Document RpVEVb6abYXyp0oG26Z7rnQrE
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v- are here today to acquaint you with the PCB (Arocior)
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pollution problem and to secure your guidance and approval on a recommended plan ofaction.
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Certain PCB's have recently been identified by various
scientists along with OBT in fish, birds, and other wildlife.
Free, the standpoint of reproduction, the PCB's are highly ! tc;:lc to birds. In a few moments, Slmer Wheeler will describe the problem in detail.
; ' Cur objective is to describe fer you the basic problems, : the issues involved, review alternative courses of action,
and suggest an action plan program fsr your approval. -
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This is a serious matter, r.st only from the pollution viewpoint, but alto because of the SZc 71 worldwide customer business involved with resultant gross profits of $10 7? and a net
investment of approximately $5 71. In addition, there could .
be possible adverse legal and public relations problems leveled
against Monsanto. Our Agenda will be as followo:
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&cur. M. vva Bcponer
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SIR CCU55 --
HARTOLDMON0027006
-2-
PC3 AGENDA REVIEW
I. INTRODUCTION
II. THE PROELS1
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- DEVELOPMENTS IN CRIMINATING PCB'a
- COMPLEXITY OF IDOfTIFl CATION
NATURE OF
- SERIOUSNESS
III. LAW DEPARTMENT VIEWPOINT AND RECOMfGNDATIONS
IV. EFFECT ON MONSANTO AND ALTERNATIVES
V. FUNCTIONAL FLUID BUSINESS GROUP DISCUSSION
- MARKETS, USES
- SOURCES OF POLLUTION
- CUSTOMER EFFECT
VI. PLASH CHIP. BUSINESS GROUP DISCUSSION
- MARKETS, USES
- SOURCES OF POLLUTION
VII. RECOMMENDED ACTION PLAN
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VIII. SUMMARY
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ST* CCIStC
HARTOLDMON0027007
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By ''ay of introduction, the Orgame Division and the Medical Department has been actively engaged for the last 18 months In developing facts and Jmowledge on this subject by personal visits to Universities and Industrial test laboratories, other worldwide producers, and other Industrial eollaborators, as well is keeping abreast of all literature and news sources on the subject as well as funding a toxicological and analytical test program In excess of $1D0 M. We established an Ad Hoc Committee of both Business Groups and Medical which recently issued a report - much of which will be discussed today. We have learned a lot, but there is such yet to learn as you will
hear.
V'hat arc rc~'s? They are polychlorinated biphenyls - be toevm to us as Aroclcrs. The next slide will quickly re~ familiarize you with our /.rosier business.
STfi CC1 5fc 1
HARTOLDMON0027008
.4.
MONSANTO WORLDWIDE -AROCIOR gJSINZSS
POUNDS/YEAR SALBS/YSAR
104 R
$22 H
(70 R in Functional Fluids 34 H in Plasticizers)
($16 H in Functional Fluids
$ 6 H in Plasticizers)
GROSS PROFIT/YIAR
$10.0 R ($7.5 R In Functional Fluids $2.5 H in Plasticisers)
GROSS ZNVSSTKZin
$13 M ($8.8 R net investment)
ROI `
10.5%
WORLDWIDE M/I
62%
MONSANTO PRODUCTION LOCATIONS: USA (2 plants, Anniston, Alatar.a
Sauget, Illinois)
UK (Newport)
OTHER PRC DU CIIS:
JAPAN (Yokkaichi)
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Bayer, Prodciec, Cairarc, Flick,
Kanegshucm, and several Eastern
European producers (all ex-USA}
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STB CC15fe
HARTOLDMON0027009
t
5
THE AROCLOR PRODUCT LINE
CHEMICAL NAME
TRADE NAME
MONOCHLOROBIPKEJYI
AROCLOR 1221
DI CHLOROSIPHSfYL
AROCLOR 1252
TRICHLOROBIPKENYL
AROCLOR 1242
TETRACHL0R0E2PH2NYL
AROCLOR 1248
P S.TA CKLOROEIPH3TL
AROCLOR 1254
HZXACHLORCSIPKZNYL
AROCLOR 1260
HEPTACHLOROBIPK2TCL
AROCLOR 1262
0 CTACKLOROBIPKZNYL
AROCLOR 1268
DECACKL0RG2IPKENYL
AROCLOR 1270
TERPK2JJYLS
SANTOWAX
CHLORINATED TIRPKZNYL AROCLOR 5460
NATURE OP MATERIAL
'THIN LIQUID
OILY LIQU
HEAVY MOL . THICK TAR
\f SO LID
1 SO LID
STR 6C1563
HARTOLDMON0027010
Thei e are theoretically 210 different isomers of chlorinated biphenyls.
