BAT CDC Documents
A Technological Forecast of the Future of Tobacco Processing
Fields
- Original File
- BATCO002
- URL
- http://outside.cdc.gov/images4/00/02/49/75/doc00001.TIF
- Company
- British American Tobacco
- Date Loaded
- 04 Mar 2003
- Box
- B3391-6
Document Images
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-.
SALLY ~
Please note that three further copies of RD. 1618 Restrlcted have been
sent 1=o Dr. S.J. ~n, namely copies: 29, 30 ~nd 31. These repoz~s
were sent ~er cover of D=. K.D. lg~bux~'s memo to D=. Green dated
irt March, File 38D.
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BAT Co LTD - MINNESOTA TOBACCO LITIGATION
~T l~O., I;,.'~ .~.'.,V~ CATE0Um:: C~,..,~,../..k.~,l
PROJECT JOB NO. :
AUTEOR : K -~ ~..
GROUP ~AD~L:
FILE NO. • '~'~
(
t.~,e,..k: List
Cover:
m
Iindlncs :
Fims/Gm%Dh. No. :
Pho~o~=apM So. :
R ednctions-.
Total l~A~s:
ISSUER:
DIS'l"1~IOti; SJG ( ) : IW'a (t) : RAS (2) : RMG (1) : ESW (3) : :4hEr., r.. & D.D. Asst.
FS (1) : AJK (1) : CJP de S (1) : DGF (t) : L£brsry (2) : File
w t#
"~E__REP: 4 ,~ • " ~ ~-.~..- .- ,
(2) : HS (I)
Dz~ft for Crpi~ (1)
(2)
(3)
(4)
(5)
Prepare master:
COXTeCtions (I)
(2)
Ds%e Date l~te
Sent Recd Re%u:nsd
... t i t |
£utho=
C~ecklm~
Date Issue=
]~te
T~JLI pt'o fOrlt is intended %0 fs~eil£~s~s and de£a/1 ~be l~'ol:~lll of G.R, & D,Ce
RlrpOl-tl
fx~m the ~,~8~x-Ip~ ll;at~e until %he z-epoz~ IS £J.t%IL]L]~r Ip~ ~&~ 4IERLId. The pl'O ~O~
~hould ~o cca~arAced at the tame o~ the £ni%ial ~A~g 8nd acc~l~uz~ ~he %'~elcrlpt (S~
m~ster a~¢e¢ l~'~¢ion) at &ll subsequent 8%8q~s. I% must be Bent %~ =entm-al £iling wlth
%he master when ~he np~x~ is issued.
}~c%....~: 1. ~heEevem possible, dA'8/ts £oz '~"P:£n4J II~uld be v:4tten in inM.
2. A/re= typing, %he ~-pescript ~hould no=mall.7 be ze%u~ned to the Author, who
wall anAblequontXy ob%a.ln ~ ~w~up ~-'l ~ Xel~sr,8 [p~'~V~,
CAz~JLlat£on ~tould be detezmAne4 by the Iesmez'.
4. The t~pe, ncrip¢ tit not be p~elente,! £oz printing until the IINE ]3&8 tXLltlB.Ild
the pro £crma ~t '~epa~s Ksster".
A/to: p=Inting, ons bound espy m~ASt be :etu.-ned t¢ t~o Xssue= £oz £JJml al~'~a~L
and the Issuer will ensuz~ %~% one ¢op~ i8 seen b~' ths Mmsa4~:.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-106-
OP~ATZ~O COST Or a PB~Y _-~P_J~_ _,~X,~T
R~D ZTS TOBACC9 STOn
B.A.T. CZC, A~TTIS-FAmRZK~.. G.H.B.H.
•
PEOPLE COSTS (including Social Costs)
Direct and Indirect
MACHINERY COSTS
Replacement Depreciation
Interest b,
OPERATING COSTS
Energy
Travel and Transport
Care and Maintenance
Production Expenses
Wastage
Recovery by a Sheet Process
Sub-total
LAND AND BUILDINGS
Replacement Depreciation
Interest b.
TAXATION
Total Cost
Weight of Cut Tobacco
Supplied to Fabrication Department
(Tonnes)
NOTE : a.
b.
Ahrensburg 1977
a
DM. OOO ' a I £ Sterllng/Ton
I
| Bl
2870
350O
NA
850
760
49O
1OO
980
(250)
293O
229
NA
Nil
9529 c.
3.3OOO
C •
Conversion rate £I m DM 4.039
Finance Dept. have no Eigures on calculator¥
interest charges,
54.66
66.66
NA
16.19
14.47
9.33
1.90
18.66
(4.76)
55.79
4.36
NA
O. OO
151.48 c.
The author estimates that interest charges would
not increase these totals by more than about 7%,
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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TABLE 17
OPRm_%T_7~G COSTS OF ~JAX R~CONSTITUTI0~ PLANT
IMPEPT~L TORACCO LIMITED -- CANADA (1977)
PEOPLE COSTS ( including Social Costs )
Salaries direct
indirect
Wages direct
Indlrect
Sub-total
MACHINERY COSTS
Replacement Depre¢iatlon
Znterest
Sub-total
OPERATING COSTS
Energy
Travel & Transport
Care & Maintenance
Production Expenses
Sub-tota/
LAND & BUILDINGS
Replacement Depreciation
Interest
Sub-total
Can I OOO's
90
90
343
80
603
369
336
705
TAXATION
Total Comt
624
73
175
360
Weight of Reconstituted Toblcco
Produced (Pounds)
NOTE: a. Conversion rate £I m ~ 1.876
1232
149
86
235
74
2849
9,050,000
11.87
11.87
45.25
10.55
79.56
48.68
44.33
93.02
82.33
9.63
23.09
47.50
162.55
19.66
11.34
31.O1
9.76
375.89
CD
CC
~3
CC
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
CGNTR.OL OPTIONS
.-_Jr
Tr.
Of S~_art
Predetermined
Conditional on
Preceding Events
Combination
None (i.e. Rand~n)
In~arlant
Adaptive by Material
Predetermined
Random
Combination
GUANTITY
,At Start
Invarl ant
Predetermined
Adaptive to Supply
Adaptive to Demand
Adaptive to Process Rate
Adaptive to Wastage
Adaptive to Material
State
Uncontrolled
Combination
STATE
At In_put
Invarlant (mean ÷ s.d.)
Predetermined by Materi~l
Predetermined by
Precedi~ Events
Constant Mean, and
Variable s.d.
Variable Mean, and
Varl able •. d.
Partial Cont=ol
No Control
Of Duration
Predetermined
Adaptlve ~0 Puate
Adaptive to B~terior Events
Canbination
Of Stop
Invariant
Adaptive by Material
Predetermined
Random
Combination
At Finish
Invariant
Predetermined
Adaptive to Supply
Adaptive to Demand
Adaptive to Pro~esa RAte
Adaptive to Wastage
Adaptive to Material
State
Uncontrollod
Combination
Invariant (mean + I.d.)
Predetermined
Constant Mean Vari~ble e.d.
Variable by Materlal
Partial Control
Variable by External Events
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
Oo
TABLE ~.9
CRITERIA FOR JUDGING A PRODUCTION PROCESS
CRITERIA
~SSOCIATED FACTORS
i.
o
.
m
o
o
Will it work?
Will it be
reliable?
Will it k.e
economic?
Will it be safe?
What external
factors affect
success?
Can it co-exist
with existing
system%s?
7. Can it be
controlled?
8. Can output be
changed?
a)
b)
a)
b)
c)
d)
a)
b)
c)
d)
a)
b)
c)
a)
b)
c)
d)
e)
f)
g)
a)
b)
c)
a)
b)
c)
d)
a)
b)
c)
d)
e)
f)
g)
Technical feasibility of process:
Suitable supply of materials.
Sensitivity of process to input
quality variations:
Sensitivity of process to throughput
fluctuations:
Rate of wearing of machinery:
Frequency of cleaning/adjusting.
Tax rates On new process and inputs
versus old process and inputs:
Labour intensity:
Capital intensity:
Non-recoverable wastage rates.
Hazards to operators:
Consequences of malfunctioning of
process~
Probability of detecting mlfunctions.
Government licences:
Social acceptability:
Goodwill of employees:
Availability of services (transport,
utilities):
Availability of skills:
Availability of spare parts:
Pricing policies.
Leaf plants:
Conventional primaries:
Conventional fabrication.
Measurement technology (quality, flow,
speed of response):
Dynamic range of controllers:
Specifications and tolerances:
System design.
Delay to production {single or
multiple stream):
Change to inputs (number, quality,
flow) :
Change to outputs (number, quality,
flow) :
Extent of change: __
Minimum and maximum number of
simultaneous input and output t.~
channels: u~
Minimum and maximum flow rates by t.~
channel: "~
Maximum sources and sinks per channel
(simultaneous, time sliced). CZD
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-IIO-
TABLE 19 (contd.)
1
I0 •
WAil At reduce
entrF cost for
n~br~s?
WAll it simplify
disposal of
redundant
materials?
a}
b}
a}
b)
Within existing characteristiQs
of process:
Mxtendlngprocemm.
Pacing ~t~i~s:
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
C
-Ill-
TABLE 20
ACTUAL OR POTENTIAL PHOCESS COSTS
PROCES S
1. Farming
2. Solvent
Extraction
of Tobacco
ConoentEet~on
Separation
3. PCL
Manufacture
4. PRT
Manufacture
5 • DIET
6. G 13
7. G 13C
NOTE: (a)
(b)
(c)
PRODUCT
Tobacco
Extracted Tobacco
+
Extract
• Desirables
+
Undesirables
PCL
PRT
Puffed Lamina
Cost of Royalty
Puffed Lamina
Cost of Royalty
Puffed Lamina
Cost of Royalty
Solvent used was hexane°
COST
£ sterllng/ton
800-2000
140 (a)
370 (b)
Dependent on
process,
solvents and
materials
376
227-648 (c)
396
103
226
133
434
81-162
YEAR
1977
1975
1970
1977
1978
1977
REFERENCE
RD. 1257
Restricted
Table 17
RD.1522
Restricted
1976
1976
RD. 1407
Restricted
RD.1407
Restricted
Solvent used was aqueous ethanol, which extracted much
of the weight of material present in the original tobacco.
The higher flgure was calculated using s io~ interest
rate and a 5%depreciation rate.
mmm
i
~U
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-112-
TABLE 21
Z ACTZOU MATRIX
1 •
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BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-113-
TABLE 22
I/QFLUENC E MATRIX
I Z $ • S 6
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1.000 .591 1.51~ **ue"
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1.511 1.S1, 5.3~
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~Y 5TC~&G[ ~ 1.090
PiCFiS~ ~[•[ • I.OVB
NJT~[ sij ~&TW~ • i.101
NAT~cC rl~ msTm. " 10 S.3-~
OU~tT? ¢~IT(~I& It 1.51~
C0%~[JS|Cq P~GC 1~ ,*SEI
COST 0AfJ i] 50~00
G0Vt I~V[uvt~r~ I0 l.lO•
,l++[TI•G 11 llSl+
S0CI:-PC~[T|¢ 10 ~.1,t
JOOS*kAIIGdW ~| Itl00
m
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
TWENTY--ONE FACTORS AND ASSOCIATED ZDEAS
i. Plant Location
ii
Relation to supplies, marketsT within country, free-trade
zone, or continQnt. Environmental IntQractlon.
B
Instrumentation
Ability to measure impersonally, in field, auction,
warehouse, factory.
o
Control
Systems to assimilate information, to identify appropriate
response and to initiate action.
.
Transport Systems
Any means of moving goods: wheelbarrow, conveyor,
fork-lift truck, lorry, train, etc.
B
Leaf Grade
Quality assigned to leaf at any staqe of process, and
method of assignment.
.
Q
Leaf Purchasing
The process of "transferring ownership of
farmer to processing oompany/plant.
tobacco from
Leaf Storage
Method of keeping leaf in transit or as stockpile.
.
Package Size
Minimum lot size and aggregations to maximum transport
load, e.g. Container. Raw materials and package.
o
IO.
Nature of Raw Materials
Materials entering a discrete process (tangled leaf,.
hands, stems, strips, PCL, Cyt=el)°
Nature of Finished Materials
What is supplied tO makina machine.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
11.
-115-
TABLE 2 3 ( contd. )
Quality Criteria
Physical, chomlca~, biological or subjective scorings,
using defined scales.
12.
Conversion Processes
Functions, characteristics, (wastages, temperature,
pressures, noise, effluents}, throughput, dynamic aspects.
13.
14.
Costs
The cost of producing finished materials within specification.
Interest rate, Depreciation, Investment. WastQd effort
or material, consumables.
Tobacco Production
Totals, qualities, response of farmers to opportunities to
produce.
15.
Smokinq Motivation
Why and how of smoking, consumer needs, consumer characteristics.
16.
Energy
Usage, availability.
17.
Investment ~n ~nno~atlon
Purchases in processes and machinery, expenditure on R. & D.,
testing concepts, exploration of new commercial practices.
18.
Government Influences
Laws (general or speclfkc to industry), taxation, licences
to operate (selective or general), export/Import controls,
propaganda, subsidies, employment regulations, registration/
licensing of materials and processes. Financial controls.
19.
Marketlng of Cigarettes
Distribution, end-users, volumes and variants.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
C
O",
-116-
(contd.)
20.
21.
Soc£o-Political Attitudes
To industry, its products, and their uses. Belief in
Smoking and Health information. Self confidence. Memories
of previous reports and events connected with the industry.
To appropriateness of location (environment).
Jobs and Availabilit¥ of Labour
Number, quality and inter-relationshlps of jobs;
of suitable skills.
s upp ly
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
"-,,.,,t
N
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Z
Z
0
0
[.-
Z
TASL~ :~.4
~TPUT nON PPOORAH PIWTA
OoA,NIOD.C. Nldt
07~ 1978
NJI~OIr SllO~Cr - II~IUlK.O.K. , P,O.O,O, • R.M.G.
OATE OIrI~L~E|VINONATPlI - e2 NAR ¥0
OAJA RAI~( e.e TO 3.0
TOTAL IWL~I~IVIIRfICAL) YS R4TiOOUTPUTIItiPUI(HOIIIZONTtLI - BY RANK
zl.eel ...... I ........ ! .........
I ........... I ............. I
ICOST OATA .I¢OIWERS[ON PNOC IMTun[ rlH nATaL
IL[IUr PUItCIIAS( |NATUIII~ A&V IM|lq. I
I I ICONTROL
IQUm.IT¥ CI~ITERIA • I I
! I !
! I !
l I I
! I I
li,131 .... "-'-----'---"--'-'1----'--------'--'-----!--'---'--'u--" .....
i ...... "'~~1 ..... I
ITRIINSPOIflT "IMAmKET|NG ITOIIACCO pIIIOOUCI I
ISOCIO-PIITI¢ I
! I IlHV(SlllffT INNOV. I
IGOVI Iflf£RV(NTN I
I I i I
1LEM" G~AOE i
1 l l I
I I
T, 111 ....... --'. ---" I .... I ...... I
...... I ....... I
ILEAT SIOIIMW. "llNlll6T I
IPACKIK Sill ISnm~l HOIIVATIH I
IJOIS,LAtOIJt IPLANI LOC, ATIOff I
llNST~rATIINt I i
I I I
l I I
l I I
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l,ll S.ee 9,el If, l|
17,0| |I,oi
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OUTPUT FRDN pMO6RM P[NTA
+(
_(
T~LE 25
I01'AL RANK
im.u(Nc~'s
6,RolmO O,C, #aA OT, 1070
NAH[ 01P SUD.J[CT " M[iN KoD,K* • P,D*O*0* *a,N,I,
DATE OF I~C(IVINOMATRIX " OZ NAil 7|
DATA DANGle+ 0,0 TO 3.0
STATISTICS ON |MrI.U(MC[ MATRIX
(1WI(QGV S3.02 |.De
PACKAO( SlZ( 66,52 2.|0
IHS1UlJllAItfirATiUM 7~.SB 3.O|
JIN$,LAIBOUR |4.1| 4.00
SHIttl6 MIIVATIIII |4,3S s.eo
L(~F ~|DkiK I§.§1 t.00
PLANT LDCA||ON |9,2| 7,00
SOCIO-I~I.III¢ +3,11 hoe
L(AF (~aK17.11 5.00
Tn*ll+l~;tl IN,69 II.OO
lDflACCO I'ROOUCI IIZ.I3 II.00
MI.I,~(IlkG IIS,26 12,10
INvtsrllRr IRIIOV, 100,45 13,01
GOVT lfl|fPV(NIN |01,7S J4el;
L(AF PQRCHAS( IZI,+S Is,el
COIW[HSIOM PHOC lZ200+ 16.11
COS.I OAIA 141.11 17.00
OIMLIIY ClIIIE+IA I02,19 II,II
COIIIAIMI. 142,17 19ell'
NIIUH( FIH RA;M. 146,00 10,00
NAIUHI~ RAM HAIR. IS2,1S 21.01
VAR IAIHJ[ HAM[
** - ILL Z[RO EL[~IIS FOR Tills V~qlML[
AV(RAD(
MOIt-z[aO
INPUTS
RAI~
E~qtAT I,~4 lot|
PACKAGE SIZEi.OT 2*0|
SOCIO-POLIIlC IoQ9 ),el
L[AF GRAD[ 2,20 4,@1
IOVl INIEDVF.MIN 2,20 S,|l
SHItNO NOIIVAIIOH 2.31 6.01
INSIHUIS[HTITION 2,S0 7.il
LIAr S|OfliG[ Z,S4 I.OI
JOMS•LAIWLHIZ,ST 9,ii
PLANT LOCATION 2,ST 10.00
INV(S;NMI IHNOV, Z,SO !1,11
TOBACCO PDOOUCT 2,6Z 12.01
L(At" PUItCHASA[ Z,89 I$.00
CONVEH$ION PROC 3,28 14.11
TRAh$P09T 3,20 IS,II
MAR~tTIHO 3,40 16.tl
MA[UIt[ HAM MATRL 3,41 IP,il
OUALITY ~ll[PlA 3,4Z li, OO
¢0HlR0t 3*IS 19,11
NAIUI~L FIN MATDL 3,96 ~l,II
COST OATA 4+22 21el0
Dee . JILL ZERO |LEI~[N!S IN INPUT AND/0R OUTPUT FOil THIS YARIAIN.E
I
I--'
I--'
c+..l
I
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VAnlAet.[ NAn[
(t~[RGY
JOIIS*LAUO(JII
PACKAG( All[
THAIg~POlllr
t.(Al" 51ORA6(
lttSTI;UI~II|A11041(
TUI)ACCO PIIOIIUCT
NAIdK[ I liNG
|NV(,.%II41q[ laY*
LI[AF GHAU~
SOClO-~m.ll 1C
l~Aml LOCAl lOe
COilvtl4tSlH PilOt
COST OAIA
L[AF pWCNI.~
boil IHT[Rv[NTN
cOIIIIIOL
HAIUI4[ Ir IN Itlllll.
+.~,~m MOItVlltm
UuALi IV CRIIiI41A
NAIUHI~ PAW IqAIRL.
TJU3LE 26
OUTPUT Ir11814 PillOeRAM PINIA
g.m.AtO 0.¢. ~ IT, 1971
MM[ OF SUO~L7 " /I[AH K.O.K. * P.D*Owl. * R.~.6.
Oat[ Of" II[CEl¥1N6 HAllllll " tZ MAR 71
OArA tMllOI[ l*l TO 3.e
StaTISTICS ON INIrLIJ~I~ Nllllll]l"
AVEI~AtE IIAHK VARIaNt..( Nil[
RATIO
IIOPl-ZlLllO OUtPUt/
OUTPUTS INPUT
411,
I.Z8 I.II TnAIOSPOgtT
.51
I*?3 2*el JOIS+I.AIIOUIt
,M~
1,93 3.10 COSl OAlA
.57
Z,oZ *.oo L(~ 5VONA6(
.~r
2.20 So00 (N(AGY
"084
2041 6.00 ¢O~(RSION PNOC
.06
.2,4q T,0l PLAINT LOCATION
093
~,68 O.OI NAHI~[IING
094
2,19 q.OO NAl~[ FIN RAIRL
,~4
Z,11 10.00 TOBACCO PROOUC1
.gS
ZoO| 11005 CONIROl.
.gS
Z.16 I2*lO IHVtS;14NT IMUOV,
1.04
2*9T 13.10 PACKAGE Slf[
1.09
|.~11 14,00 L[AF I'URCHAS[
I,II
3,34 15.00 INSIRUI4EHIATION
I.IZ
3,31 l+.10 Ou~ilY CnlT(+tA
1.19
3,19 IT.l| NAIUH[ flAM HAIHL
|.~4
3,55 I0,00 L[I~ GRAD[
I,~5
3,6Z 1%00 $OCIO.,,,POI.ITI¢
i.34
3*85 2t*ll eOVl INT(RYI[NTIi
1,41
4,Z3 21,10 S#Kfl6 MOTIVATION
!.81
- ALU ZEN [L[~[N|5 FON THIS VARIAIILE
*0" - ALL Ill[NO [LENF.NTS IN |lPUf I~iOlOR OUI?UT IrOR THIS VARIAllL(
IqANl~
1.00
2,le
),It
4,0o
5,o1
5.00
7,10
8000
9,10
IO,l|
IT.el
ll.n
13.01
14.11
15.II
li*Ol
17.10
IO.OO
19.10
21.11
21.10
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4ofiqJv FROu t~AN PINTA
i,R,ANO O,C,
NAN O?, lelO
NAN( OF SUBJ£CT " N£AH K.O,K, * P,O,O,|, * R,Ho4,
DOT[ OF f~C[IVINO NJTR|X - 02 MAN 11
DATA RANGE I.I yO 3.1
NUHflI[RS OF NON-ZFIIO INPUTSIV(RT/CA4.| VS AVCRAS[ |NPUTiHORIZONTAL) - lit RANK
F IGUN£S iN BHACK(|S AH( RANKS OF INPUT INFLU[NC3[$
17,oet ......... ~o-1 ......... I ...........
