Document da5OjEy8p0X4a4ReDdNMdm6Yq

LL CHEMICAL COMPAi ' C-yA'/n /-, / vw** ----- TO ?}M'vUAORRS/CUFERIKTilliDKJiTS date from DECEMBER 7, 1972 MANAGER - ENGINEERING SERVICES - HEAD OFFICE susject SHELL CHEMICAL INSULATION STANDARDS Further to our memorandum of November 8, 1972 on above -subject, vc are transr.itt3-ns-.fpr your information a copy of a ^.lemroaridlini from Head. Office Furchnsir.g dated November 1^, 1972, Giving the'current supply picture on asbestos- free insulation. This memo points oat the fluidness of the supply picture and that the major manufacturers will probably intermix their inov.lr.tionn during the changeover periods. - -- -- The memo further anticipates that the formulations may veil be changing for some time. Evaluations of field experience of insulating materials_vill have to include the period of manufacture as veil as the name of the supplier in order to be valid. We vill continue to keep you informed on this subject. JWJ:dt T. J.* Hayes Attachment cc -- v/att achment Manufacturing - General Manager Agricultural Division - Manager Manufacturing ` Head Office - Engineering Construction - Manager Head Office - Environmental Engineering - Manager __ Shell Development Company - Beliaire Research Center - Mi*. C. M. Schlaudt NOR-001318 SHELL OIL COMPANY to SlInU, KNGINLLKIKG COUNCIL - CHAIKMAK date XOV5SG33R Xh , 1972 f*oM engineered euuip;-i:nt and - SERVICES - PURCHASING HEAD OFFICE suaJiCT SUPPLY PICTURE ASBESTOS-PRES INSULATION Your October 2o note asked for an update of the supply picture for asbestos-fret their?;ml insulation. To this end ve have talked recently vith several people who have a good view of the industry, end from these discus sions inferred the following. ' After about late Third Quarter 1973, there should be no-significant quantity of asbestos-containing material remaining in the market and, if present schedules hold, none at all from the major manufacturers. At-this, time, all of the majors either have converted all or part of their production or are committed to a scheduled conversion program. As you know, Fibreboard has been offering only an asbestos-free material for some time now, vhile both Johns Manville and Owens Corning are converting.- We hear that Keene Corporation is actively negotiating for a licensing arrangement. Between nov and late Third Quarter 1973, both asbestos-containing and asbestos-free materials will be available in trie market vith the /> asbestos-free becoming increasingly available while the asbestos material vanishes. During: this time, there will probably be~TBotwe^i-pte.TTityi-ng-of thpr.p" materials without so notifying the buyers'dfffirn.c-v-? ng tp, rusnu- facturers convert plants in stepwise fashion and as the inventories of asbestos-containing materials are worked off. . ' . Also during this period, and probably well p.nto 197L, ve expect.t see several changes of composition of the materials being marketed as each ''tiU** manufacturer strives to hold or improve his market position by improving' ' quality to gain buyer preference. This seems certain since these viH be all new materials , developed in haste and subjected to only cursory field trials, and buyers will not. have had opportunity to evaluate or conpaye-one product to another. The buyers will compare products , vhich will indeed tend to shape the market split between manufacturers and, if the split is not to the'manufacturers * wishes, will cause then to revise their products. As ve have seen, vhich probably portends the future vith all manufacturers, in an attempt to gain customer acceptance Fibreboard has made numerous .changes in their product in the thirteen months since introduction. As to pricing, the asbestos-free materials will cost more and, furtuer, ve will see less, if any, ortne price-cutting that has ' Deed "char- acteristic of this industry in the past. V:e are told that the asbestos-free materiel costs more to produce: fibers are more expensive; the orocess takes- r.ore_ of a more expensive" ~u?l; andr^costs or ?.LD and capital for conversion ~ mugt be amortized, fhe cost cutting that ve have gro^^'liseil^to' 1 lu^ng"1" out for the future because (a) supply capacity has decreased some 15/* since . .