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| U. 8. DEPARTMENT oF NARTMENT OF AGRICULTURE |

Appalachian Apples

PACKING COSTS and EFFICIENCY

U.S. DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
Marketing Economics Research Division

PREFACE

This report is part of the Northeast regional project NEM-19, ‘‘Handling Methods
and Costs in Storing and Packing Apples.’’ In this particular phase of the regional
project, the Agricultural Marketing Service cooperated with West Virginia University
in planning the study and conducting the fieldwork. This study is part of a continuing
research program designed to improve efficiency and reduce costs in the marketing
of farm products.

This is the fourth in a series of reports on economic-engineering studies of
Appalachian apple packinghouses. Earlier reports are:

‘*Costs and Mechanical Injury inHandling and Packing Apples’’ by Homer C. Evans
and Ray S. Marsh, West Virginia Agricultural Experiment Station Bulletin
416, June 1958.

‘*Possibilities for Reducing Apple Packinghouse Costs’’ by Homer C. Evans and
Ray S. Marsh, West Virginia Agricultural Experiment Station Bulletin 436,
November 1959.

‘*Cost of Marketing Appalachian Apples’’ by Jules V. Powell and John K. Hanes.
U. S. Dept. Agr. Marketing Research Report 300, February 1959.

Grower-packers in the Appalachian area cooperated wholeheartedly in permitting
work-sampling observations and time studies to be made in their plants during the
packing seasons and provided detailed information on overhead and operating costs.
Equipment replacement costs were supplied by Mr. C. E. Sheetz, Food Machinery and
Chemical Corporation, and Mr. Kurt Story, Trescott Company. The pictures were
taken by David Creel of the West Virginia Agricultural Experiment Station.

CONTENTS

DULIMIIMALY 306 << sie: ose 6) o!erpoi ie Wot Site were) eel sie. ‘Sipeine Wel elo We le Wepieiite (aie Selneteiiel at ote mo ltntie pe 3
Introduction: 2 ss) sis 26 wee sla Setieua e/a ie slneive-yerte ue, shoe) ‘eu cul Pel ciiomol one Netomenrs nell ol oMteite 4
MEthOd Of Study .oc.co0 aja wo Gh clleet wo ace 0) or eletinl oie pele es cial enietel sitese ouem omen ane 4
Packer labor requirements)... < 6 < s)s)siwms 61 oe oie eter eorne: or cpeetarte. io) euncta te Tetet clas 6
Mffect of apple: Size’ é.<. sore wy ose « 0 <0: 61s 4 «© eMoketsns refs « oilch ce stoi Poh shay ihe 6
Effect of type-oficontainer), .cs'o cutter ters ic ©. ais uct oael a) oy of cust elem eneriove cic 6
Effect of packer payment plans? 2.25. .%. Guo o 0 Scotereie © obtsl ey ener: os ole ie fe 6
Effect of semiautomatic tray-packing machines .....-2.2c2eccee+cccce 8
Packer labor requirements for packing apples in bags .....cccceesccceevee 9
Packing labor Costs? sca. sto se 1s cuetio fie tole o Neve os ic donee Renee oh enamel rele? <ikeeeuome 9
Equipment requirements and costs
Container -COSsts . 675.6 4: o sis 6 -«. 0" 6 te oe) ose) eile fo) oie) iol eet ieite sine nedoel lc ne vedere eis 11
otal season costs ; %. <.s % sis. 0 0c «1006 soa etic! ch owe) eo veitewe ronelenonestokeria; el sme 13
A tray-pack plant <: 0.60 oo a cue © to. ott or oie iie et ote eee oieeMe rele tele Medco ols 14
Avbag plant sc crs0 s) se 1e-0 40) 0 6 “cone oi! onl uae laine felei1 1s 6 sito e one Morienlet(s/serem seule 14

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A multicontaine A ts plant ° ° .-7 ° ° °o ° ° e e ° ° e ° eo QO ° ° e e e° e@ Qo e ° e ° eo eo e °° eo ° ° ] 7
Implications e e ° ° ° e ° ° ° ° ° ° ° ° e Q ° ° ° e ° ° ° ° °e ° ° ° ° e e ° ° ° °o ° ° ° ° e ° ° e ° ° 20
October 1960

SUMMARY

Labor and machinery costs are of major importance in determining the efficiency
and costs of packing apples inthe Appalachianarea. This report analyzes these factors
as they affect the costs of performing one of the most important packinghouse jobs--
placing apples in containers for shipment to the fresh market.

Labor costs in packing apples are affected by (1) type of equipment, (2) type of con-
tainers, and (3) method of paying the packing workers. Machinery costs are affected by
(1) types and quantities of equipment and (2) length of packing season. Packinghouse
operators are interested in finding least-cost combinations of labor and equipment.