I .............. I ............... |
ISOCIO-POL|TI¢ f S.Ofl IJOBACCO PNOOUCT
(IZ.OIICOflVERSIONPPOC IJ7.O|ICOSI OAIA t2|.OJ|
I£H[H6¥ I Ioill IJOOS*LAROUN
(|O.IIILEAF PURCflAS[ (14.0)IHAIU~£ RAH #ATI~I|fl.Ail
1 1 IIHV[Sll~tl
lHIqOV,111,OIJ 1 1
I I I
I I I
11.611 .......... I .......... I .............. I
................ I I
IL(AF 6RAK | 6,IIILIK STOIAOt | 9.lII
IINiflSPOR! IJ§.OJlbUikllV CHII[RlAlI6oOII
I igor| IHI[RV(NTN I 7.ill
I INAiUd~ FIN HA|RLI20.OII
I I 1
I lCOXriml. 119.o11
I I I
I I !
6.33l ........ o~'-------I ....... I ........
I ........... I ................. I
IPACKAG( SIll I $,lJI~HIN5 HOIIVAIIOHI 2,O)llq.AH| LOCATION 1 8,OIINARKETIMG
113,011 I
i II~STNUpg(NTAIION I IollI
i I !
I I I
I I I
I I I
1 I I
I .el I ................. I .............. I ............
1 ........ I ............. I
i,AO S.Io 9oll
13,t0 iToOl 21.00
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OUTPUT FROM PIIOmAll PINTA
I.floMO O.C. #M OTp IQTI
N£q| Of SUOJ(CT - ~AH KoDoK. , PeD.Ot|. • A.No6.
BAT( Of' III:C(IVlNO NATHIX " 02 lIAR 7n
..o. --.
DATA IIAPl6( O,.O TO 3.0
NUHHtEIIS W" tiOq-ZLrliO OUTPUTS(V(IITICALI VS AV(RAO( OUTPUTIflOAIZONTALI - BY RANK
Ir|GURIES IN iig&CK(TS AHI[ IIAIIIKS 01r OUTPUT INFLUENCES
111.00 [ ................. .I .............. ! ..............
I ............. I-""-- ........... I
[ "ifOiliCCO PI~OOUCT ( I.OllL(df" CdlAO( (I2,OI|
ICOflTROL Ilk.Oil
I I" IINVESTMNT IHNOV,
I|l,OI I IHAI'UI4( FIN HJlrr~l.lly,O) I
I I 1
I /OUALIIY CRll[lllAlZO.e) I
I I |
I IHATURF. flAd HATRL|21,O| |
I I I
! ! I
12.501 ............. I ,.-,.,..,,.,.o..--.-,..,--.,,... .... I ............
I ......... I ................ !
I(H(Iql¥ ! I,IIIIAARIt(TIHq I 9,0ilSOCIO'POL|TIC
ilI,O)ILEAIr PUItCHAS( 116Dill 1
IJOOSeLAIIO~ ¢ 2,01 | !
|COil DATA I|S,tlI I I
I I I
I(ONVEIISION PIIO¢ li4,lll I
I I I
15OVl INT(IIV(NIN lll.lll I
I I I
I I I
T, ell I ........ I ............. I .... -- ........
I ............. I ..... "" ---'-'--:- ...... l
IIRaNsPUlIT I 4,1111Nslllllil[llTill01l i I,IllPLANT LOCATION
I IP.Oll ISI41(HG t00llVAflOt4II),011
IPACJ~AG[ SIZE ¢ 3,IIILI[AF STHItH[ | g.O)l
I i I
I I I
I I I
I I I
l l I
I I I
I I I
I.SOI .................. I ...... --T ...... I- + = ............
I ........... I ................ I
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VARIABLE NAH(
OUTPUT FROM PROGRAM PINTA
TABLE 29
RAm
.ou-zE~
INPUTS
S.RoAIm O,C, HAR e7,1~g
NAN[ Of SUBJECT -H(AHK,D.K, , P,|,O,|. * A,HeD,
DATE OF ~C(IVlNe mATRIX - 02 mar TO
DATA Rifle[ Ool TO ].1
STATISTICS ON INFLUENCE NAtAIX
SUNf, mOTIVATION I] hoe
INSIPImEmIAIION IS Z.OO
HAmNEIING II 3,00
PACKAGE SiZE 17 4,00
Pt.ANI LOCAIIOfl li 5,O0
OUiLIIT CHIILHIA Ig 9.00
Liar 5|ORAG[ 19 %o0
CI)NIPOL I9 q,%0
II'A,(S~IIAT |9 900|
NAlUkk ~Ifl maiM. 19 q.O0
50~1 INIE~VIENIH 19 0.00
LEaF GRADE 19 9000
(flNV~PblOli PRO¢ 20 JT.OO
Ig|~a(Cd PNOIOUCU 20 ||BOO
LfAF PURCIIA~E20 i7.ee
EiaEflG¥ 20 | 7. DO
IIit) SinAI IWOOV. 20 17.00
CI15| OA|J 21 II.OO
NAIUkt HAY flAlflL ZO 17009
SUCIO-POLIIIC 20 17000
JOBS*LABOUR 20 17,00
** - All, ZERO LL[NENTS IrOll THIS VANIAIL[
VAHIADL[ NAN[
PLMIT LOCATION
$HKNt HOTlVATION
INSIRtA4(NIATION
LEAF STORAGE
TRANSPORT
PACKAGE SIZE
LEAF PURCHASE
COST DA[A
NARKETIN6
SOCIO"POLITI¢
JOiS*LAEOUa
¢O~VEHSlONPIOC
tOVI IN|ERVGHIN
EN(HG~
LEAF c~qM)[
TOBACCO PBNUCV
JNVESlflN| IflNOV*
CON|ROL
NAIUI~( RAY NATAL
NATURE TIN HATNL
OUALITT CRITERIA
mmofi
NO~ZEAO
OUTPUIS
IS
IS
IT
It
• 10
IO
19
19
19
19
19
le
19
20
20
20
20
20
RAH8
I .SO
I,S0
"loSe
3.50
5,so
s,so
lO.bo
le.50
10.si
100so
lOoSe
lOeSS
|loSS
Ji.Si
In.Be
In.Oe
IB,BO
In.oe
ill,Ol
IWoOi
IB.O0
I
I~J
I
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VARIABL[ NAN(
OUTPUT fROM PNOGRAH PIHIA
i
TABLE 30
INPUT RANK
INFLUilIC~S
aoA.ANO O.C. HAlt tT, 1970
NAN[ OF SUBICT " ~[AN K.D.K* • P.P*O*B. • R*N.G,
OAT( OF R[C[IV|NG MATRIX - 02 MAR 71
OAIA RANG[ 0.1 TO 3.0
STATISTICS ON INPLU[HC[ MATRIX
[N[HGY 2|.IT hog
~K~ ~IIVAIION 30.11 2.OO
PACAAG[ SIZ( )I.OO 3.00
Ih~IHUH£HIAIION ~1.61 4olt
50CIO*POL|TE¢ 3qo16 1000
GOYl INTLRV[H|N 43.36 7000
PLANT LOCAIION 41,34 hOO
LELf ,lO~Ar~ 4n.26 q.eo
.LIIOIIAILARI)UII 51,31 ie.eo
II4VIAIHPll IINOlIV, 51,tO 11,00
IO+ACCO PRUflUCI 52.4t 12011
HAw~[lll,O+$4036 i3oOg
L(AF PlPCllAsf. SI,Yl 14,OO
TRWIA*qIRI 6~.3S 15,10
OU,LIIV CAll[AIR 64,$9 16,00
CONVfdSION PRO¢ 6S.52 17,00
NAIUII( ~AV MAIRL il.+i 11,01
CO, InOt. T3,Ig |+*tO
HATUtI[ rIH MAIRL 75,1S Zi.Oi
COS! DI|A 14,31 21,11
ee - ALL r[MO [L[H[HIS FOil TUlS V~qlAIL(
VARIADL[ MAH[ IHIITIILI|
IHFLU[HC[5
RANK
[MERIT , ~4,2S hi|
JOIS*LAIOIM 32oll t.lO
PAt+ROT Sir( 34,72 3,el
TRANSPORT 36.34 4.01
LEaF STONASE 370J2 S,O0 "
IkSIRUM(NTAIIOII 42,13 6,DO
PLAMI LOCATION ~2,81 ?,o1
lOS+COO I'~OUCT 4q,7~ O,Oe
HAHI(||NG SO,gO g,lo
So¢IO*POLITI¢ 53,40 10,00
INY(SlMrif IMMOVo 53,11 11.10
L[AIF ~lRAOq[ S4,27 12,00
SHKIM HOIIVAIION $4021 12.01
CONV(RSION PROC 56.49 14000
¢051DAIA 56.~8 11.11
LtAF PURCiiAS[ i),SS 16,|1
tOVI IHI[RV[NIH 14,39 IToiO
¢ONIROL69,11 li,ii
NAIUItE FIN RATA. 70o94 Jgoil
OU~LIIT GtlVt'RIA 37,10 ~i,01
NAIU~ RAM MA1~L 14o§6 21.10
I
I-'
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I
t]16/ 01
-124-
TABLE 31
DEPRECIATICK~ AND INTEREST RATES
Plant
Ahrensburg
Liverpool &
Southampton
Guelph & Montreal
Louisville &
Macon
Lexington
Aylmer
E.L.T.
inn
Depreciation
% p.a.
i0
7
7
7
i0
7
i0
JBuildings
2.5
2.5
5
2.5
2.5
(7)
iO
iO
8
iO
iO
5
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
r~
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; :
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: i
--Added- Haizer'lal-~o ..
% of Cut Tobacco----i--,-
_In-C_igarett~s ,, !
............ -C
i : "
: I"' I
............ !_.: ....... i... : :
! :
l
w |
• - ......... i ....,I ..............
: • !
,25 : :
..~. :; ..-: . .
FIG...].
IIlS'POR¥ OF CRS+ PCL USAGE
: i
....... ; ................ I.T.L, CANADA ........
... , .... [ ..... :
i !
; i
....... : .............. ; ..... : .....
•, ...... -:-:: ...... i ............ i ....... : . i ....
;-II : I • '
• ! ..... , ....... . ...... ! .... +,i__~_.!_.:__! ....... i
............ I ...... ~ ...... ", ........
e
.......... ! ........
• • . . t
; :
...... " ....... : ....i ...... : ...............
: ; ". !
........... . ............ : ............... : ,..
: i, :
. I
!
: 1 ......": .............;
-.. ~. OIS
++
_': i:: i- .......... ....... - ' + .......
I !. i ; 'i " i ': !T.-
........... : ....... ! .......... -. .... !'.-
~ --:.:--l..;.i.-i ._ ...i ...... + .........
• ::..: i;:.,:::i.:::;. I ; : : : ; : " ! ; :: : ..I -. i : I :" I : +:i .:: : I ": '. . ~
..... ~Lu_~_~_~ ................................................. : ........:
.... i..: ....... -..ILL ...... I I ":..P .... , . , . i
::" "i "'.i: :!:l:'::i ! :. i i + i " • , . : " .:.:,.~.
,v,~'-T'~-'T.:T~.;.7..~;:.'.'--7".':'i""7"i ........ r ....
................ ' ..... " " '
" " . '!+. :: .... I" I "" "1'": .... : " : i
• " , .| ..... : - .
:i-::: 1!:: i :: :i ..~ i i : : A-m-4,~ l: ..... ' '
:;-'.. : . I • I • .I ' It I'm~I : • :
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• i
; "::.~:.i.i::i::.;:..!:ii: ! '::'~1:'; "'I "' ': ! • : •
•
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.... ':' "i :
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• -: .... .: :l-:.::.:~,..:-..-.. !- ~:~i!]. .,. I:, I. "-!
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N
.0
I-
0
Z
:15
,.
!
!
..... I .......... 7-
.... i ..... s
!
-:i ...... ~ .....
;
.... I !
... , .........• ...... , ..................
, i- , • + ": "-:i.1: " ' I
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91 Lg!t,_,cO I , ..... +, I • : ' '
.... :" " "'"1 .... ; .... " '
• :-::!../.. ~ i...-~ :.+. : i: :3 : ~ ;
:~ i:~-:i:~+~:lT:-i--F::-T: i: ...... i
• ."::i.::!"".1.11:~:: !!i...':.: i " ! i. • ; : ;
u2":~--"..._--l.:::::_,u:~._-:l:__.:r._:__¢____.I " ~__:.._; :
"" ' ~'"~ I "?':..I -" ' " ,' " " : "
: . ; o . :
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: ".:- ..:+,.:1:--:.--:!:+-;~:-:,::.~::::1.::,.::1...:.-. • I,.:._.! ..,. . i. .-.
r-- .... 7-K,-!-.+:. :. i.:F"!-I::!: :i. I:!: .!:: + , : ;
i I i :~ " , I • "
:: ...... l..-:i .-J.,.",l ,~...I , i.. ; i. ~ ,
!-i: -., i ~ l--,:-r-i--r--.--! ...... .. ..... i ...... '~ ......
i I '. ! I ~'" ! '---
-126-
FIG. 2
DIAG_I~IS OF PHT.NCIPAL PROCESSES AND FLOWS
. GENERAL
~u Tobacco Fines
Tobacco pplies ~
Warehouse ( ~ Sheet-Maklng Plant
Primary Ma~nufacture
t
Other Supplies -.
T
Dusts
) Fabrication
• .B. WAREHOUSE
Serial EntEy
i s
Parallel/Set es Storage 4----- Planning and Control
Serial withdr awal~
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
w
-127-
FIG. 2 (contd°)
DIAGRAMS OF PRINCIPAL PROCESSES AND FLOWS
C. PRIMARY MANUFACTURE
/
IMeter Inputs I
I
j Preblend and Parallel Feed I
ITransform ccxnpressed fragile tobacco in lumps l
to robust tobacco in continuous flow
--~) Tanq~ed Leaf
Sheet Meter Stri~
Cook for up to 20 minutes at 280°F
I
I
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-128-
FIG. 2 (=on~d.)
DIAG_RAMS OF PRINCIPAL PROCESSES ~ FLOWS
) Foreign Matter to Waste
Soften I
Stem Supply
Condit ion
~Meter I
IStorage, & f~ J
to fabrication
I
Foreign Matter to Waste
x~D
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-129-
FIG. 3
INTERACTION MATRIX
F~om
Factor A
'r Factor B
~ Factor C
Factor A
O
O
3
TO
Factor B ,,I
i
2
0
1
Factor C
i
-2
2
O
B ; C
2
Subjective scores of amount of interaction on a 0 to 3 scale.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
~m
,r,,o
-130-
FIG. 4
WEIGHTING OF SCORES
Influence u 2 s=ore -I
Sc¢~'@
0
1
2
3
Znfluen=e
O
1
3
7
Weighting allaws for the c.haEa=terlsti=m of subje=tive
m=ales, where unit steps in the mcale approximate to •
=onstant ra=io in the effe=t.
%4D
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-131-
FIG. 5
~/4FLUENCE MATRIX
(
I" Factor A
From ~, Factor B
!
Factor C
im
Number of
Non-Zero Inputs
Total Input
Influence
Factor
A
O
O
7
1
7
To
IFactor
B
3
0
1
2
4
IFacto=
C
3
3
O
2
6
NO. of
Non-Zero
O~tputl
2
I
2
Total
Output
Influence
6
3
8
B< ')c
3
"-C
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-132-
r
|.
~~cEs
(io)
[Ii)
(12)
(I) Perspectives on Experience, Boston Consulting Group, 1972.
(2) ~uroforum, 4.4.1978, No. 13, p.4.
(3) The World in Figures, The Dconomist New~a3~rs Lim/tad, 1976.
(4) Project Pyrrho, W.H. Ward, Export Leaf Tobacco Co.,
iOth May, 1976.
(5) W.F.'McClure, A. Ham/d, W.W. Weeks, and T.B. Whittaker,
Tobacco Chemists Research Conference, 1977.
T.M. Long and P.A. Sadler, ibid.
(7) Report on "Dryers for Threshed Tobacco StrAps" by
L.A. R~wall, 5~ Set.ember, 1977.
(8) B.A.T Report No. RD.1453 Restricted, 14th January, 1977o
(9) B.A.T Report No. RD.1353 Restricted, 12th April, 1976.
U.K. Patents 1,O33,674 and 1,083,761.
G.L. Dennis, Chelwood Review, 1977 (1), poS.
J.A. Sharp, O.R. Quarterly 1977, 78, 489-504.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-..I
N
o
l"-
|
Z
Z
-,-,I
0
N
8
0
Z
1 i
m"
N
0
!
Z
Z
>
--I
0
>
N
0
E-
Q
0
Z
~;~f, IChcn~
\
This conflden~lal repor~ is the property of Brltlsh-Amerioan
Toba=co Company Limited, and must not be copied or shown to
unauthorised persons.
A TECHNOLOGICAL FORECAST OF THE
FUTURE OF TOBACCO PROCESSING
RD. 1618 RESTRICTED
16.10.1978
AUTHOR: K.D. Kilburn*
The author would llke to thank all those in B.A.T. Germany,
B.A.T. (U.K. & E.), Brown and Williamson Tobacco Corporation,
Imperial Tobacco Limited, and the Head Office Departments whose
active support and encouragement has made this report possible.
*Group Research & Development Centre
Regent' s Park Road
Southampton
DISTRIBUTION :
Dr. S.J. Green
Dr. K.D. KiLburn
File 38D
Dr. I.W. Hughes
Dr. R.A. Sanford
Mr. R.M. Gibb
Mr. R.G. Niuholls
Herr E. Rittershaus
Dr. C.J.P. de Siqueira
Library
Copy Nos. i-i0, 13, 14
" " Ii
" " 12
" " 15
" " 16, 17
" " 18, 19, 20
" " 21, 22
" " 23, 24, 25
" " 26
" " 27, 28
COPY NO:
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
c..,~
--,-.1
CO
• , ° "% "~ c :. ~
This confidential report is the property of British-Amerlcan
Tobacco Company Limited, and must not be copied or shown to
unauthorised persons.
A TECHNOLOGICAL FORECAST OF T~E
FUTURE OF TOBACCO PROCESSZI~G
RD,1618 RESTRICTED
AUTHOR: K.D. Kilburn*
The author would like to thank all thoae An B.A°T. Germany,
B.A°T. (U.K. & E.), Brown and Williamson Tobacco Corporation,
In~erial Tobacco Limited, and the Head Of Zice Departments whose
active support and encouragement has made this report possible.
*Group Research & Development Centre
Regent's Park Road
Southampton
DISTRIBUTI ~:
Dr. S.J. Green Capy Noa. l-lO
Dr. K.D. Kilburn " " 11
File 38D " " ~2
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
COPY NO:
C~
Contentf LAst
Paqe No.
I
iI
III
Appendix 1
Appendix 4
Tables
Figures
References
Summary
Current Outlook-Product
Future Technology for Current Products
A. Costs
B. Other Factors
i) Raw Material, Leaf Purchase,
and Quality Criteria
li) FinlshedMaterial, Conversion
Process, and Control
Future Technology for Future Products
A.
BI
Cl
Do
Cigarettes Based Essentially on
Tobacco
Cigarettes Containing Materials
Derived from To~cco
1
4
i0
12
19
28
28
31
Cigarettes Containing Pharmacologically-
Active Substances not of Tobacco
Origin 32
Aids Other Than Cigarettes for
Adjusting Personal Performance and
Mood
The Processing of an Asymmetric Interaction
Matrix
34
35
38
42
88
91
125
132
Storage of Leaf as a Process
A Discussion of Factors Influencing the
Processing of Tobacco
Tobacco Conditioning and Microbial Growth
~D
~D
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
SUMMARY
The purchase, stabilisation0 and preparation of cut
tobacco for filli~g cigarettes has been dominated by
interpersonal and commercial accommodatlons, interspersed
by technological easements. The result is a mature low-
cost system with considerable ability to withstand sudden
change.
Orthodox process develo~nent will continue to be a
profitable activity, but by looking outside the confines
of individual stages in the process, there are indications
that a stepwlse redistribution of activities within the
chain between auction and making machine could provide
useful improvements in quality assurance within and between
seasons, and could reduce the cost impact of brand
proliferation. The progress sequence is not critical from
a technical point of view, but the culmination of 15-20
years develol~nent might be that the GLT plants would
supply closely c~trolled grades of cut tobacco, and
primary department would bland ~"ld modify cut tobacco in
a small machine feeding a group of makers with one or more
blends. At best, o~ratin~ im~roveenents m/ght increase
the profits of Tobacco Division by iO~, and increase
responsiveness to a commercial challenge.
