Document emwN8vR4oB55GK51wYXZGwRNq

At their December Board Meeting, our Directors approved the following decisions which hac been made earlier by Corporate Management: . 1. Terminate all sales ox" PC3 heat transfer fluid immediately (i.e. Therminoi B'R-Lo Temp, ?3-0 and B'R-1). 2. *Implement a program to phase out of plasticizer chlorinated terphenyl sales by March 31, 1972 (i.e. Aroclor f>432, 6000 series and 1221 3, etc.). 3. Continue to sell dielectric fluids to the capacitor/trans former industry only so long as certain conditions satis factory to Monsanto are met. Here you may wish to pause for a little before reading further; Actually we don't think this is going to be as gloomy for Specialty Products as you nay first imagine -- we'll explain why later. 1. Plasticizers Don't try to explain or answer questions in this area. Refer any specific inquiries to the Plasticiser Regional Manager for attention. 2. Dielectrics you will be informed v-.ry shortly exactly what this deci sion means in detail an how it will be implemented. Co not communicate to customers on this without hearing fur ther from. Norm; .Johnson, Tom Oosssge or myself. Meetings have already been held between top corporate V.P.'s of General electric aad b'estinghouse and Monsanto's H.I.C.C. management 'which are extremely encouraging as far as the future of dielectrics is concerned. 3. Heat Transfer It is in this area that action with regard to all customers is currently being Implemented beginning December lo. 0461166 TOWOLDMON0058800 -2 - The Effect of Thermlnol FR Withdrawal The Immediate discontinuation of all Thermlnol PR sales should be viewed as a positive step for Monsanto's Specialty Products Group: A. The sooner we get the PR problem completely behind us the better. B. Already over 160 locations have been converted from PR or about 20$ of all FR locations. Ninety percent (90^) of these FR systems have been converted to Thermlnol 55 or 66. The task ahead is not an Impossible one by any means. C. Quick action may well blunt Dow's attempts to win customers over to Dowtherm G because Dowtherm A Isn't a very viable replacement for Thermlnol PR. D. Over the past few years, 50^ of our Thermlnol 66 business has been new business. We already see enough firm commit ments for" 1972 to know It will be no exception. E. You'll hear a lot about Dowtherm G being an improvement over Dowtherm A. However, Jay Pullman has .lust gained 7000 gallons of new business at DuPont with Thermlnol 66 where Dowtherm G was a very strong contender. Also, Dowtherm G has no use history behind It; Thermlnol 66 Is a proven product In use for over 8 years in heat transfer. F. Research has begun a program to get a fluid with AIT above Thermlnol 66. Initial results look promising. Please on no account mention this to anyone outside Specialty Products at this time. We tell you this only to show that we still see a profitable business In heat transfer fluids down the road. G. Obviously in refilling Thermlnol FR systems with Thermlnol 55 or 66, we'll have much higher sales than anticipated in I?7'2 even if we retain only 75-80,i of existing FR systems. Con version costs and other costs related to biphenyl,terphenyl will be high In 1972, but we still think that heat transfer will continue to be "In the black" In 1972. How are we going to Implement withdrawal on Thermlnol FR? 1. A task force on heat transfer conversions has been estab lished. This task force Is expected to be in existence for the next 4 months or so. The organization cf the task force is attached. 2. Essentially we have augmented the talents of Jim Roder and Don Roush by getting 4 engineers on assignment. These are 0<i811<>7 I TOWOLDMONOQ58801 -3 - 1 the "practical" men who will communicate to customers by phone, letter and visit on how to convert PR systems and how to go to Thermlnol 55 or 66 If the customer decides they are the satisfactory replacements. 3. Paul Gann will co-ordinate all the activities involved in a project of this magnitude and will report to me. Paul will be based In St. Louis. His responsibilities Include: - Liaison with COP on orders for replacement fluids. ! - Liaison with distribution on T-55/T-66 needs. - Liaison with Sauget on incineration. - Accurate record keeping on each conversion. - Focal point for communications between customers, conversion team, field sales and product management. - Scheduling of conversion dates if T-55/T-66 refills are Involved. b. The ob.lect of the task force is to take all the workload of actual conversion off field sales. We will also take most of the load off you on customer notification. The reasons for this are as follows: A. About 80-85^ of unconverted Thermlnol FR customers have systems smaller than 2000 gallons. We feel your talents in selling will be more profitably utilised In going after other business than in taking the time needed to win 100-1000 gallon'systems over to T-55 and T-66. B. We don't want you to give up on heat transfer fluids but we would like you to allocate your heat transfer time to companies which routinely add new systems (e.g. PPG, Purex, Relchhold, etc.) or else to leads on new business. 5. We may need your assistance at key Monsanto accounts in negotiating the terms of conversions, etc. We will be in touch with regional managers on this. Rest assured, we'll keep you posted of our activities in your territories. 6. We attach the formal notification letter that will be mailed or hand carried to all existing Thermlnol FR users. Formal letters to non-key customers went out December 16, 1971 7. About 110 key Monsanto customers or big Thermlnol FR users will be given a more personalized notification: A. Cover letter attached to the formal letter explaining 1 where active conversion is underway or which locations of a multi-point user have been converted. (Dec. 17, 1971) (HtUlbB TOWOLDMONOQ58802 4- I B. By phone from St. Louis on December 17 to 20 with con firming formal letters mailed after the phone calls. C. By phone from St. Louis to alert the customer (Decem ber 17 to 20) and set up a visit between December 20 and January 7, 1972. (The letter would be hand carried.) 