Document 2Db2ag4ZJaQrEEzJjNy7XV1r

POLYVINYL CHLORIDE RESIN ENVIRONMENTAL IMPACT WHITE PAPER 22906001 Prepared by: W. J. Wetzel October 3, 1975 BFG23049 H02022 / / / // / BACKGROUND The PVC Industry 1. Introduction PVC plastics are among the oldest of the major plastic mater ials. The first commercial plant to make PVC resin was con structed in 1939. There are currently twenty-one (21) separ ate producers of PVC resin operating thirty-six (36) plants in the U.S. PVC resin is a white powdery material which is made from vinyl chloride monomer (VCM--a gas under standard conditions of temp erature and pressure and a liquid when transported and stored under pressure) PVC resin, as such, cannot be processed but must be made into a PVC compound which contains several other additives (such as plasticizer, stabilizer, and colorant) in addition to the basic resin, in order to fabricate it into use ful product forms. Because they can be compounded to yield a wide range of materials with specific properties, PVC resins are used in more applications than any_-other type of plastic material. 2. Vinyl Chloride Monomer (VCM) VCM is the basic feedstock for PVC and the industry is made up of nine (9) producers (see Exhibit I) Four (4) companies (Shell, Dow, PPG, and Allied Chemical) produce VCM for merchant sale only and together they account for over half of the current total VCM capacity. The other five (5) producers make VCM largely or completely for captive use in making PVC resin. (Hooker should also consider VCM production). In 1973, the U.S. production of VCM was about 5.3 billion lbs. valued at about $292 million (about 5.5C/lb. on average). In 1974, VCM production was approximately 5.5 billion lbs., but at about 9C/lb; the 1974 VCM market value was nearly $500 million. This production required roughly 2.8 billion lbs. of ethylene and 3.7 billion lbs. of chlorine as raw materials having a combined market value of about $300 million. Total industry nameplate capacity is now about 6.4 billion lbs, of VCM. When operating rates, losses in polymerization, exports and other uses are applied, there appears to be an actual VCM capacity of 5.3 million lbs. available for PVC conversion. At present, no new VCM capacity is under construction in the United States. Since it takes approximately 2 1/2-3 years to build and start up a VCM plant, decisions on new capacity expansions are needed in the very near future to allow for continued PVC resin growth beyond 1976. In 1974, it is estimated that 940 workers were em ployed in the VCM industry; 77% were employed in the manufactur ing operations. _____________ K0,-023 2290600Z BFG23050 (i) 3. PVC Resin The term PVC resin is used to describe a family of synthetic polymers in which the vinyl chloride monomer content is over 50% by weight. In practice, the VCM content is usually 85% or more. Resins which are made from VCM only are called homo polymers and those containing other monomers (such as vinyl acetate) are called copolymers. Homopolymers represent about 85% of total PVC resin output. The total production of PVC resin in 1973 was about 4.5 billion lbs. valued at about $550 million (14.SC/lb.). In 1974 production was 4.6 billion lbs. valued at $920 million (20C/lb., on average). About one-quarter of the total world production of PVC resin is made in the United States. The industry rated capacity of the twenty-one (21) existing PVC resin producers is now about 5 billion lbs./yr. (.See Exhibit II) However, at least one-third of the ex isting resin producers are expanding their capacity and at least two (2) new producers are entering the market. By the end of 1975, the total PVC resin capacity will be about 6.4 billion lbs. PVC is the most versatile type of synthetic resin produced and is used in more individual end products than any other type of plastic material. It is possible to identify over twenty-five (25) individual end use product areas for PVC, each of which accounts for between 1 and 29% of the total PVC resin market. By grouping these products into broad market