Workers can pack more quickly from return-flow belt systems than from rotating
tubs. The rotating tubs have twodisadvantages: (1) They have low capacity per square
foot of floor space and (2) they are not adapted to the use of semiautomatic packing aids.
Workers could pack 18 cartons per hour from rotating tubs and slightly over 26 cartons
per hour from return-flow belts. If semiautomatic tray-packing machines were in-
cluded in the return-flow belt system the packing rate could be increased to 47 cartons
per hour.

The type of container affects packing efficiency. Tray-pack cartons can be filled
more quickly than Northwest boxes. From rotatingtubs, packers could attain a rate of
18 tray-pack cartons per hour orl7 Northwest boxes. (Northwest boxes were not packed
from return-flow belts in any of the plants studied.)

Master cartons of nine 5-pound andtwelve 4-pound bags were packed from return-
flow belts. The average production rate for cartons of twelve 4-pound bags was 5.8
cartons per hour when homemade bagging contrivances wereused and 8.15 cartons per
hour when commercial bagging machines were used. For master cartons of nine 5-
pound bags the production rate was 8.7 cartons per hour with homemade bagging con-
trivances and 1l.2 cartons per hour with commercial machines.

Methods of paying the packing workers had no discernible effect on the performance
rates of bag packers but did have considerable effect on that of tray packers. Packers
who were paid a piece rate of 10 cents per tray-pack carton, could pack 18 cartons of
size 100 apples per hour. Those who were paid an average hourly wage of 75 cents
packed 14.5 tray-pack cartons per hour.

When labor costs based on the foregoing labor requirements were combined with
equipment costs, for certain lengths of season and volumes of output, the data indicate
that increased mechanization of the packing operation pays. In smaller plants with
short packing seasons of 200 hours and season output of 50,000 tray-pack equivalent
units, packing costs for labor and machinery could be reduced from 2] cents to 15 cents
per tray-pack carton by using semiautomatic tray-packing machines.

In larger plants that operate 1,400 hours a season and have an output of 250,000
tray-pack equivalent units, labor and machinery costs could be reduced from 19 cents
to 12 cents per carton of tray packs by using the semiautomatic equipment. Similarly,
labor and machinery costs for each carton of twelve 4-pound bags could be reduced
from 26 to 23 cents each, while costs for cartons of nine 5-pound bags would drop from
21 to 19 cents each if semiautomatic bagging machines were used instead of manual
methods.

APPALACHIAN APPLES--PACKING COSTS AND EFFICIENCY

by
Jules V. Powell, agricultural economist
Marketing Economics Research Division

INTRODUCTION

Packing-cost studies in Appalachian apple packinghouses have indicated wide vari-
ations between plants in the cost of packing apples for fresh market. 1/ There are also
variations in costs from day to day, or week to week, in any particular plant. These
variations are due to many factors which affect packinghouse efficiency and labor costs.

Appalachian apple growers and packers are placing increased emphasis on sales to
the fresh market. In order to meet the competition from other apple producing areas,
packinghouse operators are interested in finding ways to reduce their production and
marketing costs. This report is concerned with one of the major cost components in
marketing apples--the labor and machinery used in placing apples in containers for
shipment to market. The major factors affecting the efficiency and cost of packing
labor are analyzed: (1) Types of packing equipment, (2) type of containers, (3) method
of paying workers, and (4) length of packing season.

METHOD OF STUDY

This study is based upon data obtained from eight packinghouses in the Appalachian
area. The packinghouses were selected so as to permit comparison of costs and effi-
ciency for different types of equipment and different methods of packing apples for the
fresh market. A further requirement was that each plant should pack a minimum of
50,000 bushels per season. The sample consisted of one packinghouse in Pennsylvania,
two in Maryland, twoin Virginia, andthreein West Virginia. These plants were repre-
sentative of the more efficient methods of packing and marketing apples in the
Appalachian area.

Work sampling andtime studies were made ineach of the plants during the 1956-57,
1957-58, and 1959-60 seasons. Detailed records of season packout, sales, operating
expenses, and overhead costs were obtained from each plant in the spring of 1958
through personal interviews.

1/ Evans, Homer C., and Marsh, Ray S. Costs and Mechanical Injury in Handling
and Packing Apples. W. Va. Agr. Expt. Sta. Bul. 416, 26 pp., illus. June 1958.
Powell, Jules V., and Hanes, John K. Costs of Marketing Appalachian Apples.
U.S. Dept. Agr. Mktg. Res. Rpt. 300, 24 pp., illus. 1959.

= eae

The costs presented in this report do not necessarily represent actual costs in-
curred in any of the plants studied. To facilitate comparisons of efficiency of different
methods the following standardizations and adjustments were made: The labor require-
ments are the observed net time spent in packing plus an allowance of 15 percent of the
total worktime for personal delays, rest periods, and minor work stoppages. The re-
sulting labor requirements are not averages of the actual performance rates attained
in the eight plants, but are rates that can be attained by competent packers fully sup-
plied with fruit. Rates of output equalto or greater than the requirements used in this
report were found in 20 percent of the observations.

