Document N257dqapkkjjVNDo45ndNr0jb
,ti 4
0641978
GRACE
Ceestrodion Product* Division r")
TO: J. A. Danneker R. M. Vlning R. C. Walsh
DATE:
September IS, 1983
SUBJECT: August 1983 Monthly Report
ec: R. C. Abernathy H. C. Duecker Marketing Department (14)
Mees/Zono Ajax
B. Sladat J. V. WoIter
I. Summary
e Although tremolite contamination of vermiculite-based products continues to be a problem in the marketplace (we have seen our
- first "tremolite-free" Monokote specification out of St. Louis), it does not appear as though the issue is of the same crisis proportion we thought it to be. We have prepared a fact package which is now being distributed to the sales organization and are continuing to handle tremolite inquiries on the subject on an individual basis.
e Complaints on the variability of Monokote 5-SG at Patti's 49th Street Tower job resulted in our monitoring this job and Patti's standard MK-5 job (199 Water Street) also in New York City on a dally basis for three weeks. We concluded that the variability with MK-5SG was about the same as seen with standard MK5 - both were unacceptable. We have Initiated a program to define and eliminate the causes of the variability and are postponing further conversions to MK-5SG until this program is completed. We anticipate a four to eight-week delay.
e CAFCO has tested and received approval on some U. L. designs using reduced thicknesses of material to obtain equivalent fire
resistance ratings. They have recently used these designs, which result in s lower cost to the applicator, to beat us out of several large jobs in the Central Region. We anticipate that these thickness disadvantages could impact our business in the Eastern and Southern Regions. (As ICBO jurisdictions use different and simplified thickness criteria, we are not presently disadvantaged on the West Coast.) We are in the process of developing a test protocol which will enable us to reduce the Monokote design thickness and again become competitive with CAFCO.
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0641979
Ve net with National Gypsum during the month (they have eupplled 411 of our Gypsum requirements so far this year) to determine their willingness to continue to supply ZOO plaster for the long term. Since they put new or refurbished kettle equipment in the plants from which they presently supply our needs when they switched to the caleidlned Gypsum process, we are confident that they will continue to supply. (The only plant not yet converted to calcidined Gypsum is Long Beach and they also plan to add refurbished kettle equipment when this switch is made.) However, we also expect that they will continue to be aggressive with pricing as they perceive (correctly) that without their supply, we would be left with 0. S. Gypsum as a single source. Having the capability to self-retard gypsum would open additional sources to us. We have initiated a program to self-retard Gypsum in order to broaden our potential supplier base.
a Polyeel shipments for August were 109,000 lbs. representing one of the best months on record. The volume was driven by aerosol demand as both consumer and industrial products are moving well (incoming orders indicate a continued strong showing). The professional business continues to be relatively static as dramatic gains in the Regions are partially offset by market share losses and lower housing starts in Texas. Both Xnstafoam and Polyseal are moving more aggressively in this market.
e The Distributor Incentive Program for Maaonry Insulation appears to be quite successful this year as volume continues to outpace prior year despite a continued market decline. The program will be winding down in September, and we must continue paying attention to our distributors to insure a good year. At the completion of the program, we will recap the "winners" and "losers" to estimate the impact of the program.
e The new improved Thermostud "T" clip was shipped to all plants on August IS, 1983. A mailing of Thermostud information was sent to 2200 Drywall and Insulation Contractors and within three weeks, we received a 3.61 response rate. Letters were sent to distributors and our salesmen to follow up on the leads. We have finalised a distributor slide presentation on Thermostud and plan to get it to the sales organization next month to aaslst in building distribution for this product.
e Despite the favorable reception given to the Attic Fall Campaign by cur custoewrs, initial shipments (August) do not show any marked improvement over the first seven smiths of 1983. The volume decline continues at a rate in excess of 201 over prior year.
0641980
m
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We added one new Owens-Coming Supply Center to our customer base in August with the addition of one in Florida. This brings our total to 22 representing 481 of the potential. Florida is presently the leader in using O.C. distribution with 4 of 5 centers as customers of CPD. Our status with these centers is tabulated below:
O.C. Centers That Sell CPD Products
Region
Total O. C. Centers
Distributors of______
Polvcel
Thermostud
Both
Total
Eastern Central Florida Southern Ueatem
TOTAL
11 9
5 13 8 46
3 2 05 3 0 03 0 4 04 6 0 17
3 JL _L 15 6 1 22
There is still room for further growth as only one of forty-six centers carries both products.
The Uilder Kentucky Vemiculite Plant has been using SBO treated L-3 concentrate for five weeks. Mine assay yields, which are being achieved by the plant, are averaging 31 higher than the yield from untreated concentrate. Initial reports (which need to be confirmed) indicate that applicator yields with Monokote produced from SBO treated L-3 are higher than from Monokote produced with untreated concentrate. A test protocol is now being established to determine the effect of SBO treatment on L-4 concentrate and ZIC performance.
The plant trial of the flremate process was started at the Minnkota Power Co. on August 15, 1983. Although the coal being used for the test contains 91 sodium (siost utilities blend to a sodium content of 4.51) and there were mechanical problems with the soot blowers, initial results look favorable. The test will continue with continuing reduced concentrations of vermieulite until the optimum level is obtained. Af"an expected dose rate of 2 lbs/ton, this facility could use 3,000 tons/year of L4-L5 concentrate.