A more adventurous approach that mlght double the
profitability fr~n cigarettes over a 20 year period would
be to design both cigarettes and smokin~ materials to
achieve a more efficient conversion of tobacco to smoke,
and thereby to reduce the size and cost of tobacco
purchases.
Several technol~ical developments could be con
to both approaches. Thus the future ks seen to lie with
purposeful evolution, not revolution.
tJ~
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-I-
I ° CURRENT OUTLOOK : PRODUCT
Tobacco is unique. It is the only ~r of the plant
kingdom with the two attributes of being used k~ inhaling
the combustion products, and of being generally accepted by
many different societies and races.
When put into a cigarette, tobacco creates a pleuant
toy that smells good, feels good, and burns attra~ivelyT
when inhaled, its smoke creates sensations that are
satisfying through interactions with, and ~odificatio~ of
several physiological systems. The psychological outcome
i8 a willingness to repeat the experience.
By any standards this is a complex system, and no one
really knows how it works. The tobacco industry has grown
up on the fact that it does work and, in the main, progress
has been confined to eliminating dissatisfactions with
methods of presentation and to masking or ellminating unwanted
side effects. Positive contributions, such as sugar casing
Burley or adding menthol or cloves, have ~en few and far between.
Tobacco smoking ks a sturdy habit. High taxation
does not kill it, import restrictions lead city dwellers
to attempt growing it, "To Smoking" notices cause people to
go oun of doors on a cold wet night to have a =iga=ette.
Obviously the smoking habit will not die easily or
quickly. Equally obviously, there are a number of influences
which could weaken the econcsnic strength of the tobacco
industry.
So let us go back to the fundamental fact of the industry:•
its customers cannot take fro~ a cigarette what is not already
there to be distilled from it, or not latently there to be
~eated during the combustion pr~ess. I~noring develolRnents
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-2-
such as flavoured filters or tips, this means that the ~noking
material controls what is available.
Thus the key question to.ask'when considering the future
of tobacco processing is "What kinds of smoking material are
the 31rocesslng facilities required to produce"?
If the answer is "cut tobacco lamina and pr~essed stm,
differentiated by input tobaccos and variations in the cooking
processes", then the purpose of "thin forecast in largely
constrained to extrapolation of known positions. The reason
for believing that this answer is inadequate, lies in a
consideration of the costs implied in accepting it.
In the 1950's it was not uncommon for a cigarette to
de%iver 35 m~ of total particulate matter (TPM) and 2 mg
of nicotine. Today we use 10% less tobacco in cigarettes
delivering one-third of the smoke, and that sector oft he
market is growing rapidly. If we could design cigarettes
of the same efficiency as those of twenty years ago, we
could cut our tobacco purchases for those cigarettes by
two-thirds.
In other words, current practice continued into the
1980's could be "wasting" between a half and two-thlrds of
the tobacco purchased, which at current prices would
represent a world-wlde loss of ao~e $6OOm/llion. Of
course, not all the loss would be recoverable, but the costs
of modifying product and process should still leave a
considerable nett gain.
Continulng current practice has two other implications
for profitability: production cost and market share. Halving
the best current processing costs might reduce the cost of
cut tobacco at the making machines by 8%. The time required
to achieve that saving could well be in excess of 30 years in
a process that has already been driven well down its
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-3-
learning curve (I). Estimating the cost of loss
of market share is more dependent on subjective
judgement, but some of the risks are plain to see. The
consumer determines what cigarette (if any} he likes,
cultural influences affect the style of produce he feels
he should be seen with, and objective (but not necessarily
relevant) information is supplied to aid his decision
making. In consequence, market volatility ks an ever
present risk, and s~nemanufacturer with a unique strength
may well seek to provoke such volatility. It is obviously
advantageous in the ensuing commercial battle to have a
flexible low cost production system to provide profitable
competing brands. Current practice is unlikely to provide
such a systmn into the. 1980's for the following reasons:
(i} Differentiation of leaf quality is less effective on
many of the world's markets~ (ii) So many of the traditional
design options are already predetermined by league
tables (actual or threatened) and ~ke acceptability.
There is a need to have a greater number of independent
design decisions than of constraints imposed, ~'td that
need in.lies some new approaches in the manufacture of
the ~noking material. For after all, it is that material
which determines what a smoker gets.
The two principal alternatives are to change the
construction of the smoking material, and to use in~redlents
other than tobacco. A third alternative is to do both.
How are we to ensure that consumers get what they want
from am~g these alternatives? The answer must s~relybe to
offer consumers a choice of various products whlch are
perceivably different. Creating successful ~r~ucts will require
an insight into human condition, human need and the
satisfactions of smoking: an insight into the opportunities
of new science and new combinations of te=hnology~ a
---
sensitivity to fashion and trends in social attitudes and
k~haviour7 and the ability to create new processes and
materials.
~.~
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-4-
Within the confines of current products, a technolcx~ical
forecast is independently practicable, but within the more diverse
range of technologically feasible products, a forecast is highly
dependent on assumptions made about society and the consu~er.
The distinction is useful for the purpose of dividing the
present report into simpler areas, but An practice it is
likely that intermediate products will arise to make the
distinction less helpful as "the future" rolls past.
II.
FUTURE TECHNOLOGY FOR CURRENT PRODUCTS
A. COSTS
In the U.K., the contribution of the purchase price of
tobacco to the selling price of cigarettes is about 25%
(if tax elements are deleted). This places tobacco in the
same league as cereals where the ex-farmprice accounts for
20-30% of the retail price of cereal products (2}.
Current smoking products demand the purchase of tobacco,
and the conversion of that natural raw material to a form
suitable for filling cigarettes, with conccunitant movement
from growing area to a cigarette factory, and intermediate
storage to provide security of supply. To support the change
in style, place, and time, B.A.T. injects money.
Where does that money go? In broad terms, if tobacco
costs 7 coins per pound, shedding sand and excess moisture
raises its value to S coins per pound, ~een leaf thremh/ng
costs 1 coin, 8tockhol~ng costs I~ coins, ocean transport
to Europe costs ~ coin, and primary processing costs 1 or 2
coins. In other word8 there is s~nething llke a 70% increase
in cost between the auction floor and the hoppers of the
making machines. (Tables 1 and 2}.
Although open to abuse, excess moisture and sand fall
within the terms of trade and maybe discounted in the price
paid. Stockholding cost in times of inflation may be more
of a "book cost" than a real one, depending on the m~vement
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
........................
-5-
of prices between years. Stockholding at about present levels
is an inevitable part of the cost of staying in business with
conventional products.
The only costs that are largely within company control
are green leaf threshing and primary processing, which on
average represent a quarter of the cost of the cigarette
filling as supplied to the hoppers of the making machines.
Looked at another way, if all GLT and prlmary processing costs
were eliminated in U.S.A., Canada, Germany and U.K., the
contribution to BoA.T's profits would be £63 million or approx-
imately 20% of Tobacco Division profits (£324 million) for 1976.
£63 million represents 0.8 pence of the price of 20
cigarettes. While saving s~ne of this expenditure at the
cost of reducing market share could be false economy, the
possibilities of saving merit serious attention. However,
the expenditure of £63 million on activities associated
with purchasing and redrylng tobacco and with its subsequent
"primary" processing cannot be considered in isolation from
the tobacco growing process.
Various elements of the production cost of tobacco have
been culled from studies of farm inputs by I.T.L. in Ontario.
(Table 3). Energy-rich inputs account for 18% of current
costs and, according to some forecasts, energy costs could
be the major item by the end of the century if the socio-
political system acquiesces to a rapidly increasing fuel
cost in the late 1980's and 1990's. However, energy costs
in developed nations amount to between 10-12% of Gross
National Product (3}, hence energy usage in farming is not
that disparate fr~m other usages. Furthermore, its usage in
farming is to some extent optional. Consequently tobacco
costs are not likely to move wildly in relation to other costs
due to this cause.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-6-
The cost of North American nobacco0 after discounting for
general inflation, has been fairly stable in recent years. Even
so, political and social factors appear to be keeping tobacco
prices high in North America. Possibly prices might be reduced
if the manufacturers cease to regard the support of the farm
lobby as important and if large-scale farming operations were
politically acceptable. Low delivery cigarettes may lead to
a reduction in healnh pressures, and hence to a belief that
farmers and manufacturers no longer need the political
support of the inefficient producer. On the other hand,
export quality tobaccos fr~n the lees developed countries
have been increasing in price.
To some extent the technological consequences of large-
scale farming are with us already. In an attempt to reduce
costs, farmers in North America no longer tie flue-cured
tobacco in hands, and tobacco is not graded with the care
of earlier times. B. & W. have greatly simplified their
grading system in recognition of the situation. Intelligent
use of mechanical harvesting and bulk cu=ing on the farms
could be welcomed for its contribution to reducing raw
material costs, without fear for the consequences of lack
of control of cigarette blends, if B.A.T had a satisfactory
mechanical regrading system in its leaf plants. Develolznent
of such a mechanieed system would continue the process of
transferrlng work frown labour intensive farming to the
n~Ee capital intensive factories. (Tobacco production
requires 200 man hours/ton*, while the leaf plants and
primaries togethe~ require 50 man h~ure/ton). The function
=f B.A.T factories could be strongly Influenc~ ~y develol~nents
on the farm, and the change of functian will influence
processing coats.
Very approximately, present processinq costs are
equally divided between the activities of buying and
$tabilielng tobacco for storage, and the activities of
preparing and supplying a blend to the cigarette making
math ine ."
*Throughout this report, the long ton (2,240 l~s) is used.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-7-
For the activities based on the leaf plants, at least
83% of the total cost is accounted for by people costs,
machinery costs and operating expenses. However, the rank
order of those three costs is different at each of the
th=ee plants studied (Aylmer° Lexingt=n, and E.L°T~T data
g~ven in Tables 4-9). The costs per ton of usable tobacco
product are as follows:
Percentage of
Total Cost
People Costs:
, Machinery Costs:
i Operating Expenses:
Total Cost i/Ton:
A¥1mer
51.9
17.9
13.5
183
Lexington
{ Burley )
43.2
7.5
48.7
195
ELT
47.5
ii.i
3O. 1
296
Excluding the heavy costs of casings and flavourings in
B. & W., and in Germany, the average cost of primary processing
in 1977 was £216/ton~ split into people cost (36%), operating
cost (269&), machinery cost (19~), and land/buildings (ii%).
For the factories quoted (Tables IO-16) company average cost
was within 10% of £216/ton, even though individual factory costs
varied between £125 and £335/ton.
With the caveat that seven factories are rather few for
applying statistics, it is nevertheless surprising that people
costs are not linked with hourly wages. Furthermore, costs
are almost unaffected by the nature of the product (blended
or flue-cured} when =asing/flavouring costs are excluded.
The lower cost factories tend to be in newer single
storey buildings with adequate space to deploy machinery, set
in rural or semi-rural surroundings.
I
~.r'1
t.r;
"-...J
CO
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-8-
The most consistent of the contributory costs are the
operating costs (average £57/ton; range £33 to £70/non)
of which wastage accounts from £16 to £35/ton and recoveries
via a sheet making process range from nil to £25/ton of
output. Within the operating cost, energy cost averages
out at 5.2% of total primary cost and much of that energy
can be involved in environmental control for the benefit of
those working in the factory. However, energy for a
reconstitution process cost £82/ton or 22% of process cost
(Table 17).
Less consistent are the people costs and the machinery
costs~ The variations can be explained in two ways:-
i)
the people costs and machinery costs are to some
extent interchangeable (where highcapltal investment
can lead to reduced manning levels): and
ii)
the total people and machinery cost depends on the type
of work allocated to a factory, (where one manufactures
a few high volume brands and another many minor brands
and new launches).
The latter points can be illustrated as follows: take
the across-factory rank order of costs for people and for
machinery (Table 2): if there was true cost interchangeability
the s~n of the two rank orders should be 8 for each factory.
The sums are not all 8, and the higher numbers tend to align
with those factories prxemsing less than seven 51ends. At
the other end of the scale, the Montreal factory with a
rank order sum of 3, processes 21 blen~. Ahrensburg is an
exception to this, b=t one blend accounts for half of its
output.
CD
and
* Machinery costs are allocated costs: aeprec~a~on
interest. Table 31 lists the rates used An the plants quoted%Jn.,j
~O
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-9-
Ahrensburg
Liverpool
Southampton
Montreal
Guelph
Loui svi 1 le
Macon
Across-Factory
Rank Orders
People
Cost
5
3
4
1
7
2
6
Machinery
Cost
1
4
6
2
7
5
3
No. of
Blends
Sum
ii
6 5
7 iO
iO 3
3 21
14 6
7 iO
9 1
Usual Size
of
Operation
{lbs)
IO,OOO
Ii,0OO
11,250
2-30,000
32,000
55,000
The "interchangeability" of labour and capital costs,
and the economies of larger-scale long production runs, are
indicative of a mature technology. If these views on cost
factors are valid and if trends towards a multiplicity of
I~ volume brands continue, the implications for the future
technology of primary processing are obvious.
io
2.
3.
0
o
The capital cost/throughput ratio needs improving.
The labour cost/throughput ratio needs improving.
Economies of scale can only be sought on coaeuon-to--all
input materials.
Blend assembly must involve rapid settling to target
specification.
Product change should not interrupt product flow.
Historically, cost reduction schemes have focussed on
reducing labour input and reducing operating costs, and few
engineers have had the opportunity to design a new plant
involving new machinery. It is less risky to in.rove
layout and labour utilisation, and to introduce new
t~chnologypi~emeal. However, the conservatism in
technology has not been due to lack of ideas or perception°
The sequence of favourable situations likely to lead to
new technology and its logical exploitation will seldom
occur within any single operating company.
tjn
O
C~
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-I0-
B. OTHER FACTORS
Following visits to Canada, Germany and the United States,
twenty factors in addition to cost were identified as influencing
operatlons. The tangled web of the relationships between these
factors had already been shown to have frustrated technical
innovations that had ignored remoter i~lications. Consequently,
a small group of people set out to study the relationships in
some depth. Of 420 possible relationships, 392 have been
observed to be active by people in production and in leaf.
This is a complex system and it is bound to be stiff (in the
mathematical sense). The seven most important factors were
identified as :
I. Nature of the raw material.
2. Nature of the finished material.
3. Connrol.
4. Quallty criteria.
5. Cost data.
6. Conversion process.
7. Leaf purchase.
A description of the study is given in Appendex I: the
relationships and their implications are discussed in Appendix 3.
The main concern of technological forecasting £s with the
L-~nverslcn process since this is a technological activity,
but with the possible exceptions of =cost" and "leaf purchase"
there are technological components in the others too. There
ere more tec~u~ological opti~m now than in former times and
this might be expected to lead to accelerating change. On
the other hand, there are more constraints, from governments,
social prsssuxes, organised labcn~r, and the uncertainties of
energy prlcing: the intensity and pervasiveness of these
~rticular constraints increase the stiffness of the system
and retard change. Increased stiffness coupled with unexploited
c~portunity tends to lead to abrupt change and has ]~een widely
discussed in recent years under the general title of
"catastrophe theory".
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Although the outside world has recently become sensitized to
catastrophic behaviour as a consequence of the interplay of
forces in a complex system, such ~ehaviour is nothing new to
B.A.T: indeed a senior manager in B.A.T has defined its
principal skill as "crisis management", or the ability to
act quickly and surefootedly when the unexpected happens.
Even in the technology of leaf handling and processing,
progress has been spasmodic. Historically, when a new idea
or machine has been introduced it has gone through a period
of development to improve its utility and economic performance,
before it has been overtaken by a new idea or machine. The
machinery is extremely durable, which is appropriate for a
mature technology. The only way to obtain a sense of the
rate of change is to trace the introduction of ideas and
machines.
Prior to 1930 the stems were removed from the lamina
by tearing on a hand-loaded stemming mach£ne. Probably
most of the stem was wasted, certainly this was the
situation for Burley tobaccos. Under the pressures of the
2nd world war, utilisation of Virginia stem was complete (Fig. i)
although cigarette quality suffered. In the 1940's a process
was developed that provided a good quality CRS from Virginia
sty. In the 1950's threshers were developed to break lamina
off the stem, and separation ~y air lift provided a flow of
lamina and a flow of stem. A good feature of that time which
has since been lost is that blending took place continuously
at the beginning of the primary process. Nowadays, large
blen~ng bins are used ahead of the cuttlng process.
In the late 1950'a and 1960's, reconstitutlon processes
were introduced (PCL0 SRT, BATEX, st=. ) which were successful
in reducing tobacco wastage to a very low proportion. In a
continued attempt to minimise tobacco usage, various expansion
processes were introduced to achieve good end stability and
firm packing in cigarettes at a reducad bulk density.
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Development continued until the resultant reduction in the
number of puffs from a cigarette became of concern to marketing.
At the same time the function of separating strum and lamina
was transferred from the primary departments of some of the
cigarette factories to the leaf re-drying plants.
Returning now to consider the seven factors listed above:
cost has already been discussed in II A~ raw material,
leaf purchase, and quality criteria will be discussed first in
one group: and finished material, conversion process and
control, will be discussed second in another group.
B. (i) RAW MATERIAL, LEAF PURCHASE AND QUALITY CRITERIA
The raw materials in the tobacco column largely determine
the smoke generated by the cigarette. Traditionally, individual
grades of tobaccos (graded by geography, variety, p~ant ~osition,
curing, sight, enuell, and feel) are stahillsed and compressed
for storage and transportation. They are blended and processed
prior to cigarette manufacture. Both storage and blending
have the effect of smoothing discontinuities of supplies of
tobaccos, and have the potential for minim/sing the product
variations due to changes in grade quality,
How good is grade quality7 Surprisingly, there is scanty
evidence to answer this. E.L.T. studied (4) some flue-cured
operations in 1975 in connection with the introduction of
blending bins ( Project Pyrrho).
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VARZAT~ON ~ N ZCOTZ~;E CONTENT ~D. SUGAR C~ FOR
FIVE FLUE-CURED GRADES (PROJECT PYRRHO)
AF2--E
(tip)
CF2-E
(tip)
H--W
( Cutter )
E2-E
( Cutter )
Data Type
No. of Tests
Mean Content (%)
c. of v. (%)
No. of Tests
Mean Content (%)
c. of v. (%)
NO. of Tests
Mean Content (%)
c. of v. (%)
No. of Tests
Mean Content (%)
c. of v. (%)
No. of Tests
Mean Content (%)
c. of v. (%)
Without Bin
Alkaloids
Ill I
417
3.30
8.2
428
3 .IO
12.6
370
2.94
9.1
330
2.30
7.0
415
2.87
6.6
JSugar
417
14.62
II.i
428
12.89
17.0
370
16.77
8.5
330
16.58
8.1
415
17.80
8.3
With Bin
Alkalolds
425
3.44
8.1
356
3.14
I0.2
373
2.97
6.7
330
2.29
6.1
405
2.80
4.6
I sugar
425
13.60
9.6
356
12.78
12.1
373
16.60
5.7
330
16.95
7.3
405
18 .oo
5.4
The results mhow an average coefficient of variation of
approximately 10% between cases, therefore it is to be expected
that one case in twenty will contain tobacco having eithe= less
than 80% or more than 120% of the average nicotine or sugar level.
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The use of a blending bin holding about 35 cases reduces the
coefficient of variation by one fifth to approximately 8~.
Canada obtain a coefficient of variation of 5~ for the
nicotine content and 6~ for the sugar content of sequences of
50 hogshead lots. Obvioualy, the variation for individual
hogsheads would be greater than this.
None of the cigarette manufacturing companimm visited
are happy with this situation. B. & W. have a pilot project
to analyse the tobacco in each hogshead, and to plan withdrawals
fr~n stock in order to achieve better control of sano~e deliveries
from a cigarette. I.T.L. (Canada) use blending bins in primary
holding 33,000 ibs of leaf to smooth o~t variability, but at a
cost of having a minimum econanic operation larger than monthly
sales of minor brands. B.A.T. (Germany) exercise strict but
expensive surveillance at all stages: leaf~uylng, leaf
drying, blending and manufacturing. B.AoT (U.K. & E.) have
been studying their operation and assessing how to achieve
improved control at modest cost.
The discussion of this mubject has an 'Alice in Wonderland'
aura surrounding it, although very serious and worrying to those
responsible for company products. Essentially, a situation of
long stockholding and multic~nponent blends has yielded under
financial pressure to reduced stockholding and simpllfiedblends.
Coupled with poorer grading practice at the farm, and pressures
to assure cigarette smoke deliveries, these developments have
forced manufacturing practice to resort to technology that is
known to be usable now.
Mechanical harvesting gives greater mixing of plant position
than good hand-picking. Whether 'ride and pick' machines offer
a worthwhile compromise remalns to be mean. The crucial question
is "Can mechanically aided picking consimtently harvest leaves
that will cure properly together?" After curing, the lots of
tobacco are taken to auction. Some warehouses select that which
may be sold, by refusing tO accept I~ quality offerings.
