MXG
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Chemical start-up
Perhaps a dumb question - if so, please help me kill it now...
But I (like most of us) can make things like fuming nitric acid, fuming sulfuric acid, bromine, PBr3, AlBr3, PBr3, PCl3, PCl5 etc., etc. for vastly
less cost than to order them from a chemical company. (For example, fuming nitric acid can be made for about $10 a pint, but it costs around $400 from
the chemical suppliesrs I know. I make bromine OTC for a few dollars an ounce, but it's over $100 for 25 grams from the chemical suppliers.)
My question is: Is there a need for a small chemical supplier to schools, small labs and hobbyists to provide basic reagents like those I mentioned?
Someone who can sell them for a fraction of what the chemical companies charge (and still make a profit)?
Or do I simply misunderstand some reality about the chemical business?
Thanks for any reality check anyone can provide!
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Lambda-Eyde
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I think this is the problem. In your estimates you have only thought of the chemical costs. You did not take into account the hassle and money
involved in setting up a proper company. To start, you'd need glassware, analytical equipment, proper fume hoods and good ventilation in general,
approved storage for chemicals, balances. The running costs would be (among other things) facilities, analysis to ensure your products are up to
standards, electricity, proper waste disposal and so on. Shipping such vile chemicals as RFNA and bromine is a hassle in itself.
If you ever become so popular that you need to hire more people there's even more bureucracy to handle, wages (obviously) in addition to other
responsibilities as an employer, the need for your area to be conformant with regulations becomes even more important. The list goes on.
I'm not saying that it's impossible (but it's hard), just that the prices that the chemical companies are charging aren't just 10$ in chemicals and a
120$ markup.
This just in: 95,5 % of the world population lives outside the USA
You should really listen to ABBAPlease drop by our IRC channel: #sciencemadness @ irc.efnet.org
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MXG
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Thank-you Lambda-Eyde for your quick and thoughtful reply. I think your point is well-taken; and I can see how there would be a lot of overhead, and
much of it unique to the chemical business.
However, some years ago I set up a light metals casting business because there was a niche for lower cost short-run castings. As someone like you may
suspect there were a lot of costs beyond metal, making heat and molds - but it was successful. Nevertheless, it seems that there is a huge margin with
key reagents (considerably larger than there was in the light metals business). But then again, as you mentioned, there would be expenses unique to
chemicals. (My limited business experience is in niche T-shirts, niche light metals and niche electronics - you probably notice a pattern.)
I guess I would have appreciated a source for small quantities of some of the key reagents before I had to start making them myself. Then I could have
focused on the syntheses I am really interested in.
I suppose I should start by looking into the laws and regulations you alluded to. Then I need to find some way to discern how big the potential market
may be and who (if enough) would be interested.
Thank-you for helping me to clarify my thoughts!
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Magpie
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Have you looked at the prices charged by Elemental Scientific LLC? They are a company from which home chemists can actually buy vs the likes of
Sigma-Aldrich, Fisher Scientific, VWR, etc, which won't sell to us. Also note what they don't sell among the list of chemicals you gave. There's
probably a good reason why they don't sell them. Also, I doubt if the owners of ESL are getting rich, but I could be wrong.
Small labs and schools can probably buy from anybody they want. So places like ESL, of which there are quite a few, probably do sell to them already.
[Edited on 22-2-2013 by Magpie]
[Edited on 22-2-2013 by Magpie]
The single most important condition for a successful synthesis is good mixing - Nicodem
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Dr.Bob
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The real problem comes with regulatory issues. You may be able to make bromine, PCl3, and nitric acid for cheap. But can you provide documentation
for where the waste from those went? If the DEA shows up, can you verify that you have followed all rules for watched chemicals? If OSHA shows up,
do you have a safety program for working with these? Have you passed a DOT approved course for shipping chemicals? If not, then you might get
closed down, sued, or arrested.
A friend ran a small business for years back in the 1960-90 era. He had a few employees, and was mostly under the radar for years. But the he
expanded and set up another venture, recycling waste solvents, and actually spent a lot of money doing it, bought special fire-proof motors for pumps,
recycling solvent stills, etc, and had a great operation going. Then someone saw some "Chemicals" near them and called a newspaper to find out what
was up. They saw Butyl Acetate, recovered from used nail polish remover, and saw that it was a flammable chemical, with a MSDS, so it must be
hazardous. Months later an expose came out showing that a chemical company existed in our town, which had "hazardous" chemicals in an industrial
area. Shortly after that, the EPA, OSHA, and scads of others showed up and audited every minor detail of his business, until he could not do any
work with so much oversight, paperwork, inspections, etc. The business closed eventually after much angst and publicity.
He moved away to join another medium sized company in a more remote area, which has a very nice lab facility with lots of safety equipment, good
hoods, etc, that they had purchased from another company after they merged and were closed. 10 years later they were visited by the EPA, who found
waste from a previous business (from the 1950s) buried nearby. This was enough evidence to declare the entire area a Superfund site and close them
with only a couple days notice. Unless you have a team of lawyers (like GE, DuPont, Union Carbide, etc), there is no way a small company was
withstand the government regulatory world.
So that is part of why companies charge $100 for $10 worth of chemicals, and almost all chemical production has moved to China, along with most US
jobs. Not to mention that shipping any of those chemicals LEGALLY requires a DOT permit, license, training, DOT approved boxes, hazmat paperwork, and
much, much more. Or you can hire a specialized company to do it for ~$50-100 a bottle. There are exceptions to the rules for certain chemicals,
but you would need a class to know those rules as well. One hint, under 35 g can be a "small sample exception", if you know the packaging, labeling,
and shipping requirements. And remember, carrying a bottle of a chemical across a public street, between buildings at a single site, in the back of a
pickup truck, or in your pocket on a bus can all be construed as interstate or in-commerce shipment, which requires adherence to all local, state and
Fed. DOT regs.
So while I hate to discourage anyone from starting a small business, you should work for one in the industry you are thinking about before considering
it too much. I have done that in several areas now, and discovered that it may not be as simple as you think. Some businesses are easy, some are
very hard, and not all are as clear as I thought, for sure. A local software startup was recently cited for working in a home's basement without a
business license. I had always thought that was a pretty safe things to do, but even that can run into regulations.
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radagast
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What Dr. Bob said. I wish that a small chemical supplier like the one the OP proposed existed, but the reality is that unless you have a team of
lawyers advising you, it's hard to survive that kind of scrutiny. And regulatory attorneys are expensive -- anywhere from ~$150 - $1000 dollars per
hour per lawyer, not counting legal research fees, etc.
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wireshark
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The shipping expenses are the major cost (you can't just ship bromine without following extensive regulations), plus the quality guarantee. The
businesses that you sell you chemicals are hardly ever those that produce them. More middlemen, higher prices. Being a professional distributor of
chemicals would be like any other sales job; it won't have any more to do with chemistry than car sales would have to do with mechanical engineering.
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elementcollector1
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A good example of this is United Nuclear. Prices are fine, but shipping all the hazmat charges is going to murder your wallet dead.
I will always prefer personal transactions between our members in some respects, because each and every one of us has some inkling of the insanity of
trying to ship bromine or cesium across the country.
Elements Collected:52/87
Latest Acquired: Cl
Next in Line: Nd
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