Document QJNa5JRgVGQrNENym1gNabXM8

GRACE RECEIVED JUL 301983 Construction Products Division NORTH BRUNSWICK, NJ. 03902 TO: J. A. Danneker R. H. Vining R. C. Walsh FRO* cc: H. C. Duecker Marketing Department (14) B. J. Mees/Zono Ajax (Regional Managers (5) B. Siadat D. L. Wightman - J. W. Wolter DATE: July 27, 1983 SUBJECT: July 1983 Monthly Report 1. Sumnary o Tremolite contamination of vermiculite-based products continues as a -- pregnant issue in the marketplace. While the tremolite content of Monokote is, at present, the most significant aspect of this problem (because of the New York/Goldfarb situation), ve continue to receive calls and letters on other products including Attic and Masonry Insulation. It is clear that our competition is making "good" use of the recent article in Exposure. We are presently handling these requests on an individual basis and are looking at a more general approach. o Estimates of Monokote volume derived from the regression model based on steel office and bank contract awards are dramatically higher than actual results (deviation of the twelve-month moving total through July is While we believe that we have lost some market share to Cafco in the past twelve months, we believe this loss in market share is small relative to the total deviation. We will update the model to find the reason for the discrepancy. We will also attempt to better define our loss in market share. o We have recently lost 230,000 bags of Monokote volume in the Midwest Region on 3 jobs because of uncompetitive thicknesses relative to Cafco. Cafco has recently run new tests at UL which reduces the amount of Cafco material necessary on some specific designs to obtain a given fire rating. This results in a disadvantage of 10 to 13% higher material requirements for Monokote for the same designs. In the short run, we are going back to the applicator with a proposal which would offer him free material for the incremental requirements. For the longer term, we are putting together an active fire-test' program to re-gain the initiative from Cafco. 15183724 -3- o Imperial Chemical Industry (ICI) has developed and patented new technology to manufacture foams and coatings based on vermiculite. We have duplicated their approach in the Lab and find materials with interesting properties. ICI has met with us in the past to "whet" our appetite but has never pursued a concrete proposal. I plan to meet with ICI in an attempt to determine their plans and to determine if we can or should license their technology. o SBO treated vermiculite will be shipped to the Wilder Plant for 3 months to confirm the yield improvements, determine finished product performance, and establish air sampling data. Although previous results showed no yield improvement with SBO treated at Enoree, recent samples in which wet Enoree concentrate was shipped to Libby for treatment showed a 7.67. yield improvement. We believe that the previous non-performance was due to over-drying the concentrate at Enoree, thereby retarding the effectiveness of SBO treatment. o Sales of concentrate to the gypsum companies are further threatened (we lost 4,000 tons to Virginia Vermiculite) as Bill Strong i6 attempting to get African Vermiculite approved by U. S. Gypsum. If successful, he would likely have a freight advantage to the West Coast as we are shipping all USG plants from South Carolina. USG will not take concentrate from Libby due to the label on the railroad cars. o Licensing of Zonolite/Vermiculite products to the Mid East is pro gressing. The attorney for Gosabi plans to be in Cambridge to discuss terms in the near future. However, in "typical" Saudi fashion, they have not yet given us concrete responses to our proposal. On a second front, we are having disucssion6 with two United Kingdom firms (IMC and Thermoduric, Ltd.) to take a manufacturing license on Monokote from us in the United Kingdom and Western Europe. o Sales of Serviwrap products are strong relative to last year and relative to the market which is significantly depressed. However, 76.17. of the sales in the first seven months were to 3 customers (Transco, Brown & Root, and CMM), who specify only Serviwrap. We do not get much business where Serviwrap is an "or equal" as the product is more difficult to apply than competitive products, and contractors do not use Serviwrap unless they have to. o Litigation activity in the Roof Deck area appears to have slowed as no new cases have been filed since. April. Of the 8 cases filed year-to-date in 1983 (compared to 11 and 13 in 1982 and 1981, re spectively), 5 were with Celotex. Of the 44 activity cases, 19 are with Celotex against whom we recently went to trial with favorable results (Celotex $160,000--GRACE $0). Our position, relative to the BUR manufacturers, appears to be getting stronger as we develop a strong technology base for our arguments and as we learn how to more effectively approach the litigation/negotiation activities. 