, corrosion-resistant metals, metallic coatings, cathodic

protection, and design for corrosion control. Those industries with

high rankings in the parameters of Table 8, are aware of corrosion

costs and exert considerable effort to control costs. Estimates for

corrosion costs for this study were based on extensive interviews with

industrial experts and several studies reported in the open

literature. Prime sources were a detailed study of costs in a petroleum refinery by Landis,'"*^' a study of refinery costs by

Sherwood,''^' and a study of the causes of failure in chemical process

industries by Collins and Monack . In addition to the above,

suppliers of the corrosion related items to the petroleum and chemical

industries were interviewed.

Coefficient adjustments were made in the sectors for inputs of

corrosion inhibitors, corrosion-related maintenance, axid corrosionrelated technical support

Costs associated with corrosion inhibitors and water treatment

were estimated as a proportion of the input of chemicals to the particular industry where possible or by distribution of an estimated

dollar value of corrosion inhibitors where data for a direct estimate

were unavailable. An example of the former was the treatment of corrosion inhibitors to the petroleum refining industry (Sector 5.01). It was estimated that corrosion inhibitors comprised 40 percent of total

chemical purchases by Sector 5.01 based on data from the survey by

Landis and by review of chemical purchases of a large petroleum

refinery over a 1 year period. Procedure for distributing the estimate

of total dollars of corrosion inhibitor purchases by all chemical industries into the individual sectors is discussed in Section 4.2.6.1,

Treatment of Corrosion Inhibitor and Water Treatment Costs.

The basis for adjustments for maintenance costs in the chemical

industries is discussed in Section 4 . 2 . 32—Maintenance and Repair

Equipment Costs. Specific data available for the chemical process and

petroleum refining industries were used to estimate corrosion related

costs for various types of equipment in the other sectors.

Several process units in Sectors 5.01, 5.03, 5.05, and 5.06 are run continuously. It is standard procedure in the industries to

have scheduled down-time for maintenance of approximately 5 percent of

total capacity, and significant portions of the down-time can be attributed to corrosion-related maintenance and repair. Consequently, a

2 percent excess capacity was ascribed to the above industries for

corrosion and capital/output coefficients were adjusted.
75

In addition to the above adjustment to capital/output coefficients, adjustments were made to account for redundant equipment in

Sector 9.02—Pumps and Fans and Sector 12 . 03—Motors . Standard design

practice calls for installation of three large units from these sec- tors where two are required for operation. This allows for continuous

processing while a fan or motor is being maintained. Adjustment to ac- count for this redundancy was made in Sectors 5.01, 5.03, 5.04, 5.05,

5.06, and 5X10.

Replacement lives of several types of capital equipment are significantly affected in the petroleum and chemical industries and

appropriate adjustments were made. Best practice ratings for each of

the industries based on incentive and responsiveness were listed in

Table 8.

4.4.6 Stone, Clay, and Glass Products

Four sectors are included in this group: 6.01—Glass and Glass

Products; 6 . 02—Hydrauli c Cement, Lime and Gypsum Products; 6 . 03—Clay

and Cement Products and Refractories; and 6.04—All Other Stone and

Non-metallic Mineral Products. No items which corrode are produced in

these sectors.

Sector 6.01—Glass and Glass Products is a rather homogeneous sector with similar corrosion problems experienced throughout. Corrosion

costs arise from handling of water, primarily cooling waters; from

enhanced attack due to elevated temperatures; and from handling of

hydrochloric and hydrofluoric acid fumes produced in etching and other

surface treatments. The latter causes extensive corrosion of duct

work. Corrosion inhibitors, organic and metallic coatings, corrosionresistant metals, and cathodic protection are used by the industry to

control corrosion.

Coefficient adjustments in the I/O Model were based upon interviews

with industrial experts and data from other industries. Inputs to Sector 6.01 were adjusted for (1) Corrosion inhibitors-based upon scaling

up an estimate of corrosion inhibitor usage by a company and (2) Corrosion-related maintenance cost. Total corrosion-related maintenance

costs were estimated by an industry expert to be approximately 0.2

percent of sales. Capital coefficients were unchanged as no evidence

was found for either excess capacity or redundant equipment.

Corrosion affects the replacement life of several components

throughout the glass and glass products industry. An industry expert

estimated the replacement life of pipe systems could be doubled if it

were not for corrosion. Also the replacement life of pumps is shortened by corrosion. It was also estimated that replacement life of

buildings and machinery were determined by obsolescence, smd corrosion

was not a factor for these items.
76

Sector 6.02, 6.03, and 6.04 are all affected by corrosion and

wear. With the exception of production of refractories as a portion of

Sector 6.03, the principal operations in these industries are grinding

and material handling. Coefficient adjustments were made based on the

estimate that corrosion costs in the industry are a small percentage

of total maintenance costs and data from other industries. Inputs to

the industry were adjusted for corrosion maintenance.

Capital coefficients were unchanged as no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

several types of equipment are affected by corrosion and adjustments

were made accordingly.

Best practice ratings for these industries were 2.5 for Sector

6.01—Glass and Glass Products, based on high incentive and moderate

responsiveness; and 1.5 for Sectors 6.02, 6.03, and 6.04 based on moderate incentive and low responsiveness.

4.4.7 Primary Ferrous Metals and Manufacturers

This major group includes establishments engaged in the smelting

and refining of ferrous metals from ore, pig, or scrap; in the rolling, drawing, and alloying of ferrous metals; in the manufacture of

castings, forgings, and other basic products of ferrous metals; and in

the manufacture of nails, spikes, and insulated wire and cable. The

group also includes the production of coke. Ferrous metals are disaggregated into five sectors: 7A01—Mild Steel-Carbon Steel, 7B01—Low

Alloy Steel, 7C01-Alloy Steel, 7D01-Stainless Steel, and 7E01-Coke

American Iron and Steel Institute steel grade definitions were used

for identifications of each sector.

Costs of corrosion in these sectors are incurred for both

providing corrosion protection to the metals supplied and for corrosion of plant and equipment during production. Corrosion has heavy impact on the industry and considerable effort is expended within the

industries to improve corrosion resistance of products. Plant and

equipment corrosion costs are substantial because of exposure to atmospheric corrosion in highly industrial areas and processes which ex- pose equipment to high temperatures, corrosive vapors, and corrosive

solutions. Corrosion protection for products is supplied by organic

coatings, metallic coatings, chemical composition of metal, and

metallurgical structure control. Corrosion of plant and equipment is

controlled through the use of organic coatings, metallic coatings,

corrosion inhibitors, design, and use of corrosion resistant alloys.

Coefficient adjustments were made in the sectors to account for

the use of corrosion resistant coatings, inhibitors, maintenance

costs, and technical support. Corrosion inhibitors and corrosion

related water treatment costs were handled by distributing $48 Million

for annual purchases of these items among the five sectors based on
77

total dollar output. Estimate of total purchases was based on a study

of industrial water treatment purchases. Inputs to the ferrous metals

industries from Sector 5 . 03— Industrial Inorganic Chemicals were adjusted according to these dollar estimates.

Both metallic and organic coatings are used in the ferrous metals

industry to provide corrosion protection for products. Adjustments

were made for inputs of Sectors 5A12-Paints and Allied Products for

Corrosion and 8A07-Coat ings and Plating for Corrosion based on the

premise that essentially all coatings applied to ferrous meta] s are

for corrosion protection. Metal inputs to Sector 8A07 coatings and

platings for corrosion used in the steel industry were 65,000 tons of

zinc per year for galvanized steel, 5,000 tons of aluminum per year

for hot-dip aluminized steel, and 2,300 tons of tin per year for tin

plate steel.

Corrosion related maintenance costs were estimated based on input

from mechanical foremen and engineering departments of a major integrated steel plant. Their estimates of corrosion related maintenance

for various items were as follows:

Industrial controls—15 percent

Electrical Instruments—25 percent

Mechanical Equipment—5 percent

Engines and Turbines—15 percent.

Corrosion related plant and building maintenance costs were es- timated to be 20 percent for mild steel, low alloy steel, and alloy

steel industries; 5 percent for the stainless steel industry; and 30

percent for coke industries.

Estimates for corrosion related technical support were determined

by information on percent of sales for research and development and

for percent of research for corrosion.

Many of the processes in ferrous metals manufacture are continuous

and capacity is reduced by scheduled down-time. None of this scheduled

down-time could be ascribed to corrosion. While considerable corrosion

related maintenance and repair is performed during these down-times

the time required for repairs is not related to corrosion. Adjustments

were made to capital coefficients for capital supplied by Sector

9.02—Pumps and Fans and Sector 12.02—Motors to account for corrosion

related redundant equipment. Redundancy arises from the standard

design practice of installing three large units from these sectors

when two are required for continuous operations. The third unit allows

maintenance without interrupting continuous operation. Replacement

lives of several types of capital equipment throughout the plants are affected by corrosion and appropriate adjustments were made.

Best practice ratings for all five sectors in this group were 3.0

based on high incentive and high responsiveness.
78

4.4.8 Primary Non-Ferrous Metals and Manufacturers

Sectors included in this group are 7.02—Primary Copper, 7 . OSPrimary Aluminum, 7A04-Ni and Ni Alloys and Cobalt, 7B04-Zinc, 7C04-

Magnesium, 7D04—Lead, 7E04—Titanium, Tantalum and Zircnium, 7F04-

Silver, Gold, Platinum, and Palladium and 7G04—All Other. The costs,

of corrosion in these sectors are related to materials degradation and

maintenance of equipment used in producing primary metal from various

ores. The amount of corrosion occurring is strongly dependent on the

type of ore being processed. For example, sulfide ores are usually

roasted to form an oxide. In this process large amounts of SO3, which

are highly corrosive to plant equipment and buildings, are produced.

This necessitates the extensive use of stainless steels for process

equipment and structures. For example, smelter exhaust stacks are made

of Type 316 stainless steel to overcome the corrosive effects of sulfuric acid condensation on the sides of the stack. Those primary metal

producers where the process is highly corrosive include copper, zinc,

nickel, and lead. Data furnished by one copper and one nickel producer

indicate that 15 percent of maintenance costs can be attributed to

corros ion

Another area which has relatively high corrosion costs is aluminum

production. The fluoride salts involved in the electroref ining of

aluminum ore result in severe corrosion to building and other equipment located in the refining area. Similarly to estimates for the

copper, nickel, zinc, and lead industries, corrosion costs are es- timated by the aluminum industry to be approximately 15 percent of the

total mairitenance budgets.

In contrast, many hydrometallurgical processes for refining of

ores more nearly resemble moderately corrosive chemical processes. The

primary metal producers in this area are producers of magnesium,

precious metals and others. For these industries no data were

available for corrosion cost from producers. Coefficient adjustments

were made on the basis of data pertaining to maintenance, and useful

life of equipment in moderately corrosive chemical processes which

were assumed to have similar corrosion experience.

Likewise, data for the extent of corrosion caused maintenance were

not available for Sector 7E04—Titanium, Tantalum and Zirconium. From

discussion with experts in titanium, zirconium, and tantalum production it was concluded that maintenance costs for corrosion in the

steel industry were probably quite comparable to theirs; therefore,

coefficients in 7E04 were adjusted to reflect experience similar to

that in the steel industry.

Estimates were obtained for the portion of research and development which is directly related to improving corrosion performance, to

understand corrosion mechanisms or to testing new alloys. The data obtained suggest that for the primary metal producers about 1.2 percent
79

of sales is allocated to research and development. Discussion with

research managers in laboratories of a large copper and aluminum

producer, a nickel and precious metal producer, and an aluminum

producer revealed research and development dollars spent on corrosion

varied considerably between metal producers. Approximately 20 percent

of the research and development conducted by the copper and nickel

producers is directly concerned with corrosion. The aluminum industry

on the other hand spends about 10 percent of its research and development budget for corrosion, while the zinc industry spends only 1 percent. It was estimated that other non-ferrous primary metal producers

spend between 0.1 and 0.2 percent of their research and development

budget for corrosion related studies.

4.4.9 Fabricated Metal Products

Nine sectors are included in this group: 8 . 01—Metal Cans,

8.02—Metal Barrels, Drums and Pails, 8.03—Metal Sanitary Wear and

Plumbing Fittings, 8 . 04—Non-Electric Heating Equipment, 8 . OSFabricated Metal Structural Products, 8.06—Screw Machine Products and

Stampings, 8A07—Coating and Plating, Corrosion, 8B07—Coating and

Plating, Non-corrosion, and 8C07—Mi scellaneous Fabricated Metal

Products. With the exception of the coating and plating sectors, industries in this group have low corrosion maintenance, repair, and

replacement costs. The coatings and platings industry has substantial

corrosion related operating costs because of handling highly corrosive

fluids and vapors. Primary emphasis was placed upon changes of inputs

to products for corrosion resistance. Corrosion protection for

products is provided by organic coatings, metallic coatings, and the

use of corrosion resistant metals.

Coefficient adjustments for input of paint and allied products to

the fabricated metal products industries were made based on the

technical judgment that 90 percent of paints and allied products were

to provide corrosion protection in Sectors 8.01, 8.02, 8.03, and 8.04;

95 percent for corrosion protection in Sector 8.05; 75 percent for

corrosion protection in Sectors 8.06, 8A07, 8B07; and 95 percent for

corrosion protection in Sector 8C07 . Similar adjustments were made for

the use of metallic coatings in platings in the industry, where 95

percent of the use of metallic coatings was ascribed to corrosion

protection for Sector 8.01—Metal Cans and between 50 and 75 percent of

the use of metallic coatings was ascribed to corrosion protection for

the remaining industries.

Metal inputs to the industries were reviewed and adjustments made

to account for use of corrosion resistant metal. In Sectors 8.01 and

8.02, all use of aluminum and stainless steel was ascribed to corrosion. In Sector 8.03, all usage of aluminum, stainless steel, alloy

steel, and high strength low alloy steel was attributed to corrosion,

but only fifty percent of the use of copper was ascribed to corrosion

because considerable amounts of copper piping are used for ease of installation as well as corrosion resistance.
80

Adjustments for Sector 8.04 were the same as for Sector 8.03 with

an additional adjustment to account for 10 percent of mild steel usage

as corrosion allowance in products. For Sector 8 . 05—Fabricated Structural Metal Products all usage of alloy, and high-strength low-alloy

steels was attributed to corrosion. However, stainless steel, copper,

and aluminum are use/i for both corrosion resistance and ornamental or architectural purposis; accordingly 50 percent, 25 percent, and 50

percent of these metals was ascribed to corrosion, respectively. In

Sector 8.06 all usage of aluminum, copper, stainless steel, alloy

steel, and high-strength low-alloy steel was attributed to corrosion

resistance. In Sector 8C0 7—Miscellaneous Fabricated Metal Products,

the following percentages of metal usage were ascribed to corrosion

resistance

Low Alloy Steel— 100 percent

Alloy Steel—50 percent

Stainless Steel—50 percent

Copper—90 percent

Nickel and Nickel Alloys—100 percent.

Corrosion related maintenance in all Sectors except coatings and

platings was estimated to be low and adjustments were made based on information from other sectors. Corrosion related maintenance in Sectors 8A07 and 8B07—Coat ings and Platings was made based on data from

the industrial chemical sector.

Capital coefficients were unchanged as no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

several types of equipment are affected by corrosion gind adjustments

were made accordingly.

All industries in this group were judged to have moderate incentives for best practice and moderate responsiveness with resulting

best practice ratings of 2.0.

4.4.10 General Machinery and Components

Three sectors are included in this group: 9.01—Engines and Turbines, 9.02—General Industrial Machinery and Equipment, and 9 . OSMachine Shop Products. Corrosion related operating costs in these industries were considered to be low and major emphasis was placed upon

determining changes in inputs to the industries for corrosion protection for products. Inputs for corrosion resistance are paints and

allied products, corrosion resistant metals, and coating and platings.

Greater than 90 percent of the use of paints and allied products in

Sectors 9.01 and 9.02 was ascribed to corrosion protection. Portions

of the usage of coatings and platings in Sectors 9.01, 9.02, and 9.03

were ascribed to be 50 percent, 20 percent, and 15 percent for corrosion resistance, respectively.
81

Adjustments were made to account for use of corrosion

metals in Sector 9.01—Engines and Turbines. Corrosion was account for:

100 percent of Low Alloy Steel

50 percent of Alloy Steel

50 percent of Copper

50 percent of Aluminum

In addition, 30 percent of the dollar purchases of stainless steel and

75 percent of the dollar purchases of nickel and nickel alloys were

ascribed to costs for higher priced alloys for corrosion resistance.

In other words, lower priced alloys from these categories could be

used if corrosion were not a factor. In Section 9.02-General Industrial Machinery and Equipment, the following percentages of usage

was ascribed to corrosion resistance:

Low Alloy Steel—100 percent

Alloy Steel—50 percent

Stainless Steel—75 percent

Copper—50 percent

Aluminum—75 percent

Nickel and Nickel Alloys—75 percent.

Similarly in Sector 9.03 the following adjustments were made:

Low Alloy Steel—100 percent

Alloy Steel—50 percent

Stainless Steel—75 percent

Aluminum—75 percent

.

Corrosion related maintenance was estimated to be low and adjustments were made based on experience from other sectors. Additional

adjustments were made to account for corrosion-related technical support .

Capital coefficients were unchanged, as no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

several types of equipment are affected by corrosion and adjustments

were made accordingly.

Best practice ratings for industries in this group were 2.0 based

on moderate incentive and moderate responsiveness.

4.4.11 Specialized Machinery

Eight sectors are included in this group: 10.01—Farm Machinery,

10 . 02—Construct ion Machinery, 10.03—Mining Machinery, 10.04—Oil Field

Machinery, 10.05—Oil Materials Handling Machinery, except trucks,

10 . 06— Industrial Trucks and Tractors, 10.07—Metal Working Machinery,

and 10 . 08—Special Industry Machinery. Corrosion-related costs in these

industries are incurred for providing corrosion protection in products

resistant

judged to
82

and corrosion-related maintenance, repair, and replacement costs. Corrosion resistance is provided for products by the use of organic

coatings, metallic coatings, and corrosion resistant metals.

Adjustments for inputs of paints and allied products and coatings

and platings were based on technical judgment. Nearly all of the use

of organic coatings was ascribed to corrosion protection, and approximately 1/2 to 2/3 of the use of metallic coatings and platings

was ascribed to corrosion protection. Breakdowns estimated for each

sector are presented in the section describing adjustments for

coatings and platings.

Adjustments were also made to the inputs of corrosion-resistant

metals into each of the sectors. Metal uses ascribed to corrosionresistance were:

Low Alloy Steel—100 percent

Stainless Steel—100 percent

Alloy Steel—60 percent

Copper—90 percent

Aluminum—76 percent

Nickel Alloys—90 percent.

In Sector 10 . 02—Construct ion Machinery, 10 . 03—Mining Machinery, and

10.04—Oil Field Machinery, further adjustments were made in the use of

mild steel of 1 percent, 1 percent, and 6 percentj respectively to ac- count for the incorporation of corrosion allowance in the construction

of machinery by these sectors

Maintenance cost adjustments in each of the sectors were determined based on estimates of total maintenance costs and estimates of

portions of total maintenance related to corrosion. The latter es- timates were based on knowledge of severity of corrosion in the

manufacturing processes of each sector and experience of other sectors. Further adjustments were made to account for technical support

based on procedures previously described.

Capital coefficients were unchanged as no evidence was found for

excess capacity or redundant equipment. Replacement lives of several

types of equipment are affected by corrosion and adjustments were made

accordingly.

Best practice ratings for all sectors in this group were 2.0 based

on moderate incentive and moderate responsiveness.

4.4.12 Motor Vehicles and Miscellaneous Transportation Equipment

Three sectors are included in the group: llAOl—Automobiles , llBOl—

Trucks, Buses, etc., and 11 . 05—Motorcycles , Bicycles, Trailer Coaches,

and Miscellaneous Transportation Equipment. Primary interest in these

sectors is in the inputs to each sector for corrosion protection of
83

products. Operating corrosion costs for these industries are low. Sector llAOl—Automobiles was the subject of a more detailed study, and

corrosion costs for personally owned automobiles are discussed in

Appendix C

.

There is a need for corrosion protection on products produced by

these industries because visible and non-visible components corrode,

affecting both aesthetic appearance and operation. Various forms of

prevention and corrosion control are utilized including:. (1) Internal

and External Coatings, (2) Modifications in design, (3) Inhibitors,

(4) Alternate Materials, (5) Testing and development of new corrosion

materials. Major corrosion costs ascribed to these industries are for

(1) Organic and metallic coatings and platings, (2) Use of corrosion

resistant materials, (3) Research and development and other technical

support, and (4) Maintenance, replacement, and repair.

Significant portions of inputs to the industry can be ascribed to

corrosion in several areas. Adjustments were made in the inputs from

Sector 5 . 01—Petroleum Refining and Related Products axid Sector 5 . OSMiscellaneous Chemical Products to account for use of corrosion

preventive waxes and lubricants and corrosion-inhibited radiator

coolant, respectively. Fifty percent of all organic coatings was

ascribed to corrosion protection in Sectors llAOl and 11.06; and 50

percent of organic coatings was ascribed to corrosion protection in

Sector llBOl. These adjustments account for a portion of the primer

and top coat costs which are applied for both corrosion prevention and

aesthetics, all of the use of zinc rich paints, and all of the use of

other organic coatings on underbody parts. Portions of metallic

coatings and platings ascribed to corrosion protection for each of the

sectors were llAOl-30 percent, llBOl-60 percent, and 11.05-50

percent

.

Metal inputs to the motor vehicle industries are significantly

affected by corrosion considerations. In Sectors llAOl and llBOl the

following proportions of metal usage were ascribed to corrosion

protection

:

Low Alloy Steel—50 percent

Alloy Steel-50 percent

Stainless Steel-100 percent

Copper—10 percent

.

Use of aluminum alloys for corrosion resistance was estimated to be 25

percent in Sector llAOl and 75 percent in Sector llBOl. Similar es- timates for Sector 11.05 were:

Low Alloy Steel-100 percent

Alloy Steel-50 percent

Stainless Steel-100 percent

Copper—95 percent

Aluminum—50 percent

.

In all cases corrosion resistant metals were substituted for mild

steel

.
84

Corrosion-related maintenance costs in these sectors were con- sidered to be low and adjustments were made based on experience from

other sectors

Capital coefficients were unchanged as no evidence was found for

either excess capacity or redundant equipment. Replacement lives for

several types of equipment are affected by corrosion and adjustments

were made accordingly.

Best practice ratings for Sector llAOl and llBOl were 3.0 based on high incentive and high responsiveness. Best practice rating for 11.05

was 2.5, based on high incentive and moderate responsiveness.

4.4.13 Aircraft and Air Transporat ion

Two sectors are included in this group: 11 . 02—Aircraft and Parts

and 17.05—Air Transport. The former includes establishment for the

manufacture of aircraft and parts, including aircraft engines. The

latter provides air transportation services for passengers and cargo.

The combined aircraft fleet of the United States' airlines ex- cluding charter companies total 2400 planes of which 2250 are jets.

This number is made up of a wide variety of types including two-engine

aircraft; three-engine 727; four-engine aircraft, 707 and DC-8; and

the jumbo jets represented by 747, DC-10, and L-lOll's. In a given

year the industry spends about $1.5 Billion for parts and $6.5 Billion

for salaries. The Air Transport Association in Washington has compiled

extensive data pertaining to the industries' performaxice ; however,

data for maintenance costs related to corrosion were not readily

available. On the other hand, maintenance and performance costs per

block hour for different types of aircraft as compiled by the airline

carriers are regularly published in Air Transport World. In addition,

each of the large air carriers keeps extensive records of both air

frame and engine maintenance costs with a breakdown of that portion

attributable to corrosion.

In the course of this survey, maintenance managers of six of the

largest air carriers were contacted for pertinent data. Excellent

cooperation was obtained. In general, the data supplied by each com- pany are in good agreement. However, the commercial airline corrosion

costs when compared with the military appear to be quite low. For ex- ample, data from the air carriers suggest that corrosion-related

maintenance ranges between 2 and 2.5 percent of the total maintenance

budget. The Air Force, on the otherhand, spends 20-30 percent of

maintenance appropriations for corrosion. Similarly, an order of

magnitude difference in costs per airplane is reported. For example,

the corrosion-related costs in the commercial fleet averages beteen

$3,000 and $3,500 per aircraft. For the military, the range is $15,000

to $30,000 per aircraft, depending on the type. The larger the

military aircraft, the higher the corrosion-related maintenance costs.
85

This is also true for the airline companies where the average cost of

corrosion is $1.59/ flight hour for 727 aircraft compared with about

12.88/ flight hour for the larger 747 aircraft.

A portion of the difference in corrosion costs between the

military and commercial airlines can be attributed to the different

modes of operation and the useful aircraft life. Military data show

that older aircraft have higher corrosion costs. Many of the aircraft

in the.^ military are much more than 10 years old which is the replacement life for commercial carriers. Another difference between the

military and commercial aircraft is flying time. Military aircraft

spend most of the time on the ground while commercial aircraft fly 8

to 10 hours per day. However, the major difference appears to be in

the accounting procedures. It is believed that commercial airline ac- counting procedures are such that most corrosion related costs are not

identified as such.

Two techniques were employed to obtain a rationale for total cor- rosion related maintenance for the commercial airline industry. First,

based on the available data, corrosion related maintenance data indicated the average corrosion cost per flight hour to be $1.59. Assuming an aircraft flies 10 hours per day for 300 days per year, the cor- rosion-related cost per aircraft per year is $4,770. This compares

favorably with the $3,000 to $3,500 reported by several airlines. Based on a total fleet of 2400 aircraft, the corrosion-related costs for

the industry range from $7,200,000 to $11,448,000 per year. The airlines indicate this is between 2 and 2.5 percent of maintenance

budgets

.

Secondly, if one assumes that 1 percent of the monies spent for

parts ($1.5 Billion) is for corrosion this amounts to $15,000,000 per

year. One percent of parts was identified by Navy as being attributed

to corrosion. It is also reasonable and perhaps conservative to es- timate that the total labor costs attributed to corrosion are approximately 0.1 percent of the total labor dollars or $6,500,000. From

this analysis, the cost per airplane per year for corrosion amounts to

$8,950, which compares favorably with military aircraft cost data.

Coefficient adjustments for inputs to Sector 11.02 were made to

account for inputs to provide corrosion protection to products and

also to account for corrosion-related maintenance within the industry

itself. It was estimated that 80 percent of the purchases of paints

and allied products and 50 percent of the metallic coatings and

platings are corrosion-related. Ten percent of the use of stainless

steel, in lieu of carbon steel, was ascribed to corrosion. In addition, 30 percent of the sales of nickel and nickel alloys to this industry were ascribed to purchasing more costly corrosion-resistant

alloys from this sector.

Corrosion-related maintenance costs in the industry were judged to

be low and adjustments were made based on experience from other sectors. An estimate of technical support for corrosion was based on procedures as in other sectors

.
86

Coefficient adjustments in Sector 17.05 were made to accoiint for

corrosion-related maintenance and technical support. Corrosion ac- counts for a significant portion of maintenance costs and estimates

were made based on information from commercial airlines and analysis

in the federal sector. An estimate of corrosion related technical support was determined by procedures as in other sectors

Capital coefficients in both sectors were unchanged as no evidence

was found for either excess capacity or red\andant equipment. Replacement lives of several types of equipment are affected and appropriate

adjustments were made.

Best practice ratings for Sector 11.02 was 3.0 based on high incentive and high responsiveness, and best practice rating for Sector

17.05 was 2.5 based on high incentive and moderate responsiveness.

4.4.14 Water Transportation Services and Equipment

Two sectors are included in this group: 11.03—Ship and Boat

Building and Repair, and 17.04—Water Transportation. The former is involved in construction of ships and boats, while the latter provides

transportation services. Significant costs are incurred in corrosion

protection during operation and construction and corrosion maintenance

during operation due to exposure to corrosive marine environments.

Primary material of construction in ship building is carbon steel,

although, other corrosion-resistant metals are used. Organic and

metallic coatings are used extensively for corrosion protection of

carbon steel

In addition to discussions with industry experts, two articles

were prime sources used to evaluate costs of corrosion in the ship

building industry: (1) An article by Soltz''"'' discussed major corrosion problems encountered by a large steamship company and outlined

several procedures for corrosion control and (2) An article by Turlee,

et al'^'' presented results of an economic analysis of tanker operation.

In general, four major areas for corrosion costs on ships were

identified: Steel renewal and replacement, piping and valve

maintenance, boiler maintenance, and mechanical equipment maintenance.

Primary emphasis in this study was to evaluate: (1) Costs incurred

during ship construction for corrosion prevention and control and (2)

Operating expenses including maintenance costs for corrosion.

Coefficient adjustments in Sector 11.03—Ship and Boat Building

were made to account for inputs to provide corrosion protection for

ships built by the industry and also to account for corrosion-related

maintenance for the ship building industry itself. Inputs for corrosion protection to ships include organic coatings, corrosion resistant

metals, corrosion allowance for mild steel, and cathodic protection.
87

It was estimated that 75 percent of the organic coatings used on ships

are for corrosion protection. Adjustments of metal inputs to Sector

11.03 were made to account for the use of corrosion resistant metal.

The following percentages of metal inputs were ascribed to corrosion

related usage:

Low Alloy Steel-75 percent

Alloy Steel—25 percent

Stainless Steel—100 percent

Copper—90 percent

Aluminum—50 percent

.

In addition, 20 percent of the usage of mild steel for ship building

was ascribed to corrosion allowance. This estimate was based on information in the articles by Soltz'''^' and Pearly'"' which identify

specified corrosion allowance for various structural steel members in

ships. Input of cathodic protection from Sector 20 . 05—Other Business

and Professional Services was estimated to be 0.05 percent of total

construction cost.

Based on data from a major ship building yard, corrosion related

maintenance costs for the ship building industry were estimated to be

10 percent of total plant and equipment maintenance, which in turn was estimated to be 3 percent of total sales. These corrosion related

costs were distributed among the appropriate sectors providing

maintenance to the ship building industry. Corrosion related technical

support was estimated as in other sectors and an adjustment made to

input from Sector 25 . 00—Value Added.

Capital coefficients were unchanged as no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

several types of equipment are affected by corrosion and adjustments

were made accordingly.

Coefficient adjustments for Sector 17.04—Water Transporat ion were

made to account for corrosion related maintenance and operation costs.

Fuel requirements for ships are increased by rough hulls, which increase can be attributed partially to corrosion. Accordingly, fuel

usage by the industry was estimated to be 0.1 percent greater because

of corrosion.

Corrosion related maintenance is a significant part of overall

maintenance because equipment is exposed to highly corrosive seawater

and marine atmospheres. Increased use of sulfur bearing fuels further

increases corrosion costs. Estimates for portions of total maintenance

ascribed to corrosion were:

Fabricated Structural Metal Products-90 percent

General Industrial Machinery and Equipment—20 percent

Material Handling Machinery—20 percent

Miscellaneous Electrical Machinery—20 percent.
88

Based on data from a major ship building yard, £0 percent of all

maintenance provided by the yard is attributed to corrosion. Corrosion

related technical support was estimated as in other sectors and adjustments made to input from 25 . 00—Value Added.

A corrosion-related, overall excess capacity of 0.25 percent was estimated for the water transportation industry to account for load

carrying capacity reduction (by weight of steel for corrosion

allowance), and in some cases, rust scale buildup and loss of product

in scale. No evidence of redundant equipment was found in this

industry

Replacement lives of several types of equipment are affected by

corrosion and adjustments were made accordingly. The replacement life

of ships is significantly affected by corrosion and the replacement

life range was shifted from the base of 30 to 60 years to 50 to 60

years, if corrosion was not a factor; and to 40 to 60 years, if best

corrosion practice was used.

Best practice ratings for both industries in this group were 2.0

based on moderate incentive and moderate responsiveness

4.4.15 Railroad and Equipment Related Services

Two sectors are included in this group: 11 . 04—Locomotives and Rail

and Streetcars and 17 . 01—Railraod and Related Services. The former

sector is involved in construction of railroad equipment, while the

latter provides transportation services. Costs of corrosion in these

sectors are predominantly for corrosion control in the construction of

railroad equipment and maintenance for corrosion damage of equipment.

Corrosion related costs for the roadbed and track are minor.

Primary materials of construction for railroad equipment are mild

steel and high-strength, low-alloy steel, although stainless steels

are used to a significant extent in tank cars handling corrosive

materials and in passenger train cars. Organic and metallic coatings

are used primarily for corrosion protection of mild steel.

A breakdown of the types of railroad equipment is presented in

Table 9. The statistics were taken from ''Yearbook of Railroad Facts:

1977 Edition'' published by the Economics and Finance Department of

the Association of American Railroads.

Corrosion decreases the replacement life and increases operating

maintenance costs for covered and uncovered hopper cars, gondola cars,

tank cars, and passenger train cars. An extreme example of the effects

of corrosion is that covered hopper cars in service carrying copper

ore concentrate can have a replacement life of 8 months as opposed to

30 to 35 years for an identical car in non-corrosive service. Application of protective organic coatings to the interior of hopper cars can
89

TABLE 9. RAILROAD EQUIPMENT IN SERVICE IN 1976

Type Total Number

Box Cars 473, 953

Covered Hoppers 230, 069

Flat Cars 141, 781

Refrigerator Cars 98, 017

Stock Cars 3 637

Gondola Cars 185, 776

Hopper Cars 365, 526

Tank Cars 168, 018

Other Freight Cars 32, 250

Passenger Train Cars 6, 471

Locomotives 27, 573

significantly decrease corrosion at an initial cost of approximately

10 percent on a $40,000 covered hopper car. Replacing steel roofs on hopper cars can cost approximately $5,000 per car. It is estimated

that the total annual maintenance costs for freight cars to the

railroad industry is $2.3 Billion. While the largest single

maintenance item is replacement and reworking of wheels, which have

very little corrosion costs involved, a significant portion of the

remaining maintenance costs can be attributed to corrosion.

Coefficient adjustments were made in the two sectors on the basis

of (1) Change in inputs to each sector and (2) Change in replacement

lives of capital in the sectors; no adjustments were made in the

capital for the industries since no evidence was foxxnd for excess

capacity or redundant equipment.

In Sector 11.04, adjustments were made to account for input of

corrosion protection materials for car construction and for corrosion

maintenance in the industry. Inputs adjusted included corrosion

paints, corrosion platings and coatings, and metal inputs. It was es- timated that 1 percent of mild steel use was for corrosion-related

steel replacement. Conversion of other metals to mild steel use were

made as follows: 80 percent conversion of low alloy steels, including

copper steels and high strength, low alloy steels for corrosion

resistance, 50 percent conversion of alloy steel used for corrosion

and wear resistance, 100 percent conversion of stainless steel used

exclusively for corrosion protection, 50 percent conversion of copper,

and 80 percent conversion of aluminum used for corrosion resistance

and weight savings

.
90

Input coefficients for maintenance in Sector 11.04 were reduced 10

percent to account for corrosion related maintenance based on data in

other sectors and discussions with industry experts. This proportion

for corrosion maintenance is somewhat higher than that for general

manufacturing industries to account for the heavy equipment and ex- posure to more severe atmospheric corrosion.

In Sector 17.01, adjustments were made to input coefficients to

account for corrosion related maintenance. Estimates were made based

on data for other sectors

Replacement lives of railroad cars supplied by Sector 11.04 to

Sector 17.01 are significantly affected by corrosion. Based on the

breakdown of types of equipment in service in 1976, it was estimated

that approximately 55 percent of cars in service are affected by cor- rosion. It was further estimated that the replacement life was doubled

when corrosion service was not encountered. Furthermore, presently

available corrosion technology can be applied to realize this increased life. Accordingly, replacement lives of capital equipment

supplied by Sector 11.04 to S6ctor 17.01 were changed from the base

value of 28 years to 35 years if corrosion was not a factor, and to 34

years if best corrosion practice was implemented.

Best corrosion practice ratings for both sectors was 2.0 based on moderate incentive and moderate responsiveness.

4.4.16 General Electrical Apparatus

Six sectors are included in this group: 12 . 01—Electrical Measuring

Instruments, 12 . 02—Electrical Motors and Generators, 12 . 02— Industrial

Controls, Transformers, Etc., 12X04—Electric Lamps and Fixtures,

12 . 06—Electronic Components and Accessories, and 12 . 07—Miscellaneous

Electrical Machinery. Primary interests in these sectors were in the

inputs used by the industries to provide corrosion protection for

their products. Corrosion protection is provided by organic coatings,

metallic coatings and platings, the use of corrosion resistant metals,

and corrosion inhibitors during shipping and storage. Corrosion

related maintenance and repair costs within each industry were judged

to be low.

Coefficient adjustments of inputs to Sectors 12.01, 12.03, and

12.06 were made for vapor phase corrosion inhibitors from Sector

5 . 03— Industrial Inorganic and Organic Chemicals and for packaging

materials from Sector 5.15 to provide for corrosion protection during

shipping and storage. These adjustments were based on data for Sector

15 . 01—Computing and Related Machines, where similar corrosion protection is required.

Portions of inputs from paints and allied products and coatings

and platings ascribed to corrosion for each of these industries were

presented in the sector describing procedures for these adjustments.
Portions of organic coatings ascribed to corrosion range from 10 percent for Sector 12 . 06—Electronic Components to 75 percent for Sector

12 . 01—Electrical Measuring Instruments, and portions of coatings and

platings ascribed to corrosion ranged from 33 percent for Sector

12X04—Electrical Components and Accessories.