categories, it is possible to estimate that over half of all PVC resin is used to make products that are classified as building and construction materials. This includes pipe, conduit, flooring, wire and cable insulation, siding, panels, window frames, wall covering, trim, and gaskets and sealing materials. Home furnishing and household goods taken together represent about 12% of the overall PVC resin usage. This broad grouping of products includes furniture up holstery and decorative laminates (using PVC printed films) for furniture and TV cabinets, table covers and shower curtains, garden hose, applicance components (e.g., hoses and gasketing) and window shades. The end-use market called consumer goods, which also represents roughly 12% of PVC resin use contains items such as phonograph records, footwear (e.g., shoes, boots), and athletic goods, luggage, handbags and many other products. Packaging materials, such as flexible and rigid film (used for packing fresh and processed meats, produce, cookies and candy as well as non-food products (e.g.,. blister packs), bottles and can and closure lining (coating) materials account for about 8% of total PVC resin sales. The transportation equipment industry (mainly, motor vehicles) in total represents about 6% of the PVC resin market. The major products include upholstery materials, trim, headliners, wire and cable insulation, floor mats, and ex ternal (e.g., Landau-type) tops. HCS034 (2) BFG23051 22906003 The remaining 9% of the domestic PVC resin market is composed of a miscellaneous products category containing hundreds of individ ual applications. Among the most significant are: medical pro ducts (e.g., tubing, blood bags), stationery supplies, book covers, and bindings, conveyor belting, credit cards, tools and hardware (e.g., handles), agricultural products (e.g., reservoir liners), and novelties. Exhibit III presents an approximate end-use break down of the PVC resin market. PVC is produced in sixteen (16) states, as shown in Exhibit IV. Production is close to raw material supply (VCM) or near resin market centers. - Over 50% of PVC resin capacity is concentrated in five (5) states -Ohio, New Jersey, Texas, Massachu- setts, and California. - Within these five (5) states are located eighteen (18) producing plants. - Only ten (10) plants are located in warm climates where open structures are possible; the remaining twenty-six (26) plants are situated instates having moderate to cold temperatures. - The PVC manufacturing industry has approximately 5000 plant employees. Estimates were developed based on the 1974 -production level. Approximately 3,100 workers identified with suspension processes represent 62% of industry employment, while emulsion process workers represent 26%; bulk and sol ution process workers represent 12%. 55% of PVC plant employment is represented by pro duction workers, while 24% by maintenance personnel. The remaining force consists mostly of management personnel. DISCUSSION Vinyl chloride monomer (VCM) has always been known to be a haz ardous material due to its high flamability. Recently, however, it has been determined that VCM is highly suspect as a carcinogen. This has been confirmed for high levels of concentration both on rats and by human.experience, In early 1973, B. F. Goodrich announced that several workers in their PVC operations had died from a rare form of liver cancer *0090622 BFG23052 (3) H0C025 (angiosarcoma) which they believed to be associated with massive exposures to VCM over a period of years. These findings have resulted in a flood of new and/or proposed legislation by the various environmental agencies that have legislative control over the manufacture and sale of PVC materials. These agencies are: Occupational Safety & Health Administration - OSHA (Labor Dept.) Environmental Protection Agency - EPA Food & Drug Administration - FDA (HEW) OSHA Each agency's impact on the industry is assessed below. The Occupational Safety & Health Administration is primarily con cerned with controlling the manufacturing environment with the basic goal of protecting the workers in the plants. OSHA has issued a standard for vinyl chloride monomer; 1910.93q, effective on April 1, 1975 that calls for the following actions by industry and Ruco. 1. Monitoring the plant environment for VCM level. 