1518 3726 TABLE I KEY SALES AND MARGIN STATISTICS (1) 1983A (2) 1983B (3) 1982A (4) (5) Z Variance 1983A 1983A vs 1983B vs!982A (1) FIREPROOFING (2) GENERAL INSULATION (3) POLYCEL (4) ORE TO OUTSIDERS (5) SERVIWRAP (6) EXPORT (7) TOTAL (8) FIREPROOFING (9) GENERAL INSULATION (10) POLYCEL (11) ORE TO OUTSIDERS (12) SERVIWRAP (13) EXPORT (14) TOTAL (15) FIREPROOFING (16) GENERAL INSULATION (17) POLYCEL (18) ORE TO OUTSIDERS (19) SERVIWRAP (20) EXPORT (21) TOTAL (22) (23) (24) (25) (26) (27) (28) FIREPROOFING GENERAL INSULATION POLYCEL ORE TO OUTSIDERS SERVIWRAP EXPORT TOTAL 2511 1457 366 332 158 318 5143 JULY 83 GROSS SALES ($000) 3658 1688 501 331 100 88 3267 1411 289 334 20 52 (31) (14) (27) 0 58 261 6366 5373 (19) (23) 3 27 (1) 673 515 (4) 18195 9258 1837 2344 584 1095 33312 Y-T-D JULY 83 GROSS SALES ($000) 23432 10623 2802 2571 420 608 21249 9699 1724 2104 146 660 (22) (14) (13) (5) (34) 7 (9) 11 39 300 80 66 40455 35582 (18) (6) JULY 83 GROSS MARGIN($000) 1165 1724 1340 587 665 555 189 270 142 197 202 188 74 47 11 105 36 18 (32) (12) (30) (3) 57 192 2317 2944 2254 (21) (13) 6 33 5 595 484 3 8358 3646 935 1391 285 411 15028 Y-T-D JULY 83 GROSS MARG.($000) 10828 4005 1493 1529 191 232 8680 3730 850 1273 73 264 (23) (9) (37) (9) 50 77 (4) (2) 10 9 291 56 18278 14869 (18) 1 ^ / ** C / -i TABU II KEY PRODUCT L IN E DATA JULY I9 B 3- A to 7/25/83 <n |8 |a sto jT i a i (N *oi B * 2i eK 2 to ! i1 : aCD :t nm ass r> o> 5 | gr,f. 5 - Sa : 5 S ^ e PInEIe f* 5 g S S 3 ; ^ mtmn 1 SjggSSS? Si sSs a ? -a m ? s?? o rw- o s 9 PK8 E Is 3 = F zz K 1 Is o m g E 8 5- 1 SP s s i g|S mAoC?- s *: s RS" ? E5S 3 sIS s o a CD S" a Z5X 1 ft : z(S l1 i ci r2 o* Q N9 i t 9 ?wn ^ w^8 < wm l 9 g I 1tmo w* > |S; Qm *Sj w CD $tjnn Si 5 8 S ig 1 1 f" 2 i gSPjgi S > ? 2i g S i Z !>t *" ItJR ^ ^ w^ ^ '*' *{In 11 * ''= i iil 8S88RtS i Z 1 < 8^ 8F8A8i 681%5n?* <i 28 i Bg?S85 is ** ^ ^ t1 * ^ *=3 R f ssl S 88 S ?b* S8S S aa* * s a a S Is SCtn o 25 r : Xn t P nE R! R Z 3 flMO: nc = g 8 in iv 8 8Rt g gS S US S*>! !S-SF R a p* s ass m ft i n Sm : i n tr> I n SS 3 S * 5 > M OR 1" P 8 t g fa ac s R CD k ; 5RI 3 S*" s B"" s ZR" "'"'55 Xc aaag M X asb:ss - a* 3 a" sis 3 HnS 3 Rg 3 S 8; 3 !Hr i Is 3 = ! S5 S 3 :| 5 SB g 8a 2g3 3 Rgs mm. 5 ~3 X 1*3 Xc 3 33 X 3 3 3 X 333 <XK 333 isan S"- s Rgssga. z 8 r- 3 ~82S . B*s X 3 33 <X |al til illB2 bi g a! g S- k E -o ca iiliiiii i 9/ I i 1 ill 6 g e k< sfl &SB Ss|l at0a sIo#8 a g go 1 is " EM f- sO .ft '( e lis o w1 - ? ? oTS *z n P Is R an ? sis R <x s 3| 3j X a s: o n 15183729 table m KEY PRODUCT L IN E DATA JU LY I9 B J YTD- AJG 7 /2 5 /B 3 i |8 i g IE 8 f i* 5S i m IIs a; s: jr j s! R8 n M * CD 1 j l#s 1 FS^kpFr H -FFaa at srsiixe* B 5SIk5rS 1 ii 8 j fss a CD I s*sjs <i RB R? i 1 t 1 5S5 l <i 85?B If ii 5S5- is i i n B | CD cJ m e { S? i SSKg ] ss*e is SSSr is 1 51* IS 5sl s s-- p :;s s S8E *R P i s i 9 C !p ! 8Z R j ar ^ :i aN 8ES i Z r* - i -j * fj E1 m R: a: g *. 5 *B 8 ! SS 1 0? I a R0 <: 8 BKE 1 tn b3 N . |l! a tn A i w Is*80 ; tt tt pi a1* a 0s : * \ i *e s s" 8 * n ~ns*ls ?? lO Ke g|S2I I 5 t55S2 i 8s$823 2 ** 'm'Cm* S *}1 r- SS5S!5 i i allDj sea; a> 23S (N psB ig 1 122 8 ;5 ; ** S8H8 a8 5 * n*- ijn - a* 8 ss? R 3 ai Sa a 8RE 8 x r 8 *85 1 fi5 8 Sm kn On | "m si R: ffi : j N! 1f a SsO a* :1: a Fa 9 =m. O -4 *B D CN 9 9 t*z9 9 -ssr: sgi |sfl!; SS* 9 t*o 1 aR a s X S?Rs 9 gHi|8 X 1I E9 K&, m\ i: a0 RB :< ^ n n X f0) i1 i g*R X - sK 9 M'lfi X 35 88R 6R9P -MU I 2 s a 5 il||lall! iiiiifi; Hi! i* g ii s 8S. =! S i a! ft E* tW * E s ss s ss sss 9 55 ::: .s III e* SS5 S ESSE llf Sill a I !S S 5 15183730 GRACE TO: FROM: SUBJ: Construction Products Division July 25, 1983 R. J. Bettacchi R. A. Merther/G. T. Anderson July 1983 Report - Fireproofing Products cc: D. H. Hilton L. S. Shu A. Major Project Status Report 1. MK-5 SG Introduction Trenton has started supplying the 49th Street Tower with the modified MK-5 SG formula. Initial reaction from the applicator, E. Patti & Son was very positive. Pumping pressure was reduced by 75-100 psi while pumping rate (bags/ hour) remained constant. The decision was made to continue supplying the project with modified MK-5 SG for the remaining 14 stories of the 44 story tower. Marketing and sales will continue to monitor the product performance. Easthampton is also supplying the modified MK-5 SG to two projects being done by Cuddy Construction. They are the Copley Marriott and the Harvard University building. Both are progressing without incident. July production of MK-5 SG was 64,113 bags. This represented 14.5% of the total production for the month. YTD 526,198 bags of MK-5 SG has been manufactured representing 18.0% of the total US production of Monokote. 