EPA-23D/l-74-03o
JULY 1974
ECONOMIC ANALYSIS
OF
PROPOSED EFFLUENT GUIDELINES
THE ASBESTOS PRODUCT
MANUFACTURING INDUSTRY
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Planning and Evaluation
Washington, D.C. 20460
3)
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ECONOMIC ANALYSIS
OF
PROPOSED EFFLUENT GUIDELINES
THE ASBESTOS PRODUCTS MANUFACTURING INDUSTRY
Report to
U.S. ENVIRONMENTAL PROTECTION AGENCY
July 1974
;,cj. Protection
'Vh^is 6060H
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This report has been reviewed by the EPA, and approved for publication.
Approval does not signify that the contents necessarily reflect the
views and policies of the Environmental Protection Agency, nor does
mention of trade names or commercial products constitute endorsement or
recommendation for use.
PPOTECTION AGENCY
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PREFACE
The attached document is a contractors' study prepared for the Office
of Planning and Evaluation of the Environmental Protection Agency ("EPA").
The purpose of the study is to analyze the economic impact which could re-
sult from the application of alternative effluent limitation guidelines
and standards of performance to be established under sections 304 (b) and
306 of the Federal Water Pollution Control Act, as amended.
The study supplements the technical study ("EPA Development Document")
supporting the issuance of proposed regulations under sections 304(b) and
306. The Development Document surveys existing and potential waste treat-
ment control methods and technology within particular industrial source
categories and supports promulgation of certain effluent limitation guide-
lines and standards of performance based upon an analysis of the feasibil-
ity of these guidelines and standards in accordance with the requirements
of sections 304(b) and 306 of the Act. Presented in the Development Docu-
ment are the investment and operating costs associated with various alterna-
""""* tive control and treatment technologies. The attached document supplements
Lied viability of affected plants, effects upon foreign trade and other
rxj competitive effects.
\TJ The study has been prepared with the supervision and review of the
;x Office of Planning and Evaluation of EPA. This report was submitted in
3 fulfillment of Contract No. 68-01-1541, Task Order No. 18, by Arthur D.
Little, Inc. Work was completed as of June 24, 1974.
This report is being released and circulated at approximately the
same time as publication in the Federal Register of a notice of proposed
rule making under sections 304(b) and 306 of the Act for the subject point
source category. The study has not been reviewed by EPA and is not an
official EPA publication. The study will be considered along with the in-
formation contained in the Development Document and any comments received
by EPA on either document before or during proposed rule making proceedings
necessary to establish final regulations. Prior to final promulgation of
regulations, the accompanying study shall have standing in any EPA pro-
ceeding or court proceeding only to the extent that it represents the
views of the contractor who studied the subject industry. It cannot be
cited, referenced, or represented in any respect in any such proceeding
as a statement of EPA's views regarding the subject industry.
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TABLE OF CONTENTS
Page
PREFACE 111
LIST OF TABLES vi
LIST OF FIGURES vi
EXECUTIVE SUMMARY vii
PART I: INDUSTRY STRUCTURE
A: ASBESTOS TEXTILES 1
A-l: MANUFACTURING PROCESS AND TECHNOLOGY 1
A-2: FIRMS 1
A-3: PLANTS 3
A-4: EMPLOYMENT 5
A-5: PRODUCTION 5
A-6: WATER UTILIZATION AND DISCHARGE 6
A-7: FINANCIAL PROFILE 6
1. Manufacturing Economics 6
2. Salvage Values of Assets and Constraints