8. Please do not notify customers on your own. 9. Attached Is a sample of the fdrm the conversion team will use on each Thermlnol FR location. You will be sent a copy when a location In your territory has been "taken off" Thermlnol FR either to us or the competition. 10. The engineers will write reports on all field calls made and you will get copies. Questions from Customers We're sure your will get questions. We az-e sending you a set of typical questions we expect you will get and answers to them. It Is vitally Important that you stick to those answers. We expect to mall these questions to you in the next few days. Any ques tions not covered but with Important ramifications for Monsanto should be routed first to your regional manager. Please do not xerox any prepared questions and answers for cir culation to customers. Do not volunteer more Information than the customer asks. Tf you are asked to put anything on Monsanto's decisions and policies In writing, please clear first with the task force. Attention Regional Managers Please contact myself. Norm Johnson or Tom Gossage If you have any doubts. Conversion Terms Regional managers will get the guidelines the product group may use on the refill costs of Thermlnol 55 and Thermlnol 06 for Thermlnol FR conversions in the next few days. Please do not make any commitments on refill prices of Thermlnol 55 or 66 other than schedule without consulting Tom Gossage or myself. I suggest we use per gallon prices, not per pound prices on Thermlnol 66 when comparing it to Thermlnol FR. After all, we price Thermlnol 55 by the gallon in our price books. Further more, Thermlnol 66 costs considerably less per gallon than Ther- mlnol FR. So, If you or the product group are asked what the price of Thermlnol 66 is In 10 drum lots, the answer Is $3.17 per gallon FOB Anniston (usually cheaper freight as well for most customers) versus $4.22 per gallon (Thermlnol FR-Lo Temp) or $4.13 per gallon (Thermlnol FR-0 or $3.31 per gallon (Thermlnol FR-1). In addition to the lower initial cost, Thermlnol 66 048lU>9 TOWOLDMONOQ58803 5- - make-up costs will be 16-25$ less per year than Thermlnol F.H assuming both use the same amount of make-up per year. We attach per gallon pricing on all Thermlnol products. International Canada Notification will follow the U.S. pattern as quickly there after as practical. Other World Areas Action will be taken tlj-ough World Area Marketing Management In first quarter of 1972. Other Business Groups Since these decisions on PCBs and chlorinated terphenyls may have repercussions on other Business Groups, we are Informing them of the situation. This Is for Information purposes only as we don't want them to be surprised. Separate memos will . be sent to Regional Vice Presidents/Business Groups Directors and Directors of Marketing/Field S les Directors and Managers/ District Managers. A copy of the memo to the latter Is attached. COP/Future Orders of Thermlnol FR 1. No more orders of Thermlnol PR will be shipped to U.S. Domes tic customers for U.S. domestic use after December 15. Corporate Management has established very rigid guidelines for exceptions for a very limited time only. Your regional manager Is the person to apply to If you get involved In "extreme hardship" cases -- but, remember, we are trying to minimize your Involvement In FR conversions. Don't give customers any opportunity to feel exceptions will be made mighty few will be granted, If any! 2. One solution the conversion group may suggest where an Imme diate change-out is not possible is to top up with a drum or two of Thermlnol 66. This may enable medium-sized systems to keep going for another 1-2 months before conversion. This is a matter for a conversion engineer to Judge on a case-by case basis. 3. COP personnel will tell Thermlnol PR customers who call In that the products are on hold and someone will call back . that same day. COP will relay this to Paul Gann who will assign someone from the task force to contact the customer and decide on the course of action. COP personnel will not engage in "arguments" with customers on Thermlnol PR availability. The task froce will contact the customer that day as long as It is not a 5 p.m. Inquiry! 0481W0 4. A "hold" has been put on all warehouse stocks of Thermlnol FR until they can be shipped back to Sauget for disposal. 5. Some customers may ask you If you can tell them where they can get "make-up" FR from the inventory of some other cus tomers. Do not get involved in this at all. Returned Thermlnol FR 1. I We may establish "consolidation centers" at certain ware houses for the return of Thermlnol ER for disposal to minimise freight costs to Monsanto. We will work with Distribution on thl3. 2. Monsanto Is absorbing return freight and incineration costs on all Thermlnol FH fluid drained from systems after December 15. 1571. We hope we have covered most of the major points on a project of this kind. A VERY MERRY CHRISTMAN and A BUSY HEW YEAR. - C. Pnton P.S, We'll be nailing you a list of all customers who got our notification letter P.P.S. It may seem that if we are asking you not to participate in Thermlnol FR conversions, we are giving you a Ion; memo to read. The reason is that you will encounter custom,ers asking questions as you -c about getting new heat transfer business anti on other calls; we co want you to be informed about v:!\at are doing, but we don't want you to get over-involved on Thermlnol EH anymore. Let me hasten to add it is not because you are not capable in fact, there are those of us who may wish at times we could turn this over to your capable hands; C. Paton