Document gXXeny94aJyxkYdwea6mEoqJ
22670
Federal Register / Vol. 51, No. 119 /.Friday, June 20, 1986 / Rules and Regulations
Table 30.--Percentage Change in Profits the current industry practice of only
of Suppliers as a Result of the Revised producing asbestos gaskets '
Standard
intermittently. Thus, OSHA anticipates
Industry sector
Percent Change in
profit*
that many firms In this sector will choose to forego this investment and shift production entirely to the
Primary manufacturing:
A/C pipe........... --................... ............ A/C sheet......................... ......... .......... Friction material* Textile*....................................... ..... .... Flooring_______ __________________ Gaskets--- ---------------- --- ---------------Paper*........ ............ .............................. Coatings........... .................................
Plastics Secondary manufacturing:
A/C sheet............-....................... ........
1.9 -- 38.4 -11.5
-3.7 N/D -5.5 -3.4 -- N/O -1.4
2.5
manufacture of non-asbestos gaskets. This will concentrate the secondary manufacture of asbestos gaskets among fewer firms (289 firms currently compose this sector), each of which will have higher production levels and thus will be better able to afford the required capital expenditures.
Regulatory Flexibility. OSHA also
Friction materials........... ..................
Gasket*
-
____ ... ,,
Textiles...................... ..... ..... ....... .....
Plastic*
Auto renwxnaca/nng......................
-6.0 -23.2 -2.4 -2.5 -3.4
considered the differential impacts of the revised asbestos standard on small businesses in primary and secondary manufacturing. Primary A/C pipe, sheet,
N/D=Nol detectable.
textiles, floor tile, and friction products
Soutce: U.S. Department of Labor, OSHA, Office of Regu sectors, and the secondary friction
latory Analysis.
. products sector were omitted from this
Profits are projected to decline by approximately 11.5 percent for primary
analysis because they are characterized entirely.by medium and large firms. In
friction products and.by approximately addition, since secondary textiles and
38 percent for the primary asbestos-
plastics are predominantly comprised of
cement sheet producers. These.declines small firms. OSHA assumed that there
occur primarily because of a large reduction in demand for these products
will be no differential impacts in these sectors. Thus, OSHA's differential
by consumers, (i.ei, these products are
impact analysis focused on primary
associated with highly elastic demand
gaskets, paper, coatings and plastics,
curves due to the availability of
and secondary A/C sheet, gaskets, and
substitutes). For example. OSHA
automotive remanufacturing.
estimates that the costs to the
First, OSHA considered the relative
construction industry of using A/C sheet magnitude of the profit declines in each
would increase by about 40 percent as a sector (see Table 30). In those markets
result of the new standard. OSHA does where profitB do not decline
not anticipate, a major adverse impact ' significantly there will be no negative
on firms in these sectors, however,
impact, and thus, OSHA assumed that
because firms can switch to the
there, will also be ho significant
production of non-asbestos substitute
differential negative impact between
products. Firms currently producing A/C small and large firms. Based on this
sheet can shift some of their production analysis. OSHA determined that small
to the manufacture of products.auch as firms in the primary, asbestos coatings
glasB-reinforced cement sheet, calcium sector would assume a profit non-
silicate.cement sheet, and poly:
detectable decline, and that small firms
propylene-layered Cement sheet, and
in the secondary A/C sheet industry
firms currently producing asbestos
would assume an increase of 2.5 percent
friction products can switch to the
and therefore would not be at a
production'of non-asbestos-friclion
competitive disadvantage. This leaves
products.
primary gaskets and paper, and
A profirdeplirie of-23 percent is also
secondary, gaskets and automotive
projected for secondary gasket
remanufacturing as markets in which
manufacturers. This decline primarily - significant differential impacts might
results from the small volume of gaskets occur.
produced by.most firms in this sector
Next, OSHA compared the differences
relative to the projected compliance
in unit compliance costs between small
costs. Most firms in the secondary
firms and larger firms since a negative
asbestos gasket manufacturing sector
differential impact will obviously not
primarily produce non-asbestos gaskets occur in those markets in which there is
and only manufacture asbestos gaskets no significant difference in unit
on an intermittent basis. In order to
compliance costs. The difference in unit
comply with the requirements of the
compliance costs between small and
revised standard, firms in this sector
medium-sized producers of primary
would have to make major capital
. gaskets is only $0.0023 per pound. This '
investments in ventilation equipment. It represents only 0.274 percent of the
may be unprofitable for firms to pay for post-regulation price of primary gaskets.
this capital investment, however, given For primary paper, the difference in unit
compliance costs between small and medium-sized firms is'only $0.0021 per' pound, a differential representing only 0.214 percent Of the post-regulation price of primary paper. These are negligible differences.
In the automotive remanufacturing of asbestos-containing products, the compliance costs will increase the cost of production by less than 2 percent. Further, the difference in compliance costs per unit of output between small . and medium-sized automotive remanufacturing firms will be about $0.0322 per piece, which represents 1.312 percent of the post-regulation price. This case shows an extremely small differential impact oh small versus medium-sized automotive remanufacturing firms.
OSHA anticipates a significant negative differential impact on small firms in the secondary gasket manufacturing sector. The compliance costs per unit for small producers are well over twice those for the large producers, arid OSHA's model predicts a large (23.2 percent) decline in profits in the secondary gasket sector. Thus, most small secondary asbestos gasket producers will probably stop manufacturing asbestos gaskets and will shift production entirely to the manufacture of nori-asbestos gaskets. This will result in a concentration of production of secondary asbestos gaskets among medium and large firms which will be better able to afford the capital expenditures (for ventilation) required by the revised standard.
Service and Construction Industries
Economic Impacts. In order to analyze the economic impacts of the revised standard on the service and construction sector, OSHA employed a methodology similar to the one uSed in the CONSAD report [Exhibit 84-474, Chapter 5). Using this methodology, the impacts were based on estimates of the elasticity of demand for the goods and aervices.of the various sectors. In general^ OSHA determined that the demand in these sectors is inelastic, and' that firms in these sectors will be able to comply with the requirements of the revised standard by passing the compliance costs on to their customers,
The revised asbestos standard should have a negligible impact on firms in the service and construction industries because the estimated compliance costs are a minor percentage of the value of the object being produced or repaired. - This will allow costs to be passed on to the consumer. For example, it is unlikely that the additional cost of a spray can for brake repair will have a significant
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