Significant usage of corrosion resistant metals was identified in

these sectors and appropriate adjustments were made in coefficients.

The following portions of usage for materials was ascribed to corrosion protection for products:

Low Alloy Steel—100 percent

Alloy Steel—25 percent

Stainless Steel-100 percent

Aluminum—50 percent

.

In all cases, corrosion resistant materials were substituted for mild

steel

.

Corrosion-related maintenance costs are low for these sectors. Adjustments to coefficients for corrosion related maintenance were made

based on estimates of (1) 2.4 percent of sales of maintenance and (2)

5 percent maintenance costs for corrosion purposes. This amount was then distributed among the appropriate sectors providing maintenance.

Capital coefficients were unchanged, as no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

several types of equipment are affected by corrosion aind adjustments

were made accordingly.

Best practice ratings for all sectors in this group were 2.0 based

on moderate incentive and moderate responsiveness.

4.4.17 Special Electrical Apparatus

Three sectors are included in this group: 13 . 01-Servi ce Industry

Machinery, 13.02—Home Appliances, 13.03-Radio, TV, Communication

Equipment. Primary emphasis was placed on inputs to each industry for

corrosion protection of products manufactured. Corrosion protection to

products is provided through the use of organic coatings, metallic

coatings and platings, corrosion resistant metals, and in the case of

water heaters in Sector 13.02, cathodic protection. Corrosion-related

maintenance costs in the manufacturing operations were judged to be

low

.

Portions of organic coating usage for corrosion protection of

products were 60 percent in Sector 13.01, 85 percent in Sector 13.02

and 50 percent in Sector 13.03. Portions of metallic coatings and

platings ascribed to corrosion were 75 percent in Sector 13.01, 60

percent in Sector 13.02, and 60 percent Sector 13.03. Further coefficient adjustments were made in Sector 13.03 to account for purchases
92

from Sector 5.03, 5.06, and 5.15 to account for vapor phase inhibitor

and packaging to provide corrosion protection during shipping and

storage

Metal inputs to each of the sectors are significantly affected by

the need to provide corrosion protection in manufactured products. In

Sector 13.01 and 13.03, all use of low alloy steel, alloy steel,

stainless steel, and aluminum was attributed to corrosion protection.

In Sector 13.02 all use of low alloy steel, alloy steel, axid stainless

steel was attributed to corrosion. Fifty percent of the use of copper,

aluminum, and nickel and nickel alloys was ascribed to corrosion

resistance. In all cases corrosion resistant metals were substituted

for the use of mild steel. Inputs of Sector 20.05—Other Business and

Professional Services was adjusted in Sector 13.02 to account for the

use of magnesium in the cathodic protection of water heaters.

Corrosion related maintenance costs in each of the industries were

considered to be low and adjustments were made based on experience in

other sectors

Capital coefficients were unchanged and no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

several types of equipment are affected by corrosion and adjustments

were made accordingly.

Best practice rating for Sector 13.01 and 13.03 were 2.0 based on moderate incentive and moderate responsiveness. Best practice rating

for Sector 13.02 was 2.5 based on high incentive and moderate responsiveness .

4.4.18 Scientific and Measuring Devices

Five sectors are included in this group: 14 . 01—Scientific Insturments. Measures and Controls, 14 . 02—Medical , Surgical, Dental Instruments and Supplies, 14 . 03-Watches , Clocks and Parts, 14 . 04-Opt ical

and Ophthalmic Goods, and 14 . 05-Phot ©graphic Equipment and Supplies.

Major areas of costs of corrosion in these sectors are for corrosion

protection in the products manufactured and corrosion protection during shipping. Corrosion related maintenance in these sectors is low

except for some aqueous processing in the photographic sector. For

corrosion protection during shipping, vapor phase inhibitors and

plastic packaging are used. Coatings, platings, and corrosionresistant metals are used for corrosion protection in manufactured

products

No specific data were available for these industries and estimates

for coefficient adjustments in the I/O Model were based on data from

other sectors. Inputs of industrial chemicals and manufactured plastic

products for corrosion protection during shipping were estimated to be

10 percent of purchases for Sectors 14.01, 14.02, 14.03, and 14.04,

and 1 percent of purchases for Sectors 14.05.
93

Three adjustments were made to account for inputs for corrosion

protection in manufactured products. These were based on estimates of

the corrosion related costs of (1) painting, (2) metallic plating and

coating, and (3) the cost differential between mild steel and the

corrosion-resistant metals used, i.e., aluminum, stainless steel,

alloy steel, and low alloy steel.

In addition, the portion of corrosion related maintenance of

plants and equipment in these sectors was estimated. Portions ascribed

to corrosion maintenance were somewhat higher in Sector 14 . OSPhotographic Equipment and Supplies to account for handling aqueous

solutions in this industry.

Capital coefficients were unchanged and no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

equipment in these industries were not judged to be significantly

affected by corrosion.

All industries in this group were given a best practice rating of

2.5 based on high incentive and low responsiveness.

4.4.19 Business Machines and Supplies

Three sectors comprise this group: 15 . 01—Comput ing and Related

Machines, 15.02-All Other Office and Business Machines, and 15.03-

Office Supplies. The last sector is a dummy sector for the I/O Model

and no changes are warranted for the corrosion study. Corrosion costs

for the prior two industries are predominantly for corrosion protection in the construction of products and corrosion protection during

shipping. Corrosion related maintenance costs to the industries

themselves are estimated to be minor.

Two industry sources estimated cost of corrosion to be 2 percent

of product cost in Sector 15.01. Corrosion costs were broken down as: Painting—17 percent. Plating—35 percent. Electronic Construction and

Packaging—43 percent, and Shipping—5 percent. An industry source es- timated corrosion cost in Sector 15.02 to be 1.5 percent of product

manufacturing cost.

Inputs for corrosion protection in Sector 15.01 were identified as vapor phase inhibitors for protection during shipping, plastics used

for packaging for corrosion protection, use of corrosion-resistant

metals, corrosion-protection paints, and corrosion-protection

platings. An industrial expert estimated that 50 percent of industrial

chemicals and 50 percent of plastic purchases could be ascribed to

corrosion protection. Further, 40 percent of costs for painting; 60

percent for costs of plating; and all use of aluminum, stainless

steel, and high-strength, low alloy steel were ascribed to corrosion

protection.
94

Adjustments in machinery sectors for corrosion related maintenance

were based on experience and data from other sectors. Similar coefficient adjustments were made in Sector 15.02.

Capital coefficients were unchanged as no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

equipment were not judged to be significantly affected by corrosion.

Best practice rating for the Computing and Related Machinery sec- tor was 2.5 based on high incentive and moderate responsiveness, while

best practice rating for the Other Office and Business Machine Sector

was 2.0 based on moderate incentive and responsiveness.

4.4.20 Miscellaneous Manufacturers

Two sectors are included in this group: 16 . 01—Ordnance and

Accessories and 16.02—Other Miscellaneous Products. The former includes establishments engaged in manufacturing artillery, small arms,

and related equipment; ajmnunition; tanks and specialized tank parts;

fighting and fire-control equipment; and miscellaneous ordnance and

accessories. The latter sector includes establishments primarily

engaged in manufacturing products not classified in any other manufacturing group. Industries in this sector fall into the following

categories: jewelry, silverware and plated wear; musical instruments;

toys, sporting and athletic goods; pens, pencils, and other office and

artists' materials; buttons, costume novelties, miscellaneous notions;

brooms and brushes; morticians' goods; and other miscellaneous

manufacturing industries.

Costs of corrosion in this sector are incurred for both corrosion

protection of products and corrosion related maintenance, repair, and

replacement

In Sector 16.01, coefficient adjustments were made to account for

corrosion protection of products during storage and shipping, namely,

the use of vapor phase inhibitors and special packaging purchases from

Sectors 5.06 and 5.15, respectively.

Organic coatings for corrosion protection were estimated to be 80

percent of total paint usage, and corrosion related metallic coatings

and platings were estimated to be 75 percent of the total usage.

All of the use of low alloy steel and stainless steel in this industry was attribued to corrosion resistance as a substitute for mild

steel. Similarly, 20 percent of the use of aluminum was ascribed to

corrosion resistance for canisters and containers with the remainder

for non-corrosion applications such as weight savings. All of the

usage of titanium, tantalum, and zirconium from Sector 7E04 was ascribed to corrosion resistance.
95

An estimate of technical support for corrosion was made as in

other sectors. Corrosion related maintenance in this industry was judged to be low, and coefficient adjustments were made based on ex- perience from other sectors.

Sector 16.02 is a widely diverse sector and coefficient adjustments were made based on experience in other sectors. Input adjustments for corrosion resistance of products were made to account

for the use of organic coatings (50 percent of total usage), metallic

coatings (67 percent of total usage), and use of corrosion-resistant

metals in place of mild steel. The following percentages of total

metal usage were ascribed to corrosion resistance: Low Alloy Steel—100

percent. Alloy Steel—25 percent. Stainless Steel—100 percent.

Copper—75 percent, and Aluminum—50 percent.

Corrosion related maintenance was judged to be low and adjustments

were made based on experience from other sectors.

No changes in capital coefficients were made as no evidence for

excess capacity or redundant equipment was found. Replacement lives of

several types of equipment are affected by corrosion and appropriate

adjustments were made.

Best practice rating for Sector 16.01 was 2.5 based on high incentive and moderate responsiveness, and best practice rating for Sector

16.02 was 2.0 based on moderate incentive and moderate responsiveness.

4.4.21 Highway Passenger Transport, Motor Freight

and Warehousing, and Transportation Services

Three sectors are included in this group: 17.02—Local and Other

Highway Passenger Transport, 17.03—Motor Freight and Warehousing,

17 . 07—Transportation Services. Sector 17.02 includes companies

primarily engaged in furnishing local and surburban passenger

transportation by rail, coach, or Motorbus Line. Also included are companies engaged in furnishing highway passenger transportation and

companies furnishing highway passenger terminal maintenance or facilities. Intercity bus lines are included in this sector. Sector

17.03 includes establishments furnishing local or long distance trucking, transfer, and draying services, or engaged in the storing of farm

products, furniture, and other household goods, or commercial goods of

any nature. Operation of terminal facilities for handling freight is

also included in this sector. Sector 17.07 includes companies engaged

in freight forwarding, establishments engaged in arrangements of

transportation, and miscellaneous services incidental to transportation, e.g., inspection and weighing services, packing and crating, and

fixed facilities for motor vehicle transportation.

I
96

No items which corrode are produced in this group. Only corrosion

related costs in operation, replacement, and repair are of concern in

this study. Major corrosion costs are related to maintenance of

vehicles used to provide transportation services.

Information as a basis for estimates of corrosion related

maintenance costs was obtained from interviews with major trucking

firms, operators of buslines, input from the detailed analysis sector,

and past experience with corrosion problems for automobiles, trucks,

and buses. Overall, corrosion was not judged to play a major role in

the maintenance of equipment in these sectors.

Coefficient adjustments to inputs were made to account for

corrosion related maintenance and technical support. In addition 50

percent of the chemical purchases in Sector 17.02 and Sector 17.03

were ascribed to corrosion control in the form of inhibited radiator

coolant

Adjustment of coefficients for maintenance were based on information from industry experts and experience in other sectors. Treatment

of technical support for corrosion was as in other industries.

Capital coefficients were unchanged as no evidence was found for

either excess capacity or redundant equipment. Replacement lives of

several types of equipment are affected by corrosion and ajustments

were made accordingly.

Best practice ratings for all sectors in this group were 2.0 based

on moderate incentive and moderate responsiveness.

4.4.22 Pipelines

Sector 17 . 06—Pipelines includes companies engaged in the pipeline

transportation of petroleum and other commodities, except natural gas.

Pipelines for crude petroleum and refined products of petroleum com- prise the bulk of this industry. No items which corrode are produced

and inputs to the industry are not greatly affected because of corrosion. Capital which corrodes includes pipelines, pump stations, and

ancillary equipment.

The industry is aware of corrosion, and in general employs

specialists to monitor and conduct corrosion control programs. Forms

of corrosion prevention and control are organic coatings, cathodic

protection, inhibitors, and removal of water and corrodents, e.g.,

hydrogen sulfide and carbon dioxide. Cost for application for organic

coatings, labor to monitor corrosion control, and repair of corrosion

dajnage are the major contributions to the costs of corrosion.

Coefficient adjustments were made based on interviews with industry experts, suppliers of corrosion related goods to the pipeline

industry, and extensive experience in corrosion related problems in
97

the pipeline industry. It was estimated that 50 percent of the

chemical purchases by the industry are for corrosion control. Further

adjustments were made for corrosion related maintenance based on information from operators of pipelines. Estimates of technical support

for corrosion were made as in other industries and adjustments made to

Sector £5.00-Value Added.

No evidence was found for excess capacity within the industry. The

capital coefficient for Sector 9.02 input to the pipeline industry was

adjusted at account for redundant pumps in pump stations. Standard

design practice is to install three pumps where two are required for

continuous operation. Fifty percent of the redundant pumps are ascribed to corrosion. Replacement lives of several types of equipment are affected by corrosion and ajustments were made accordingly.

Best practice rating for Sector 17.06 was 2.5 based on high incentive and moderate responsiveness.

4.4.23 Public Utilities

Four sectors are included in this group: 18 . 01—Telecommunication,

18. 02-Electric Power, 18.03-Gas, and 18.04-Water and Sanitary Services. Each is discussed separately below.

4.4.25.1 Telecommunication. Sector 18 . 01—Telecommunicat ion includes companies furnishing point-to-point communications services by

wire or radio intended to be received aurally or visually; and radio

broadcasting and television. Services for the exchange or recording of

messages are also included.

Major causes of corrosion costs in this industry are atmospheric

corrosion of transmission towers and lines, corrosion of buried

cables, and air oxidation. The latter is a special case associated

with deterioration of switching components and relays which ''arc''

during activation.

No specific data were available for this industry and estimates

for coefficient adjustments were based on data from other industries

and a general knowledge of the forms and severity of corrosion within

this industry. Inputs to the industry were adjusted for corrosion

maintenance and research and development. No evidence was found for

either excess capacity or redundant equipment and thus, capital coefficients were not chaunged.

Best practice rating for the industry was 3.0 based on high incentive and high responsiveness.
98

4.4.25.3 Electric Power. Sector 18 . 02—Electric Power includes compajnies engaged in the generation, transmission, and/or distribution of

electricity. Such companies (or systems) may be combinations of any of

the above services.

This industry is treated in detail in Appendix B of this report.

Specific data were foiand for costs in the nuclear power generation; in

other cases expert opinion and judgment were used to estimate coefficients adjustments. Inputs to the industry were adjusted for

maintenance, chemicals, and research and development. Corrosion

related maintentnace is a major factor in the power industry as is

described in Appendix B. By its very nature, the power industry must

maintain excess capacity. A portion of this excess capacity can be

related to corrosion caused outages, and thus capital coefficients

have been adjusted accordingly.

Best practice rating for the industry was 2.5 based on high incentive and moderate responsiveness.

4 . 4 . 23 . 5 Gas

Sector 18.03—Gas includes companies and systems

engaged in transmission, storage, and/ or distribution of natural gas

for sale. In addition, companies engaged in the manufacture or distribution of L.P. gas are included.

No items which corrode are produced by these companies, but corrosion maintenance and control contribute significantly to overall

costs in each of three major facets of the industry; natural gas

transmission pipelines, gas storage, and distribution systems. Carbon

steel is the primary material of construction throughout the industry.

Organic coatings, cathodic protection, and corrosion inhibitors are used to control corrosion.

Natural gas transmission pipelines transport gas across the coun- try from production fields, primarily in the South and Southwest, to

major user regions, the Northest and Midwest. Corrosion affects the

buried pipelines, compressor stations, and auxiliary equipment. A com- pilation of cause of leaks in gas transmission from 1970 to 1975 gives

the following percentage breakdown:

Corrosion—14 . 9 percent

Outside Force (e.g., backhoes puncturing the pipeline)—

56 . 3 percent

Materials Failure—16.9 percent

Construction Defect—5.0 percent

Other—6.9 percent.

Corrosion protection is included during construction by external

organic coatings and cathodic protection. These represent approximately 5-10 percent and 0.05 percent of pipeline construction costs,

respectively. Operating costs attributable to corrosion are costs for

portions of maintenance, inhibitors for internal corrosion control.
99

sulfur removal from gas, and portions of inspection and testing.

Useful life of a pipeline would be indefinite if corrosion was not a factor, since it is the only significant mode of degradation of

pipelines

.

Gas is typically stored in underground storage reservoirs. In

1975, there were approximately 350 underground reservoirs in the U.S.

with approximately 15,000 associated wells. Corrosion control of

storage wells is accomplished through the use of coatings, inhibitors,

corrosion allowance and cathodic protection. Two prime sources of information for corrosion costs in this area were (1) results of a sur- vey by the National Association of Corrosion Engineers and the

American Gas Association''"''' and (2) a paper by Push and Beasley'''"'

.

Corrosion costs in gas distribution systems result from

maintenance, coatings, inhibitors, and cathodic protection. Compilation of cause of leaks in distribution systems of the gas industry for

1970 and 1975 indicate that 46 percent of leaks were caused by

corrosion.

Wise'"""* reviewed corrosion costs associated with a moderate sized

distribution system. Corrosion control costs for construction as percent of total investment were coatings—8 percent, cathodic protection—2 percent, and electrical insulation—2 percent. Operating costs

for cathodic protection were 0.46 percent of investment protected.

Chemicals purchased by the industry include odorants, glycol for

dehydration, and corrosion inhibitors. The latter were estimated to be

approximately 5 percent of total chemical purchases.

Coefficient adjustments were made for inputs to the industry to

account for corrosion inhibitors, corrosion related maintenance, and

technical support for corrosion control. No excess capacity was identified in this industry; however, the capital coefficient for engines

and turbines was reduced to account for redundant equipment in com- pressor stations.

Replacement lives of much of the capital equipment are affected by

corrosion and adjustments were made accordingly.

Best practice corrosion rating for the industry was 2.5 based on high incentive and moderate responsiveness.

4.4.25.4 Water and Sanitary Services. Sector 18.04-Water and

Ssinitary Services includes systems primarily engaged in distribution

of water for sale for domestic, commercial, and industrial use (except

irrigation); systems engaged in the collection, treatment, and disposal of wastes conducted through a sewer system; systems engaged in

the collection and disposal (but not transport) of refuse by processing or destruction; and other sanitary services such as sweeping, mosquito control, and malaria control. The industry relies heavily on plumbing systems and chemical plant type operations.
100

Specific data were scarce for this industry sind estimates for

coefficient adjustments in the model are based on data from other industries and general knowledge of the forms and severity of corrosion

within this industry.

Inputs to the industry were adjusted for electric power, gas,

maintenance and corrosion inhibitors. Fuel and power adjustments were

based on the widespread use of pumps. Published information indicates

that pumping horsepower requirements increase about 20 percent for

roughened pipes. Estimates that corrosion accounts for about 40 percent of roughening aand that about 50 percent of the electricity and

gas used by the industry is for pumping results in a 4 percent change

{Z0% X 40% X 50%) in these two direct technical coefficients. Similarly, the appropriate capital coefficient (Sector 9.02) also was adjusted by 4 percent to account for extra pump capacity required

because of corrosion.

Best practice rating for the industry was 2.0 based on moderate

incentive and moderate responsiveness.

4.4.24 Construction

Six sectors are included in this group: 19.01—New Construction,

Nonfarm Residences, 19.02—New Construction, Nonresidential Buildings,

19.03—New Construction, Public Utility, 19 . 04—New Construction,

Highway and Other, 19A05—Maintenance and Repair Construction, Corrosion, and 19B05—Maintenance and Repair Construction, Noncorrosion

Sector 19.01 includes establishments engaged in construction of

residential homes and apartments; farm buildings and homes are excluded. Sector 19.02 includes establishments engaged in construction of

non-residential buildings. This includes office buildings, public

buildings, factories, and other types of buildings used for purposes

other than in farming and residence. Sector 19.03 includes es- tablishments engaged in construction of public utility infrastructure,

not including buildings used by public utilities. Infrastructure re- quired by the telecommunications, transportation, power, gas, and

water industries includes railroads, high-tension power lines, cities'

service poles, antennae, and pipelines. Sector 19.04 includes es- tablishments engaged in construction primarily of streets and roads

with all necessary appendages, e.g., bridges, and guard rails. Construction items also included in this sector are deuns and jetties,

drainage ditches, farm construction, improvements to the land, and

well drilling. The largest single activity in this sector is construction of highways. Sectors 19A05 and 19B05 provide the maintenance and

repair for all items constructed by the above sectors. They do not

provide maintenance and repair for specialized machinery and equipment

within the construction.
101

Corrosion related costs for these sectors were judged to be low

and primary emphasis was placed upon the inputs to construction sec- tors for corrosion protection of items constructed.

Coefficient adjustment in Sector 19 . 01—Construct ion, Nonfarm

Residences were made to account for inputs for corrosion protection of

constructed items and for corrosion related maintenance in the industry itself. The latter was judged to be low based on input from

construction companies. Coefficient adjustments were made based on ex- perience in other sectors.

It was estimated that 25 percent of the paints and allied products

used in this industry are for corrosion protection. Inputs of primary

metals to the industry were also adjusted for corrosion resistant

usage. Fifty percent of the use of copper by the industry was judged

to be for corrosion. Copper is used for both electrical wiring and

plumbing. Use of copper in plumbing is primarily for corrosion,

although in large projects copper is selected also because of the ease

of installation when compared with threaded steel pipe. Corrosion is

not a factor in the selection of copper for electrical applications.

All of the use of aluminum was ascribed to corrosion resistance. In

both cases, more corrosion-resistant materials were used as a substitute for mild steel.

Coefficient adjustments in Sector 19 . 02—New Construction, Nonresidential Buildings were made to account for inputs for corrosion

protection in constructed items and to account for corrosion related

maintenance within the industry itself.

Corrosion related maintenance costs were judged to be low and

coefficient adjustments were made based on experience from other

sectors

.

It was estimated that 40 percent of the paints and allied products

used by this sector were for corrosion protection. Adjustments in the

use of corrosion-resistant metals were made based on estimates of portions of metal usage for corrosion as follows:

Low Alloy Steel-100 percent

Alloy Steel—75 percent

Stainless Steel-100 percent

Primary Copper—90 percent

Aluminum—100 percent

.

Input from Sector 20.05-Other Business and Professional Services was adjusted to account for an estimated |29 Million of cathodic protection installed by Sector 19.02.

For Sector 19.03-New Construction, Public Utility, coefficient adjustments were made to inputs to account for corrosion protection in

constructed items and for corrosion related maintenance in the industry itself.
102

Similarly to the other construction sectors, corrosion related

maintenance was judged to be a small percentage of total maintenance

and coefficient adjustments were estimated based on experience from

other sectors

It was estimated that 60 percent of the use of organic coatings in

this sector were for corrosion protection. The following portions of

metal inputs were judged to be for corrosion:

Low Alloy Steel-100 percent

Alloy Steel—76 percent

Stainless Steel—100 percent

Copper—90 percent

Aluminum—100 percent

Nickel and Nickel Alloys—100 percent.

All corrosion resistant metal usage was assumed to be in place of mild

steel. Input from Sector £0 . 05—Other Business and Professional Services was adjusted to account for the estimated $108 Million of

cathodic protection installed by this industry.

Similar coefficient adjustments were made in Sector 19.04—New Construction, Highway and Other. Corrosion related maintenance was judged

to be low and adjustments were made based on information from other

sectors. It was estimated that 50 percent of the paints and allied

products used was for corrosion protection. The following adjustments

were estimated for corrosion related inputs:

Low Alloy Steel—100 percent

Alloy Steel—75 percent

Stainless Steel-100 percent

Copper—90 percent

Alluminum—100 percent.

Input from Sector 20 . 05—Other Business and Professional Services was adjusted to account for an estimated $7 Million for cathodic protection installed by this sector.

Sectors 19A05 and 19B05—Maintenance and Repair Construction, Corrosion and Noncorrosi on, were treated similarly. Inputs to both industries can be ascribed to corrosion protection on items repaired and

for corrosion related maintenance to the industries themselves. It was estimated that 50 percent of the paints and allied products used by

Sector 19A05 was for corrosion protection. The following proportions

of metal inputs was ascribed to be for metal corrosion resistance in

both sectors:

Low Alloy Steel—100 percent

Alloy Steel—75 percent

Stainless Steel—100 percent

Copper—90 percent

Aluminum—100 percent
103

Input of Sector 20.06—Other Business and Professional Services to Sector 19A05 was adjusted to account for cathodic protection based on es- timates in the other construction sectors.

Capital coefficients were unchanged in all sectors as no evidence

was found for either excess capacity or redundant equipment. Replacement lives of several types of equipment are affected by corrosion and

adjustments were made accordingly.

Best practice ratings for all sectors were 2.0 based on moderate

incentive and moderate responsiveness.

4.4.25 Trade and Business Services

This group comprises four sectors: 20 . 01—Wholesale and Retail

Trade, 20X02—F inance , Insurance, Real Estate, Advertising,

20.05—Other Businesses and Professional Services, and 20 . 06—Business

Travel, Entertainment, and Gifts. Sectors 20.01 and 20X02 are diverse

industries and produce no corrosible goods. Corrosion is not recognized as a significant problem nor addressed directly by the industries.

Sector 20.05 is also a diversified industry containing many

different functions. Of particular interest to this study is the

cathodic protection services which are included in this sector.

Cathodic protection coefficients have been discussed in another sec- tion of this report. Sector 20 . 06—Business Travel is a dummy sector

constructed for the I/O model and no coefficient adjustments for the

corrosion study are warranted.

Coefficient adjustments for 20.01 and 20X02 were made based on data for laboratories and office buildings. Inputs to the industry

were adjusted for corrosion maintenance only and no capital coefficient adjustments were made. No evidence of excess capacity or redundant equipment was found.

Replacement lives of some equipment for buildings is affected by

corrosion and adjustments were made.

Similar adjustments to those for Sectors 20.01 and 20X02 were made

in Sector 20.05 with additional adjustments to account for cathodic

protection services.

Best practice ratings for 20.01 and 20X02 were 1.0 based on low

incentive and low responsiveness. Best practice rating for 20.05 was 2.0 based on moderate incentive and moderate responsiveness.
4.4.26 Other Services

104

Eight sectors are included in this group: 21 . 01— Print ing and

Publishing, 21.02 Radio and Television Broadcasting, 21.03-Hotels and

Lodging Places, 21.04 Personal and Repair Services, except auto, 21.05

Automobile Repair Services, 21 . 06-Amusements , 21 . 07-Medical and Health

Services, and 21 . 08-Educat ional Services and Nonprofit Organizations.

With the exception of the repair sectors, 21.04 and 21.05, all sectors

in this group produce no items which corrode. In the former sectors

corrosion is not recognized as a significant problem and is not addressed directly by the industries. Inputs to these industries were

adjusted for corrosion maintenance based on data for office buildings

and laboratories. Capital was not affected as no evidence for excess

capacity or redundaxit equipment was found. Best practice ratings based

on incentive and responsiveness were

Printing Publishing—2 .

Radio and Television—1 .

Hotels and Lodging Places—1.5

Amusements—1 .

Medical and Health—1.5

Eucational Services—1 . 0

Adjustments in Sector 21 . 04-Personal and Repair Services and

21.05—Auto Repair and Services were made to account for both corrosion maintenance within the sectors as well as inputs of materials

used in corrosion related repairs. For both sectors the use of paints

and metallic coatings for corrosion were estimated. Capital was not

affected as no evidence of excess capacity or redundant equipment was found

Best practice ratings for 21.04 and 21.05 were 2.0 based on moderate incentive ajnd moderate responsiveness.

4.4.27 Government Enterprise—Post Office

Sector 22.01—Post Office produces no items which corrode, and cor- rosion is not judged to be a major problem in the Post Office.

Inputs were adjusted for corrosion related maintenance, based on data from other sectors. Predominant items in the maintenance budget

are for autos and trucks, and fixed structures. Capital coefficients

were unchanged as no evidence was found for either excess capacity or redundant equipment.

Replacement lives of several types of equipment are affected by

corrosion and adjustments were made accordingly.

A best practice rating of 2.0 was given to the Post Office based

on moderate incentive and moderate responsiveness.
105

4. 4. £8 Final Demands

Final demand comprises six components: personal consumption expenditures (PCE), private capital formation, exports, federal government

expenditures, state and local government expenditures, and net inventory change. Adjustments discussed in this section concern personal

consumption expenditures, federal government expenditures, and state

and local government expenditures. Adjustments to private capital formation have previously been discussed, and net export and net inventory changes are disregarded for this study. Adjustments in final demand are analagous to those in the industrial sectors, i.e., adjustments in consumption levels of non-durable goods and services

(paints, coatings, inhibitors, etc.), redundant capital because of

corrosion, and adjustments in replacement lives of durable goods.

4.4.28.1 Changes in Non-Durable Goods. Non-durable goods are defined as goods that last less than 1 year, change form in the con- sumption process, or are intangible. Three non-durables: paints,

coatings and platings, and maintenance and repair construction were

treated as in the flow matrix, and inputs from these sectors were

separated into corrosion and non-corrosion portions. Other adjustments

are discussed below for each of the three components of final demand

of interest here.

4.4.38.1.1 Other Adjustments for Personal Consumption Expenditures. Other adjustments in Personal Consumption Expenditures were

made to account for corrosion related maintenance and protection.

Purchases from Sector 5.06 were adjusted to account for the approximately $180 million of radiator coolant bought for automobiles

annually. The bulk of these purchases is made to retain sufficient

corrosion inhibitor concentration in automobile cooling systems.

Purchases from Sectors 10.01 — Farm Machinery, 11.03 — Ship and Boat

Building, and 13.03 - Radio and Television and Communication Equipment

were adjusted to account for corrosion related purchase of repair

parts. Estimates for corrosion related parts and purchases were made

based on experience in the comparable industrial sector or direct es- timate. Finally, adjustments were made in purchases from Sectors 21.04

Personal and Repair Services, except auto and Sector 21.05

Automobile Repair and Services based on experience from industrial

sectors. Corrosion related costs in these sectors were estimated to be

1 percent and 25 percent, respectively.

4.4.28.1.2 Other Adjustments for Federal Government Expenditures.

Adjustments were made in Federal Government Expenditures to account

for corrosion related maintenance and control. Purchases from Sector

5.06 - Miscellaneous Chemical Products were adjusted to account for

corrosion costs based on experience from other sectors and distribution of estimates for water treatment, corrosion inhibitors, and

radiator coolant. The result was that 6 percent of purchases from Sector 5.06 were attributed to corrosion. Adjustments were made in the
106

purchases of paints and allied products based on an estimate that 40

percent of paints and allied products were for corrosion protection.

Purchases of corrosion-resistant metals as substitute for mild

steel were estimated to be the following percentages of total

purchases

Low-Alloy steel - 100 percent

Alloy Steel - 75 percent

Stainless Steel - 100 percent

Copper - 90 percent

Aluminum - 50 percent.

Purchases of coatings and platings were adjusted based on the es- timate that 60 percent of coatings and platings were purchased for

corrosion resistance. Purchases from Sector 20.05-Other Business and

Professional Services were adjusted based on the estimate that approximately $10 million of corrosion related technical support is

purchased annually.

Corrosion related maintenance costs for aircraft, ships, ordnance,

and communication equipment were treated as follows. Where an estimate

of total corrosion related costs was available, supplied labor was removed from Row 23.02 - Government Industry; the Government Industry

cell indicates all wages and salaries paid by the federal government.

All materials and the remaining labor were distributed among industrial sectors which supplied them. For example, analysis of federal

government expenditures on corrosion related aircraft maintenance indicated annual expenditures of $833 million for labor, and $153

million for material. The former was allotted to Row 23.02 - Government Industry and the latter, $153 million was distributed

70 percent to aircraft and parts

20 percent to electronic components

10 percent to paints

The distribution of materials was based on information from the com- mercial airline sector.

Maintenance on ships was treated somewhat differently in that approximately one-half of ship repair is contracted to privately owned

shipyards, and the other half done in government owned shipyards. As a result, one-half of the government expenditures for ship repairs was allocated to the ship building and repair sector while the other half

was distributed as follows:

30% - Government Supplied Labor to Row 23 . 02—Government

Industry

70% - Materials Distributed to Sectors

35% - Miscellaneous Fabricated Metal Products

6% - Engines and Turbines

3% - General Industrial Machine and Equipment

1% - Non-Electric Heating Equipment

55% - Mild Steel.
107

Distribution of materials was based on the distribution of inputs to

the ship building industry.

Where no estimates were available for corrosion related

maintenance on types of capital equipment, estimates were made based

on experience from the comparable industrial sector with the assumption that corrosion related maintenance costs per dollar for like

capital would be similar in both cases.

4.7.28.1.3 Other Adjustments for State and Local Government Expenditures . State and local government expenditures were adjusted in a similar manner to the federal government expenditures. Purchases from

Sector 5.06 - Miscellaneous Chemical Products were adjusted based on

an estimate of use of corrosion inhibitors. Corrosion related paints

and allied products were estimated to be 25 percent of total

purchases. Use of corrosion resistant metals in place of mild steel

were judged to be the following percentages of total purchases:

Low Alloy Steel - 100 percent

Alloy Steel - 75 percent

Stainless Steel - 100 percent

Copper - 90 percent

Aluminum - 50 percent.

Corrosion related maintenance expenditures were handled as in the

federal government

.

4.4.28.2 Adjustments to Durable Goods. Adjustment to inventory of

durable goods in the final demand sectors were made similarily to that

in the industrial sectors, i.e., considerations were excess capacity,

redundant equipment, and changes in useful lives.

No excess capacity as a result of corrosion was identified in the

final demands. Two redundant equipment changes were identified from

analysis of the federal sector presented in Appendix A. It was es- timated that 6 percent of federal government-owned aircraft and parts

and 0.5 percent of federal-owned ordnance and accessories can be

ascribed to corrosion.

Replacement lives of durable goods in final demand were adjusted

on the same basis as used in the industrial sectors. Relative changes

were made to the base replacement life estimate to account for effects

of corrosion. Where available specific information for corrosion

effects in final demand sectors was used. Where no specific data were

available, it was assumed that replacement lives for durables purchased by final consigners were the same as those estimated for industrial

sectors

.
108

6 COSTS OF CORROSION: ANALYSES OF RESULTS

There are two aspects of corrosion costs which have been determined by this study. They are (1) Quantification of total costs to the

economy and (2) Attribution of costs to specific industrial sectors.

The first aspect is economy-wide in its significance, dealing with

measurements of the resources which our society devotes to the corrosion problem that would be available for other uses if (1) there were

no corrosion, or (2) every segment of the economy followed ' 'best practices' ' (as defined) in dealing with corrosion. The second aspect is

more sectorally specific. It deals with a determination of which industrial sectors are most affected by corrosion. This aspect of the

study provides a data base to guide decisions of where corrective ac- tions and/or where ant i corrosion R&D efforts can best be taken.

These results are presented below with a discussion of uncertainty of the estimates and of uses of the I/O model for technology

assessment

5.1 Quantification of Total Costs

The total cost of corrosion to the U.S. economy may be viewed as

the total value of resources (including labor, energy, embodied materials,

and technical /manager ial expertise) that the economy consumes because

of corrosion. Viewed in a different way, it consists of the value of

resources that, in the absence of corrosion as a destructive force,

would be available for other uses. Viewed in a third way, it may be

thought of as the difference in Gross National Product ( GNP ) between a real world in which corrosion exists and an alternative world which

would be corrosion-free, with nothing else changed.

Estimates of the total cost of corrosion to the United States in

1975 were

Total Cost of Corrosion $82B

Intermediate Cost $24B

Final Demand Cost $58B

The sum is made up of two subtotals. Final demand cost measures the

reduction in final demand purchaess by consumers, investors and

governments that would be realized in a corrosion-free situation.

Intermediate cost measures the reduction in resource requirements that

would become technologically feasible if productive processes no longer needed to take corrosion into account.

Portions contributing to final demand costs included $23B

attributed to private consumer expenditures, $8B attributed to Federal

Government expenditures, and $3B attributed to state and local government expenditures.
109

The total cost of corrosion.

Gross National Product ( GNP ) . This

I (the economy with corrosion) in

$82B, constituted 4.9 percent of

is based on GNP of $1677B for World

the Input /Output analysis.

Total cost of corrosion was broken down into avoidable and un- avoidable costs. Avoidable costs are the total value of resources that are amenable to savings by application of best corrosion control practice. Estimates were

Avoidable Cost of Corrosion $33B

Unavoidable Cost of Corrosion $49B

Avoidable cost is made up of $31B for final demand purchases and |2B

for intermediate costs. Based on a GNP of $1677B, avoidable costs

constitute 2.0 percent of GNP and unavoidable costs constitute 2.9

percent of GNP. Thus, approximately 40 percent of total costs of cor- rosion are avoidable costs.

