Document 06Qjwz6Lk6xD3KGvwZ8bYXerb

\ DIELECTRICS Product Summary In 1972 we will continue the efforts, begun in 1972 to convert customers to lower chlorinated PCBs. In the U.S.A. and Canada all capacitor accounts have been converted to Aroclor 1016 from Aroclor 1242. There are small specialty uses for Aroclor 1221, 1232 and 1254 in the capacitor industry. In transformer fluids, Aroclor 1260 and Inerteen PPO will no longer be offered and I^yranol A13B3B will 'be reformulated away from Aroclor 1260. Our transformer fluid line will thus consist of Aroclor 1254, Inerteen 70-30 and 100-42 and Pyranol. . Market Summary 1972 promises to be a tough year as far as the future of die lectric fluids is concerned. It should not be tough as far as achieving budgeted sales and profits are concerned for 1972 but rather in coping with what lies ahead for Monsanto's cur rent product line beyond 1972. We know that competing chemical companies are trying hard to come up with non-PCB replacements. We know that our customers are anxious to see PCB replacements if only as "insurance" policies. What we don't know at this time is the legislation that may be enacted on PCBs in the U.S. after the PCB task force presents its findings and recommenda tions. Also, we don't know how many governments may follow the lead of Japan and ban PCBs, although the Japanese authorities spelled out their belief that PCBs were essential in certain electrical equipment. # Capacitors Positive factors for 1972 are: 1. Domestically, customers representing over 98$ of capacitor fluid sales have signed our hold harmless letter. 2. Internationally, our parallel program involves the signing of warning letters and initial feedback is highly encourag ing. ` 3. Bayer appears to be following Monsanto's PCB program almost to the letter. 4. Domestically, some customers predict that 1972 could be al most as good a year as 1970. 5. Imports of Japanese PCB capacitors by the U.S. should cease. 6. The discontinuation of PCB manufacture in Japan reduces worldwide capacity by 25 M pounds and should lead to firmer pricing. _ 7. Aroclor 1016 has been accepted domestically as a replace ment for Aroclor 1242. P DSW 283813 STLCOPCB4065232 Negative factors for 1972 are; 1. Progil (France) and. Caffaro (Italy) still do not admit to PCB problem but this could turn to be a factor in our favor longer-term. . 2. Will overseas governments follow lead of Japan/Sweden (acknowledging need for PCBs as dielectrics) or Switzerland (total ban).? 3. Will EPA muddy the waters by recommending continued use of PCBs in dielectrics while setting plant effluent levels of PCB at zero? 4. Advertisements are now appearing promoting metallized film capacitors that require no PCB. : .. 5. Research by customers and suppliers competitive to Monsanto has been stepped up to find non-PCB replacements. Transformers Positive factors for 1972: 1. Domestically, transformer manufacturers representing 95$ of our transformer fluid sales have signed our hold harm less agreement. 2. Internationally, we do not expect major problems in getting signed warning letters from transformer manufacturers. Negative factors are; 1. Forced to choose between safety of property and lives versus environmental safety, the ultimate specifiers of transformers in today's climate are likely to prefer environmental safety. 2. By turning-"make-up" business over to OEMs,we have made it more difficult for askarel transformer users to get f-luid. 3. OEMs have not settled on their procedures for supplying makeup askarel, further aggravating the PCB situation partic ularly at big utilities who are well set up to repair and fill transformers. 4. At least four small transformer manufacturers have quit making askarel types and others are expected to follow suit. This will not create a climate for promoting future askarel transformer sales. . 5. Dry-type transformer manufacturers will try to "cash in" on the PCB situation. ' , 6. Higher cost on Askarel narrows the margin vs. dry or oil and may force dilution with TCB or other chemicals. 