2. UL Fire Tests A significant amount of time will be spent in fire test preparation during late July and early August. Two floor deck assemblies will be sprayed 1) a Metal Deck Inc. assembly the week of 7/18 and 2) a sand filled Bowman assembly is scheduled to be sprayed the week of 8/1. Other ULI activities include construction of an electrified Mac Fab floor assembly and construction of 4 GRM roof samples to attain necessary GRM listings over ZIC roof deck assemblies. 15183731 -3- Historic O&B square footage in millions of sq. ft. per year are as follows: Year (000 Sq. Ft.) 1982 1981 1980 1979 1978 1977 1976 263,868 324,632 244,080 233,560 206,754 137,466 105,649 E. Competitive Activity In light of threatened legal action by Cafco in reference to our in-place performance program, we are happy to report.that the Navy has included all of our performance criteria in their revised specification NCGS (07250). The specification is expected to be issued within the next 30-60 days. Gregg reviewed and made a presentation to GSA in relation to their revised sprayed fireproofing specification PBS (07250). They have indicated that they will also include our proposed performance criteria in the revised specification. The 1984 pricing strategy is being formulated to secure our market penetration while maximizing gross margin. Included are both a micro and macro analysis of raw materials, manufacturing process/costs and economic forecasts for ourselves and Cafco. F. General The advertising program for the performance story must be reviewed and formulated for the remainder of 1983. The direction decided on will also Influence our 1984 advertising budget which is presently under consideration. G. August Activities 1. Analysis MK-5 SG field performance. 2. Finalize Grace position in reference to asbestos in Monokote. 3. Complete pricing analysis. 4. Complete 1984 advertising budget. 5. Mac Fab test construction. RAM/GTA:mg &. A. Merther G. T. Anderson 15183733 1983 X OF MK-5 SG OF TOTAL MONOKOTE SHIPPED BY PLANT/BY MONTH u> !SS Kr* in ON z t-3 z _M3 z fJ z HO Hoo j-i z Mj z N 00 mH HH Qc) 3 m COMN ij M z i-3 H Z J t-l z J M z O o o H <-3 Mz J IH z 00 00 rH IH NO in ON iJ Mz fJ M z fJ zM J fh z Ko oo fJ M Z fJ M z N NO O rH H Ho r*. am ON hJ M z i-3 zM H O CM fJ zM o oo i-3 M z fJ M z N O ON r-4 H ON CM rl CO|MO NiH ON NVO NNOO fMJ z K mo Hm KO o_o1 HrC*M. MJ z K CM CO o CM >uC3ON .u0o) K CmO KOONN K00* Hm MCcanO* HCM or-H MooHo Hm CoM M-3 z fMJ z 0N*CHM0 Ui H H M HK HK cCO 3 m H CM vC r*. \D H vO m ON O O m 00 en fH CO m vO HHoH H rH N cn ON f-< aH 2 ^2 c< K a H a *4 H CO C a CO 4-1 01 H > t4 c o H 4) o CO 4= CO |M >0) e 01 cM o 4J H M e uat Pm 2 Pm CO PM Q p H w p 5 15183734 4Vk 40J Ml H 4aJ rl OO 0 o a 0 o 0 4J o 0 CO 1 -H <f> + 0 w o o ok * CM y e o N 4k U a u mi a *o Ui *0 oo as t> 0 O N AJ u 0 UH 0 *D 4J O oo 25 U O o o NO CO 1 H 05> iw H 0 4- 0 U >S T0-J H 4J O *H .0 0 o *u n W0 0 0 *9 0N 0c 0 > M-l C o o <-H Cb 0 0 M0 Vi r** tCk HO* IM M-l IM o >00 0 4J 0 4J 0 0 0 c0 *d M 0* >* O 0 4J 40-J iH0 *OH 0>% 40J > WH 00O C/3 QUO* 23 m O IM iH a) > o M a o. a >> Ha Mo a a) a iq a> o a> < e Pu i Mel <u 4aJ X .o c oo 2 Pi IMO CD f-H a >o M CP cp a ik . CaD a. a> x! oU 0) 0) c *a em Ml Q 4aJ 2 xi e oo 2 Vi O M 0 H 0 >ow o* S0* 0* Vi 0M 0U 00 0 TJ U 00 00 6 C5 Ml 5 4ak n X) e oo CO e 0 4J 0 >* 0 0 o u u M N 0 0 > O 0 - >o u Qu CL 0 oS o 60 4ak) CHU*9) U U<H 01 9 U HD# j o e V* *H g &4> g- mo O 4k CP (i <e eo 0 W >tt) tcO 9 fH Ml f-H u a v o) 0 4J C O X> H(l CO Ui U rl u fJ O p IM - 4k 4J a a) a o C >rH mOI wO mO *4ek a) 3 m h h M Xi D is O 3 H 0) O 9 Q o *n M O X* 41 4) 41 x: m x: 4k e co 4) Ml > a 5s Pi H a9 CO i-J o . 41 4k is a a rk P4 CP 4k CD CD 9 O 40 XD 9 o< 4k IM O o , 4) X* H <U 9 41 a > 4) x: 4) u x: CO 4k 0 0H rH 2 0 -< 09 0 *"3 0 C 0 *H H 0 VI U iH 0 H iH ^9 9i0 9 4oJ Low e 0 10 Vi d * 0 4J 00 4J Vi >> V O. fH 0 CO O *"] 04 o0 *4 04 60 4>J> 04 0 0 4J CD 0) H 0) M Ml Pk eq < Pk 1 O g Vi 0 > u 00 5 iH U 00 X* > *o uo 4) Vi m O c D* O 04 O H 4k 4) fi 5 0 Vi 5SB UM (B O 04 15183735 GRACE Construction Products Division TO: R. J. Bettacchi DATE: July 26, 1983 FROM: G. N. Ciampa SUBJECT: cc: W. Wydra/CPD Park Ridge M. Darragh/CPD No. Brunswick L. Hilliard/CPD Atlanta J. M. Reilly R. H. Locke Monthly Report July 1983 Business Summary Polycel Products - (July Coplanar sales figures are not available at this time. The following figures are for the first half of 1983.) Professional - Combined sales volume in June of 34.6M lbs. is behind June 1983 results and June 1983 budget by 10.2Z and 35.4Z respectively. Gross Margin in June of $94.1M is ahead of June 1982 results by 11.6Z, but behind June 1983 budget by 43.5Z. 1983 January - June Results 1982A 1983A 1983B Z Var. 83A to 82A Z Var. 83A to 83B Volume lbs. (000) GM $ (000) GM Z 134.7 329.5 56.0 137.9 385.6 54.7 197.5 583.9 59.6 2.4 17.0 (1.3) ts. (30.2) (33.9) (4.9) pts. The turnaround in May of refill sales was short-lived. Sales volume of refill sales continues to lag budget and prior year's performance. Virtually all of the shortfall is from a lack of sales in Texas due to competition and a soft Houston housing market have hurt. Polycel Two Component - Sales of 79 kits (2.5M lbs.) were recorded in June. The bulk of the kits. 48, went to Foam Craft in Sarasota, FL. It has taken nine months to obtain their committment to our product. They are in InstaFoam master distributor and were one of the original target accounts. Seventeen of the kits went to smaller distributors and the balance went to an existing distributor. 