5.2 Sectoral Attributions of Costs

As a basis for industrial analysis, Input/Output technique was used to attribute relative costs of corrosion to specific segments of

the economy. A major reason for choice of the I/O Model as the device

for quantifying (measuring) corrosion costs in the U.S. was that this

model is uniquely capable of tracing the indirect costs of corrosion

as well as those costs directly borne by each sector. For instance, if

the metal can industry uses aluminum to control corrosion, this means

that different (larger) amounts of energy must be consumed in making

aluminum than in making steel; but either more or less energy (as the

case may be) might be consumed in mining, because of the need to capture a different mix of metallic ores. Thus, there would be a net indirect change in resources used in other sectors than metal cans that

would be attributable to this anti-corrosion activity.

One way of tracing sectoral attributions of corrosion costs would

be by cell-by-cell analyses of the matrices which comprise the I/O

Model. However this is a rather unwieldy and involved procedure that

requires a great deal of technical expertise on the part of the

analyst to trace aspects of costs in detail. A more direct approach

was made possible by the development of ''Industry Indicators''. These

indicators provide a relative measure of the impact of corrosion on specific sectors of the economy.

5.2.1 Industry Indicators and Examples of Their Use

There are eight different Industry Indicators for each sector,

four measuring total cost of corrosion and four measuring avoidable

cost of corrosion. In each of these groups, two measure direct costs

attributable to the sector and two measure the sum of direct plus indirect costs attributable to corrosion. Costs are expressed first on a
110

cost per unit basis (i.e., cents worth of corrosion cost per dollar of

output value) and second on a total dollar cost of corrosion basis

(i.e., cost per unit multiplied by total value of output in World I).

The eight industry indicators are

(1) Total Direct per Unit Cost

(2) Total Direct Aggregate Cost

(3) Total Direct/ Indirect per Unit Cost

(4) Total Direct/ Indirect Aggregate Cost

(5) Avoidable Direct per Unit Cost

(6) Avoidable Direct Aggregate Cost

(7) Avoidable Direct / Indirect per Unit Cost

(8) Avoidable Direct / Indirect Aggregate Cost.

The terms used in these eight titles have the following meanings:

''Total'' indicates total costs of corrosion, avoidable and un- avoidable, combined. ''Avoidable'' indicates only those costs which

are amenable to savings by the adoption of current best anti -corrosion

practices. '' Direct / Indirect ' ' indicates the summation of (a) the

direct costs of the sector, (b) the indirect (or supporting) costs

borne by other sectors, and (c) the interactive effects on the sec- tor's output of changes made in its own and other sector's activities.

''Per Unit'' indicates average costs per dollar's worth of sector

output. ''Aggregate'' indicates the total costs for the entirety of

sector output

Each of the indicators has relevance and best choice for com- parison is determined by the issue being analyzed. For instance, a sector could have high per unit costs of corrosion, but, because its

value of output was very low, account for a small aggregate cost of

corrosion

The Industry Indicators for all 130 industrial sectors are presented in Table 10. Five examples of uses of indicators are discribed below.

Example 1: From column 1 of the table it can be determined that

Sector 8C07—Miscellaneous Fabricated Metal Products and Sector

19.03—New Construction, Public Utility have the highest total direct

costs of corrosion per unit. For both these sectors costs of corrosion

are more than 8 cents on each dollar of output. However, from column

5, Sector 8C07 has avoidable direct cost per unit of only 0.05 cents

per dollar of output, while Sector 19.03 has avoidable costs of 1.24

cents per dollar of output. In other words, universal application of

best corrosion practice would have only small impact on the fabricated

metal products sector and would do little to further reduce the corrosion costs associated with its activity. The public utility construction sector, however, would be significantly affected and corrosion

costs associated with its activity would be reduced by a substantial

amount
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Example 2: A similar analysis can be made based on indicators

in column 2 of Table 10. Sector 20 . 01—Wholesale and Retail Trade and

Sector 18 . 02—Electric Power have the largest total amounts of direct

corrosion cost, $5.4 Billion and $4.1 Billion, respectively. Referring

again to column 5, and comparing these values with column 1, we find

that Sector 18.02 has avoidable unit costs of 0.3 cents per dollar of

output (approximately l/30th of total direct corrosion costs per unit)

and Sector 20.01 has reducible xanit costs of 1.3 cents per dollar of

output (approximately 1/2 the total direct corrosion costs per unit).

From column 6, avoidable costs for the trade sector are greater than

$3 Billion, while avoidable costs for the Electric Power Sector are only $120 Million.

Example 3: A third type of analysis involves sector decisions con- cerning R&D activity versus adoption of best practices as a means of

reducing corrosion costs. Using columns 1 and 5, we find that Sector

8C07—Miscellaneous Fabricated Metal Products which was used in Example

1, can also be viewed in a somewhat different context. Nearly all the

direct corrosion costs per unit (7.4 cents per dollar of output) are unavoidable costs and require technological advance for savings to be

realized; moreover, potential savings are great.

In contrast. Sector 6.02, Cement, Lime, and Gypsum Products, would

be affected to a minor degree only by any anti-corrosion activity. Its

total direct costs per unit are shown to be 0.7 cents per dollar of

output; half of this is reducible by adoption of best practices; and

half could be reduced only by technological advance.

Example 4: In order to suggest industrial priorities for the

allocation of anti-corrosion resources, sectors can be arrayed in

terms of their proportionate contributions to total unavoidable

aggregate direct/ indirect costs (column 4 minus colxamn 8). This can be

done by establishing sector- to-total economy ratios. For instance:

Sector llAOl/Total Economy = 8819.28 - 325.56

126019.49 - 27727.99

8493.72/98301.50

.0864

14620.20 - 7438.91

Similarly

Sector 20.01/Total Economy = 98301.50

= 7181.29/98301.50

= .0731
115

Therefore, while Sector 20 . 01-Wholesale and Retail Trade had greater

total costs of corrosion than Sector 11 . 01-Automobilea , its un- avoidable costs are lower.

Example 5: Another allocation

avoidable costs that are directly

differences between columns 1 and 5

criterion can be based on un- related to each sector. First,

are taken:

Sector llAOl: .0221 - .0010 = .0211

Sector 20.01: .0211 - .0126 = .0085.

Secondly, these values are expressed as ratios to the corresponding

per unit averages for the total economy (2 column 2/World I total

output less S column 6/World I total output):

Total Economy = .0162 - .0043 = .0119

Making this conversion, we obtain

Sector llAOl = .0211/. 0119 = 1.773

Sector 20.01 = .0085/. 0119 = .7143.

Thirdly, the allocation measure is adjusted by multiplying these

values by the corresponding values in Example 4. The normalized

allocation parameters then become:

Sector llAOl = .0864 x 1.77 = .1529

Sector 20.01 = .0731 x .714 = .0522.

These parameters can be calculated for every sector and normalized to

sum to unity. Whatever values the normalized ratios might have, by

this criterion Sector llAOl would be viewed as being three times as effective as Sector 20.01 trade in ability to utilize anti-corrosion

resources

.

While the parameters presented above provide guidance as to

priorities, other factors such as potential returns and pay-back

periods enter into analyses of this sort. Detailed analysis of the

source of costs and their impact is necessary in addition to analysis

of the parameters.

5.2.2 Analysis of Industry Indicators

A better appreciation of the industry indicators can be gained

through analysis of the components from which they are constructed. An

industry indicator is a relative measure of the requirements attributed to corrosion for the industry to produce $1 of its product

per year.
116

Four components of the indicators are presented in Figure 3.

First, there are corrosion effects on inputs required to make a product. These effects are reflected in changes to coefficients in the

flow matrix and include costs of coatings and platings, corrosion inhibitors, maintenance and repair, corrosion resistant metals, and

cathodic protection. Secondly, replacement of capital stock in the industry is affected by corrosion through changes in replacement lives

of equipment and through changes in capital requirements because of

excess capacity or redundant equipment. Thirdly, capital stock for

growth is affected by corrosion through changes in replacement lives.

Fourthly, value added activity of the industry is affected by corrosion through changes of inputs (e.g., research and development and

technical services) and changes in depreciation of capital. The sum of

the four components, calculated from input /output model data, is the

Industry Indicator,

Industry Indicators provide a relative ranking of industries.

Alternative criteria for ranking include:

To what industries are greatest direct cost of corrosion

as percent of sales attributed?

To what industries are greatest direct dollar costs of

corrosion attributed?

What portion of costs attributed to an industry are avoidable? and what portion are unavoidable!

What percent of all avoidable costs are attributed tb each

industry?

What unavoidable costs are attributed to each industry?

Sectors with the highest Industry Indicators for total cost of corrosion are presented in Table 11. Sectors with the highest Industry Indicators for avoidable costs are listed in Table 12.

Industries to which highest total costs of corrosion are attributed based on percent sales include copper ore mining, manufacturing industries, public utilities, and public utilities construction. For highest total cost on a dollar basis, industries with large

total sales appear on the list: Wholesale and Retail Trade, Automobile

Manufacturers, Livestock, and Petroleum Refining.

The list of sectors with highest industry indicators for avoidable

costs changes considerably from that for total costs. Based on percent

of sales; Livestock and Agriculture, Mining, Transportation, Construction, and Trade and Business Services are attributed the highest

costs. On a dollar basis, the list remains the saune except mining industries no longer appear and the Food Industry and Pulp and Paper Industry are added. No major differences are observed on comparing lists

for direct avoidable costs with that for direct and indirect avoidable

costs
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TABLE 11. SECTORS WITH HIGHEST INDUSTRY INDICATORS FOR TOTAL COST*

Sector % Sales Sector $M

Direct Costs

2.02 Copper Ores 5.6 1.01 Livestock + Livestk Prod 1100

4X05 Furniture + Fixtures 4 1.02 Field + Orchard Crop 1400

8.01 Metal Cans 4 5.01 Petrol Refng + Reltd 1100

O . uz Metal Barrels, Drum + P J D 7Am iiixa oceei—L-dL Don ot yuu 8.03 Met Sanit + Plumbing P 1 8.05 Fab Structural Metal 1200 8.04 Non Electric Heating

Ecju i. pmG n t 4.7 llAOl L kJlllW U i J. C 3 2200

8 . 05 Fal^ C dU Qt"T"iir^l'iii"Ql OLLLll-LLlLctX Mot"al LlCLdX 5 .18 . 02 Electric Power 4 100

8 . 06 7 .19.03 2000

8A07 r\ PI t i r\ o 4- Pl;it"Tncj Pot 6 .

20 . 01 WilUXcodXC 1 ixcLdJ-J. XLd 5400

8C07 ^^^c^'Cll LiJ.oUC-LXdIld-'LlOj 1 QTici(~iiic T^ahv idUL • Metal Prod 7.4 20X02 Financ, Ins, Real E, Ad 1300

9.02 General Indus Mach + Equipment 4.3

10.03 Mining Machinery 4 10.08 Special Industry Machin 4.1 13.02 Household Appliances 5.7 17.06 Pipe Lines 4.3

18.02 Electric Power 10 18.04 Water + Sanitary Ser 4.9 19.03 New Const, Public Uti 7.8 19A05 Main + Repr Const, Cor 4.8

21.05 Automobile Repair + Se 4.1

Direc t + Indirect Cos ts

2.02 Copper Ores 12 1.01 Livestk + Livestk Prod 2700 8.01 Metal Cans 10 1.02 Field + Orchard Crop 3300

8.02 Metal Barrels, Drum + P 13 3X01 Food + Kindrd Prod, Tob 3600 8.03 Met Sanit + Plumbing P 20 5.01 Petrol Refng + Reltd 2400

8.04 NonElec Heating Equi 12 8.05 Fab Structural Metal 2600

8.05 Fab Structural Metal 13 8.06 Screw Mach Prd + Stamp 2000 8.06 Screw Mach Prd + Stamp 17 9.02 Gen Indus Mach + Equip 2100

8C07 Misc. Fabr. Metal Prod 18 llAOl Automobiles 8800

9.02 Gen Indus Mach + Equip 11 17.03 Motor Freight + Wareho 2000 10.03 Mining Machinery 10 18.01 Telecommunicat ion 2000

10 08 Sped Indstry Machin 11 19.01 New Const, NonFarm Re 2700 13.02 Household Applicances 13 19.02 New Const, NonResid B 3500 17.06 Pipe Lines 11 19.03 New Const, Public Uti 5600 18.02 Electric Power 11 19B05 Maint + Repr Const, NCO 2700

18.04 Water + Sanitary Ser 10 20.01 Wholesale + Retail Tra 14600

19.03 New Const, Public Uti 22 20X02 Financ, Ins, Real E, Ad 4000

19AO 5 Maint + Repr Const, Cor 12 21.04 Persnl + Repar Serv, Ex 2400 21.05 Automobile Repair + Se 11 21.05 Automobile Repair + Se 2200

* Relative costs attributed to industrial sectors
119

TABLE 12. SECTORS WITH HIGHEST INDUSTRY INDICATORS FOR AVOIDABLE COSTS*

Sector % Sales Sector $M

Direct Costs

1 01 Livestk + Livestk Prod 1 6 1.01 Livestk + Livestk Prod 700

1 02 Field + Orchard Crop 1 3 1.02 Field + Orchard Crop 800

1 03 Forestry + Fishery P 1 0 3X01 Food + Kindrd Prod, Tob 400

1 04 Agri, Forst + Fish S 1 3 4.07 Pulp + Papr Prd Ex Con 100

2 01 Iron + Ferroalloys 0 1 6 17.01 Railroads + Relatd Ser 200

2 02 Copper Ores 2 4 17.02 Local + Highway Passng 300

2A0A Underground Coal Min 1 9 17.03 Motor Freight + Wareho 300 2B04 Strip Coal Mining 1 2 18.02 Electric Power 100

17 01 Railroads + Relatd Ser 1 1 19.01 New Const, NonFarm Re 300

17 02 Local + Highway Passng 1 6 19.02 New Const, NonResid B 200

17 05 Air Transport 1 2 19.03 New Const, Public Uti 300

17 04 Water Transportation 1 3 19.04 New Const, Highway + OT 300

17 Oh Pipe Lines 1 3 19B05 Maint + Repr Const, NCO 400

18 04 Water + Sanitary Ser 1 2 20.01 Wholesale + Retail Tra 3300

19 03 New Const , Public Uti 1 2 20X02 Financ, Ins, Real E, Ad 700

19 04 New Const , Highway OT 1 3 21.05 Automobile Repair + Se 300

20 01 l^olesale + Retail Tra 1 3 20.05 Othr Bus + Prof Servic 300

21 04 Persnl + Repar Serv, Ex 1 1 21.04 Persnl + Repar Serv, Ex 400

21 05 Automobile Repair + Se 1 3 21.03 Hotels + Lodging Pla 200 21.07 Medical + Health Ser 100 21.08 Educat Serve + NonProf 100

Direct + Indirect Costs

1 01 Livestk + Livestk Prod 3 5 1.01 Livestk + Livestk Prod 1500

1 02 Field + Orchard Crop 2 8 1.02 Field + Orchard Crop 1800

1 03 Forestry + Fishery P 2 0 3X01 Food + Kindrd Prod, Tob 1000

1 04 Agri, Forst + Fish S 2 4 4X01 Lumber Mill, Plywd, Wd 200

2 01 Iron + Ferroalloys 0 3 2 5.01 Petrol Refng + Reltd 200

2 02 Copper Ores 4 8 7A01 Mild Steel-Carbon St 200

2 03 Nonferrous Ores, Exp 3 8 llAOl Automobiles 300 2A04 Underground Coal Min 2 5 17.01 Railroads + Relatd Ser 500 2C04 Other Coal Mining 2 0 17.02 Local + Highway Passng 600

17 01 Railroads + Relatd Ser 2 2 17.03 Motor Freight + Wareho 700

17 02 Local + Highway Passng 3 7 18.02 Electric Power 300

17 03 Motor Freight + Wareho 2 7 19.01 New Const, NonFarm Re 800

17 04 Water Transportation 2 3 19.02 New Const, NonResid B 500

1 7 06 Pipe Lines 2 6 19.03 New Const, Public Uti 700

18 04 Water + Sanitary Ser 2 2 19.04 New Const, Highway + OT 700

14 03 New Const, Public Uti 2 7 19B05 Maint + Repr Const, NCO 800

19 04 New Const, Highway + OT 2 9 20.01 Wholesale + Retail Tra 7000

20 01 I'Jholesale + Retail Tra 2 9 20X02 Financ, Ins, Real E, Ad 1600

21 03 Hotels + Lodging Pla 2 9 20.05 Othr Bus + Prof Servic 800

21 04 Persnl + Repar Serv, Ex 2 5 21.03 Hotels + Lodging Pla 400

21 05 Automobile Repair + Se 3 1 21.04 Persnl + Repar Serv, Ex 900

21.05 Automobile Repair + Se 600

21.07 Medical + Health Ser 200 21.08 Educat Serve + NonProf 200

Relative costs attributed to industrial sectors
120

By analyzing the input /output matrices and compilation of adjustments made for corrosion, the components of an Industry Indicator

can be determined. This provides necessary information on the source

of costs attributed to the industry. To illustrate the usefulness of

this procedure, the components of Industry Indicators were calculated

for five industries:

Sector 1 . 01—Livestock and Livestock Products

Sector 5 . 03—Industrial Chemicals

Sector 8 . 05—Fabricated Structural Products

Sector 19.03—Public Utility Construction

Sector 20 . 01-Wholesale and Retail Trade.

These industries provide a broad spectrum of activities, and illustrate that the major source of costs can vary significantly from

industry to industry.

Breakdowns of each direct Industry Indicator into its components

for the five sample sectors are shown schematically in Figures 4

through 8. Areas of the two circles are proportional to magnitudes of

total costs and avoidable costs, respectively. The portion of each

cost resulting from changes in requirements for (1) Inputs to the

production process, (2) Replacement capital, (3) Growth capital, and

(4) Value added are identified. In addition, sources of change from

the analysis are identified, e.g., change in use of inhibitors, change

in maintenance and repair requirements, and change in replacement life

of capital equipment.

For Sector 1 . 01—Livestock and Livestock Products, Industry Indicators for Total Direct Costs and Avoidable Direct Costs were |1 086 M

and $671 M, respectively. As shown in Figure 4, the major contribution to Total and Avoidable Costs was from adjustment of replacement

lives in the analysis. Average replacement lives for all capital in

Sector 1.01 was 14 years in World I, 21 years in World II, and 18

years in World III. These changes in replacement lives resulted in a slight change in value added. A small portion, approximately 4 percent, of total direct costs resulted from input adjustments to account

for corrosion related maintenance and repair.

For Sector 5 . 03—Industrial Chemicals, Industry Indicators for

Total Direct Costs and Avoidable Direct Costs were $692 M and $91 M,

respectively. A breakdown of these indicators is shown in Figure 5.

The largest contribution to total costs resulted from adjustments

to inputs. Furthermore, adjustments for inhibitors and water treatment

accounted for approximately 20 percent of this portion of costs with

adjustments for maintenance and repair accounting for the remainder.

Other contributions to direct costs were (l) Replacement capital

resulting from changes in useful lives and an estimated 2 percent ex- cess capacity for the industry, (2) Growth capital resulting from ex- cess capacity, and (3) value added resulting from adjustments to

technical service inputs and capital requirements.
121
122
123

125
126

Avoidable costs, which are less than 15 percent of Total Costs,

comprise primarily growth and replacement capital costs with a smaller

contribution from inputs. The former results from changes made to

replacement lives, while the latter results from adjustments to

maintenance and repair inputs.

Industry Indicators for Sector 8 . 05—Fabricated Structural Metal

were $1153 M for Total Direct Costs and $9 M for Avoidable Costs. As

shown in Figure 6, except for a small contribution from capital re- quirements resulting from change in replacement lives, total costs are

the result of adjustments to inputs. Further breakdown indicates that

97% of adjustments to inputs were to account for incorporation of cor- rosion protection in the products of this industry. Corrosion protection was provided by metal coatings, use of corrosion resistant metal,

cathodic protection, and organic coatings. Maintenance and repair inputs made only a slight contribution.

In contrast to results for Sector 1 . 01—Li vestock and Livestock

Produts, Avoidable Costs for Sector 8.05 are less than 1 percent total

costs

For Sector 19.03—Public Utility Construction, Industry Indicators

were $1977 M for Total Direct Costs and $315 M for Avoidable Direct

Costs. As shown in Figure 7, total costs are ascribed primarily to adjustments to inputs. Approximately 97% of input adjustments were attributed to incorporation of corrosion protection in items con- structed: 90% use of corrosion resistant metals, 6% cathodic protection, and 1% coatings. Maintenance and repair input accounted for only

3% of this portion of costs. Change of average replacement life from

7.5 to 12 years resulted in replacement and growth costs and the

remainder of total direct costs.

Avoidable Costs were attributed to changes in capital requirements

and changes to maintenance and repair inputs. Avoidable Costs ac- counted for approximately 15 percent of total costs for this industry.

Industry Indicators for Sector 20 . 01—Wholesale and Retail Trade

were $5441 M for Total Direct Costs and $3251 M for Avoidable Direct

Costs. Breakdown of these costs shown in Figure 8 identifies the

source of these costs. Both Total and Avoidable Costs are primarily

attributed to changes in replacement capital costs resulting from adjustment of replacement lives from 13.5 years for World I to 17.5

years for World II and to 16 years for World III. Adjustments of inputs for maintenance and repair account for the remainder of costs in

the industry.

The five examples presented above demonstrate the relationship

between adjustments made to elements of the Input /Output model and

results of cost of corrosion. Analysis of this type identifies sources

of costs attributed to an industrial sector and a relative measure of

the impact of adjustments on costs.
127

5.2.3 Costs of Corrosion for Components of Final Demand

Costs attributed to the industrial sectors were discussed in the

previous section. A measure of impact of corrosion on components of

final demand is available from dollar values indicated in social

savings (row 27.00 of I/O Transaction Tones).

Total costs for personal consumption expenditures, the private

consumer activity, were $22.8 B with avoidable costs of $15.9 B. Total

costs for federal government expenditures were $8.1 B with $1.7 B as avoidable costs. Total costs for state and local government were

$2.9 B with avoidable costs of $0.9 B.

Sources of these costs for each of the final demand components

were discussed in section 4.4.28. The costs resulted from changes in

purchases of non-durable goods and services, redundant capital, and

corrosion effects on replacement lives of capital.

5.3 Uncertainty

Uncertainty in the model's results may be attributed to uncertainty associated with each of the model's component parts:

• The A matrix

• The capital matrix

• The stipulated final demands.

5.3.1 A Matrix Uncertainty

The A matrix consists of the direct technical coefficients, of

which there are n', n being the number of sectors in the matrix. Each

of the n' cells is subject to measurement error which may ultimately

find its way into the model's results. In the case of world I, this A

matrix generated error is likely to be more evenly distributed than in

the world II and III cases. The reason the world I A matrix errors are

likely to be more evenly distributed is that the n columns of coefficients in world I are all normalized to unity. The normalization

acts to prevent the errors in the individual cells from being ac- cumulated in the residual cell, in this case, value added. In the

world II and III cases, the errors are not normalized but rather

collected in the social savings cell as a residual.

In spite of the fact that the world II and III coefficient errors

are not normalized, those errors tend to converge when they are translated into the inverse since (1) all the errors are less than

one, and (2) the inverse of the (I-A) matrix may be estimated as

2 3

°° I+A+A+A+ ... +A
128

Additionally, certain sensitivity testing of input-output models

suggests that the model's outputs are relatively insensitive to errors

in the direct technical coefficients.* For exsunple, using various

order matrices, Stevens and Trainer found that a mean error of 26 percent in the matrix coefficients resulted in a mean U value of .067 for

the total output levels.** The testing was performed on matrices ranging from orders of 10, 25, 50, and 100 while the errors in the coefficients were selected randomly from normal distributions with standard deviations of either 10, 20, 30, or 40 percent of the original

coefficient value.

5.3.2 Capital Matrix Uncertainty

The capital matrix when used in conjunction with the remainder of

the model results in gross private domestic investment. There are various sources of errors which may affect these final levels of investment. Errors in the capital coefficients themselves likely exist

but unfortunately there is seemingly no way of determining the

magnitude of those errors. Capital replacement rates and growth rates

also involve errors and again it is difficult to estimate their absolute magnitude. It is also difficult to state analytically what the

implications of those errors are upon the models final output.

Replacement capital coefficients are determined by multiplying the

capital coefficients by their replacement rates. The replacement rate

is estimated as

Thus any error in the ultimate replacement capital coefficient

becomes a function of the error in the capital coefficients multiplied

by the error in the replacement rate which is itself a complex function of the errors in replacement life and growth rates.

However, since the capital replacement and growth coefficients are combined with the direct technical coefficients in the dynaunic inverse, ( I-A-BR-BG)~' , and since the term (A+ BR + BG) is generally less

than one, the errors would seem to converge for the calculation of

*Stevens, Benjamin H., and Glynnis A., Trainer, ''Error Generation in Regional In- put-Output Analysis and its Implications for Non-Survey Models,'' Regional Science

Research Institute, April 14, 1977.

where RR is the capital replacement rate

g is the growth rate for a specific type of capital

u is the replacement life of a specific type of

capital

** u = (P. - A )^/Z A^]

i X X ^ 1 Actual or exact output of sector i Predicted or estimated output of sector i given the errors.

A, =

P, =
129

total ouputs in a way analogous to the errors in the direct technical

coefficients. If, however, (A + BR + BG) is greater than one, unlikely

in this case, the errors would not converge but rather increase during

the inversion process.

5.3.3 Stipulated Final Demand Uncertainty

Errors in stipulated final demand for World I arise primarily from

the estimation procedure which is described in the methodology section. Again, little is known of their magnitude except that the value

estimated as full employment GNP is approximately 2 to 3 percent

greater than actual GNP for 1975. Since we are measuring full employment GNP it is difficult to determine the errors implicit in the

difference. Errors in Worlds II and III derive from both the errors in

the World I estimate and the methods used to make the Worlds II and

III adjustments to the World I levels of stipulated final demand. The

adjustments included

• ex ante adjustments for redundancy of social capital infrastructure and for other corrosion related consumption

• adjustments to social capital infrastructure replacement

lives which are translated into changes in the rate at which

the items are replaced.

Finally, the adjusted stipulated final demands were used to ac- tually drive the model so that errors in this final demand component

probably are more significant in terms of the model's final results

than are the errors in other model components. However, while these

errors will tend to affect the absolute sizes of both the GNP estimates

and the estimates of corrosion cost, and in the same directions, they

probably have less influence on the resulting estimates of the relative

significance of corrosion costs. The relative estimates, i.e., costs

as percent of GNP or relative costs among industrial sectors, are more

certain than absolute dollar value estimates.

6.3.4 Total Costs of Corrosion Uncertainty

Given the uncertainty in the model's component parts and in its

output, the cost of corrosion estimates will also embody uncertainty.

We feel that uncertainty will tend to result in an underestimation of

the total costs for the following reasons:

(1) Where specific information has not been obtained, U.S.

averages will tend to be used. This means that special

situations, so far as high corrosion is concerned, will

tend to be understated, more often than not, if not

specifically quantified in the field.

ii
130

(2) The coefficient adjustments that must be made in going from

World I to World II are generally made by subtracting a corrosion-related portion from the entries into specific

cells. These cells must not and cannot be reduced below

zero. Therefore, if the World I coefficient is large enough

to cover or more than cover the full correction, it will be

made; however, if the coefficient is not large enough to

cover the full correction, only a partial adjustment will

be possible. Given random errors in the cell values,

results will be biased in one direction, only—toward understatement of the World I - World II differential.

(3) There are a large number of small instances of corrosion

(e.g., corrosion of umbrella ribs or of small appliances)

which cannot be specifically accounted for. No attempt has

been made to estimate their aggregate impact and incorporate it into the model, because such a correction would

destroy the integrity of an interdependent model of this

kind. Although these are individually small costs, they are not included in the estimates. Their aggregate value and

their contribution to the understatement of corrosion costs

is not known but likely to be significant.

(4) There are some subtle and intangible costs of corrosion

(e.g., engineering attempts to reduce it or its effects in

designing items that are not conspicuously vulnerable) that

undoubtedly occur, but cannot be estimated and ascribed to

a particular sector. These will be systematically omitted

from the World I - World II adjustments.

(6) Where specific estimates have been made of World I /World II

differentials, we have tried to make accurate estimates

rather than to estimate on the high side. Thus, these es- timates probably are subject to random rather than biased

errors. Given the ''conservatism'' of the I/O model, we can

say that the net impact of these errors will be low and

random—i . e . , in a narrow ± range. All the systematic errors

(items 1-4, above), on the other hand, will tend to bias in

the negative direction, and will therefore lead to a high

probability of understating the total cost of corrosion.

(6) When we turn to the distribution of total cost between

avoidable and unavoidable, i.e.. World III, we cannot say

with any assurance what bias, if any, will be injected. The

World III corrections logically could range from the same

negative errors of World II to zero bias. There is no

reason to believe that they would systematically tend in

the opposite direction. This would imply that both total

and avoidable corrosion costs would be understated (though

not necessarily to the same degree), making the unavoidable

costs more nearly correct than either of the other two.
131

The degree of certainty of estimates of the effect of elements of

corrosion cost discussed in section 4.2 ranges widely. Estimating

procedures were described and should be judged individually. Clearly,

estimates of corrosion costs for maintenance and repair, where

detailed studies were available and total maintenance costs were

reasonably well established, are more certain than estimates of costs

based on changes in replacement lives, where specific data were un- available and a more qualitative approach was necessary.

The supporting data in components of the I/O model and rationale

of estimates of corrosion effects provide a means to determine the

source of significant costs of interest. By tracing these costs and

performing further analysis, it is possible to evaluate the estimates

and to make refinements where warranted.

5.4 Input /Output Model As A Means Of Technology Assessment

Technology assessments were not included within the scope of this

study, but data gathered and procedures developed provide a sound

basis for such activities. The principal attribute of the I/O analysis

is the determination of indirect as well as direct consequences of

technological change. The corrosion I/O model, used here to determine

costs of corrosion, can be used to assess proposed means to reduce

costs

.

In contrast to procedures to determine total effect of corrosion

where technologies of all industrial sectors -were changed

simultaneously, only those adjustments specific to the proposed

technology would be entered into present technology (World I) values.

The consequences of alternative proposals can thus be determined.

To illustrate this procedure, a hypothetical example is chosen; a two-fold increase in the use or galvanized steel for automobiles. In

the World I Input/Output tables, ''motor vehicles and parts'' is a row

and a column in which all parameters are fitted to the real world. In

order to measure the social and industrial impacts of this increased

use of galvanized steel, an alternative world (World lA) is created.

The first change introduced is in the motor vehicle column of the

A-matrix (the column of input coefficients). Here inputs are shifted

from mild steel to galvanized steel with an off-setting entry into Row

27.00 (Social Saving) to account for differences in real (resource)

costs. If this chainge alters other inputs, as well (e.g., labor or energy use in auto manufactures), then these changes are also made.

In the final demand vector as well as in the input columns of

other industries, the change in materials may directly alter the

relative purchases of motor vehicles and parts and of automobile
132

repairs and services. These changes in input coefficients are also

determined. Similarly the change in materials may affect replacement

lives of cars in various uses.

When all the differences have been incorporated into the World lA

tables that are ascribed to the material alteration, the transaction

table is determined and compared with the World I base. Differences

between the two worlds introduced by the scenario provide the bases of

the assessment of the proposed technology. A result of the analysis

may be that present galvanized-steel production capacity in the U.S.

would have to be increased to meet the new demand.

Other simulations are possible, by means of which various alternatives to reduce corrosion costs may be evaluated.
133

6 CONCLUSIONS

Corrosion has a major impact on the economy of the U.S. Reduction

of the wastage of resources by decreasing corrosion costs is an effective means to provide materials, energy, labor, and technical expertise for alternate uses

.

Costs of corrosion in the United States in 1975 were estimated to

be

Total Costs to U.S. $82 Billion

Avoidable Costs $33 Billion

Unavoidable Costs $49 Billion

Total costs were 4.9 percent of Gross National Product (GNP).

Avoidable costs were 2.0 percent of GNP, and unavoidable costs were

2.9 percent of GNP. Thus, approximately 40 percent of total costs were

estimated to be avoidable, i.e., amenable to reduction by presently

available corrosion control technology.

Total costs of corrosion are comprised of (1) final demand costs

of $58 B, a measure of the final demand purchases by consumers, investors, and governments because of corrosion and (2) intermediate

output of $28 B, a measure of the resource requirements for productive

processes because of corrosion. Final demand costs include $23 B for

personal consumer expenditures, $8 B for federal government expenditures, and $3 B for state and local government expenditures.

These estimates should not be taken as absolute, but rather as the

best available measurement of the economic effect of corrosion. Their

significance is that they provide a reference point for the impact of

corrosion against which the relative impact of other factors affecting

the economy can be compared. By this means, priorities and allocation

of resources to reduce costs can be established in a rational manner.

The results indicate that large potential savings are present for both

unavoidable costs (requiring technological advance for reduction) and

avoidable costs (requiring technology transfer and implementation for

reduction)

.

The second objective of the study, after total costs were determined, was to allocate total cost to individual segments of the

economy. This allocation is necessary to identify areas where potential savings are the greatest and, therefore, provide guidance for

cost-reduction efforts. A set of indicators was developed to ascribe

relative costs of corrosion to industrial sectors of the economy. A

series of indicators express corrosion costs of an industry on a dollar basis and as percent of sales for total corrosion costs and

avoidable corrosion costs.

The source of costs to an industry can be determined by analysis

of the foundational data for estimates of costs. The approach of cost

reduction efforts will depend greatly on the source of costs.
134

Several industrial sectors were analyzed, and costs were attributed to operating costs (resource requirements to produce the industries product or service) and to capital costs (plant and equipment

requirements for the production process). These analyses illustrated,

(1) The importance of identifying the source of costs and (2) The wide

variation from industry to industry of predominant element of cost,

e.g., maintenance costs, corrosion control costs, and replacement life

costs. Three exaimples are reviewed here.

For the livestock industry, approximately 95 percent of total

costs $1100M were the result of adjusting the average replacement life

of capital from 14 years to 21 years if corrosion were not a factor,

and less than 5 percent of total costs were the result of corrosionrelated maintenance. For the Fabricated Structural Metal industry,

greater than 95 percent of total corrosion costs of $1150M resulted

from costs for providing corrosion protection to the industries

product, i.e., metallic coatings, corrosion resistant metals, cathodic

protection, and organic coatings. For the Industrial Chemical Industry

approximately 65 percent of total costs of $690M were ascribed to

operating costs and 35 percent to capital. Operating costs resulted

from corrosion-related maintenance and repair and purchases of corrosion inhibitor, whereas capital costs resulted from corrosion effects

on replacement lives of equipment and production capacity.

Input/Output analysis, which provided the methodological framework

for this study, permitted detailed and comprehensive treatment of all

elements of the costs of corrosion. Production costs, capital costs,

changes in replacement lives, etc. were treated in a coordinated and

systematic manner. The methodology applied and developed in this study

can be used to study the effects of other forms of wastage to the

economy

Data gathered and procedures developed in this study provide a sound basis for technological assessments. The principal attribute of

Input /Output analysis is the determination of indirect, as well as

direct consequences of technological change. The corrosion I/O Model

can be used to assess proposed means to reduce costs. Through

simulations alternatives to reduce corrosion costs can be evaluated.
135

7 GLOSSARY

A Matrix: matrix, also called the flow matrix, of direct technical

coefficients; the value of each coefficient indicates the dollar's

worth of inputs from the row sector necessary to produce one dollar's

worth of the column sector's output.

Annual Replacement Rate: the average, annual rate at which existing

capital stock (private or social) is replaced.

Avoidable Cost of Corrosion: that portion of the total costs of cor- rosion which could be avoided if best corrosion control practices were

used.

B Matrix: a matrix of capital-to-output coefficients; also called

the capital matrix.

Best Corrosion Control Practice: the most economically effective and

efficient use of labor, materials, energy, and technical expertise

possible with presently available corrosion control technology.

Capital: in the context of this study, this term refers only to

physical plant and/or equipment that is not directly consumed or changed in form, but is used in the production of goods and services,

either for sale or for consumption. By general usage, all items of

capital have a replacement life of one year or more.

Capital-Output-Coefficient: the value of capital equipment required by

an industry in order for it to produce one dollar's worth of output.

The coefficient is measured in terms of capital replacement value and

at the using sector's full capacity.

Capital Matrix: a matrix of capital-to-output coefficients; also

called the B Matrix. Each cell indicates the value of capital produced

by the row sector and used by the column sector.

Cell: a single value of entry in a matrix or vector. A cell is

defined as the intersection of a row and column.

Corrosion: the degradation of metals because of interaction with

aqueous or gaseous environment, e.g., aqueous corrosion, stress corrosion cracking, corrosion fatigue, erosion-corrosion, oxidation, and

sulfidation. Non-metallics are excluded from the more general definition of corrosion for this study.

Depreciation: the incremental decrease in the value of capital

because of wear, aging or obsolescence.

Diagonal Matrix: a matrix which contains values only in the diagonal

cells, with zeros in all off-diagonal cells.
136

Direct Technical Coefficient Matrix: also called the A Matrix; matrix

of values which indicate dollar's worth of input from the row sector

required to produce one dollar's worth of the column sector's output.

Direct Costs: the costs on industrial sector accrues as it purchases

inputs and produces its products.

Disaggregation: the separation of an industrial sector (in the

input-output sense) into two or more of its component parts; the sec- tor's row and column in each of the input-output model matrices is

separated into two or more component rows and columns.