Labor costs were obtained by applying anhourly wage rate of $1 or a piece rate of
10 cents to the labor requirements obtained. Container costs were standardized to
represent the most popular sizes andtypesused throughout the area during the 1958-59
season. The net weight of apples in each type of container was obtained from samples
taken during the observations in each of the plants. Average net weights per container
used throughout the computations are shown in table 1.

Table 1.--Average weight and cost of various types of containers used in 8 Appalachian
apple packinghouses, 1957-58 season

Container : Gross weight : Net weight Cort Cea
; . container
Pounds Pounds Cents
PUCTAVEALCTA*. “ls cS o's 010 2 6 4 51 41 10
Mray “pack carton ....csssss 48 44 63
Northwest box. 3... 6262. s 6 0 50 44 70
Master carton: 2
9 5=pound bags. ......0.. 49 46 48
P2:4-pound bags. .s..c..s«? 52 49 55
P5°3=pound bags. .«....ss 49 46 62
Bushel- basket ....<0.6s<00%8 03 52 47 57
Graded-out fruit: 1/ :
Cartons (jumble filled) ....: 48 44 ---
Crates (jumble filled).....: 51 41 ---
Eliminated small apples .....: 59 49 oo

1/ Graded-out fruit consists of apples to be sent to processors or sold in bulk to
itinerant truckers. These apples are placed in used cartons and boxes.

Annual overhead and operating charges for use of packing equipment were computed
by applying certain percentages to the replacement cost of the equipment. These per-
centages--averages of those used by the plants inthe sample--were: Depreciation, 10
percent; taxes, 0.2 percent; insurance, 0.3 percent; repairs, 0.5 percent; and power,
1.3 percent. A charge of 3 percent was added to cover interest on the invested capital.
While, on the face of it, this seemsto be a small interest charge, when 3 percent of the
replacement cost is used for annual interest charge, it averages (over the lifetime of
the equipment) slightly over 5 percent on the undepreciated balance.

PACKER LABOR REQUIREMENTS

Labor requirements for packing are influenced by the type of container, the type of
equipment being used, the method of paying packers (that is, hourly or piece rate), and
the size of apples to be packed. The labor requirements observed in packing tray-pack
cartons and Northwest boxes are shown in table 2.

Effect of Apple Size

Apples packed in Northwest boxes and tray-pack cartons are sold by sizes which
indicate the number of apples in the container. Thus size 64 apples are much larger
than size 150. Large apples can be packed more rapidly than an equal weight of small
apples regardless of the type of containerorthe equipment used. For example, it took
3.07 man-minutes to pack size 64 apples in a Northwest box and 3.69 man-minutes for
size 150 apples when packers were paid apiece rate. Comparable labor requirements
for packing tray-pack cartons ranged from 2.55 man-minutes for size 64 apples to 4.29
man-minutes for size 150 apples. When packers were paid an hourly wage, labor re-
quirements for packing tray-pack cartons ranged from 3.22 man-minutes for size 64
apples to 5.18 man-minutes for size 150 apples.

Effect of Type of Container

Most competent packers believe they can individually wrap and pack apples in the
wooden Northwest boxes as rapidly as they canplace apples on the indented trays used
in tray-pack cartons. The data support this belief for the smaller sizes (table 3).
Workers paid a piece rate could pack 16.3 Northwest boxes of size 150 apples per hour;
for tray packs they averaged 14 cartons per hour when paid piece rates and 11.6 when
paid an hourly wage. There were toofew observations of hourly-rate workers packing
Northwest boxes for reliable estimates of packer performance rates. However, it is
believed that the performance rate would be below that of packers paid a piece rate,
but the relationship between labor requirements for Northwest boxes and tray-pack
cartons would remain the same.

A major reason for the lower labor requirements in packing small size apples in
Northwest boxes rather than tray-pack cartons is the amount of time required to place
the individual trays inthe cartons. Asthe size of apples decreases the number of trays
to be placed increases, thus increasing the total worktime required. For example,
packers paid a piece rate required 0.47 man-minute to place the trays ina carton. In
Northwest boxes this element is eliminated.

However, the use of Northwest boxes inthe Appalachian area has been declining in
recent years. Actually, most of the larger packers in the Appalachian area had aban-
doned use of Northwest boxes during the 1959-60 season, except for a few shipments to
the armed services or to foreign countries that particularly specified wooden boxes.

