Document XegbxqgL1pqoNN5XJLQ77aV4
K0
PCB PRESENTATION
TO
t i f f (A
CORPORATE DEVELOPMENT COMMITTEE
I. IKTROOUCTION:
are here today to acquaint you with the PCB (Arocior)
! pollution problem and to secure your guidance and approval
| on a recommended plan of action.
> i l.
' '.
* , :. Certain PCB's have recently been identified by various
i (
**
scientists along with .DDT in fish, birds, and other wildlife.
' From the standpoint of reproduction, the PCB's are highly
| toxic to birds. In a few moments, Elmer Wheeler will describe
; the problem In detail. I
I
j Our objective is to describe for you the basic problems,
i
j the issues involved, review alternative courses of action,
and suggest an action plan program for your approval.
This is a serious matter, not only from the pollution viewpoint,
but also boeaxise of the
M worldwide customer business
1 involved with resultant gross profits of $10 I and a net It investment of approximately $9 M. In addition, there could
be possible adverse legal and public relations problems leveled )
against Monsanto. .
\
! i 741945
!
j
NV 023691
t
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-2-
PCB AGENDA REVIEW
I. INTRODUCTION
;
II. TIIE PROBLEM
DEVELOPMENT:' INCRIMINATING PCB's
COMPLEXITY OF IDENTIFICATION
NATURE OP
SERIOUSNESS
H I . LAW DEPARTMENT VIEWPOINT AND RECOMMENDATIONS
IV. EFFECT ON MONSANTO AND ALTERNATIVES
V. FUNCTIONAL FLUID BUSINESS GROUP DISCUSSION
MARKETS, USES
SOURCES OF POLLUTION
CUSTOMER EFFECT
VI. PLASTICIZER BUSINESS GROUP DISCUSSION
MARKETS, USES
SOURCES OF POLLUTION-
VII. RECOMMENDED ACTION PLAN
VIII. SUMMARY
741946 NEV 028692
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y -
3-
By 'ray -of Introduction, the Organic Division and the Medical Department has been actively engaged for the last 18 months in developing facts and knowledge on this subject by personal visits to Universities and Industrial test laboratories, other worldwide producers, and other industrial collaborators, as well as keeping abreast of all literature and news sources on the subject as well as funding a toxicological and analytical test program in excess of $jLOO M. Vie 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 much yet to learn as you will hear.
What arc P C D 1s? They arc polychlorinated biphenyls - better known to us as Aroclors. The next slide will quickly refamlliarize you with our Aroclor business.
741947 NEV 023693
r-T
MONSANTO WORLDWIDE AROGLOR BUSINESS
POUNDS/YEAR
104 M (70 M in Functional Fluids 34 M in Plasticizers)
SALES/YEAR
$22 M
( f l 6 | in Functional Fluids $ 6 M in Plasticizers)
GROSS PROFIT/YKAR GROSS INVESTMENT
$10.0 M ($7.5 M in Functional Fluids . $2.5 M in Plasticizers)
$13 M ($8.8 M net investment)
ROI 10.5#
WORLDWIDE M/l
62#
MONSANTO PRODUCTION LOCATIONS: USA (2 plants, Anniston, Alabama Sauget, Illinois)
UK (Newport)
JAPAN (Yokkaichi)
OTHER PRODUCERS:
Bayer, Prodelec, Caffaro, Flick, Kanegahuchi, and several Eastern European producers (all ex-USA)
t/ y t\ I-\
741948 NEV 028694
THE AROCLOR PRODUCT LINE
CHEMICAL NAME
TRADE NAME
MONOCHLOROBIPHENYL
AROCLOR 1221
DICHLOROBIPHENYL
AROCLOR 1222
TRICHLOROBIPHENYL
AROCLOR 1242
TETRA CHLOROBIPHENYL
AROCLOR 1240
PENTACULO ROB IPH EHYL
AROCLOR 1254
HEXACHLOROBIPHENYL
AROCLOR 1260
HEPTACHLOROBIPIIENYL
AROCLOR 1262
0CTA ClILOROB IPH ENYL
AROCLOR 1268
DECA CHLOROBIPHENYL
AROCLOR 1270
TERPHENYLS
SANTOWAX
CHLORINATED TERPHENYL AROCLOR 5460
NATURE OP MATERIAL THIN LIQUID
OILY LIQUID
HEAVY MOLASS THICK TAR
\t SOLID
\f s o :LID'
741949
/ Theie 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 'bbyv 7 t
A recently found pollution problems which Elmer Wheeler will now discuss.