1983 January - June Results 1983A 1983B Z Var. 83A to 83B Volume lbs. (000) GM $ (000) GM Z 11.5 16.2 26.4 30.5 70.2 44.1 (61.7) (76.9) (17.7) pts. 15183736 ZMI Southern Florida Eastern Midwest Pacific Southwest Total 1983 bags 192,017 79,224 309,758 203,086 68,492 87,585 940,167 -3- 1982 bags 222,681 67,438 284,825 221,206 82,686 83,565 962,401 Z Variance (13.8)Z 17.5 Z 8.8 Z ( 8.2)Z (17.2)Z 4.8 Z ( 2.3)Z Plainboard - July volume of 2184.0 MBF is behind1 last year's sales by 9.3% and July 1983 budget by 21.4Z. Year--to-date we are no better off. Volume of 15344.0 MBF is off compared to 1982 by 13.0Z and 1983 budget by 16.9Z. 1983 January - June Results 1982A 1983A 1983B Z Var. 83A to 82A Z Var. 83A to 83B Volume (MBF) GM $ GM Z 14898.2 12957.0 18075.7 235.3 231.5 307.8 17.3 20.9 18.3 (13.0) (1.6) 3.6 pts. (28.3) (24.8) 2.6 pts. 15183738 -5- The other visit to Toledo was to discuss Thermo-Stud and DB+. Both products were very well received by the commercial market product manager and we have already received a copy of the memorandum he sent out to the field advising them of the availability of Thermo-Stud and DB+. It is our intention to have OC be a distributor for Thermo-Stud in areas where we are lacking distribution. We hope that they nationally distribute DB+ in all 65 supply centers. This product seems to be a natural fit with the accoustical section of their supply center business. It is not a new concept but rather a unique product fitting into a market they already supply. OC was particularly impressed with the kind of margins that they could generate for themselves by selling DB+ and in turn their customers would be seeing as much as a 50% reduction in their in-place cost using DB+ as an accoustical sealant. During our visit we discussed with OC their latest marketing scheme called "The Thermal Crafted Home". Builders who employ OC products, i.e. insulation can be classified as building a TCH and would receive the benefit of millions of dollars in advertising for TCH's by OC. Of particular importance to us is the fact that the primary design consideration in Thermal Crafted homes is air infiltration control. I was able to obtain a list of the TCH sales managers around the country and I am in the process of sending this out to the field. Since infiltration control is a primary design consideration for the home builder if he wants to qualify for TCH it would behoove us to become familiar with OC sales managers and make them as Intelligent as possible on air infiltration control and in doing so elicit from them potential home builders. For example, we were able to come up with six large home builder leads in the North Carolina, South Carolina area during a joint air infiltration control and TCH presentation to Fortis Corporation, a large home builder in North Carolina. The information ^about these leads was readily given to us by the OC sales representative. The Pacific Coast Builders Association held their annual show in San Francisco this year. With the passage of Title 24 in California, there was a lot of interest in Polycel. We are scheduling the air infiltrometer back to California to test some additional homes for one of the largest builders in the U.S. (H. J. Brock) who is headquartered in Southern California but builds extensively throughout the Western United States. Efforts to win back the business at Eagle Insulation hit a snag in June. We ran a "blind" applicator test on several homes in the Houston area using Polycel One as the foam sealant. Unfortunately, as we have altered the extrusion rates over the last few months there occurred a noticeable difference in the body of the foam. The material flowed very well out of the cylinder; however, the light bodied foam did not stand up to the heat and humidity present in Houston. Since the test, we have shipped back into Texas new samples that Stan Tam prepared and the results were promising. Our next move is to send several more samples to Eagle within the next 30 days. It is our intention to regain at least half of Eagle Insulation's refill business. 