Document 4a99dKEE5qpq73yn9zZZg2aNe

FILE NAME: Union Carbide (UC) DATE: 1969 Aug 20 DOC#: UC032 DOCUMENT DESCRIPTION: Memo RE The Asbestos Market in the Flooring Industry r< * . . A IO y J -.. j-.. i i N T R U A L C O - P . Z Q ? 0 ? J 2 K C i ------- ,__ J s'*.. ' is (tiarait Ot:ion location O .1 .. i ... \ V 4 i Mr. F. D. Baxter Mr. W. 3. Young Dr. L. ?. Jehle Chemicals and Pias sics New York ?*n pa.-*.-; a-.tm :? v-"x np.v york ik 7 Dato Orhjlnnilnj *5-it?. August 20 ^ 1909 An:wirirj ItHtr dati Cep/ le Sub|:l r \ The Asbestos Market in the Floor ing Industry___________________ The Market V/ i' J (y The total asbestos market-in VA__and asphalt floor tile is approximately 150,000 tons. The asphalt market has been dwindling steadily and the VA market is growing at approximately 5>c per year. As a result, total asbestos sales have been relatively constant for theilast few y e a r s . At present copolymer sales of l30 MM lbs.; we estimate asbestos sales of 35,000 tons in VA tile after estimating proportion now going to Coalinga producers. The entire V.\ market is available to Coalinga producers. The asphalt tile market is not as clear cut. Asbestos, contents range 20-2-rp normally, but Coalinga fibers are used only in formulations which contain significant percentages of polystyrene. Loss of hot strength occurs with Coalinga if sufficient styrene is not pre sent . Vie do not hove' reliable information on pres'ent asphalt formulations at the major tile companies. Historically, Johns-Manville and Armstrong have not used styrene, Kentlie was borderline and American Biltrite, GAF, Uvalde can use Coalinga asbestos. The Products Flooring manufacturers have become quite sophisticated in a competitive market charac terized by constant style innova-cions and new product introduction. Asbestos from Coalinga field has been available and used since early 1962 when Johns- Manville converted their Western plants and introduced it to the market. No new asbestos technology has been added since U C C s ISob entrance to the market with a pelletized floor ing grade. The advantages of Coalinga asbestos are high fiber content, lighter color, and ..63S batch to batch variation. Among the grades available, UCC excels slightly in each 0 these categories. Its disadvantages are high absorptivity and greater surface activity bringing a p u t the most common .. complaints . of . excessive 1 water sensitivity ___O *___ -j __- -- -------- and higher _ ^ Am cost stabi mm. mm"mm i Y l i M z M a ^ t *i> AonM . UCC products arc no bettor or worse than others, bum we have devoted much mere r.LD e .'fort to solving she.... 1 * 4 - 2- As things stand today, the price and simple log Coalings products all California and Taras isoics O- the situation has given along the SP right of way. producers ; and they are dominant in the South price v s . volume curve would best describe the market. 2 ? The Customers Coalinga sradss * 0:1 sun> a bat no similar r a f i n e i e n t ^ x S t s 'for'aspSlt'^tile''3 PattSrn ln VA tlle can be guesstimated, Asbestos Customer American Biltrite Armstrong Flintkote GAF Kentile Johns-Manville Uvalde Others Uvalde Potential VA Tile (Estimated location Asbestos Source la M i r a d a ' La Mirada Trenton Trenton Iancaster Kankakee Jackson South Gate Chicago L. A. New Orleans Vails Gate Joliet Houston long Eeach Brooklyn Brooklyn Chicago Chicago Torrance Chicago All Houston UCC Calif. Minerals UCC Carey Carey Carey Carey Calif. Minerals J-M Can. J-.M Coal. J-M Coal. J-M Coal. J-M Coal. J-M Coal. J-M Coal. Calif, Minerals Carey Can. UCC Calif. Minerals Calif. Minerals Carey J-M UCC Stragari Total Quantity (tons) 1000 S A ft , ,,- , 6o o \ i a U 3 M Av 1000 3000 i*8oo Shoo 3O --000 100 -O''.V r b V' 6coo\.