2. *Any exposure to VCM above lppra -(parts per million) is pro hibited and engineering changes must be instituted to try to get the work environment below lppm. Until the VCM exposure is reduced to lppm, all workers exposed must wear fully con tained air breathing respirators. 3. All workers must be given certain medical tests at six* (6) month and one (1) year intervals. 4. Extensive record keeping is required. *Until April 1, 1976, a worker.can elect not to wear a respirator provided the VCM level is below 25ppm. So far, the OSHA regulation has not resulted in any major PVC plant shutdowns; primarily, because the worker is exercising his right not to wear respirators below 25ppm. S00906ZZ There have been several small PVC operations that have announced shutdown of either all or part of their plants as follows: COMPANY LOCATION CAPACITY Uniroyal Olin Goodyear Ruco Painesville, Ohio Assonet, Mass. Niagara Falls, N.Y. Hicksville, N.Y. 120 mm lbs. 150 mm lbs. 60 mm lbs. 12 mm lbs. The full extent of lost productive capacity in both industry and Ruco will not be known until we observe the operations after next April 1 when respirators for all personnel will be mandatory, we believe there will be a slight reduction in productive capacity (less than 15%) for at least the first year and then each year there after will see improvements until the industry is again at 100% capacity.* ____ KO-QSS (4) BFG23053 We do know that the OSHA ruling has caused industry and Ruco to spend money for equipment and process changes in an attempt to reduce worker exposure to below lppm. We ourselves have appropriated to date, $960,000 of engineering and/or plant changes. In addition, the use of air mask cannisters, uniform changes ($1.50/day/man), medical costs (140-160 $/year/man), monitoring costs and increased utility costs have been estim ated to increase the industrys1 operating costs between It and 2t per lb. (including added depreciation) We believe that once the PVC industry recovers from the current recession that we will be able to pass these costs on to the consumer* In the future, we can continue to look forward to capital ex penditures as OSHA keeps the pressure on industry to reduce VCM exposure of industry workers. In addition-, the need to keep the plastic fabricators from not being controlled (less than 0.5ppm) is causing a complete change in the PVC resin man ufacturing process to provide the market with low residual VCM in the base PVC resin as shipped. We are responding to these market changes and expect to be able to keep abreast of our competitors; providing of course, that capital will be made available to support Ruco in this endeavor. We will soon sub mit an APE to purchase and install a post, stripper that will permit us to get down below 5ppm residual VCM in .the resin. The original pilot operation will cover 25% of the plant and is expected to cost $800,000. ENVIRONMENTAL PROTECTION AGENCY The Environmental Protection Agency has proposed to establish a national air standard for public exposure to VCM under the premise that VCM has been proven to be a hazardous material. This proposed rule is expected tobe issued within the next sixty (60) days. The PVC industry through the Society of the Plastics Industry, Inc. has hired the former head of EPA, William Ruckelshaus, to represent the VCM/PVC industry in this EPA area. The in dustry has had a meaningful dialogue with the EPA staff and many changes have been introduced in the latest EPA draft doc ument that reflect some of the industry's concern about the original draft. We do not forsee the EPA ruling having any significant effect on the industry's ability to produce PVC resin except in the area of capital spending. In this regard, the EPA estimates that the cost of the compliance could add 20% to the cost of making PVC resin. Basically, the EPA'is proposing to limit plant emission points to be lower than 10ppm. This control is to be either carbon absorption and/or incineration. 