2-31 OSW 283814 STLCOPCB4065233 IV I % I General Strategy We believe that PCBs are indispensable at this time for the I dielectric Industry. Even where governments have moved to restrict PCB sales (japan, Sweden and U.S.A.), the official attitude has been to accept the need for PCB dielectrics. We realize, however, that our customers feel vulnerable because I Monsanto is the sole U.S. producer and that we are continuing sales only if Monsanto is legally protected from the conse quences of damages or lawsuits. This concern is spurring on I greater research efforts by our customers and potential fluid suppliers to find non-PCB replacements. Monsanto has a strong research effort under way to find replacements in capacitors. I It is imperative that we treat this program as highly confiden tial as far as progress towards an actual replacement candidate is concerned. At the present time there is a somewhat panicky reaction in the industry and a tendency to clutch at any straw I as long as it is not PCB. A replacement fluid must meet 3 major performance criteria: per se properties, capacitor perfor mance and service life; and toxicity/environmental acceptability. I Since it was the environmental aspect that created the PCB furor, any replacement must be shown to be environmentally acceptable. Neither the industry nor Monsanto wants another NTA/phosphates I fiasco. There are no replacements at hand for PCB in spite of recent announcements by Nippon and others. We don't want to give customers the impression that Monsanto can give a date when we will have replacements available. Any new fluid candidates I will need to be carefully .evaluated to see if Monsanto can really justify commercialization. I Our strategy in U.S.A. and Canada is: (a) Protect the continued use of PCBs in dielectrics by working I with government agencies/customers/ANSI so that decisions are made on facts and not emotions. (b) Continue to support the use of Aroclor 1016 over other die lectric fluids in capacitors. I (c) Continue exploratory work on PCB capacitor fluid replace ments as an insurance policy working towards a position whereby we have approved (technically and commercially) i stand-by products that we can move with in case government bans on PCB or competitive suppliers make this necessary. (d) Restrict our evaluation work with new candidate fluids to 1 no more than four well-selected customers and utilize se crecy agreements to prevent rumors sweeping the industry. I I 0S\N 283815 I 2-32 STLCOPCB4065234 (e) Continue biodegradability work on Aroclor 1016 to Justify v its choice as an Aroclor 1242 replacement. (f) Base our transformer fluids on Aroclor 1242 and 1254. Eliminate Aroclor 1260. (g) Attempt to maintain confidence in askarel transformers through specifying agency trade associations (e.g. utili ties, etc.) ' _ Outside U.S.A. and Canada our strategy will be; (a) Communicate ANSI C-107 guidelines so that dielectric cus tomers can handle the PCB problem and also gain the support of government agencies in continued usage. (b) Replace capacitor Aroclor 1242 by Aroclor 1016 provided we can get satisfactory selling prices. (c) Build up an image of a responsible supplier by citing our leadership on PCBs and our actions to protect the dielectric industry. 2-33 OSIN M*816 STLCOPCB4065235 1972 Goals / J- /> _ 3. Ato A- .\/ 5. 6 / Make certain that there are no exceptions to our world-wide PCB policy of sales only to capacitor/transformer manu facturers who have signed acceptable hold harmless agreements (U.S.A./Canada) or warning letters (ex-U.S.A./Canada). Make a presentation'to the PCB task-force by May 31 so that need for continued dielectric sales is accepted and under stood. _ 3. <-j Domestically, sell $2.6 M transformer fluids and $3.5 M capacitor fluids. _ In Canada, sell j; M of dielectric fluids. Obtain sales of $1.5 M from MCl production. Export the following quantities from U.S. production: Latin America , A.I.P.C. ** Asia Pacific Australia 2.7 M lb '1' J2 4? nv') \0.2 0.3 0. I ^ O' 0.3 0 - Lb ) <?41- Outside U.S.A. and Canada, obtain price increases of at least $70 per metton on U.S. export for all orders after June 1 at latest. z8-' Maintain a positive posture at all dielectric accounts on the future of PCBs with supporting visits by St. Louis management to key U.S./Canadian accounts as required. v/9- Support a research program on PCB replacement capacitor fluids as an insurance policy, backed up by selected cus tomer evaluations at no more than four carefully selected ^ . domestic `accounts. 