* *-- / .. NOR-001319 Pittsburgh Corning (unibestos) and GAS (daksilite) withdrew from the market . (b) denied is increasing with acceleration of util:'ty construction programs and vita tendency of ail to apply more insulation due to increasing fuel costs and (c) the manufacturers seem to recognize this change in supply/ demand picture and those that ve talked to seem determined to avoid such cost cutting in the future. V.'e don't yet know what the asbestos-free material will cost ana probably will not know until all of the old material vanishes from the marketplace. "j Tne trend tovrard producing and marketing only asoestos-free mate riels aptears irreversible. We understand both Johns Manviile and Ovens Corninp. decided this firmly at corporate level seme tins ago before alTbeating funds for ?.10 and for the new facilities. -- X At present, the market split among the major manufacturers - appe art to_be aheub-az foilovs: Q 0 ,l ' v ) t' ^ JTo^,hns Manviile (Thermobestos) - $15-v-?0MM Ovens Corning (Kaylo) - klC-J12KM Fibr&board Corporation (Pabco) - $5-36mm Keene Corporation (Thermosid) - 3-3^MM Jim Valters-Corporation (Care^/temp) - Incidentally, ve understand that Pittsburgh Corning v'Jnioestos) and GAS (Calsilite), before quitting the -business vithin the last year, enjoyed sales totalling some ppM- per year, or about 15^-20,7 of the market. The supply picture by major manufacturer "Swears to be shaping up as follows: r- 7J/ Johns Manviile will be converted totally to asoestos-free material by end of June, 1973. The Manviile, h"ev Jersey, plant(3l2-$15M'/year) is being converted stepwise with one-sixth of productiop r.ow asbestos-free ,ana another sixth scneduled for conversion this month. This stepwise conversion will be completed next June. The long Eeach, California, plant f3-$3?W/year) vill be shut down for conversion after the first of the year and started back up in May, 1973- We understand taat they will install some -J2MM of new asbestos-free calcium silicate capacity at an existing plant in Waukegon, . Illinois. Most of the present asbestos-free production is being sold in the Northeast. Tney predict that asbestos-free material vill be introduced in the Gulf Coast in Second Quarter 1973. Owens Corning claim, that their plant in Berlin, 1'ev Jersey (310-S12 KM), will be converted to asbestos-free in mid-Iiovember, 1972, and that they snould be producing 3nd selling only asoestos-free material by end cf First Quarter 1973. Seme asbestos-free material is being mixed in with the old . 4- tott* material now. . Fib reboard ' s plant (v5-5oMM) in Emeryville, Californi^-j-*?Tas ceen producing only asbestos-free material 1 hep_r that f**i *.***' S Any they made another change in the material about two weeks ago in an attempt to improve its physical properties. They are constructing a new plant o some -p5";;>oMM capacity near Rust on, Louisiana, which they feel vill be in production about raid-simmer, 1973. NOR-001320 3 Keene Corporation operates the old B&ldvin-Shert-Hill plant r.ear Va?J.ey Forge, Pennsylvania, producing some ?3-$UM of calcium silicate going primarily into the Eastern market. Vfe hear that they arc negotiating v-ith Ch/ens Corning- gy sr'l'rc'cnse^to manufacture the asbestos-free material. Jj.m Valters Coi-poraticn summer bought the old Carey building materials business from Panacea, including the Carey^snp insulation plant near Cincinnati, Ohio, which has produced an c.sbestos-free -perlite material for sene yejirs at about a per year rate. It appears that Jim Valters intends to continue operation of this facility at "least for the time being-.-. -- Please call if you wish to discuss. cc - Shell Engineering Council Members E&? _ Production - Gas Engineering - Mr. J. E. Ry'ourn ' Southern Region - Public Affairs - Mr. G. Derickson Manufacturing - Engineering - Mr. V. C. Bluhn/Mr. C. 1. Richards Shell Chemical Company - Environmental Engineering - Mr. R. B. Howard NOR-001321