Durable Goods: products which last in excess of one year and which

do not change form during their use. Dynamic Inverse: a transformation of a matrix containing direct

technical coefficients, capital replacement requirements, and capital

growth requirements (I-A-BG-BR)

Econometric Model: a mathematical representation of an economic

system.

Ex ante: a process of determining model parameters through use of

expert knowledge and opinion rather than through the manipulation of

existing statistics.

Ex post: estimating model parameters through use of historical, ex- isting statistics.

Final Consumers: consist of private individuals purchasing for

their own satisfaction, governments, private investors, and parties

receiving U.S. exports.

Final Demand: in national income accounting terms, the consumption

attributable to private investors, individuals purchasing for their

own private use, governments, net inventory change, and net exports.

Flow Coefficient: also called direct technical coefficient. Dollar's

worth of inputs required from a given industry for some other industry

to produce one dollar's worth of output.

G Matrix: a diagonal matrix of industrial sector growth rates.

GNP: the gross national product, that is, the value of the final

output of an economy, measured without double counting.

Growth Capital: annual capital equipment purchases which may be attributed to the fact that the economy is growing.

Input-Output: a particular methodology used in modeling an economic

system. It consists of a set of simultaneous equations which may be

solved for the system's total output.
137

Indirect Costs: the costs which accrue in producing the inputs to a particular production process, and the costs of producing the inputs

to the inputs until the additional costs become negligible.

Industry Indicator: a special index used in this study to help assign

relative total costs of corrosion to individual industrial sectors.

Intermediate Consumers: those industries purchasing products which

are to be transformed into different products.

Inverse: a transformation of the A Matrix. Each cell in the inverse

indicates the total dollar's worth of inputs from the row sector

necessary in order for the column sector to deliver one dollar's worth

of output to its own final demand.

Inversion: the process by which a matrix is transformed into its

inverse

.

Input: a necessary element in the production of a sector's output.

In general, inputs consist of raw materials, energy, intermediatecomponents, supplies, purchased services, and value added. The total

value of a sector's inputs is equal to the value of its output.

Matrix: a table made up of rows and columns. In mathematics, a ''short-hand'' way of expressing a set of simultaneous equations.

Output: the result of the productive process. The totality of goods

and services produced and sold by a sector. The value of a sector's

output is equal to the total value of all its inputs.

Private Fixed Capital Formation: the annual purchase of capital (plant

and equipment) by private investors for reasons of growth and replacement .

Privately Owned Social Capital: equipment, structures, and other

durable goods owned and used by individuals for their own enjoyment.

Process Sectors: industrial sectors of the input-output model which

use one technological process to produce a homogeneous product (or

group of products)

.

R Matrix: a matrix of annual average capital replacement rates;

each cell indicates the average annual replacement of capital produced

by the row sector and used by the column sector.

Replacement Capital: annual capital purchases which are made to

replace obsolete or worn out plant and equipment.

Replacement Life: the time to first replacement of a piece of

capital equipment.
138

Sector: an industry or group of industries that is treated as a productive unit in an input-output table.

Social Capital / Infrastructure: plant, equipment, ajnd structures,

purchased and used by private individuals and/ or government. These

items last in excess of one year and do not change form during their

use, e.g., highways, bridges, and navigational aids.

Social Savings: an accounting mechanism in the modified input-output

model used in this study. The social savings accounts for real

resources being consumed and value added accruing because corrosion

exists

Stipulated Final Demand: the value of goods and services which ac- crue to individuals, government, net inventory change, and exports.

Stock Coefficient: also called capital coefficient; indicates the

value of capital stock of a certain type required for an industry to

produce an additional dollar of its output.

Total Cost of Corrosion: the total resources consumed in our economy

because of the fact that corrosion exists.

Total Output: the value of the total goods or services produced by

some industrial sector.

Unavoidable Cost of Corrosion: that portion of the total cost of cor- rosion which cannot be reduced by application of best corrosion con- trol practice.

Value Added: the additional value accruing to a sector's inputs as they are fashioned into the product itself; included are wages,

salaries, rents, profits, interest, tsuces, and depreciation. It can also be defined as the value of the productive factors contributed by

the industry itself, rather than purchased from other industries.

Vector: a single row or colximn of values.

World I: the present environment and economy as they now exist.

World II: a hypothetical environment and economy in which no corrosion exists.

World III: a hypothetical economy in which best corrosion control

practices exist and are universally applied.
139

8 CORROSION BIBLIOGRAPHY

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Estimating of Maintenance Painting", Corrosion, 13^ (D j 3t-llt (January

1957)

.

10. Keynes, A., "Economic Aspects of Corrosion", Chemistry and Industry, 14^, 398-400 (April 5, 1958).

11. Senatoroff, N.K., "Economics of Cathodic Protection", Oil and Gas Journal,

57 (30), 107-108 + 110 (July 26, 1959).

12. Pemberton, G.M. , "Evaluating the Economy of Reconditioning and Coating

Underground Steel Pipe", Corrosion, 15 (5), 279t-282t (May 1959).

13. Sherwood, P.W. , "Some Aspects of Refinery Corrosion Due to Crude Oil",

Corrosion Technology, 6_ (1), 10-12 (January 1959).

14. Benedict, M. , "An Economic Appraisal of Stainless Steel and Zirconium in

Nuclear Power Reactors", Metal Progress, 75. (2). 76-81 (February 1959).

15. Coburn, S.K. , "Amount of Annual Purchase of Corrosion Resistant Materials

by Various Industries", A Report of NACE Technical Unit Committee T-3C

on Annual Losses Due to Corrosion, NACE Technical Committee Report Pubn.

59-8, Corrosion, 15 (3), 121t-122t (March 1959).
140

16. Lopata, S.L. , "Economics of Chemical Plant Maintenance Painting", A Report

of NACE Technical Unit Committee T-6D on Industrial Maintenance Painting

prepared by Task Group T-6D-1 on Economics of Maintenance Painting, NACE

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17. Glass, D.C., "Economic Survey of Underground Corrosion Preventive Measures",

paper presented at the Am. Petroleum Inst., Product Pipe Line Conf . , Chicago,

May 16-18, 1955, Pipe Line News, 27_ (6), 45+46+48+50+52-55 (June 1955);

Pipe Line Industry, 2, 37-38 (June 1955); Oil and Gas Journal, 54^ (7), 133-

135 (June 20, 1955); Oil in Canada, 1_ (52), 14-17 + 27-28 (October 24, 1955).

18. Godard, H.P. , "Reducing the Cost of Corrosion in Canada", Chemistry in

Canada, 1_ (9), 35-38 (September 1955).

19. Johnson, W.A. , "Economics of Cathodic Protection", Petroleum Engineer,

26^, D18-D19 (May 1954).

20. Parker, M.E., "Economics is a Basic Problem", Pipe Line Industry, 1_ (3),

54-56 + 65 (March 1955).

21. Wachter, A., "Relation of Corrosion to Business Costs", Corrosion, 10^ (9),

273-278 (September 1954).

22. Wainwright, R.M. , "Economics of Cathodic Protection, Parts I and II", Paper

presented before A.G.A. , Montreal, April 20-23, 1954, Gas, 30 (4/5), 48-53,

44-48 (April, May 1954).

23. "The Battle Against Decay", Fortune, 47^ (2), 148-151 + 168 + 170 + 173-174

(1953).

24. Smith, H.G., "What Corrosion Costs Canada", Canadian Chemical Processing,

37_ (10), 10 (September 1953).

25. "1. Rust-Protective Painting is of National Importance. 2. Further Remarks

on Rust Protection in the National Economy", Ind . -Lack. -Betrieb , 1^ (2/3),

19-20, 39 (1951).

26. Uhlig, H.H., "Cost of Corrosion to United States", Corrosion, 6^ (1), 29-33

(January 1950).

27. Vernon, W.H.J. , "Costs of Corrosion and of Its Control", Engineering, 169

(4385), 160-161 (February 10, 1950).

28. Vernon, W.H.J. , "The Costs of Corrosion and Its Control", Proceedings of the

United Nations Scientific Conference on the Conservation and Utilization of

Resources. Vol. II. Mineral Resources, 218-222 + 240-244 (1951).
141

29. Uhlig, H.H., "Costs of Corrosion to the United States", Paper presented

before the United Nations Scientific Conference on Conservation and

Utilization of Resources, New York, 1949, the United Nations Economic

and Social Council, May 6, 1949, Chem. Eng. News, 27^ (39), 2764-2767

(September 26, 1949); Corrosion, 6^ (1) 29-33 (January 1950).

30. Vernon, W.H.J. , "The Corrosion of Metals", Cantor Lectures to the Royal

Society of Arts, 1949, J. Roy. Soc. Arts, 92, 578-610 (July 1, 1949);

J. Birmingham Metallurgical Soc, _29, 131-152 (September 1949); Dock

and Harbor Authority, 30 (350)

31. Vernon, W.H.J. , "The Corrosion of Metals", Journal of the Birmingham

Metallurgical Society, 2^, 131-152 + 198-221 (September + December 1949).

32. Vernon, W.H.J. , "The Costs of Corrosion and of Its Control", Paper

presented before the United Nations Scientific Conf. on Conservation and

Utilization of Resources, New York, 1949, the United Nations Economic and

Social Council, June 30, 1949, Sheet Metals Ind. , 2_6 (270), 2135 (October

1949) - Abstract; Engineering, 169^ (4385), 160-161 (February 10, 1950);

Canadian Metals, U (11), 24-25 (1949).

33. Dubrow, M.H., and Coffer, H.F. , "Management and the Corrosion Engineer",

Materials Protection, 3 (8), 22-24 (August 1964).

34. Kimberley, J.L. , "Comparative Economics", A.Z.I. Tech. Seminar (June 12,

1963)

.

35. Charlton, F.R. , "Why Paint? ", Chem. Eng., 70^ (22), 158 + 160 + 162

(October 28, 1963).

36. Everett, O.W., "Corrosion Control Problem for a Pipeline Management

Economics and Procedures", Materials Protection, 2 (D > 60-63 (January 1964).

37. Hillier, F.S., "Surveillance Programs for Deteriorating Lots in Storage",

Technical Report No. 56, Stanford University, Contract Nonr-22553 (January

2, 1962). AD 271 522

38. McFarland, R. , Jr., "Industry, Corrosion, and NACE: A Message to Engineering

Management", Materials Protection, 2^ (9), 36 + 38 + 41 (September 1963).

39. Price, D.P., "A Practical Look at Corrosi^^ Control Costs", Gas, 39. (3),

129-133 (March 1963).

40. Swandby, R.K. , "How to Reduce Maintenance Painting Costs", Chem. Eng.,

69 (9), 115-120 (April 30, 1962).

41. Crowston, W.B., and Harries, H. , "What Management Wants to Know About

Corrosion Control Investments", Materials Protection, 1 (11), 18-22 +

24 + 26-27 (November 1962).
142

42. Sisler, C.W. , "The Engineered Approach to Industrial Maintenance Painting",

Materials Engineering, 1^ (12), 28-29 (December 1962).

43. Schwabe, K. , "Economical Importance of Corrosion and Corrosion Protection",

Chemische Technik, 13, 249-252 (May 1961), In German.

44. Marauta, F. , "Working Costs in Anodic Oxidation Plants", Alluminio Nuova

Metallurgia, 31 (2), 75-78 (February 1962).

45. Sherwood, P.W. , "Economic Aspects of Preventive Maintenance of Refinery

Tanks", Corrosion Technology, 8, 235-238 + 249 (August 1961).

46. Fabian, R.J., "Low-Cost Coatings for Metal Products", Materials Design

Eng., 51 (3), 123-138 (1960).

47. Francis, R.C., and Cook, F.E., "Economics of Cathodic Protection for U.S.

Navy Ships", Paper presented at the 17th Annual NACE Conference, Buffalo,

New York, March 13-17, 1961, Materials Protection, 1, (2), 18-20 + 22

(February 1962).

48. Landis, N.J. , "Estimating the Cost of Corrosion in Refinery Crude Units",

Corrosion, 16^ (10), 479t-486t (October 1960).

49. Ballard, W.E., "Some Thoughts on the Economic Aspect of Metal Spraying",

Metal Finishing Journal, I (74), 57-62 + 70 (1961).

50. Therrell, F.A. , Jr., "Studies on Determining Pipeline Cathodic Protection

Economics", Corrosion, 17_ (1), 12-13 (January 1961).

51. Junkin, E.D. , Jr. , "Economics of Corrosion Control in Oil and Gas Production", Materials Protection, 5_ (6), 27 (June 1966).

52. Dillon, CP., "Economic Comparisons: Calculation of Net Present Value and

Equivalent Uniform Annual Cost", Materials Protection, 5^ (6), 47 (June 1966).

53. Dillon, CP., "Economic Evaluation of Corrosion Control Measures", Materials

Protection, ^ (5), 38 (May 1965).

54. "A $25 Billion Investment - - -, Editorial, Materials Protection, 6_ (1), 3

(January 1967).

55. Brooke, M. , "Dollars and Sense in Cooling Water Treatment", Materials Protection, 5^ (7), 53 (July 1966).

56. Helms, F.P., "To the New Engineer in Industrial Coatings: Importance of

Painting Economics", Materials Protection, 5^ (4), 3 (1966).
143

57. Hewes, F.W. , "A Survey of Requirements and Costs for Cathodic Protection

on 22,000 Miles of Coated Pipeline", Materials Protection, 5^ (9), 41

(September 1966)

.

58. Wade, O.W. , "Evaluating New Materials and New Techniques by Capitalized

Cost Method", Materials Protection, 4^ (3), 29 (March 1965).

59. Jelen, F.C., "Economic Comparison of Alternatives in Equipment Service

Life", Materials Protection, 4- (3), 23 (March 1965).

60. Hirschmann, W.B., "Some Economic Realities of Corrosion Control", Materials

Protection, ^ (7), 8 (July 1965).

61. Gutzeit, J., "Corrosion and Fouling of Admiralty, Aluminum, and Steel

Tubes in Open Recirculating Cooling Water Systems", Materials Protection,

4 (7), 28 (July 1965).

62. Toncre, A.C., "Corrosion Control Evaluation With Electronic Computers",

Materials Protection, 4- (7), 57 (July 1965).

63. Mayer, J.F. , and Dieterle, R.J. , "Glass Reinforced Plastics for Petroleum

Tank Bottoms", Materials Protection, 4_ (10), 74 (October 1965).

64. Vickers, R. , "Combination Coating System: Hot Dip Galvanizing and Inorganic

Zincs Can Give Economical Protection", Materials Protection, _3 (8), 25

(July 1964).

65. Fisher, A.O., "Laboratory Study of Corrosion Control for a Once-Through

Cooling Water System", Materials Protection, 2 (10) > 8 (October 1964).

66. Siebert, O.W., and Engman, W.C., "Case History on Economics of Chemical

Treatment of a Recirculating Water Cooling Tower", Materials Protection,

3 (10), 20 (October 1964).

67. Funk, E.R. , "Titanium and Zirconium in Corrosion Resistant Service",

Materials Protection, 4_ (1), 52 (January 1965).

68. Minter, J.F., "Calculated Risk as a Tool in Corrosion Economics", Materials

Protection, h_ (3), 35 (March 1965).

69. Jones, D.B., "Can You Afford Your Cooling Water Treatment Program?",

Materials Protection, _4 (3), 62 (March 1965).

70. Devoluy, R.P. , "Protective Coatings for Ship Bottoms", Materials Protection, ^ (4), 10 (April 1965).

71. Kirsch, CM., "A Method for Determining Bridge Painting Cycles", Materials

Protection, 4^ (6), 40 (June 1965).
144

72. Purlee, L. , Leyland, W,A, , Jr., and McPherson, W.E.; "Economic Analysis

of Tank Coatings for Tankers in Clean Service", Materials Protection,

4 (6), 50-63 (June 1965).

73. Ward, J.L. , "Advanced Economics of Drill Pipe Coating", Materials

Protection, 5_ (11), 31 (November 1966).

74. Daly, G.L. , "Economic Aspects of Cathodic Protection", Materials Protection,

5_ (3), 55 (March 1966).

75. VanDelinder, L.S., "The Convincing Corrosion Language", Materials Protection

5_ (1), 25 (January 1966).

76. "Corrosion Control Makes Dollars and Sense", NACE Brochure- (1967)

77. Fink, E.W. , Buttner, F.H., and Boyd, W.K. , "Technical Economic Evaluation

of Air Pollution Corrosion Costs on Metals in the US", Final Report, Battell

Memorial Institute, Contract CPA-70-86 (February 1971). N71-33122.

78. Wilson, C.L., "Economics of Corrosion Prevention", Anti-Corrosion, _18 (8),

4-5 (1971).

79. Sloat, B., and Weibel, J,, "How Oxygen Corrosion Affects Drill Pipe",

Oil and Gas Journal, 6_8, 77-79 (June 1970).

80. Couture, J., "Reprocessing of Irradiated Fuels", Ann. Mines, 44-55

(January 1969). In French.

81. Kostrop, J.E., "$330 Million for Downhole Repairs", Petroleum Engineer,

45 (7), 37-40 (July 1972).

82. Jacobs, R.L. , and McMaster, J. A., "Titanium Tubing: Economical Solution to

Heat Exchanger Corrosion", Materials Protection and Performance, 11_ (7),

33 (July 1972).

83. Junkin, E.D. , Jr. , "Electronic Data Processing of Equipment Failures",

Materials Protection, 8 (7), 31 (July 1969).

84. "Cost, Maintenance Evaluation, and New Developments", BBR Pres tressed

Tanks Inc., Booklet (1969).

85. Holme, A. , "Economics of Corrosion and Corrosion Control", Anticorrosion

Methods Mater., 1_6 (2), 12-17 (February 1969).

86. Dougherty, G.H. , "Discounted Cash Flow", Australasian Corrosion Engineering,

15 (5), 29-31 (June 1971).

87. Hoar, T.P., and Orman, S., "The Cost of Corrosion", New Technology, (46),

1-2 (1971).
145

88. Goggins, R.D., "Problems of Industry", paper presented at Corrosion/ 71

,

NACE, Chicago, Illinois, (March 1971).

89. Dingley, R.E., "Discounted Cash Flow Analysis of Corrosion Prevention

Alternatives", paper presented at Corrosion/71, NACE, Chicago, Illinois

(March 1971).

90. Rodgers, J., "Understanding Economic Aspects of Coatings is Vital to

Engineers", Materials Protection, 9_ (5), 26 (May 1970).

91. Gupta, M.L., "Review of the Protection of Zinc and Its Alloys by Paint

Coatings", M.Sc. Report, University of London (December 1969).

92. Johnson, K. , "Economics of Surface Preparation. Part 2", Corrosion Prevention Control, 16^ (4), 17-19 (August 1969).

93. Rodgers, J., "Coating Economics", paper presented at NACE National Conference, Philadelphia, Pa. (March 1970).

94. Sissler, C.W. , "Maintenance Painting Concepts: Where Do We Stand After

20 Years of Effort?", paper presented at NACE National Conference,

Philadelphia, Pa (March 1970).

95. Cunningham, D.A. , and Lovett, E.P., "Economics of Zinc Coatings for the

Protection of Steel", paper presented at AZDA Symposium on Zinc Coatings

for the Protection of Steel, Melbourne (May 1968).

96. Patterson, W.L., and Banker, R.F. , "Effects of Highly Mineralized Water

on Household Plumbing and Appliances", American Water Works Assn. Journal,

60 (9) September 1968.

97. Bishop, R.R. , "Economic and Technological Trends in Protection Methods",

Construct. Steelwork Metals Mater., 30-33 (October 1971).

98. Krayov, V.I., and Klurfed, I.N. , "Methods of Economic Assessment of the

Need for and Efficiency of New Paints and Varnishes on Merchant Ships",

Trans. Res. Inst. Merch. Mar (USSR), (130), 71 (1971). In Russian.

99. Seiter, W. , "Hot Dip Galvanizing Plus Paint - An Outstanding Corrosion

Protection for Steel Structures in Electricity Supply Undertakings",

9th International Hot Dip Galvanizing Conference, Users Interests Booklet,

11-18 (1970).

100. Hurd, R.M. , "Some Economic Aspects of Inhibitor Usage and Development",

paper presented at Corrosion/ 72 , NACE, St. Louis, Mo. (March 1972).

101. Bohm, 0., "Corrosion Losses and Protection of Materials", Listy Cukrovarn,

82_ (6), 145-147 (1966). In Czech.
146

102. Makarov, V.A. , and Kolotryrkln, Ya.M. , "Some Aspects of the Anodic Protection of Metals Against Corrosion", in the coll. , Media for Prevention

of Corrosion, Moscow, 5-15 (1966).

103. Bobrovskiy, S. A., Brents, A.D., and Kisel'man, G.S., "Methods of Calculating the Annual Cost and Economics of Combined Systems of Protection

of Pipelines Against Corrosion", Korroziya i zashchita v neftedob. promsti. Nauchnotekhn. sb. , (2), 23-26 (1967).

104. Potter, E.C., "The Corrosion Scene in Australia", Australasian Corrosion

Engineering, 16 (3) 1972.

105. Ceilings, P.J., "Economics of Corrosion Control", Ingenieur, 80^ (9),

Ch 1 - Ch 5 (1968). In Dutch with English summary.

106. Negreyev, V.F., "Combating Corrosion of Oil-Extraction Equipment in the

AZSSR", Korroziya i zashchita v neftedob. prom. Nauchno-tekhn . sb . , (5),

9-12 (1967). In Russian.

107. Palmer, J.D., "Corrosion: Our $1 Billion Write-Off", Canadian Chemical

Processing, 50^ (3) March 1966.

108. Garside, J.E., "The Economics of Corrosion Prevention", Anti-Corrosion

Methods and Materials, _1 (1) (January 1966).

109. Bridges, L.H., "Acceptable Coatings for Steel Scantling Reduction", Shipbuilding and Shipping Record, 107 1966.

110. Garside, J.E., "Economics of Corrosion Prevention", Ind. Fin. (Brit), 1_7 (208) 1965.

111. "Importance of Corrosion Control to the Military", Materials Protection,

5 (11) 1966

112. "A Survey of Practices and Cost of Corrosion Control of Offshore Platforms",

Materials Protection, _6 (11), 65 (November 1967).

113. Fallon, J.M. , "Management's Concern", paper presented at the 25th Annual

NACE Conference, Houston, Texas (March 1969).

114. Charlton, F.R. , "Economics of Corrosion Control by Protective Coatings",

Corrosion Prevention and Control, 12^ (2) February 1965.

115. Stanford, A.E., "Economics of Inert Gas Systems for Tankers", Tanker Times,

10, 274-279 (February 1964).

116. "The Economic Aspects of the Problem of the Protection From Corrosion and

Fouling in the Navy", L' Ingenieur General du Genie Maritime FAMY (Congres

Internat. Corrosion Marine et Salissures, Cannes, 471-494 (M.A. , 1002

(1966). In French.
147

117. Carr, D.M. , "Economics of Corrosion Protection - A Case Study", Australasian

Corrosion Engineering, 13^ (12) 1969.

118. Cress, H. , and Kienast, H. , "Analysis of Costs of Corrosion-Protective

Coatings in 1952 and the First Half of 1970", Fette, Seifen Anstrich, 72

(2), 107-108 (1971).

119. "How Much do Marine Coatings Really Cost", Marine Eng. /Log, 76i (12),

51-54 + 104 (1971).

120. Linderborg, S., "The Cost of Protection Against Corrosion", Kem. Teoll,

24. (3), 234-240 (1967).

121. Sherwood, P.W. , "Economic Aspects of Corrosion Prevention in Refineries",

Corrosion Anti-Corrosion, 12 (5), 227-232 (July 1964). In French.

122. Paillassa, R. , Dieumegard, M. , and Estavoyer, M.M. , "Corrosion Control in

the Gathering System at Lacq Sour Gas Field", Proceedings of 2nd Internat.

Congress on Metallic Corrosion, New York, 1963, NACE, 410-417 (1966).

123. Van Sandt, J.H. , "Cut Heat Costs With Chemical Cleaning", Hydrocarbon Processing & Petroleum Refiner, 43.> 99-100 (December 1964).

124. Hardy, R. , "The Corrosion Resistance of Stainless Steel in Hot and Cold

Water Systems", Australasian Corrosion Engineering, L2 (2) 1968.

125. Thorpe, P.H., "Economic Selection of Corrosion Resistant Materials for

the Pulp and Paper Industry", Australasian Corrosion Engineering, 1_3 (6) 1969.

126. "Thermoelectric Cathodic Protection", Corrosion Technology, 11 (7), 25

(July 1964).

127. Littauer, E.L., "Cathodic Protection of Buoys and Offshore Structures",

Reprint Trans. Marine Technology Society Symposium, March 1964.

128. Braumuller, H.J., "Economic Considerations on Metallic Coatings", Proc.

Symp. Protection of Steel Structures by Metallic Coatings, Vienna, 66-

69 (September 1964). In German.

129. Van Kuyk, H.J.L., "Cost Relations of the Treatment of Ship Hulls and the

Fuel Consumption of Ships", Netherlands Ship Research Centre TNG, Report

No. 93C (March 1967).

130. Ponchel, B.M. , and Horst, R.L. , Jr., "A Cost Evaluation of Galvanic Anodes.

Comparison of Aluminum, Magnesium, Zinc for Sea Water", Materials Protection,

6 (6), 39 (June 1967).
148

131. "Tips on How to Reduce Corrosion Costs", Canadian Chemical Processing,

49^ (12) (December 1965).

132. "The Cost of Protective Coatings and of the Protection of Steel Structures

Against Corrosion in the Chemical Plants of Czechoslovakia", Korrozios

Figyelo. XIV. Evfolyan 3. szam (1974).

133. Radtke, S.F., "Zinc for the Protection of Steel and Plastics", Metall, 2_7 (9), 870-875 (September 1973).

134. Drisko, R.W. , "Equipment & Procedures for Cathodic Protection of Fleet

Moorings", Materials Performance, 13^ (2) (Feburary 1974).

135. Drisko, R.W. , "Cathodic Protection of Water Tank Interiors, Surveillance

& Automatically Controlled Systems", Materials Protection and Performance,

12 (11), November 1973.

136. Porter, F.C., and Payne, J.H. , "Economic Aspects of Metal Spraying", AntiCorrosion, 2Q_ (1), 9-12 + 14 (1973).

137. Kormoczi, L. , "Some Aspects of the Economy of the Corrosion Prevention",

Korrozios Figyelo Xiii. Evtolyam 3, szam (1973).

138. Porter, F.C., "U.K. Costs for Protecting Steel", Construction Steelwork,

8-10 + 12-13 (December 1972).

139. Blancheteau, P. , "Cost of the Protection of Steel Buildings Against Environmentally Induced Deterioration", Peint. Pig. Vernis , 48 (12), 645-649 (1972).

140. Davy, M.F., and Mueller, W.A. , "Pulp and Paper Industry Worldwide Corrosion

Costs", NACE book, Pulp and Paper Industry Corrosion Problems (1974).

141. Eraser, J. P., "Corrosion Economics", Materials Performance, 1^ (4), 15

(April 1974).

142. Buss, G. , "Corrosion and Corrosion Protection in Motor Car Manufacture",

Galvanotechnik, 64 (5), 377-391 (May 1973).

143. Walker, I. , "Vehicle Manufacturer's Approach to Corrosion Control", paper

presented at Nature & Prevention of Vehicle Corrosion Conference, Hatfield Polytechnic (September 1972).

144. Jacobson, M.A.I. , "The Motor Car Corrosion Problem - Its Costs and Effects",

paper presented at Nature & Prevention of Vehicle Corrosion Conference,

Hatfield Polytechnic (September 1971).

145. Potter, E.C., "The Cost of Corrosion", Electroplating, 2_6 (3), 17-18 + 20

(1973).
149

!!

146. Coll, E.N. , "What do Automakers Expect From the Paint Industry?", Metal

Finishing Abstracts 15_ (1), 47 (1973).

147. "Carbon Dioxide Removal Cost cut $550 , 000/Year" , Oil and Gas Journal,

71, 107-110 (March 17, 1975).

148. Feige, N.G., "Corrosion Service Experience and Economics of Titanium's

Usage in Gas Scrubbing Equipment for Refuse Incinerators", paper presented

at Corrosion/ 74 , NACE Conference

149. Fischer, I.H., "15 Years of Corrosion Research in the Federal German Republic.

Part 1.", Werkstoffe Korrosion, Z4 (6), 525-535 (June 1973).

150. Milos, Kulis, "A Proposal for Evaluation Methods to Calculate Losses Due

to Corrosion in the Comecon States", Korrozios Figyelo. XIV Exfolyam 2, szam (1974).

151. Porter, F.C., and Payne, J.H., "Economic Aspects of Metal Spraying", paper

presented at Symposium of the Protection of Steel Structures by Metal Spraying, London, April 1972,

152. Shannon, D.W. , "Economic Impact of Corrosion and Scaling Problems in Geothermal Energy Systems", Battelle Pacific Northwest Labs, Richland, Wash.

(January 19 75)

.

153. Piluso, A.J., and Nathan, C.C., "Chemical Treatment to Control Corrosion

in the Wet End Operations of Pulp and Paper Mills", NACE Publication,

Pulp and Paper Industry Corrosion Problems, 14-22 (1974).

154. Porter, F.C., "Structural Steelwork: A Case History", Proceedings, Autumn

Review Course - Economics of Corrosion Control, New York, November 1974,

Institution of Metallurgists, London, 30-38 (1974).

155. Clay, L. , "Summary of Key Pulp and Paper Industry Corrosion Problems",

NACE publication. Pulp and Paper Industry Corrosion Problems, 7-8 (1976).

156. O'Neal, A.J., "The Nature and Cost of Residual Fuel Oil Problems and the

Profits Realized From Proper Corrective Action", paper presented at

Corrosion/75, NACE, Toronto, Canada (April 1975).

157. Perugini, J., and Nathan, C.C., "Modern Concepts in Prevention of Fouling

in Petroleum and Petrochemical Processes", NACE 76/154

158. Stalder, C. , "The Small Hole Concept for Installing Anodes", Pipeline Gas

Journal, 202, 22-26 (February 1975).

159. Davis, J.G., Doremus , E.P., and Pass, R.B., "New Aspects of the Application

of Cathodic Protection to Offshore Structures", Materials Performance, 14_

(9), 9 (September 1975).
160

160. Stewart, J.F. , "Materials Considerations for Utility Sulfur Dioxide

Scrubbing Systems", NACE publication, Resolving Corrosion Problems in

Air Pollution Control Equipment, (1976).

161. "Deicing Salts, Their Use and Effects", NACE publication 3N175, Materials

Performance, 14 (4) , 9 (April 1975).

162. Gerhard, J., and Hanie, F.H. , "Air Pollution Effects on Catastrophic Failure

of Metals", Technical Report, National Environmental Research Center, Researc

Triangle Park, N.C. (November 1974).

163. "Cost of Clean Air 1974", Annual Report, Battelle Memorial Institute

(April 1974).

164. Bross, H.E., and Burgbacher, J.A. , "Reinstallation of Cathodic Protection

for Deep Water Structures", Materials Performance, 1_5 (6), June 1976

165. Kulis , M. , ''Rationalizations in the Maintenance Works of Steel Structures

by Applying a Suitable Surface Protection", Korrozios Flgyelo, XIV. Evfolyam

6, szam (1974).

166. Tlmmlns , D. , "Protection of Steel - Paint, Metal Spray, Hot-Dip Galvanize,

Weathering Steel - Which and Why?", paper presented at 7th International

Metal Spraying Conference, London, 1957, Zinc Abstracts, 32_ (2), 60 (1974).

167. Kinstler, T.J., "Galvanized Steel: Added Cost or Capital Investment",

Materials Performance, 14_ (10), 34 (October 1975).

168. Hermelin, R. , "Economic Aspects of Protection by Paint Films Against

Corrosion", Oil Colour Chemists Assoc., 58^ (8), 298-302 (August 1975).

169. Kulis, M. , "Losses Due to Corrosion in the Czechoslovak Chemical Industry",

Korrozios Flgyelo. XV. Evfolyam, I. szam (1975).

170. Huppmann, H. , "Major Damage to Steam Turbines", Transl. from Maschinenschaden

(West Ger.), 46 (1) 1973, BLL-CE-Trans-6296- (9022 . 09)

171. Process Industries Corrosion , NACE publication (January 1976).

"NACE Recommended Practice: Direct Calculation of Economic Appraisals of

Corrosion Control Measures", 49-65.

172. Earls, D.L., "Combined Environments Reliability Test", Technical Report,

Air Force Flight Dynamics Lab.

173. Stevens, H. , Heldersbach, R. , and Hahin, C, "Costs of Corrosion at Air

Force Fixed Installations", papei presented at Corrosion/ 75 , Toronto,

Canada, April 14-18, 1975.
151

174. Rowe, L.C., "Automotive Corrosion Resistance - Past and Present",

Corrosion, 15 (4), 167t (April 1959).

175. Webster, H.A. , "Automobile Body Corrosion Control Problems", Corrosion,

17 (2), 9-12 (February 1961).

176. "A Close Look at Some Auto Corrosion Problems", Corrosion, 17_ (2), 14-18 + 22-23 (February 1961).

177. "Corrosion Damage on Automobile Exhaust Systems. $500 Million Spent for

Replacements in 1960", Corrosion, 17_ (10), 18-24 + 26-29 (October 1961).

178. Sellers, D.R. , and Harmon, F.L., "A Cost Effectiveness Study of a Consolidated Corrosion Control Work Center", Technical Report SLSR-34-76B,

Air Force Inst. Of Tech., Wright-Patt erson AFB, Ohio School of Systems

and Logistics, Theses (September 1976). AD A032297.

179. Pearlstein, F. , and Gallaccio, A., "Characterization of Galvanized Sheet

Steel for Automotive Vehicle Bodies", Technical Report FA-TR-74021, Frankford Arsenal (August 1974). AD A000709.

180. Gureev, A.A. , "Use of Automotive Gasolines", Technical Report FSTC-HT23-1525-73, Army Foreign Science and Technology Center (February 7, 1974).

AD 784424.

181. Radcliff, A.S., and Stringer, J., "The Effect of Phosphorus-Containing

Additives in Fuels on Automobile Exhaust Valve Corrosion", Corrosion

Science, 14 (11/12), 651-656 (December 1974). MCIC 91949

182. Levy, M. , and Morrossi, J.L., "Corrosion Fatigue Behavior of Coated 4340

Steel for Blade Retention Bolts of the AH-IG Helicopter", Final Report

AMMRC-TR- 76-34, Army Material and Mechanics Research Center (October

1976). MCIC 97464.

183. Muroaka, J.S., "Plastic Film Coatings. Marine Fouling and Corrosion

Prevention", Materials Protection, 9_ (3), 23-26 (March 1970).

184. Jones, W.J.D., "Materials in a Marine Environment", Journal of the

Society of Environmental Engineers, 13-3 (62), 9-13 (September 1974).

185. "Corrosion Problem on Selected Ships at the Aluminum Superstructure and

Steel Interface", Technical Report No. 1039, Naval Ship Systems Command,

Maintenance Management Branch (April 1969). AD 864 258L

186. "Paralyzed Atlantic Fleet", Technical Report FTD-HC-23-1273-72 , Foreign

Technology Division, Wright-Patterson AFB (August 7, 1972). AD 904070L
152

187. Goetzee, W.J.J. , and Kievits, F.J,, "The Corrosion Behaviour of Cunifer-10

Alloys in Seawater Piping Systems Onboard Ship. Part I.", Technical Report

122-M, Nederlands Scheepsstudiecentrum TNO, (December 1968). AD 857 931.

188. Bosworth, T.J., "Trade-Off Study for Materials and Fabri cation Processes

for Advanced High Performance Ship Applications. Volume II", Technical

Report D180-17941-l-Vol-2 , Boeing Company, Naval Systems Division,

Contract N00024-73-C-5506 (February 197A). AD 775 329. MCIC 89617

189. Muroaka, J.S., "Plastic Film Coatings for Protection From Marine Fouling

and Corrosion", Technical Report NCEL-TR-612, Naval Civil Engineering

Lab (February 1969). AD 682 938.

190. Abidi, F. , "Pipeline- System Costs Estimated", Oil and Gas Journal, 73. (41), 99-100 (October 13, 1975).

191. Patton, C.C., "Dissolved Gases are Key Corrosion Culprits", Oil and

Gas Journal, 72^ (29), 66-69 (July 22, 1974).

192. Ewing, R.C., "Pipeline Economics. 17th Annual Report on Pipeline

Installation and Equipment Costs", Oil and Gas Journal, 72_ (32),

71-114 (August 12, 1974).

193. Temmerman, J. A., and Sterlin, A., "Control of Corrosion by Salt Used

for De-icing Highways", Corrosion, 6 (12), 391-394 (December 1950).

194. Mosbacher, C. J. , "Forecast '77 $42 . 7-Billion for R&D", Research/

Development, 22-27 (January 1977).

195. "Galvanic Corrosion Shuts Down Freeport's Salt Water Plant", Corrosion,

17_ (19), 37 (September 1961).

196. Canavan, H.M., "Insurance Company's Viewpoint on Catastrophic Explosions

of Pressure Vessels Caused by Corrosion Damage", Corrosion, 17_ (3),

22-23 (March 1961).

197. Soltz, G.C., "Corrosion From the Ship Owner's Viewpoint", Materials

Protection, 2 (1), 36-40 (January 1963).

