Document ypV69L8deqBmL8MGabJoXDK1D

TO: 146-1 A.; J. Faivo FROM: *147-5 C. Si. Howard, Jr. s EJECT: L'.S.G. 'S NON-ASBESTOS PROGRAM tf July 17, 1981 The attached Chronology of.Evencs leading to our current business position is offered to supplement and elucidate the following summary or che'oost time-consuming, cosc-affecting, ambitious undertaking in the.history of our business. BACKGROUND; U.S.C.'s joinery business was deeply involved in the 3 to 4 year craterfree ready mixed program when the asbestos issue begin to peak ... a program which brought a unique, saleaSlei-quality improvement in the product while increasing our ready mixed capacity by BOX at a relatively low investment cost . . . and while increasing our market share by 4 paints to 35-. A major program of implementing terra alba filler at significant cos: savings at 3 operacing planes was additionally demanding of Produce Management, Research, and Technical Service efforts. PROBLEMS: EXTERNAL A. ) Increasing government regulation and public concern over asbestos fiber as an alleged cancer producer. B. ) The subsequent threat of costly product liabilicy claims. C. ) The pocencial for a coscly competitive, non-asbestos breakthrough to our leadership position. D. ) The drywall mechanics who were generally unconcerned about the 1 threat, buc highly concerned that the product was noc changed. internal Research evidence that asbestos,,fiber was the most critical and irreplaceable ingredient in our products. OBJECTIVE: FIRST STAGE: Reformulate products, with at least equivalent quality, with' fiber content to meet increasingly louered government regulations, at acceptable costs. liM t SECOND STATE: Refomulace without any asbescos fiber while maintain ing performance properties regardless of cosc. THIRD STAGE: Refine the retomulaced products, while holding qual-icv, by reducing costs co acceptable levels. 0 UNITED STATES GYPSUM COMPANY COAL: To be che first producer co introduce a full line of asbestos-tree ' products nationally in order to preserve our nark.ec position, laadershio image, and role of concerned corporate citizen. --' ' TIMETABLE: All products converted to non-asbestos by July 1, 1976. RESt/uTS: ' TIMETABLE 1.) C.S.G. introduced ch.e 1st non--asbescos product co market -- a powder topping into CCPD - in 1972. 2.) U.S.G. completed conver*s4jCbo.jiationally June, 1976. RESEARCH COSTS SI.500.000 MARKET SHARE Fell from 352 to 24Z during che 1st two years of implementation. From 1976 to 1979 our 1. ?. moved co 32Z- an'8 pc. increase, which represents a nec sales penetration of 524,000,000. Further coved to 422 by April, 1981. COMMENT: If U.S.C. were producing the 1975 asbestos formulation today, che cosc penalty would amounc co $12,000,000 based on 1990 volume cc: 147-1 5147-5 R. P. Faust M. V. Cook )(> )i N/ Chronology of Internal anc External Events Effecting U.S.C. 's Non-Asbestos Program 1. 1967 -- Federal Register of Deoc. or .Labor published new Threshold Limit Value (TLV) allowing a maximum of 30 fibers of asbestos no greater chan 3 microns length per milliliter of air. 2. 1968 - New Yorker Magazine -Quoted findings'of Dr. Selikoff's research study at Me. Sinai Hospital of City University -of N.Y. contending chat asbestos causes mesothelioma or cancer of lung cavities. 3. 1968 - Wall St. Journal article featured asbestos as cancer inducing substance. 4. 1968 - First U.S.G. position leccer released co operating plants by G.R. Krug on Asbestos and Cancer. . 5. 1969 - Federal Regiscer published a reduced TLV of 12^ fibers. 6. 1969 - Meecing(s) with Price, Cushman, JCeth-and Mahin, our attorneys, re: their leccer urging U.S.G. co label its products so as to conform wich the Federal Hazardous Substances Act and Federal Packaging and Labeling Act. 7. 1969 - Meeting at Research where a Hazardous Materials Committee of seven members was formed. 8. 1970 - Company decision chac iabeLing uouLd be "hazardous co our sales" if U.S-C, moved first. ' 9- 1970 - State of Illinois and New York Cicy banned spraying of asbestos containing materials - the possibility of product liability' claims began co build as a'serious Company threat: A parade of state and municipal governments began legislating against asbestos. 