Document RJnJwzdxwOYVa2jO1n4pL1kqz

PLASTICS PROFIT CENTER - MONTHLY REPORT APRIL, 1971__________________________________________________________ MAY 2?l9?t A- k. McMillan A. Ross Adams May 21, 1971 AP00047036 TO: FROM: RE: Richard Fleming DATE: May 18, 1971 A. Ross Adams PLastics Profit Center - Monthly Report April, 1971 COMPANY CONFIDENTIAL NOT TO BE DUPLICATED Highlights: 1. 2. Escambia sales budget exceeded ($628M vs. $606M) NPAT at budget (($16.5M> vs. <($16. 0M>) 3. New manufacturing record established at Calvert City {8,962,595 pounds) 4. New manufacturing record established at Pace, Florida (5, 537, 000 pounds) 5. Off grade at Pace again below 3% 6. GAF shipments off $75M due to quality problem 7. A molding compound has been developed suitable for handset molding trials at Bell Labs. April financial results were an improvement over March as indicated in Table 1 below: Feb. Profit Before Fed. Tax March Profit Before Fed. Tax April Profit Before Fed. Tax May Estimate Escambia, $M Calvert City, $M Total, $M (77) (44) (121) (30) (35) (65) (32) ( 7} (39) (46) 0 (46) AP00047037 I'lasties Profit Center - Monthly Report April, 1971 Pass -2- The high proportion of 6180 sales (900M pounds against 613SM pounds shipped) and a $17M favorable volume production variance brought gross profit to budget levels at Escambia. Calvert City sales were off from the $900M projected because of a quality problem at GAF ($75M lost business). High volume production and shipments of pipe resin contributed to a record favorable variance of $59M for resins at Calvert City, Again pricing is the major industry problem and will continue until the new capacity of Hooker, Conoco, and B. F. Goodrich is sold out. Table II below compares Calvert City and Escambia operations: TABLE II Significant Variances April Year~to-Date Sales Revenues, $M Escambia Calvert City Price Variance 21 (96)* (328) (366) Escambia Calvert City (51) <128) (275) NA Volume Variance, $M Escambia Calvert City 32 22 (9) NA Production Variance, $M Escambia Calvert City 23 47 58 NA AP00047038 PlanH.cs Profit Center - Monthly Report April. 1971 Page 3________________ April Resin Unit Cost of Goods Sold (/lb, ) Escambia {7. 96^/lb, budget) Calvert City (8,42^/lb. budget) .38 .32 Selling Variance Escambia, $M Calvert City, $M (4) (8)** R & D Variance Escambia, $M Calvert City, $M 7 3 Distribution, $(lb. Escambia (1.48 budget) ,12 Calvert City (1. 56 budget) .23 vBased on 8 months 1971 in Five Year Plan Year-to-Date .1 .0 31 NA None 15 .23 .04 Sales: District shipments for the combined sales force are shown in Table IV. AP00047039 r7 r r r" r i (In Thousands of Dollars) Sales Cost of Sales Cross Profit Operating Expenses Selling Distribution 'Central 6 Administrative Divisional Corporate Services Rendered Total Operating Expense Operating Profit Research 6 Development Expense Other Income (Expense) Profit Before Allocations Corporate Allocations Corporate Fee Interest -State Taxes Total Corporate Allocations Profit Before Federal Income Taxes Federal Income Taxes KET INCOME i_____ ! AIR PRODUCTS AND CHEMICALS, INC CHEMICALS GROUP PLASTICS Pro-Forma Income Statement TABLE III Escambia Current Honth Plastics Year To Date Calvert City Current Month Plastics Year To Date Total Plastics Current Yoar To Month Date $ 628 437 191 $ 3,958 2,926 1,032 $ 819 601 218 $ 2,379 1,799 580 $ 1,447 1,038 409 S 6,337 4,725 1,612 49 79 14 9 151 40 ( 52) 2 ( 10) 272 464 96 64 896 136 < 410) 23 ( 251) 28 102 6 12 148 70 C 47) 5 28 91 311 24 35 461 119 ( 135) 24 8 77 181 20 21 299 110 ( 99) 7 18 363 775 12C 99 1,357 255 ( 545) 47 ( 243) 11 9 1 21 ( 31) ( 14) $( 17) 80 59 7 146 ( 397) ( 190) $( 207) 14 21 -- 35 c 7) c 3) $( 4) 41 60 ( 7) 94 ( 86) ( 42) $( 44) 25 30 1 56 ( 38) ( 17) $< 21) 121 113 -- 240 ( 483) ( 232) $( 251) AP00047040 PLASTICS DIVISION April, 1971 TABLE IV Pensacola Philadelphia Toledo Providence Atlanta Chicago Los Angeles Louisville New York Hill Associates GAF House Market Development April, MM lbs. 2. 3 2.0 -9 .9 .3 .3 .4 1.3 .2 .8 1. 7 2.4 .1 13. 6 ''`Based on Five Year Plan Monthly Budget MM lbs. 1. 0 1. 6 . 84 1. 14 . 16 _ _ 2. 5 _ 12. 