II. The Problem (Wheeler) - see attached Appendix A
III, Law Department Viewpoint and Kecommendations (French)
IV. Effect on Monsanto and 0\;tr Alternative Courses of Action As discussed, Aroclors 125^+ 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:
741950 NEV 028696
AROCLOR SALKS (M POUNDS)
AROCLOR 12j`>h AROCLOR 1260 & ABOVE
FLUIDS 1.45 3.7 5.15
PLASTICIZERS 5.4 1.7 7.1
TOTAL
6.85
5-4 12.23
741951 NEV 028697
We considered 4 alternative courses of action;
(Slide)
Alternative 1 : Do nothing was considered unacceptable from a legal, inoral^and- customer-, public relations & company policy viewpoint. This is also.the quickest route to being forced out of business.
Alternative 2 : Go out of total Aroclor business was considered unacceptable from a Divisional viewpoint, but from a Corporate viewpoint may be necessary. Only-you--can-make-that-- decision. All Aroclor products are not serious pollutants - many degracb; there is too much customeryWrkct need and selfishly too much Monsanto profit to go out. To go out would require a write off of Aroclor net investment of $7 M (10/,/share) or if biphenyl included .f>8.8 M (liy/share). In addition, inventory disposition continuing cost of utilities, and back-up capital and serious manpower & resources reallocation at Anniston.
Alternative 3 Go out of Aroclor 1254 and 1260. This was seriously considered and may eventually occur by our actions and customer* actions, nevertheless, wo feel that segments of this business are defensible or arc so "confined" In use that specific plans of action arc -called for this portion, our re :. . for eliminating this alternative will become clearer as we on 11.
our action plans.
n e v 028698
- 741952
ALTERNATIVE COURSES OF ACTION
1. DO NOTHING - JUST REACT TO LEGISLATION AND EMOTION.
2. GO OUT OF TOTAL AROCLOR BUSINESS. 3. GO OUT OF AROCLOR 125'l AND 1260 PRODUCTION k. DEVELOP SPECIFIC ACTION PLANS "TAILORED" TO
EACH BUSINESS GROUP AND EACH CUSTOMER/MARKET SITUATION TO "CLEAN UP" THE MESS.
741953 NEV 028699
6
Alternative
Develop specific action plans.tailored to each
Business Group and each customer/market situation, - was the
alternative selected at this point of time and based on our
knowledge from a Divisional viewpoint as malting Monsanto act
in the most positive, responsible way to society and our
customers, as well as our Interests.
However, because of the magnitude and seriousness of this problem and its total implications for Co'rporat Monsanto, ^ne finaJL decision on this matter must be. made by-the CDC.
Pune11onal Fluids Business Group Discussion: Aroclors are used widely in 3 of our h market areas in the Fluids Group:
741954
FLUIDS USE OF AROCLCRS BY MARKET ARFA
____DOMESTIC MARKET AREA AROCLOR PRODUCT INDUSTRIAL HEAT TRANSFER ELECTRICAL
TOTAL
1242 12.48 1254 1260 & Above
4.1 1.2
0.6 5.9
1.1 36 41.2
1.0 - 2.2
0.1 0.8 0.9
- 3.5 4.1
2.2
. 40.3
48.4
741955 NV 0870l
SOURCES OP FLUIDS POLLUTION
APPLICATION INDUSTRIAL FLUIDS DIELECTRICS HEAT TRANSFER PRODUCING PLANTS
INTENSITY OF POLLUTION
GREATEST (DIRECT)
(INDIRECT CONTA IN Eli)
(INDIRECT CONTAINER)
LEAST
(DIRECT)
741956 NEV 028702
-1?FLUIDS CUSTOMER ALTERNATIVES
AREA OF APPLICATION Industrial Fluids
Transformer
Capacitors
'
Heat Transfer
PRODUCT OF CHOICE
CUSTOMER OPTIONS
Pydraul 312/F-9/
Customer could get along
A-200/Phosphate Esters/ without us, but Pydraul
Water Glycol
312 favored. HpO Glycol
has some pollution problems
Phosphate ester route ok
at present.
