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 GLEASON-000918