15183740 A 24,000 square feet job for Dryvit was started in late June using EPS manufactured at South Gate. This was our initial test job. A. E. Hopper & Sons (Arizona) is the Dryvit distributor and is also one of our roof deck applicators. The sub-contractor Eliason & Knuth (a very large national drywall contractor) as well as Hopper were satisfied with the EPS that we supplied for this job. Hopper will attempt to secure another test job for us in the Phoenix area. At this point we meet all the specifications for exterior board except for Bowing. We will continue to negotiate with Dryvit to have them waive this extremely tight tolerance as well as the plant inspections they insist on making with new suppliers. It has to be pointed out again that the importance of supplying board for Dryvit applications for Hopper is important because he wants a full line EPS supplier. While we can only accommodate his Insulperm needs Hopper has pointed out that Western Insulfoam can accommodate all his EPS needs for roof insulation as well as Dryvit board and Western Insulfoam "claimed" that they would put a production facility in Phoenix to service Hopper. As stated earlier, we called on OC for distribution of Thermo-Stud. They were quite impressed with the product and our sales effort aimed at architects. It is unusual for them to have products for distribution with the manufacturer participating in the sales effort. This kind of relationship can only help us as we continue to strenghten our relation with OC. A bead price increase has been received from bead suppliers, the latest increase will increase the price on all beads to 66c per pound delivered to all of our locations. We have, at this point sent out to the regional managers a letter on price increases which will be effective August 17. Research Stan Tam continues to work with the A-l Catalyst for Polycel. The opportunity here is two-fold. If all works well, we will have a product which will produce a tack-free time in seven minutes at low ambient humidity levels. The second opportunity is we would be able to eliminate producing formula C. Actually there is a third opportunity and that is the material has a longer shelf life than we currently manufacture which could give us a marketing opportunity with increased shelf life and the quick cure product. We can use the quick cure product as a feature worth paying a little more for, at least right away in our Texas market, where we need continuing separation between us, Instafoam and Poli Seal. We are currently working with Worthington and Pressure Pak for less expensive disposable cylinders. I estimate that we will be ready commercially with these by mid-September. Through the efforts of Bob Deardoff in Purchasing, we have negotiated a 48c per cylinder cost reduction from Amtrol. 15183742 POLYCEL TWO-COMPONENT MONTHLY SALES ACCOUNT SUMMARY (000 LB S .) u o 151837A A ____ _ GRACE Construction Products Division TO: FROM: R. J. Bettacchi A. N. Crawford cc: J. E. Danel/CPD Enoree V. J. McCaig/CPD Libby J. C. Yang DATE: July 22, 1983 SUBJECT: July 1983 Monthly Report MONTHLY HIGHLIGHTS o Imperial Chemical Industries (ICI) of England has developed and patented a new technology to manufacture vermiculite foam and vermiculite film. Both the foam and film are completely inorganic and contain about 98% vermiculite. Our laboratory has produced small quantities of a modified foam using some of the ICI technology. We are investigating the feasibility of producing commercial products such as vermiculite insulation board, and fire resistant coatings. I. VERMICULITE CONCENTRATE (VCX) A. Dearborn Chemical's Firemate Process 1. The full scale trial at Mlnnkota Power Co. should commence sometime this month. DUSCO's contract with Mlnnkota states that the trial shall last approximately 6 to 8 weeks with an option to renew if the results are encouraging. DUSCO believes they will demonstrate the efficiency of vermiculite with this test and hopes that Mlnnkota Power Co. will continue to use vermiculite on an ongoing basis. 2. The trial will use both oil treated and untreated Libby #4 concentrate. We are trying to make arrangements with DUSCO to set up a test to evaluate comparative fiber levels between oil treated and untreated concentrate. DUSCO's primary concern is to demonstrate the value of the Firemate process; however, they understand the importance of the fiber analysis and are cooperating with us to schedule a test. 15183745 R. J. Bettacchi July 1983 Monthly Report Page Three II. MARKET AND COMPETITIVE INFORMATION A. Market Share Analysis (Graphs I and II) Last month we analyzed the market share between African vermiculite, Virginia vermiculite, and Grace at today's volume. In order to try to understand the growth rate of the vermiculite business, we analyzed the historical data from the U. S. Bureau of Mines (Graph I). Using the information from the USBM and our actual shipment data, we calculated the African and Virginia market share by difference. The market shares indicated by Graph I do not make sense based on the knowledge we have of our competitors. As a check, we plotted in Graph II the total domestic market defined by the U. S. Bureau of Mines and below that the actual Grace shipments over the Same time period. It appears that the U. S. Bureau of