0* Salea Analysis: GAF cancelled at least three rail cars of 122 because of resin quality problems at Vails Gate. Apparently, Calvert City has not made it a practice to clean out rail cars returned from GAF if these cars have been dedicated to 122 service. As a consequence, resin fines (50% on the pan) build up in the bottom of the rail car and eventually lead to problems with tile user. In addition, Vails Gate complained of high volatiles. This is difficult to trace but possibly some correlation exists between the complaint and an automatic humiditysystem installed at Calvert City last December to break static, As a precaution the system will be turned off. Calvert City quality control personnel will visit Vails Gate May 16 to supervise the unloading and use of new material. GAF has purchased approximately 1 1 million pounds less 122 for the first four months of 1971 as compared to 1970. A meeting with GAF purchasing people is scheduled to see what can be done to pick up the deficit. AP00047041 Plastics Profit Center - Monthly Report April, 1971 Pape -6- Conoco sales in April were two million pounds and will have to be replaced before July. A strategy has been developed to pick up some of these sales with another co-producer. Incremental business is expected at Chrysler in June and now wire and cable shipments to Phelps Dodge at DuQuoin, Illinois, and General Cable at Cass City, Michigan will help replace Conoco. A bid was made for FMC film resin requirements (new), A good base load must be developed quickly for the compound plant. Muehlstein claims that 500 pounds per month of rigid pipe compound can be moved if APCI will toll and stabilize at 7. 0 per pound. The phonograph record market also appears to offer a target of opportunity for volume compound sales. Pipe resin sales to Robintech continue at almost contract level (1.4 million pounds). Shipments have been primarily to Houston and Florida from Pensacola. Freight savings of 0, 3 per pound exist at Springfield, Kentucky from Calvert City so it is imperative that good 1230P be made at Calvert City as soon as possible. ' Suave Shoe sales were down slightly due to the Easter holidays. This account has purchased almost seven million pounds so a new contract must be discussed soon. Philadelphia District Sales (F. G. Mendrey) were at a record high for the year. Tenneco and Harte received a very gratifying 700,000 pounds of 6180 and these sales are expected to remain firm until July. A quality problem developed at Harte when the customer discovered reactor glass (assumed to be from Pace, Florida) in his silo, Zapata Industries is now ready to receive 2250 via bulk rail. The first shipment should be in early June. Of significance for future sales is Escambia qualification of 1230P at Johns-Manville in Green Cove, Florida, J-M has instituted a policy of establishing one resin supplier at the nearest PYC plant and back-up approval at other production locations. We have process approval at Green Cove, Florida and should have process approval in Dennison, Texas shortly. L Prices: Unit prices are shown in Table V: J, L. AP00047042 Plastics Profit Center - Monthly Report April, 197 1 Pace -7- Escambia Apr ill 1971 <t /lb. Bulk Resin Bag Resin Total Prime Off Grade Total Plastics 10. 63 11. 59 11. 02 6. 30 10. 84 Calvert City Total PVC Resin 9. 71* Total 400 Resin 18. 03 Total Compound 33. 60 TABLE V March 1971 <7lb. February 1971 /lb. 10.40 11.24 10. 63 6.93 10.48 10. 72 11.46 11.05 4. 92 10. 06 Budget Stan ^/lb. 11. 61 12.32 11. 95 7. 25 11. 67 10.05 13. 00 33. 70 *2 million pounds sold F. O. B. Calvert City in Conoco rail cars Table VI lists the top fifteen accounts for the Profit Center. AP00047043 -8- TABLE VI ACCOUNT ANALYSIS ACCOUNT Conoco Plastics GAF Corporation Universal Pipe Adams Brothers Suave Shoe Tenneco Chemicals Clopay Corporation Goodyear Tire & Rubber Glamorgan Pipe Plastic Calendering Goodrich Company Elm Coated Fabrics Continental Copper Cities Service ' General Cable Essex International USM Chemical Harte S Company Southbridgo Plastics oo APRIL 1971 2062 1694 1413 815 531 476 431 388 367 316 ' 308 306 295 289 270 . 