Effect of Packer Payment Plans

The number of cartons packed per hour in any given plant is influenced consider-
ably by the method of paying workers. In the Appalachian area packers were usually
paid a piece rate of 10 or 11 cents for each tray-pack carton or Northwest box they
packed. In plants that paid an hourly wage, rates ranged from 55 cents to $1 an hour,
depending upon the location of the packinghouse and the competition for labor in the

Hy ae

Table 2.--Labor requirements for packing apples from rotating tubs, by size of apples,
type of container, and method of paying workers, Appalachian area, 1957-58 season

(Man-minutes per container)

Container, wage payment Size of apples

method, and job element

64° 72° 80° 88 * 100° 113° 125% 138° 150

Tray-pack cartons, hourly rate

of pay: :
Get and place carton......:0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
Get and place trays.......: 45 .45 .45 .45 .54 .54 .54 .54 .54

Place fruit ....0+.c20c¢+2:31.68 1.84 2.00 2.15 2.38 2.62 2.83 3.05 3.25
DlampCaftON 25. 6 6s cles « t 613" 13 213 «53 413 03. 213 <13- 213
Wside-tullcarton ..6.6.60%+: «16 .16 1.16 1.16 .16 416 0 06©=4160641606«6|16
Get materials .......2264: Of .07 .O7 .O7 .O7 .O7 .OF7 .O7 .O7
Change station.......cce. ete 10°: -.20° 270: " .hOr “.diOr” LO? ” OMe eo

Total net worktime. ...: 2.74 2.90 3.06 3.21 3.53 3.77 3.98 4.20 4.40
Delay allowance......: .48 .54 .54 .57 .62 .67 #.70 .74 = .78

Total worktime. ...: 3.22 3.41 3.60 3.78 4.15 4.44 4.68 4.94 5.18

Tray-pack cartons, piece rates: :
Get-and- place carton....<.2 .-15 .15 .15 15 15 = .T5S, .15 ..15 415
Get and place trays.......: »39 .39 .39 .39 #147 #147 1.47 1.47 ~~ ~«WAT
Place trust S.. 3 sss se ses 3 1521) 61.30 1.38 1.50° 1.78" 2:00 2.18 2.43 2.61
Stamp) Carton. cies siso se ae ald «lS. 413) “203: obs 1309.13) 13 2.13
Aside full carton ........ oto lo. sho? slo. 4296. S16 16 4.16.
Getumaterials: . . sso 1s 3 3s : .O7 .0O7 OF .O7 .O7 .O7 .O7 .O7 = .07
Ghange' station. .ss66.«.2:e.: .06 -.06 .06 .06 .06 .06 .06 -.06 .06

Total net worktime....: 2.17 2.26 2.34 2.46 2.82 3.04 3.22 3.47 3.65
Delay allowance......: -38 .40 .41 .43 .50 .54 .57 .61 .64

Total worktime....: 2.55 2.66 2.75 2.89 3.32 3.58 3.79 4.08 4.29

Northwest boxes, piece rates: :
Get and place box........: .09 .09 .09 .09 .09 .09 .09 .09 .09
Place and adjust liner.....: .12 .12 .12 .12 112 112 112 0 = 112) = 12
Wrap and place fruit......:1.97 2.07 2.15 2.24 2.34 2.37 2.42 2.46 2.50
Stamp box..... eee cae ele. S12) a2. 22 es 2 lee ale, 2 le ee
Aside full box ...... Pee ele She SIR Hel wT ett alo abel,
Get materials ..........: -06 .06 .06 .06 .06 .06 .06 .06 .06
Change station........-.: .08 .08 .08 .08 .08 .08 .08 .08 208

Total net worktime. ...: 2.61 2.71 2.79 2.88 2.98 3.01 3.06 3.10 3.14
Delay allowance......: 046 .48 .49 «51 553. .53. 9.54 0 255° .55

[UU EIDE EIEN IREE REE RERE RE

Total worktime. ...: 3.07 3.19 3.28 3.39 3.51 3.54 3.60 3.65 3.69

Table 3.--Number of containers packed per hour from rotating tubs, by size of apples,
type of container, and method of paying workers, Appalachian area, 1957-58 season

Container and wage Size of apples

Be eneny meted 2 64 72° 80° 88 ° LOOMIS 25cmaer “50

Tray-pack cartons, hourly rate

Of pay ss ss 6s -« « cee a sie se ubo.Oeld.o 16.7 “15.95 714.5) obsess Saale. lee elo
Tray-pack cartons, piece rates : 23.5 22.6 21.8 20.8 18.1 16.8 15.8 14.7 14.0
Northwest boxes, piece rates. .219.5°18.8 18.3 17.7 17.1 W659 “16.6:4796-4" 1623

area. Obviously, a packer who can pack 17 or 18 tray-pack cartons an hour has more
incentive to work at anoptimum rate when paid 10 or 11 cents for each carton than when
paid a dollar or less for the same work. In plants paying a piece rate, packers aver-
aged 23.5 cartons per hour for tray-packing size 64 apples. Approximately 14.0 car-
tons per hour of size 150 apples could be packed in these same plants. Workers packed
18.6 cartons of size 64 apples and 11.6 cartons of size 150 apples in plants paying an
average wage rate of 75 cents per hour.