Mines is simply taking the data obtained from Grace and inflating it by some constant factor to estimate the total domestic market. We know that while our market share has declined from 1974 to date, the actual market has remained relatively flat. Therefore, the practice of giving our mining shipping data to the U. S. Bureau of Mines is of limited value unless the U. S. Bureau of Mines obtains more accurate information from our competitors. Graph III is an estimate of the historical market share data based on the information we have from the 0. M. Scott Company, which is the major reason for our decline from 1978 to date. African and Virginia both picked up significant business at 0. M. Scott Co., and in recent years Virginia Vermiculite's gain in market share has been at the expense of Africa rather than us. B. Virginia Vermiculite Company Reports from Enoree indicate that Virginia Vermiculite is pursuing purchases of mineral leases in the Enoree, SC area for vermiculite reserves. It.is not surprising that they are in the market for mineral reserves; based on our projections of their reserve position at.their current volume they would only be in business for another five years at best. C. Stronglite Corporation, Pine Bluffs, AR Bill Strong continues to push very hard at U. S. Gypsum Co. for approval of fine-grade African vermiculite as a replacemgnL_for__-- \ out SC-5. 1982 sales of SC-5 to USG were approximately `4.1,000'- i* tons. According to USG Purchasing in Chicago, Bill Strong-iar offering the fine African material at a lower price, and a closer FOB point to their western plants. Bill Strong plans to bring the African material by barge up the Mississippi River with FOB points 15183747 R. J. Bettacchi July 1983 Monthly Report Page Five C. Vermiculite Foam Our Laboratory has been experimenting with the inorganic foams using patented technology from ICI. The foams we have made range in density from 10 lbs./cu. ft. down to 3 lbs./cu. ft. We have also made vermiculite emulsions which can produce 1001 inorganic vermiculite films which will make an excellent coating for fireresistant applications. Both the foam and the film are truly unique materials and offer a wide.range of new product development opportunities. For example, the vermiculite foam could replace polystyrene and polyurethane insulation board. ICI appears to have a strong patent position in this area, and a patent search is underway to determine the extent of their coverage. Our laboratory is developing larger samples in order to make thermal measurements and physical strength measurements for comparison with polystyrene and polyurethane materials. We should have a report on the patent status by the end of August, and at that time we can decide whether we want to license the technology from-ICI or continue working on our own. There have been several inquiries from other companies such as Armstrong World Industries and Hollingsworth and Vose Paper Co. asking us to produce materials using this technology. No solicitations to outside companies or samples are being given out until we evaluate the patent situation. D. LTEV 1. A hew product authorization for LTEV has been initiated, and is being held pending a decision on the label requirements. 2. The amonium chloride treatment of LTEV offers the opportunity to further reduce the tremolite content. Analysis of early production runs of LTEV Indicate approximately 0.2% tremolite; however, no additional effort was made to reduce the tremolite. On future batches of LTEV, we will attempt to change the process slightly to remove tremolite and determine the benefit by X-ray analysis. * 3. 3M Company projects approximately 1,000 TPY requirement for L-4 concentrate used in their expandable paper application. The portion of the 1,000 tons that will require LTEV 16 unknown at this time and dependent on automative specifications. 3M expects to have some feedback from the automotive industry by November of this year. 15183749 GRACE Construction Products Division To: R. J. Bettacchi From: 0. H. Johnson CC: S. Whicher I. Sales Statistics Date: July 22, 1983 Subject: Monthly Report July, 1983 Gross Sales (S0D0) Product 83A 838 82A 81A X Variance Fav/(Unfav) 83A vs 83B 83A vs 82A 83A vs 81A P-500 S 11.5 S 33.0 $ 4.2 $ 39.1 (65.2) X 173.8 X (70.6) X P-400 52.4 14.0 6.3 17.8 274.3 731.7 194.4 P-300 1.1 11.0 4.6 3.2 (90.0) (76.1) (65.6) V-650 77.2 25.0 1.6 39.5 208.8 4725.0 95.4 A1umiwrap 7.6 14.0 2.4 0 (45.7) 216.7 N.D. CM GO CM Mi sc. 7.5 4.0 167.9 525.0 87.5 Total SI57.2 $ 99.8 $ 20.4 $108.3 57^5 670.6 45.2 Product Year-to-Date X Variance Fav/(Unfav) 83A 838 82A 81A 83A vs 83B 83A vs 82A" 83A vs 61A P-500 S 75.0 S141.0 S 61.9 $277.6 (46.8) X (21.2) X (73.0) X P-400 243.2 59.0 30.7 112.6 312.2 692.2 116.0 P-300 9.1 47.0 41.0 30.2 (80.6) (77.8) (69.9) V-650 214.0 105.0 2.3 81.2 103.8 9204.3 163.5 A1umiwrap 21.9 59.0 5.2 0 (62.9) 321.2 N.D. Misc. 