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In the U.S. a government grader marks lots to show the support
price, while company buyers grade and value lots that may be
quite heterogeneous An quality. Adjacent lots can be mixed
when graders pull out their samples, and a certain amount of
contamination occurs with rubbish and through spillage of
drinks. On receipt at the threshing plant the incoming lots
may be regraded. Leaf in the same grade is collected until
there is sufficient to be worth running through the plant.
Averaging out the grade is aided by blending bins.
Storage of c~ressed tobacco almost certainly ald8 the
production of a more homogeneous grade (Appendix 2). Volatiles,
including nicotine, ought to transfer between adjacent leaves
and lead to a greater local uniformity. The diffusion process
involved is unlikely to be effective at distances greater than
a centimetre and would not improve uniformity where average
composition varies substantially across a =ass. Simultaneous
feeding of various grades onto the primary lines, blending bins
before the cutters, and bins for storage after cutting (e.g.
for mentholated brands} all contribute to the uniformity of
the final product. At best, these measures are very
successful. The level of disquiet about the system as a
whole suggests that the technology is being pushed to its
useful limit.
The Wilson plant at E.L.T. can process 1.8 million pounds
of "green" tobacco in a 20 hour day, although the daily
average is nearer half the maximum. If the average leaf
weighs i~ oas, the throughput is apprc~.imately 20 million
leaves or one leaf every 3.75 milliseconds. This la slow
e~ough to consider the processing of each leaf as an individual
item.
An individual leaf processor (I.L.P.) might (I) identify
the position of stem by X-rays and an image analyser: (2) pick
up the butt with tonga~ (3) pass the leaf under several "--
spectroscopic analysers to measure composition (e.g. nicotine (506)~
and waxes) and to an acoustic analyser to determine thickness t.~
and flexibility: (4) strip the lamina from the stem (as in
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old-fashioned stemming machine) or punch out leaf zones in a
pre-determined pattern to create sub-grades: and (5) direct the
lamina to the appropriate bin for the grade determined in (3).
Handling outght to be far less brutal than An threshers.
Broken pieces of leaf could be winnowed out, and either
classified if large or sent for sheet making if small.
Perhaps 25 I.L.P. 's would have the throughput to match
the-Wilson threshing lines. Drying and packing might
continue as now, although At has been suggested that energy
consumption would be reduced if present apron dryers were
replaced by a modified I.T.M. System (7).
For the purposes of this report the exact layout of an
individual leaf processor is not important: the branching
points, recycling, and decision making are the concern of
a design engineering team. The majority of the technology
already exists. It requires developing, gvaluating, and
assembling, into an economic and effective machine.
If B.A.T had a satisfactory machine for regrading
leaf, mechanical harvesting and bulk curlng on the farms
could be welcomed for their contribution to a reduction of
raw material costs, without accompanying fears for the
quality of cigarette blends. Development of such a
machine would continue the process of transferring work
fr~u farms (200 man hours/ton of tobacco produced) to
factories (50 man hours/ton of tobacco processed). This
example is one of several where future farm practices
could influence factory processes.
What would the impact of such a machine be on people?
The skills of the leaf grader and blender would no__.tt be
made redundant0 if anything, he could e~pect to have better
defined materials on which to exercise those skills, but
the nature of the workload would shift. If the auction
system were to remain as now, the leaf buyer would be
seeking to achieve buying targets against human Lnd
mechanical grading with the opportunity for continuous
and rapid feedback of impersonal results to tune his
Judgement° and increase his confidence. It is possible
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tha~ the I.L.P. could be mounted in truck(s) for follc~ing
the auctions.
Contract growing entails expensive supervision,
"selection" before harvesting, and an acceptance oft he
crop as a whole. When desirable grades are in short
supply, auction at a warehouse also entails acceptance
of tobacco allocated, with little choice possible.
Purchase decisions of the past are represente~by the
stockholding, while current puwchase decisions influence with-
drawals from stock. Improved definition of grades should enable
useful grades to be identified and conserved at minim~n
total cost, since good grading avoids the increase in bulk
when such grades are diluted with readily available
materials.
Thus technology should enable B.A.T to counteract the
tendencies towards poorer grading on the farms in developed
countries due to enhanced labour costs. Even on the farms,
cheap automatic equipment is becoming more widely used to
control flue-curing and, as seen at the I.T.L. experimental
farm, improved versions are possible for reducing both risk
and labour cost.
Thus grading n~my proceed in future as follows:-
GeoqraDhy
(and hence soll
characteristics
and climate)
known generally, possibly
specifically by farm
lim/ted~y agreement between
growers, companies, government
agencies, and seed merchants
Plant Position
known by timing in the season,
and~Y skilled Judg~nent
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Chemical and
Physical Indices
determined ~y I.L.P.
Aroma
subjective judgement on leaf,
and on single grade cigarettes.
For the companies in North America, B. & W. and I.T.L.,
who rely on locally grown tobacco for the bulk of their
tobacco supplies, this scenario could represent their
situation for raw material control. In Europe the picture
is more complicated. The E.E.C. is growing much of its
own tobacco and the quality is said to be improving, even
though bad seasons affect quality adversely, particularly
north of the Alps.
Political factors in Italy, France, and even Germany
could influence the style and quality of leaf, and the
freedom of manufacturers to acquire it in its freshly
cured state. Germany in particular acquires tobacco from the
Soviet block and that tobacco is sullied as cc~upressed
tangled leaf. (E.E.C. duty rates favour the importation
in that form). Suppliers in Asia, Africa, the Near East
and the Far East may not be able to supply leaf other than
in one style and pack size.
Freed~u to import from almost anywhere in the world
encourages a coneaercial opportunimn which takes advantage
of favourable prices, freight rates, or tax structures.
This presupposes a knowledge of how to adapt blend
formulations so that substitutions are undetectable by
the smoker. The extent to which such activities will
be practicable in future depends on influencing suppliers
to avoid certain cultural practices, and to maintain high
standards of grade homogeneity, with or without mechanical
classification by I.L.P.
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B. (ii)
FINISHED MATERIAL, CC~VERSI~ PROCESS, AND CC~TROL
Within the confines of current products, chopped tobacco
(or material that can be treated like tobacco) is ubiquitous.
Casings and flavourings can only be added to the extent that
the tobacco product remains a stable solid.
Differentiation between finishedmatgrials is achieved
by combinations of raw materials and processes; e.g.:-
Tobacco 1
[ i .oo,o ooo1
Including I x Proportions x | Smoking
Stem & ~ [ Materials
Reconst itut ed J
C inlx [Fl v°uri°g I x 1
Even on a very simple view such as this, there are
several thousand possibilities, most of which will be
unacceptable and some will be indistincjulshable.
Historically, certain options have been discarded as
products have been matched to discrete market segments,
and the factories have streamllnedmat~Tial flows.
Within a tobacco type stem has been considered a single
material, leaf grades have been merged, and epecialised
processes have been reduced whenever possible. On the
other hand, there is evidence that those options may need
to be recomsidered: e.g. stem is not uniform in its
contribution to =a=bon monoxide delivery (8), leaf grades
could become more numerous to meet product specifications,
pro~esses (sheet treatments, expansion methods} could
develop in complexity, and be applied to parts of a blend.
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If the latter view is realistic, the traditional simple
primary layout of a few flow lines could become a complex
network of Jobbing stations in the last resort. Present
trends are for many markets to fragment into a multiplicity
of small brands. Perhaps this is an inevitable stage
before the traditional product settles into a reasonably
stable range of new product styles. Thus it could be that
the number of finished materials made in a primary department
will not be very much greater than is experienced now.
On the other hand. the range of individual input
materials and process options is likely to increase as a
consequence of attempts to achieve profitable manufacture
of products acceptable to consumers and to regulatory
agencies.
So what is a process? For the purpose of this report
it is consider~ to be an activity causing a change of
status. It may consume one or more useful ingredients
and generate one or more useful outputs. Su~orting the
process are a series of facilities: time, space, working
capital, capital equipment, labour, energy, recyclable
substances, patents/licences, back-up processes, protection
and renewal. This definition covers the range of "procesees"
fr~n the complete primary department down to a conveyor belt
or a tobacco store.
There Lre only six basic processes:
Useful Useful
ProcesJ Inputs OutPuts
I Transforming 1 1
II Separating 1 > 1
ZII Merging • 1 1
IV Rearrange > 1 > 1
Examples
Move, store, ~ter, cut,
meSsiah/dry, heat/cool,
change shape
Thresh, e~tract, sieve
Blend, case, flavour
Primary department, i.e
cambination of the first
three
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BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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contd.
U~eful Useful
Procels Xnm=ts Outputs
V Creating O 1
VI Destroying 1 O
Waste recovery
To take advantage of
fiscal anomalies
Processes can be operated contlnously or intermittently.
They can handle multiple inputs and outputs ~y ti~e-mli=ing
single channels (series operation) or by usingmultiple
channels (parallel operation). In practice, most primaries
feature all possible aspects, while the GLT plants have
quasi-continuous operation An time-slice mode. Even
allowing for the complexities of series/parallel operation
and the appearance of non-useful products, there are only
a few process choices. The explosion of choices comes
fr~consideringthe control options for time, place,
quantity and state (Table ~). Over a million choices then
appear for each process. When combined with choices of the
sequence of processes the range of choice becks incredibly
large. Yet there is a correspondence with reality in this,
wh~ is done is remarkably simple, but there are many
variants on the h~ of doing it, which leads to a debate
on the merits of alternative system,s of process managemant.
Let us consider these two am3M~:ts separately. The
~.q~ of processes used in B. & W., B.A.T. Germany,
B.A.To (U.K. & E.)0 and I.T.L. can be summ~arised in a flow
dla~ram ( Fig. 2 )0 If the processes are ¢onmldered as
exaxEples of a=tivltles, the activities can be listed
even moEehriefly:-
Raw Material Stockholdlng
Direct Materials to Process Stream
Sauce and/or Cook Gently
Blend Within/Across S~reams
Fine-Tune Properties
Supply to Fabrication
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There seems to be no reason to tamper with so eminently
sensible a set of activities for producing conventional
products. That £s not to say that the manner of implementing
activities {the how) will remain unchanged.
Raw material stockholding traditionally ensures
continuity of supply between crop years, and smoothes the
transitions of quality between crops. It also contributes
to the quality of certain grades. Yet after months of
storage the materials pass through primary department in a
few hours. Can the dead time of storage be put to better
use? (For example, by gas processing in large tanks, or
raising moisture content with cool ~ist air). Sl~w pr~esses
are unpopular because their testing is prolonged and the
working capital requirement tends to be high. Since the
tobacco industry has to accept the high cost of stockholding,
there may be advantages in moving counter to the practice
in other industries. Stock control and withdrawal patterns
will become more complicated as more constraints are applied
to the cigarette market. There may be a need to re-classify
received materials by chemical analysis at entry to s
warehouse and prior to allocating storage areas.
At first sight, directing raw materials to a process
stream appears to be a trivial activity, and largely in the
realm of how things are done. Nevertheless, it is worth
pa~ing to consider the ~atter. Implicit in this activity
is an assumption that materials are, and will continue to
be, sufficiently different to require separate treatments°
Furthermore present primaries are constructed in the belief
that all materials require treatment. Neither of these
assumptions is inevitably correct. If all st~nwere supplied
in sheet form, one processing line could suffice for Virginia
cigarettes. If sheet were unreeled straight into the cutters,
no pre-treatment ~%ight be necessary. Again, if the leaf
plants provided cut tobacco, pr~essing might be limited
to a single line.
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There are several reasons for adding casings and
flavourings to tobacco. At the lowest level, unacceptable
tobaccos can be made tolerable. At an intermediate level,
they can create a distinctive cigarette having a long shelf-
life, pleasant pack aroma and good smoke taste. At the
highest level, they are a flexible tool for creating
acceptable smokes within the constraints of league tables
and legislative requirements. The technical and commercial
sophisticatAon needed to use them effectively Ancreases
with level.
Casings~nd flavourings are principally used on blended
cigarettes~ B. & W. spend between £66 and £95 on thean for
each ton of tobacco supplied to fabrication. B.A.T. Germany
spend between £37 and £50 on some blends. It could be that
the traditional flue-cured markets will find flavourings
essential to the formulation of acceptable low delivery
brands, and it is possible that new speciality substances
will be involved. Many flavours are effective at 50
micrograms per cigarette and, at this concentration, prices of
about £2 per gr~m could be paid without exceedLing current
B. & W. expenditure= Many exotic subst&nces cost less,
although some current ingredients attain this price. Thus
it is likely that newer flavours will be more expensive,
but that the cost will not reach the total of other
processing costs in primary. On the other hand, a non-
tobacco flavoured cigarette is unlikely to be economic.
Synthetic and natural flavours have yet to match the
character and balance inherent in tobacco smoke, and their
cc~r~ounding and control as major components of smoke
would be costly.
Where casings and flavourlngs are added to tobacco they
contribute An one or more of three main ways: influencing
the physical condition of cigarettes, influencing pack aroma
and tobacco chemistry, and influencing the combustion
process (~nd hence smoke aroma and smoke chamistry).
BAT Co~ LTD - MINNESO. _TA_TOBACC_O_ L_ITIG.ATION
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The cooking process may be concerned with optimising the
effectiveness of the casing (dip leaf dryer), or it may be
concerned with improving the uniformity of the final blend
(relocation of volatile or soluble components). When
casings and flavourings are not used (straight Virginia
and Virginia-Oriental blends} the cooking process is
generally ~nitted, and tobacco temperatures are minlm/sed.
1~o~ever, there are occasions where such tobaccos are cooked
to develop plu~-llke aromas, which are attractive in pipe
and chewing tobaccos. Nevertheless, • tobacco dryer
can be considered to have "cooking" properties. Current
dryer practices tend towards max~nising the drying rate
~y adjusting heat input and ambient humidity to keep surface
po~'es Open. A~ initial ~LTylng rate that :J.m tOO fast leads
to surface shrlnkagm and reduction in m~:~;uent dx~ring rate
because of a reduced surface permeability. When tobacco is
dried, the flow of water vapour sweeps other volatile matter
from tobacco, hence top-dressing flavours are added as late
as possible in the process.
The predominant method of ad~ing sauces is spraying
into a cylinder. If sheet materials could be fed from a
reel into a cutter, printing techniques could be used to
achieve an accurate uniform loac'l.ing Of a sauce onto the
sheet. This might be a preferred means of addLing the
more delicate materials such as tobacco extracts.
Extraction of tobacco may become an accept~le function
of primary processing if non-lnflammable solvents are used,
such as the liquid carbon ~ioxide in the DIET ~ion
process.
BlendLir~is an activity that mhould take place near
the time the cigLTette is made, because ~ then the stock
position and market situation are known as well as they
can be. If blending takes place in the leaf processing
plants both the characteristics of future crops and of
future markets have to be predicted. The cost of getting
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BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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it wrong could be high, and the cost is unnecessary. The
same argument does not apply to cutting, and the crucial
question is: "Can cut tobacco be blended efficiently to
give a good cigarette?" Cut tobacco in cigarette form
has approximately the same bulk density as strips, so
storage and transport costs would be similar. Storage
and transport of cut tobacco is known to have been
satisfactory from Ahrensburg into the German Democratic
Republic, and from Liverpool into West Africa, thus the
blending of cut tobacco is the uncertain step. Existing
technology (e.g. multiple winnowing, or partially fluidised
beds) is likely to be succssful, after an "application
development" phase.
Thus the discussion of processes has to move on to
the how of using them.
What would be the consequences of cut tobacco blending.
Firstly, it becomes possible to co.ten.late a "primary
machine" to feed a small group of makers with one or more
blends continuously. (Production Services, Mill~ank, have
suggested that such a development is desirable in principle).
Secondly, the cutting of tobacco might be transferred to
the leaf plants where the throughputs would justify a large
bank of cunters (insurance against machine failure).
Thirdly, the traditional sequence of blending/processlng/
blending/cutting might be changed.
A previous technological forecast (9) discussed the
economic advantages of a highly automated network of
machines to assemble and pack cigarettes. Such a network
would consume between one and two tons of tobacco an hour
which is a similar rate to that produced by many traditional
primary departments. What advantage could there be in having
a primary machine of equivalent capacity? If the machine
were to be fed with strips and stem, the answer will probably
be: no advantage. If the machine were fed with grades
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BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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(or elementary blends) of cut tobacco the answer could
be: grean advantage. Tobacco particles ex cutters weigh
a milligram or less, and have • high surface •red to
volume ratio. Deposition of casing up to 20~ loading
might require 3 seconds, assuming a spray of 20 micron
diameter droplets (each weighing 4 x iO-- gram) st a
concentration of 104 droplets/~ and linear relative
flow of 1 metre/second. Diffusion of casing into p•rtlcle
might require i0 seconds, and microwave drying a little
while longer. Perhaps the minimum process time is
approximately half a minute, and the quantlty of tobacco
in process is approximately iO kg for a flow of one ton
per hour. Time and quantity might he doubled if • Laval
nozzle can be used as an expansion and filling power
impro've~x'nent device, it ought to be possible to dispense
with current-style blending bins if the inputs are homogeneous*,
and to achieve a transit time through the primary machine
similar to that being achieved through linked makers and
packers*."
Thus • possible process system for 1986-1990 might
be--.
Leaf Plants
/
Grade Bins (Stem)
(merged?)
Condition~ Roll, Cut
Containers of CRS
Individual Leaf Processors Grade Bi~s (Lamina)
iOne Grade at • Time
Condition and Cut
1
Containers of Cut Tobacco
(Single Grades)
Transport and Storage
t~
I kq of cut tobacco contains more particles than a
15,000kg blending bin.
Similar transit times would aid system control, and would
minimise the scavenge time between blend changes.
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Primary Dep~tments Simultaneous Pneumatic Feed Fr~n
Containers of Cut Tobacco
Casings ~ Primary Machine ----~Waste to Sheet Manufacture
Fabricat ion
Many variants can be envisaged:- cutting might be
retained in primary department, strip blending may be
preferred for some or all blend components, the timing of
on-lAne stockholding of ready material is optional (at
entry, sub-blends, finished material), the exploiting of
the storage period to modify or prepare tobacco could be
explored, subject to the constraints of mould growth
[Appendix 4 ). The number of variants allows the ste~7~/se
introduction of new developments without major disruptions
of production capacity. Nevertheless spontaneous
developments are unlikely to fit together efficient
and proper management of change will be essential to
continued cost control.
How can such a family of development goals be judged?
A list of ten criteria and factors associated with them
is given in Table 19. Those with greater experience of
operations could probably add to this list.
Only modest gains can be expected for seven of the
ten criteria listed, but controllability and flexibility
can be expected to improve ~reatly to gave a ~mnoother
flow of production and a readier response to market
opportunities (criteria 7, 8, and 9). Those are Just
the areas of greatest weakness postulated from the cost
data of present factories (page g).
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III.
FUTURE TECHNOLOGY FOR FUTURE PRODUCTS
Ao CIGARETTES BASED ESSENTIALLY ON TOBACCO
Those readers familiar with currently available processes
are probably wondering why some of those processes have been
overlooked in the previous section. The reason is cost.
Table 20 contains a list of process coats culled from
various sources. All the processes are partial in that they
are responsible for only part of the converalon of tobacco
in an auction warehouse to tobacco ready to fill a cigarette.
Yet several of these processes cost approximately the same
as the sum of the costs in GLT and in primary.
On the basis of the evidence available, it is very
unlikely that other processes will undercut the costs of
present systems to any major extent when those systems
can be used for large-scale uninterrupted production.
Of course, there will be developments and in~rovements*,
but costs are unlikely to fall very markedly.
However, that does no__,~tmean that new or modified
processes cannot be highly profitable or advantageous in
other ways:
im
PCL and PRT processes are examples of u3x/rading the
value of low cost or waste materials, and the profit
can be calculated:
Profit -- "Coat of ecluivalentI _ fProceas cost and 1
tobacco filling ) I raw materials cost)
e
A similar type of calculation applies to expansion
processes where the tobacco displaced is more valuable
than the coat of achieving expansion.
A
* e.g.X.T.L, have ~uoted an annual ROX of 335% on a shag
weighing machine.
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~jcr faCtO=s in assessing 8uc~ pr~:esees are firstly
in valuing the material being displaced (cheaper filler
grades, expensive flavour grades or blend average cost),
and secondly in dete~nining the way taxation is levied on
raw, part-~rocessed or flnishedmaterials.
The benefits of sheet making and of filling power
improvement have not been fully exploited. Low level
usages of sheet or expanded tobacco =a~ give an economic
return. High level usages create difficulties:- taste,
ends stability, coal drop out, fewer puffs~ and all
because these materials are used within the straight-
jacket of conventional processing.
Primary department produces cut tobacco, sectary
department wraps rut tobacco, and thus it shall be.
Or will it?