22906006 BFG23054 RCC0S7 (5) Until the iSPA standard becomes final, we have no real basis for assessing the actual impact of this standard. We do know, how ever, that the Ruco bulk PVC plant is, in the eyes of the EPA staff, the third best plant in the country to--date as far as VCM emissions are concerned. This is mainly due to the fact that the bulk process has no water pollution problem when compared to the standard suspension PVC process. FOOD & DRUG ADMINISTRATION* 1 The Food & Drug Administration has responsibility for protecting the public from impure foods and/or from toxic substances that could enter the food as additives, such as might migrate from a food package. They also control the use of cosmetics, drug, toiletries, and potable water. FDA has expressed a sharp interest in all uses of PVC in pack ages that might cause VCM to migrate into food. A three tier approach to the control of VCM was proposed on September 3, 1975 as follows: 1. The first part of the proposal reaffirms the prior sanctioned status of PVC as a food contact material if used in "flexible" applications. The FDA position here is that the compounding (adding plasticizer), and fabrication techniques release residual VCM so that there is no likelihood of VCM becoming a food additive due to migration. This ruling essentially OK's the use of PVC meat and produce wrajv can coatings, bottle cap liners, etc. 2. The second part of the proposal states that the FDA believes that PVC pipe for carrying potable water is OK because there is no reasonable chance for VCM to get into the water due to the continuous nature of water flow. Industry has sixty (60) days to set up programs to confirm the FDA position. 3. The third part of the proposal is to withdraw the prior sanctioned status of PVC as a food package in PVC bottles and rigid packages (e.g., pre-packaged luncheon meat). In the proposal, the FDA invites food petitions by industry to show no "reasonable" expectation of VCM becoming a food add itive. This ruling, if upheld, could cause a loss of sales at Ruco of from 2% to 20% depending on whether the FDA con siders mouthwash as a food. Most PVC food grade bottle com pounds are not really for food, but for toiletries and cos metics. If only PVC food packaging was eliminated, it would mean a 2-5% reduction. If, however, mouthwash in included, the impact could be 20% loss of sales (immediate) which rep resents lost sales revenue of $3,000,000, and income reduction 22906007 BFG23055 RCCCKSS (6) of $500,000 for Ruco. In the bottle area, we are a dom inant factor and we would be hurt along with Ethyl and B. F. Goodrich. The rigid meat wrap producers (Tenneco and American Hoescht) would also be seriously affected by a complete ban of PVC used for luncheon meats. Industry (SPI) is forming small select committees to present comments to the FDA proposal by November 3, 1975, the end of the sixty (60) day comment period. Industry hopes to show that new technology is such that there is "no reasonable ex pectation" of VCM migration from food packages made of rigid PVC. The question is largely political inasmuch as we have practically no VCM migrating from food containers (less than 50ppb(part per billion)) at this time. CONCLUSION It's much too eaiiy to draw precise conclusions regarding the total impact of all of the regulatory._bodies, but it appears that it will be significant at least in the area of capital expenditures. We,.as well as the suspension PVC people,' expect.to be able to adequately resolve the technical issues that arise. Ruco ex pects to remain a viable PVC supplier. 