247 244 232 SIX MONTHS AVERAGE APRIL 1970 VARIAKi 2234 455 2153 252 -540 +95S 566 169 - 35 354 410 +122 94 +273 266 238 + 50 121 120 +187 349 391 - 43 -- -- 306 367 - 62 80 114 -152 AP00047044 Plastics Profit Center - Monthly Report April, 1971 Pape -9-__________________ Production: Production of prime resin for the month of April was 5, 537M pounds, versus a budget of 4, 840M pounds. This represents a new all-time production record for the PVC plant, the previous record being 5,380M pounds set in December of 1970, In addition, this record was achieved while holding oftgrade exclusive of tails and sweeps to 92M pounds. Total off-grade amounted to 167M pounds, 2. 9% of production. The variance for PVC bulk production is $22, 700 favorable versus $4, 000 favorable forecast. The major factors are listed below: Raw Materials (favorable) VCM Vinyl Acetate Chemicals By-product Credit $(7,148) ( 414) (1,593) 8, 053 Process Costs Volume Steam Salaries Maintenance and Repair D eprec iation (17,000) ( 2,036) ( 3,700) [ 1, 826) 3,442 Escambia production statistics are shown in Table VII; Pensacola Plant Prime Production Off Grade, Tails, Sweeps, M lbs. Total Product, Ibs/gal/yr. Reactor Availability, % Production Runs/Grade Off grade, % Total Prime VCM Efficiency April 5535 167 1438 86.4 11/17 2. 9 96. 5 Budget 4820 312 6, 0 95. 0 Last Month 5147 97 1322 86. 3 13/13 1.8 93. 6 Bulk, shipments for the month were 62, 8% of prime production Local inventory increased by 210M pounds but total inventory for the Division was reduced by 434M pounds. Plastics Profit Center - Monthly- Report April, 1971 Page -10-______ Calvert City Plant April Budget Last Month Prime Production, M lbs. Off Grade, M lbs. Total Product, lbs/hour/reactor Reactor Availability, % Production Runs/Grade' Off-Grade, % Total Prime Monomer Efficiency, % 8849 1 13 695 98. 9 8/8 1.26 95. 50 7100 71 685 1.00 93. 00 7103 10 573 92. 6 7/7 0. 14 92.70 A new manufacturing record of 8, 962, 595 pounds was established in April. This led to a $59M favorable variance from' budget. Monomer price variance was $13M at this production level. Compound production was 373M pounds, leading to an unfavorable variance, of $12M. Inventories increased by 1. 1 million pounds, primarily because of quality problems at GAF. Business Development; Tariff Commission results for January 1971 showed a decline of 16. 9% in domestic sales and 4. 6% in export sales. (See Figures 1 and 2 attached.) The sharp drop in January sales might explain the strong months in March and April. The phonograph record market was a major project during the month to determine the potential for in-situ record grade copolymer. It was found that the actual demand in 1970 was 40% below Tariff Commission data. There seems to be a growing shift backward to the purchase of record compound in place of in-plant compounding because of contamination and economics. Pricing for pelletized product is 18. 0 to 18.'5^ per pound vs. l.Q per pound less for dry blend. Market Development; Western Electric (Baltimore) is running 2003A on a 24-hour basis and product appears to be running well. Oster blender base trials were unsuccessfxil because of what appears to be burning at the far end of the cavity at)d near the weld line. Fabricated Products believes that mold venting is insufficic*nl and consequently superheated air is entrapped in the cavity with subsequent burnm?;. Either the mold has to 150 altered slightly or a higher loading of titanium dioxide used in the formulation to mask the dark line. Top technical officials from General H)cctno visited Philadelphia for inclusion oi a Kydene type product from APC1 in their air conditioner housing program to replace Lexnn. AP00047046 l-'lasticc Profit Center - Monthly Report April, 1971 Pa ,gc - 11 - ____ Eye Glass Frames Poster Grant is finalizing color matches and we expect to supply precolored 5011 by mid-summer. American Optical has molded 1000 pounds into frames for a market test. Packaging 400 resin sales were at a low level of 120, 000 pounds due to a shut down at Allied Chemical while a new extrusion was installed. Usage should hit the 300, 000 pound/month level starting in May. Seagrams reports that a variation of