There is no problem in achieving high filling power
if production facilities are product oriented. Sheet
materials have a natural springiness that could be explolted
by I~aper folding technlques: they can be printed to give
general or localised concentrations of casings and flevcn:ringe:
they can be laminated: they can suI~port particles of tobacco
(wh/ch might be of the irreplaceable quality grades); they
=an be porous or perforated. All of which could confer
totally new design options for creating cigarette hran~s to
cc©usumer and l~isletive neecEg. These options will
surely be needed, as the demands on cigarette perfarmance
exceed the number and range of adjustable parameters now
avallable.
Fouz per Gent of the cigarette r~ by welght is the
oigarette pa~, yet it exercises a~rofound~ontrol of the
smoke Ilr~uc~. It determlneswhere a~dwhen the air enters
the h~ning cigarette.
Likewise sheet structures inside an outer wrapper (or
maybe no WEAVE) CO.LId influence the flow of air inside
the cigarette to influence the amount of ~oke prcx~uced
and where it goes.
OO
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Intrinsically, the filling power of the structure
could be very high and hence the earlier statement that
this is no problem. In the short-term, tobacco expansion
is profitable: in the long-term it ought to be irrelevant
except as an aid to delivery control.
For the moment, let us assume that the ultra low
delivery cigarette is an aberration, and the market settles
down to TP~4 deliveries of 5-13mg. Given the efficiencies
of the cigarettes of the 1950's, the future cigarette will
require 250-35On~ tobacco. Unfortunately, conventional
sized cigarettes at this weight would burn differently
if they were to work at all. There is insufficient fuel
in them to sustain heat losses. Approximately 6OOmg is
necessary for this alone. Thus there As roam for a non-
conventional low cost fuel as a tobacco supplement (perhaps
derived from tobacco stalk or woodpulp).
Unfortunately the Bmoke taste can be terrible, but as
an alternative to upgrading the taste, why not m/nlmlse
the contribution of the fuel to taste by using sheet
structures to channel the smoke?
Thus the cigarette of the 1990's might have a strongly
ventilated tip to draw little smoke through the rod. The
~noke that is drawn through the rod might be generated
mainly from orthodox high quality cut tobacco in channels
of tobacco-based sheet. The smoulder peric~mightbe
sustained by carefully cited fuel materials.
The inherent flexibility An such an approach should
enable future pressures on the Cc~pany to be absorbed
more easily than by following traditional practice.
The fuel and, to s lesser extent, the tobacco sheet
are amenable to chemical modification. Selection of the
tobacco fraction to be used as cut tobacco and as
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manufactured material gives the designer considerable
options. Much of the apparently abortive effort devoted
to the development of tobacco substitutes in the 1960's
and early 1970's, and some of the (so far) unsuccessful
attempts to revolutionise tobacco production methods, or
tobacco plant utilisation, could be reconsidered for the
contribution they could make to the new cigarette designs.
The contribution of reduction in product weight and
reduction in the tobacco content of that weight would
allow an increased margin for more sophisticated processes,
as well as increasing the range oE materlal purchasing
options.
Either conventional cigarettes or those suggested
above could be mc~ified subst~tially to give mmoke that
~ears little resemblance to TPM as we know it.
A very early example was "Ariel" (iO), a device for
producing an aerosol of nicotine and largely innocuous
materials. The smoke was rather unattractive and the
device was not fully developed.
Extraction of tobacco changes the smoke, addition
of humectants alters both chemical and physical characteristics
of the smoke. Smokes have been produced where the smoke
~Lroplets contain suspended solids, where they are emulsicma,
or where they c~tain an inner liquid core. A major aim of
such studies is to control the transfer of com1~nents from
mmoke to the human system. If the smoke droplets are
largely of other than tobacco origin what relevance do
league tables possess? Will they'decrease in importance
technically or socially?
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Tobacco extracts are used as flavour enhancers: if this
goes to the extreme ~nd nicotine levels are substantially
modified will these activities attract detrimental legislation?
The production cost economics of this sort of approach look
generally unfavourable in conventional cigarettes but could
be favourable in channelled cigarettes. However, both
situations are taxation-sensitive.
Co
CIGARETTES CONTAINING PHARMACOLOGICALLY-ACTIVE
~T~-g~-SP-~5~5-5~i~ ..............
Three classes of substance may be identified:
substances of natural origin, substances closely related
to active c~npoun~ in tobacco, synthetic materials.
Substances of natural origin include raw materials
and their isolated active ingredients. Herbal cigarettes
have been used as folk remedies, and a recent example is
the Chinese claim for a relief for bronchitis, where
cigarettes contain physolaniawhose active principle is
hyoscyamine. Similarly, Bulgarian Atrotab cigarettes
contained atropine. Marijuana is an obvious exile, and
a recent television news item quoted the U.S. Coastg~tard
as having seiz~material worth five billio~ dollars on
the illicit market. Technically, such a material would
be easy to handle but legal and ethical considerations
are paramount °
Substances closely related to active compounds in
tobacco could include analogues of the nicotine alkaloids.
It is conceivable that substances present in flavours
have a pharmacological action. WhAle G.R. & D.C. has
s~ne "connecting research" in hand, the cQmmerci~l use
of such substances would have to overcome legal,
political and social resist~ces.
Synthetic substances are a potential threat to the
industry, particularly if they are marketed illegally.
Analgesics of the morphine type (e.g. etorphine) ~re known
that are effective in doses as low as one microgram in
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five hours, that is, they are i0,OOO times as potent as
morphine itself. Doses for a month could be hidden in
the gum of a postage stamp. If euphorics of similar
potency become available, is it likely that the tobacco
industry will be invited to become their distributors,
and if invited will it wish to accept? They could take
league tables into the one-tenth milligram delivery
range :
Are new euphorics or pleasure-giving substances
likely to be developed, and if so, by whom?
The pharmaceutical industry has three main lines of
innovation: extension of chemical structures known to
be effective, identification of useful structures in
natural materials, and synthesis of new structures.
After a period of rapid expansion the industry faces a
situation where many of the major diseases and hence
main sales outlets are fairly well supplied, treatment
of the minor diseases is unlikely to pay for develol3nant
of the drug, partly because regulatory and legislative
requirements and product liability are increasing the
cost of development. However, mental health is of
incrsasin~ concern to the industrially advanced nations
and efforts are being made to improve treatment,
including by drug develolmnent. It is possible that
compounds synthesised to serve this end may have
properties attractive to a number of healthy people.
The pharmaceutical companies are not unaware of the
potential market, but with the few drugs n~t under
medical supervision bBing further reduced ~y a risk-
conscious society, the method of distribution would
be uncertain. The chances of developing a successful
(effective and acceptable) social drug are very low:
only the prospect of medically-viable products being
produced en route is likely to ~ustify the research and
development costs. For a tobacco company this would
be a very high cost/high =isk project.
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Do
AIDS OTHER THAN CIGARETTES FOR ADJUSTING PERSONAL
The principal existing aids are social, psychological,
food and drink, religious and n~dical. Commercial aspects
include refreshment, entertainment, s~rts and leisure,
advertising, publishing, education, some =rganised religious
activities, and mamemedical activities.
The latter include medical electronics, from
"pacemakers" to control heart rate to u-wave feedback
systenm of brain rhythms to ntinimlse dependence on
tranquillisers and other drugs. Social attitudes have
yet to develop towards an individual seeking electronic
assistance in self-control. Other medical developments
such as those based on modifying genetics, modifying
enzyme systems, or modifyin~dy components should be
monitored but are ~nlikel¥ to influence the market for
tobacco products in the time horizon oE this forecast.
~D
oo
~D
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APPENDIX 1
THE PROCESSING OF AN ASYMMETRIC INTERACTION MATRIX
V..
Following visits to factories in Europe and North America
it was clear that the GLT plants and the primary processing
departments were subject to influence fr~ many dListinct
factors. After att~npting some arbitrary simplifications
the outcome looked unrealistic. Consequently the factors
were examin~ systematically.
Twenty-one factors were identified. The relative
interaction of one factor with each of the others was scored
by D.P. O'Brian, R.M. Gibb and the author, using a O, i, 2, 3
scale. Major differences in indlvldual scoring were discussed
and scores were agreed. (In one or two cases "agreed to
differ", k~cause of circumstances differing between E~rc~e
and North America).
The three matrices were averaged and examined by cluster
analysis, and by a principal components approach. No stable
aggregations emerged, and no reduction in c~lexitywas
possible.
Similarly, no sub-systems ~nerged from application of
the SPIN package developed by the Science Policy Research Unit
at the University of Sussex.
Since no mud-system8 could be ~solatad for analysis and
for predictlon of future Interactive, it was decided that
mama method was needed to identify the most important factors
and to suggest how each factor operated. The method devised
is illustrated in Figures 3, 4 and 5 for a three-factor
matrix. Briefly, the method assumes that interactions are
scored on a power law hasis~ it seeks to determine the
C~
C~
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influence exerned by, and influence received by each factor~
and it lists the nunO~r of factors interacting with each
factor, and the average influence associated with those
interactions.
The averaged data from the three contributors is given
in Table 21, and the influence matrix in Table 22. In terms
of total influence, seven factors* are clearly more important
than the rest. Table 24~ and source data in Tables 25, 26.
Nature of the raw material A
Nature of the finlshed materlal
Control
Quality criteria A
Cost data B
Conversion process B
Leaf purchase A
The driving factors are shown with an "A", and the driven
factors are shown with a "B". The ~ut=ame is p~Thaps what
might have been expected. At the lower levels of influence
(T~ble 24) it ks interesting that m~okin~ motivation, socio-
polltical pressures, and government intervention emerge as
driving forces to which marketing responds. "Jobs ~nd labour"
is also a driven situation. (Unionisation was also classified
as a driven respor'me In an application of this t~hnlque to
a U.K. inter-industry study of the future socio-political
environment of the research manager~ co--ordinated by
Manchester Business School).
Tables 27 and 28 show the influences e~erted on a factor,
and bv a factor respectively. [The numerical data is listed
in Tables 29 and 30). Tables 27 and 28 are useful in
classifying factors as p~rvasive and/or individually powerful.
i
*Definltions are given An Table 23.
CD
CO
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For example, government intervention has a slmilar ranking
for numbers of interactions but it affects more strongly
than it is affected. A~ain the s~io-politlcal pressures
are weakly influenced by many other factors but have a
stronger but less pervasive influence on the other factors
in ~h@ syate~n.
In discussion some weak interactions were identified
as a chain of successive strong interactiOr~o Some progress
was made in identifying these chains with a vigw to creating
a predictive model, basing the model on matrix multiplication
and determining significance from case histories. However
it became clear that the factors used here would requlre
sub-classiflcation, and a groat amount of now data would be
needed. Such a project was beyond the scope of the present
work.
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STORAGE OF LEAF AS A PROCESS
Traditionally, tobacco was stored for a longer time than
is current practice and it was said to mature or improve on
ageing. There are a number of leaf experts who now consider
that only the more valuable flay our grades benefit in a
discernable manner from ageing, which is associated with the
spring "sweat". The latter is an enzymatic or microbial
process that leads to chemical change. Other chemical changes
may be encouraged or inhibited by gases and vapours, the use
of ethylene in curi~ barns is an example of this. There is
disagreement about whether lamina ages more satisfactorily
attached to its stem or not.
New forms of chemical modification during storage will
take many years to develop, because each experimental step
takes many months to complete.
The same is not necessarily true of processes involving
physical change, for the underlying mechanisms are better
understood and process development should be easier. The
principal physical changes are changes in colour and in
shape, and the redistribution of materials within or betweem
leaves. Colour change tends to be a c~nsequence of chemical
reaction rather than a physAcal chan~s An its own right.
Shape change in the storage sltuatlon is usually an undesirable
shattering of particles or crushing of cells.
Redistribution of materials can occur through liquid or
vapour phases. Liquid phase redistribution can occur due to
condensation of water (often with deleterious mould gr~h)
or to pressure (chewing or pipe tobaccos), or by the use of
solvents. Vapour phase redistribution happens naturally.
It is encouraged by heating, and is greatest ~nong substances
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having high vapour pressures. Yet transfer should be iu~Dortant
even for nicotine: the time required to reduce by 90~ the
difference in nicotine content between two leaves pressed
together (O.O1 cm thick and O.O1 cm apart) is calculated to
be one year at 20°C and two days at 50°C. (Data from
RD°1395 Restricted, and a simple mathematical model of the
pr~ess given at the end of this AppandAx).
v~.
If nicotine were unhindered by the restrictions ~sed
by the tobacco substrate, the transfer timss wou.ld becc~
5 days at 20°C end one day at 50°C. Sinoe At is known that
non-ideal solution behaviour can be n~dified by the presence
of mmall quantities of other materials, ~here must exist a
possibility that vapour treatment of tobacco could accelerate
the transfer of nicotine on storage at 20°C to gave a greater
homogeneity of nicotine content amongst leaves in a case.
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A Si~pZ...e Nathematical Model for Vapour Phase ~ansfer
Between Adjacent Leaves
By Fick's first law of diffusion
-dm AD dc (Eq.
2)
dt ~ dx
For infinite plane parallel leaves
dc . K (~- C~) CF4' 3:)
~x x
- Ca y A (/4- 5)
dc ___~
• "" dx " xyA (~ -- "~ ) (mq. 7)
Substituting Rq. 7 into Zq. 2 and roa~ranging
Integrating b~ch sides
Or, for the dlffermntial concentration to decrease h~ 90%
2,~O3 xy
(Eq. iO)
time requlred - KD
tJ~
C~
t~u
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Sv oZu
A J area of leaf
C = concentration of diffusing substance in leaf
(g cm-'J)
c = concentration of diffusing substance in air
gap between leaves (gcm-a)
D
K
diffusion coifficient of |ubstance in air gap
(e.g. for nicotine D = 0.06 =ms s-z )
= partition coefficient of diffusing substance
between leaf and air
m
= mass of diffusing substance per millilitre of
leaf (gcm-a)
t = elepeed time (s)
x = air gap between leaf surfaces (cm)
y = leaf thickness (cm)
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~P~IX 3
A DISCUSSI~ OF FACTORS INFLUENCING THE PROCESSING OF TOBACCO
The construction and processing of the interaction matrix
was dlscu~sed in Appendix i, and the more important factors
have been discussed in the main body of the report, where many
future IDosmibilities were o~itted for the simple reason that
their outcome me~ to have less bearing on the probable
course of developments in GLT and primary processing. For
the make of cQmpleteness, the m~in inputs and outputs on
each factor are disc=seed briefly here. Each section starts
with a llst of the principal input and output factors derived
from Table 21.
PLA~T LOCATION
Interaction
Score
Plant Location
Is Influenced By
2.5 to 3.0
2.0 to 2.5
1,5 to 2.0
G~ern~nt Xnte~ention
Transport
Leaf Storage
Jobs ~d Labour
Soci c~Politi cal
Cost Data
Nature of Raw MateEial
Leaf Pur~ame
Marketing
Tobacco Pr~ucti~
Conversion Process
Plant Location
~ert$ Xnfluence On
,i
G~arn~t Int e~entior
Tr~port
Jobs and Lak~
Cost Data
X~f Storage
Energy
Socio-Politi~l
• , - i
m
*That is, plants tend to use traditional pmckages for which they,
the supply and the handling services, are equipped to use.
Naive of Raw Mat~iel
Package Size*
Leaf Purchase
Marketing
-~
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~en a new plant is being considered, governments intervene
by tax concessions, development grants, in~ort licences and land
use approvals. Once the plant is built and has been in use for
some time the implicit contractual relationship is re-priced:
indirectly by controls or taxes on materials and services,
tariffs, other trade barriers, employee legislation, exchange
controls, or directly by local taxation and specific good
neighbour legislation. The socio-politAcal system reacts
according to the weighting it places on various forms of benefit,
and as it learns more of the disadvantage of an industrial
development. Jobs and labour considerations depend on previous
experience, on future expectations, on the nature of em~loyee/
employer mythology, on the rigidity of organisational structures
(formal and informal)~ and above all on the existence of
satisfactory alternatives for workers. The tendency to regard
a job in a given place as a negotiable item of industrial
property is just one indication that, in Europe at least,
changes in plant location are going to becG~e increasingly
expensive. A flexible production system may demand a r~uced
commitment to immobile workers.
Cheap and easy transport of goods in and out is obviously
desirable and a mixed system (road, rail, water) may give a
lower risk of disruption. Most of the factories in Zurope and
North America are well placed on the supply and distribution
arteries of their business. Leaf storage enters into these
considerations as it is essentially a buffer stock in a da~and
network. Easy access and frequent replenishment is obviously
desirable. TEarusport costs and the natuxe of the raw material
can be important for plant location {especially for GLT) as
the raw material is a source in the transport network. Some
raw materials may be scarce or expensive An sc~me localities,
but this iS not usually a serious difficulty.
Leaf purchase, or the process of transferring ownership,
has had little influence on plank location to date but if
large-scale farming is introduced and auctlons ~ome less
significant, redried tangled leaf may enter the transaction
instead of green leaf. Most people in the business consider
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this unlikely but the situation could change if small cylinder
driers proved to be cQmpetltive with the big Procuor and
Schwartz type. The nature of the process in "GLT" plants, and
the location might then change. Effective marketing involves
responsiveness to demand, and with cost pressures to mlnim/se
goods in transit may influence choice of plant location when
he. manufacturing facilities are needed.
INSTRUMENTATION
Interaction
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.O
Instrumentation
Is Influenced By
Control
Investment in Innovation
Nature of Raw Material
Nature of Finished
Material
Quality Criteria
Conversion Process
Cost Data
Instrumentation
Exerts Influence On
Control
Quallty Criteria
Conversion Process
Nature of Finished
Material
Comt Data
Investment in Innovation
Jobs and Labour
Leaf Grade
Leaf Grade
Defining instrumentation as impersonal measurement does
not imply that what can be measured Is necessarily relevant.
Nevertheless, instrumentation is an increasingly important
feature of the tobacco business, and is intimately tied to
control. Instrummnns in qDaal£ty control laboratories are
being supplemented by instruments in factories, and the trend
towards onsite testing equipment is likely to continue.
Electronics wi~l~ecomemore readily lir~ed to cc~4~uter systems
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for management data and for automatic control systems. Mobile
laboratories will become feasible as an aid to tobacco buying.
The ability to measure will lead to more comprehensive
quality criteria, and surprise results will lead to the demand
for better instrumentation. Mmnagerial evaluation of the true
needs, and managerial decisions on when and how to invest in
instrumentation, will become of greater in~ortance in overall
financial performar~e. In some areas, legislation will
determine the rate of developments.
The characteristics of natural and synthetic raw materials,
and of the processes required will influence the demand for
instrumentation, and the variance of the quality of the finished
material will depend on its success: for currently many
measurements are too imprecise and slow to be used as a base
for real-time control. Improved classification of materials
will encourage adaptive control in the conversion process.
Improved instrumentation and control will slowly reduce
the total labour requirement but the nature of jobs will
change faster and lead to increased trainin~ costs.
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CONTROL
Interaction
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Control
Is Influenced By
Investment in Innovation
Instrumentation
Quality Criteria
Conversion Process
Cost Data
Jobs and Labour
Government Intervention
Leaf Grade
Leaf Purchase
Package Size
Nature of Raw Material
Rature of Finished
Material
Marketing
Tobacco Production
Energy
Socio-Polltical
Control
Exerts Influence On
Marketing
Znvemt~ent in Innovation
Nature of Finished
Material
Quality Criteria
Conversion Process
Cost Data
Transport
Leaf Grade
Leaf Purchase
Leaf Storage
Government Imtervention
Jobs and LLbour
Tobacco Production
Energy
Control interacts strongly with the other factors because
it is so closely connected with purpose. Achieving the purpose
of the business "implies connrol of as many factors as possible.
Control is concerned with allocating resources, with setting
targets, with obtaining and holding the right materials, with
monitoring progress, with choice of action.
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Consideration of purpose raises issues at a level higher
than the basic matters forming the bulk of this Appendix. The
interactions being discussed are within a much larger syste~n,
which colours individual attitudes, judgements° and actions.
It may be helpful to consider the levels of the larger syst~n
thus : -
Value
Judgement s
Purpose
Demands
and
m,
and Satisfaction
Time Horizons
Achievements
Control as a technical matter is firmly rooted in level I,
but it is driven by the higher levels. The higher l~vels are
areas of interaction between individuals, groups and society as
s whole. As far as the Company is concerned, it interacts with
level 4 through society (represented by its officers, politicians,
the media, religious and educational establishments, and the law}
and with organlsations and groups of comparable size. Departments
of the Company interact with individuals: personnel internally,
and marketing externally. At level 4 society is concerned with
its survival and its welfare (ethical standard~, cultural
integrity, commercial ~rectlces, and social priorities)~ the
individual has a shortaE llfe expectancy and a more complex
portfolio of values and time horizons that ha ett~ts to keep
in balance.
LD~
tJn
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Level 3 is predominantly the operating area for conscious
or unconscious groupings, which tend to polarize around
unsatisfied needs, and tend to determine resource allocatlon°
For the individual, Maslow's hierarchy of needs would be at
this level. Level 2 is predominantly the area of individual/
group involvements, and negotiations. Levels 2 and 3 ~diate
general aspirations at level 4 to level I where concrete actions
occur.
The above discussion has been placed in a technological
forecast of the future of leaf processing fQr three reasons.