198. Gackenbach, R.E., "Corrosion Problems in Phosphoric Acid and Phosphate

Fertilizer Manufacture", Materials Protection, 2^ (1), 50-57 (January 1963).

199. Hall, W.N., "How One Company Saves Thousands of Dollars by Using Plastic

Materials", Materials Protection, 2 (4), 70-75 (April 1963).

200. "Oil-Soluble Inhibitors for Controlling Corrosion in Tankers and Pipe

Lines", Corrosion, 16 (3), 9-16 (March 1960).
153

201. "How to Postpone the Days of Balance. An Editorial", Corrosion, 16_ (4),

6 (April 1960).

202. "Magnitude of Hot Water Heater Problem", Corrosion, 16 (9), 16 (September

1960).

203. "Review of Survey Made on Oil and Gas Well Corrosion Costs. NACE Technical

Committee Report", Materials Protection, 2 (12), 85-89 (December 1963).

204. Beesley, Glyn, "Tainter Gate Corrosion Prevented for $200 per Year",

Materials Protection, 1 (3), 102 (March 1962).

205. "Akron Votes to Add Rust Inhibitors to Deicing Salts", Materials Protection,

1 (2) , 71 (February 1962)

.

206. Nordhielm, B.E., "Corrosion Control in Brewery Packaging Operations",

Materials Protection, 1 (3), 52-58 (March 1962).

207. Crowe, K.J., "Economics of Using Non-Destructive Testing in Corrosion

Control Programs", Materials Protection, 4^ (3), 43-45 (March 1965).

208. "Air Pollution Versus Materials - Costs, Manmade Smog is Costing Billions

Each Year", Materials Protection, 6^ (5), 47-51 (May 1967).

209. "$2 Million Lost Annually to Metal Corrosion in Sweden", Materials Protection, 6 (2), 72 (February 1967).

210. Banks, W.P., and Hutchison, M. , "Anodic Protection of Carbon Steel Rail

Tank Cars for Transporting Nitrogen Fertilizers", Materials Protection,

8 (2), 31-35 (February 1969).

211. Kelly, B.J., "Cooling Tower Chromates - Recovery or Disposal?", Materials

Protection, 8 (3), 23-25 (March 1969).

212. Verink, E.D. , Jr., "Aluminum Alloys for Desalination Service", Materials

Protection, 8^ (11), 13-15 (November 1969).

213. Fallon, J.M. , "Coatings Symposium. Need for Improved Economics of New

Construction Painting. Role of Management", Materials Protection, 8^ (5), 29-30 (May 1969).

214. Morgan, J.H., "The Economics of Ships Cathodic Protection", Corrosion

Technology, 11 (11), 53-55 (November 1964).

215. Wilson, C.L. , "The Management Approach", Corrosion Technology, 11 (9),

13-15 (September 1964).
154

216. Mcintosh, R.B., "Corrosion Problems Encountered in a Nickel Refinery

Ammonia Absorption System", Corrosion, 17_ (10), 91-96 (October 1961).

217. Best, G.E., "Profit Squeeze and Corrosion", Materials Protection, 1_ (5), 118-119 (May 1962).

218. Baggott, J., "Economics and Market Growth", Anti-Corrosion, 18^ (8),

7-9 (August 1971).

219. "Corrosion Commentary", Corrosion Technology, 6^, 99-100 (April 1959).

220. "Corrosion Cost to South Africa", Corrosion Technology, 102 (April

1961).

221. Bittence, J.C., "Waging War on Rust. Part 2: Resisting Rust", Machine

Design, 48 (25), 146-152 (November 11, 1976).

222. "A Report on the 4th International Congress on Metallic Corrosion held

in Amsterdam, Holland, September 7-14, 1969", Anti-Corrosion, 16^ (10),

11-13 (October 1969).

223. "Corrosion Commentary. How Much Does it Cost?", Anti-Corrosion, 16_ (9),

3 (September 1969).

224. "Corrosion Commentary. Status of Stainless", Anti-Corrosion, 16^ (7),

3 (July 1969).

225. "Corrosion Commentary. Consumption of Speciality Metals to Double by

1975", Anti-Corrosion, 16 (1), 3 (January 1969).

226. "Corrosion and Modern Technology - a $10-Billion-a-Year-Fight", AntiCorrosion, 16 (6), 24-25 (June 1969).

227. Haynie, F.H., "The Economics of Clean Air in Perspective", Materials

Performance, 13^ (4), 33-38 (April 1974).

228. "Senator Tunney Asks for National Study on Cost of Corrosion", Materials

Performance, 1_3 (9), 41 (September 1974).

229. Sisler, C.W. , "Coatings: Observations on Costs and Concepts Over Two

Decades", Materials Protection, 9_ (5), 23-25 (May 1970).

230. Ralston, P.H. , "Inhibiting Water Formed Deposits with Threshold Compositions", Materials Protection and Performance, 11_ (6), 39-44 (June 1972).

231. Wills, R.R. , "Economics of Reinforced Plastic Piping Systems", Materials

Protection and Performance, 11 (12), 23-27 (December 1972).
155

232. Freedman, A.J., Dravnieks , A., Hirschmann, W.B., and Cheney, R.S.,

"Selection of Rust Inhibitors to Meet Service Requirements", Corrosion,

13 (2), 89t-94t (February 1957).

233. Battle, J.L., "Casing Corrosion in the Petroleum Industry", Corrosion,

13 (2), 132t-138t (February 1957).

234. "Chipping the Rust — Importance of Corrosion Control to the Military",

Materials Protection, 5^ (11), 3 (November 1966).

235. Field, C.W. , "The Use of Titanium in the Pulp and Paper Industry",

Materials Protection, 5^ (10), 47-48 (October 1966).

236. Farrow, T.J., and Yerger, H.J., Jr., "How to Conduct a Pulp and Paper

Mill Corrosion Survey", Materials Protection, 5^ (10), 9-10 (October 1966).

237. "Cathodic Protection System Inhibits Water Box Corrosion", Materials

Protection, 5 (7), 65-66 (July 1966).

238. Phenicle, J.W. , "Increased Petroleum Production Demands Increased Corrosion

Control", Materials Protection, 5^ (3), 23-24 (March 1966).

239. "Corrosion of Military Equipment", Materials Protection, 4^ (12), 7-10

(December 1965).

240. "Performance and Maintenance of Industrial Fences in Corrosive Environments", Materials Protection, 4- (8), 8-12 (August 1965).

241. Mason, C. , "The Importance of Corrosion Control: You and Your Company",

Materials Protection, ^ (6), 20-21 (June 1965).

242. Graves, J.W. , and Sullivan, E.H., "Internal Corrosion in Gas Gathering

Systems and Transmission Lines", Materials Protection, _5 (6), 33-37

(June 1966).

243. Talley, R.K. , "Thirty Years of Proof: Corrosion Control Pays Off",

Materials Protection, 5 (2), 35-36 (February 1966).

244. Brand, B.G., "Economic Cathodic Protection", Corrosion Technology, 2

(1), 12-14 (January 1956).

245. Parker, M.E., "Innovations and the Future of Cathodic Protection",

Materials Protection, 8 (2), 21-25 (February 1969).

246. Dillon, CP., "Economics", Materials Performance, 14, January-July, 1975.
156

247. Williams, J.S., "Portable Total Energy Package for Advanced Base

Functional Components", Technical Report NCEL-TR-530, Naval Civil

Engineering Lab (June 1967). AD 653 081.

248. Lohsl, G.A. , and Romanoff, M. , "Corrosion Evaluation of Shielding

Materials for Direct Burial Telephone Cables", Technical Report,

Rural Electrification Administration, Telephone Standards Div.

(1968). AD 677 521

249. Matsui, E.S., "Field Study of Fencing Materials in a Marine-Atmospheric

Environment - Results of up to Three Years of Atmospheric Exposure and

Corrosion Rate Determination", Technical Report NCEL-TN-1231 , Naval

Civil Engineering Lab (June 1972). AD 746 842.

250. Cooper, E.E., "Analysis of a Dual Mode Desalination System for Naval

Bases", Technical Report NCEL-TN-1285 , Naval Civil Engineering Lab

(May 1973). AD 764 055.

251. "Department of the Army Letter on Management Practices", Office of the

Comptroller of the Army (March 24, 1959). AD 851 259L.

252. Phillips, C.B., "Testing Monsanto Chemical De-icer ID-1352B", Technical

Report NA-68-12, National Aviation Facilities Experimental Center

(March 1968). AD 835 129L.

253. Draim, I.E., and Stalzer, C.E., "Sea Launch of Large Solid-Propellant

Rocket Vehicles. Part I. Technical Aspects and Nonmilitary Applications",

Technical Report NMC-TM-60-4, Naval Missile Center (March 22, 1960).

AD 836 540.

254. "Anchor Chains: Maintenance Analysis Report. Problem Identification Program",

Technical Report NAVSHIPS-796 , Naval Ship Systems Command (May 1968).

AD 839 040L.

255. Matsui, E.S., "Field Study of Fencing Materials in a Marine-Atmospheric

Environment: Results of 12 Months of Atmospheric Exposure and 4 Months

of Salt Spray Tests", Technical Report NCEL-TN-1043 , Naval Civil Engineering

Lab (August 1969). AD 859 668.

256. Fisher, E.W. , "Development of Shipboard Electrical Cables With CompactedStrand, Copper-Clad Aluminum Conductors", Technical Report NSRDL/A-27-14,

Naval Ship Research and Development Lab (January 1972). AD 890 952.

257. Cibi, V., "Calcium Chromate, a New Anticorrosive Pigment", Technical Report

FTD-HC-23-0397-72, Foreign Technology Div, Wright-Patterson AFB (August 11,

1972). AD 904 843L.
157

258. Rumbarger, John H. , "Aeronautical Analytical Rework Program. An Analysis

of the State-of-the-Art for Design and Application of Rolling Element

Bearings Used in Naval Aircraft (Emphasizing Reduced Maintenance and

Improved Reliability)", Technical Report FIRL-F-C2840 , Franklin Inst.,

Contract Number N00156-70-C-2058 (April 1971). AD 908 738L.

259. Mellsen, S.B., "Complementary Investigations at ORES Related to the Thermal

Destruction of Mustard", Technical Report DRES-Technical Paper-409, Defense

Research Establishment Suffield (April 1973). AD 912 784.

260. Gross, M.R. , "The Mechanical Performance of Materials for Hard Sea-Water

Piping Systems - A Follow-On Tradeoff Study", Technical Report NSRDC-4187,

NSRDC-28-920, Naval Ship Research and Development Center (January 1974).

AD 916 417L.

261. Reinhart, F. , "Design for Corrosion Control of Aviation Fuel Storage and

Distribution Systems", Technical Report TR-74-31, Navy Civil Engineering

Lab (June 19*75). AD AOll 588.

262. Nichols, T.R. , "Development of Low-Cost Phosphate-Free Steam Cleaners",

Technical Report USAMERDC-2139 , Army Mobility Equipment R&D Center

(April 1975). AD A014 198.

263. Thomas, G.L. , and Halliwell, H. , "Evaluation of Metal Journal Bearings

for Operation in Sea-Water Environment", Technical Report NSRDL/A-8-393,

Naval Ship R&D Lab (November 1970). AD 875 524L.

264. "Electrolysis Survey Underground Distribution Systems, Naval Air Material

Center", Technical Report (August 12, 1958), Hinchman Corporation, Contract

Number NBY-14535. AD 496 348.

265. Braden, Elmo T. , "Cathodic Protection Installation for the 132 Kv Oil

Filled Cable Enclosing Pipe at Naval Air Turbine Test Station", Technical

Report, 4th Naval District (March 23, 1959). AD 496 344.

266. Wagner, S. , and Doelp, W.L. , Jr., "Low Cost Integrated Circuit Techniques",

Technical Report, Philco-Ford Corporation, Contract Number DA-28-043-AMC01424(E) (May 1967). AD 652 699.

267. Borgstrom, P., "Chemical Oxygen Sources for Submarine Air Purification",

Technical Report NRL-P-1291, Naval Research Lab (July 28, 1936). AD 494 414.

268. Rogers, T.H. , "Whither Corrosion?", Anti-Corrosion, 1 (7), 5-6 (July 1966).

269. "Corrosion Commentary. The Cost of a Copper Washer", Anti-Corrosion, 14 (2),

7 (February 1967).

270. Wilson, C.L., "The Evaluation of Corrosion Problems (Part 1)", Anti-Corrosion,

14 (3), 15-17 (March 1967).
158

271. Wilson, C.L. , "The Evaluadon of Corrosion Problems (Part 2)", Anti-Corrosion,

14 (4), 12-14 (April 1967),

272. Wilson, C.L. , "The Evaluation of Corrosion Problems (Part 3)", Anti-Corrosion,

1± (6), 11-13 (June 1967).

273. "Annual Consumption of Hot-Dip Galvanized Sheets", Anti-Corrosion, 14_ (6),

13 (June 1967).

274. "Corrosion Commentary. Corrosion Control in Britain Costs 195 Million

a Year", Anti-Corrosion, 14 (11), 7+24 (November 1967).

275. Bush, G.F., "How US Auto Engineers are Attacking the Corrosion Problem",

Anti-Corrosion, 14 (4), 15-18 (April 1967).

276. Temmerman, J. A. , and Sterlin, A. , "Control of Corrosion by Salt Used for

De-icing Highways", Corrosion, 6 (12), 391-394 (December 1950).

277. Carriere, J.E., and Lobry De Bruyn, C.A. , "Cost and Benefits of Conservation

of Cast Iron and Steel Pipelines by Control of Corrosion", Proceedings of

the United Nations Scientific Conference on the Conservation and Utilization of Resources. Volume II. Mineral Resources, 234-237 (1951).

278. "Conservation by Corrosion Control. Summary of Discussion", Proceedings of

the United Nations Scientific Conference on the Conservation and Utilization

of Resources. Volume II. Mineral Resources, 240-244 (1951).

279. Webster, H.A. , "Can We Afford to Ignore Corrosion?", NACE Publication,

Resolving Corrosion Problems in Air Pollution Control Equipment , 1-2

(1976).

280. Vaughan, T.B., "Reducing Enamelling Costs", Industrial Finishing, 17^ (201), 46-56 (March 1965).

281. Johnson, K. , "The Economics of Surface Preparation (1)", Corrosion

Prevention and Control, 16, 12-14 (June 1969).

282. Hemmelrich, J.E., "Corrosion Protection of Pipelines by Coal Tar Coatings",

Corrosion Prevention and Control, 16_, 12-14 (February 1969).

283. "The Cost of Corrosion to the Pipeline Industry", Corrosion Prevention and

Control, 16 (1), 9-11 (February 1969).

284. "More British Power Stations Affected by Corrosion", Corrosion Prevention

and Control, 17_ (1), 9-11 (February 1970).

285. Hall, J.R. , "The Protection of Bridges by Galvanizing", Corrosion Prevention

and Control", 17_ (2), 12-14 (April 1970).
159

286. "The Cost of Car Corrosion in Britain", Corrosion Prevention and Control

17 (6), 5-7 (December 1970).

287. Porter, F.C., and Walden, G.K. , "Zinc Coated Steel Prevents Car Body

Corrosion", Corrosion Prevention and Control, 17^ (5), 10-12 (October 1970).

288. "Pipeline Economics", Oil and Gas Journal, 72 (32), 71-114 (August 12

1974). ~

289. Rule, G. , "The Production, Treatment, Application, and Performance of

Continuously Hot-Dipped Galvanized Steel", Australasian Corrosion

Engineering, 15 (5), 5-15 (June 1971).

290. Hay, J., "Factors Affecting Chemical Industry Capital Investments",

Chemistry in Canada, 28 (10), 19-20 (November 1976).

291. Roebuck, A.H., and McCage, D.L. , "Coating Economics", Materials Performance,

15 (10), 30-34 (October 1976).

292. Donham, J.E., "Chemical Control of Drillpipe Corrosion", Materials Performance, 15 (10), 34-38 (October 1976).

293. Bishop, R.R. , "UK Research Aimed to Reduce Motor Vehicle Corrosion Caused

by Highway Deicing Salt", Materials Performance, 15 (11), 15-20 (November

1976).

294. "Editorial — Pollution Control - We Can't Afford to be Emotional",

Materials Performance, 33 (4) , 7 (April 1976).

295. Wienert, L.A. , "Resistance to Flash Rusting and Corrosion Undercutting",

Corrosion Prevention and Control, 23^ (1), 12-16 (February 1976).

296. Wienert, L.A. , "Resistance to Flash Rusting and Corrosion Undercutting.

Part 2", Corrosion Prevention and Control, 23 (2), 17-18 (April 1976).

297. "Solving the Problem of Car Silencer Corrosion. Rustproofing Used Cars",

Corrosion Prevention and Control, 22^ (2), 2-3 (April 1975).

298. "The Economics of Corrosion Control", Corrosion Prevention and Control,

22_ (3), 3 (June 1975).

299. "The Japanese Market for Metal Finishing Equipment", Corrosion Prevention

and Control, 22 (5) , 2 (October 1975).

300. "Corrosion Control in the Forest Industry", Corrosion Prevention and Control,

23^ (5), 2 (October 1976).

301. Potter, E. , "The Principles of Corrosion Science", Australasian Corrosion

Engineering, jL9 (3), 5-12 (March 1975).
160

302. Fischer, B.A. , "Corrosion Protection Methods in the Steel, Water and

Gas Pipe Industry", Australasian Corrosion Engineering, 19_ (4), 5-12

(April 1975).

303. Stevenson, M.R. , "Pretreatment and Primers", Australasian Corrosion

Engineering, 19 (8), 9-18 (August 1975).

304. McCaffrey, W.R. , "Cathodic Protection and its Regulation in New South

Wales", Australasian Corrosion Engineering, 19_ (11/12), 9-14 (November/

December 1975).

305. "How to Save a Cool $200 Million", Advertisement for Sulphide Corporation,

Australasian Corrosion Engineering, 19_ (11/12), 27 (November /December 1975).

306. Gorham, C. , Corrosion Attack and Defence , Book Reviexj, Australasian Corrosion

Engineering, 20^ (6/7), 15 (June/July 1976).

307. Lyall, R.W. , "Effective Corrosion Control With Stainless Steel Risers",

Pipe Line Industry, 40 (5), 41-43 (May 1974),

308. Miller, D., "$15 Billion Challenge. Corrosion and the Materials Shortage",

Pipe Line Industry, 42 (3), 29-30 (March 1975).

309. Meany, J.J., "A Corrosion Specialist's View of Federal Regulations", Pipe

.Line Industry, 42 (3), 31-33 (March 1975).

310. Brown, R.J., "How to Protect Offshore Pipe Lines", Pipe Line Industry,

42 (3), 43-47 (March 1975).

311. Murray, D.M., and Ernst, U.F.W. , "An Economic Analysis of the Environmental Impact of Highway Deicing", Final Report EPA/600/2-76/105, Abt

Associates, Inc., Contract EPA-6 8-0 3-0442 (May 1976). PB 253 268/7GA.

Abstract Only.

312. Hamilton, H.L. , "Coordination of Corrosion Control", Petroleum Engineer,

_26 (9), D-42 + D-44 (August 1954).

313. Robinson, S.T., "The Economics of Gas Turbine Compressors", Gas, 39^ (12),

99-104 (December 1963).

314. Vernon, W.H.J. , "Corrosion Research and its Industrial Background", Chemistry

and Industry, (43), 1381-1389 (October 25, 1958).

315. Brannon, R.A. , "How to Combat Internal Corrosion", Pipe Line Industry, 2_ (3), 44-49 (March 1955).

316. "Stainless Steel in Automobiles", Metal Progress, 75_ (2), 132-138 (February

1959) .

317. Thomas, N.L., "Cathodic Protection of the V.P.C. Natural Gas Transmission

System", Australasian Corrosion Engineering, 1_5 (2), 26-29 (March 1971).
161

318. "External Protective Treatment for Mild Steel and Cast Iron Pipes for Use

Underground by the Sydney Water Board", Australasian Corrosion EnRineerine

11 (3), 9-17 (April 1971).

319. "Corrosion Resistance for Non-Ferrous Metals", Australasian Corrosion

Engineering, 15^ (1), 36-38 (January/February 1971).

320. Wigney, P., "Chemical Pretreatments Prior to Painting", Australasian

Corrosion Engineering, 15^ (4), 21-26 (May 1971).

321. "New Rust Inhibitor - Kelate - Economics", Australasian Corrosion Engineering,

15 (4), 31-32 (May 1971).

322. "GAS Selected Bibliographies. 1. Corrosion - Its Causes and Prevention",

Gas, 30 (10), 83-85 (October 1954).

323. Chance, R.L., "Corrosion, Deicing Salts, and the Environment", Materials

Performance, 13 (10), 16-22 (October 1974).

324. "U.K. Automobile Association Probes Car Rust in Depth, Rainfall the

Crucial Factor", Materials Performance, 13_ (11), 40-41 (November 1974).

325. "Controlling Automobile Exhaust. Corrosion Effect on Smog Control Devices",

Materials Protection, 6_ (5), 52-54 (May 1967).

326. Conner, R.F. , "Protection of Motor Vehicles Against Tropical Corrosion",

Materials Protection, 2 (4), 61-63 (April 1963).

327. Bottcher, H. J. , "Hot Dip Galvanizing as an Economical Means of Protecting

Against Corrosion", Metall, 22^ (8), 862-863 (August 1968).

328. "A $10 Billion a Year Fight Against Corrosion", Australasian Engineer, 22

(July 1972).

329. Padman, M.W. , "Industry Faces $14 Million a Year Bill for Wear", Australasian

Engineer, 43 (May 1971),

330. Corrosion. Volume 2. Corrosion Control , Edited by Shreir, L.L., "Economic

Aspects of Corrosion", 10,47 - 10.52 , George Newnes Ltd, John Wiley & Sons,

Inc. NY (1963).
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331. Kruger, J., "NACE's Role in the Federation of Materials Societies",

Process Industries Corrosion , NACE Publication (1975), pp 291-295

332. Krisher, A.S., "Corrosion Testing, Evaluation, and Monitoring",

321-328, Process Industries Corrosion , NACE Publication (1975).

333. Helms, P.P., "Paints and Corrosion Control", Process Industries

Control . 346-364 NACE Publication (1975).

334. "Symposium on 'Loss Prevention'", British Corrosion Journal, 11_ (3),

118-119 (1976).

335. Nelson, W.L., "How the Nelson Refinery Construction-Cost Indexes

Evolved. Nelson Indexes - l", Oil and Gas Journal, _74 (48), 68-

70 (November 29, 1976).

336. Nelson, W.L., "index Price Bases Explained. Nelson Indexes - 2",

Oil and Gas Journal, 7± (50), 59-60 (December 13, 1976).

337. Nelson, W.L., "Sources Cited for Quarterly Itemized Cost Indexes.

Nelson Indexes - 3", Oil and Gas Journal, 74 (51), 73 (December 20,

1976) .

338. Nelson, W.L., "Where to Find Base Refinery Costs. Nelson Indexes - 4",

Oil and Gas Journal, 7^ (52), 199-200 (December 27, 1976).

339. Nelson, W.L. , "Here's How Operating Cost Indexes are Computed. Nelson

Indexes - 5", Oil and Gas Journal, 75^ (2), 86-88 (January 10, 1977).

340. Nelson, W.L. , "What Does Miscellaneous Equipment Component Mean?

Nelson Indexes - 6", Oil and Gas Journal, 75_ (3), 80-81 (January 17,

1977) .

341. Nelson, W.L. , "Costs Indexed Since 1946. Nelson Indexes -7 (Conclusion)",

Oil and Gas Journal, 75^ (4), 56-57 (January 24, 1977).

342. Nelson, W.L., "Chemical Costs Show 4-Year Jump", Oil and Gas Journal,

24 (40), 110-111 (October 4, 1976).

343. Nelson, W.L. , "Nelson Cost Indexes. Refinery Construction (1946 Basis).

Refinery Operating (1956 Basis)", Oil and Gas Journal, 74 (44), 85

(November 1, 19 76).

344. Nelson, W.L. , "The Concept of Refinery Complexity. Complexity - 1",

Oil and Gas Journal, 74 (37), 81-82 (September 13, 1976).

345. Nelson, W.L. , "Process-Unit Complexity Factors Examined. Complexity -2",

Oil and Gas Journal, U (38), 202-204 (September 20, 1976).

346. Nelson, W.L., "How to Apply Complexity. Complexity -3", Oil and Gas

Journal, 74^ (39), 83-84 (September 27, 1976).
163

347. Vreeland, D.C., "Review of Corrosion Experience with Copper-Nickel

Alloys in Sea Water Piping Systems", Materials Performance, 15 (10),

38-41 (October 1976).

348. Judson, L.P., "Experience With Impressed Current Cathodic Protection

in Ships of the Royal New Zealand Navy", Australasian Corrosion

Engineering, 15^ (6), 3-8 (July 1971).

349. "Corrosion Still Big Problem in Coal Gasification", Oil and Gas

Journal, n (22), 55 (May 28, 1973).

350. Dillon, CP., "The Economic Advantage of Deferred Topcoat Zinc-Base

Painting Systems", Materials Performance, 14- (5), 29-31 (May 1975).

351. "Chipping the Rust. Corrosion Costs $10 Billions Per Year", Materials

Protection, 6 (4), 29 (April 1967).

352. Worner, H.K. , "The Cost of Corrosion", Corrosion Technology, 3^, 289-

292 (September 1956).

353. "Recommended Practice. Direct Calculation of Economic Appraisals of

Corrosion Control Measures", NACE Standard RP-02-72, Materials Protection, 11 (8), insert (August 1972).

354. Rizzo, F.E., and Bauer, E. , "Cathodic Protection Current Distribution

on Offshore Platforms", Paper presented at NACE Corrosion/77.

(Abstract only)

355. Gleason, J.D., "impressed Current Cathodic Protection For Large Offshore

Structures", Paper presented at NACE Corrosion/ 77 . (Abstract only)

356. Hall, R.E., "Effects of HVDC on Underground Structures", Paper presented

at NACE Corrosion/77. (Abstract only)

357. Ryder, R.A. , and Hoyt, B.P., "Corrosion Conditions and Correction of

Seattle's Mountain Pure Water", Paper presented at Corrosion/ 77

(Abstract only)

358. Dillon, CP., "Selection of Piping for Corrosive Service", Paper presented at Corrosion/77. (Abstract only)

359. Roebuck, A.H. , and Bennett, CA. , Jr., "Chemical Cleaning Economics",

Paper presented at Corrosion/ 77 . (Abstract only)

360. Robb, L.E., "How Kynar PVDF Resin is Being Used to Fight Corrosion",

Paper presented at Corrosion/ 77 . (Abstract only)

361. Hagemeier, T.G. , "Developing the Use of Fluoropolymers for Corrosion

and Cost Control", Paper presented at Corrosion/ 77 (Abstract only)
164

362. Rizzo, F.E., Wilson, R. , and Bauer, D. , "A Potential Survey Method

for Existing Marine Pipelines", Paper presented at Corrosion/77.

(Abstract only)

363. Roebuck, A.H., and Cheap, G.C., "Recent Advances in Marine Coatings",

Paper presented at Corrosion/77. (Abstract only)

364. Tonini, D.E., "Galvanized Heat Exchangers for Refinery Cooling Water

Service", Paper presented at Corrosion/77. (Abstract only)

365. Lundquist, J.T., Jr., Rosenberg, A.M., and Gaidis , J.M., "Calcium

Nitrite as a Corrosion Inhibitor for Chloride Containing Concrete-II,

Improved Electrochemical Test Procedure", Paper presented at Corrosion/7

(Abstract only)

366. Boova, A.A. , "Furans as Chemical Construction Materials", Paper presented at Corrosion/ 77 . (Abstract only)

367. Parks, L.E., "Coating Selection and Maintenance Painting Costs - Pulp

and Paper Industry", Paper presented at Corrosion/77. (Abstract only)

368. Roebuck, A.H,, and McCage, D.L,, "Coating Economics", Paper presented

at Corrosion/76.

369. Drisko, R.W. , "Effects of Energy, Economy, and Ecology on Marine

Coatings", Paper presented at Corrosion/76.

370. Lingle, R. J. , "Energy, Ecology, and Environment (and Costs)", Paper

presented at Corrosion/ 76

371. Kravik, R.C., "Structural and Economic Advantages of Corrosion Control

with VCI's", Paper presented at Corrosion/76.

372. Tator, K.B., "New Coating Developments, Problems, and Trends in the

Chemical Industry", Paper presented at Corrosion/74.

373. Pinney, S.G., "Effects of New Coating Developments on the Paint

Contracting Industry", Paper presented at Corrosion/74.

374. Montz, E.M. , "New Coating Developments, Problems and Trends in the

Design, Engineering and Construction Industry", Paper presented at

Corrosion/ 74

375. Grandstaff, C. , Schweitzer, J.N., et al, "Performance Evaluation of

Quality Aluminum Anodes in Seawater", Paper presented at Corrosion/ 74

376. Bishop, R.R., "The Development of a Corrosion Inhibitor for Addition

to Road Deicing Salt", Paper presented at Corrosion/ 74
165

377. Fox, C.E., "OSHA Increases Painting Contractors Cost", Paper presented

at Corrosion/73

378. Elliott, O.M. , "Low Cost Nonchromate Cooling Tower Water Treatment",

Paper presented at Corrosion/ 73

.

379. Sussman, S. , "Nonchemical Factors Governing Corrosion Control Treatment of Domestic Waters in Buildings", Paper presented at Corrosion/73.

380. Kelly, T.E., Kise, M.A. , and Steketee, F.B., "A New Approach to Corrosion

Control in Potable Water Distribution Systems", Paper presented at

Corrosion/ 73

.

381. Lincoln, D. , Randolph, R.C., and Waters, F.O., "Corrosive Effects of

Potable Water", Paper presented at Corrosion/73.

382. Wills, R.R. , "Economics, New Developments and Applications of Plastic

Pipe", Paper presented at Corrosion/ 72

.

383. Pierce, R.R., "The Testing, Engineering and Economics of Brick Lined

Process Vessels and Towers for the Process Industry", Paper presented

at Corrosion/72,

384. Wood, W.A., Jr., "How Huch is a Gallon of a Protective Coating Worth?",

Paper presented at Corrosion/ 72

.

385. Choate, L.C., "Painting Dollars: Worth or Waste? Quality Control",

Paper presented at Corrosion/72,

386. Baker, J.L. , "Painting Economics: Specifications, Application, and

Inspection", Paper presented at Corrosion/72.

387. Holzapfel, F.J., "Industrial Painting - Management's Dilemma", Paper

presented at Corrosion/72.

388. Branch, H.C., "Corrosion Resistant Materials for URD Equipment", Paper

presented at Corrosion/72.

389. Bucaram, S.M. , Byars , H.G., and Kaplan, M. , "Proper Selection, Handling

and Protection of Downhole Materials - A Practical and Economic Approach",

Paper presented at Corrosion/72.

390. Bucaram, S.M. , "Analysis of In-Hole Failure Data", Paper presented at

Corrosion/ 72

,

391. Fitzgerald, J.H. , III, and Kadlec, J. P., "Cathodic Protection of Stationary

Marine Structures", Paper presented at Corrosion/ 72

.
166

392. Talley, R.K. , "Summary of Report from Technical Committee of the InterAssociation Steering Committee for HVDC Corrosion Research", Paper

presented at Corrosion/71.

393. Bosch, W. , "The Old and the New in Coatings", Paper presented at

Corrosion/71

394. Tremari, A., "Sizing of Potable Water Supply Piping in Buildings",

Paper presented at Corrosion/71.

395. Obrecht, M.F., and Myers, J.R., "The Corrosion Engineer's Role in

Designing Long-Life, Potable Water Systems for Buildings", Paper

presented at Corrosion/71.

396. Peabody, A.W. , "Principles of Cathodic Protection", Paper presented

at Corrosion/71.

397. Pittman, F. , Stevens, W.E., and Porteous, B. , "High Pressure Hydraulic

Water Jet Techniques as Applied to Industrial Cleaning Services", Paper

presented at Corrosion/ 71

398. Park, B.D., "Corrosion Economics", Paper presented at Corrosion/71.

399. Wood, F.O., "The Role of Deicing Salts in the Total Environment of the

Automobile", Paper presented at Corrosion/70.

400. Bolmer, P.W. , "Bright Aluminum Trim - Alloy and Process Developments",

Paper presented at Corrosion/70.

401. Gelfer, D.H., "A New Concept in Steel Handling and Protection - Thin

Film Inorganic Zinc Shop Primer", Paper presented at Corrosion/ 70

402. Cakes, B.D., Wilson, J.S., and Bettin, W. J. , "The Inhibition of Mild

Steel Corrosion Under Desalination Conditions. 2-Phosphate-Chromate

Mixtures", Paper presented at Corrosion/ 70

403. Promisel, N.E., Schultze, W.A. , Staehle, R.W. , Hammersley, E.J., and

Brunin, M. , "The Theory, Significance and Prevention of Corrosion in

Aircraft", AGARD Lecture Series No. 84 (October 1976). AD 031642.

404. Collins, J.A. , and Monack, M.L., "Stress Corrosion Cracking in the

Chemical Process Industry", Materials Protection and Performance,

12 (6), 11-15 (June 1973).
167

405. Guzzetta, F.H., "ZINCROMETAL: Its Manufacture, Testing, and Use",

SAE Paper llQ'i^)! presented at the International Automotive Engineering

Congress and Exposition, Detroit (February 28-March 4, 1977).

406. Neville, R.J., "Task Force on Undervehicle Corrosion of Coated Steels

(SAE-Iron and Steel Technical Committee, Division 32)", SAE Paper 770364

presented at the International Automotive Engineering Congress and'

Exposition, Detroit (February 28-March 4, 1977).

407. Kalson, A.M. , Jr. , "Corrosive Environment Factors on Automobile Bodies",

SAE Paper 770291 presented at the International Automotive Engineering

Congress and Exposition, Detroit (February 28-March 4, 1977).

408. Rowe, L.C., "The Application of Corrosion Principles to Engineering

Design", SAE Paper 770292 presented at the International Automotive

Engineering Congress and Exposition, Detroit (February 28-March 4, 1977).

409. Endo, M.K. , "Painting Practices for Galvanized Steel", SAE Paper 770363

presented at the International Automotive Engineering Congress and

Exposition, Detroit (February 28-March 4, 1977).

410. Wise, J.J., "Costs Associated With a Corrosion Control Program on Small

or Moderate Sized Distribution Systems", Paper 70-D-66

411. Push, H.E., and Beasley, A.E. , "Effect and Control of Corrosion in Gas

Storage Wells and Lines", Paper 75-T-28

412. Parker, M.E., "The Economics of Corrosion Control", Butane-Propane News,

58-60 (October 1962).

413. Husock, B., "Galvanic Anode Renewal Programs in Gas Distribution Systems",

Paper 72-D-18)

.

414. Steelman, R.L. , "Cathodic Protection of Storage Wells", Paper 76-T-2

415. Beezley, H.V. , and Olson, G.R., "Corrosion and Cathodic Protection.

Part I", Anti-Corrosion, 1 (2), 20-25 (February 1966).

416. Beezley, H.V. , and Olson, G.R. , "Corrosion and Cathodic Protection. Part II Pipelines", Anit-Corrosion , 1 (3), 11-15 (March 1966).

417. Choate, L.C., "Pipeliners Turn to Fusion-Bonded Powders for Coatings",

Oil and Gas Journal, 74 (10), 72-82 (March 8, 1976).

418. Congram, G.E., "Organic Inhibitors Help Control Internal Pipeline Corrosion

Oil and Gas Journal, 12_ (52), 157-158 (December 30, 1974).
I

I
A-1

APPENDIX A

CORROSION COSTS IN THE FEDERAL GOVERNMENT*

1 INTRODUCTION

The Federal Government is the owner of a large amount of capital

equipment that is subject to corrosion, and large amounts of money are spent yearly to protect that capital from corrosion. Generally speaking, agencies of the Government are very much aware of their corrosion

prevention costs, and several important studies have been carried out on these costs, particularly in the Department of Defense. However, to

do a thorough study of the costs of corrosion in the Federal Government would mean that each agency would have to be studied individually. Each agency has custody of its own equipment, and maintenance

and repair costs would have to be obtained from each of them. Within

the time and effort available for this study this was impossible.

Hence the strategy that was followed was to investigate those agencies

that own specialized capital, and those that own a large amount of

capital from which extrapolation could be made to the total costs for

the Federal Govenment . This meant a heavy concentration on the Department of Defense, for this Department owns the largest share of the

capital owned by the Federal Govenment. Fortunately, this is also the

Department that has, in many cases, the most reliable cost data.

The agencies from which data were obtained were the three services

of the Department of Defense, NASA, the U.S. Coast Guard, the GSA, the

Legislative Branch, and the National Bureau of Standards. Corrosion

costs data were not available in all cases. Where not available, es- timates of corrosion costs were made from the available data by

ourselves, guided in most cases by data from those agencies for which

corrosion costs data were available.

The costs we have collected are primarily maintenance and repair

costs. Where appropriate, capital redundancy information was also

collected, as well as capital lifetimes. However, no attempt was made

to obtain added first costs because of corrosion. These would be

reflected as changes in inputs to the appropriate capital producing

sector in any case, and not as changes in Federal capital acquisition

expenditures. The data for World II are, generally speaking, based on previously reported surveys or studies whereas data for World III involve a great deal of subjective judgment.