Monsanto entered the Aroclor market in 1930 by acquiring
Swan Chemical Company. The first load of Aroclor went out
of Anniston, Alabama to General Electric in 1931. Since then,
the market has grown to one of Monsanto's most profitable
franchises. This franchise is now being threatened by A
recently found pollution problems which Elmer Wheeler will
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now discuss.
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II. The Problem (Wheeler) - see attached Appendix A
III. Law Department Viewpoint and Hecommendations (Trench)
Effect or. Mcr.sar.to and Chur Alternative Courses cf Action As discussed, Aroclors 123^ and 1260 -- the 5 and 6 Cl ringed biphenyls are the ones most seriously involved in the pollution problem. Both Plasticizers and Fluids Groups are
Involved as shown:
STfc CC 15c<t
HARTOLDMON0027011
AROCLOR SALES
(H FOUNDS)
AROCLOR 12fU
AROCLOR 1260 & ABOVE
FLUIDS
l.**5
5.15
PLASTICIZERS
5.^ 1.7 7.1
TOTAL
6.85
12.25
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I I ST K CCISti
HARTOLDMON0027012
We considered 4 alternative courses of action;
(Slide).
Alternative 1: Do nothing was considered unacceptable from a legal, moral aw* customer , public relations & company policy viewpoint. Elis is also the quickest route to being forced out of business.
Alternative 2: Go out of total Arocler business was considered unacceptable from a Divisional viewpoint, but from a Corporate viewpoint may be necessary. Only you can-wake-thee--deci-sion. All Arocler products are not serious pollutants - many degrai: there is too mush customer/market need and selfishly tec much Monsanto profit to go out. To go out would require a write off of Arocler net investment of $7 M (10d/share) or if biphenyl included $8.8 ft (12^/sharc). In addition, inventor:' disposition, continuing cost of utiliti.o, and back-up capital and serious
manpower & resources reallocation at Anniston.
Alternative 3: Go out of Arcelor 125^ and 1250. This was
seriously considered and r.:y eventually occur by our actions-
and customer actions, nevertheless, we feel that segments of
this business are defensible or are so "confined" in use that
specific plans of action art called for this portion. Cur reason:
for eliminating this alternative will become clearer as we outline
our action plans.
S1S CC15te
HARTOLDMON0027013
ALTERNATIVE COURSES OP ACTION 1. DO NOTHING - JUST REACT TO LEGISLATION AND
EMOTION, 2. GO OUT OP TOTAL AROCLOR BUSINESS.
3. GO OUT OP AROCLOR 1254 AND 1260 PRODUCTION 4. DEVELOP SPECIFIC ACTION PLANS "TAILORED" TO
EACH BUSINESS GROUP AND EACH CUSTOKZIV'MARIET SITUATION TO "CLEAN UP" THE MESS.
STR CC136? `
HARTOLDMON0027014
Alternative h; Develop specific action plans .tailored to each
Business Group and each oustoner/market situation, - was the
alternative selected at this point of tine and based on our
knowledge from a Divisional viewpoint as making Monsanto act
in the most positive, responsible way to society and our
customers, as well as our interests.
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However, because of the magnitude and seriousness of this
problem and its total implications for Corporate Monsanto,
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the final 'decision on this matter must be made--by- the- CDC.