Firstly, the processes at levels 2 and 3 are changing rapidly
for individuals, groups, and society, and they are critical
for plant operations in the long-term. Secondly, the framework
suggested allows classifications to be made which are useful
in a situation of che~ge for identifying gaps that may lead
to unnecessary lack of control. Thirdly, a proper txploration
of these levels may help to improve the nature and location
of investment.
Perhaps to some readers this approach still seenns too
general and imprecise. Maybe some specific issues will make
the relevance more obvious. Several factories have been
built in recent years on sites far from existing tobacco
factories, and ~Ee new factories ~e planned. PaEt of the
motivation is to recover control that has been eroded by
groups not concerned with improvlng ccmq~uny performance.
Have the values, tlma-hori=ons, demands, and attitudes of
the host society been monitorea with the same care as
canmnunications, utilities, or even the nature of subsoil~
Has there been a conscious effort to improve ~oup attitudes -
workforce0 management, local pressure groups - and to isolate
the new froths undesirable features of the old? Clearly
the answer is yes° but can a systematlc critique of experiences
improve future planning?
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°,
Another aspect of control is the right to collect and
store information, and to deny access to those who wish to
reduce company effectiveness, be they competitors or pressure
~roups. That right is being challenged, an~ the growing
opportunities for effective process control and company
control should be implemented in such a manner as to minimise
the impact of disclosure legislation, and to minimise
subversion by poli~ically-motivated muployees. Companies
suffer if they become the battle ground of conflicting value
syst e~u~.
One such area is the demand for higher standardbs of
living which, when achieved through automation, conflicts with
the demand for full anployment. This conflict will bring
fluctuating pressures on all factories An Europe and North
America, and will lead to ambivalent attitudes to the
introduction of factory and process control systemm.
Nevertheless those systems will increase in number and
sophistication because of the overriding considerations of
quality assurance and cost reduction.
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TRANSPORT
Interaction
Score
2.5 to 3.0
2.O to 2.5
1.5 to 2.O
Transport
Is Influenced By
Plant Location
Control
Leaf Storage
Package Size
Nature of Finished
Material
Marketing
Nature of Raw Material
Conversion Process
Cost Data
Tobacco Production
Socio-Political
Leaf Purchase
Transport
Exerts Influence On
Plant Location
Leaf Storage
Package Size
Conversion Process
Marketing
Cost Data
Leaf Purchase
Nature of Raw Material
Jobs and Labour
External transport mystems affect the choice of plant
location, once the choice is made those systems may limit the
size of unit inputs, the frequency of delivery, and influence
the natuze, scale and positioning of leaf storage. The cost
o£ long haul transport has an influence, albeit minor, on the
choice of leaf source. Leaf source influences transport usage
but the effect is smalll total UoS. tobacco shi~xnente
represented less than O.1% of rail and truck freightage within
that country.
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The existence of environmental pressure groups can
influence both the choice of transporE system and the timings
of its movements. Changes in the methods of leaf purchase
could affect that part of the transport system feeding into
the leaf plants.
The existence of break-bulk, pelletized, or container
facilities will affect transport routes and package size,
particularly from same developing countries. The absence
or irregularity of services may well influence leaf buying
policy to a greater extent in future.
Within-factory transport can be labour intensive, an~
can influence processes, such as the cooling of tobacco along
a co~veyor. The principal factors appear to be space, location
of existing machinery, cost, and the need (actual or predicted)
for flexibility.
LEAF GRADE
Inter act ion
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Leaf Grade
Is Influenced By
Nature of Raw Material
Quality Criteria
Control
Leaf Purchase
Cost Data
Tobacco Productlon
Smoking Motivation
sl
Instrumentation
Package Size
Leaf Grade
Exerts Influence On
Leaf Purchase
Nature of RawMaterial
Nature of Finished
Material
Tobacco Production
Cost Data
Control
Leaf Storage
Quality Criteria
Conversion Process
Inmtrumentetion
Package Size
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Leaf grade is determined by quality criteria, so~e of
which are knowable beyond reasonable doubt (leaf type, colour,
sugar content, nicotine content) others of which involve a
personal judgement. Leaf grade has connotations of end u~e,
and so the criteria can change slightly to take account of
diEferent crop years. Leaf grades also have price tags, and
so policies of blend average costs enter the decisions to
purchase •
Wha~ is not available cannot be bought and so, with less
effort being put into leaf sorting in U.S.A., leaf grading
has had to cope with the consequences of e~onom/c forces on
grade average properties, and on the variances within a pile.
A study of samples from Project BROCHURE has indicated a
coefficient of variation of approximately i1%. Slowly but
surely more analytical information about grades is being
demanded. Cheap, rapid techniques will be sought, and
instrumentation will increase. However, if it is to reach
the sophistication and mutual compatibility required for
an individual leaf processor, a conscious decision to
invest in innovation and to manage it will be required from
s~eone.
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Interaction
Score
2.5 to 3.O
2.0 to 2.5
1.5 to 2.0
Leaf Purchase
IB Influenced By
Leaf Grade
Nature of Raw Material
Quality Criteria
Cost Data
Tobacco Production
Leaf Storage
Nature of Finished
Material
Conversion Process
Plant Location
Control
Transport
Package Size
Smoking Motivation
Government Intervention
Marketing
Socio-Politlcal
Leaf Purchase
Exertm Influence On
Leaf Storage
Nature of Raw Material
Nature of Finished
Material
Quality Criteria
Conversion Proems
Cost Data
Plant Location
Control
Leaf Wade
Tobacco Production
J~bm and Labour
Transport
Government Intervention
This subject has been diacuas~ in main ~dy of the
report.
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L~ STOSAGE
Interaction
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.O
Leaf Storage
Is influenced By
Leaf Purchase
Package Size
Plant Location
Control
Transport
Leaf Grade
Nature of R~w Material
Leaf Storage
Exerts Influence On
Plant Location
Transport
Package Size
Leaf Purchase
,,m •
Nature of Raw Material
Quality Criteria
Cost
Tobacco Production
Quality Criteria
Conversion Process
Cost
Tobacco Production
Most of these influences are obvious. Storages and GLT
plants tend to be located conveniently to the Growing areas,
which are responsible for the leaf Grades available. A
concentration of Growers "influences cost directly, and through
the learning process. Different areas have different attitudes
to cost camponents and to the development of the business.
The cigarette factories prefer to have local storage of
tobacco in the sense t/~at their input ~umteriala are subject to
mlnimumoutside influences, such as dock strikes, transport
strikes, tariff changes.
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What is the magnitude of the storage function? Aylmer
has twelve stem milos 30 ft diameter and 60 ft high which amount
to over 500°000 cubic feet. It has 2 million square feet of
covered storage and can hold 92,000 hogsheads, which amount to
4.5 million cubic feet. SO peak storage ia about 5 million
cubic feet and 40,000 tons. This could be stored in approximately
I,~50 40 ft containers, but the coat of containers would
apprc~J,nately equal to the total replacement coat of the Aylmer
plant. Thus storage in this form would be tOO costly unlema
other costs could be offset against it or additional benefits
accrued. If a container were gas-tight, storage in container
might facilitate slow processing during storage. However,
self-heating of tobacco could be a problem especially if
moisture content was high in part of the bulk.
PACKAGE SIZE
Interaction
Score
2.5 to 3.0
2.0to2.5
Package Size
Ia Influenced By
Leaf Storage
Pack&ge Size
Exerts Influence On
T=aneport
Leaf Storage
Transport
Nature of Raw Material
Control
Conversion Process
Conversion Process
1o5 to 2.0
Plant Location
Leaf Grade
Tobacco Production
• l
Leaf Grade
Leaf Purchase
Cost Data
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Packaging protects compressed tobacco in storage and in
transit. Packaging is an expensive nuisance: capital costs
are £0.44 per cubic foot as hogsheads and would be £I.15 per
cubic foot in a 40 ft container. Returnable packaging needs
repair~ single trip packaging costs money and trouble for
disposal. Fragments of packaging materials may contaminate
the tobacco entering processing lines. B°A.T has a
considerable capital sum tied up in packaging, possibly £8
million in North America alone.
Unit package size is traditionally the smallest individual
component of a blend, although subdivision of packages is used
in Germany. It is, therefore, a function of minimum acceptable
proportional increment of blend components and orb etch size.
Hc~ever, many suppliers have a limited style of packaging
(especially oriental grades) and attempts to insist on a
single package size and style are unlikely to be totally
successful.
Furthermore, it may not be possible to collect enough
leaf at any one time to fill a large container (e.g. 50,000 ibs},
and so large a unit may be inconver~ent to some GLT customers.
Certain packaging materials (e.g. metals and some plastics)
stick to wet tobacco leaves and tend to collect slime.
Physical redistribution of water in a bale subjectedto
temperature fluctuation can cause excess moisture to build
up in some locality leading to rot, mould growth, or
fermantation and burn-up. It would seem that most successful
packaging is parn~able and has a low thermal mass, and it
may also be a good insulator.
Zn general, the invest~nt in packages and in packaging
plant is too large, and the benefit to be gainld f=am any
change is too small, to encourage rapid alterations in
established practice. Stuffing hogsheads into =ontainers is
awry example of the durability of a long estal~lished habit.
CO
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If analysis of each package ks deemed necessary for product
control, pressures will exist for having fewer (i.e. larger)
packages and more sophisticated procedures for stock =on~.~ol.
NATURE OF THE RAW MATERIAL
Interaction
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Nature of the
Raw Material
Is Influenced By
Leaf Grade
Leaf Purchase
Nature of Finished
Material
Quality C=iteria
Government Intervention
Cost Data
Smoking Motivation
Plant Location
Transport
Leaf Storage
Conversion Process
Tobacco Production
Energy
Investment in Innovation
Marketing
Nature of the
Raw Material
Exerts Influence On
Leaf Grade
Leaf Purchase
Nature of Finished
Material
Conversion Process
Cost Data
Tobacco Production
Government Intervention
Instrumentation
Control
Transport
Leaf Storage
Package Size
Quality Criteria
Investment in Innovation
Plant Location
S4n0king Motivation
Energy
Marketlnq
Socio-Political
Jobs and Labour
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This subject has been extensively discussed in the body
of the report. In giving interaction scores it was realized
that these were sensitive to changes in the m/x of raw materials.
If tobacco leaf is the principal raw material, changes within
that material will have a noticeable but modest impact on
energy, jobs and labour, and smoking motivation. If the raw
material changes, fundamentally or tobacco is manufactured
more extensively (e.g. into sheet form) there could ~ ~ajor
shifts in work type and location, in total anergy uJage and
in its geographlcal distribution, and in smokers attitudes.
There are many forces concerned with avoiding a rapid rate of
innovation.
Governments will" attempt to erode the 8rooking habit
over a few generations, other products will attempt to
encroach on the tobacco market. The future of the industry
would seem to be more secure, if it can fend off government
and social pressures by product modification, and can fend
off replacement products by maintaining the tobacco
character of that part of the smoke that interacts with
the smoker.
However, in seeking to improve future prospects for
the industry it is likely that new raw materials will be umed
in products and the tobacco content will drop. If tobacco
purchases fall, relationships with produclrs will require
more attention to maintain goodwill and a continued supply
of desirable tobacco.
~O
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NATURE OF THE FINISMED MATERIAL
Interaction
Score
2.5 to 3.0
2.O to 2.5
1.5 to 2.O
Nature of the
FinishedMaterial
Is Influenced By
Control
Leaf Grade
Leaf Purchase
Nature of Raw Material
Quality Criteria
Conversion Process
Smoking Motivation
Government Intervention
Marketing
Socio-Political
Investment in Innovation
Instr~nentation
Tobacco Production
Nature of the
Finished Material
Ebcerts Influence On
Transport
Nature of Raw Material
Quallty Criteria
Cost Data
Tobacco Production
Smoking Motivation
Jobs and Labour
Control
Conversion Process
Instrumentation
Leaf Purchase
Energy
Gove~nt Intervention
Marketing
Socio-Political
The most noticeable feature of this table is its asymmetry:
much of what Influences the finished materlal most is what At
influences least, and vice versa. Furthermore, the ~bility to
buy the right tobacco and sell it in cigarette form is seen as
more fundamental to the finished material than the conversion
process itself. Quite large changes in the finished material
can be obtained at low cost by tobacco breeding and selection
progr~mnes but, unless the varieties are already available
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co.merci•fly, the response to changing demand is very slow.
The conversion process can be changed mot. quickly, but
extensive =h•nges in the finished product tend to be costly.
Thus breeaing programmes ought to aim at s•tisfying the
long-term trends, and leaf purch•se ought to meet short-term
need: similarly, conversion processes ought to aim at
•chieving low cost flexible production in the long-term,
and more innovative (and prob•bly more expensive) processes
to open up newmarket opportunities.
In the course of making the technological forecast,
an •ttempt was made to define a finished smoking material.
The following is a compilation of associated characteristics
th•t were thought important:-
PURPOSE
i. To generage smoke, t•ste, and pharmacological effect.
.
To provide a combustible materi•l or mixture for use
in a cigarette wrapper or in a clgarette-like device,
•nd h•ving suitable physic•l, structur•l, and
chemical char•cteristics.
1
To provide a component of that combustible mixture
to extend, dilute, augment, or modify the properties
and/or beh•vlour of the other com3x:nent•.
SOURCE MATERIALS
l.
Should be of • purity and authenticity to be ~oth
credible and suitable.
.
Should be re•dily available (now and future) from
independent suppliers in several localities.
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1
.
1
Should be available throughout the year.
Should not be discriminated against by tariffs,
taxes, or prejudice.
Should have controllable properties.
"~
COST
io
Should have no worse a benefit/cost than
alternatives.
MANUFACTURE
I.
Processing required should be feasible in d£fferent
localities (labour cost, skill level, temperature,
humidity, supply breakdowns, control equil~Mant,
throughput required).
t
Processes should be simple, reliable and with high
yields (minimum waste).
.
Processes should be suitable for ~tch or c~tlnuous
operation, using readily available or adaptable
machinery and technolc~y.
4. Waste products should be recyclab!e.
.
Processes should generate minimum nolae, small,
effluent.
I. Physical and chemical properties of source materials,
of intermediate materials, and of final smoking
material, should be sta~le.
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2. The materials should be resistant to:
atmospheric oxidation
envirorm~ntal pollutants
m/crobial contamination
insects
radiations
compaction on storing and An transit.
m
The integrity of the material shou.ld be unaffected by:
tempeEature changes -20°C to +40°C
humidity change 20% RH to 90% RH.
PHYSICAL CHARACTERZSTICS
So
Ease of forming, shaping, cutting, shredding,
sticking.
o
Attractive subjective "feel", (objectively:
hardness, thermal capacity, elastic memory,
coherence, resilience, fillin~power, density).
3. Attractive colour and appearance.
4. C~npatible with cut tobacco.
1
Low tendency to: dustiness, f=i~ility, lumpiness,
aggregation, density va=iations0 de-blending
acquiring contam/nantSo
6. $atisfactory hygroscoplcity and solu~illty.
7. H~nogeneous response to moisten£ng, drying, heatlng.
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m
Should retain characteristics when permaat~
with warm moist smoke.
Ct~BCMICAL CHARACT,ERISTICS
i. Attractive aroma.
2. Non-corrosive.
3. Non-irritant.
4. Non-tox/c.
5. Non-hazardous.
6. Resistant to evaporational loss.
7. Resistant to relocation of its in~r~ients.
8. Free fro~ contaminants [heavy metals, pesticides).
9. Inert towards common packing materials.
BURNING CHARACTERISTICS
io
Should form a firmly attached and coherent fire cone,
not melt or drop hot fluid or ash.
o
Draughts should not cause as~trlc combustion,
or unduly influence m~oulder Eateo
o
a
Should provide an adequate number of puffs without
needing rellghtln~.
Should ignite easily but not spontaneously.
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5. Should leave a coherent ash of acceptable appearance.
•
Ash should be non-toxic, non-corrosive, non-irritant
and non-c~orous.
•
•
Q
Solid particles should be absent from ~noke stream.
The ~ehaviour of the material should b, predlctable,
qualitatively and quantitatively.
The taste of the smoke from the unflavou~ed material
should n.t be unpleasant•
iO. The after-taste should be weak but pleasant.
ii.
The aid.stream aroma should be attractive, and
should not leave stale offensive odours on ageing.
12. The arena of s smoker should be attractive.
13.
14.
15.
The smoke should not impair health by itself, or
in combination with co~mon air pollutants.
Incipient clinical conditions should not be
activated ~y the smoke.
Smoke constituents should not inhibit normal body
clearance mechanisms•
16.
The pharmacolc~i=al effect of smoke Ihou..Ed occur
rapidly and persist for up to thirty mlnutes.
~w~RACTBRISTICS I~ A SMOKING DEVXCE
~°
B
The visual appearance of smoke should be =Chit,liable.
The quantitative chemical consequences of changing
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the formulation or mixture of ~nokingmaterials
should bepredictable for important chemical
indices.
o
The rate of release of specific cctnpounds should
be controllable on a puff by puff basis.
1
The smoke should contain the minlmumq~ntlty of
undesirable materials and less than recommended
maximum levels in a regularly reviewed list.
o
The overall efficiency of utilization of euq~ensive
ingredients should be high.
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CAr R.ZA
Qual Aty Criteria
Is Influenced By
Interact ion
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Instrumentat i on
Control
Nature of Finished
Material
Smoking Motivation
Government Intervention
Marketing
L4af Grade
Leaf Purchase
Nature of Raw Material
Leaf Storage
Cost Data
Tobacco Production
Investment in innovation
S~:io-Political
Jobs and Labour
Quality Criteria
Exerts Influence On
Control
Leaf Grade
Leaf Purchase
Nature of Raw Material
Nature of Finished
Material
Conversion Process
Investment in Innovation
Marketing
Tobacco Production
Smoking Motivation
Znstrunwmtation
Leaf Storage
Cost Data
Quality criteria are the signposts that guide the many actions
of the h~siness, and they are needed only if they improve those
actions. C~nsequently, their usefulness is always in cfuestion,
their relevance to particular needs ks constantly monitored,
and their natume and values are subject to alteration.
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Their nature covers an enormous range, from the precisely
definable to the almost unknowable. Much technical effort
inside and outside the R. & D. function is devoted to Improving
the definitions. Their values change with changes in raw
materials (e.g. crop years for tobacco, develol~nents in
manufactured items such as cigarette paper), with changes in
understanding (e.g. the implications of certain =haracteristlcs),
with changes in market preference, with changes in standards
of "good citizenship" of the meaning of the term "due diligence",
and with changes in the cost/benefit of improvements to materials
and process.
In the sixteenth century ek/lled craftsmen could make
excellent steel blades with a tamper varying through the
thickness of the metal. In the 1930's the brewing industry
could make an excellent beer and it had chemical and micro--
biological tools to aid the basic art. In the 1950's the coffee
industry was in a similar position. Now all three industries
can optimise their products ~y t~hnlcal criteria and by
technically controlled processes. It is inevltable that the
tobacco industry will go the same way. The tlme-scale will
probably be twenty years, but one or ~ c~qpanles have the
potential to achieve it in ten. There is a great deal to be
learnt about raw material, process, flnished material, market,
smoking devices, and consumers. Since present knowledge is
so often ephemeral there may be merit in formal situation
reviews being carried out by all departments on, say, a five
year basis. Implicit in such revle~s would be documentation
of the quality criteria in current use.
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COST DATA
Interact i on
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Cost Data
Is Influenced By
Control
Leaf Grade
Leaf Purchase
Nature of Raw Materlal
Nature of Finished
Material
Conversion Process
Tobacco Production
Investment in Innovation
Government Intervention
Plant Location
Marketing
Instrumentation
Transport
Leaf Storage
Package Size
Quality Criteria
Smoking Motlvation
Energy
Jobs and Labour
Cost Data
Exerts Influence On
Control
Leaf Purchase
Investment in Innovation
Plant Location
Transport
Leaf Grade
Nature of Raw Material
Instrumentatl on
Leaf Storage
Nature of Finished
Material
Quality Criteria
Conversion P~'ocess
Tobacco Production
Energy
Jobs and Labour
Everything that is done costs money. The main factors have
been discussed earlier, and the above listing is given for
c~npleteness and to aid cross-referenclng-
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In comparison with some other industries, tobacco
processing costs are an order of magnitude higher: cement
manufacture costs less than £20/ton, and petroleum processing
less than £30/ton. Product density is obviously a factor,
but part of the trouble is that economics of scale are not
.
achievable, because high throughput plants working continuously
would have too great an output for the markets they serve.
reducing the number of plants and enlarging the maEkot each
serves is likely to encounter higher distrlbution costs,
fiscal barriers, and social costs. Nevertheless, continuous
operation would help to offset higher capital investment,
especially in newer processes.
Some of the processes costed in Table 20 are operated
very slowly: for example, the PRT machine only runs st 5%
the speed of a newsprint machine, and while the latter is
produced very fast it might be possible to make a dramatic
i~rovemant in PRT throughput. A major problem is the rate
at which water is drained from PRT slurry. If the latter
=ontained faster draining fibres {as it could as a formed
fuel in a new design of cigarette, p.30} the capital charges
(at 15%) on the process might drop to around £30/ton. It
then becomes possible to consider a completely new set of
fluid processes ahead of shoot making.