Section prepared by Elio Passaglia—NBS with assistance from W.K. Boyd-BattelleColumbus Laboratories.
A-2

2 CAPITAL EQUIPMENT OF THE U.S. GOVERNMENT

A complete inventory of the capital equipment of the U.S. Government was not available. However, all the real property (buildings,

structures and land) at book value is given in Reference 1, which has

many other valuable data as well. Real property and personal property

(all property other than real property) for the Department of Defense

is given in Reference 2. Reference 3 gives statistics on highways,

which are, however, property of the States. Reference 4 gives valuable

information of various kinds.

An overall inventory of the capital of the U.S. Government, at

1975 replacement prices, is given in Table A-1. This was calculated by

Battelle from yearly purchases, expected lifetime and rate of growth.

The inventory is broken down into dollars of capital from each

capital-producing, industrial sector in the I/O Model. In Tables A-2

and A-3 we have collected all items of inventory with a value greater

than three billion dollars. Table A-2 gives real property, which ac- counts for 36.3% of total capital owned by the U.S. Government. Table

A-3 gives the remainder. The capital listed in these two tables ac- counts for 97.6% of the capital owned.

With these two tables in mind, the strategy that was followed for

the Federal Government was as follows. Corrosion costs were collected

on real property and those items of capital equipment where the

Federal experience is expected to be unique. This is in the military.

The particular items chosen were aircraft (29.2% of total capital),

ships (8.4%) and ordnance and accessories (9.5%). In monetary value,

these four items of capital equipment account for 83.4% of the capital

owned by the U.S. Govenment . Their fraction of the corrosion costs is

expected to be at least that great. Corrosion costs for the remainder

of the items in Table A-1 and Table A-3 were not studied specifically

for the Federal Government, but were estimated from the results of

other portions of the study.

3 AIRCRAFT

The major owners of aircraft in the Federal Government are the Air

Force, the Navy, the Army (primarily helicopters) and the Coast Guard.

Detailed study was carried out for the Navy, the Air Force, and the

Coast Guard. The Army costs were estimated from the information obtained from the Navy and the Air Force. Data obtained from each of

these agencies are discussed below.
A-3

TABLE A-1. CALCULATED INVENTORY OF CAPITAL

OF THE FEDERAL GOVERNMENT

Capital Producing Sector $ - M

4x05 Furniture + Fixtures 2165, 72

8.02 Metal Barrels, Drum + Pails 47. 79

8.04 Nonelectric Heating Equipment 82. 42

8.05 Fab Structural Metal Prd 1079. 59

8C07 All Others 726. 91

9.01 Engines + Turbines 4501. 54

9.02 General Industrial Machinery + Equipment 5082. 07

10.01 Farm Machinery 232. 02

10.02 Construction Machinery 1626. 83

10.03 Mining Machinery 47. 10

10.04 Oil Field Machinery 7. 82

10.05 Material-Handling Mach Ex True 107. 58

10.06 Industrial Trucks + Tractors 1070. 40

10.07 Metal Working Machinery 1732. 91

10.08 Special Industry Machinery 385. 30

llAOl Automobiles 3165. 10

llBOl Trucks, Buses, etc. 4061. 80

11.02 Aircraft + Parts 194714. 05

11.03 Ship + Boat Building + Repairs 56367. 33

11.04 Locomotives + Rail + Street Cars 242. 04

11.05 Cycles, Trailers, etc. 20. 15

12.01 Electric Measuring Instruments 4250. 08

12.02 Electric Motors + Generators 3208. 85

12x04 Electric Lamps + Fixtures 526. 80

12.07 Mscellaneous Electrical Machinery 1995. 19

13.01 Service Industry Machinery 905. 97

13.02 Household Appliances 218. 54

13.03 Radio, TV + Communication Equipment 57668. 07

14.01 Scientific Instruments, etc. 7874. 81

14.02 Medical, Surgical, Dental Instruments 867. 24

14.03 Watches, Clocks + Parts 27. 70

14.04 Optical + Opthalmic Goods 323. 49

14.05 Photo Equipment + Supplies 2981. 01

15.01 Computing + Related Machines 4310. 96

15.02 Other Office + Business Machines 731. 08

16.01 Ordnance + Accessories 63293. 16

16.02 Other Miscellaneous Products 185. 32

19.01 New Construction, Nonfarm Resid 11804. 11

19.02 New Construction, Nonresid Build 40481. 49

19.04 New Construction, Highway + Other 189817. 86
A-4

TABLE A- 2. REAL PROPERTY, U.S. GOVERNMENT

Sector Ainount-M$ % Total

19.01 Residential 11,804 1.77

19.03 Building, Non Res. 40,481 6.07

19.04 Highway and Other 189,817 28.47

TOTAL 242,102 36.32

TABLE A-3. PERSONAL PROPERTY

Sector Amount-M$ % Total

9.01 Engines & Turbines 4,501 0 .68

9.02 General Industrial 5,082 0 .76

llAOl Autos 3,165 0 .47

11001 Trucks, etc. 4,061 0 .61

1101 Aircraft 194,714 29 .2 1103 Ships & Boats 56,367 8 4

1201 Elec. Meas. Inst. 4,250 0 64

13.03 Communication Equipment 57,668 8. 65

14.01 Scientific Instruments 7,875 1. 18

15.01 Computers 4,311 0. 65

16.01 Ordnance and Accessories 63,293 9. 49

TOTAL 408,496 61. 3
A-5

3.1 Navy, World II

3.1.1 Maintenance and Repair

Costs for the corrosion portion of maintenance and repair were

derived from discussions with several experts from the Naval Air

Systems Command. The maintenance and repair figures are given in Table

A-4. These are divided up as to costs incurred for maintenance and

repair in the depot and in the field. The latter in turn are broken

down for scheduled maintenance and unscheduled maintenance and repair.

Since scheduled maintenance for corrosion is accurately specified, and

unscheduled maintenance is the subject of a thorough study, these es- timates are considered quite firm.

3.1.2 Capital Redundancy and Lifetimes

We estimate that 5-8% of the time Navy aircraft are not available

because they are undergoing maintenance and repair for corrosion.

Hence, we conclude that the Navy aircraft have a redundancy of 5-8%

because of corrosion. All discussions with Navy personnel have indicated that aircraft are not replaced because of corrosion, but

because of obsolescence. Hence, it is concluded that aircraft lifetime

is not influenced by corrosion.

3.2 Air Force, World II

3.2.1 Maintenance and Repair

Costs of corrosion of aircraft were obtained in discussions with

experts from the Air Force Materials Laboratory. Based on these discussions estimates are made for corrosion maintenance expenditures.

Corrosion costs are also available from two other sources: FY-76 Aircraft Maintenance Costs'^' and USAF Corrosion Data, Manhours Expended

for Corrosion Inspection and Treatment.'^' From various sources it is

possible to obtain a range of estimates for corrosion costs for aircraft .

Maintenance costs were expended in depots and in the field (see

Table A-4) . Reference 5 gives a complete breakdown of the fraction of

maintenance expenditures expended for corrosion for each type of AF

aircraft. These data are summarized in Table A-5. From this it is es- timated that 27.3% of total maintenance man-hours are expended for

corrosion. Reference 5 also gives the overall maintenance costs for

depot repair and maintenance. The product then gives the corrosion

costs incurred in depot repair and maintenance. These are given in

Table A-6 along with field costs.
A-6

TABLE A-4. SUMMARY OF CORROSION COSTS - NAVY AIRCRAFT

Depot Costs M$

Air- Frame 0.1 X 199 M/year 19.9

Engines, assume 0.25 X 88 M/year 22

Other Equipment 0.1 X 344 year 34.4

Total Depot 76.3

Field Costs

This applies to ^ 5,000 airplanes

Scheduled maintenance

Man-power

II X 5000 X 365 X 15

Materials 0 10%

Unscheduled Maintenance

206, 565 X 12 X 15 =

Materials 0 10%

Total Field

31.3

3.1

37.2

3.7

75.3

GRAND TOTAL 151.6
A-7

TABLE A-5. PORTION OF MAINTENANCE EXPENDITURES

FOR CORROSION FOR DIFFERENT TYPES OF

AIR FORCE AIRCRAFT

Aircraft No % Corrosion No. Hours/Corr. Total

F/FB 111 445 5-10% 176 2,347

B52 ? 20% 8,800 44,000

F106 249 17-20% 807 4,362

F105 247 8-9% 613 7,222

F102 223 o(?Ho 773 7,730

FlOO 518 24% 644 2,683

F4 1,640 15% 678 4,520

A-7 346 13% 416 3,200

CI 41 280 30% 2,760 9,200

CI 35 762 23% 2,459 10,691

C5 79 60% 15,535 25,892

ens 93 58% 2,146 3,700

CI 30 662 23% 8,980 39,043

T29/C131 436 50% 280 560

5,981 45,067 165,150

^tl'^Vr. = 0.273 Corrosion Fraction
A-8

Developing the field costs is a more difficult matter. Reference 5

gives no data on field costs for corrosion. However, it gives the

total appropriation for field maintenance, the total number of field

and depot personnel, and the total field and depot maintence costs for

the F-4 aircraft. Unfortunately, these are three different rates,

being 3.0, 1.37 and 1.53, taking depot warehouse costs at |20/hour and

field warehouse costs at $15/hour as recommended by AFML . Moreover,

from Reference 6 it is possible to derive that 25% of field

maintenance costs are expended for corrosion, as compared to the 27.3%

derived from Reference 5 for depot work. These niimbers are remarkably

similar. From these various data and the known depot maintenance

costs, it is possible to derive a series of estimates for the field

costs, and hence the total costs. These are given in Table A-6.

This gives a very wide range of estimates. However, following discussions with Air Force personnel, we discard the high costs. These

result from the large ratio of appropriation for field work as com- pared to depot work. We accept the lower estimate for two reasons: (1)

the field depot man-hour ratio and the field/depot costs for the F-4

are quite similar, and (2) the Navy experience (Table A-4 ) shows depot

costs and field costs to be very similar. A representative figure of

$750 M/year was decided upon. This is essentially determined by the

relatively firm figures for the F-4.

3.2.2 Redundancy and Lifetime

The redundancy is estimated to be at the upper end of the Navy

figures, since a greater fraction of maintenance and repair expenditures is used for corrosion. Hence a figure of 8% redundancy is

estimated

As with the Navy, no change in lifetime of aircraft is anticipated

because of corrosion.

3.3 Coast Guard

The Coast Guard provided us with detailed maintenance and repair

expenses for aircraft. From these we derived corrosion costs. The

results are shown in Table A-7, where we have used the fraction of

maintenance and repair expenses for corrosion that we obtained for the

Air Force fleet to make the estimate.

It is to be noted that field maintenance for the Coast Guard is

carried out largely by crew members, and their labor is not separately

accounted for, as it is for the Navy and the Air Force. Hence, to

place the Coast Guard expenditures on a comparable basis to those of
A-9

the Navy and the Air Force, the field labor expenditures were increased until materials represented 20% of total maintenance costs.

This was for the comparison made in the next section.

No data were derived for redundancy or lifetimes.

TABLE A-6. AF AIRCRAFT CORROSION

MAINTENANCE COSTS

$, Minion

(a) DEPOT

*

*

From AFML 300 - 450

Calculated from Ref. (5) 300

(b) FIELD

From AFML 300

Using fraction from (5)

Scaled by appropriation 900

Scaled by MH 411

Scaled by F-4 459

Using fraction from (6)

Scaled by appropriation 824

Scaled by MH 376

Scaled by F-4 420

Total dnd Range 600 - 1,350

* Includes materials Q 20% of labor

Average decided with CT Lynch = $750 M
A-10

TABLE A-7. COAST GUARD, AIRCRAFT

Total, $K % Corr Corrosion Cost $K

Field

Labor 30 25 7.5

Matls1,472 368

Depot

Labor 4,952 25 1,238

Matls

1,238 309

TOTAL 1,922

Cost per aircraft = = $ll,200/year

Cost per aircraft, scaled for field labor = 19,700/year

3.4 Comparison of Navy and Air Force Figures

Table A-8 gives a comparison of the corrosion maintenance costs

for Navy and Air Force aircraft. In this table, costs are given for

each service in terms of dollars spent per year per aircraft. It is

seen that the Air Force spends about 2.5 times as much per aircraft as does the Navy. The reason for this is made clear in Table A-5 . There

it can be seen that the larger aircraft, like the C135, the C5 and the

0118 require a considerably higher proportion of maintenance expenditures for corrosion control than do the smaler aircraft. Indeed, for

the F-4 aircraft, the experience is quite similar to the figures given

in Table A-4 for depot repair for the Navy. Hence it is concluded that

the ratio of per-aircraft yearly corrosion maintenance costs for the

Air Force and the Navy is in the expected direction, although its ac- curacy cannot be assessed.

The table also gives the yearly maintenance costs per dollar of

inventory value as given in Reference 2. However, here no ratio is

given since this is much harder to interpret.

3.5 Total Aircraft Costs, Federal Government

Table A-9 gives the total corrosion maintenance costs for aircraft

for the Federal Government. The figures for the Army are not part of
TABLE A-8. COMPARISON OF NAVY AND AF AIRCRAFT

CORROSION MAINTENANCE COSTS

NAVY AF AF/NAVY

Total cost, M$/year 152 750

No. of Aircraft 6,475 12,425

Cost per aircraft, $/year 23,500 60,360 2.5

Dollar value of aircraft, B$ 18.3 31.2

Cost per year per dollar value

$/$year * 0.0083 0.0240

TABLE A-9. AIRCRAFT, CORROSION MAINTENANCE COST

Book

Value Labor Materials

$B $M $M

Navy 18.2 137 14.5

Air Force 31.2 625 125

Ariry 4.7 69* 13

Coast Guard 2 .6

TOTAL 833 153

* Scaled from Navy and AF Sum.
A-12

an independent estimate, but were scaled on the basis of the inventory

value from the Navy and Air Force experience. The total corrosion

maintenance costs for aircraft in the Federal Govenment are approximately one billion dollars per year.

4 SHIPS AND BOATS

The two organizations investigated for corrosion maintenance costs

were the Coast Guard and the Navy.

4.1 Coast Guard

The Coast Guard provided detailed figures for total repair and

maintenance for cutters and boats . From the aspect of the overall ex- penditures for the Federal Government, the expenditures for boats were

sufficiently small that they were not analyzed. However, from the

figures provided on cutters, an estimate of the fraction of

maintenance and repair expenditures for corrosion was made and was later used for the analysis of the Navy figures. Hence these were

analyzed in detail

The costs for cutters are given in Tables A-10 and A-11. Table A10 is for maintenance and repairs in dry-dock and yards (labelled

''Depot'' to make them consistent with Tables A-4, A-5, and A-6).

Table A-11 gives similar figures for maintenance and repair in the

field, and totals. In each table the total maintenance and repair

figures were provided by the Coast Guard. The portion attributable to

corrosion is our estimate. How this was done is described in the

following paragraphs

The two first columns of Table A-10 give the total maintenance and

repair costs expended in depots. These are broken down into categories

of ''Dry-docking and Underbody '','' Propulsion '' , ''Auxiliary Systems''

and ''Hull''. It is this detailed breakdown that permits an estimate

of the fraction of these costs that is attributable to corrosion.

Drydocking and underbody work on ships is done to remove fouling

and not because of corrosion. Hence none of these costs were attributed to corrosion.

For propulsion systems the following analysis was used. Reference

7 is a thorough study of maintenance and repair expenses for the

propulsion systems on LST's. From the data assessed during this study,

Peterson derived that 29% of the labor and materials used for

maintenance of these propulsion systems were required because of cor- rosion. These data are not published but were made available to us by

Mr. Peterson. The figure of 29% was used both for propulsion and for

auxiliary systems.
A-13

TABLE A-10. COAST GUARD CUTTER - DEPOT

Dollars in Thousands

Labor Matls Corrosion Corr. Labor Corr. Matls

Drydocking and 5,930 130 0 0 0

Underbody

Propulsion 2,425 1,126 0.29 703 326

Auxiliary Systems 2.620 852 0.29 759 247

Hull 2,354 311 1.00 2,354 311

TOTAL 13,331 2,421 3,816 884

Corr. Labor = 29%

Corr. Matls = 36%

Corrosion Total = 30%

For hull repair axid maintenance in the depot, the total amount was attributed to corrosion. Accident repair is accounted for separately

from these figures.

Fractions of maintenance expenditures attributable to corrosion in

the field were derived in a similar fashion, but 25% of hull work was attributed to corrosion. There is, of course, no underbody work in the

field. It is also to be noted that the time of crew members spent on maintenance and repair is not counted.

From these figures it is estimated that approximately 30% of depot

maintenance and repair expenses are attributable to corrosion, and

about half the field expenses.

The total corrosion maintenance costs are given in the bottom part

of Table A-11. The overall fraction of maintenance and repair expenses

is approximately 35%.
A-14

TABLE A-11. COAST GUARD CUTTER - FIELD

Dollars in Thousands

Labor^/ Matls Total %C Corrosion Cost

Propulsion 118 1,231 1,349 29 391

Auxil iary 153 1,758 1 Ql 1 9Qcy

Hull & Structures

412 2,080 2,552 75 1,869

TOTAL 683 5,129 5,812 2,859 (49%]

—'^Does not include CG Personnel

Corrosion Costs

Dollars in Thousands

Field Depot Total

Labor Matls Labor Matls

Propulsion 34 357 703 326 1,420

Auxiliary 44 510 759 247 1,560

Hull 309 1,560 2,354 311 4,534

TOTAL 387 2,427 3,816 884 7,514
A-15

4.2 Navy Ships

Corrosion maintenance costs for Navy Ships were the most difficult

to obtain and should be considered as representing only an estimate

based on available data.

The Navy maintains a ''3M'' (Maintenance and Materials Maxiagement

)

accounting system for maintenance and repair costs. From this system,

some costs for maintenance of six classes of ships, accounting for a total of 184 ships, are reported in the ''Ships Data Book Operations

and Support Costs, FY 1975''. These data are shown in Table A-12.

Costs are collected in three categories: Direct Organizational Costs,

which is for work performed aboard ship; Intermediate Costs, which is

work performed by the fleet tenders; and Depot Costs. These costs are well documented for these 184 ships. The method selected to scale

these costs upward to the total fleet of 535 ships is described in the

following paragraphs

.

The Direct Organizational Costs and the Intermediate Repair Costs

were considered to be costs that did not fluctuate greatly over time

since they are primarily for small, routine tasks. Hence for these two

costs, the scaling upward to the total fleet was accomplished by multiplying the figures shown in Table A-12 by the ratio 535/184. This

implicitly assumes that the costs on all ships would be comparable to

this group of 184. In the absence of other directly applicable data,

no other assumption could be made.

It was felt that a similar procedure could not be justified for

the depot costs which were large and variable. It is reported to us''"^' that on the average ships came into the depot for maintenance and

repair about once every three years. It does not follow that one third

of each class of ships comes into the depot every year for repair. Indeed, an inspection of the variation in the figures for the various

classes of ships shown in Table A-12 shows that this almost certainly

is not the case. Hence the data indicate that a simple scaling of

depot costs as was done for the other costs could be seriously in

error

.

In an attempt to establish the costs for depot repair of Navy

ships. Navy budget documents"^* were consulted. From the figures given

on page 766, Reference 13, it is estimated that a lower limit on ships

depot maintenance is $693 M for FY 1975. This probably overlooks other

ships depot maintenance expenses accounted elsewhere in the budget . On

page 593, Reference 13, figures for ships maintenance and modernization as well as other Navy depot maintenance are given. From these it

is estimated that some fraction of $2165 M representing ship

maintenance and modernization is properly ship depot maintenance for

FY 1975. It is estimated that about 50% or $1000 M may be used for

maintenance and repair. Thus it is concluded that the expenditures for
A-16

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A-17

ships depot maintenance are between about $700 M and $1000 M for FY

1975. This range is somewhat larger than the result in Table A-12

because of actions involving other ships and hence not accounted for

in that sample.

The total figures and the corrosion costs are given in Table A-13.

To make the estimates, an overall 30% of maintenance costs were attributed to corrosion. That fraction is consistent with the figures

developed from the Coast Guard considering the high fraction of the

total maintenance costs expended in depot actions. Of the costs listed

in Table A-12 for Organizational and Tender actions, only those con- nected with corrosion-susceptible actions were used. These involve

labor and spare parts costs of $148 M for organizational actions and

$160 M for Tender actions, after scaling to a fleet size of 535 ships.

A figure of $1000 M for total depot repair was used, the upper end of

the range given above.

TABLE A-13. MAINTENANCE AND REPAIR

Navy Estimated (535 Ships)

Materials Labor Total \^ll°s/

(10 $) (10 $) (10 $) Labor) Corrosion Costs

(10^$) 0 30%

Fleet

(Organizational) $ 116 $ 32 $ 148 3.6 $ 44

Level

Tender (IMA)

75 85 160 0.9 48

Level

Depot 75Q 250 1,000 3.0 300

Level

Total 941 367 1,308 2.6 392

Corrosion 282 110 392

Costs @ 30%
A-18

The total figure for corrosion maintenance on Navy ships is

therefore estimated to be $392 M with the labor and materials

breakdown shown in Table A-13. This is subject to a great deal of un- certainty ^ the magnitude of which cannot be well estimated.

5 ORDNANCE AND ACCESSORIES

The U.S. Army has an enormous inventory of ordnance and

accessories which are subject to corrosion. This amounts to some 9.5%

of the personal property owned by the government (63,293 billion

dollars )

In an attempt to establish which percentage of maintenance costs

can be attributed to corrosion several different areas within the Army

and DOD were contacted. No data were derived for corrosion related

maintenance, redundancy or lifetimes. In the absence of data estimates

were made on the basis of data available from related sectors. Adjustments made on this basis to the coefficients ascribed the cost of

corrosion as $307 M. This amount appea,rs to be somewhat conservative

in light of corrosion costs in other military operations.

6 REAL PROPERTY

6.1 Introduction and Structure of Study

As can be seen from Table A-2, real property in the form of

buildings and other structures (but not including land), comprises 36%

of the total capital owned by the Federal Government. The inventory of

this property is given in Reference 1 by agency and by type. The inventory is a highly variable one. Reference 1 lists ten different

types of buildings and sixteen different types of structures and

facilities. To do a complete and thorough study of the corrosion costs

for all these different types of buildings and structures and

facilities would mean visiting every agency for every type, and this was not possible within the resources and time available. What was done basically was to use data available from the Department of

Defense, and to deduce the costs for the remainder of the Federal

Government from the costs for the DOD, with checks made where possible

from the data obtained from other agencies. The agencies that were

studied were the DOD, NASA, GSA, the Coast Guard, NBS , and Post

Office

The Department of Defense is the single largest property owner in

the Federal Government. Tables A-14 and A-15 give respectively the

book value of the inventory of the buildings and of structures and

facilities for the DOD and the remainder of the Federal Government,

omitting that portion, such as TVA, that do not form part of general
A-19

TABLE A-14. COMPARISON OF DOD AND ALL FEDERAL

BLDGS (NOT INCLUDING POSTAL SERVICE)

DOD ($M) Other ($M)

Housing 6,849 552

Service 6,243 678

Office 1,566 2,805

R&D 1,455 2,634

Industrial 1,205 1,543

Hospitals 817 1,483

Storage 1,618 563

School 1.534 248

Other Inst. 183 333

Prisons 1 60

TOTAL 21,471 i 10,899

% 66% 34%

Government. The data are taken from Reference 1. It can be seen from

these tables that the DOD has custody of 66% of the inventory value of

buildings, and 70% of inventory of structures and facilities.

Reference 1 also shows that on the basis of floor area, the DOD has

custody of 73% of the buildings, which implies that the overall age

distribution of DOD buildings is approximately the same as that of the

rest of the Federal Government, but slightly older. Thus, to the ac- curacy with which other data are available in this study, we can say

that the DOD has custody of 70% of the buildings and of the structures

and facilities owned by the Federal Government. Hence, what was done

was to identify the corrosion costs for real property in the DOD, and

to scale them up to the total Federal Government by dividing by 0.70.

This assumes that the costs in the DOD are approximately the same as

in the remainder of the Federal Government. As will be seen, this is

not a bad assumption.
A-20

TABLE A-15. STRUCTURES AND FACILITIES

Unit DOD other (B$)

Power Dev. & Distri

3.43 .008

Flood 6-0^ 0.

294 DOI: 0.105 DOT

103 Other

Uti 1 i tv 4.01 2,14

Roads & Bridges 1.52 3.14

Reclamation & Irrigation .063 2.35 (DOI)

Airfield Pavements 2.192 .105

Misc. Military 1.971 .003

SERvice 1.821 .002

R&D .551 0.255

Storaae fexceot buildinas) .931 0.046

Mon. & Mem. 0.270

Harbor & Port .676 0.123

Industrial .121 0.126

Railraods .392 0.147

Nav. & Traffic! Aids .173 0.167

Comm. Syst. .348 0.222

Total {%) 24.24 (70.5) 10.106
A-21

6.2 Corrosion Maintenance Costs for Real Property in the DOD

A thorough study of corrosion maintenance costs was carried out by

C. Hahin of the Army Construction Engineering Research Laboratory"**.

In this study, Hahin investigated real-property maintenance axid repair

expenditures, both in-house and on contract, at four Air Force installations and three Army installations. By investigating each individual item of work performed and discussing each with the individual performing the work, he was able to estimate what portion of

each was attributable to corrosion. This in turn was categorized by

the type of system, such as plumbing, heating systems, refrigeration

and air conditioning, etc. From these data Hahin was able to develop a comprehensive corrosion costs prediction model relating various en- vironmental factors such as SO2 content of the atmosphere, soil

resistivity, etc., to characteristics of the installations like length

of buried pipe, total building surface area, etc.

Hahin' s model can in principle predict the corrosion cost quite

accurately. However, the large volume of data necessary on the various

installations was not available to us and hence could not be used.

Fortunately, Hahin also calculated the fraction of all operations and

maintenance expenditures that were due to corrosion for each of the

bases. Hence, the approach that was adopted was to multiply the total

operations and maintenance expenditures for the Air Force and the Army

by these fractions to obtain the total cost of corrosion maintenance

actions for these two services. The results obtained are, of course, a grosser estimate than would have been obtained using Hahin'

s

methodology. The results are shown in Table A-16, where we also show

results for the Navy and the Civil Works Division of the Army. We will

now describe how we obtained the figures for these last two services.

Overall figures for operations and maintenance of Navy facilities

are contained in Reference 9. These figures indicate that the Navy ex- pended $255 M for this purpose in 1975. However, consultation with individuals at Port Hueneme"^' indicate that this is only about half the

amount expended for real property maintenance. The other half is

recovered by an overhead charge carried out on repair work done at

depots, etc. As a result, the overall maintenance expenditures for the

Navy were taken as $500 M for FY 1975. This is exclusive of family

housing, of which the Navy has 107 M square feet.

The estimate of the corrosion expenses was then made in two

different ways. In one way, 15% of this overall total was attributed

to corrosion. This fraction is 25% higher than that used for the Army,

and was used because of the proximity to the ocean of Navy installations. This figure is consistent with the judgment of Navy personnel""'. In another way, each of the specific systems costs listed in

Reference 9 was analyzed according to the figures given by Hahin'*' for

specific systems, and in addition includes a cost of $0.03/sq ft

year for family housing (see below, GSA) . Both sets of estimates are given in the table and are seen to be quite consistent.
A-22

TABLE A-16. DOD REAL PROPERTY CORROSION COSTS

M & R ($M) % Corrosion Corrosion Cost ($M)

Army, Military 1000 US 12 120

1630 World 196

Navy 510*^1) 15 80(2) 74-87(3)

AF 600 10 60

Army, Civil 380 20

TOTAL 280

(1) Does not include family housing

(2) Includes 3M for 107M sq ft family housing.

(3) By larger calculation from NAVFACNOTE 11%.

The figures for the Civil Works Division of the Army were arrived

at from the maintenance expenses for each type of facility. With the

help of Mr. Hahin, a fraction was attributed for corrosion for each of

these expenses. Because of the nature of these facilities, the fraction is generally quite small. The error in the total estimate is

probably substantial, but fortunately the final figure is only a small

percentage of the total

6.3 The Coast Guard

The Coast Guard provided accurate figures for total maintenance

and repair expenses for their shore units. These are divided into rou- tine maintenance and repair and major maintenance and repair. To es- timate the fraction of these expenses that are attributable to corrosion, the same reasoning as above for the Navy real property was used,

and a figure of 15% was assigned. The figures are shown in Table A-17.

Here, because of figures provided, a breakdown between materials and

labor was possible. This checks very well with data provided by GSA

presented below.
A-23

TABLE A-17. CG, SHORE UNITS

Total $K % Corr. Corr. $K

Routine

Labor 12,292

Parts 5,766

Major

Labor

U.S. t>arts

TOTAL

6.4 NASA

Figures for real property maintenance costs and associated corrosion costs were obtained from discussions with NASA representatives.

In NASA's budget structure, the appropriate costs come in two

categories: Capital Rehabilitation, and Operation and Maintenance. In

each category, funds are appropriate in two sub-categories: Institutional, and R&D. The corrosion costs for each of these categories

are given in Table A-18. It is to be noted that this is an estimate

( 8 1 that is completely independent of the DOD study. This is important,

for it will be used in the final estimate made for the Federal Government below.

6.5 GSA

The General Services Administration has custody of a large amount

of real property in the form of office buildings. In Reference 1, they

are shown as housing custody of 36% of the office buildings space, and

39.4% of the book value of office building inventory in the Federal

Government. While this is a substantial amount of real property, in

terms of the total Federal Government it amounts to only 2.6%.

15 1,844

665

6,983 15 1,047

1,144 172

3,728.
A-24

TABLE A-18. NASA CORROSION COSTS;

REAL PROPERTY MAINTENANCE

Category Total M$ Labor M$ Materials M$

Capital Rehabilitation

Institutional 0.9 0.45 0.45

R&D 0.44 0.22 0.22

Operation and

Maintenance

Institutional 3.5 - 5 1.9 - 2.2 1.6 - 2.3

R&D 3.5 ~ 5 1.9 - 2.2 1.6 - 2.3

Inhibitors 0.1

TOTAL 8.5 - 11.5

Accurate figures were provided by GSA on operations and

maintenance expenses for the last quarter of 1976 and the first

quarter of 1977. A rough calculation from the data of Hahir*"' shows

that approximately 13% of these operations and maintenance costs are attributable to corrosion. The corrosion maintenance costs for Navy ! buildings is estimated to be approximately 8% of operations and | maintenance. When it is considered that the GSA buildings are self I contained, i.e., contain their own heating and air conditioning ' plants, etc., whereas the Navy buildings generally involve separate } heating and air conditioning, the agreement is satisfactory.

j The GSA provided other information that is of importance to our i study. This has to do with the lifetime of building systems. Besides | operations and maintenance, the GSA has a program called Alteration 1 and Repair. This includes ''Basic Work to Correct Deterioration and i Malfunction'', ''Improvement of Space to Promote Utilization, and

j Special Fire Safety, Life Safety and Property Protection'', ''Special I Aids for the Haxidi capped '' , ''Special Environmental Protection j Measures'' and ''Special Energy Conservation Measures''. Approximately j 60% of the expenses in FY 1977 are for ''Basic Work...'', and clearly

some of these are corrosion related.

Figure A-1 shows the expenses in this program as a function of

building age. It will be seen that the cost per unit area of building

space rises dramatically when the building age reaches 30 years. This

corresponds to the average lifetime of major building systems, and is

the age when replacement is required.
A-£5

—

> /

/

/ J

0

1 1 1 1

1 1 0-10 11-20 21-30 31-40

Age in Years

41-50 51 +

FIGURE A-1. COST OF BUILDING REPAIR AND ALTERATION

AS A FUNCTION OF AGE
A-26

I

It should not be assumed that the costs shown in Figure A-1 are ! the actual expenses of the GSA for this purpose. In fact, only about ! 10% of the estimated ajnoxant necessary is appropriated per year. The

remaining amount is the backlog.

I

I

I 6.6 National Bureau of Standards I

An intensive and detailed study of corrosion costs at the ' Gaithersburg site of NBS was also carried out. An itemized list of | corrosion expenses incurred in corrosion protection, generally for i 1975, is provided in Table A-19. Where costs do not occur on an annual

basis, the time between operations was estimated, and the costs distributed uniformly over this time. The largest such item was the

replacement of a reactor heat exchanger, which is very likely com- parable to the type of cost included by NASA in their capital

rehabilitation budget.

The building maintenance costs incurred by NBS are $0.53/sq ft/

year. This is comparable to the GSA costs of $0.60/sq ft/year and the

Navy of an estimated $0.46/sq ft/year. Additional NBS costs due to the i extensive grounds maintenance are not included here. j The corrosion maintenance costs for NBS amount to $0.036/sq

ft/year. This is very comparable to the costs of $0.029/sq ft/year at

Battelle"". Indeed, if the extraordinary heat exchanger expense is

subtracted, the cost becomes $0.0284/sq ft /year, an agreement which

can only be fortuitous. It is anticipated that these costs will rise

as the facility ages.

6.7 Post Office !

On the surface it would appear that the Post Office owns a con- j siderable amount of property which is subject to corrosion, namely

collection and distribution mail boxes located throughout cities in i the United States and real property such as buildings and vehicles. ] However, a detailed study of the area indicates that corrosion related

maintenance costs are minimal. The Post Office Department leases most

of its buildings. It also turns out that only a small amount of the

maintenance painting of the mail boxes can be attributed to corrosion.

The boxes need repainting because of noncorrosion related damage, long

before the protective quality of the paint has been compromised.

6.8 Federal Government Summary

Before we discuss the overall summary for the Federal Government

we present a table of some unit costs. In Table A-20 we present the

yearly corrosion maintenance costs for the agencies we have studied.
A-27

TABLE A-19. NBS CORROSION MAINTENANCE COSTS

Water treatment, steam and chilled water: chemicals $ 20,560

technician salary (50%) 8,746

Calgon consulting 1,150

Cooling tower, deck plate repair, $1,487, est.

5 yr. cycle 300

Electrical failure near cooling tower, $880, est. 220

4 yrs.

Tower fan repair 200

Hood systems, fans and ducts, GP 5,200

Air conditioner buffles, $6,000 over 2 yrs. 3,000

Lab sink drain leaders 2,551

Hot water valve repairs, est. per year 250

Chilled water nipple replacements per year 300

Hot water vertical header lines, $97,684, 20,000

est. 5 year period

Exterior metal painting, loading docks, $10,531, 1,500

est. 7 year period

Reactor heat exchanger replacement, $326,000, 16,300

est. 20 year period

corrosion costs, total, $ 80,277

for 1 year, est. about 1975

NBS total maintenance costs, 1975, $1,200,000 (excluding grounds maintenance)

Corrosion % = 6.7 of maintenance

NBS bulding floor area = 2.25 x 10^ ft2

Corrosion costs 1 ft^ = $0.036 ft"^

NBS facility cost (initial) = $104,000,000

Corrosion cost/initial value = 0.0008
A-28

TABLE A- 20. RATIO, YEARLY CORROSION COST TO

BOOK VALUE, REAL PROPERTY

Book Value

M$

Corrosion

Cost, M$ C/B, $/$ Year

Army Military, U.S. 11, 700 120 0 .010

Army, Civil 10,100 20 0 .002

Navy 9,900 80 0 .008

AF 14, 300 60 0 . 0042

TOTAL DEFENSE 46,000 280 0 .0061

NASA 2,617 8.5 - 11.5 0.0032 - 0.0044

CG 523 3.73 0 .0071

NBS 90 .080 0 .0008

and the ratio of these costs to the inventory book value of the

property as obtained from Reference 1. This ratio is sensitive to the

type of facility, but perhaps more importantly to the age of the

facility. Age influences this ratio in two ways. First, since the

value of the property is carried as the original acquisition cost,

this ratio will be higher for older facilities. Second, as we have

seen above in the GSA actual costs are a very strong function of

building age, being much higher for older buildings.

The ratio shown in the table varies by a factor of approximately

ten from a low 0.0008 for the Gaithersburg site of NBS to a high of

0.010 for the Army. Now, NBS has the newest facilities; NASA had the

next newest. Among the DOD facilities, the Army facilities are known

to be much older than the Air Force'^' and it is estimated that the Air

Force is somewhat older than NASA. Hence, in at least a qualitative

way the ratio seems to correlate with building age. A more thorough

analysis would require the age distribution of the facilities. We have

not done this.

Finally, in Table A-21 we show the final figures for yearly corrosion maintenance costs for real property in the continental U.S. for

the total Federal Government. The total was estimated in two different

ways. First, the costs developed for the DOD were divided by 0.70 to

obtain an estimate from this source. Second, the NASA costs, which are
A-29

a completely independent estimate were scaled upward to the rest of

the non-Defense part of the Government. This scaling assumes (among

other things) that building structures and facilities mix for NASA is

the same as for the rest of the non-Defense part of the government . In

fact, the ratio of inventory value of structures and facilities to inventory value of building for NASA is 1.45:1. Whereas from Tables A-14

and A-15 the ratio is seen to be approximately 1:1 for the non-DOD

part of the Government (including NASA). Hence there will be some

error in this extrapolation, whose magnitude is hard to assess, but

will probably not be too large. In fact, considering the nature of the

assumptions, the agreement between the two methods is quite satisfactory. The total was taken as the approximate mean of the two results.

