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Does it pay to make stoves? by Simon Burne
Let's look at each type of business. [top] [end]Informal Sector ArtisansThese people cannot take risks. Their capital resources are very small: money comes in; and it goes straight out again. They will only produce a new line either when the market is fully established, or when an existing product ceases to be demanded. To stimulate these artisans to produce improved stoves will require not only training but either the placing of firm orders with them or a large marketing effort to bring consumers directly into contact with the producers.Within that context, we can then estimate whether an artisan will be interested. Assuming that the artisans already possess the necessary skills and tools (they are simply being trained to re-apply their knowledge), then the minimum price artisans would accept would be the same price they could get for some other article they produce which takes roughly the same time, effort and resources. Thus, if an artisan can make 10 clay pots in a day at R.5 each, but only 5 stoves using the same amount of clay, the minimum price that potter would accept is R.10. In reality, to get them to switch, you may have to initially offer R.15 or more. Offer less than R.10, though, and they won't even negotiate. Where you are training new people in new skills, price setting is more difficult and can only be arrived at over time. In theory, you can estimate what their current income is and match that, but people's expectations usually rise faster than that and you could find all your successful trainees disappearing as soon as they can, unless their income matches what they could get elsewhere with those skills. [top] [end]Formal Sector Workshops or FactoriesThe simplest way to see whether a stove will pay is to carry out a small breakeven analysis.First work out what all the costs are; say, rent, labour, manager, clay, depreciation, firing, bank interest. Then list these depending on whether they vary with the number of stoves produced or whether you will have to pay if you produce one stove or one hundred. Those costs which vary are called VARIABLE COSTS and other costs are called FIXED COSTS. The costs listed above could be split like this:
You must then work out your variable costs in terms of how much each stove costs:
If you can sell each stove for R.5, say, then you are making R 1.75 on each stove towards paying your fixed costs. This is called the CONTRIBUTION.
Now list your fixed costs in terms of how much you have to pay over time, say, a month or a year. Here, we'll take a year.
If each stove pays off R 1.75 of your total fixed costs of R 3750, then 3750 divided By 1.75 = 2144 stoves will be needed to pay off the year's fixed costs. The breakeven point is, therefore, 2144 stoves per year. The annual breakeven point is defined as: Annual Fixed Costs Contribution per stove You can also use this method to work out profits for a particular level of output. If you are planning sales of 10,000 one year, then:
This technique is also useful to see the effects of changes in price levels. If prices fell to R 4.00 per stove:
Breakeven point = 3750 divided by 0.75 = 5,000 stoves. Profits at 10,000 stoves per year:
Thus a 25% reduction in selling price, reduces profits by 75%, from R 13,750 to R 3,750. The higher the proportion of fixed costs, the greater the sensitivity of a business to fluctuations in selling price. [top] [end]An Improved Woodstove[top] [end]Construction Manual for a Masonry, One Pot, Chimney StoveUNICEF project Republic of Burundi. (In French)The manual consists of illustrations of the equipment, components and process for constructing the stove with brief captions for each illustration. The illustrations are clear, simple, isometric sketches mainly without dimensions (see Fig. 1). The manual assumes some competence in preparing and working with mud mixes but specifies additions of chopped sisal fibres (hand length) mixed into the mud. The stove body is made in two halves - top and bottom, in a wooden base mould with inserts to leave holes for fire box, pot and chimney. This facilitates the carving of the passage from combustion chamber to chimney as it can be cut is the form of a channel in each of the two halves. Bricks for the base are made in the usual way and the chimney is moulded round a length of plastic pipe 10cm diameter and then sun dried. No details are given in this manual for the size of the stove or quantities of materials needed nor are there any figures for performance.
During a visit to Ecuador in the summer of 1983, Anne Leon was able to visit potters at work in and near the village of Otavalo. In an article in Ceramics Review 97, from which the following extracts are taken, she describes their making and firing techniques. As we entered the potter's narrow work yard, night was rapidly closing in, and we witnessed a firing which took us back in time. The eight foot high, above ground dome brick kiln had a shed attached to the back of it, which protected the firemouth and the fuel from the rain. The floor of the shed had been dug out, and the roughly six foot square area was filled with sawdust, some of which was piled up four feet high against the wall near to the fire-mouth. The fire had just been started, and for the next thirty to forty minutes the potter sat in the sawdust and continuously fed the kiln by scooping in armfuls of sawdust. Night had closed in, and the potter's face became illuminated only by the bright orange-red glow thrown out by the scorching fire. The glow also cast a huge shadow of him against the opposite curving wall. Without a word he continued to tend to the firing, bathed in light and sweat. Picolpasso must have witnessed firings such as this. Juan Jaramillo, the potter, mainly sells tiles which he buys ready formed and bisqued from a factory in the nearby town of Ibarra. He then glazes some of them for his richer clients who prefer tiles which allow the rainwater to run off, thus discouraging the growth of lichen. As the kiln is packed, wood for the firing is placed between rows of tiles, but no spacers are used between each tile. Once the kiln is bricked up, the sawdust is fed into the kiln to kindle the wood inside. The firing lasts for six hours, during which the potter must stay by the kiln in order to add fuel and to be on hand to judge the critical maturing point of the glaze by eye. [top] [end]Contents: Boiling Point 11: Successful Stove Programmes
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29 September 2008; Last edited:
29 September 2008; Version: 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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