Methods of paying packer wages were determined largely by the location of the
packinghouse, the competition for labor in the area, and the emphasis on speed and
quality in the particular packinghouse. In areas where packing labor was plentiful,
packinghouse operators preferred to pay an hourly wage, not only because of the lower
labor costs of packing but also because they believe packers would do more sorting of
fruit and thus maintain a higher quality pack. In areas where packinghouses needed to
Pay a piece rate in order to attract a sufficient number of competent packers, the
overall pace of the packinghouse was faster, the volume of packed fruit per hour or day
was greater, and the quality of the pack less meticulously guarded.

However, it was observed that the caliber of packinghouse supervision hada
greater effect on the overall quality of the packinghouse output than the method of
packer payment. High-quality packs of fruit were put out by packinghouses that paid
a piece rate as well as ones that paid an hourly wage. Close supervision of packers,
either by a hired inspector who is continually on duty or by a packing supervisor, can
insure careful packing of fruit, regardless of the method of packer payment.

Effect of Semiautomatic Tray-Packing Machines

With the introduction of semiautomatic tray-packing machines, however, packers
should be paid an hourly rate. One packer plus a machine can pack three times as
many tray-pack cartons of apples as a packer using manual methods (table 4). If
packers were paid apiece rate, labor and machinery costs per unit would be prohibitive
or piece rates would have to be set so low that packers would not be attracted to the job.

Table 4,.--Labor requirements in tray-packing apples with semiautomatic tray-packing
machines, Appalachian area, 1957-58 season

Item 5 Sizes 64-88 : Sizes 100-150
—_ Man-minutes Man-minutes
Per carton: :
Net worktime......02..2e0c003 0.88 1.07
15 percent delay allowance. . : ~16 nile)
Total worktime.....: 1.04 1.26
Cartons Cartons
Pershore cc 61%. 6 66ic.0 6 6 6 ot 57.7 47.6

PACKER LABOR REQUIREMENTS FOR PACKING APPLES IN BAGS

The type of bagging equipment used was a major factor affecting labor requirements
for packing master cartons of 4- and5-poundbags. Methods of packer payment or type
of crew organization had little effect on packer performance rates (table 5).

Labor requirements were lowest for 4-pound bags in packinghouses A and G In
packinghouse A, one girl filled the bags, another closed them, and still another placed
the bags in cartons. The packers in packinghouse G filled and closed the bags and
placed them incartons. Bothpackinghouses Aand G had commercial bagging equipment
which consisted of two bagging heads per machine and automatic weighing devices
which cut off the flow of apples when the bags were filled. Packinghouses C and D had
simple bagging equipment which consisted of bagging heads (or bag holders) and
separate scales.

Labor requirements for packing 5-pound bags were lowest in packinghouses B, F,
and G. All of these plants had commercial bagging machines, but different crew ar-
rangements. In packinghouses B and F, one girl filled bags, another closed them, and
still another placed them in cartons. In packinghouse G, as explained above, the bag
packer also closed the bags and placed them in cartons. Packinghouse E was the only
one observed packing both polyethylene and mesh bags. A carton of mesh bags could be
packed more quickly than one of polyethylene bags. However, polyethylene bags are
much more widely used for apples than mesh bags, largely because of their lower costs.

PACKING LABOR COSTS

When packers are paid apiece rate of, say, 10 cents per carton, that is the packing
labor cost per unit of output regardless ofthe volume of output for any given unit of time
or for the season. When packers are paid an hourly wage, however, the labor cost for
each unit of output varies inversely withthe number of units packed in a given period of
time. For example, the packing labor cost for a carton of size 64 apples when packers
are paid an hourly wage of 55 cents would average slightly less than 3 cents per carton,
with an output per packer of 18.6 cartons per hour. For size 150 apples, labor costs
per carton would average less than 5 centsper carton. With an hourly wage rate of $1
per hour, packing labor costs would be 5.4 cents per carton for size 64 apples and 8.6
cents for size 150.

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EQUIPMENT REQUIREMENTS AND COSTS

The amount and cost of packing equipment required for any particular level of
output can vary widely depending upon the preferences of plant operators as to size,
flexibility, and expectations for future levels of output. The equipment specifications
in the following analyses are based on observed types and combinations of equipment
currently used in the Appalachian area. In order to isolate the packing cost element,
only the equipment used directly by the packers is included. Or, putting it another way,
the dumper, sorting tables, and transportation belts or trucks are not included in
equipment costs for packing.

Equipment costs for the rotating-tub system are based on 40 tubs (two rows of 20
tubs each) with a canvas-cup weight sizer running the length of the tubs (fig. 1). This
equipment is no longer manufactured because it does not lend itself to the use of semi-
automatic packing aids and has the further disadvantage of low output rate per square
foot of floor space. However, much of this equipment is being used in the Appalachian
area, and at 1960 equipment price levels the 40-tub unit would cost $9,875 installed.

Equipment costs for the return-flow belt system are based on two 16-inch belts
80 feet long (fig. 2). If nine packers are stationed along the belt, this allows almost
9 feet of space per packer. Twelve feet would be preferable and some manufacturers
recommend 18 feet per packer, especially if operators expect to introduce the semi-
automatic tray packers into the system. For this analysis, however, 9 feet of space
per packer was allowed. The total costof this return-flow belt system would be $13,450.