20.3 11.7 4.1 19.9 73.5 395.1 2.0 Total $583.5 $422.7 $146.9 $526.2 38.0 297.2 10.9 15183751 GRACE 0. H. Johnson Monthly Report Construction Products Division Page 3 section in order to start a new roll of tape. Because of these difficulties, this order for a mill applied V-650 will be refused and mill applied coating will be recommended with V-650 at the joints. Tbis order from Bahamas Oil and Refining Company is small but it would have represented the first step toward offering a mill applied tape system. Such a system has great potential and could easily be a larger market than the joint wraps we currently sell. According to Burt Irish, a prominent pipe coating applicator: the greatest promise Lin pipe coating over the next 20 yearsj is with the extruded plastics LPritec and X-Tru CoatJ and the plant applied polyethylene tapes. You cannot beat them today for economy and ease of application, and they have been in the ground long enough to prove they will last. There may have to be some more research done to determine if some types are bonded properly." Irish's statement was made in an article concerning the next 20 years in pipelining. Other subjects discussed: crude oil pipelines; refined products pipelines; natural gas pipelines; gas liquid pipelines; coal slurry pipelines; construction of international pipelines; new types of pipelines; distribution piping; and, offshore pipelines. Copies are attached. IV. Manufacturing July sales were achieved with the good cooperation of manufacturing. Orders were juggled as priorities changed. The Chicago plant supplied the critical projects and allowed us to make partial shipments where we could and squeak by where backorders were not acceptable. A backlog of $70,000 remains for August but no customer appears unhappy at the present time. In spite of the good cooperation from the plant, we could.not have handled one more major order. If Servi-Wrap is to grow, larger inventories and/or additional slitting equipment will have to be considered. A second manufacturing run of Servi-Wrap with plastic release film is planned. This second run will test a 1% mil film (down from 2 mils) made by a firm with more experience in coating plastic release films. V. Research .A research review was held on July 18th to discuss the current status of Servi-Wrap research and to discuss potential 1984 projects. Among those topics discussed for 1984 were: 1) continuation of the analysis of competitive products; 2) improved release films; 3) development of new primers to reduce flammability, improve low temperature application, improve adhesion to steel so that i.mastic failure would be cohesive, develop a corrosion inhibiting primer, and improve adhesion to epoxy coatings; and, 4) the 1518 3753 GRACE j To: R._ JJettacchi / From: P. E. Korenberg Construction Products Division Date: July 22, 1983 Subject: Monthly Report July, 1983 I. International Consolidated Gross sales for July were $317,842, 262% favorable to budget ($87,900), and 515% ahead of July, 1982 ($51,666). Gross sales YTD were $1,094,918, 80% favorable to budget ($607,400), and 66% ahead of YTD 1982 ($659,750). Gross sales now exceed total year end 1982. II. Zonolite Finished Products A. Sales Monokote ($229,341) represented 72% of gross sales and 100% of Zonolite finished products. Actual breakdown is as follows: Monokote to PID $194,241; Monokote Other $35,100 (Mexico, Greenland). August Monokote orders to PID total approximately 55,000 bags. B. Zonolite Expandinq/Blendinq Facilities 1. Saudi Arabia Gosaibi has continued to indicate that they view the possible license of a Zonolite facility favorably and will make a final decision within the next 2 weeks. Bob Ross, their in-house counsel, is preparing to respond to our licensee proposal for our review during a meeting with him scheduled for July 29th. Due to Ramada and travel schedules, it is likely to be 4-6 more weeks before all the details are completed. 2. United Kingdom & Europe A meeting was held with Michael Ruddock (Thermoduric, Ltd., United Kingdom) to further explore Monokote opportunities in the United Kingdom. Ruddock has agreed to discuss with IMC how they might work together as applicator and manufacturer of Zonolite products. Subsequent to their meetings we will explore with either, or both, a license to manufacture Zonolite.products in the U.K. A July 25th meeting is 15183755 __ GRACE P. E. Korenberg Monthly Report Construction Products Division Page 3 F. BS476 Pt. 8 We have been unable to resolve the Monokote thickness problem with the British testing laboratory which reported MK thicknesses 20-50% greater than required for our competitors. Merther is exploring an alternate British testing laboratory while trying to resolve the problems with the first. Major Monokote projects in Singapore and other areas of British influence will be lost if this is not resolved quickly. 