The breakdown into materials and labor is the average of figures

for this breakdown provided by GSA and the Coast Guard. The total

figure is undoubtedly too low for two reasons: First, it does not include expenses outside the continental U.S. These were obtained for

the Army ($76 M, see Table A-16) but could not be obtained for the

other services. Second, it does not include that portion of minor con- struction which is directed to replacement of corroded systems. It is

felt that this is small for Defense agencies, but may be substantial

for other agencies (see above under GSA).

TABLE A- 21. TOTAL REAL PROPERTY

CORROSION MAINTENANCE

COSTS

M$

DOD 280

Remainder Federal:

(Estimated)

Scaled from DOD

Costs 120

Scaled from NASA 66-92

Selected Value 95

TOTAL 375
A-30

REFERENCES

Real Property owned by the U.S. throughout the World, Summary

Report, 1975, GSA. Real Property Leased by the U.S. throughout

the World, 1975, GSA.

Real and Personal Property of the DOD as of June 30, 1975, and

June 30, 1976. By OASD (Comptroller).

Highway Statistics, for 1975 by FHWA, in four volumes.

Statistical Abstracts of the U.S. Department of Commerce, 1975.

FY-76 USAF Maintenance Costs, Provided by Dr . C. T. Lynch, AFML

USAF Corrosion Data, Manhours Expended for Corrosion Inspection

and Treatment, Robert L. Lough, July-September, 1975.

M. Peterson, et . al . , ''Feasibility Study for a Diesel Engine

Condition Monitoring System for 1179 Class LST ' s ' ' , 1975.

''Construction of a Joint Service Facility System Corrosion-Cost

Prediction Model'', Christopher Hahin, U.S. Army—CERL, February,

1977.

NAVFACNOTE 11010, ''Facilities Management Statistics'', FY 1975.

Personal Communications, R. T. Weldon, Port Hueneme, California.

Personal Communication, W. Boyd.

Personal Communication, Cmdr . Pearson.

Department of Defense Appropriations for 1977, Hearings before a Subcommittee of the Committee on Appropriations, House of

Representatives
B-1

APPENDIX B

CORROSION COSTS IN THE ELECTRIC POWER INDUSTRY

1 INTRODUCTION

This section discusses the special problem areas that impact on the cost of corrosion in the electric power industry. Two broad areas

are considered, electric power generation and electric power transmission and distribution. Corrosion problems and corrosion costs are the

same in the latter area regardless of the means of generating electricity. However, in the generating field, the problems and the costs

vary widely depending on the type of generating plant. Particular

emphasis is placed on nuclear generating stations where outages can be

costly because of the added cost of buying replacement power generated

from higher priced fossil fuels.

The information for this section was obtained from several sources

and included a visit to the Electric Power Research Institute where

discussions were held with four specialists in the nuclear and fossil

fuel fields, some ten telephone calls to well-known corrosion experts

in major utility companies (who, in turn, often consulted with

economists in their company), and a review of the literature in the

overall project reference source plus additional references suggested

by those people who were contacted.

2 BACKGROUND

Electricity is generated by several means. Regardless of the means

of generating electricity, all systems experience the same type of

corrosion problems in the transmission and distribution of electricity, namely atmospheric corrosion of above ground structures and

soil-ground water corrosion of buried structures. The major

differences in corrosion problems exist in the area of power generation because of the variety of generating systems.

There are five generic types of power plants as indicated below:

• Fossil Fuel

• Coal

• Gas

• Oil

• Wastes

• Hydroelectric

• Nuclear

• Geothermal

• Solar
B-2

The classifications depend on the energy source employed.

Note that there are sub-breakdowns for the fossil plant category

and there are even further breakdowns within these categories such as gas turbines and gas-fired boiler. The latter is being drastically

reduced due to restrictions imposed on firing boilers with gas because

of the natural gas shortage.

Electric power generation from solid wastes, geothermal steam, or solar sources is so small at this time that these sources are not

tabulated in the Electrical World 1977 Annual Statistical Report"*.

The present geothermal capacity is about 600 Mw. The Electrical World

report projects additional geothermal capacity of 161 Mw in 1978 rising to 245 Mw in 1979 and 1094 Mw for 1980 and beyond. Projections for

solid waste are 32 Mw in 1978. The 1977 Statistical Report lists the

following generating capacity breakdown for 1976:

Fuel Type Mw Percent

Fossil-Steam 366,533 69 5 Combustion turbine 45,661 8 7 Internal combustion 5,287 1 0 Nuclear 42,412 8 0

Conventional hydro 57,636 10 9 Pumped storage 10,161 1 9 Total 527,690 100 0

Combustion turbine represents oil and gas fired direct turbines, internal combustion is power from internal combustion engines, while

pumped storage is hydroelectric power that is stored by pumping water

to higher elevations during low demand periods for later use during

peak demands

The electrical World 1977 report breaks down actual electricity

generated in 1976 as follows

Type of Fuel

Coal

Oil

Gas

Nuc lear

Total

Billions kwhr

942.4

319.4

294.4

190.7

Percent

53 .8 18.2

16.8

10.9

1750.5

The total above includes production from geothermal, wood, and waste

but does not address hydroelectric.
B-3

3 TRANSMISSION AND DISTRIBUTION CORROSION COSTS

Major corrosion areas in the transmission and distribution portion

of the power industry involve the following:

• Atmospheric corros ion—above ground

• Aqueous corrosion—underground

• Aqueous corrosion—underwater

Transmission towers, lines, and hardware; underground cables ana

equipment; substation equipment; and electric watt-hour meters are the

principal items exposed to atmopheric attack. Industry experts assert

that electric meters are well sealed and corrosion plays little or no

role in their operation or service life. Approximately 98 percent of

the transmission towers in use are constructed of galveinized steel*''.

In 1970 the estimated inventory was $1,165,000,000*''. Towers in rural

areas last 25 to 40 years before rusting which is within design life.

However, towers in polluted areas rust within 5 to 15 years. These

towers represent 12.5% of the total. Painting galvanized steel extends

tower life by about 8 years in polluted air. Based on 1970 data of

194,000 towers, a cost of $375 to $1000 to paint a tower, and 12.5% of

the towers in polluted areas, an annual corrosion loss of $1,480,000

was calculated'''. Based on the average inflation rate since 1970 this

figure projects to $2,380,000 in 1975 dollars.

Corrosion underground or underwater is mostly controlled by

coatings plus cathodic protection with the major difference being

heavier coatings for underwater service. Costs of the cathodic protection-coating system are assumed to be about the same as in the gas industry, where estimates were available, namely, 0.05 percent of the

total installed cost.

Increasing attention is being given to corrosion of bare copper

concentric neutrals on buried cable. The extent of the problem has not

yet been defined. Part of the difficulty lies in the fact that cables

with corroded concentric neutrals can continue to function via earth

or adjacent conductors. Thus, they do not provide the intended low impedance path for load and short circuit currents and can pose a safety

hazard during dig-ins or other operations involving personnel.

A survey prepared by Harco for EPRl'^' reveals a reported incident

rate of 0.006 per cable mile, which extrapolates to $60,000,000

replacement based on the incident rate of 0.006 per mile, although

Harco feels the problem is more widespread than most believe. Some

200,000 miles of this type of cable are now in service. Estimated re- placement cost is $50,000 per cable mile which extrapolates to

$60,000,000 replacement based on the incident rate of 0.006 per mile

although complete replacement may not be necessary to effect repair.
B-4

4 MAJOR SPECIFIC CORROSION PROBLEM AREAS

4.1 Coal Fired Units

Coal-fuel power plant performance is boiler dominated. Total unit j outage time for coal plants is about 1.25 times the boiler outage | while the total time spent in all outages is about 2.5 times the

j boiler outage according to the Edison Electric Institute data base.

According to an industry expert, most outages in today's coal plants

are due to corrosion and many trace to variable fuel supplies which

require plants to operate on coals of different quality from that

specified in original designs.

Boiler failures occur on the water-steam side of boiler tubes as [ well as on the fire side. A survey made in 1970 of 640 high-pressure j boilers operating over the period 1955 to 1970*'*' revealed 20% of the I units experienced forced shutdown because of internal water-steajn

j side corrosion. Sixty-two percent of these failures were the result of

corrosion gouging associated with high alkalinity while the remainder

were brittle hydrogen damage associated with contamination and low pH

conditions.

The second major cause of outages in coal plants is turbine

| failure. Stress-corrosion cracking and corrosion fatigue of blades and i deposits on the blades are principal causes of outages. Forced outage

from turbine malfunction representes about 20% of total downtime com- pared to 67% for the boilers'^' .

|

I Coal plants have planned outages of 700 to 1000 hours/year to j maintain turbines and boilers. Some of this planned outage can be ac- | complished in the shadow of major forced outages so that not all down- | time in a forced outage due to corrosion can be debited to corrosion.

|

i

4.2 Gas Fired Units I

Gas-fired boilers are being phased out because of the critical

natural gas shortage. Thus, principal corrosion failures in gas fired

units will now be in the gas turbine units. High-temperature corrosion

is reported by some experts to represent 25 to 33 percent of

maintenance costs on blades where total maintenance costs run 5 to 6 | mils/kwhr. Thus, based on the 294.4 billions of kwhr generated by gas

in 1976 as reported in Electrical World, a potential corrosion loss of j' $5, 000 , 000/year can be projected for gas turbines.
B-5

4.3 Oil-Fired Units

Oil-fired steam plants experience the same steam-side corrosion as coal-fired units. On the fireside, corrosion problems come from two

sources: vanadium-sodium and sulfur-sodium. The vanadium problem is

related to vanadium oxide present in some sources of oil that combines

with sodium salts (usually NaCl) to form sodium vanadates. The latter

possess low melting points and upon depositng on boiler tubes serve to

flux the normally protective oxide film thereby causing increased ox- idation. The sulfur problem is somewhat similar. During combustion,

sulfur in the fuel oil combines with sodium salts (NaCl) to produce

low melting sodium sulfate salts. Increased oxidation plus sulfidation

results from this fluxing action which is popularly termed ' 'hot

corrosion '*

.

Hard data are scarce on the costs of corrosion in oil-fired units.

The overall cost is accounted for in maintenance costs which will be

discussed later.

4.4 Hydroelectric Units

Principal corrosion problems in hydroelectric power plants are

related to the turbine, piping, and pumps. Because of the

low-temperature aspect of hydroelectric power, the corrosion-erosion

is not greatly accelerated and is of the order of that experienced in

the water and sanitary services industry sector 18.04.

4.5 Geothermal Units

Corrosion is a serious problem in geothermal power production.

Piping, valves, pximps, and turbines all are attacked by the

high-temperature acidic sulfide brines characteristic of this power

source. Corrosion probably accounts for at least 80% of the outages in

this segment of the industry, but total power output is so small that

the input to the overall cost in the entire industry is not

significant

.

4.6 Solar Units

Electric power generation by solar units is still in the embryonic

stage. Depending on which concepts are used, the potential corrosion

problems will be marine corrosion (and fouling) of Ocean Thermal

Energy Corrosion (OTEC) units, atmospheric deterioration of solar

collectors, corrosion and erosion of wind generators, chemical attack

of bio-mass units, aqueous corrosion of water storage units, and

high-temperature water and steam corrosion of central station solar

thermal units.
B-6

4.7 Nuclear Power Plants

The Electric Power Research Institute (EPRI) has conducted extensive studies on costs in the nuclear power industry. Lapides and

Zebroski'^'^* relate the costs to outage duration rather than to the

maintenance costs during the outage. Their reasoning is based on the

large price differential between power generated by nuclear plants as compared with replacement power which must be purchased from fossil

fuel plants. For a 1000 Mw nuclear plant, this cost differential can

run as much as $500 , 000/day . Actual costs for power generated from

coal and oil are reported by industry experts to be some 30% greater

than that produced by nuclear. In rare cases, where the replacement

power must be obtained from peaking units fueled with emergency gas,

the cost difference can be as great as 700%. The incremental

direct cost—mostly fuel— is about 100% higher for coal replacing

nuclear, and 300 to 900% for oil or gas replacing nuclear. The costdifferential approach to costs appears valid since corrosion-related

shutdowns require extra reserve capacity (capital cost), the replacement power is generated by a more costly fuel, and the replacement

power is probably generated by a less-efficient system (older plants).

Lapides and Zebroski have summarized the details of nuclear

power plant shutdowns. Their data are summarized in Tables B-1 and

B-2. Industry expert estimates of the percent of each outage cause due

to corrosion are included in Table B-1. Note that when each outage

percentage is adjusted for corrosion that the total outage due to cor- rosion is about 48 percent. This figure agrees well with the 50 percent figure due to corrosion that is often quoted for outages by ex- perts in the power industry.

Several items in Table B-1 require additional mention. Note the

high percentage attributed to corrosion for turbines, steam

generators, and condensers. The latter two will be discussed in more

detail later. The turbine problem is related to corrosion-erosion by

the relatively low temperature wet steam that is generated by nuclear

plants

Although refueling represents the major outage percentage, corrosion problems are estimated to extend refueling outages by 50 percent.

Similarly, downtime due to regulatory requirements also is about 50

percent corrosion related.
B-7

TABLE B-1. REPRESENTATIVE AVERAGE OUTAGE DURATION AND PARTIAL POWER

REDUCTION IN NUCLEAR UNITS THROUGH JANUARY 1, 1976(6)

CORROSION RELATED

DURATION PERCENT OF,

A. ITEM (HOURS) PERCENT TOTAL OUTAGE (a) TOTAL

Forced Outage (Equipment Malfunction)

Turbine/Generator 140 5. 1 80 4.0

Condenser 105 3. 8 60 2.3

Steam Generator 120 4. 3 60-100 3.0

Pumps 75 2. 7 25 0.7

Valves 122 4. 4 30-40 1.4

Vessel and Core 60 2. 2 25 0.5

Plant Electrical Distribution 90 3. 2 All Other 281 10. 1 50 5.0

SUBTOTAL 993 35. 8

Scheduled Outage

Maintenance 288 10. 4 50 5.2

'Refueling' 1350 48. 7 50 24 .

3

Training and Administration 30 1. 1

SUBTOTAL 1668 60. 2

Regulatory 112 4. 0 50 2.0

TOTAL 2773 100. 0 48.4

• Availability Factor (Based on One Year Operation Between Refueling)

2773

8760 + 1350

72.5%

B. Partial Power Reductions (Approximate)

Fuel Defect Related

Equipment Failure Related

Regulatory Issues

Load-Following

Time to Come to Full Power

All Other and Unaccounted

OUTPUT FACTOR

(PRODUCT)

• Capacity Factor = Availability x Output Factor

72.5% X .84 = 61%

(a) Estimated by industry expert
B-8

TABLE B-2. MALFUNCTION RATE AND MEAN-TIME-TO-REPAIR (MTTR) DATA FOR NUCLEAR PLANT AVAILABILITY ESTIMATION* (7)

A MTTR *^90 COMPONENT OR SUBSYSTEM INCIDENT/YEAR (HOURS) INCIDENT/YEAR

A) Derived From This Study

B)

Turb iriG 1 . 74 44 —

. 07 60 .14 CondsnsGr . 68 12 .90 Stssm Gsnsirstor . 43 90 .67 R63 c toir VsssgI 3nd Cors . 25 20 .36 Pumps

CondensatG and Booster (BWR) . 012 17 .027

(^r WK) . 025 21 .041 Rpri'milpfTnn ( RUP "1 '^CV-Xl.U.LiXclLXfJli \ LjVi i\ J . jU 90 .42

\r Wis.

. 13 178 .19

. 0065 6 .022

M;3 k P — 1 1 n / PVi r o t n cr ( RT*rR ^ NF NF

(PWR) . Ui 50 .04 NF NF

. 040 62 . 12 (PWR) .19 19 .30 Component Closed Cooling Water NF Service Water (BWR) .012 30 .04 (PWR) NF

rt.X AllX rPiimnc Ullip b /'RLrP'l o WIS. .036 —

. 050 — - Va1 V s s Stop/Isolation .003 85 .0035 Safety/Relief .022 62 .024 Main Steam Isolation .063 61 .067 Bypass .007 42 .012 Control/Regulation .030 37 .042 Check .009 53 .016 Governor .011 34 .016 Discharge .004 17 .006 Intercept .006 24 .013 All Valves

Derived from EEI Data Sources

Plant Piping .00113 20 Feedwater Heaters •11 54 Switchgear and Electrical .140 18 Operator Error 1.2 7

*Notes :

1) These data are for events causing full power outage - or mandating full isolation of the component in the case of a multi-loop system. Condensers

in particular frequently undergo repair with partial power outage only.

2) A = Observed Malfunction Rate/Active Operating Year MTTR = Mean-Time-To-Repair (Hours)

c

— 90 Malfunction Rate at 90 Percent Confidence Level

3) Note that data for supporting systems (e.g., radwaste) and safety equipments

are not included.

4) Conversion of availability to inherent capacity factor data requires empiric assessment of scheduled outage, refueling and factors which decrease output

factor. See Reference 1, pages ClO-11.
B-9

5 SPECIAL PROBLEMS

Several special corrosion related problems have beset the nuclear

power industry. The first of these is associated with boiling-water

reactors (BWR's). To date, stress-corrosion cracks have been detected

in heat affected zones of some 80 welds in small diameter (<2 in. ) piping out of some 17,000 welds in service. Major costs have been

associated with downtime to replace affected components, determine

cause, and justify replacements.

A second problem is associated with steam generator tubes in

pressurized-water reactor plants (PWR's). Chronologically, outages

have occurred as the result of caustic stress-corrosion cracking of

the tubes, phosphate (water treatment chemical) attack of the tubes,

and runaway corrosion (denting) of the steel support plates surrounding tubes

.

Denting attack in steam generators in several plants has progressed to the point that replacement is being considered. Estimated

replacement costs vary from $30 to 50 million''' per plant depending

on whether the steam generators can be introduced through existing

hatchways or whether openings must be made in the containment vessel

.

Estimated downtime will be 6 months to 2 years depending on the same

entry problems. In addition to these costs, a group of utilities plans

to spend some $40 million to attack the problem and EPRI has committed

another $3 to 4 million'^'.

Many utilities are retrofitting condensate polishers to further

reduce the possibility of chloride intrusion which is believed to be

the major contributor to denting. According to utility experts, the

total cost for these units will be about $7 million per plant. If con- densers are replaced with improved designs consisting of double wall

tube sheet construction and titanium tubes, the cost would be an additional $10 million/plant.

Also in the generating part of the industry, a common problem in

all steam plants is corrosion of the condenser. After initial problems

with leaking tubes because of unrolled tubes (in tube sheet) and

vibrations and steam impingement, most condenser problems are corrosion related. Because of the potential for leaking condensers, additional costs are required for ion exchange equipment and boiler

water chemicals to prevent corrosion and fouling. Marked improvement

in condenser performance is a major consideration for World III best

practice efforts.
B-10

6 GENERAL CONSIDERATIONS

Maintenance represents a major cost in the electric power industry. According to the Electric World 1977 Annual Statistical

Report, maintenance costs in the power industry were 3.7 billion in

1976 and will be 4 billion in 1977. Percentage breakdowns for 1976

were

Category Percent Amount, millions

Generation 53 1,900

Transmission 8 320

Distribution 34 1,300

Miscellaneous 5 177

Applying an estimate of 10 percent corrosion factor to the last three

items and the industry-acknowledged 60 percent factor to the generation portion results in an average $1.1 billion as the annual

maintenance cost due to corrosion in the power industry.

Excess capacity in the power industry is generally agreed by ex- perts to be about 20 percent. As stated by one expert, ''with 30 percent excess capacity a company is in good shape, with 20 percent ex- cess capacity a company can get by with good management, while with

only 10 percent excess capacity a company is in trouble' ' . Almost all

the excess capacity is in generating plants. Since the cost of corrosion in generating plants is about 50 percent, the excess capacity re- quired because of corrosion is estimated to be 10 percent of the total

capital investment

A sizeable item in the cost of doing business in the power industry are expenditures for research. Electric Power Research Institute expects to fund $180,000,000 for research in 1977. This plus

the industry's $26,000,000 annual contribution to the Clinch River

Breeder Demonstration Plant and an estimated $200,000,000 total

research sponsored by individual utilities in 1977 brings the total

expenditure for research to about $400,000,000. According to the 1977

Electric Power Research Institute Digest, of the 3,000 utility

research projects listed with a total funding of $260,000,000, some | $11,800,000 or 4.76 percent was corrosion related. Thus, the total, I annual cost of corrosion related research is estimated to be 4.75 per- | cent of $400,000,000 or approximately $10,000,000 for 1977. The j percentage for 1977 is up somewhat over that tabulated in the data ; base for all prior research funding which was 4 percent ($30,000,000 I' for corrosion research compared to $754,000,000 for all research).
B-11

7 CONCLUSIONS

The major corrosion cost in the electric power industry appears to

be associated with generating power. As much as 50 percent of the outages (downtime) have been attributed to corrosion. Downtime affects

costs in three areas: maintenance costs, lost revenue plus higher

costs for replacement power, and capital to maintain excess capacity

(reserve). The cost of replacement power is greatest for nuclear

plants where the price of fossil fuel is much higher than that of

nuclear fuel. Corrosion problems have been dealt with in fossil and

other non-nuclear generating plants for many years and reasonably good

economical fixes have been developed. Thus, further application of

good corrosion practice is not expected to have a major effect in

reducing costs in these plants. However, solutions to the corrosion

problems in nuclear plants should effect a major reduction in costs.

It appears that some, but no major, reduction in costs can be

realized with further application of good corrosion practice in the

areas of transmission and distribution of electrical power, since con- siderable experience also has been gained over the years in dealing

with corrosion problems in these areas and reasonable economical fixes

have been developed. Solutions are needed for the corrosion problems

with bare copper concentric neutrals on buried cables. However, the

extent of the problem has not yet been ascertained so that the

economic benefits to be gained by such a solution cannot be predicted

at this time.
B-12

REFERENCES

(1) 1977 Annual Statistical Report, Electrical World, pp.

35-62, March 15, 1977.

(2) F. W. Fink, F. H. Buttner, and W. K. Boyd,

''Technical-Economic Evaluation of Air-Pollution Corrosion

Costs of Metals in the U.S.'', Battelle Memorial Institute

Columbus Laboratories Report to Air Pollution Control Office, U.S. Environmental Protection Agency, February 19,

1971

(3) B. Husock, F. E. Rizzo, D. H. Kroon, ''An Investigation

and Status Report on Concentric Neutral Corrosion of URD

Extruded Cable'', EPRI EL-362, January, 1977 (prepared by

Harco Corporation).

(4) H. A. Klein, J. A. Lux, D. E. Noll, W. L. Riedel, and H.

Phillips, ''Field Survey of Internal Boiler Tube Corrosion in High-Pressure Utility Boilers'', Proceedings

American Power Conference, 33, 702-709 (1971).

(5) M. E. Lapides, ''Steam Turbine Performance Overview'',

Paper presented at 1977 Electric Power Research Institute

Steam Turbine Workship.

(6) M. E. Lapides and E. Zebroski , ''Use of Nuclear Plant

Operating Experience to Guide Productivity Improvement

Programs'', Electric Power Research Institute Special

Report, EPRI SR-26-R (November, 1975).

(7) M. E. Lapides, ''Nuclear Unit Productivity Analysis'',

Electric Power Research Institute Special Report 46, EPRI

SR-46 (August, 1976).

(8) Nucleonics Week, 18 (22), June 2, 1977.
C-1

APPENDIX C

CORROSION COSTS FOR PERSONALLY OWNED AUTOMOBILES

1 INTRODUCTION

The automobile industry was one of the industrial sectors selected

for more detailed analysis. The scope of the study did not provide for

surveys or analysis to generate new data, but rather the approach was

to collect available imformation from the literature and interviews

with technical experts. In this section of the report results of

previous studies on various aspects of corrosion costs associated with

automobiles are presented with a discussion of factors affecting cor- rosion of automobiles. The costs of corrosion for providing corrosion

protection to automobiles during manufacture is then discussed,

followed by a discussion of operating corrosion costs for maintenance,

repair, and corrosion control for automobiles. The information

presented here was used as a basis for estimates of corrosion effects

associated with automobiles in the Input/Output analysis.

The automobile industry is aware of corrosion and its detrimental

effects on their products. These companies employ materials and corrosion specialists to conduct and monitor programs aimed at controlling

or preventing corrosion. Special facilities exist in the laboratories

and at proving grounds specifically oriented towards corrosion evaluation and prevention. In addition, exposure tests in the field are often conducted to correlate the R&D findings with real world

situations. At the present time many forms of corrosion prevention

measures are employed, including

(1) Metallic paints and coatings offering galvanic protection

(2) Organic coatings, with or without metallic components

(3) Inorganic coatings

(4) Metallic (electroplated) coatings

(5) Corrosion inhibitors

(6) Physical separation of dissimilar metals

(7) Substitution of materials

(8) Improved design

(9) Improved fabrication techniques.

Many of these measures are discussed below by comparing costs in a World III scenario (best corrosion control practices used) with the

World I (existing technology) and World II (no corrosion) scenarios.
C-2

2 PREVIOUS ESTIMATES OF CORROSION COSTS

To place the results of the present study in perspective, it is

desirable to know what estimates exist in the contemporary literature

for automobile related corrosion costs in the U.S. Both the original

equipment and the replacement (maintenance and repair) markets have

been included in Table C-1 where data are available. The products

manufactured by the automobile industry are subject to corrosion attack, and this attack can decrease the aesthetic value of the

product; or the properties of some structural members; or specific

components can be degraded. (For example, perforation of mufflers and

tail pipes can occur.)

Early data"~^' were concerned largely with the replacement costs of

mufflers and tail pipes, and based on prior estimates made by Uhlig.

In 1960, for example. Reference 2 reported that corrosion damage to

automobile exhaust systems cost the owners $500,000,000. This total

was broken into $375,000,000 for mufflers (30 x 10^ units sold) and

$125,000,000 for tail pipes (35 x 10^ units sold). More recent estimates'" ' attribute a cost of $700,000,000 to the corrosion related

replacement of mufflers and tail pipes, while total automobile and

truck corrosion-related costs have been set at about $5,000,000,000 to

$7,000,000,000. Note that these dollar values given have not been

translated into 1975 constant dollars. However, from the data

presented it would appear that in 1975, the reference time frame, the

average automobile owner incurred a cost of at least $40 per annum,

primarily as a result of body corrosion and corrosion of the exhaust

system. This value is in close agreement with similar estimates*^' made

for automobile owners in the U.K., although driving habits and en- vironmental conditions vary somewhat from those found in parts of the

U.S .

Another point made in the literature is that in the *' snow-belt '

' regions, where salt used on highways and bridges for deicing purposes

increases the rate of corrosion attack, preventative rustproof ing '

or '' undercoat ing '

' can lessen the amount of attack, hence lower the

depreciation rate and improve the resale value of an automobile. Estimates of savings vary widely. For example. Reference 1 gives an es- timated resale value of a 3-year-old, rust-proofed vehicle some $200

to $300 more than an untreated vehicle. More recently, the National

Assocation of Corrosion Engineers tried to obtain quantitative data,

but with limited success, and an estimate of $100 to $150 was con- sidered to be more real ist ic .

I

I
C-3

TABLE C-1. AUTOMOBILE RELATED CORROSION COSTS

FOUND IN THE LITERATURE

No. of Cars Corrosion Cost , $ X 10^

Cost'*' per

Year Car, $

Registered

(Millions)

Mufflers and

Tailpipes Total Reference

1956 66 1,030 1 1960 61.4 500 2 1967 80.0 500 0-5,000 'x^62 3,19

1975* 106.7 >2,000-HI- >19 4

1976 rvl355'C5V 5,000** '\^37 5 1976 '\,135** 5,500** 6,22

1976 ^135** 700 6-7,000** '\.44-52 7

* Reference year for the present study.

** Estimate for cars and trucks. + Obtained by dividing the estimated "total" cost (column 4) by the

number of cars registered in that year (column 2)

.

++ $2,000 X 10^ only due to highway deicing salt usage.
C-4

3 FACTORS AFFECTING CORROSION

Today a much better appreciation exists''^' of the many factors

which affect corrosion of automobiles, either directly, such as the

influence of design or- choice of materials of construction, or indirectly, such as changing or different patterns in driving habits.

Steps taken to apply this knowledge to build a more corrosion resistant automobile, or to educate the driving public in proper care and

maintenance and driving habits, all contribute to the costs of corrosion. Specific examples of some of these costs are detailed in subsequent paragraphs

For the purposes of this present study, in 1975, the reference

years, although there was an understanding of the factors affecting

corrosion, the implementation of the necessary technology to prevent

or minimize corrosion was not fully applied for a variety of reasons.

Other requirements placed upon the automobile industry also

necessitated considerable expenditure of time and money, notably the

need to reduce pollutant levels in exhaust, and to reduce weight in

order to improve gas mileage, so as to conserve petroleum supplies.

These other requirements may themselves indirectly affect the cost of

corrosion. For example, reducing weight by using thinner gage

materials further increases the need to minimize corrosion attack,

particularly of the localized type.

Between 1977 and 1980, however, there is a consensus that adequate

materials and corrosion control methods will be implemented to give a product acceptable to the consumer in terms of its rate of degradation

(corrosion) and initial cost premium resulting from the corrosion con- trol methods implemented. Table C-2 lists some of the possible approaches to controlling automobile corrosion under the categories of

modifying the environment, design, and materials. Factors such as proper and adequate maintenance and care are discussed in Section 5.

Of the three types of possible approaches listed in Table C-2,

modifying the environment is likely to be the least effective

technically and economically. Reported efforts to modify the environment have met with only limited success. The addition of corrosion inhibitors to road (deicing) salts has been shown to be ineffective."^*

The use of plastic film-forming materials"'*' to replace road salt is in

the experimental stage, but the indication is that this approach will

not be cost effective. Similarly, heating large stretches of road sur- faces to melt ice is impractical. Because it is not practical to

modify the environment, recourse must be made to other approaches such

as the careful selection of corrosion-resistant materials and

coatings, and the implementation of good corrosion design practices.

In marine areas where salt deposits can form on automobiles, in rural

and industrial areas where dust and chemicals can settle or be present

in rainfall, and in the ''snow-belt'' region where deicing salts are used extensively, frequent car washing to remove these soils can
C-5

TABLE C-2. POSSIBLE APPROACHES TO CONTROLLING

AUTOMOBILE CORROSION

Item Approach

Modify Environment • Reduce salt usage

• Use alternative road deicers

• Reduce pollution levels

Modify Design • Minimize number of traps for moisture, mud

• Provide good drainage

• Use preferred joining techniques

Modify Materials • Specify new alloys

• Use inorganic coating

• Use organic coatings

• Add inhibitors

• Use protective shields and other non- metallic materials

• Use metallic coatings

This table is given to illustrate some of the approaches which might

be possible under each category: each approach has to be analyzed

for technical and economic feasibility before being specifically con- sidered for use in conjunction with automobile corrosion control.
C-6

reduce the incidence of corrosion. These car washings may be con- sidered as indirectly modifying the environment, and in a detailed

analysis would constitute one of the costs of corrosion.

Assessing a cost for modifying automobile design to improve corrosion resistance has not been attempted because it could be considered

as part of the engineering development of a new product. There is some

controversy''^' over whether design costs should be allocated in this

manner; however, there is no doubt that improved designs can significantly reduce the occurrence and extent of corrosion. Reference

16 is an excellent review of current practice and thinking in this

area

Modifying the materials of construction, that is selecting alternative materials which are more corrosion resistant; applying corrosion resistant coatings; adding inhibitors to fluids such as coolants,

oils and waxes, or to sound-deadening materials; and using plastic inserts or coatings in wheel arches or on lower body panels to resist

chipping (exposing bare metal which can subsequently corrode) are all

examples of modifying materials which can substantially reduce the incidence of corrosion attack. This is the other area where much attention has been placed in recent years, and which affects the cost of

the automobile. Thus, in the following discussion emphasis will be

placed on materials technology, and how changes over the last few

years have impacted the cost of an automobile. This increased cost for

corrosion control represents a major component of the cost of corrosion attributable to automobiles.

4 CORROSION CONTROL AND COSTS IN NEW AUTOMOBILES

Because measures and materials being incorporated into automobiles

in 1977 reflect good corrosion control practices, axid it is an- ticipated that improvements incorporated between 1977 and the near

future will only add a relatively small increment in manufacturing

cost, it is convenient to use 1977 cost data for assessing best

available technology relevant to the 1975 reference year for the Input/Output Model.

Table C-3 lists the principal materials to be found in a 4000 lb,

six-passenger vehicle which comprised over 70 percent of the vehicles

registered and used in 1971."^' Both original usage (new automobiles)

and replacements averaged over an assumed 10 year life are presented.

It is obvious that over 80 percent of the automobile's weight results

from the iron and steel present, materials which require protection

from corrosion attack. The majority of the other metals which are listed are used as alloying additions, or as electroplated decorative

and corrosion-resistant coatings. Some lead is used in bearings and

solder, but the majority is associated with the automotive battery in

which corrosion is small and will be neglected for the purposes of

this study. Copper is a more corrosion resistant material, and does
TABLE C-3. MATERIALS BREAKDOWN FOR AN AVERAGE

4000 lb, SIX-PASSENGER AUTOMOBILE

Original

Equipment Af termarket Percentage

Material Materials Materials AM to OEM

Requirements Requirements Materials Over

(lb/car) (Ib/Car-Year) a Ten Year Span

Iron (including that in steels)

Aluminum

Lead

Copper

Zinc

Nickel

Chromium

Molybdenum

Manganese

Silicon

Tin

Synthetic Rubber

Plastics

Ethylene Glycol (antifreeze)

Petroleum Lubricants

Electrolyte (battery grade acid)

Insulation

Glass and Ceramic

Paper

3440

65

28

30

65

4.5

0

12

18

2 122

100

19

18,2

11

5.2

90

5

0

49.6

1.77

9.93

0.79

1.22

0.04

0.02

0.35

0.25

0.004

23.25

2.55

4.4

25.8

3.26

0.70

2.14

1.05

14.4

28. 3 355.0

26.3

18.0

8.9

2.5

29.2

13.9

2.0

190.0

25.5

230.0

1420.0

296.0

134.5

23.8

210.0

1971 data taken from Reference (17)

.
C-8

not rapidly deteriorate when incorporated into the automobile wiring

circuits. The corrosion of radiators will be discussed later. Aluminum

finds use as decorative trim for example, and as a corrosion resistant

material. In later automobile models, where weight savings are important, the percentage of aluminum is likely to be higher because of

applications such as bumpers, even hoods. In 1975, for example, the

usage of aluminum had risen to about 87 lb per automobile. The nonmetallic materials listed in Table C-3 will not be subject to corrosion in the sense adopted for this study (degradation of metals).

Ferrous materials are therefore those of greatest concern to the present study, and Table C-4 shows a breakdown of automotive steel con- sumption in the U.S."**' for both 1971 (the baseline used in Table C-3)

and 1975 (the baseline for the Input/Output Model).

Various techniques may be used for protecting the large amounts of

iron and steels used in automobiles where surface appearance is important, or where structural integrity must be maintained. As Table C-£

shows, metallic, inorganic and organic coatings, or combinations of

these, may be used. Alternatively, in critical areas (subject to

relatively more wear, impingement, or corrosive environments)

materials may be substituted, A brief discussion of these coatings and

materials follows. Different manufacturers use different amounts or combinations of these materials.

Figure C-1 shows the trends in the use of galvanized sheet and

strip and '' Zincrometal '' in passenger automobiles. Zincrometal is a proprietary inorganic coating containing zinc placed on specially

treated coil steel. In 1969, when this two-coat system was introduced a total of only 150 tons were used. By 1975, this total had

risen to about 250,000 tons, or approximately 75 lb per automobile

produced. In 1977 production is expected to be about 1,000,000 tons, or the equivalent of about 300 to 250 lb per automobile. It is

currently being used on exterior parts such as doors, fenders, quarter

panels, rear decks and tail gates, as well as for some underbody

structural parts. Reference 5 describes the use of Zincrometal on Ford

Motor Company and General Motors Corporation products.

The use of galvanized steel in the automobile industry has re- mained fairly constant over the last 5 or so years. There was a temporary drop in average usage* in 1975, but there is some indication

now that the usage is increasing as shown by the projections in

Figure C-1. At the same time it is expected that the use of Zincrometal will level off; however, the total use of zinc (including the

use of zinc-rich paints as discussed below) is expected to show a con- tinued upward trend.