In general there seems to be two choices for process
development aimed at minim/sing plant operating cost:
(1)
Slow processing during the storage period,
involving very little labour or capital
investment.
(ii)
Fast processing of material withdrawn from store,
involving minimum labour and continuous operation
of capital assets. The latter implies high
throughput, minimum material in process, and
effective process control.
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Exmples suggested els~here in the report include ~as
processing in store, and the priory machine. Both choices
involve a modification of existing developing goals into
areas that have tended to lie with machinery suppllers, yet
it is doubtful whether they can do th~s work because of
their modest cash flow and lack of facilities for product
evaluation.
cusv i PRocEss
Inter act ion
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Conversion Process
Is Influenced By
ram,
Instr~ntation
C~trol
Leaf Purchase
Nature of Raw Material
Quality Criteria
Package Size
Nature of Finished
Material
Investment in Inn~ation
m,
Leaf Grade
Cost Data
Smoking Motivation
Energy
G~ern~t Inte~enti~
Market Ing
Jobs and Labo~
C~verslon Process
Exerts Influ~ce On
Control
Nature of Finished
Material
Cost Data
Energy
,i ii
Tr~port
Investment in I~ation
Jobs and Labour
Plant Location
Inetr umentat in
Leaf P~chase
Leaf Storage
Package Size
Nature of Raw Material
A view was expressed to the author when visiting certain
GLT plants that the future process for the bulk of tobacco
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produced would be whole-plant utilization as sheet. Plant
for making sheet is capital intensive and energy intensive.
The cost of a sheet maAing process is critically dependent on
the assigned costs of depreciation rate and of interest rate
on the investment. In the paper industry the traditional
deprecia=ion rate is low (5% or less) and reflects the iQng
life of the plant and the slow rate of product obsolescence.
Many present plants were constructed at a time of low
interest rates. Since tobacco sheet is of c~aratively
recent origin its future is less car=sin, and its manufacture
may change. Thus the depreciation rate applied to traditional
processing machinery may overestimate future plant and process
llfe. Thus the higher cost given in Table 20 for paper
reconstitu~ion is likely to be the more reasonable of the
two, and may be an underestimate.
Thus, as a new investment, such a process has to offer
substantial product advantages to break even with cheaper
~rades of tobacco, and that when it is assumed the raw
materials cost nothing. Only existing, depreciated, plant
is likely to achieve econom/c operation, in the absence of
a tax concession (whether fortuitous or planned).
The costs of processes, for taking tobacco apart and
sticking the pieces together again, must fall substantially
before such processes can displace the conventional primary,
So, for the present, sheet hulking must remain a tobacco
waste utilization technique using old machinery. What
might change the situation? There are three principal
options: cheap raw material, cheap process, higher value
product, end of course some mix of these.
There are plenty of cheap materials, unfortunately they
tend to lower the value of the product. A cheap process is
probable, but is likely to be an outcome of show-moving
development. A higher-value product is especially feasible
for low delivery cigarettes.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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Some possible produces might be:
(1)
A combustible, porous sheet through which factory
dusts and winnowing could be filtered to give
instant raconseitution.
[2) Paper helices to improve filling power.
(3) Sheet printed with flavo~T coaqDounds.
(4)
Perforated, shaped sheet to control burning and
mnoka ~raction fr~n a cigarette coal.
(5)
Inner wrapper for a coaxial cigarette to separate
smoking materials designed to be oxidised on the
outside of a cigarette frcxn smoking materials
intended for charring on the axis in the virtual
absence of oxygen.
(6)
Orthodo~ development of a blend constituent to
give favourahle ratios of smoke constituents,
biological test data, or taste characteristic.
Some cereals contain natural blowing agents that enable
a low density product to be m~de (@.g. so~e cEunchy biscuitm).
Mixture with tobacco has been said to be unsatisfactory.
Certaln toba=com are fermeneed to develop their potential,
and to remove nasty materials (e.g. ammonia). Tra~itionally,
deliberate fermentation has been labour intensive but that
is not inevitable. Fermentation in a sheet making plant could
represent a very modest extra cost, and ought to be highly
controllable. Enzymic processing may be advantageous for
bringing a~out highly specific changes. Novel fmz~nentation
processes are of increasing industrial importance, but only
traditional procasaes are used by the tobacco industry as
far as the author has been able to discover. It seems most
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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unlikely that the opportunities can be ignored when the
industry is under pressure to improve the attributes of
its products. A major hurdle is in translating a "need"
into a technical specification.
If the future lles w~th primary processing much as it
is today, it would be desirable to blend at the entry to
primary, to improve materials handling and chocking, and
to respond more quickly to blend change. One idea that
is superficially attractive for high throughput primaries
using a limited number of grades (e.g. less than 20) c~mnon
to a range of blends would be to have blocks of tobacco
moving into continuous conditioners, analysers at the
output of each conditioner, and weigh conveyors to a
common feed line, with one feed line into each process
line. Blend change would be effected by instructing the
weigh conveyors to make the appropriate contributione and
slight changes in contribution would be made in response
to the analysers detecting deviations fro~ the norm for
a grade.
(One of the reasons for examining the container freight
business was that if the tobacco blocks could be 8' x 8'6" x 40',
the current production of Louisville primary would re~zuire the
delivery of only 34 blocks per week. The cost of storage in
this form is higher than current practice, and there are
undefined hazards. Nevertheless, if campanies were starting
without past investment the possibilities would merit serious
eu¢~,ninat i on ).
Continuous flow of tobacco into the processing lines
implies batch production as is done now, and there would
still be a need for bulking/storage bins for each blend.
However, a rapid changeover from blend to blend should
minimise the size of that intermediate storage unless an
irreducible bulking time is decreed by quality considerations.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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TOBACCO PRODUCTION
Interaction
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Tobacco Production
Is Influenced By
Leaf Grade
Nature of Raw Material
Nature of Finished
Material
Leaf Purchase
Quality Criteria
Smoking Motivation
Control
Leaf Storage
Cost Data
Ener~y
Government Intervention
Marketing
Soc~o-Polltlcal
Jobs and Labour
Tobacco Production
Exerts Influence On
|
Leaf Purchase
Cost Data
l
Transport
Leaf Grade
Plant Ix>cation
Control
Leaf Storage
Package Si~e
Nature of Raw Material
Nature of Finished
Material
Quality Crite=ia
Government Intervention
Socio-Political
Jobs and Labour
Tobacco is an agricultural commodity, and as such is subject
to the influences common to that class of ccmmc~litywhere the
free market is eta~ilisedby long-termcomstltments by buyer and
seller, and~ttresae~ by third parties, such as cooperatives
and government agencies. Total production is influenced h~ the
o~portunity to pw~uce, transport, and market tobacco of certain
characteristics. It is influenced by last year's prices, the
capital invested in curing barns and other special facilities
and, of course, the current season's weather.
mm
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BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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Total tobacco production is unlikely to be a problem,
although there may well be shortfalls on a year to ye~ basis.
Tobacco production involves a minute proportion of the total
land area under cultivation. In the Unites States, some
tobacco is grown by part-time farmers who intend to use that
business as a supplement to a retirement pension. Me~hanisation
and larger farm units could develop. Both these sources could
expand production if the demand existed at an economic price.
The quality of that tobacco could be a problem and, as
that problem has received widespread comment, it ks l~kely
that the~e will be an attempt to produce varieties that retain
quality when harvested mechanically and cured in bulk.
Tobacco production {especially oriental) is or can ~e
labour intensive. There are signs that governments of some
countries with a high rate of unemployment wo'uld prefer to
keep people on farms and away from urban trouble spots.
Subsidies, stock piles, and minimum prices to farmers may be
~sed increasingly for social engineering.
Co
C~
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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SMOKING MOT TVAT ION
Interact i on
Score
2.5 to 3.O
2.0 to 2.5
1.5 to 2.O
Smoking M~tivation
Is Influenced By
Nature of Finished
Material
Marketing
|i
Quality Criteria
Soclo-Political
i • ,,,,,,
Nature of Raw Material
Smoking Motivation
Exerts Influence On
Nature of Finished
Material
Quality Criteria
Marketing
Socio-Politlcal
Leaf Grade
Nature of Raw Material
Tobacco Production
Government Intervention
Leaf Purchase
Conversion Process
Cost Data
Investment in Znnovation
Human motivation to ~ke is the foundation of the tobacco
industry. The industry is the commercial response to that
motivation. It is not at all self-evident that the motivation
will continue if tobacco is replaced by other substances-
Marketing is concerned wlth offering attractive choices within
the constraint of the basic raw material, and with mlnimising
the influence of the motivation towards non-smoklng. The
latter aim involves a technical effort to nulnimise actual risk
and a psychologioal effort to minimise the ratio of perceived
risk to actual risk, i.e. it enters into the formation of
value ~uagements.
By its products, its actions, and its statements the industry
influences individual motivation, and the collective responses
of smokers and non-smokers as diffuse groups in society.
C~
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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The weighted responses are fed back to the ir~ustry directly
through sales figures, and indlrectly (when aggregated with
other value Judgements) through constraints by power groups
in society.
It wall be increasingly important to separate studies of
the basic motivation to smoke from short-term activities aimed
at maximising sales of company products. If the latter activities
erode the fundamental motivation, the industry will decline.
On the other hand, marketing should not be hand.red in its
exploitatlon of fashion by an unjustifiable mythology. There
is a pressing need for a solid understanding of the basis of
smoking motivation.
ENERGY
Interact i on
Score
2.5 to 3.0
1.5 to 2.0
Energy
Is Influenced By
Conversion Process
Plant Location
Control
Nature of Raw Material
Nature of Finished
Material
Cost Data
Investment in Innovation
Energy
Exerts Influence On
Control
Nature of Raw Material
Conversion PEocess
Cost Data
Tobacco Production
without energy the business must etc~, ]m.lt the usage of
tobacco preceded the modern era of mechanical power and chem/cal
products for agriculture. The energy used for production An
leaf plants and primaries ks approximately i~ watt hours per
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-78-
cigarette. (a third of that generated when the cigarette is
burnt) but that nee~ed for production is probably very small.
In many areas energy usage is determined by legislation and
socio-political forces (e.g. minimum temperatures in factories
and offices).
B. & W. carrled out a study of energy usage*over a five
year period and this showed that the type of energy depended
on plant:
Type of Plant
PCL Factory
Snuff & Chewing Tobacco Factory
GLT Factory
Cigarette Factories
Head Office
Corporate Average
i i ,.l . • i
% of Total Energy as Fuel
(oil, coal, gas)
95.4
85.6
84.1
70.4
51.4
m l i
77.2
Oil price and availability is critically dependent on the
political events in Saudi Arabia and, in recognition of the
potential instability of the energy market, socne factories are
installing multi-fuel systems.
I
il J
*Corporate usage of energy approximates to the energy that
could be produced by burning that quantity of tobacco procisse~
by the company.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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~NVES'~HZNT IN II~,"N~ATION
Interaction
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Investment in
Innovation
Is Influenced By
Control
Quality Criteria
Cost Data
Socio-Political
Nature of Raw Material
Conversion Process
Instrumentation
Smoking Motivation
Government Intervention
Marketing
Jobs end Labour
Investment in
Innovatlon
Exerts Influence On
Control
Instrumentation
Cost Data
Marketing
Nature of Finished
Material
Conversion Process
Jobs and Labour
Nature of Raw
Material
Quality Criteria
Energy
Investment in innovation is determined by a perception of
current and future needs. Often the need arises on the basis
of a deteriorating situation or an uncomfortable comparison°
and action is taken. Hence the strong l£nk assigned to cost
data. Much of the innovation takes place outside the formal
R. & D. function and it is perhaps not surprising that no
=orrelatlon could be found between R. & D. expenditure and
the t~al financial performance in GLT and primary. More
speciflc costings of the influence of the innovation and of
its induction route are needed. O~ the other hand, when the
investment is large (e.g. Macon) large changes can be seen
in cost components.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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fL
Most of the interaction scores are self-evident but
there is a paradox, and that is the low acQre given to the
influence by n~arketing. The author rationaliaes this on
the basis of the delay to interaction. Were marketing to
request innovation in tobacco prxessing, the delay would
be great, and is likely to increase in the future (e.g.
Hunter Committee in U.K. ). The lead time for successfu~
innovation (as opposed to varying established recipes} is
tending to exceed the planning hori=on for marketing
specific products. If the trend is maintained as m~
pressure groups hope, one consequence will be that patents,
licences, and official registrations will have a much
greater financial impact on the Company than has ~een so
historically, and the impact may approach that on the
pharmaceutical industry. Time not used effectively could
prove very expensive. Efforts will continue to be
required to resist inflexible legal requirements.
some of the requirements are potentially catastrophic.
For example, the F.D.A. has the duty to prohibit carcinogens
in products it regulates, attempts have been made to bring
tobacco under £ts control.
~mmdb
CD
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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GO~ IN~ERVENTION
Interaction
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Government
Intervention
Is Influencg~ By
Plant Location
Nature of Raw Material
Socio-Political
Smo)r~ng Motivation
Control
Leaf Purchase
Nature of Finished
Material
Tobacco Production
Marketing
Jobs and Labour
Government
Intervention
Exerts Influence On
Plant Location
Nature of Raw Material
Nature of Finished
Material
~ality Criteria
Cost Data
Marketing
Socio-Political
Control
Transport
Leaf Purchase
Conversion Process
Tobacco Production
investment An Innovation
The scores given can be explained on the basis of the desires
within the government mystan:
?
A. Keeping the governing group in office
i) by image creation
ii) by embodying wishes of its citizens
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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Bo
Increasing the power of office
d~nestically,
i)
li)
lii)
internationally, iv)
v)
by increasing revlnues
by increasing taxable wealth
by minimising group and individual
autonomy and diversity
by improving trade balances
by improving information sources
overReas
C. Improving welfare of citizens
i)
ii)
ill)
iv)
v)
vi)
by providing better employment
by improving working conditions
by improving health and environment
by redistributing benefits
by improving accuracy and relevance of product
description and presentation
by limiting the content of undesirable materials
in products.
The translation of these desires into a technical area is
slow but, once achieved, the consequences are pervasive. The
regulations that are draughted tend to set boundaries that
are exptnsive to surmount, and are most effective when only a
few groups have to be monitored by the regulatory arm of
goverTm~nt.
Because technological regulation is generally slow to
develop, and because a go-it-alone ~licy by IndLividual countries
has a tendency to involve entaglements with the issues of "fair
competition" and "non--tarlff barriers to international trade",
the international negotiations slow the application of the
technological regulations still further. Thus by monitoring
the early stages of development of t~ical requirements in
the host country, and internationally, there is likely to be
sufficient lead time tO avoid excessively mx~e~ive consequences.
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BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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The same may not be so in the socio-polltical arena (ii)o
MARKETING
Interaction
Score
2.5 to 3.0
Marketing
Is Influenced By
Control
Quality Criteria
Smoking Motivation
ZnvestJnent in Znnovation
Government Innovation
Marketing
Exerts Influence On
Nature of Pinlshed
Material
Quality Criteria
Smoking Motivation
2.0 to 2.5
Socio-Political
Transport
Plant Location
Nature of Finished
Material
Control
Cost Data
Plant Location
Transport
Leaf Purchase
1.5 to 2.0
Nature of Raw Material
Nature of Raw Material
Conversion Process
Tobacco Production
Investment in Innovation
Government Intervention
Marketing in this context has been cQnsidered more narrowly
than is usual. Only its effects on the purchase, movement, and
processing of smoking materials, and of decisions taken in that
domain have been taken into account.
The main concerns of marketing in this restricted sense were
with the form of the smoking material observed and sensed by the
C
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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consumer, the smoke produced, the sociability of the act and the
conatrainta ~omed on industry and gmoker. Quality criteria and
their maintenance are of major ~nportance, as are the fruits of
earlier investments in innovation. Planning the conjunctions of
product and customer are a major concern that can be helped or
hindered by transport, intezlnediate storages, and plant locations.
The weak influence of marketing perceived by those acoring
the interactions may be an erroneous view, or it could reflect
the lack of actionable insight at" the technical level that =an
be derived fr~n current techniques for probing markets and for
evaluating the forces that determine them.
SOCTO-POLITICAL
Interaction
Score
Socio-Political
Is Znfluenced By
Smoking Motivation
Socio-Political
Exerts Influence On
Nature of Finished
2.5 to 3.0
2.0 to 2.5
Government Intervention
PiLnt Location
Nature of Raw Mat~Tial
Material
Investn~ent An Innovation
Goverrm~nt Intervention
Marketing
, J ,q ,,,
Plant Location
Transport
Smoking Motivation
i
Control
Leaf P~.r. chase
1.5 to 2.0
Nature of Finished
Material
Tobacco Production
Jobs and Labour
Quality Criteria
Tobacco Production
Jo~s and Labour
C~
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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Attitudes to smoking depend on both the nun~beE of mmokers
and the stren~h of this habit. The attitudes also depend on
the n~terial being used (tobacco, marihuana}, on the form of
the product (pipe, cigarette, chewing tobacco, snuff), and on
whether tobacco production is a local industry with farmers
lobbying to maintain farm inco~ne.
Attitudes to the cigarette industry will vary with the
behavlour of factories (traffic, effluent, aesthetics, ~loyee
attitudes) and the need for Imployment and cash flow in a
particular location.
Znvestment by that industry will depend on the attitude
of people to business, to econ=anic performance, to direction,
to behaviour at work, and possibly to transfer of material and
money.
That much is reasonably o~vious. What is less clear is
the reaction of the industry to changes in risk. Terrorism,
inclu4ing fire ~xmnblng, is an extreme form of political
expression, and could be adopted by anti-smoking groups.
Tobacco in bulk burns with intense heat. The loss of major
tobacco stocks and processing facilities (e.g. Aylmer) could
be a substantial setback for the group. Does any group in
the Con~any assess systematically the relationships of cost
and risk that are ~riven by changes in the value systems in
society?
On the mller scale, the balance of interactions between
some groups have the delicacy and sophlsti=atlon of a three-
term co~troller (derivative, integral, proportional). One
example is the transactions in a tobacco warehouse. It
would be interesting to apply a systlmns dynamics al~groach (12) to
established interactions prior to the GLT plant to assess how
far and fast they can change without inducing instability.
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A more general vi~ of the soc~o-political coa~ponent of
the environment of the industry has been given An the section
"Control" , page 46.
JOBS AND LABOUR
Interaction
Score
2.5 to 3.0
2.0 to 2.5
1.5 to 2.0
Jobs and Labour
Is Influenced By
Plant Location
Nature of Finished
Material
Instrumentation
Leaf Purchase
Conversion Process
Investment in Innovation
Control
Transport
Nature of Raw Material
Cost Data
Tobacco Production
Government Intervention
Socio-Political
Jobs and Labour
Exerts Influence On
Plant Location
Control
Quality Criteria
Conversion Process
Cost Data
Tobacco Production
Government Intervention
Socio-Political
Jobs and laboux in this report excludes farm labour, and
labour after the arrival of tobacco at the hoppers of making
machines. The number of jobs involved is ~nLll in =oa~arison
with total ~loym~nt~t, since those Jobs involve ~pendLitu~e,
the pressure for a man to achieve more will continue to be
present.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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Most Jobs are within factories and storages so their
location determines where that labour is based.
The pressure to achieve more, when taken with changing
social attitudes, wall change the content of Jobs and demand
~reater skill. Hand sorting of leaf at EoL.T. costs 6 cents/
pound or about ~ cent for each leaf. Sc~ially it is a low
~rade job and may not ~e able to attract ~ople~ technically
it could be replaceable by instruments° In consequence
hand-sorting is likely to disappear. The replacement
technology will demand fewer people with higher skills.
Similarly, the development of a primary m~chinew~uld
reduce e~ployment of unskilled people and increase the need
for s~ne with greater skills. Retraining of younger people
maybe adecp~ate for this. The principal ~enefits are likely
to be in quality control and rapid changeover of blend
rather than the potentially mc~est reduction in total cost.
The widespread adoption of a "ch~elled cigarette"
design would have a greater impact by modifying the nature
of processes, the mix and flow of factories and could lead
to a net transfer of work away from leaf plants.
In all of these postulated processes, the emission of
heat, steam, dust and smell is likely to decrease and the
cigarette factory may be more tolerable in residential areas.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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t
APPENDIX 4
TOBACCO CONDITIONING AND MICROBIAL GR~
The limiting P~ for microbial growth is commonly considered
to be around 70% or a little below. Some enzymes may retain
activity at lower values, e°g° down to 60%. Under limiting
conditions of water availability, reaction and growth rates
are very slow, leading to very long perlods (measured in mo~ths)
before evidence cf microbial growth is obtained.
Temperature interacts with RH in that, as the temperature
moves away from the optimum for activity, itrestricts the
range of RH over which change will occur. Microbial growth
can occur over the temperature range -5°C ~ ÷80°C. As a
general rule, a doubling of growth rate or activity can be
exl~cted for every iO° rise in temperature.
