Document Jvme27nN1p04VQ9MB58N3QQqK

l. 8* ? Shannon ytiLTI-SKP - Granville R. C Amos - Granville R. 5. Grant - Toledo P. K. Scheuerle - Berlin J. A. Smith - Toledo Art* Z have attempted to prepare the brief surrcary report you requested on the product called Kulti Temp. It Is my understanding you vented me to specifically eover three areas of interest to Manufacturing: (1) cost projections prepared several years ago on the entire Multi Temp product line* (2) a brief review of the product itself, including its advantages, disadvantages, problems in processing and the like, and (3) ay own personal thoughts on the product especially as to how it relates to the total high temperature insulation market* Multi Teap is completely free of asbestos. If we were selling Multi Tern today, ve would have the only asbestos-free, rigid high temperature product on the market. As you know, it is our hope and plans to have an asbestosfree calcium silicate (Kaylo) preduet on the market in about a year. Uie activities of Selikoff, the adverse public reaction to the use of Insulating products containing asbestos and the presence of asbestos-free Kaylo and Multi Temp in our product line would without doubt all contribute to OCF* s regaining its rightful position of leadership in the high temperature insulation market. Once we regain this position of leadership we can q>eet it to have a positive effeet on sales of related glass fiber products such as pipe, roofing, IS board, duct insulation and the like. Mien KultiTemp was dropped several years ago, two reasons were given; one was the refusal on the part of. our distributor to Inventory and handle two lines of high temperature insulations for the same market; the second was the relatively low gross margins being achieved as well as projected for Multi Teap pipe insulation. Recent discussions with Marketing indicate the real reason for dropping Multi Temp was low gross margins. A feasibility report prepared and Issued by Justin Boeker's group back in 1965 projected a gross margin level of 2A2 for Multi Temp pipe. This same report projected a gross margin level of 33? for Multi Teap block, (it should be noted a projected gross margin f 33/ for Kulti Temp block is actually higher than the gross margins we 3q?ect to achieve on Kaylo block during the next several year period.) Produced ia cn*r under seal by ord Judges Paul Riley cod Cordon Meeq, October 16, la Jaalaon v. A. P e el. 67-L1230 % \9 j-.' Pearson # .i-TerTp H*7 9 19^9 Pg 2 00530 l vint- to caution you in drawing too many conclusions from Boeker* a 1965 lost, projection. Conclusions reached in 1965 are no longer valid since many it the process and market parameters have also changed. When Boeker prepared the 1965 cost projection for Pfiefer, apparently everyone vas thinking big. they were projecting a multimillion dollar market for Hulti Temp and a similar size market for R-2 fire-rated acoustical products. They envisioned a multi saturator, multi oven, multi molding press (for Kulti Tc?.p pipe) operation requiring an investment of substantially more then a million dollars. As a nirther complication in interpreting data frem this cost projection vas the fact the facility vas designed to process R-2 fire-rated tile, R-2 fire-rated :eiling board, Kulti Tenp pipe. Multi Temp Block, and Hulti Temp fittings ' 'if economical) All on the same facility. Ct la ay understanding you are considering resuming the production of Multi Temp >lock and vented ay thoughts on the subject. Although I do not have cost data to >aek up ay position, I am convinced ve could produce all of the Kulti Temp block !arketing could sell during the next several years and ve could do it in on a .`aeillty similar in size to the R-2 facility at Kevark. Furthermore, I believe ve :an produce Kulti Tesp block vith a gross margin level over 30? level, ve vill jave to coue up vith a new one-step process (not yet invented). the R-2 facility at Kevark vas torn down recently and most of the mixing, pumping, ind suction equipment transferred to other areas for use in other operations, i- ver, two of the more expensive process items, namely the R-2 oven and vare ' ~s, remain and eould serve as the nucleus for rebuilding the operation at ainisal coat. It this point, I would like to get in sy two cents worth. If the decision is nade to again produce and market Multi Tenp block and pipe, ve have no choice but vo locate the facility at Kevark where the pipe molding presses are located, iovever, if production is to be limited to Multi Temp block, I would reeosnend vhe facility be moved out of Newark. There is nothing personal in this reecnaendation. [ just believe ve would have a more efficient and more profitable operation if located elsewhere. My choice for facility location vculd be Berlin. 2 have a number of reasons for this reccroendation and would like to elaborate on these in greater detail in the following paragraphs. She R-2/toulti Tenp saturating facility vas considered as one of the dirtiest operations by the Newark Plant hourly employees. It vas dusty and the employees isually ended up covered vith vet clay slurry on their clothes. Most of the newly vired help at the Newark Plant were assigned to this area. Our problem vas they transferred out to cleaner Jobs faster than ve could train them. I am not kidding <hen I aiy you would see almost all new faces each week. Die R-2 facility vas operated not only vith minimum supervision but also with unskilled, untrained end iuite often undesirable help. All of these factors combined to lower product juality levels and Job efficiencies. A further complication vas our inability to control labor costs. This vas due to our inability to transfer the workers to other Jobs during the long drying cycles. A five-man crew could saturate in 2-3 "** sufficient material to fill up the drying oven. The operation vas then shut i for 3-8-3/2 hours (depending on thickness of the ware being processed) while * sare was being dried. For Union reasons, these men could not be temporarily 42 002 0187 t, J. Pearson' Toledo Froductd la c.n.r. titular l by ord. Judq.. Paul Rllay and Cordon N..q, JL Kay 9, 1969 Page 3 00538 s-agned to other Job* outside the R-2 area. Except vhen the walnut shell fissured tile and ceiling board line (also located in the R-2 area in 1965) 'as running, the R-2 crew had nothing to do for hours at a tine. Because of this condition, labor costs were sky high. Throughputs per man hour and product gross margins were extremely low. In the ease of Multi Temp block production, the base wool was produced at Barrington, packaged and shipped to Newark, unpacked, processed through the taturator and drying oven, repacked and shipped to customers, many of whoa were seated on the East Coast. All of this handling tended to reduce product quality and Job efficiencies. Also, the 1965 eost projection indicated the cost of shipping base wool from Barrington to Newark was projected at $50,000 per year for a projected sales level of $1,200,000 for Multi Temp block. As mentioned above, I recommend we give serious consideration to moving the R-2 oven and setting up a Multi Temp manufacturing facility at Berlin, provided, of course, we limit production to block ( and eventually to fittings). If we do, I am convinced we can produce a quality product yielding a 30? plus gross margin. At this point, I would like to enumerate several of the main reasons for such a recommendation, first, the Newark Plant never did want the R-2 facility. It was a thorn in their side-difficult to man and difficult to control. Second, based on the type of operation currently at Berlin, sy guess is the hourly employees at the Berlin Plant would classify the Multi Temp facility as a clean operation. Third, transportation costs of basic wool frea Barringtcn would be minimized, fourth, ft--- probably the most important reason for locating the facility at Berlin, is the J iter flexibility and utilization of labor. For example, we are now operating the third pouring line on a two-shift basis. We could operate line 3 around the dock but shut it down at intervals so the crew could run the Multi Temp line long enough to saturate oven loads of ware. Vhen the oven was reloaded with wet Multi Temp block, the third line pouring crew could again resume the pouring of Ksylo. The addition of five or six people would make it possible for Berlin to maintain current pouring levels on line 3 and still operate the Multi Temp facility around the dock. Labor costs charged to Multi Temp under such s plan would be exceedingly low and the dollar throughput of Multi Tenp block high. Bow many pieces of Multi Temp block could w* process through the R-2 oven if located At Berlin and operated around the clock on a five-day week? It would all depend on the thldmess of the block being processed and ths mix of goods. Assuming ve ran only one thletasss of block for 24 hours per day, five-day weak, we could produce the following quantities of Multi Temp Blocks Slock Thickness Oven Load/ Bd. ft,/ (Inches) 5-Day Wk. Oven load Production Capaclty/5-Dav Week Pieces of Bd. ft. So. ft. 2x4 Block 1 1-1/2 2 40 4,900 22 7,350 24 9,800 196,000 161,700 237,200 196,000 107,800 68,600 24,500 13,475 8,575 &Z5 Product la UUU undr ! by << Judq Paul Uy <1 Gordon Ociob.r 1, lM, la Jmltaft v. )u ?. .C i. 7-L12J0 J. Pearscn Kay 9, 1969 ltl-*Tyrp H&9 U 0053S "v the rajor advantages of Kultl Temp block when carp*red with other types of enperature insulation? 1 Proprietary to OCF - Patents applied for 2. Completely f-*ee of asbestos 3. Water and rain repellent 4. Easy to cut, good fabrication characteristics $ Breakage due to rough handling is nominal * 6. lightweight, easy to handle 7* Can be impaled over metal 80 Potential 30+ gross margin product Iti Tesp block also has its disadvantages. They Include! 1. Maximum temperature reconnended for Kultl Temp block is 1000*F. (Probability of increasing this to 1200*F is 75/25) 2. Dusty when cut, especially with power saw 3* Ends and edges are susceptible to in-transit and handling damage 4. Softer than calcium silicate and bonded aggregate products. (Kay not be a disadvantage to some customers for certain applications.) 5* Creates problem of double inventories for distributors. c,wods up this product report and and should my feelings, find a place I am of the opinion Multi Temp, overall is in the marketplace (especially not with the sh on asbestos), and if we limit production to Multi Temp block and locate the eility where the product is not penalized by poor workmanship and/or excessive bor costs, a good gross margin product will result. estions 2 feel must be resolved with'Marketing before we take any positive action a Multi Tenp facility include the following! Do they really want Multi Temp? they **nt only block or the entire line including pipe fittings7 At what price fels do they expect to sell Multi Tenp? What it the projected sales value production T 1970 and beyond? Marketing says they want not only Multi Tenp block but also pipe and pipe fittings, must recognize the fact ve have a problem In facility location and also have a need do considerable experimental work before pipe gross margins can be raised to an eeptable level. We must also'recognize the fact no work has been done to-date . Multi Temp pipe fittings, lhis program is still in the planning stage (on aporary hold eo manpower could be shifted to the Replacement of Asbestos in Isylo mgram). At the moment we have not even prepared a cost projection to determine ether this is a business ve should get into. 2. F. Shannon 42 002 0189 j.er`UJi>w SH.