Functional Fluids Business Grout Discussion:
Aroclers are used widely in 3 of our k market areas in the
Fluids Group:
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SIR CC 1$>6
HARTOLDMON0027015
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FLUIDS USE OP AROCLC.ES BY MARKET AREA
AROCLCR PRODUCT
DOMESTIC MAIUtET ARE/1. TKJOUsTRIaL' ~faAfT>JjLrZS
1242
1248
1254 . 1260 & Above
4.1 1.2
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0.6
5.9
1.1 1.0 0.1
2.2
36 0.8
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40.3
(V I AS
2.2
0.9 4.1
48.4
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HARTOLDMON0027016
SOURCES OP FLUIDS POLLUTION
APPLICATION
industrial fluids
DIELECTRICS HEAT TRANSFER PRODUCING PLANTS
' INTENSITY OF POLLUTION
GREATEST (DIRECT)
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(INDIRECT CONTAINED)
(INDmECT CONTAINED)
LEAST
(DIRECT)
STR CC157C
HARTOLDMON0027017
FLUIDS CUSTOMER ALTERS . IVES
Aerjj op APPLICATION
Industrial Fluids
Transformer Capacitors
Heat Transfer
PRODUCT OF CHOICE
CUSTOMZ?. OPTION'S
Pydraul 312/F-9/
Customer could get along
A-200/Phoaphate Esters/ without us, but Pydraul
Water Glycol
312 favored. HgO Glycol
. has seme pollution prod
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Phosphate ester route ok
at present.
Alr/Oil/Aroclor/Gas
Could drop Arocler at
sacrifice of safety, cos
r Use of equipment or
noise level.
Aroclors .
No immediate replacement
available. Longer tern. eil at expense of size
and cost of efficiency
and redesign of equipmer/
Therminel
Cil/Dowtherm/T66
T55
T77
TS8
No option for FR liquid
market. Other system
possibility.
Licuid systems favored.
T6o and
increasing
rapidly ir. use. Oil also
a pollution problem.
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HARTOLDMON0027018
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Customer Choices h alternatives & Penalties:
Sunnarlxlng, iob< of out sm toners have no isaarUtte aitemat.ive, acme could change only at sacrifices f safety* or cost or
. various technical factors. Only la the Industrial field
could the customer make as Immediate conversion.
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` PCS Threat to Prmetlonal Fluids Business and Profit:
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HARTOLDMON0027019
FLUIDS BUSINESS THREATENED (1970 BUDGET)
PROBLEM
1. Confined to A-125V 1260 only.
2. Spreads to andA-1242
1246
First to: a) Industrial Fluids
Then to: b) Dielectric Fluids
Then to:
c) Heat Transfer
SALES
1 3.0 H
$ 4.0 R $ 8.0 R $ 1.0 R
iic.O T'l
CROSS PROFIT
$1.36 R
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$1.6
R
$3.8 R
$ .6
R
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SIR CO 157 3
HARTOLDMON0027020
/ ARCC1C?. 122V126C
^L ^ a, i"* (2t;")
9.5 - (25^;
$O.S 7! (322)
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HARTOLDMON0027021
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L&rse r.u=s cr of direct U.. eustasers - 570.
Cuatesars are ocali: 23 direct customers - ^72 A-125V12
sales.
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3. 5Z2 dssestie A-I25V12S0 salts through distributers -
Wse> e s 0 tea W W **
p
**f
STR CO 157 5
HARTOLDMON0027022
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T5 s Celt's or. ?s.?e: i^ool Pi^r.-s
;.d.-.isivis
x.v;xcr.
:^SS SAL"2
& ' 1 0 O 5.7 E lb. 1.7 71 lb.
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M^.rc?. >7ZZLZ7. r;;i
Aroclcr 12-2
Aroelor p45c
Are oxer 125
Aresler p-clj
Aroslor 12pl)
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Aroxie:- 121 . Arof:_xr 125-]
i* ^ ^ Arsolor 1,
.-xajer c-.T' ef ecus-:;
vepf> of /.; o:
..xsclsri
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HARTOLDMON0027023
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Fa gi g1 """j v fita - ----------- - ' to>a (PLASTZCIZSpg^
**5*.*^'
a Wto*tos S>BBU^
Ca h* a <to G to * a ^
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{W -*<*<->Tf>*.T
rB a t* ft roV .
r--ir.e Paints'
U-eer tank
linings
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SGURCI
Leteiilns
Leaenlns Vaperizitl
Vcaorinatio:
A-125-
/12cC Yes
:tt .*o
:es Yes
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a
cisers tra ee.zll.-i - therelsre, ."ir* .