Semiautomatic tray packers may beused with return-flow belts (fig. 3). These re-
quire a minimum of 7 feet per packer, although 12 to 18 feet is preferred to allow ade-
quate space for the accumulation of fruit. The semiautomatic tray-packing machines
observed were installed at a definite spot along the return-flow belt, but it would be a
simple matter to make them mobile so that they could be moved to take care of heavy
runs of fruit to one or two sizes. Under these conditions, five semiautomatic tray
packers would be sufficient for the volumes consideredhere. At 1960 price levels, the
cost of these machines installed was $738.50 each, or $3,692.50 for the complete
installation.

Bagging machines are currently being built by several manufacturers in a wide
range of prices. The ones incorporated into the following analysis were medium-priced
ones costing $401 installed. The numberof bagging machines has been varied in order
to attain the levels of output considered.

CONTAINER COSTS

Container costs varied considerably even for the same type of container, particu-
larly in tray-pack and other fiberboard cartons.

Differences in container costs were due to differences in quality of the fiberboard
and the amount of printing and artwork on the carton. For example, cartons of heavy
fiberboard were used for apples that were to be placed in storage. Apples packed for
immediate shipment to market were placed inthinner cartons, which may have had more
advertising material printed on them.

Costs of materials for tray-packing apples, including the carton, trays, and pad,
averaged 63.3 cents and ranged from 60.5 to 67.2 cents each. Costs for master cartons,
twelve 4-pound bags, and bag closures ranged from 52.6 cents to 60.4 cents and aver-
aged 55.2 cents per completed carton. Master cartons, bags, and closures for nine 5-
pound bags of apples averaged 47.6 cents. Total costs for Northwest boxes, including
lid, pads, and wraps for 100 apples, averaged 70 cents.

Ps ee

Figure 1.--A typical packing line
using rotating tubs.

BN-11180-X

Figure 2.--A modern plant layout
using return-flow belts and
dimension sizer.

BN-11181-X

Figure 3.--A semiauto-
matic tray-packing
machine.

BN-11182-X

TOTAL SEASON COSTS

This section compares costs of packing various types of containers using types of
equipment described previously for certain quantities of output, methods of paying
workers, and varying lengths of season. Before this analysis is undertaken, however,
it might be well to describe how packinghouses in the area actually operate.

The length of packing season for the eight plants studied varied widely. Total hours
of operation ranged from slightly less than 400 to over 1,400 hours. The total season
hours of operation for the individual packinghouses seemed to depend primarily upon
the amount of storage capacity of the plant. There seemed to be little relationship--
at the levels of output considered here--between the volume of fruit to be packed and
the length of packing season. The largest plant studied packed apples less than 400
hours, the smallest plant packed approximately 500 hours, while three of the medium-
size plants had packing seasons ranging from 1,200 to 1,400 hours.

The packinghouses having the longer seasons of operation were those that packed
only out of storage. Fruit from the orchard was received into storage and was packed
on order. These plants also emphasized high quality, bruise-free fruit. Packing was
largely a hand operation andthe pace was slow. Mechanical means of filling cartons or
bags were not employed. While actual costs of packing apples in these plants were
higher than they might have been, returns to the plant were also higher because of the
premium prices paid for apples from these firms.

Those plants with short packing seasons had limited storage facilities and packed
apples as they were brought fromthe orchard. Overflow fruit in excess of the capacity
of the packing line was placed in storage until it could be packed. The flow of fruit
through these packinghouses was rapid. It was in these plants that most of the obser-
vations of newer types of packinghouse equipment were obtained.

ue

Most of the plants with long packing seasons had only one dumper and packed only
one variety of apples at any particular time. The plants with short packing seasons,
however, usually had two or more dumpers and could pack two or more varieties of
apples concurrently. For example, these packinghouses might pack Extra Fancy Red
Delicious in tray-pack cartons, Fancy Red Delicious in Northwest boxes, and U. S. No. 1
Jonathans in master cartons of twelve 4-pound bags or nine 5-pound bags. Following
are some simplified examples of the effect of packing equipment and hours of operation
on costs.

A Tray-Pack Plant

Assume first, a packinghouse that packed only tray-pack cartons and Northwest
boxes. Labor and machinery costs per carton for various hours of operation would be
as shown in table 6. Labor and equipment costs were computed from the labor and
equipment requirements presented earlier.

Labor and machinery costs are higher for rotating-tub plants than for return-flow
belt plants for all types of containers, whether packers are paid a piece rate or an
hourly wage. This illustrates the comparative inefficiency of the rotating tubs.

