Document Bjg0kN72Q3Xy10K3YkkBgKmL

1*it to Tyler, Ion OXI3RSTOS flant 7. H. Donaldson October 31, 1968 In as effort to determine the reason or reasons for the $20,000 shortage of Aaoslte Asbestos at Tyler 1 node an inspection of the operation froa the time the fibers are received until the time they are charged into production. It it evident from everything that 1 eonld learn that this shortage has been accmlating slowly over a period of approximately 2-1/2 years. Prior to ; the realisation that a problea existed, the aetbod of acconntlsg for fiber usage was through the use of a fora CDally Fiber Osage Report) which was prepared by the feeder, l.e., the operator who actually opens the bags and begins the productive process. This report is prepared for each aachine for each ahlft. At the end of the ahlft the nuaber of eapty bags are counted and inserted at the bottoa of the report. Vhen a discrepancy existed between the nuaber of bags charged by the feeder and the nuaber of eapty bags, the feed r'a report was accepted and became part of our accounting records for the period. Over the years many discrepancies between the two figures have bean noted. It ie the opinion of our plant manager and plant accountant that the feadera have aiaply neglected to put the appropriate cheek mark on their report from tiae to tiae over many shifts extending back over the previously mentioned period of tiae. The confixed shortage amounts to 2,301 bags, primarily grade Dll. This approximates 77 bags per month over the indicated period of short reporting. This averages out to about one bag per shift. In viewing their operation it la not too difficult to Imagine that a feeder could easily overlook a bag froa tiae to time. Corrective measures have been instituted by the plant manager beginning with a new report. Record of Bagged Material Taken frog Warehouse Stock, which has been adopted effective October 21. This is a weekly report which will be prepared by the lift truck operator who removes bags of raw asbestos froa stock and delivers thea to the feeders. At the end of the first week's use of this report, tiae results indicated that the correlation between the warehouse stock disbursement and feeder requisitions showed, contrary to expectation, that the feeder had charged more material to his operation than the warehouse delivery report showed. In opinion this could have resulted from two situations (1) the feeders could have been made aware of the current problem and, consequently, checked off a few extra bags to atone for past missions, and (2) there may have been some initisl confusion in balancing the nuaber of unopened bags at the beginning and end of the week at the feeding machines. When the Tyler management reviewed the results of the use of the deport after one week and noted the discrepancies, they Immediately added an additional control feature in that the content of each lift truck delivered vill be checked by the superrleor In charge of the particular shift. It would appear that we now have three independent methods is accounting for the usage of asbestos. I have asked that we receive eeeh week the results of the three separate counts. They should very shortly be in heir agreement. I believe that, within the next few weeks, the differences of the past aontha vill be THIS, DOCUMENT WAS NOT A RECORD OF PPG INDUSTRIES, INC. DID NOT COME FROM IT'S FILES AND CANNOT BE AUTHENTICATED BY PPG* INDUSTRIES, INC. 9~JI BB 002370 53.Q4 Til* 2 narrowed down to the point where w* will luvt nearly t tel agreement. If each of the people responsible for the reporting becomes aware of the importance of the situation and the fact that we are insisting upon accuracy, there would appear to he no valid reason for continued discrepancies. V* I thoroughly investigated the controls and procedures for accounting for the Inbound shipments of fibers to ascertain If our eousts were true and correct. Ve control frcm this office the accounting for asbestos until It reaches the plant gataa. All shipping papers and supplier Invoices ar received through Pittsburgh and costs are transferred to Tyler. Therefore, we know exactly the quantities for which we have been charged by our supplier and we have certified "on board" bills of lading indicating the receipt of the proper quantities by the naster of the vessel carrying our asterial. Further, we obtain appropriate dock receipts and inland bills of lading showing the number of bags consigned to Tyler. Any discrepancies at this point arc handl d with our insurance carrier, as we are fully insured fro* the port of departure to our plant. Therefore, we have complete control until the Material la physically unloaded at Tyler. Z was advised that the outside labor force that la brought in to unload these netcrisis has left s lot *to be desired, particularly until very recent tinea. This unloading has always been done at night and will continue to be done at night for two reasons - (1) we do not have the automatic trucks available in the daytime, and (2) in the sunnier nonths the heat la so oppressive that an unloading crew could not be obtained. The type of crews that ve have gotten from Manpower have, for the west part, consisted of derelicts and thers of this Ilk. Sone of these men have arrived for work in a drunken condition, fights have taken place among then, and the output per nan had baen extremely low. These people had been under the iapreseion that all they were to d on a night shift was to unload *_ car of asbestos, charge for sight hours, and take off. The Tyler nanagessent~has instituted a program whereby Henpowcr la paid per bag. This incentive keaps the men working fully through the entire shift with the result that ve are getting perhaps twice as many bags unloadad than in the past. The count is made by the driver froa Manpower who operates the lift truck and supervises the crew. Theoretically he does not know how many bags are loaded In a car, but in actual practice his experience would indicate to him that a car normally contains 800 bags. It la possible that his count could be shaded by this knowledge. However, 1 don't think that our shortage lias In this area, since ve are getting eonslstantly good eounta at our Port Allegany operation, which is handled by our own people. The lav'of averages would indicate that shortages from the ship would apply to both locations. 1 reviewed the accounting controls which have been established by Mr. Suavely for reporting the receipts and disbursements of the asbestos. The controls are good and adequate, but they are dependent upon accurate and complete reports from production. Ed Snevely and his accountant, Mias Martin, have gone back through all of their raw material disbursement records for a period of three years and have re-checked their nanny sheets mathematically. They have checked all of the postings to their Inventory records and ara satisfied that this shortage la not a result of an accounting error. Z reviewed their method of maintaining thaae records and have no criticism of any nature in this regard. I believe they are doing an excellent job, and tharc la no necessity for any change la this area of the operation. i bb 22222-i os Visit to Tyler, Texas UNIBESTOS Place hge 3 I discussed in broad general tens the problem of properly accounting for asbestos vith Mr. L. Trnovec, General Auditor of Union Asbestos, without revealing any apecial aituation or actual indicated shortage. Lou has bean an old friend of Pittsburgh Coming both during the purchase of the UWIBESTCS business and vith certain mutual accounts where we have both extended credit* Bo informed me that the problem of properly reporting asbestos usage existed in the days that they operated this business. They had learned that there ves a tendency for the operators to ''requisition" raw asbestos from stock without recording sawe. This took place primarily at night and on weekend*.. It seems Chst in certain tines they obtsLn better results by using a higher proportion of raw material and cutting back on scrap. Lou also suggested that* our raw material mix reports could indiesta a possible excess use of raw 1.... asbestos, however, Ed Suavely had already checked this factor and found no deviations from the normal percentages. In amsaary, it la my opinion that the shortage has been Isolated ta bad reporting by the Feeders over an extanded period of time. Steps have been taken to rectify this situation. We will receive each week copies of the three independent reports so that we may be apprised as to the progress or lack of progress in the establishment of a sound reporting system. For your added information 1 have attached a copy of the Dally Fiber Usage Report and a copy Of the new Record of Bagged Material Taken from Warehouse Stock Report. The people at Tyler were extremely cooperative, most informative, and did everything possible to make my visit worthwhile. I believe chat my having visited with them and having gone through the entire plant operation with Van and Ed will have a beneficial effect on all concerned in the reporting function in that they thoroughly realize the gravity of the situation. ee: Mr. C. L. Kelley Mr. F. R. Maston T. H. Donaldson | BB 0023711 |