# MEMORANDUM

DATE: October 28, 2010

SUBJECT: Affordability of Lower VHAP Coatings and Add-on Controls for Wood

Furniture Manufacturing Operations

FROM: Kaye Whitfield

TO: Docket No: EPA-HQ-OAR-2010-0786

Section 112(f)(2) of the Clean Ai r Act (CAA) directs EPA to assess the risk remaining (residual

risk) after the appli cation of maximum achievable contro l technology (MACT) standards under

section 112(d). EPA is to promulgate more stri ngent standards for a category or subcategory of

sources subject to MACT standa rds under section 112(d) if promul gation of such standards is

necessary to protect public health with an ample margin of safety or to prevent (taking into

consideration various factors) adverse environmental effects.

In an effort to streamline the process of maki ng residual risk decisions, EPA plans to address

residual risk and perform a technology revi ew simultaneously for the wood furniture

manufacturing source category. The first part of this approach is to compile and review (and

update with facility-specific data collected by EPA in some cases) readily available source

category emissions data from the 2005 Nationa l Emissions Inventory (NEI) and to conduct

preliminary risk assessments.

The second part of this approach is to reduce any remaining “residual” risk according to CAA

section 112(f). Section 112(f)(2) of the CAA th en directs EPA to assess the risk remaining

(residual risk) after the application of the MA CT standards and promulgate more stringent

standards for a category or subcat egory of sources subject to MACT standards if promulgation of

such standards is necessary to protect public health with an ample margin of safety or to prevent

(taking into consideratio n various factors) advers e environmental effects.

Two control options were evaluated. The first was the use of a regene rative thermal oxidizer

(RTO) system to control emissions from the w ood furniture coating booth. The second was the

1

# 2 use of lower VOC coatings in wood furniture manufacturing operations. The purpose of this

memo is to document the affordability of the co ntrol options evaluated fo r this source category. 1



# For the purpose of this analysis, the cost of th e control option as a percentage of revenues was

used as a rough indicator of a ffordability. Six wood furniture manufacturing facilities were

chosen for the affordability analysis. A mixture of wood furniture faciliti es was selected—three

cabinet facilities, two home furnishing facilities, and one office furniture facility.

The list was used to investigate reported revenues in the Hoovers Database 2 

# . All six facilities

were located in the Database, which lists repo rted revenues by parent company, and sometimes

by individual facil ity locations.

The database contained facility sp ecific revenues for f our of the wood furniture facilities. Using

the annualized cost of the RTO option ($2.57 million) , the affordability for these four facilities

was greater than 329 percent of the facility revenues.

For the remaining two facilities, assumptions we re made about the parent company sales in

relation to specific facilities. Due to the predominance of wood furniture manufacturing

operations for these two companies, we assumed that 100% of the parent company revenues for

American Woodmark and Thomasville Furniture were related to wood furniture manufacturing.

Then, we gathered information on the number of facilities owned by each of the parent

companies. According to American Woodmark’s website 3 

# , the company owns 29 locations in

the United States. According to the Hoovers Data base, Thomasville Furniture owns 15 facilities

in the United States. By dividing the total revenues by the number of facilities, we calculated a

revenues-per-facility estimate for each parent comp any. The affordability of using an RTO at

each facility was calculated by dividing the cost of the RTO by the revenues at each location.

The results were 18% and 63% for American Woodmark and Thomasville Furniture,

respectively. Due to the large disparity be tween the affordability calculation using parent

company revenues and facility sp ecific revenues, we believe the facility-specific affordability

calculations are more representative.

These analyses indicate a definite problem with affordability for the RTO control option. The

results are shown in Table 1.

1 

# Cost Analyses for Control Options. Memorandum dated September 27, 2010.

2 

# Business Solutions from Hoovers. http://www.hoovers.com/ . Accessed October 28, 2010.

3 

# American Woodmark Corporation. http://www.americanwoodmark.com/about.asp?iAreaID=1&iSectionID=4

. Accessed October 28, 2010.

# 3 Similar calculations were performed for the op tion of using lower VHAP coatings. The only

change to the analysis is th e annualized cost of coatings is approximately $7,000 while the

annualized cost of the RTO option is $2.57 million.

The results of the second evaluation indicate that there may be a problem with affordability for

the lower VHAP coating option. The affordab ility ranges from 0.9% to 6% of the facility

specific revenues. The numb ers are shown in Table 2.

Screenshots of the results from Hoovers. com are shown in Attachments 1 through 6.4Table 1. RTO Control Affordability ScreeningWoodFurnitureCityStateCompanySalesWoodFurnitureSales(millions)NumberoffacilitiesWoodFurnitureSalesperfacility(million)CostofRTOperFacility(millions)AffordabilitySteelcase,Inc.KentwoodMI$2,291.70‐‐‐‐‐‐‐‐$0.16$2.571,606.25%AmericanWoodmarkKingmanAZ$406.54$406.5429$14.02$2.5718.33%La‐Z‐BoyRedlandsCA$1,179.21‐‐‐‐‐‐‐‐$0.18$2.571,427.78%McConnellCabinets,Inc.ElMonteCA‐‐‐‐‐‐‐‐‐‐‐‐$0.78$2.57329.49%BertchCabinetsWaterlooIA‐‐‐‐‐‐‐‐‐‐‐‐$0.11$2.572,336.36%ThomasvilleFurnitureLenoirNC$61.32$61.3215$4.09$2.5762.87%Table 2. Lower VHAP Coatings Affordability ScreeningWoodFurnitureCityStateCompanySalesWoodFurnitureSales(millions)NumberoffacilitiesWoodFurnitureSalesperfacility(million)CostperFacility(millions)AffordabilitySteelcase,Inc.KentwoodMI$2,291.70‐‐‐‐‐‐‐‐$0.160.0074.38%AmericanWoodmarkKingmanAZ$406.54$406.5429$14.020.0070.05%La‐Z‐BoyRedlandsCA$1,179.21‐‐‐‐‐‐‐‐$0.180.0073.89%McConnellCabinets,Inc.ElMonteCA‐‐‐‐‐‐‐‐‐‐‐‐$0.780.0070.90%BertchCabinetsWaterlooIA‐‐‐‐‐‐‐‐‐‐‐‐$0.110.0076.36%ThomasvilleFurnitureLenoirNC$61.32$61.3215$4.090.0070.17%Attachment 1. Steelcase Inc. Company Results from Hoovers.com5Attachment 2. American Woodmark Company Results from Hoovers.com6Attachment 3. La-Z-Boy Company Results from Hoovers.com7Attachment 4. McConnell CabinetsCompany Results from Hoovers.com8Attachment 5. Bertch CabinetsCompany Results from Hoovers.com9Attachment 6. Thomasville Furniture Company Results from Hoovers.com10