For plants that have rotating tubs, however, and are not in a position to change
types of equipment in the near future, labor costs can be minimized by paying packers
an hourly wage. Even for a short season of 200 hours, labor and machinery costs for
each tray-pack carton produced would approximate 11.2 cents if packers were paid $1
per hour (a high wage rate for the area) and 13.5 cents if packers were paid 10 cents
per carton.

Labor and machinery costs are lower for return-flow belt plants than for rotating
tub plants because of the higher rates of output packers are able to attain from this
equipment. The higher machinery costs are morethan compensated for by lower labor
costs. Savings that are possible with return-flow belt equipment are further augmented
by the addition of semiautomatic tray-packing equipment. Labor and machinery costs
would approximate 2.6 cents per tray-pack carton overa 1,600-hour season in return-
flow belt plants with semiautomatic tray-packing machines, 4.3 cents with return-flow
belts, and 7.4 cents with rotating tubs--assuming all packers were paid a wage of $1
per hour.

A Bag Plant

If a packinghouse specialized in producing consumer packs of 4- or 5-pound bags,
labor and equipment costs might be as shown in table 7. Although bags can be filled
manually from rotating tubs, this type of operationwas not observed. In this example,
the same lengthof return-flow belt is used but the types of bagging machines are differ-
ent. In the first case, the bagging is done from return-flow belts using homemade or
inexpensive bag holders and separate scales. The bagging crew consists of nine packers
and two extra employees who place the bags in cartons. This setup is similar to one
observed in the area. In the secondexample, packers use commercial, semiautomatic
bagging machines. These packers fill and close the bags and place them in cartons.

It costs less to pack master cartons of nine 5-pound bags than to pack cartons of
twelve 4-pound bags because a 5-pound bag can be filled as quickly as a 4-pound bag,
and there are three less bags to be filled. For any given type of equipment or wage
payment, it is cheaper to pack the 5-pound bags. The cheapest way to pack cartons of

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Table 7.--Estimated labor and equipment cost per carton for packing Appalachian
apples, by 2 methods of bagging, for seasons of 200 to 1,600 hours

Return-flow belt 60 feet long used with--

Ker Homemade bagging Commercial bagging
machines : machines
Workers <0. 10. «6 3 « ees « 3 s. (NUMbEer): 7; ll 6
Labor capacity for: 3
12 4-pound bags 2/
oe ee ee es (Cartons per crew Houeh: 52.2 48.9
9 5-pound bags 3/ :
oe ee eee» (Cartons per crew hour): 78.3 67.2
Replacement cost of belts .. (dollars): Papraratl Pda ap AL |
Replacement cost of bagging machines:
° oO ° ° oO ° ° ° ° ° ° ° ° ° ° Qo e e (dollars): 4/ 900 2,406
Total replacement cost of bagging :
machinery... «6 « «0s.%-.. (dollars): 3,127 4,633
Annual cost of machinery Dye (dollars): 478 709

Labor and machinery cost per carton
when wage rates were--

$1 per ; 12 cents : $1 per : 12 cents

hour ‘per carton’ hour ‘per carton
Cents Cents Cents Cents
12 4-pound bags per carton ina
season of-- :
DOOPNOUT Senos ene ren erad eee ener one 23.9 16.6 19.5 19.2
AQO hours se ises Sse eee eae 21.6 14.3 15.9 15.6
GOOPHOUT Siac Neacuel conc rer neN ee tee 20.8 13.5 14.7 14.4
SOOMMoOuTSicy emt cn el won codes comolemomen : 20.4 3e 14.1 13.8
IMO COROT Sige cdot cca eciios dmecmcue nc a: 20.2 12.9 13.7 13.4
9 5-pound bags per carton ina
season of-- :
ZOO WOT Sis ose exe) cues ers ee uenee 16.0 15.1 .2 Nf)
AO OB OUTS merece cc voles cicebolte Romietoutenioun: 14.4 1335 MS) 14.3
GOOPHOUTS isc cscs ene) ce eeeeeuoeas 13.9 13.0 10.7 13.8
B00 hours 47. 2s cto otc e eet ete wets: 137 12.8 10.2 1333
I OO0OMhouT: Sis cee cues 2 cen one, 4 coors 13.5 12.6 10.0 13.1

"1/7 9 packers filling and closing bags paid $1.00 per hour; 2 placing bags in cartons
paid $0.55 per hour. Packers using patented machines fill and close bags and place
them in cartons.

2/ Cartons per hour per worker--homemade machines 6, patented machines 8.

3/ Cartons per hour per worker--homemade machines 8, patented machines 11.5.

a Cost of scales and bagging head. Could range from $25 to $150. Arbitrarily set
at $100.

5/ Belts and patented bagging machines depreciated15 percent. Scales and bag heads
not depreciated. Sate

5-pound bags would be to use commercial bagging machines and an hourly wage rate
for the packers. For a short season of 200 hours, total labor and machinery costs
would amount to 14.2 cents per carton. If the season were extended to 1,600 hours,
costs would decline to 10 cents per carton.

