Document mkOLEmnVpybv5M90gdmZ8d44

RAi BE5TOS -/v i ANliATTAN, INC. UKnr.D States .sdestgs Drvisto.v Manhcir.' P.n. 175'5 E. P. Steel MA.4ACII September 3A 1969 ft Mr. Wm. S. Simpson BRIDGEPORT Messrs. Kennedy, Patterson ar.d myself visi'ed the Marshvilie plant of Johns-Manville on Sunday, September 2S. Representing Job: s-Manville were Messrs. Moreno, Vice President of Jchns-Manville, Gccdcil, Plant Manager of Karshville, and Young, Division Controller. A great deal of secrecy surrounded our visiting the plant, and the time in the plant was limited to about tv,-a hours due to persemei coming to work at various times throughout the day. The majority of the discussions were held at a nearby motel and much of the reported Information accumu .ated from key personnel during t^iat time. Attached to this summary is a report of our findings divided into seven areas of presentation - *1) Conclusions c.n production facilities. 5.) Recommendations on existing cloth and tape products. 3) Recommendations to produce Vee-Lck clot;. 4) .Estimated cost to Implement recommendations or. existing cloth and tape ar.d recommendations for the' production of Vee-lck clcth. 5) Summary of book values. 6) A summary of fringe benefits for salary and hourly employees. 7) A detailed discussion of the plant. Based on the information presented it is recommended that Hayisstos-Manrattan acquire the plant, if a reasonable price can be negotiated, In the preliminary discussions with Mr. Moreno he had indicated a price of Ml.2 mill icn, based cn a book value of approximately $1.1'million. A detailed analysis of t he bock value showed t.nat over $100,CCC of the Marshvilie book value actually was as sedated with equipment in the research facilities at Mar.ville. The true beck value of assets at Marshvilie is reduced as of tne end of 1962 to :7,CCO. 196? oepreciation the book value would be reduced to $862,765. During our discussions with Mr. Moreno I indicated that in view of the reduction ir. book value I felt th ere should be a corresponding reduction in the original asking price. Vr.ile in the pr"~rer,lim.ir.ary discussions he indicated he 'would not .consider dickering on price, I was pleasantly surprised tc find that on Sunday he war, willing to negotiate regarding t he selling price. I believe the facility can be purerased for about $1 million. Further discussions with Mr. Moreno resulted in a new approach in our thinking regarding the acquisition of this facility. This is due to the fact that Johns- "'nville would desire to remain in tne asbestos textile business from a sales stanc- -nt as long as had private brand supplier for their products, such as we could be. This is due to the fact that Johns-Manville have a built-in requirement for these textile products in their building materials operations. Through their lictributcr organizations ar.d their contracting firms they sell over $1 million orth of textiles a year in this arranro-ent . mh<-T .--1 ^ i te Q j ~ci* r'--- ------.tsupplying lor t.ncm. I As such, the bulk of that c;.rucity as it stands today couic _e used for sales, rather than for the production of Vee-Lck clothes e had originally anticipated. . Preliminary discussions again indicate that f ohr.s-Manville would be willing to purchase ^^`->ese textile products from us at a discount of 15/2 from the P./M list price. This would xlov us to return a reasonable profit on a private brand basis. They are willing to enter into a sales agreement with us, cither on a long term or short term basis, as our wishes may be. As such., we must consider the use of this facility on a dual basis, (1) for acquisition of their existing business which can be developed at a profitable level and, (2) as a source of additional Vec-Lok cloth for our operations. The reconroendations are broken into two groups} one showing what needs to be done for existing cloth and tape products, and, second, the necessary changes in the facility to produc e Vee-Lok cloth. As pointed out in the conclusions, the plant has good buildings, but the equipment, altho sound, is badly in need of repair and maintenance. There is an obvious need for asbestos textile manufacturing knowledge ar.d know-how. and good textile management, techniques and procedures. It is unbelievable to witness the inefficiency' that is prevalent in the facility. Obviously, they can tolerate an inefficient zanufacturing operation such as this because of the excellent built-in outlets they have in the marketplace for their products. I have indicated that this business could be profitable as private brand when sold at 15 below the R/M price. This profit can be achieved when efficient manufacturing operations are installed in the facility in line with the recommendations. It was felt the manufacturing costs at Marshviiie could be developed sc they would be no'higher than ^hose at Charleston. As such, I have used Charleston's manufacturing costs as a basis estimate what profit before taxes coin made on the Manville business. Assuming ! VJ w Division and the Johns-Manville account handled as a House account, on six S of C 1c t h ir. 12^1 to d3 W ' -- `*n different grades our profit before ; litv comparac -- GoSt. a year' .ir.e to accomplish all these phases. A good percentage of this expenditure is needed for maintenar.ee items that have been ignored in this facility. In erder to accomplish this program it would be necessary for Raybestos-Manhattan to have a high calibre asbestos textile man in charge of the operation as Plant Manager. I believe r.av uch a person available 'within our corporate organization. If the money is spent to improve the carding facilities, the addition of new speeders would be all that would be necessary to produce 50 rolls of Vec-Lok cloth a week. Vie vere receiving about cy per week from Charleston. As such, we could produce this volume of cloth for Vee-Lok and increase cur sales in the neighborhood of $1.5 million at a profitable level while operating this facility. Requirements for Vee-Lok cloth beyond the 50 rolls per week would require additional capital expenditures. However, there is sufficient floor space in the existing buildings for expansion. It is recommended that we proceed with the acquisition of this facility' in that we arc essentially buying the Johns-Mar.v lie asbestos textile business which will give us a volume increase of at least $1.5 lillion at a profitable level and, at the same time. acquire facilities that vri.ll provide Vee-Lck cloth for cur ov.n operations and an exist building for further expansion. Trained personnel is available and start-up expense;, rhould be limited to the inefficiencies in existence until such time as v;e could chxng focedures and equipment. Differences in fringe benefits are very nominal, for pension purposes is still being determined a V- The extent of past service liability the time of this writing. Z. P. S'tefl r Attachments