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HARTOLDMON0027024
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?LASTI 0121?.
In-2 ATZ: "10
Ccr_fi.*..r :: A-125-/L260 type only.
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salss "ii.-.r.no"
5^.3 ::
s c.?. zziAzno (icst' $1.7 !7 (-$0.3 7)
02.0
$c.6 (<
c.o o.c ( i
2 S
:;._crj ssi;
5*>/lo0.
c.n Eri vjr.
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SIR CC1578
HARTOLDMON0027025
RECOMMENDED ACTION FLAN
THE JOINT ACTION PLAN DEVELOPED S THE FUNCTIONAL FLUIDS
AND PLASTICIZER BUSINESS GROUPS, AND THE MEDICAL AND LAW DEPARTMENTS IS AS FOLLOWS:
1. Appoint a Project Manager - responsible for the overall management of tne Aroclor pollution problem. He would be assisted by a Task Force from members of each Business Group plus Medical,
Law, engineering and Manufacturing.
2. Notify all Aroclor customers of PCS problem and relabel containers - within 60 days.
3. Clean up Monsanto plants1 effluents within 12 months.
4. Develop ar.d Implement new packaging systems for Aroclor 1254/1260 - within 6 months.
5. Educate customers on need for clean-up at their plants - within 4 months.
6. Introduce to market, replacement products for Aroclor 125V1260 - beginning 1/1/70 (Fluids),
4/1/70 (Plasticisers).
STR CC1579
HARTOLDMON0027026
RE00MMEN2P ACTION PLAN
7. Continue and expand blodegr&t&tion test program with Arcelor series, particularly 1142, 1148 and 1254.
8. Continue toxicological test program. 9. Accelerate present analytical test program.
10. Determine feasibility and cost of eliminating 5/6
Cl2 in Aroclors 1242 and 1248. (3/70) 11. Study incineration products. (3/70) 12. Develop business plan to offer:
Monsanto Fluid Reclamation and Recovery
with Enviro Cnem (4/70). (Reclamation already underway at Findett.)
ST a CC156C
HARTOLDMON0027027
WHAT rj ws d^ect from t?cs program? Cirow^'- thls etln program, 1Monsanto would aspect to:
?.<taln or convert a good portion of our business and profits
PVJ2LEMS
Confined to A-125V 1260.
b. Spreads to A-1248 and 1242.
CONVERT
OR
RETAIN
$20.3 H
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$10 H
$1 SALES OUT OF PRESENT
$22 K
$22 H
ODDS OF
SUCCESS 7051
60%
10
2. further valuable knowledge and time to*.
fct Leam more facts.
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t. Protect our position.
c. Make further decisions regarding our program.
d. Contribute to overall pollution Imowledge.
3. clean-up the major contributing PCS pollution factors,
il, i:i/ilmlze customer complaints and hardships.
5TR CC 1 5 i.
HARTOLDMON0027028
'The Program Would:
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1. Cost same money.
Eat. IAKE
- $400-500 M
Eat. Capital - $700 M '
$1.1 H - 1.2 H
2. Depose us to continued adverse publicity and possible law
suits.
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3. Cause some customer discontent - but much less than an abrupt termination of production.
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HARTOLDMON0027029
SUMMARY
In summary, the FCB pollution problem 1 a very serious one. It Is a worldwide ecological problem. At preient the most ierlous offenders are the 5 and 6 chlorine containing products (Aroclors 125^ and 1260). dere are some indications other members are biodegradable to varying degrees. Currently, much
i scientific testing is underway and more Information will be forthcoming. Monsanto must act In a positive cooperative fashion. A plan of action has been discussed which we feel Indicates responsible action. Our stakes are large and because of the many possible effects on the Corporation -- your guidance and approval of the suggested action program is requested. Thank you for your consideration. May we answer any questions
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HARTOLDMON0027030