Document MMMJvLZ86egL97gb0MORZQdmV

* 1JC 149-2 INTERNAL CORRESPONDENCE METALS DIVISION To (Nome) 0/vision Location Floor Number Mr. R. L. Folkman Building 38th Floor Copy to Dr> p.j. Shortsleeve 270 PARK AVENUE, NEWYORK, NEW YORK 10017 Dote Originating Dept. October 27, 1980 * RECEIVED | Floor Number Answering letter date OCT 2 71980 " J. SHORTSLEEVE Subject 1981 Asbestos Budget The objective set for the Asbestos Business during the St. Louis Budget Meeting is to increase sales income so that rising plant costs are offset, and to project a 1981 percent gross margin equivalent to that now estimated for 1980 (about 30%). The attached revised sales budget will provide the income necessary to meet this objective. The revisions include the addition of new sales; increasing the volume of some existing accounts and increasing prices by an average of 17.9 percent. John Myers is preparing the necessary requests for authoriza tion to increase prices. The magnitude of the increase in income required to offset the rapidly escalating costs is a graphic illustration of what is happening to energy costs in California. The actual increases in the cost of energy in California are comparable to what is being experienced everywhere in the Western World, but in California a disproportionate part is passed on to industry and the individual consumer is purchasing energy at less than cost* This has happened quickly and its full impact is not yet clear, but California energy intensive industries may already be non-competitive. Increasing prices as required in the 1981 Budget will be a test of King City asbestos products in this respect. A significant part of the increased volume in the revised budget is floor tile filler for GAF. We have supplied some product to two GAF locations since Atlas ceased operation. One location is in the east and it is not possible for UCC to compete with Canadian short fiber at this location. Atlas did compete and perhaps this added to their eventual demise. GAF has always been a price buyer and it is likely that GAF will continue to buy from UCC only until they can work out the technical aspects of switching from Coalinga fiber to Canadian short fiber. Mr. R. L. Folkman -2- October 27, 1980 All things considered, the risk associated with the budget attached is high. In an attempt to quantify the risk, the price and volume changes have been rated roughly as to the probability of attainment and the ratings are summarized as follows: Sales, M$ Cumulative, M$ Probability of Attainm 1980 FcstIV 7,317 1,447 80 512 7,317 8, 764 8, 844 9, 356 1.00 .85 . 50 . 25 This is probably an optimistic assessment. RWR:ac Att. Calidria Asbestos 1981 Sales Budget (JLM Revised Oct. 27, 1980) Product Budget Tons $M CL Prices, FOB Plant, S/T Current Planned % Increase SG-103-5 (1) -7 (2) -9 SG-104 -130 (3) -200 -210 HPP HPQ (3) RG- 100 -110 -144 -244 CSV SHUR (4) UNIVIS Dom, Total 1500 3600 1800 10400 200 360 300 20 740 570 220 400 440 3300 1140 500 25490 198 487 238 1206 39 63 75 4 185 399 59 280 1408 594 205 90 5530 122 122 122 106 170 160 220 204 220 560 240 560 2500 160 160 160 132 132 132 116 194 176 250 224 250 700 270 700 3200 180 180 180 8.2 8. 2 -9. 1 14. 1 10. 0 13. 6 9.8 13. 6 25.0 12. 5 25. 0 28.0 12. 5 12. 5 -- SG-100-EX -130-EX -210-EX AS-200 HPP-EX HPQ-EX T- 135-P-EX RG-144-EX SX-14 (5) RG-244-EX (6) SX-24 3100 180 0 1100 2640 480 100 250 90 400 570 409 34 0 174 533 120 71 175 44 1212 1054 125 164 -- 144 184 220 648 560 390 2300 1500 132 188 -158 202 250 710 700 488 3030 1849 5.6 14. 6 -- 9.7 9.8 13.6 9.6 25.0 25. 1 31.74 23.27 Exp. Total 8910 3826 Total 34400 9356 Average Price Increase (1) Assumes 300 Tpm to GAF- lb. and/or Flintkote (2) Assumes 150 Tpm to GAF-VG (3) Assumes no commission to Harwick (4) Assumes Montello finds packager and promotes UNIVIS (5) Assumes $2800/T for TEC and $3000/T for others (6) Assumes price of $1700/T on 10/1/80 and $1900/T on 7/1/81 17.9