10. 1970 - Attorney General of the Scace of Minnesota sene U.S.G. an Interrogatory regarding che shipping of asbestos containing product's into its Scace. 11. 1970 - The Occupational Safety and Health Act, under- che Department of Labor, was passed. The first regulatory body on-.TLV's. 12. 1971 (May) - Research manned che program co neec existing government codes/regula. uhile searching for asoescos replacement. Product Management was to be che key element coward closely guidine , encouraging, direccine/ redirecting, and scheduling-Research .eiforcs inco acceptable cinelv results chroughouc che next 7 years. 13. 1972 - National Institute for Occupational Safecy and Health: Raced asbescos as che numoer one hazardous oacerial; proposed warning labels on all containers-, job sices, etc. ; 14. 1972 - O.S.H.A. announced a reduction in asbestos fiber TLV to 5 fibers per cubic cencimeter o: air on an 8 hour-cire-weighced- average. 15. 1972 - U.S.G. Research programed co cesc all of its join: ccaoound formulations (approx 40); contracted with NATLSCO (Kemper Insurance Co. technical arm) to prove its results as an independent agency - also, co determine if package labelling was necessary. Yet government specified nd testing \ apparatus or procedure for determining che TLV. Our cesc results .supporce chat-all of our formulacions met know standards, except one. NATLSCO results supported that all our formulacions mec existing regulations. 16. 1972 - Company decision chat labelling was necessary and a program was completed for labelling joint compound and texture containers. ; 17. 1972 - Consumer Products Safety Act identified and released regulations on hazardous su'oscances, including asbestos. 18. 1972 - U.S.G. conducted first field tests on a non-asbestos formulation in CCPD with a powder copping compound. Subsequent trials proved accepca'ole,' and was released to market as XV copping, and not non-asbestos, in order co oa security (lead time) on our overall program. 19. 1973 - N. Y. Times Newspaper - Sunday Magazine Supplement - Expose on asbescps as a cancer producing agent. 20. 1973 - Mr. Watt appointed Ken Freeman ac Research, in conjunction wich Legal, to be che official responder on oucside inquiries regarding che asbestos fiber issue. 21. 1973 - First of many policy and position letters released by product management to che field on proper non-asbestos deportment with customers, etc. 22. 1973 - U.S.G. filed a pacenc on non-asbestos technology. Patent 03,891,453' was issued co Terry Williams on June 24, 1975. Reissued as 29,754 on August 16, 1977. U.S.C. VS. NATIONAL Sacional ____________ PATENT ACTIVITY FILED ' Februarv 2S, 197-3 ISSUED Seocember 23, 1975 *- o ~ United States Gypsum July 26, 1373 June 24, 1975 Zi ^ U.S.G. produced notebook evidence that :our"laboratory work, preceded the pacenc tile cate by l> years - also, preceded National's nocebook encry. 23. 1973 E.P.A. issued regulations regarding the discharging of pollucants such as asbestos fiber and mercury (chen a basic preservative) into air or water. Primarily affected our operating plants. 24 1974 Product Management compiled an Q.S.H.A. Guideline's Booklet and a cuescior. and answer white paper for release co the field in order co help our people handle che flood of inquiries from government agencies, trade faccc mass cedia, and interested 3rd parcies. Product Management was the pivotal resource position in all this. 25. 1977 Consumer-Produces Safety Commission'opened hearings on non-asbestos produces. John Bush read a prepared statement. 25. 1977 - Consuaer Produces Safety Cocaission proclaimed e'rtae asbescos containing pr: could noc be produced after January*15, 1978; none could be sold after June 15. 1978. This became che catalyse to help us redeem our coses/ losses in converting to non-asbestos and to launch major gains in market share. 27. 1978 - C.S.G. contracted vich Hilliard-Lvons Patent Management, Inc.', ; Louisville, Ky co make them exclusive agent under our non-asbestos pacenc. For selling them che patent, they would grant us a non-exclusive license for producing product co U..S.G. and ochers ... a capital gains device. The license with National Gyosua Co. currently appears fairly imaiaenc. n o 3