Ore concentrate sales to Gypsum companies (about 20,000 tons per year) are threatened by two events. In the near term, about 7000 tons per year to U. S. Gypsum West Coast plants are at risk as a result of Bill Strong's importation of African Vermieulite. As we ship these plants from South
Carolina (U.S.G. will not use Libby Vermieulite) our landed cost is higher than Strong's. U.S.G. has recently approved South African Vemiculite
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0641981
In the longer term, Westroc Industries Ltd., e Canadian Gypsum company, has developed and obtained U. L. approval for a fire-rated wall board which does not contain vermiculite. If this product is economically viable, our entire volume of concentrate with the gypsum companies is at risk.
e We have negotiated an agreement with Kahallfa Algosaibl Co. which gives them rights to manufacture Zonolite products in the Kingdom of Saudi Arabia and rights to sell in the Arabian Gulf. The agreement, which is subject to approval by both companies, is based on the "heads of agreement" we developed several months ago. The major difference is that the license ' fee schedule was reduced in return for higher minimums and a commitment to purchase concentrate from GRACE. Subject to Saudi Goverment Approval, we expect the facility to be operational in add 1984.
e We have announced a 71 price increase on Export Peter's products effective January 1, 1984. We have had a strong negative reaction from one of our key customers (Brinkman in Holland who represents about 301 of our volume.) We plan to meet with Brinkman to discuss our pricing and a strategy for gaining additional market share vs. Plant Products.
e Although sales of Servlwrap remained strong in August (due to a large shipment to Brown & Soot for an offshore product), the backlog for pipe wrap is slim as no new major projects are anticipated before year's end.
e The hiatus in roof deck litigation activities has ended with three new Celotex cases being filed in August. Celotex cases now represent 451 of our caseload of 44. On a separate note, JM's attorney has appeared at our oral arguments on August 24th in the Norwich Pharmaceutical case. The appearance, which is the first since Manville's bankruptcy, has led to the speculation that the bankruptcy will be resolved in the near future.
II. Sales and Margin Summary
August gross sales for non waterproofing, non roofing Building Products are $1124M (151) unfavorable to budget and $806M (111) unfavorable to August 1982. Virtually, all of the budget under run is due to the shortfall ($1087M) in fire proofing as the behind budget performance in General Insulation products ($156M), Polycel ($120M) and Servlwrap ($15M) is essentially offset by gains in concentrate ($177M) and Export ($87M). We expect that sales of these product groups will continue this relative performance to budget for the remainder of the year.
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Tear-to-date gross sales for these products are $8222M (171) unfavorable to budget and $3112M (71) unfavorable to prior year. The largest portion (771) of the YTD under run is also due to Monokote ($6235). However, the YTD under run in General Insulation ($1522M), Polycel ($1095) and Ore to Outsiders ($51M) is only partially offset by above budget performance in Serviwrap ($149M) and Export ($620M).
Key Sales and Margin Statistics are detailed in Tables I. II, and III attached.
(Tables I, II, and III follows)
III. Product Line Details
Product Line Details are Included in the attached reports.
RJB/ko'c Attachments
Robert 3. Bettacchi
r
0641?83
I. SALE5 AND RARGIN STATISTICS
(1) (2) (3) (A)
(5)
t Variance
19B3A
1983B
1982A
1983A
1983A
vs 19638 vs1982A
(D FIREPROOFING (2) GENERAL INSULATION (3) POLYCEL (A) ORE TO OUTSIDERS (5) SERVIHRAP (6) EXPORT
(7) TOTAL
(8) FIREPROOFING (9) GENERM. INSULATION (10) POLYCEL (11) ORE TO OUTSIDERS (12) SERVINRAP (13) EXPORT
(1*) TOTAL
(15) FIREPROOFING (16) GENERAL INSULATION (17) POLYCEL (18) ORE TO OUTSIDERS (19) SERVHRAP (20) EXPORT
(21) TOTAL
(22) FIREPROOFING (23) GENERAL INSULATION (2A) POLYCEL (25) ORE TO OUTSIDERS (26) SERVIWMP (27) EXPORT
(2B) TOTAL
3333 1985
SOB SOB 9A 176
6604
AUG 63 GROSS SALES(SOOO)
4420 2141
636 331 109 69
4401 1960 437 436
64 70
(25) (7)
(20) S3
(1A) 96
7728 7410
(15)
(24) 0 16
16 12 1S1
01)
Y-T-0 AX 83 GROSS SALES(SOOO)
21528 11242
2345 28S1
676 1245
276S3 12764
3440 2902
S29 62S
25650 11678 2165 2543
230 735
(23) (16)
(12) (A) (32) 6
(2) 12 26 194 99 69
39890 48112 43002 (17) (7)
1527 787 256 304 23 70
2968
AX 63 GROSS nARGIN(SOOO)
2083 1663 654 762 337 223 193 267 52 42 36 23
(27)
(8) (24) 57 (55) 95
3556 3221
(17)
(19) 1 15
14 (A5) 204
(8)
9666 4433 1192 1695
328 466
17999
Y-T-0 AX 63 GROSS* MARC.(SOM)
12911 4859 1631 1722
243
239
10563 4212 1076 1540
115 267
(23) (6) (9) 5
(35) 11 (2) 10 35 164
95 62
21804 17795
(17)
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