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BEP struggles with $100

This article was originally printed in Numismatic News.

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Production of the new $100 note was a thorn in the side of the Bureau of Printing and Engraving operations in 2010.

“The single biggest obstacle to successful production was the tendency of the $100 currency paper with the three dimensional security ribbon to crease as the sheets of paper fed through the intaglio printing press,” BEP Director Larry Felix reported in the 2010 annual report.

The creasing problem and other operational challenges that surfaced with the note resulted in “high spoilage, reduced productivity and inconsistent quality of finished notes,” Felix said.

That caused the bureau to suspend production of the note until production quality issues could be resolved, he said.

As a result, the BEP did not fulfill the Federal Reserve Board 2010 currency order. Deliveries were 1.3 billion less than planned, resulting in a revenue shortfall that depleted working capital and necessitating a surcharge to the Federal Reserve Board of $212 million, reported BEP Chief Financial Officer Leonard Olijar.

Felix said the BEP’s global reputation of consistently producing high quality currency is on the line.

“However, we will not restart production of the new design $100 note until we are confident that the note can be consistently produced and delivered with the high quality that meets the demands of worldwide circulation.”

On the upside, the bureau completed the acquisition of eight new intaglio printing presses and is ready to replace its waste-water treatment facility in Washington, D.C., which will reduce it’s annual water consumption by 12 million gallons.

It is also working on recommendations for the redesign of currency to better accommodate the needs of the blind and visually impaired.

Also noted in the 2010 annual report:

• Currency spoilage was 10.9 percent, compared to a bureau standard of 7.8 percent.

• Cost per thousand of Federal Reserve Notes was $44.85, compared to a standard of $43.21.

• Overall productivity declined 8.8 percent from 2009.

• Cost of goods sold increased from $380.0 million in 2009 to $508.8 million in 2010. The $127.9 million increase relates to the higher costs associated with the redesigned $100 note.

• An independent financial audit reported effective internal controls.

• The Bureau continued a multi-year effort to retool its currency manufacturing process with a multi-year investment in state of the art printing, electronic inspection and finishing equipment for the Washington, D.C., and Fort Worth, Texas, facilities.

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