10 Assist ANSI C-107 in establishing PCB guidelines for capaci tor/transformer industry that have governmental support. ~ 11. Communicate ANSI guidelines to world area marketing managers so that they can Initiate industry action by customers to protect PCB usage. I tfr12- Convert Mexican capacitor industry to Aroclor 1016 and establish bulk deliveries at key accounts. | fucriitL- 13. Monitor activity on transformer "make-up" transformer manufacturers so that we keep sales by a finger approved on the pulse of the askarel transformer industry. (\fc 14. Make contact with large utilities to gauge their future plans for askarel transformers. - | ttfiiTlftl-- 15. Communicate changes in goals, policy, etc. rapidly to field j . sales personnel to prevent confusion. . ffo 16 Give consideration by late 1972 as to our plans on dielectric cable fluids and non-FR high impulse fluids for transformers. t-i) 1 I DSW 283817 2-34 I STLCOPCB4065236 Action Plan Responsibility World Area Marketing Managers To be decided PGB/CP/Field PGB/CP/RHM/JGB PGB/CP/RHM/Field pgb/wbp/fjc pgb/fjc jgb/cb/pdc/mm/cfs/ jgf/whs Action Sell only to capacitor/ transformer manufacturers who have signed warning letters. Presentation to PCB-Task Force in Washington, D.C. Presentations to key accounts in Canada/U.S.A. on Monsanto's intention to continue Aroclor sales. Meeting on capacitor fluids - G.E`. Meeting on capacitor fluids - Westinghouse Electrical Utilities Electronic Components Presentation on PCBs to Mexican Dielectric Industry and Government Agencies Convert Mexican capacitor usage to Aroclor 1016 and implement bulk shipments Input on how transformer manufacturers intend to handle "make-up" sales G.E. Westinghouse ITE . FPE AIlls-Chalmers Buell Hevi-Duty Niagara Transformer Research Cottrell Standard Transformer Van Tran Electric Kuhlman Electric Target Date Always Y. 5/31 .bo N 5/4 (Done) / 6/30 / 4>>nfr' Cli 5/10 J>v 10/1 V 3/31 A/0 2-35 ' DSW 283818 #; \ STLCOPCB4065237 Responsibility * pgb/Wbp Action Communicate ANSI C-107 guidelines on capacitors/ transformers to field sales and world area mar keting managers. . Target Date 7/1 FfAjf)L))fl*rT pgb/rhm PGB/World Area Mkting. Mgrs. Reformulate Pyranol A13B3B with Aroclor 1254 replacing Aroclor 1260 Decide on conversion of capacitor Aroclor 1242 to Aroclor 1016 8/1 9/l P^rc->i>^ PGB Input from large utilities Continuing on future posture re askarel transformers. | Field Sales 1 j I I I f I I I I Determine whether or not unapproved customers intend to sign hold harmless agreements or not. Acme Electric Anderson Electric American Rectifier 6/30 -A-xeUSl e crtroffi'c s CT>> Ci ** eV 'Capacitor-Specialists Carolina Capacitor Co. Condenser Products Co. Tobe Deutschmann Labs -Eas-'tern--E 1-ectric-(Cana da/ Electro-Eng. V/orks EljecJtro--Magnetic-Filter~Co r cJ English Electric Esco Mfg. ` Espey Mfg. Eriez Mfg. , >Q) . -Es&ex--El-eet-r--Eng-;-- -Fi-ltronGeneral Instrument Gudeman Co. G & VI Electronic Specialties. R F Interonics CDs''' Hart Div. of Joy Mfg. Maxwell Labs N VI L Transformers Nytronics 2-36 DSW 283819 STLCOPCB4065238 Responsibility Action Target Date - ... ... World Area Marketing Managers -` Plastics Capacitors -!ir-K7--Porter Potter Co. Reliance Mfg. R T E Corp. . San.Angelo Electric Service (Mt. Vernon Corp.) . Sierra Transformer Spokane Transformer Stearns Magnetics Inc. Turner Electric R-.--E. Uptegra-ff -Dings-- (>& i.) Buck Mfg. Dearborn Electronics Input from dielectric industry on future PCBs and any anticipated government action: Argentina ... Brazil Mexico Canada Europe India South Africa Taiwan Australia ' Quarterly I I I 1 f I I I I 2-37 OSW 28382 STLCOPCB4065239