>> 2dC0 / S 1200 V 6500* v ^ ; i6oo* / / loco - ,> i 2d00 oc? 11 /M; I 11000 2500 \ ? x o 3700 3600 900 2500 - ^ 3500 2700 85","Boo Coa3inga Pales including UCC 30,200 UCC a 1er *7,000 Recent changeover from Canadian source to Ccalin--a has b~e^ reported. The Oatlook riS lnU 3 t l T hould s e ' Srowth in asphalt tile over the next five years as state and n m 1970 of federai supported low cost housing projects profligate. This factor faas^ot been present the past and we should at least see a halt in the decline sales. . Even with total housing going to 2MM, units in the early 70's VA tile will not bene- fit as much, as sheet vinyl and carpeting. We estimate % growth for VA about right. The UCC Position To increase market share in a slow growth commodity market, there are not many options 1. Cut Price ` 2. Develop product or service superiority. - +Vi the latter approach-- UCC enjoys a superior position in product form-- l fl0 rinS industr^ use of SG-100 is limited to Banbury Mixer operations This el.xnanav.es Armstrong as a potential customer (est. 17,800 tons) in a strategy based Se should^ Tdo^sh ^ 13 not necessary to sell to everybody to achieve our o S goals, e should be carefu^. not to create a competitive imbalance for a valued UCC customer. The pellet advantages.are reduction of dust hazard, and amenability to bulk handling. The first is probably the more saleable factor. The second does bring cost advantages tor some price in capital investment. But the VA, asphalt tile plant is not & choice r J investment^ territory, unless that investment is dictated by product marketing strategies. In fact, &1- new investment by the industry has been toward buying .into competitive markets vinyl sheet flooring plant, carpeting. To sell bulk handling, as a part and parcel of ust hazara. reduction, is like selling air pollution control. From the manufacturers' point 01 view, it also carries the disadvantages of a single source of supply. In sum, the pellet form is a positive advantage to the user, but as a sole marketing strategy} it will not be a short term factor. This leaves us with the rather unpredictable strategy of price reduction. 1x1 a^way w e are following that policy now. None of the Coalinga producers followed t ,recent price rise on Canadian asbestos. By so doing, there opened up a slightly larger market snare to Coalinga. It is also worth noting the price rise was orderly, as far as we can tell, with each producer following suit. Though there may be and probably are concessionary price structures in contractual offerings. > In the asbestos industry price has been a laissez-faire battle ground. If we move to cut prices as we did in 1965, we can expect consternation and a move to follow. To reduce repercussions, we should try to make obvious to competitors the nature and limits of our intent. * . Unless we are both cm: ious and sophisti sated in any price recession policy, we wil attain only to; porary uuvan age and create a long tern problem in maintaining a diminish market share. Selection nay "be a reasonable approach. Move prices against selected competitors or for selected customers. For example, one could avoid Johns-Manville. But this reduces the available market to slightly over k0,0C0 tons and we would have to get over half of it. I^suspect this situation would lead to excessive price cutting and confusion as to our prupose. The sane result would occur for similar moves for selected customers, along with the ancillary danger of creating a disorderly market situation. ^ In short, a simplistic, unilateral approach is not likely to be successful. Recommendations Combining the positive aspects of UCC's position as to raw material, product form, and capacity, it is suggested we review the possibility of marketing SG-100 to the asbestos producing industry. To this end we would approach all competitors and offer to supply SG-100 pellets at, say, UO per ton, in bulk or bags, with a total quantity of 20-25000 tons available. All the advantages of the -pellet form would then be generally available to all tile manufacturers including the captive group at prices consistent with today's schedules. We, in turn, would maintain our marketing. There are advantages for ful it will maintain a stable market the chemical industry. current UCC and value. business and withdraw from further active to the competitive producers, and if success It is also consistent with UCC's position in I suggest we,discuss this suggestion carefully and if agreed upon, we move as rapidly as possible. N. J. Setter