Air/Oil/Aroclor/Gas
Could drop Aroclor at sacrifice of safety, cost or size of equipment or noise level.
Aroclors
No Immediate replacement available. Longer term oil at expense of size and cost of efficiency and redesign of equipment.
Therminol
0il/Dowtherm/T66 T55 T7? T08
No option for PR liquid market. Other system possibility.
Liquid systems favored. T66 and T5`3 increasing rapidly in use. Oil also a pollution pi-oblem.
741957 NEV 028703
Customer Choices fc Alternatives & Penalties: Summarizing, some of our customers have no immediate alternative, some could change only at sacrifices of safety, or cost or various technical factors. Only in the Industrial field could the customer make an immediate conversion. PCB Threat to Functional Fluids Business and Profit:
741958
FLUIDS BUSINESS THREATENED
(I97O BUDOCT)
PROBLEM
1. Confined to A-1254/ 1260 only.
2. Spreads to A-1242 and 1248
First t o : a)- Industrial Fluids
Then to: b) Dielectric Fluids
Then to: c) Heat Transfer
SALES
$ 3.O M
$ 4.0 M $ 8.0 "M $ 1.0 M
GROSS PROFIT $1.36 M
$1.6 M $3. M $ .6 M fTWlf
741959 NEV 028705
J't
PLASTICIZERS (LOLLS- v/IS'S)
Vr\-- * ft-)o
POuLDS I .0,
ILL /.'SCclop:s s 5 .0 'L 3 *-. 0 L S 2.5 K
/ ARGCLOrR-..,Li'1.o.2_-7<5 ':/i2 6 0
$ 1 .7 iv; ( ^ )
9 .5 :1 (2 L ) $ 0 .3 7 (32JS)
741960 NV 026706
-16V:TS: DlST-l'I-JC-TIOXS FROM P.P,
nxmnbcr of direct U.S. customers - 570. Customers are small: 23 direct customers - hrfp` A-1254/i2c0 sales. 50;i domestic A-1252'/12oO sales through distributors difficult to police.
741961 NEV 048707
n
iARXSTS C VJ.'bonios 3 Carbon Paper ibO.o M d t A d e s i v e s Sv;i.iirnr- Pool Paints
Pr*otoct:Lv c Co at ir.;;s
_S-- 0;* .-.enos-.voij
lo,nts *,ir_-__>- Mcdli lent,,on
Mis C01.uC ' . OOU.J
:>955 SALPS 8.6 M lb. . 5.7 H lb. 1.7 M lb. yc;o vr. --vw>-*.
1.5 lb.
3.0 lb.
2.0 1 lb.
5.0 7i lb.
MA JOK AROCLCR 13SD
Aree 1er* 12--1-2
Aroclor 5A0
Aroclor Aroclor 5ioC)
Aroclor l-y.v' Aroclor- 5160) Aro ci 'O "_1 Aroclor ic.G0
Aroclor \2fWv') Aroclor
Arocaor Aroclor
> f i-
Aroclor Aroclor
-.1.1.'..-fVot,b;/'.
cor.; ' .r.... .
i . Z.i major ear.-to...or (85>? of Arodor l-:2 sole ;. G. of de:ne tie .f o d o r s sole!: chrou.vi -/.'V.*../v,,r<
741962 NV 023708
TO
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POSSIBLE CCXT.AICJAT.TON SOURCES (PLASTICIZERS)
oAOREE OR COhxAMfiU'HOX
i*:C>0*C
MAJiVCvr
APPLICATION
SOURCE
'Coatings
Marine Paints) Leaching
Later tank )
linings
)
/
Coatings
Sv;ir:iming Pool Leaching Paints
Caihonloss Carbon Par or'
Max Modification
litulktlon es
-
-
~
1a-'-7sV i*rVL.1.C>' Adhesives
-
*.>')^ V)*'(
Automotive
Vaporisation
Vaporisation
Contact v/ith product via packaging. In cineration.