22906008 R0S023 BFG23056 (7) EXHIBIT -.1 PRODUCTION, PRICE, VALUE, PRODUCERS AND USES OF ' VINYL CHLORIDE MONOMER Production, Price, and Market Value Year 1962 1967 1972 1973 1974 Production (billion lbs) 1.3 2.4 5.2 5.3 5.5 Averaqe Price (*/lb) 7.5 5.3 4.2 5.5 9.0 Market Value I? million) 98 127 218 292 495 Producers and Capacity : Producer Annual Rated Capacity (million (at Auqust, 1974) Shell - Texas, Louisiana Dow - Texas, Louisiana Goodrich - Kentucky PPG - Puerto Rico, Louisiana Continental Oil - Louisiana Ethyl - Louisiana Monochem (Borden & Uniroyal) - Louisiana Allied Chemical - Louisiana American Chemical (Stauffer & Atlantic Richfield) - California 1,500 1,200 1,000 800 625 420 350 300 170 Total 6,365 End-Use Pattern - 1973 Use PVC Resin Export and Other Approximatei Percent of Market 88 12 Total 100 22906009 BFG23057 HCG030 (8) EXHIBIT II PRODUCTION, PRICE, VALUE AND PRODUCERS OF POLYVINYL CHLORIDE RESIN Production , Price and Market Value Year Production (billion lbs.) 1962 1967 1972 1973 1974 1.2 2.1 4.3 4.5 4.6 Producers and Capacity Producer Goodrich Borden Tenneco Robintech Continental Oil Firestone Tire & Rubber Diamond Shamrock Union Carbide Goodyear Stauffer Georgia Pacific Certain-Teed Air Products Ethyl Hooker (Ruco) General Tire Pantasote Great American Keysor Average Price (C/lb.) 17.6 15.6 13.6 14.5 20.0 Market Value (million) 212 327 585 650 920 Annual Capacity (million by December 1975 950 545 480 470 430 400 360 350 300 300 220 200 190 18 170 185 85 55 50 5,900 01090672 BFG23058 H0S031 (9) EXHIBIT III END USE BREAKDOWN OF PVC RESIN End Use and Product %of Market Million Lbs ' (Approximate) Building and Construction Pipe, conduit and fittings Flooring Wire and Cable Insulation Siding, panels Wall covering Other (window frames, trim, gasketing, sealants, miscellaneous) Sub Totals Home Furnishing and Household Goods Furniture (mainly upholstery) Shower curtains, table covers, etc. Appliance parts (including hoses, gaskets) Garden hose Other (e.g., window shades) ' Sub Totals Consumer Goods Phonograph Records Footwear (shoes, rainwear) Toys, dolls, and games Outerwear (e.g., apparel) Sporting and Athletic Goods (e.g., balls, bicycle grips, miscellaneous) Other (including handbags, wallets, luggage) Sub Totals Transportation Equipment (mainly motor vehicles) Upholstery and Seat Covers Wire and Cable Insulation Auto Tops, headliners, trim, floor mats, other Sub Totals 29 9 8 2 2 2 52 7 2 1 1 ' 1 12 3 3 2 2 1 _1 12 4 1 _1 6 1,345 440 365 90 90 90 2,420 320 105 40 35 45 545 145 140 75 70 65 55 550 180 50 45 275 TT0S06ZZ li'-. BFG23059 (10) EXHIBIT III (Confd.) END USE BREAKDOWN OF PVC RESIN End Use and Product Packaging Flexible film (for fresh meats & produce) Rigid Sheet (for cookies and candy, unit packs, blister packs) Coatings (e.g., can linings, cap liners. gaskets) Bottles, other Sub Totals % of Market Million (Approximate) 3 .135 2 105 1 50 2 85 8 375 All Other Uses Medical Products (e.g., tubing, blood bags) Stationery Supplies Agricultural Products (e.g., reservoir liners,' tubing) Novelties(including advertisement items) Conveyor Belting Miscellaneous (tools and hardware, credit cards, book binders and covers, other) Sub Totals Grand Totals 1 1 1 11 4 9 57" 45 35 30 30 30 265 435 4,600(b` (a) Includes some wire and cable used in communications equipment. (b) Domestic use only; excludes exports of about 145 million lbs. Sources The Society of the Plastics Industry and Arthur D. Little, Inc., estimates. 22906012 BFG23060 *03033 <il> EXHIBIT IV GEOGRAPHIC DISTRIBUTION OF POLYVINYL CHLORIDE* PLANTS States Ohio > Number of Plants 4 Hew Jersey 5 Texas Massachusetts ^ 2 4 California (2) 3 Illinois d> 3 Maryland d) 1 Kentucky d) 2 Louisiana d) 2 Delaware 2 West Virginia d) 2 to Mississippi d) 1 B o\UKO>> o Oklahoma Pennsylvania d) 1 1 M New York d) 2 Florida (2) 1 ' O XY a w TOTAL 1L. Notes: (1) Sited in moderate to cold climate 26 CT0906ZZ (2) Sited in warm climate 10 36 Production Capacity (million lbs.) 810 635 490 480 385 370 315 305 280 260 255 250 215 190 115 80 5,435 Share of Total Capacity (percent) 14.9 11.7 9.0 B.S 7.1 6*8 5.8 5.6 5.2 4.8 4.7 4,6 4.0 3.5 2.1 1.5 100.1**3) 3,735 . 1,700 5,435 68,7 31.4 100.1*<3> Accumulate! Percent: 14.9 26.6 35.6 44.4 51.5 58.3 64.1 69.7 74.9 79.7 84.4 89.0 93.0 96.5 98.6 100.1(3