Document 2jLyMD1Ke8JY0nzy3d8pJ7jrb

RESEARCH SUMMARY COLORED PIGMENTS BUSINESS SUMMARY MISSION The mission is to consolidate our position, improve profitability and generate cash. KEY ISSUES Will our CPC strategy to focus on specialty products be successful? Will we be able to defend our QA posi tion and profitability as patents expire? How will regulations on lead and chromium impact us? Can European marketing plan be implemented successfully? Will new product development succeed? How viable is our future capability for intermediates manufacture of new organic pigments? STATISTICS SST MM Lbs. ($MM) 1980 32 109- 1985 Forecast 41 200 Growth/Year, (1980-85) 5% 13% PTE ($MM) (8) 31 - TI ($MM) 132 200 9% PR0I 11L. (6) 16 PROCESS DESCRIPTION Quinacridone (QA) is produced in a four-step process starting with dimethylsuecinate (a Petrochemicals Department by-product). Dimethylsuccinate (DMS) is condensed to form succinyl succinic ester (Step 1), reacted with aniline to form a dianilinodihydroterephthalic acid ester (Step 2), thermally ring closed to form dihydroquinacridone (Step 3), and finally oxidized with a sulforated nitrobenzene to form quinacridone (Step 4). The low yield (80%) of the DMS condensation and the cost/availahility of the Step 4 oxidizing agent are areas of potential process improvement and cost reduction. Most of Du Font's proprietary process protection has expired, but because of good raw material cost position and large scale opera tion we expect to maintain our low cost QA producer status. Du Po n t Co n f id e n t ia l - Sp e c ia l Co n t r o l Lead chromate pigments are manufactured by reaction of lead nitrate with sodium dichromate or dichromate/molybdate mixtures. Coating chromate pigments with silica in an additional process step yields our Krolor product line. Our continuous manufacturing unit gives us a slight cost advantage over competition, but the entire chromate business is clouded by pending environmental regulations on lead dust and chromium effluent. Krolor technology is proprietary. Copper phthalocyanine (CPC)blue is synthesized by reaction of phthalic anhydride and urea in the presence of a molybdenum catalyst. CPC greens are pro duced by chlorination or bromination of blue. Our CPC processes are not unique and the business suffers from capacity under utilization and some high cost finishing processes. Azo products are generally produced by coupling of diazotized amines to acetoacetarylides or y^-naphthol derivatives. Reaction of certain azos with metal ions forms our "Watchung" product line. Du Font technology is not unique. PRODUCT DESCRIPTION Du Font's quinacridone product line is broad in color (violet to gold), and based on unique combinations of unsubstituted and substituted quinacridones. Quinacridones find their major use in automotive paints and plastics due to their superior durability and heat stability. Du Font's product line broader than competition with unique solid solution products and competitive conventional pro ducts. Du Pont proprietary position on some solid solutions will expire in 1981 but gold products will continue to be protected through the late 1980's. Conventional inorganics are competitive and geared mainly for the ink and industrial paint markets. Krolor is a unique heat resistant product used in the plastics industry. Patent protection exists into the mid-1980's, but competi tion is marketing similar products, which we feel infringe our proprietary position. Copper phthalocyanine blues and greens are used in all pigment consuming industries because of their excellent durability and color strength. The quality of Du Pont Vs CPC line is generally equal to competition. We have many high value pro ducts that command premium prices. Our green line is deficient in performance to competition. Azo products (other organics) are used primarily to consumer paints and inks because of their good balance between cost and color properties. Du Pont products are not unique and are generally equal in performance characteristics to competition. No general patent protection exists. DUP050146059 Cost effective methods to meet lead chromate regulatory requirements will be explored, including development of new low dust product forms and packaging to allow continued participation in the profitable Krolor business and selected conventional inorganics. Process improvements will be sought to improve our competitive cost position in CPC blue pigments. 1981 Pr o g r ams Strategic Research Expenditure Manpower $M Incentive Pretax Earnings Development of new environment tally acceptable, proprietary yellow-red pigments for paints and plastics (with CR&D) to significantly strengthen our competitive position in these color and end use areas. 4.0 1,080 $3.5MM (1985) Tactical Reesearch Develop new and improved QA products to meet changing automotive end use technology and maintain our competitive position. 2.9 790 $1.5MM (1985) new business & protect $4MM existing business. Develop new pigment product forms that improve value-inuse and reduce dust properties. 2.0 540 $1.5MM (1985) Reduce CPC blue costs by developing a new finishing operation. 1.0 270 $0.35MM (1985). Manufacturing Technical Consolidate CPC blue semi finishing operations, reduce raw material costs and increase yields. 3.7 600 $9.8MM (1981) Reduce investment required to meet environmental regulations on lead to chromium. 2.0 410 Reduce investment to acceptable levels. STATISTICAL INFORMATION R&D Bu d g e t 1980(E) $MM 3.4 Manpower 17.0 *CR&D funds an additional $1.6MM. 1981(F) 3.8* 15.0 -4- DUP050146060