Contact vrl.th product vaa packaging. In0piiMOAC#OMbOAi
Long-terr. leaching
/I2c0 .USED?
Yes
Yes " io Yes Yes
ho
%..' ^r*
741963 NEV 028709
I cl PLASTICIZI'.R BUSTA, 'i?iiRPATjf:::D
1. Confined to
A-1P>V'1260 typo only.
0i-*
0V(__.0-/IP:-..v'*jv.
eo all i.'~\:rifv1p'.
o:>.p/K.-viy...lit
>Jp.f (.v.8` v"O U.V-*u V..'IC5. c; do:y;....>.^>V/...>v*'J
J~i-*.>
SALES RET.fiX v>i, 0.0
S G .P. AK'fAInAD (LOS?) $1.7 i'i (-$0.8 A)
$0.6 K (-1.9 ')
0.0 (-2. p
or .9O9 prospects,
I
ell /IO1v^Jj0..y/-
A..-dor 12o2/~licrj O ^OC jiicbVC
v: ich ar >-j O en inc u..t;u
741964 NEV 026710
RECOMMENDED ACTION PLAN
THE JOINT ACTION PLAN DEVELOPED BY THE FUNCTIONAL FLUIDS AND PLASTICIZER BUSINESS GROUPS, AND THE MEDICAL AND LAW DEPARTMENTS IS AS FOLLOWS:
1. Appoint a Project M a n a g er - responsible for the overall management of the 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 PCB problem and
relabel containers - within 60 days.
3. Clean up Monsanto plants1 effluents within 12 months 4. Develop and 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. Introduct to '-market, replacement products for
Aroclor 1254/1260 - beginning 1/1/70 (Fluids),
4/I/7O (Plasticizers).
741965
NEW 0287U
RECOMMENDED ACTION ELAN Continue and expand biodegratation teat program with Aroclor series, particularly 1242, 1248 and 1254. Continue toxicological test program. Accelerate present analytical test program.
Determine feasibility and cost of eliminating 5/6 Cl2 in Aroclors 1242 and 1248. (3/70)
Study incineration products. (3/70) Develop business plan to offer:
Monsanto Fluid Reclamation and Recovery with Enviro Chem (4/70). (Reclamation already underway at Findett.)
741966 NEV 028712
'I
WHAT CC'VIJD.WE EXPECT FROM THIS PROGRAM? Through- this action program, Monsanto would expect to:
1. p.^'Vain or convert a good portion of our business and profits:
ppC.BLEMS
a , Confined to A-12J34/ 1.260.
b, Spreads to A-12^8 and 2242.
CONVERT on
RETAIN
$20.3 H
$10 M
$M SALES OUT OF PRESENT
$22 M
$22 M
.2 Ga.in further valuable knowledge and time to:
a. Learn more facts. b. Protect our position. c. Make further decision s regarding our program. d. Contribute to overall pollution knowledge.
ODDS OF SUCCESS
70$
60$
3 . Clnan-up the major contrifcmting PCB pollution factors,
4. Minimize customer complaints and hardships.
741967 NEV 028713
-21-
The Program Would;
1. Cost some money.
Est. SARE
- $100-500 M
Est. Capital - $700 M
$1.1 M - 1.2 M
2. Expose us to continued adverse publicity and possible law
suits.
<
3. Cause some customer discontent - but much less than an abrupt termination of production.
741968 NEW 028714
SUMMARY
In summary, the PCB pollution problem is a very serious one. It is a worldwide ecological problem. At present the most serious offenders are the 5 and 6 chlorine containing products (Aroclors 125^ and 1260). There 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?
" 'Tr* v * T * v mr r
741969 NEV 028715