Document Evw7XoJVEGBwq8410O5ZVK4Kn

ASBESTOS INDUSTRY QUARTERLY REPORT - 4Q 1980 Distribution G. R. Adams R. E. Byrne, Jr. J. F. Collins W. B. DeAtley G. L. Dickson R. L. Folkman R. F. X. Fusaro/J. J. Sibley B. L. Ingalls R. D. Koch G. M. Lincoln T. P. Norris H. B. Rhodes File UCC 005675 ASBESTOS INDUSTRY QUARTERLY REPORT - 4Q 1980 (J. L. Myers, 2/2/81) Asbestos sales for 1980 are compared to Budget and Forecast IV in the following table: Domestic Export Actual Sales Tons $M'" 21141 8807 3872 3306 % of Budget Tons I 105 100 90 no % of Fcst IV Tons I 100 99 97 Total 29948 7178 100 105 98 98 Export and total dollars set new records for annual sales, although the total was only $22,000 higher than 1978, the previous record year. Domestic sales were above budget for floor tile and drilling mud, while RG products finished at 85% of budget. By contrast, export sales of RG products were 122% of budget and tile sales were below budget due to our Australian customer discontinuing the use of asbestos in the second quarter. Sales to tile customers are tabulated below: Customer U.S. TILE CUSTOMER SALES, $M Actual % Budqet Kentile 810 111 Uvalde 532 120 GAF 222 313 FI intkote 55 .52 Winburn 5 23 Amtico 00 TOTAL. $1624M 116% Sales to Wf. R. Grace,_ p. rimarily_ for Euro.pe, exceeded one millii the first time; and Tomoe purchases for distribution in Japan set another record at $1.7 million. Following is a summary of export sales by country: Country/Sales Rep. Japan/Tomoe Europe/Grace Brazil/UC Canada/H & C Australia/UC Taiwan/UC Mexico/Grace S. Africa/Grace S. Africa/UC Argentina/Grace Europe/Mercomed Taiwan/Grace Colombia/Grace 1980 Sales, $M Actual % Budqet 1741 931 171 134 115 87 37 29 24 17 9 6 4 103 116 116 104 87 105 .-- -- 267 -64 -- UCC 005676 -2- February 2, 1981 As indicated by the above, Grace has increased their activity in non-European countries and is competing with Union Carbide in S. Africa and Taiwan. This competition presents some complications, such as with pricing, but it does get the attention of the UC sales offices. Highlights for 1980 are summarized as follows: 1. March and first quarter sales established monthly and quarterly records. 2. Domestic sales personnel were reduced from four to three. Geographical responsibilities were revised and Eastern Canada was assigned to export sales. 3. Flintkote shut down floor tile plants in Chicago (March) and Los Angeles (November), leaving Toronto as their only tile production facility. We were supplying LA about 75 TPM, but nothing to Chicago or Toronto. Winburn shut down in the second quarter? a loss of about 200 TPY. 4. Atlas experienced major operating difficulties in the first quarter and "officially" discontinued production in the second quarter. 5. Calaveras discontinued production of Grade 7 products in November, but this will have little effect on our sales in 1981. 6. We have obtained continuing business from GAF in Long Beach and Vails Gate because of the Atlas shutdown. This shculd continue in 1981, although GAF tile plants are now up for sale. 7. Auto maker policies on asbestos use and low auto production caused a significant loss of RG sales. 8. Drilling mud sales were strong all .year and were 165% of budget at year end. This is due to the record number of rigs operating, but our market share continued to drop due to the marketing efforts on Flosal, a wetted and prilled product from J-M. We decided not to offer a wetted product but did supply about 100 tons of UNIVIS (1/8" SSG pellets) for field evaluation of dust generation and down-hole performance. Tests will continue in 1981 and improved packaging will be considered. .9. During the first half. Great Gulf Chemicals purchased about 500 tons of CSV from Montello to make silane-treated asbestos (SMF) under contract f^nm nrsccoi- LadusiEisS- Dresser blends SMF with other materials to make a product for use in oil-base drilling fluids. Great Gulf began experiencing severe production problems in the last quarter and singled out CSV as the cause for off-spec SMF. Although we are sure CSV was not at fault, they tested HP0 from a regular distributor (D&F-Houston) and, by the end of the year, had essentially switched from CSV to HP0. Although we have an exclusive arrangement with Montello, the Law Dept, advised that we should not "get involved," The situation has been dis cussed with Montello and no significant problems are anticipated. UCC 005677 -3- February 2, 1981 10. Although Canadian asbestos producers had some labor problems, all contracts were settled before there was any Impact on our business. There is a considerable excess of Grade 7 fiber and by the end of the year it was becoming evident that we could expect unusual pricing pressures in 1981, especially in Japan and the Eastern U.S. 11. Although there was a constant threat of new regulations, none were promulgated which would have a serious effect oh our business. The main threat to the asbestos industry was the continuing use of the media by the agencies to instill an unfounded fear of asbestos. We anticipate reduced regulatory pressures for the next four years. 12. Although sales were at a record level, financial performance was poorer than prior years because of unexpectedly high production costs, especially energy-related. Following is a summary of the last three years: 1978 1979 1980 1981 Budget NIFS % Budq. 7156 6360 7178 9356 126 97 105 -- Gross Marqin $M % Sales 2944 2439 2139 41 38 30 2824 30 Net Income $H % Sales 1190 1041 827 17 16 T2 1255 13 %R0A 25.4 19.8 16.6 21 .8 13. The improved performance budgeted for 1981 can only be achieved by implementing large price increases to offset production and other cost increases. One distributor agreement was terminated at the end of 1980 which will result in a $46,000 savings in commissions in 1981. 14. Customer technical service activities for the year are summarized in the attachment. UCC 005678