6. Miscellaneous Ruddock (UK applicator) has advised that he plans to bid a 60,000 bag MK project in Kuwait, 28,000 bags in Bahrain and approximately 20,000 bags in the United Arab Emirates. We have agreed to supply material at standard list price as he might need. III. Peters A. Sales Gross sales for July were $88,501, 450% favorable to budget ($16,000), and 295% ahead of July, 1982 ($22,378). CE remains at $313,000. B. Japan We have been working for several years.with Robert Yamato of Robert International Corporation to develop a Peters consumer/ professional market in Japan. A major stumbling block has been that Busan, a company unknown to us, had registered the Peters trademark in Japan. Yamato has determined that the Murakami Family of Companies (sole agent for Hyponex and Grace MagAmp) own Maruwa Chemical and Busan. To get around this Yamato will register a new trademark for us - Bobpeters or Daichini Hikari or a combination thereof. As in Thailand, we will package in bags marked with this trademark and "manufactured by Peters Fertilizer Products, W. R. Grace & Co., Fogelsville, PA USA." With this hurtle overcome, Yamato should GRACE ( ( Construction Products Division TO: R. J. Bettacchi FROM: A. J. Garone DATE: July 22, 1983 SUBJECT: July 1983 Monthly Report I. Roof Deck Litigation Activities Activities in the roof deck litigation area were moderate in July with the exception of the Norwich Pharmaceutical case which is very active. Year-to-date, we continue to show 8 new Zonolite Roof Deck cases (un changed since April) compared to 11 in 1982 through July and 13 through July 1981. Year-to-date, 4 roof deck cases have been settled, one dismissed, and one case (Eufaula Square) was tried. Norwich Pharmaceutical - 1 attended a motion session on July 8, 1983 in Norwich in which we argued for the right to install our heat-flow measuring equipment at the Norwich Plant. After two hours of argument, the judge ruled that we could install our equipment and, in fact, ex tended the discovery cut-off in the case to November 1, 1983. This date represents the third "absolute last" discovery cut-off date. After sitting through two hours of arguments, it's my opinion that no one wants to try this case including the judge. I think that explains why the judge rather matter-of-factly extended discovery over 3 months and why the plaintiff is not pushing for trial. Additionally, the judge alluded to the Manville bankruptcy and the fact that if the trial is pushed off any further, Manville would be back in. My guess is that the plaintiff wants Manville back in because another "deep pocket" would improve the chances for settlement. Our approach will be to continue to press hard operating under the assumption that the case will eventually be tried. With regard to our trial preparation, we are working with communications consultant, Kim Mitterling, who attended the July 8, 1983 session. She will assist our attorney in witness coaching as well as jury selection. We hope to have a psychological profile of potential jurors to help in jury selection which could be the most important aspect of the whole proceeding. On the issue of thermal measurements, we are now ready to install the equipment at the plant. We are coordinating with the plaintiff's attorney to determine when and where we can install the equipment. The measurement should take 2 1/2 - 3 months. 15183758 -3- II. Business and Marketing Related Activities Approximately 501 of my time in July was spent on business-related activities. The bulk of this time was spent on developing historical sales information in preparation for the 1982 Budgeting process. I now have historical sales volumes and average selling prices back to 1978 broken down on both a product basis and a regional basis for all Building Product products lines under your supervision with the exception of Servi-wrap and export products. I have the Servi-wrap numbers but Servi-wrap regions do not compare to historical Building Product regions. Export products are not regionalized. The above computer program is set up to plug in 1983E, 1984B, and 1985E to 1988E numbers. I also spent time in July developing a new sales volume and gross margin table for all your product ines which can be updated monthly. I was able to devote a minimal amount of time to assisting Al Crawford by running regression analyses on Dodge non-res construction numbers vs. vermiculite sales. More work remains to be done on this. III. Future Activities 1. Norwich Pharmaceutical case - Site inspection with R&D personnel to select location, as well as additional walk through of Plant to determine new (if any) leaks. Additional meetings with various consultants. 2. F/U on Eufaula Square verdict - circulate decision and transcript. 3. Develop regional sales forecast based on 7/5 split. 4. Forecast 1983 expense numbers for Dept. 293. 5. Update Monthly Sales statistics. AJG/ko'c one 15183760