C-345 has passed the initial 22-day screening tests. The final test lasts 90 days. A trial at Hallmark was successful and a 10, 000 pound order was secured. Fiber contamination must be eliminated at Calvert City to retain the business. At Orchard our compound received approval for all characteristics except blocking. We believe this problem can be solved quickly. Building and Construction Pipe samples from Robintedh's Florida plant have been submitted to NSF for testing and approval. Research & Development; Bottle Program Compound C-345 and Hooker's compound 2117C looked better in Seagrams' organoleptic tests of octyl tin stabilized bottles after two weeks at room temperature. An extended one-month test at 110F is underway at Seagrams. In attempting to pin down how various octyl tin raw materials relate to organoleptic properties, -we find by gas chromatography analysis that Argus dioctyl tin product is of higher purity than M&tT's material. In a discussion with Argus personnel, they are striving to further improve their dioctyl tin stabilizers by increasing the flash point specification. We will be working closely with these people in ail attempt to further improve taste anrl odor of bottles produced from C-34.5 type compounds. AP00047047 I Plastics Profit Center - Monthly Report April, 1971 Page -32- Sixty pounds of B-140 compound was supplied to Wheaton Industries for conversion into a bottle to contain "Clearasil" for Vick. An experimental lot of 2185 made in the 5 000 gallon reactor at Pensacola, showing a very low gel content in a Calvert City QC analysis, gave bottles inferior to Lucovyl RB-B010 and a 400 Resin compound. The experimental 2185 was better than commercial 2185 resin but appreciably inferior to both Lucovyl RB-8010 and to the 400 Series compound in gels, imperfections and clarity. It is not recommended that we give this resin to KemaNord for evaluation. Film and Sheet Compound C-482, a UV stabilized version of C-373, was run successfully at Orchard Corporation. A serious contamination problem reflecting the presence of fibrous material and gels must be solved before commercial compounds can be sold. These problems relate to contamination of the 400 Resin used in the manufacture of the compound and in use of high gel containing 400 Resin, We are working closely with the plant in regard to selection and storage of the 400 Resins to be used in film and sheeting. Orchard had another problem that arose from the printing ink causing film softening due to solvents present in the ink. This problem remains to be solved. Rigid Wire Compound Several candidates have been prepared which lead to wire coatings with elongation values exceeding 200%. Some impact strength was traded off to obtain the increased extensibility but we believe the new formulations are satisfactory, Saran Resin A very critical meeting was held at W. R. Grace with respect to the future of the saran program. A full report of this meeting has been summarized by A. Ross Adams (dated May 7, 1971). As a result of a low probability of commercial success, the saran project will be disbanded and personnel used on higher priority programs. r> AP00047048 Plastics Profit Center - Monthly P*eport April, 1971 Page "' Post-Chlor Program Three chlorination processes have been studied by Group Engineering and high spot economics developed. A meeting has been arranged between APCI and B. F. Goodrich to appraise the possibility of joint development and a BFG license. A thorough and precise market definition has yet to be made and is absolutely necessary since significant development costs can come out of this project. At the bench level, chlorinations of 400 PEARLS^1 have been attempted and indications are that chlorination proceeds at a much faster rate than conventional low porosity 400 resins. ARA/acw Distribution; J ohn Barr R. W. Beech W. R. Byrnes T. L. Carey J. M. Davidson A. R. Donaghy M. H. Danzig C. A. Heiberger G. J. Mantell D. J. Mann A. K. McMillan^" H. L. Watson W. M,, Smith J. Tinnon W. R. Whitaker A, Ross Adams AP00047049 QUANTITY OF S A L E S - MILLIONS OF POUNDS - PVC4-S/-LES- For? SELCTciO PnOnliCTS- AP00047050 AP00047051