To meet the demands of the trade, however, packinghouses also must pack 4-pound
bags. This is not a great inconvenience, however, because it merely entails the added
inventory in bags. The data presented in table 7 indicate that it is slightly cheaper to
pack master cartons of twelve 4-pound bags using homemade bagging machines and pay-
ing packers a piece rate of 12 centsper carton. The next cheapest method would be to
use commercial bagging machines and pay packers a wage of $1 per hour. Since this
method was cheapest for 5-pound bags, and since the packinghouse would have to pack
both sizes, the least-cost method would be touse commercial bagging machines and pay
the packers an hourly wage rate. The cost advantage of the commercial machine and
hourly wage method would vary with the wage paid.

A Multicontainer Plant

Throughout any particular seasona packinghouse has orders for tray-pack cartons,
Northwest boxes, master cartons of bags, and other types of containers. The savings
on cost of labor and machinery possible with the semiautomatic tray-packing and
bagging machines would be made only on that portion of the total plant output that was
packed in tray packs and bags. There were no observations of improved methods of
packing the Northwest box or other types of containers.

A typical season output by type of container--disregarding varieties of apples--
might consist of 45 percent tray packs, 20 percent Northwest boxes, 15 percent cartons
of twelve 4-pound bags, 10 percent cartons of nine 5-pound bags, and 10 percent miscel-
laneous containers, such as bushel baskets, wirebound crates, cell cartons, and jumble-
filled cartons and boxes. This was the 1957-58 pattern of output for the eight plants
studied. Individual plants tended to specialize in packing two or three particular
containers.

For various expected levels of output, there would be combinations of packing labor
and equipment that would be more efficient thanothers, even for the packing job alone.
To explore this possibility, the typical season outputs of types of containers were used
to arrive at an expected level of total output. All containers are expressed on a tray-
pack equivalent basis.

The effect of types of containers and methods of packing on costs under given vol-
umes and total hours of operation during the season are illustrated in tables 8 and 9.
Plant equipment costs are held constant, but packer hours and number of packers re-
quired are varied to allow the predetermined volume of apples to be packed.

Under these conditions, plants that pack only 22,500 tray-pack cartons during a
short season of 200 hours could expect to save approximately 5 cents per carton by
using the semiautomatic machine rather than manual methods. However, at correspond-
ing levels for packing bags, savings accruing from the use of the commercial bagging
machines would be small. Savings of 1.1 cents could be made on each carton of twelve
4-pound bags, for a total of $87.50. However, a loss of 1.3 cents would result from
packing each carton of 5-pound bags. Net savings from using the commercial bagging
machines rather than homemade methods in this instance would be $22.50 per season.

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Assuming a 1,400-hour season and a total season packout of 250,000 tray-pack
equivalent units, savings using the semiautomatic machines are greater, and the use of
commercial bagging machines becomes more feasible. Laborand machinery costs for
tray packing with a semiautomatic machine would be almost 7 cents per carton less
than with manual methods. Savings of almost 4 cents could be realized by using com-
mercial bagging machines rather than homemade contrivances for packing apples in
4-pound bags. Under the same conditions, savings for 5-pound bags would be almost
1.5 cents per carton. On the packing operation alone, savings could be realized at all
levels of output by using semiautomatic tray-packing machines rather than manual
methods. Under the conditions set forth in tables 8 and 9, increased automation of the
bagging operation becomes feasible when a total of 12,500 cartons of bags is packed
during a packing season of 200 or more hours.

IMPLICATIONS

This report has analyzedthe major factors affecting packer efficiency in Appalach-
ian apple packinghouses: (1) type of packing equipment, (2) method of paying packers,
(3) type of container, and (4) length of packing season.

Tray-pack cartons are the most popular containers currently being packed in the
Appalachian area--accounting for approximately 45 percent of the total output of the
plants studied. Labor and machinery packing costs are lowest when semiautomatic
tray-packing machines are used in conjunction with return-flow belts and packers are
paid an hourly wage rate.

The Northwest box has been declining in favor as a shipping container for apples,
and during the 1959-60 season none was observed in any of the plants visited. The
wrap-and-place method of packing was slow and costly, and did not lend itself to the
use of mechanical aids. High cost of containers and excessive bruising augmented the
decline of the Northwest box.

Sales of apples in 4- and 5-pound bags are continuing to increase. Labor and
machinery costs for packing master cartons of bags are lowest when commercial
bagging machines are used in conjunction with return-flow belts and packers are
paid an hourly wage.

Miscellaneous containers will always have a place in apple packinghouses to meet
the vagaries of trade and consumer demand. And it might be that one of the present
miscellaneous containers will become the most popular one in the years ahead. How-
ever, to be profitable it will have tolend itself to automatic or semiautomatic methods
of filling. Automation has come to the apple industry, and most packers who are slow
to accept it will find it increasingly difficult to compete in today’s markets.

DOR

% U.S. GOVERNMENT PRINTING OFFICE: 1960 O - 566149

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