Measurements of microbial growth on tobacco have been
made under laboratory conditions and there is also sane
information available on RH/molsture relatianships enabling
sane indications of 'safe~ holding times to be made. Rowever,
it is important to appreciate the difficulties of conducting
realistic laboratory experiments on this subject as large
bulks of tobacco are likely to behave in a different manner
fr~n small samples.
Using reported values (B.A.T Hgport L.563) for lamina,
the following predictions can be made for the time likely to
elapse before tobacco held at different molsture levels will
became mould-damaged:
i
* Written as a memorandum by T.G. Mitchell
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Tobacco Type
US Flue-Cured (i)
(H2E) (2)
US aurley (i)
(xla) (2)
Pakistan Flue- (ii
Cured (PK2) (2}
60
Time
To
Damagel
13.7 365
11.8 365
EMC for RH of
120 365
70
18.5
15.3
16.3
Time
To
Damage
150
8O
150
8O
150
80
I Time
80 To
Damage
IO
24.8
7
iO
21
7
IO
22.5
7
Time
85 To
Damage
6
30
3-4
6
26
3-4
6
27
3-4
EMC figures were derived experimentally, time to damage by
interpolation from other data. Time to damage is shown in days,
against (i) at 20-25°C, (2) at 30°C.
Zn practice, the time for proble~ns to o~cur at 70-80~ RH
may be m~ch shorter than indicated in the Table because of the
danger of even modest heating causing ma=kodmoisture gradients
within a bulk.
Apart from the possibility of microbial growth or activity
associated with the leaf, it is iml~o~ant in any cof~sideratlon
of conditioning requirements to appreciate that significant
microbial growth may occur on equipment surfaces. The presence
of froe water f=omcondensation will allow becterial growth to
occur quite rapidly at temperatures Lbove 200° but it would
remain a significant factor even at i0° or less if holding
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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times are prolonged. Accessibility for cleaning and
unobstructed interior surfaces would be impoz~cant deslgn
criteria for new types of conditioning equipment incorporating
prolonged holding times.
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
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.TABLE 1
~VERAGE L~F COSTS ~ ADD~ vALu, Es..(1976)
v~
Leaf as purchased
weight loss on removing
sand and excess moisture
GLT operation and
storage
Interest (i09~)
22mont/ls
16months
Value at entry to
primary
Value of stripe if
stem is given a nil
value
Cumulative Values
i ii • i -
B. & W. I.T.L.
Burley
1.160
1.365
1. 510
1 • 787
1.787
2.411
Flue-Cured
1. iOO
1.265
1.415
1. 674
1. 674
2.240
Can. #/pound
1 .i038
1.2473
i. 3935
1.5793
1.5793
2.0082
BAT Co LTD - MINNE,E~TA TOBACCO LITIGATION
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TABLE 2
COSTS OF PRZMARY MANtm'~
~,ll=,al Ave~"lge Col'~.m' /RE~ '& RIXS~.~WLI, ImOUB ¢06T'S '
Arm £216.O4 Pax" Ton
. PEOPLE COSTS
£ Sterling
Per Ton
(1977)
Ahrensburg
Liverpool
Sou~J~m~t~n
Guelph
MOntEeal
Louisville
Macon (1978
i~a~gec)
UnwolghtRd Avmragm of ~ven
~ank Order
o£ Come
Ah~en~m~g
L£ver3x>ol
Bou~a~pto.
Guelph
NonT~eal
Loulr~i ~le
Macon
Average of Jeven
i "
54.86 66.66
82.41
62.51
43.58
I~.85
107.59
45.93
78 • 22
3 (5)
1 (3)
I (4)
I (7)
I (1)
I (2)
4 (6)
3
a. Excluding l.nCezesl:, cosu.
Exol~ing casings ~ flavour£ngs.
¢. P~aln £1gUEel see wi~hln-£actozy =Ink
LTe acrols-fac~x~ Eank oEders.
35.07
23.79
22.85
56.92
31.49
47.24
40.5?
1 (1)
3 (4)
4 (6)
3 (7)
3 (2)
3 (S)
3 (3)
D
55.79
53.51
58.31
32.72
69.85
60.74
63.72
56.38
2
2
2
2
2
2
I
a
4.36
12.34
82.60
21.01
48.55
18.77
54.22
24.55
(5) 4
(6) 5
(4) 5
(7) 4
(i) 4
(3) 4
(2) 2
4
O.00
i. 97
9.17
4.94
8.46
0.30
0.00
3.55
5
6
6
5
S
6
6
6
0.(30
23.63
25.66
O.00
0.OO
7.59
32.50
12.77
5
4
3
6
6
5
S
5
oE~erl, f£gtlz'es in parentheses
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
m
w
-g3-
TABLE
~4PAC~ OF COST C~TRES .~q GR~~ COSTS
CASAD~ ~O~ F~. C qLS_T su~umzEs. 19~e
L~our Costs
Capital Charges
Chemi=als and Fuel
CQmluo~ity Prices
Taxation
Influence on
Averaqe Cost of 26.3 ~/ib
50
Ig
18
I0
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
C
.a
q~
C
C
-I"
-94-
TABLE 4
COST OF 8~p, ST~ZLZZn~, ~Sn~G A~D ~ING ~C0
,i i ,= ,
PEOPLE COSTS
Wages Fixed
Variable
Salaries Fixed
Variable
Sub-total
MACHINERY COSTS
Replacement Depreciation (7%)
Interest (iO~)
OPERATING COSTS
Su]~-total
Su~-total
Znergy
Travel & Tr~sport
Care & Mainten~ce
LAND AND BUILDINGS
Replacement Depreciation (2.5%)
Znteresn (10%)
TAXATI~
MZ~ELLANE~S COSTS
Auction Charges
Rentals
Su~-total
Sub-totll
Total Cost
Weight of Tobacco
Involved (Million lbl)
IN m m,
NOTE: a Conversion Rate £ =
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
Costs
I 000'm ) £ Sterling/Ton
ii
709
1996
1252
61
4018
571
816
1387
362
397
286
1045
115
460
575
371
260
84
344
77443
58.737
m
i1.617
16.72
47.07
29.53
1.44
94.76
13.47
19.24
32.71
8.34
9.36
6.75
24.65
2.71
10.85
13.56
8.75
6.13
1.98
8.11
1.82.54
C
t
D
C
O
t
-95-
T~E S
COST OF BUyZ...NG, ST.ASZ.LZZZ~G, .THRESHING & PACK~O BURLEY TOBACCO
BROWN' & WILL~AMSON TOBACCO CORPORATION. - .LEX .~N..GTON, 19_7e
m
PEOPLE COSTS
Salaries & Fringes
Variable L~bour
Indirect Labour
Casual Labour
Pensions, Insurance
& Othe~ Fringes
Personnel
Sub-total
MACHINERY COSTS
Replacement Depreciation
Interest
Sub-total
OPERATING COSTS
Energy
Travel & Transport
Care &M~intenance
Productlon ~nses
Sub-total
LAND & BUILDINGS
Replacement Deprec£ation
Interest
Sub-total
TAXATIO~
MISCELLANEOUS COSTS
Rents
Lea_.__!8 Buying & P=Izing
Cost-Shared by ELT
Total Cost
i i m
Weight of Tobacco I~volved
(Million ibs)
917
53
O
14
26
86
1096
18
NA
18
1058
1196
2254
46
(140)
3274
83
28
2
O
20
3.
0
51
23
NA
23
3
1637
IG40
13
(25'7)
1470
J
83
O
976
O
O
468
88
1532
384
384
1916
58
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
729
2
304
O
224
43
1302
604
1
605
351
23
538
70
982
191
NA
191
5o
32~
3162
Ill I
58
(=:
(,..,-
C~
-96-
TABLE 6
_COST OF BTJY:~GI STABI'LZZINGr THRESHING & PACK2:I~ BURLE'E TOBACCO
BROWN & WILLIAMSON TOBACCO CORPORATION - LEXINGTONt 1976
ao
Units: £ Sterling/Ton of Tobacco Packed
PEOPLE COSTS
Salaries & Fringes
Variable Labour
In~irect Labour
Casual Labour
Pensions, Insurance
& Other Fringes
Personnel
Sub-total
~IITERY COSTS
R~pla=ement Deprec£ation
Interest
OPERATING COSTS
Sub-total
Energy
Travel & Transport
Care & Maintenance
Production Expensem
~ BUILDINGS
Sub-total
Replac~nt Depre=i~t i~
Interest
TAXATION
Sub-total
MISCELLANEOUS COSTS
Rents
~_~ Buying & Prizing
Coat Shared by ELT
Total
Buying
14.90
0.86
0.23
O.42
1.40
17.81
0.29
17.19
19.43bl
36.62
0.75
(2.27)
53.20
• i
Prizing
.|,
0.45
0.03
0.32
0.02
0,83
O.37
0.05
26.60]3"
26.65
O.21
(4.18)
23.88
Process
22.69
i0.88
2.05
35.62
8.93
8.93
44.55
a. -ConvIEsion rata= £i m $ 1.661
b. Charges ~ external contractors.
General
16.95
0.05
7.07
5.21
i.OO
30.27
14.05
O. 02
14.07
8.16
0.53
12.51
1.63
22.83
4.44
NA
4.44
1.16
0.74
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
a, ,,
PEOPLE COSTS
Salaries & Fringmm
variable Labour
In~rmct Labour
Pensions, InmuEance
& Other Fringes
Personnel
Sub-total
MACHINERY COSTS
Replacement Depreciation
Znterest
Sub-total
OPERATING COSTS
Energy
Travel &Transl~3rt
Care & Maintenance
Production Expenses
Sub-total
LASTD ARD BUZLDINGS
Replacement Depreciation
Interest
Sub-total
TAXATION
MISCF~RNF~DUS COSTS
Rents
Total Cost
Weight of Tobacco Involved
(Million Pounds)
,,, • , _ ,,
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
(| ooo',)
Protein8
467
228
695
240
240
935
41
General
i,
342
1
144
105
20
612
291
NA
291
291
174
ii
255
39
41'4
9O
NA
90
24
15
1506
41
O
tJ~
tJ~
C~D
C~D
C~
-98-
• TAa, cZ •
COST O.P BUFFING, STABILIZING, T}mES}IING & PACKING TOBACCO
EXPORT LEAF TOBACCO COMPANY 1,976
i,
PEOPLE COSTS
Salaries
Variable Labour
Indirect Labour
Pensions & Znsuran=e
Personnel
Sub-total
MACHINERY COSTS
Replacement Depreciation
Interest
Sub-total
OPERATING COSTS
Energy
Travel & Transport
Care & Maintenance
Production Expenles
Sub-total
LAND AND BUILDINGS
Replacement Depreciation
Interest
Sub-tot al
TAXATION
MISCELLANEOUS COSTS
Rents
Payment for Processing
by Lexington
Total
Weight of Tobacco
Involved (Million Ibs )
2208
1164
3372
37
9
46
19
2183
71"
102
2375
7
5800
160
llm i
Prooesming of 40 Million Pounds
ooa',)
80
721
801
90
46
136
17
37
297
351
131
1419
120"!
2141
2351
910
14
5416
2218
.858
3076
838
74
1049
1403
3364
278
472
750
10
12616
120
** 25% of Lear Enters Process Without Being Prized First
i, i i |l i m i i i
i
IGeneral
1379
2554
41
3974
68
68
54
195
37
2238
2524
49
39
88
1458
625
2019"
10756
160
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-99-
COST OF BUYI_NG, STABILIZING, THRESHING_ & PACKING TOBACCO
EXPORT LEAF TODACCO COMPANY 1976
PEOPLE COSTS
Units: £ Sterling/T~ of Tobacco Packed
Salaries
Varla~le Labour
Indirect Labour
Pensi~s & Ins~=e
Personnel
Sul~total
MACHINERY COSTS
ReplacmentDepreciation
Interest
Sub~t otal
OPERATING COSTS
Energy
Travel & Transport
Care & Maintenance
Production Expenses
Su~total
LAND & BUILDINGS
Replacement Depreciation
Interemt
TAXATION
MISCELLANEOUS COSTS
Subtotal
Rents
Payment for Processing
by Lexington
Total
18.61
9.81
28.42
O.31
O. 08
O. 39
O.16
18.40
0.60
0.86
20.02
0.06
48.89
Prizing
0.90
8.10
9.00
1.01
0.52
1.53
0.19
0.42
3.34
3.94
1.47
15.95
Process
24.06
26.42
10.23
O.16
60.87
24.93
9.64
34.57
9.42
0.83
11.79
15.77
37.81
3.12
5.30
: .43
O.ii
141.78
Genial
11.62
21.53
O.35
33.50
O.57
0.57
0.46
1.64-
0.31
18.86
21.27
0.41
0.33
O.74
12.29
5.27
17. Ol
90.66
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
-IO0-
TABLE i0
OPERATING COSTS OF A PRIMARY DEP~r~.
AND ITS TOBACCO STORE
BROWN&WILLIAMSONTOBACCO CORPORATION
PEOPLE COSTS (in=luding
Social Costs~
Salaries d/rect and
indirect
Wages direct and
indirect
Sub-total
MACHINERY COSTS
Replacement Depreciation
at ?%
Interest at 8%
Sub-total
OPERATING COSTS
Energy
Travel and Transport
Care and Maintenan=e
Produc~tion Expenses
Wastage
Recovery (Rett) Via
Sheet Process
Sub-total
Consumables (Casing, Flavour~ng)
Sub-total
LAND A~D BUILDINGS
Replacement Depreclati~
at 2.5%
Interest at 8%
TAXATI~
MZ~ELLRNIOUS COSTS
Oth~T Rmpls=~t
Dep=eclatic~ at 7%
Sub-total
Total Corot
Weight of Cut Tobacco Supplied to
Fa~ri=ation- Pounds
.. . _.
U'S. S
Louisville
1977
1,093
6,038
7,131
1,315
772
2,087
609
140
2,228
469
2,200
(I,620)
4,026
6,261
10,287
498
746
1,244
20
502
21,271
84,935,997
l O00s
IRecon
1977
,,m
130
301
431
668
761
1,429
560
11
270
88
247
(174)
1,002
461
1,463
299
1,463
1,762
395
5,480
e,614,ooo
IMacon
Budget
1978
398
i, 095
1,493
722
813
1,535
821
49
720
89
1,151
(759)
2,071
2,169
4,240
299
1,463
1,762
m
• 395
9,425
41,647,000
;' i,cludo, FIcA.',
Hospital Insurance, Group Life Insurance and Pensi_on. Expense.
C~
tJ~
C~
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
Units:
--101-
OPERATZNG COSTS OF A PRIMARy DZpAR~
AND ITS TOBACCO STORE
BROWN & WILLIAMSON TOBACCO CORPORATION
£ Sterling/Ton of Tobacco Supplle~ to Fabrication a.
l
PEOPLE COSTS ( including
Soc£al Costs)
Salaries
Wages
direct and
~ndirect
direct and
indirect
Su~>-total
MACHINERY COSTS
Replacement Depreciation
Znterest
Sub-total
OPERATING COSTS
Energy
Travel and Transport
Care and Maintenance
Production Expenses
Wastage
Recovery (Nett) V~a
Sheet Process
Sub-total
Consumables (Casing, Flavouring)
S~b-total
LAND AND BUILDINGS
Replacement Depreciation
Interest
Sub-total
Louisville
1977
16.49
91. i0
107.59
19.84
ii. 65
31.49
9.19
2.11
33.61
77 .O8
33.19
(24.44)
60.74
94.46
155.20
7.51
ii. 26
18.77
Macon
1977
19.34
99.38
I13.21
212.59b"
83.31 c.
1.64
40.16
13.09
36.74
(25.SB)
149.06
68.58
217.64
44.48
217.64
262.10b"
Macon
Budget
1978
12.24
33.69
45.93
22.22
25.02
47.24
25.26 c.
1.50
22.15
2.74
35.42
23°35)
63.72
66.74
L30.46
9.20
45.02
54.22
TAXATION
MISCELLANEOUS COSTS
Other Replacement Depreciation 7.59
58.76
Total 320.92
815.23b
NOTES: a. Conversion rate £i = $ 1.748
b. Cost high due to production for only part of year.
c. Majority of cost ~ue to air conditioning.
32.50
"290.00
i, i,
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
!
<
L
O
-102-
TASL¢ 12
,O_P~AT~NG qosTs 9F 8 ~,DU~Y p~PARTN~T
ASD ZTS TOnACCO, ST0~
IMPERIAL TOBACCO LIMITED - CANADA [1977)
PEOPLE COSTS (includLing Soc£al Costs)
Salaries direct
indirect
Wages direct
indirect
Sub-total
MACHINERY COSTS
Replacement Depre~iatlon
Interest
Sub-total
OPERATING COSTS
Energy
Travel & TTansl~ort
Care &Maintenance
Production Expenses
Wastage
Re¢overy by Sheet Process
Sub-total
LAND AND BUILDINGS
Replacament Depreciation
Intsrast
Sub--total
TAXATION
MISC|~ANEOUS COSTS
Total Cost
| m aim
Weight of Cut Tobacco Supplied to
Fabrication DepuTanent (Pounds)
m
Can # O00's
Guelph I Montreal
58
9
766
262
1095
414
160
574
iio
242
110
400
(40)
822
340
188
528
124
3143
30, OOO, OOO
80
49
1069
318
1516
317
255
572
132
265
125
200
(20)
702
371
117
488
85
3363
].2,000,000
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
c
k.
.£
k.
c~
Units :
--103-
TABLE 13
0P_~TING Cg~S OF A P~MARY D F~AR~
.AND ITS TOBACCO STORE
IMPERIAL TOBACCO LIMITED -CANADA (1977)
£ Sterling/Ton of Tobacco Supplied to Fabri=ationa"
PEOPLE COSTS
Salaries
Wages
direct
Indirect
direct
indirect
Sub-total
MACHINERY COSTS
Replacement Depr eciatlon
Interest
OPERATING COSTS
Sub-total
Energy
Travel & Transport
Care & Maintenance
Wastage
Recovery by Sheet Process
LAND AND BUILDINGS
Sub-total
Replacement Depreciation
Interest
TAXATIC~
Sub-total
Total Coet
Guelph
2.31
O. 36
30.49
10.43
43.58
16.48
6.37
22.85
4.38
9.63
4.38
15.92
(1.59}
32.72
13.53
7.48
21. Ol
4.94
125.O9
Montreal
7.96
4.88
106.37
31.64
150.85
31.54
25.37
56.92
13.13
26.37
12.44
19.90
(1.99)
69.85
36.92
9.95
48.55
8.46
334.63
NOTE: a. Conversion rate £i = $ 1.876
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
c
..I
1..
C
-104-
TABLE. 14
OPER~T..~G COSTS OF A PRIMARY DEPARTMENT
aND TOe Cco ST0
B.A.T ~V.,K. ARD EXPORT) LTD.. (1976/77)
|, ,, i,
PEOPLE COSTS ( including
Social Costs)
Salaries direct
indirect
Wages direct
indirect
Sub-total
MACHINERY COSTS
Replacement Depreciation
Interest
OPERATING COSTS
Energy
Travel and Transport
Care and Ma~J~t~a~Ice
Production Expenses
Wastage
Sub-total
Sub-total
LARD ANDBUILDINGS
Replacement Depreciation
~nterest
TAXATION
MISCELLANEOUS COSTS
Renta
Sub-total
(Storage and
External Handling)
Total Cost
Weight o£ cut tobacco supplied
to fabrication Pounds
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
LIVERPOOL
£
159.639
45,122
317,668
1,295
526,725
93,045
131.098
224,143
46,700
32.590
30,054
11,834
220,794
341,972
27,921
50,964
78,885
12.594
151,O00
1,335,319
14.316,588
SOUTHAMPTON
£
120,0OO
63,000
215,000
4,000
402,000
84.000
69.000
153.O00
64,000
30.0OO
59,000
18,0OO
204. 000
375,000
20,000
61,0OO
81,0OO
59 ,OOO
165,O00
1,235,000
14,405.004
t~
tJ
C
-105-
TABLE i~
OPERATING COSTS OF A PRIMARY DEPARTMENT
~RD ITS TOBACCO STORE
B.A.T (U~K. AND EXPORT) LTD., (1976/77)
Units: £ SteEling/Ton of Tobacco Supplied to Fabri=ation
PEOPLE COSTS (including
Social Costs )
Salaries dLireet
indIEect
Wages direct
indirect
Sub-total
MACHINERY COSTS
Replacement Depreciation
Znteremt
OPERATING COSTS
~nergy
Travel and Transport
Care and Maintenance
Production Expenses
Wastage
Sub-total
Sub-%otal
LAND AND BUILDINGS
Replacement Depreciation
Interest
Sub-total
TAXATION
MI SCELLAR~OUS COSTS
Rents
Total Cost
LIVERPOOL
24.98
7.53
49.70
0.20
82.41
14.56
20.51
35.07
7.31
5.10
4.70
1.85
34.55
53.51
4.37
7.97
12.34
1.97
23.63
208.93
SOUTRRMPT0m
18.66
9.80
33.43
0.62
62.51
13. O6
IO. 73
23.79
9.95
4.67
9.17
2.80
31.72
58.31
3.11
9.49
12.60
9.17
25.66
192.04
BAT Co LTD - MINNESOTA TOBACCO LITIGATION
w
O',,