Computed by dividing the total tonnage used in the automobile industry by the new

car production figure for that year.
C-9

TABLE C-4. BREAKDOWN OF AUTOMOTIVE STEEL

CONSUMPTION IN THE USA

Consumption (net tons)

Type of Steel 1975 1971

Ingots, blooms, slabs, billets,

sheet, bar 266,703 444,363

Wire rods 60,029 59,679

Structural shapes 33,972 188,268

Plates 187,495 252,678

Hot rolled bars 2,012,485 2,360,046

Cold finished bars 167,315 205,499

Pipe and tubing 179,950 167,839

Wire 87,502 144,576

Black plate 9,699 12,944

Tin plate 73,129 63,061

Tin free steel 2,170 1,155

1 in iiixx± piociucufa JVJ , O-J o -J O , J / u Hot rolled sheet 4,490,058 4,654,795

Cold rolled sheet 6,088,857 6,935,083

Galvanized sheet and strip 656,769 857,390

Metallic coated sheet and strip 331,227 355,914

Electrical sheet and strip 6,365 7,371

Hot rolled strip 401,567 561,279

Cold rolled strip 128,302 172,559

Net total steel product 15,214,232 17,482,869

Percentage of shipments 19.0 20.1
C-10

1969 1977

EC 300 <o

5 200

(0m

100

AVERAGE+USE OF GALVANIZED

STEEL PER CAR

AVERAGE+USE OF

"ZINCROMETAL" PER CAR

J I L

1969 1971 1973

YEAR

1975 1977

FIGURE C-1. SOME TRENDS IN USE OF ZINC FOR CORROSION

PREVENTION IN PASSENGER AUTOMOBILES

* Open circles and dashed lines represent

estimated values.

+ Average weight is computed by dividing

total tonnage used in the automobile

industry by the new car production

figure for that year.
C-11

' What might be the cost of incorporating these more corrosion

j resistant materials in new automobiles? In 1975, the 75 lb of Zincrometal used per car would have cost approximately $2.00 to the manufacturer. New car production in 1975 is given'^" as 6,717,043 units,

I thus the total cost to the manufacturer in the 1975 World I scenario

was about $13.5 x 10^. In 1977, the cost of cold-rolled steel for the

automotive industry was $375/ton compared with |429/ton for Zincrometal, thus a premium of $54/ton (about $2 per car) is being paid for

the corrosion resistance imparted as opposed to the World II scenario,

I where, o.f no corrosion existed, the unprotected cold-rolled steel

' would be used. The additional cost of using Zincrometal to manufacI ture a car in 1977 (taken as being representative of the World III

scenario) is estimated to be $45.6 X 10*, based on a value of about

$6.00 per car and an estimated new car production figure of 7,500,000

un its.

The use of galvanized steel has remained fairly constant over the

I last few years (Figure C-1) in terms of weight. Part of this trend is

j the use of thinner hot-dipped coatings, the use of one-side galvanizI ed, electrogalvanized, and other specialty forms which use less zinc

per square foot of steel covered. For exterior surfaces the use of

Zincrometal became more prevalent because of the better paint finish

obtained. In 1975, about 195 lb of galvanized steel was used on each

new automobile.''*" A '

' paintable '' galvanized steel costs $440/ton in

I 1977, while a high quality temper-rolled or electrogalvanized steel

costs about $560/ton. Taking the lower value, the premium for using

I galvanized steel in a World I compared with a World II scenario is

440-375 or $65/ ton, or about $6.35 per automobile. The total cost

amounts to 6.35 X 6,717,043, namely $42.6 X 10* per anniom for the 1975

production

.

The use of galvanized steel in the automobile industry increased

by about 15 percent in 1976 according to Reference 30. Assuming the

use increases by another 10 percent in 1977, followed by a levelling

off in usage, the cost of corrosion in the World III scenario is es- timated to be about $53.9 x 10*.

Zinc dust is used in zinc-rich paints which are sprayed on surfaces needing additional protection, or in areas which are relatively

inaccessible or not suited to other corrosion protection treatments,

I e.g., in the fenders, on frames, or in quarter panels. In 1975, an

I average of about 2.5 lb of zinc dust (just over 3 lb of zinc-rich

I paint, 80 percent solids content) was used per automobile at a cost of

I 49.<P/lb. In 1977, the cost of zinc dust was lower at about 49.5<P/lb

but the usage was in the range of 4 to 18.5 lb per car, with an

1 average of approximately 8.5 lb (10.6 lb zinc-rich paint). With

6,717,043 cars produced in 1975, and an estimate of 7,500,000 in 1977,

the added cost of using zinc-rich paints becomes $8,312,341 for 1975

(World I) and $30,281,250 in 1977 (World III).
C-12

Metallo-organic , petroleum-based (MOPB) waxes, either as dip or spray coatings are used for some frame members*^^*, and wax coatings are also used around windows, wheel arches and in the bottom of doors.

Vinyl-based sealers are also used in wheel housing, fenders, on door

edges and inside some body panels. The vinyl-based coatings are resistant to chipping by flying stones, etc., which could expose bare metal

and promote corrosion. Some automobiles now being manufactured have

chip-resistant coatings on lower body panels.'^*' All sound-deadening

materials of the spray-on type now incorporate corrosion inhibitors.

As an example of these costs, consider the use of MOPB or aluminumfilled waxes. These currently cost about $2 per gallon, and each

gallon can cover about 240 ft^ (0.002 inch thick dry coating). In

World III probably the frames, rear control arms, doors, fenders,

trunk and wheel arches would be coated, at least in part. The total

cost for this coverage, in terms of materials alone, would amount to

approximately $8.00 per automobile. If all the automobiles produced in

1977 were to receive this treatment, because it represents best

available practice, then the total cost would be of the order of $60 x

10'.

It should be pointed out that it is common practice in the

automobile industry to use multiple protective coatings for corrosion

protection. Thus, even though galvanized steel, or other coated steels

are specified, additional corrosion protection coatings such as the

MOPB waxes or zinc-rich paints will be applied in critical areas where

moisture can collect or poultices form, or where abrasion or impingement is severe. Also additional coatings can cover scratches, nicks

and flaws in the as-supplied coated material. Aftermarket ''rust

proofing'' or coating (

' ' undersealing '

' ) are often applied, and will

have a beneficial effect if performed shortly after manufacture.

Other examples of corrosion preventative measures are the use of

(281 zinc- or aluminum-coated steel for mufflers , and the use of greases

to prevent corrosion fatigue of torsion bars. Some manufacturers use

galvanized steel while others use aluminum-coated steel or com- binations of both for mufflers and tail pipes, although for some highperformance engines which run hotter (or in catalytic converters)

stainless steel components have to be incorporated. The zinc or

aluminxam coatings extend service life'^* by a factor of two or more,

but a cost penalty is incurred of $60 per ton over uncoated coldrolled steel at about $375 per ton. In comparison, a 400 series

stainless steel costs about $2500 per ton. Assuming 3,750,000

automobiles had coated mufflers and/or tail pipes in 1975, but that

7,500,000 automobiles were manufactured with these more corrosionresistant components in 1977, the total costs would be of the order of

$7,875,000 and $15,750,000, respectively, assuming 70 lb of coated

steel are used in 1975, and also 70 lb in 1977, based on data given

in Table C-4. In Europe, one manufacturer'^^' is using a sprayed coating

of atomized zinc covered with a synthetic rubber sleeve for protecting

its torsion bars. In the U.S. one manufacturer uses a corrosion resistant enamel coating on its torsion bars (estimated at less then $1 per

unit) thus the contribution to the cost of corrosion is thought to be

$1 X 10^ or less.
C-13

In terms of metal trim, two developments are of interest. The

first is that adhesives are being used to affix the trim to the body

work. Before, holes were drilled and fasteners used, however, the bare

edges of the drilled holes could be sites for the initiation of corrosion (''cosmetic'' corrosion) and staining. The second is the use of

stainless steel clad aluminum trim*"''*'. The cladding protects the base

steel by forming galvanic couples which reduces the corrosion attack

on the body work under the trim. Other trim such as grilles, headlamp

and tail-light bezels, and bumpers are often electroplated both for

corrosion protection and for decorative purposes. A copper-nickelchromium system is usually employed on ferrous and zinc-base com- ponents. About 86 percent of the total electroplating cost is con- sidered to be attributable to corrosion'"', namely about $1.30 out of

every $1.50 on a square footage basis (1977 data), or $1.13 out of

$1.30 per ft" (1975 data). In 1975, 2 x 6,717,043 = 13,434,086 bumpers

were fitted on new automobiles. Assuming 10 ft" per bumper and a cor- rosion related cost of $1.13/ft" the total cost in 1975 is

$151,000,000, to which should be added an additional 20 percent for

the other plated trim, making the grand total of $182,000,000.

Similarly the estimated World III grand total (1977) is $234,000,000.

Because of the need to reduce weight, the use of aluminum bumpers may

become prevalent, although for aesthetic reasons such bumpers may also

be chromium plated. Thus, the near future technology for electroplated

bumpers and trim is somewhat uncertain.

It is estimated that between two-thirds and three-quarters of the

cost of preparing and painting an automobile is related to corrosion

protection and control.* Taking a value of 67 percent the input/output

model gives a value of about $25 for the corrosion related fraction in

1975. With best available technology, e.g., better surface preparation, improved primers, especially electrophoret ic primers, and better

topcoats*'^ ' this corrosion cost is likely to double to $50 per car. Considering the number of automobiles produced in 1975 and estimated

for 1977, the corresponding corrosion costs for the industry are $167,000,000 and $335,000,000, respectively.

Whereas, up to now only materials related costs for corrosion control have been discussed and quantified, it is obvious that many other

miscellaneous costs should be taken account in an ideal model. For ex- ample, the cost of new equipment needed to produce, coat, and

fabricate new materials; the development of new techniques to handle

and join some of these new materials (especially zinc-coated steel);

the cost of retraining personnel; the redesign of components and sections; drawing up new specifications; the cost of performing corrosion

tests and maintaining a research laboratory and proving ground; and so

on. Under the scope of the present study it was not possible to assign

*In the original disaggregation for the input/output model, described in the main

body of the text, the division totv 3en corrosion and non-corrosion related costs was

50:50 for the use of all organic materials. This includes coatings on non-exposed

parts as well as exposed parts.
C-14

individual values to the above; therefore, a rough estimate was made

that the total miscellaneous costs are approximately equal to

materials-related costs given in Table C-5. Thus, in Table C-5, which

summarizes the important production-related corrosion costs discussed

above for new automobiles, the totals become $937 x 10^ and |1577 x

lO'', respectively, for the World I (1975) and III (1977+) scenarios.

These costs are equivalent to about $140 and $210 per new automobile.

To these costs must be added the corrosion costs to the owner for

maintaining, servicing, and repairing automobiles already on the road.

5 CORROSION CONTROL AND COSTS FOR USED AUTOMOBILES

Whereas the above discussion dealt with new car production, the

following discussion centers primarily on maintenance and repair costs

incurred by owners. The principal items to be considered are

(1) Body corrosion (rusting)

(2) Aftermarket rustproof ing and undercoat ing

(3) Mufflers and tail pipes (replacements)

(4) Radiator repairs and coolants (inhibitors).

The cost estimates given will be based on the total number of

automobiles registered, and include fleets which represent about 9

percent of the total. Table C-6 shows the total numbers of automobiles

registered in the U.S. over the time frame of interest, but excluding

new car production for the year in question. Corrosion related costs

believed to be of minor significance include

(1) Added gasoline consumption due to weight of undercoat ing

and rustproofing

(2) Rust inhibitors added to the cooling system other than in

antifreeze

(3) Car washing and waxing for rust prevention

(4) Interior engine parts

(5) Damage due to overheating caused by corrosion products

clogging cooling systems

(6) Increased insurance rates because of added repair costs due

to corrosion occurring before accidents.

With respect to the corrosion-related wear of interior engine

parts such as cylinders, pistons and valves. Reference 8 states that

approximately 30 percent of the total wear may be attributable to cor- rosion in 1950. However, this is only an estimate, and improved

materials of construction, and the use of inhibitors in coolants, oils

and fuels, can affect a 50 to 95 percent reduction in corrosion, hence

its related cost.
C-15

TABLE C-5. ESTIMATED COSTS OF CORROSION FOR

NEW AUTOMOBILE PRODUCTION

Item

Corrosion Cost*, $ x 10

Total+ UnavoidableH

Coated Steel ("Zincrometal")

Coated Steel (Galvanized)

Paint, Zinc-rich; MOPB Waxes

Paint, Finish Coats

Trim, Electroplated; Bumpers

Mufflers, Tailpipes, Coated

Miscellaneous**

Subtotals

Totals

13.5 45.6

42.6 53.9

23.3 91.8

167.9 335.9

182.2 234.0

7.9 15.8

437.4 777.0

_800._0..

937.4 1577.0

Cost to manufacturer.

Includes other materials, plant maintenance and services, etc.,

as described in this Appendix.

Estimate of cost of corrosion protection for new automobiles in 1975.

Estimate of cost of corrosion protection if best corrosion control

practice were used.

TABLE C-6. TOTAL NUMBERS OF AUTOMOBILES

REGISTERED IN THE USA

Year

New Car

Production*

Total Number of Cars Registered*

Privately Owned Privately and Publicly Owned

1971

1972

1973

1974

1975**

1976***

1977>'o'c*

8,584,592

8,823,938

9,657,697

7,324,504

6,717,043

7,000,000

7,500,000

92,244,448

96,567,175

101,188,735

104,272,566

106,680,000

108,900,000

110,900,000

92,741,552

97,096,162

101,762,477

104,901,066

107,371,000

109,600,000

111,700,000

Data from the Motor Vehicle Manufacturers Association of the U.S.

** Estimates by the Motor Vehicles Manufacturers Association of the

U.S. , Inc.

Estimates by extrapolation.

Inc.
C-16

A corrosion expert with one of the larger automobile companies I roughly estimates on the basis of a recent survey that the average 3

' year old car has $20 of corrosion damage, and the average 5 year old ] car |60 to $80 of corrosion damage. Assuming that 6 years was the

average age of a car in 1977, and that the amount of damage after 5

years was $15 less than after 6 years, the automobile population by { year enables an estimated corrosion cost of $2,945,000,000 to be | calculated. In Reference 4 the damage to bodywork by deicing salts in | 1974-1975 was estimated to be $1,400,000,000, and if this is con- | sidered to represent only one half of the total body corrosion j damage'" ' resulting from other causes, the total is $2,800,000,000. j Thus, for 1975 the total cost due to body corrosion is estimated to be ! about $2,872.5 x 10^, as shown in Table C-7. It is expected that more I frequent car washings and waxings, because of increasing consumer I awareness, and the rapidly increasing attention being paid to corroj sion prevention and control in new cars being manufactured, will lead j to a decrease in total costs for body corrosion in the World III

' scenario compared with the World I scenario. Assuming that 1977

[ technology had been available in 1975, and using the same guidelines j as described above, a total corrosion cost to the owner of $1,284,- j 000,000 is calculated for World III. ;

Little quantitative information exists for aftermarket rustproofing and undersealing . An estimate indicated that between 5 and 20 percent of new cars in 1975 received some form of rustproofing treatment

at an estimated cost of $90 per car. Up to 40 percent of new cars i received a dealer-applied undersealing treatment at an estimated cost i of $35 per car. Taking a value of 15 percent for the proportion of ! cars receiving a rustproofing treatment in 1975, and a figure of j 6,717,043 for the number of units produced, the World I scenario cost i for rustproofing and undersealing is estimated to be $184.7 x 10*. If

best available corrosion control technology had been used in 1975 on

'i TABLE C-7. ESTIMATED COSTS OF CORROSION TO

OWNERS FOR USED AUTOMOBILES \

Corrosion Cost, $ x IQP

Item Total* Unavoidable**

Body corrosion 2,872. 5 1,284. 2 Rustproof ing /under sealing 184. 7 90. 7 Muffler/tailpipe replacement 1,160. 0 600. 0

Radiator repair/coolants 750. 1 149. 9

Totals 4,967. 3 2,124. 8

* Estimate of cost of corrosion in 1975.

** Estimate of cost of corrosion if best corrosion control practice were used.
C-17

all new cars manufactured, there would be less incentive to use aftermarket coatings and treatments; however, multilayer corrosion control

coatings have been described as being beneficial. In the absence of

any firm data, it is estimated that the dealer applied coating would

not be requested in the World III scenario, and the owner-related cor- rosion cost would be only about $90.7 x 10*".

According to the 1972 Census of Manufacturers, 32,000,000 replacement mufflers and 42,300,000 replacement tail pipes were sold in 1972.

Between 1972 and 1975 there was an increase in registered vehicles of

11 percent (Table C-6); therefore, for 1975 it is assumed that

36,075,000 and 46,953,000 units were sold. However, only 78 percent of

these totals represent automobiles (as opposed to trucks, buses, etc.)

thus the 1975 totals become 28,138,500 for mufflers, and 36,623,340

for tail pipes. The average retail and installation prices for these

items in 1977 were $28 and $17 (quotes from a department store

automobile service chain and a muffler replacement franchise store).

Using a factor of 1.2243 to prorate the costs to 1975 the corrosion

related costs became $647,185,500 and $512,726,760 for a total of

$1,160x10^, assuming a negligible replacement rate (cost) because of

accidents. In World III, a continuing increase in the use of aluminum

or zinc-coated exhaust components would extend their life, making the

frequency of replacement less. Ceramic-coated components, and the use

of stainless steels could reduce the frequency of replacement even

further. As a conservative estimate, if their life is doubled, the

associated cost would be halved, making a total of about $600,000,000

as shown in Table C-7.

According to a trade journal representing the industry, a survey

made of radiator shops in 1976 showed total receipts of about

$700,000,000, of which two-thirds could be attributed to corrosionrelated failures or malfunctions. Making allowance for the fraction

fitted in trucks and other vehicles, the total for automobiles becomes

$546,000,000, which when adjusted to represent just corrosion costs

decreases to $364,000,000. With proper selection of materials,

coolant, and proper maintenance, the majority of this cost item could

be eliminated. A value of a 80 percent reduction was selected for

Table C-7, pending more accurate data.

Trade journals and chemical manufacturing companies state that approximately 200,000,000 gallons of coolant are sold per year. In 1975,

the volume was 217,000,000 gallons, and the cost was about $3.50 per

gallon. Making allowance for the fact that only 78 percent of this

total represents automobiles, and of this adjusted value 80 percent

represents replacements, the total volume is then 135,408,000 gallons.

At $3.50 per gallon the equivalent cost is $473,928,000. Of this cost

about 80 percent can be attributed to the need for corrosion prevention, thus the World I scenario cost becomes $379,142,400. In World

III, improved inhibitors and the use of controlled (closed) coolant

systems (possibly with in-line filters) would probably reduce this

figure by 80 percent, making the total, for the purposes of Table C-7,

$75,828,480.
C-18

The total costs to the owner for the maintenance and repair of

used automobiles is the sum of the various items listed in Table

to a first approximation. In the World I scenario these items total

$4,967.3 X 10*; while in World III the total is $2,124.8 x 10\ a reduction of 67 percent through using best available corrosion control

technology

6 TOTAL COSTS OF CORROSION

The total costs of corrosion for automobiles is obtained by adding

the data presented in Tables C-5 and C-7, as shown in Table C-8. Thus,

in 1975, the World I scenario, the total cost of corrosion resulting

from both new and used cars registered and operated is estimated to be

approximately $6,000 x 10*. Similarly the estimate for the unavoidable

costs in the World III scenario, represented by technology available

in the 1977 to 1980 time frame, is approximately $3,700 x 10*. The

detailed estimate for World I is very similar to the prior rough es- timates shown in Table C-1.

It may be concluded that for reference year 1975 the cost of cor- rosion in the U.S. attributable to automobiles is of the order of

$6,000 X 10*. When averaged, this cost is equivalent to $56 per automobile per year, a significant figure, especially when the current

trend is to own a car for a longer period, and the likelihood that

some corrosion related repair or replacement being encountered is

greater. Technology currently available could reduce the total corrosion cost by up to 40 percent which would result in a reduced per

automobile expenditure of approximately $33 per year. These calculations use the privately owned automobile population data given in

Table C-6.
C-19

TABLE C-8. SUMMARY OF TOTAL COSTS OF

CORROSION FOR PRIVATELY

OWNED AUTOMOBILES

Item

Corrosion

Total*

Cost, $ X 106

Unavoidable**

New Automobiles, Materials (^)

New Automobiles, Miscellaneous

437.4

500.0

777.0

800.0

Used Automobiles ^^-^ 4,967.3 2,124.8

TOTALS 5,904.7 3,701.8

Data from Tables C-6 and C-7

(a) Cost to the manufacturer; labor, plant etc. not included.

(b) Estimates for labor, plant, etc. included.

(c) Cost to the owner; includes cost of materials and labor

for replacement items.

* Estimate of total cost of corrosion in 1975.

** Estimate of cost of corrosion if best corrosion control

practice were used.
C-20

REFERENCES

(1) H. K. Worner, ''The Cost of Corrosion'', Corrosion Technology, Z

(September, 1956) 289.

(2) Anon., ''Corrosion Daunage on Automobile Exhaust Systems'', Corrosion, 17 (1961) 18.

(3) Anon., ''Controlling Automobile Exhaust'', Materials Protection, 6_ (1967) 52.

(4) D. M. Murray, and U. F. W. Ernst, ''An Economic Analysis of the

Environmental Impact of Highway Deicing'', Final Report No. EPA600/2-76-105 (May, 1976) for period August, 1974-July, 1975.

(5) F. H. Guzzetta, '

' Zincrometal : Its Manufacture, Testing and

Use'', Paper No. 770362 presented at SAE Intl. Auto. Eng. Congress and Exp., (February 28-March 4, 1977) Detroit, Michigan.

(6) Anon., ''Zinc Plays Four-Star Role in GM ' s Automotive Anticorrosion Program'', Zinc, No. 2 (1976) 4.

(7) J. C. Bittence, ''Waging War on Rust, Part 2: Resisting Rust'',

Machine Design, 4§ (1976) 146.

(8) H. H. Uhlig, ''Cost of Corrosion to the United States'', Corrosion, 6, No. 1 (1950) 29.

(9) Anon., ''Solving the Problem of Car Silencer Corrosion: Rustproofing Used Cars'', Corrosion Prevention and Control, 22, No. 2

(1975) 2.

(10) G. A. Watson, '

' Aftermarket Rustproof ing : A Growing Industry'',

Paper No. 164, presented at Corrosion/ 76, (March 22-26, 1976),

Houston, Texas.

(11) R. L. Chance, ''Corrosion, Deicing Salts and the Environment'',

Materials Performance, 13, No. 10 (1974) 16.

(12) Anon., ''UK Automobile Association Probes Car Rust in Depth:

Rainfall the Crucial Factor'', Materials Performance, 13, No. 11

(1974) 40.

(13) Anon., ''Akron Votes to Add Rust Inhibitors to Deicing Salts'',

Materials Protection, 1, No. 2 (1962) 71.

(14) Anon., ''Salt May Go as Road Deicer'', News Trends, Machine

Design, (February 24, 1977) p. 6.

(15) Anon., ''The Cost of Car Corrosion in Britain'', Corrosion Prevention and Control, 17, No. 6 (1970) 5.

(16) L. C. Rowe, ''The Application of Corrosion Principles to

Engineering Design'', Paper No. 770292 presented at the SAE Intl.

Auto. Eng. Congress axid Expo., (February 28-March 4, 1977)

Detroit, Michigan.

(17) D. G. Harvey, and W. R. Menchen, ''The Automobile: Energy and the

Environment'', Report to the National Science Foundation, Contract No. NSF-C674 (March, 1974) p. 18.
C. A. Gottesman, ''Materials Development in Chassis and Bodies'',

Automotive Industries, 155, No. 10 (1976) 17.

R. F. Waindle, ''Automobile Corrosion Problems: Causes and

Prevention'', Materials Protection, 6, No. 12 (1967) 30.

A. M. Kalson, Jr., ''Corrosive Environment Factors on Automobile

Bodies'', Paper No. 770291, presented at the SAE Intl. Auto. Eng.

Congress and Exp. (February 28-Maroh 4, 1977) Detroit, Michigan.

''Motor Vehicle Facts and Figures 1976'', Motor Vehicle Manufacturers Association, Detroit, Michigan (1977) p. 23.

J. M. Callahan, ''Wiping Out Corrosion by 1980'', Automotive Industries, 154, No. 6 (1976) 19.

Anon., ''Torsion Bars Metallized to Stop Corrosion'', Automotive

Engineering, 85 (1977) 42.

Anon., ''Clad-Metal Trim Solves Auto Rust Problem'', Machine

Design, 49, No. 8 (1977) 6.

W. H. Safranek, Battelle's Columbus Laboratories, private com- munication (1977).

C. A. Gottesman, ''Coating and Painting: The Finishing Touch'',

Automotive Industries, 155, No. 6 (1976) 19.

R. R. Bishop, ''UK Research Aimed to Reduce Motor Vehicle Corrosion Caused by Highway Deicing Salt'', Materials Performance, 15,

No. 11 (1976) 15.

R. J. Fosdick, ''Materials Trends in Engine and Power Trains'',

Automotive Engineering, 155, No. 10 (1976) 33.

L. C. Rowe, private communication (1977).

Anon., ''Annual Review 1976'', U.S. Zinc Industry Report issued

by the Zinc Institute, Inc., New York, New York (1977).

D-1

APPENDIX D

SECTOR TITLES AND CORRESPONDING

STANDARD INDUSTRIAL CLASSIFICATIONS

SIC's*

1. AGRICULTURE, FORESTRY & FISHERY

1.01 Livestock and Livestock Products

1.02 Field and Orchard Crops

1.03 Forestry and Fishery Products

1.04 Services to Agriculture, Forestry & Fishery

2. EXTRACTION OF MINERAL RESOURCES

2.01 Iron and Ferroalloys Ores

2.02 Copper Ores

2.03 Nonferrous Ores, Except Copper

2A04 Underground Coal Mining

2B04 Strip Coal Mining

2C04 Other Coal Mining

2A05 Crude Petroleum

2B05 Natural Gas

2.06 Stone and Clays

2.07 Chemical and Fertilizer Minerals

013, 0193; parts of

014, 0729 and 02

Oil, 012, 0192; parts

of 014 and 02

08, 09, 074

07 (except part of

0729, 074) 085, 098

101, 106

102

103, 104, 105, 108, 109

parts of 11 and 12

parts of 11 and 12

parts of 11 and 12

parts of 13

parts of 13

14 (excl. 147)

147

* Standard Industrial Classification Manual, prepared by Office

of Statistical Standards, Bureau of Budget, 1967.
D-2

3. MANUFACTURE OF FOOD, LEATHER & TEXTILE PRODUCTS

3X01 Food and Kindred Products, Tobacco

3.03 Leather Tanning & Industrial Leather Products

3X04 Misc. Leather & Fabricated Textile Products

3.05 Fabrics, Yarns and Threads

3.07 Tire Cord & Misc. Textile Goods

4. WOOD AND PAPER PRODUCTS

4X01 Lumber Mills, Plywood, Wooden Containers

4.03 Lumber & Wood Products, Except Containers

4X05 Furniture and Fixtures

4.07 Pulp, Paper and Paper Products, Except

Containers

4.08 Paperboard Containers and Boxes

5. PETROLEUM AND CHEMICAL PRODUCTS

5.01 Petroleum Refining and Related Products

5.02 Paving Mixtures and Asphalt Products

5.03 Industrial Inorganic and Organic Chemicals

5.04 Fertilizers

5.05 Agricultural Chemicals, Except Fertilizers

5.06 Miscellaneous Chemical Products

5X07 Plastics Materials & Organic Man-made

5.09 Drugs

5X10 Cleaning & Toilet Preparations

5A12 Paints and Allied Products, Corr.

5B12 Paints and Allied Products, N-Corr.

SIC's

20, 21

311, 312

23, 225, 227, 313-19

221-4, 226, 228

227

242, 2432, 244

241, 243 (excl 2432), 249

251, 252-4, 259

26 (excl 265)

265

291, 299

295

281

287 (excl 2879)

2879

286, 289

2821, 2822, 2823, 2824

283

284

part of 285

part of 285
D-3

SIC's

5. PETROLEUM AND CHEMICAL PPODUCTS (Continued)

5.13 Tires and Inner Tubes 301

5.14 All Other Rubber Products 302, 303, 306

5.15 Manufactured Plastics Products 307

6. STONE, CLAY AND GLASS PRODUCTS

6.01 Glass and Glass Products 321-3

6.02 Hydraulic Cement, Lime & Gypsum Products 324, 3274-5

6.03 Clay and Cement Products & Refractories 325, 326, 3271-3, 3297

6.04 All Other Stone & Nonmetallic Mineral Products 328, 329 (excl 3297)

7. PRIMARY METALS AND MANUFACTURES

7A01 Mild Steel - Carbon Steel

7B01 Low Alloy Steel

7C01 Alloy Steel

7D01 Stainless Steel

7E01 Coke

7.02 Primary Copper

7.03 Primary Aluminum

7A04 Ni, Ni Alloys, CO

7B04 Zinc

7C04 Magnesium

7D04 Lead

7E04 Ti, Ta, Zr

7F04 Au, Ag, Pt, Pd

7G04 All Others
D-4

SIC's

8. FABRICATED METAL PRODUCTS

8.01 Metal Cans 341

8.02 Metal Barrels, Drums and Pails 3491

8.03 Metal Sanitary Ware & Plumbing Fittings 3431, 3432

8.04 Nonelectric Heating Equipment 3433

8.05 Fabricated Structural Metal Products 344

8.06 Screw Machine Products, etc., & Stampings 345, 346

8A07 Coating and Plating, Corr. part of 347

8B07 Coating and Plating, N-Corr. part of 347

8C07 All Other 342, 348, 349

9. GENERAL MACHINERY AND COMPONENTS

9.01 Engines and Turbines 351

9.02 General Industrial Machinery & Equipment 356

9.03 Machine Shop Products 359

10. SPECIALIZED MACHINERY

10.01 Farm Machinery 352

10.02 Construction Machinery 3531

10.03 Mining Machinery 3532

10.04 Oil Field Machinery 3533

10.05 Materials Handling Machinery, Except Trucks 3534, 3535, 3536

10.06 Industrial Trucks and Tractors 3537

10.07 Metalworking Machinery 354

10.08 Special Industry Machinery 355
D-5

SIC's

11. TRANSPORTATION EQUIPMENT

llAOl Automobiles part of 3714

llBOl p ar t of 3714 3715

11.02 Aircraft and Parts 372

11.03 Ship and Boat Building & Repair 373

11.04 Locomotives & Rail and Streetcars 374

11.05 Motorcycles, Bicycles, Trailer Coaches, etc. 375, 379

12. GENERAL ELECTRICAL APPARATUS

12.01 Electrical Measuring Instruments

12.02 Electric Motors and Generators

12.03 Industrial Controls, Transformers, etc,

12X04 Electric Lamps and Fixtures

12.06 Electronic Components and Accessories

12.07 Miscellaneous Electrical Machinery

3611

3621

361 (excl 3611), 362

(excl 3621)

364

367

369

13. SPECIAL ELECTRICAL APPARATUS

13.01 Service Industry Machinery

13.02 Household Appliances

13.03 Radio, T.V., and Communication Equipment

358

363

365, 366

14. SCIENTIFIC AND MEASURING DEVICES

14.01 Scientific Instruments, Measures and Controls 381, 382

14.02 Medical, Surgical, Dental Instruments and

Supplies 384

14.03 Watches, Clocks and Parts 387

14.04 Optical and Ophthalmic Goods 383, 385

14.05 Photographic Equipment and Supplies 386
D-6

15. BUSINESS MACHINES AND SUPPLIES

15.01 Computing and Related Machines

15.02 All Other Office and Business Machines

15.03 Office Supplies

16. MISCELLANEOUS MANUFACTURES

16.01 Ordnance and Accessories

16.02 Other Miscellaneous Products

17. TRANSPORTATION

17.01 Railroads and Related Services

17.02 Local and Other Highway Passenger Transport

17.03 Motor Freight and Warehousing

17.04 Water Transportation

17.05 Air Transport

17.06 Pipelines

17.07 Transportation Services

18. PUBLIC UTILITIES

18.01 Telecommunication

18.02 Electric Power

18.03 Gas

18.04 Water and Sanitary Services

19CONSTRUCTION

19.01 New Construction, Nonfarm Residence

19.02 New Construction, Nonresidential Buildings

SIC's

3573, 3574

357 (excl 3573-4)

Dummy Indus try

19

39 (excl 3992)

40, 474

41

42, 473

44

45

46

471, 478, 472

48 (excl 483)

491, part 493

492, part 493

494, 495, 496, 497, part 493

part 15, part 16,

part 17, 6561

part 15, part 17
D-7

19

.

CONSTRUCTION (Continued)

19.03 New Construction, Public Utility

19.04 New Construction, Highway and Other

19A05 Maintenance & Repair Construction, Corr.

19B05 Maintenance & Repair Construction, N-Corr.

20. TRADE AND BUSINESS SERVICES

20.01 Wholesale and Retail Trade

20X02 Finance, Insurance, Real Estate, Advertising

20.05 Other Business & Professional Services

20.06 Business Travel, Entertainment & Gifts

21. OTHER SERVICES

21.01 Printing and Publishing

21.02 Radio and Television Broadcasting

21.03 Hotels and Lodging Places

21.04 Personal & Repair Services, Except Auto

21.05 Automobile Repair and Services

21.06 Amusements

21.07 Medical and Health Services

21.08 Educational Services and Nonprofit

Organizations

SIC's

part 15, part 16,

part 17

part 15, part 16,

part 17, 138

part 15, part 16,

part 17

part 15, part 16,

part 17

50 (excl manufacturers'

sales offices) 52-59,

7396

60, 61, 67, 62, 63, 64,

65, 66 (excl 656) 731

73 (excl 731, 7396),

7694, part 7699, 81, 89

(excl 892)

Dummy Industry

27

483

70

72, 76 (excl 7694 & 1/2 7699)

75

78,79

80

82, 84, 86, 892
D-8

SIC's

22. GOVERNMENT ENTERPRISES

22.01 Post Office

23. OTHER SPECIAL SECTORS

23.01 Imports of Noncompetitive Products

(Nonsubstitute)

23. OA Domestic Noncompetitive Imports

23.02 Scrap and Secondhand Goods

23.03 Government Industry

23.04 Rest-of-the-World Industry

23.05 Household Industry

OTHER ROW SECTORS

24.00 Total Intermediate Input

25.00 Value Added

25. OA Social Savings

26.00 Total Input

OTHER COLUMN SECTORS

24.00 Total Intermediate Output

25.00 Total Final Demand

25.10 Fixed Private Capital

25,20 Imports of Competitive (Substitute) Products

25.30 Gross Exports

25.40 Personal Consumption Expenditures

25.50 Federal Government Expenditures

25.60 State and Local Government Expenditures

25.70 Net Inventory Change

26.00 Total Output
MBS-114A (REV. 7-73)

U.S. DEPT. OF COMM. 1. PUBLICATION OR RKPORT NO. 2. Gov't Accession BIBLIOGRAPHIC DATA No. SHEET NBS-SP 511-2

3. Recipient's Accession No.

4. TITLE AND SUBTITLE

Economic Effects of Metallic Corrosion in the United States.

A Report to NBS by Battelle Columbus Laboratories,

J^pendix B

5. Publication Date May 1978

6. Performing Organization Code

7. AUTHOR(S) J. H. Payer, D. G. Dippold, W. K. Boyd, W. E. Berry,

E. W. Rrnnman, A. R. Ruhr, anH W. H. Fi <?hf^r

8. Performing Organ. Report No.

9. PERFORMING ORGANIZATION NAME AND ADDRESS

Battelle Columbus laboratories

505 King Avenue

Columbus, OH 43201

10. Project/Task/Work Unit No.

11. Contract/Grant No. 7-35716

12. Sponsoring Organization Name and Complete Address (Street, City, State, ZIP)

National Biireau of Standards

Department of Conmerce

Washington, DC 20234

13. Type of Report & Period Covered Final

14. Sponsoring Agency Code

15. SUPPLEMENTARY NOTES . 2. c ^ j • a. 0 The report consists of 3 parts, the NBS report and its 2 separate appendices B & C. Appendix B has been prepared by Battelle; J^pendix C is

I/O matrix tables. Library of Congress Catalog Card Number: 78-600033.

16. ABSTRACT (A 200-word or less factual summary o( most sigfiHicant mformation. If document includes a significant

bibliography or literature survey, mention it here.) The purpose of this study was to determine the economic effect of corrosion in the

lative, and other initiatives to promote effective economic savings. The study was

confined to corrosion of metals.

For 1975 as the base year, total costs of corrosion were estimated as follows:

Total Costs to U.S. $82 Billion 1.9% GHP

Avoidable Costs $33 Billion 2.9% GHP

Unavoidable Costs $49 Billion 2.0% GHP

Input/Output analysis, v\*iich provided the methodological framework for this study, permitted detailed and comprehensive treatment of all elements of the costs of corrosion.

Production costs, capital costs, changes in replacement lives, etc. were treated in a

coordinated and systematic manner. The coirrosion I/O Model can be used to assess proposed means to reduce costs.

17. KEY WORDS (six to twelve entries; alphabetical order; capitalize only the first letter of the first key word unless a proper name; separated by semicolons)

Capital; corrosion; costs; dollar flow; econanics; iiput/output; interindustry;

replacement; resources; transactions

18. AVAILABILITY [x] Unlimited

1

' For Official Distribution. Do Not Release to NTIS

1 yl Order From Sup. of Doc, U.S. Government Printing Office WashinPton. D.C. 20402. SD Stonlc NlT. - .qNOn^-nm-m QPT-R

1 1 Order From National Technical Information Service (NTIS)

Springfield, Virginia 22151

19. SECURITY CLASS

(THIS REPORT)

UNCL ASSIFIED

21. NO. OF PAGES

249

20. SECURITY CLASS

(THIS PAGE)

UNCLASSIFIED

22. Price

4.25

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*U.S. GOVERNMENT PRINTING OFFICE : 1978 0-266-232

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