on Financing Additional Capital Assets 7
A-8: PRICES 8
B: ASBESTOS FRICTION MATERIALS 10
8-1: MANUFACTURING PROCESSES AND TECHNOLOGIES 10
B-2: FIRMS 12
B-3: PRODUCTION 12
B-4: EMPLOYMENT 16
8-5: PLANTS 16
8-6: WATER UTILIZATION AND DISCHARGE 16
B-7: FINANCIAL PROFILE 16
1. Manufacturing Economics 16
2. Prices 18
C: ASBESTOS GASKETS, PACKING AND INSULATING MATERIALS 20
C-l: FIRMS 20
C-2: PLANTS 20
C-3: WATER UTILIZATION AND DISCHARGE 22
C-4: FINANCIAL PROFILE 22
1. Manufacturing Economics 22
2. Prices 23
iv
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TABLE OF CONTENTS (Continued)
PART II: EFFLUENT CONTROL COSTS
II-A: WATER UTILIZATION AND DISCHARGE 24
II-B: CURRENT EFFLUENT TREATMENT PRACTICES 25
II-C: PROPOSED EFFLUENT STANDARDS AND TREATMENT TECH
TECHNOLOGIES 26
II-D: EFFLUENT CONTROL COSTS 31
1. Capital Investments fof Representative Sources 31
2. Annual Costs for Representative Sources 31
3. Costs to Operating Plants 31
PART III: ECONOMIC IMPACT ANALYSIS
III-A: METHODOLOGY 36
III-B: ECONOMIC IMPACT ANALYSIS 37
1. Financial Impact 3^
2. Price Effects 39
3. Production, Employment, Community, and Other
Effects 41
4. Impacts of NSP Standards 41
5. General 41
PART IV: LIMITS OF ANALYSIS
LIMITS OF ANALYSIS 43
ASBESTOS TEXTILES MANUFACTURING: SUMMARY OF ECONOMIC
IMPACT 44
FRICTION MATERIALS MANUFACTURING: SUMMARY OF ECONOMIC
IMPACT 45
GASKETS/PACKING/SEALING DEVICES MANUFACTURING: SUMMARY
OF ECONOMIC IMPACT 46
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LIST OF TABLES
Table
No. Page
-^— — ^^— — t f~f ____
A-l U.S. Asbestos Textiles Manufacturing Firms and Plants 2
B-2 Trend in Value of Shipments of Asbestos Friction
Materials 11
B-3 U.S. Manufacturers of Asbestos-Bearing Friction Materials 13
B-4 Estimates of Distribution of 1973 Sales of Asbestos
Friction Materials by the Major Manufacturing Companies 15
C-5 Major U.S. Manufacturers of Asbestos Gaskets, Packings,
and Insulations 21
D-6 Description of Effluent Sources in Asbestos Products .
Manufacturing 25
D-7 Proposed Effluent Quality Standards for BPT, BAT, and
NSP Standards 27
D-8 Effluent Treatment Technologies for Attaining the
Proposed Standards 29
D-9 Effluent Generation Rates from Representative Source
Categories 30
0-10 Capital Investment Estimates for Effluent Source
Categories (Representative Sources) 32
D-11 Annual Costs for Representative Sources of Asbestos
Manufacturing Effluents 33
D-12 Cepitsl Investments Required by Effluent-Discharging
Plants 34
D-7 3 Annual Ccsts Incurred by Effluent-Discharging Plants 34
D-14 Annual Costs of Achieving BPT Standards as Function of
Sales of Relevant Products 38
D-15 Annual Costs of Achieving BAT Standards as Function of
Sa!"5s of Relevant ^roducts 38
0-16 Impact of Proposed Guidelines on Return on Investment 40
LIST OF FIGURES
Figure
No- Page
A-l Geographical Distribution of U.S. Asbestos Textile
Manufacturing Plants 4
B-2 Geographical Dispersion of U.S. Friction Materials
Plants 17
VI
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EXECUTIVE SUMMARY
The potential economic impact on the asbestos textiles, friction ma-
terials, and gaskets/packings/sealing devices segments of the asbestos
products manufacturing industry were assessed on the basis of effluent
treatment technologies and the corresponding incremental costs presented
in the relevant Draft Development Document for Proposed Effluent Limita-
tions Guidelines. A survey conducted by an EPA-sponsored contractor pur-
suant to the preparation of the above document identified only nine man-
ufacturing facilities in the above segments of the industries that gen-
erated any disposable effluents. Two of these plants are producers of as-
bestos textiles, one is involved in sheet gaskets manufacture, and six
plants manufacture friction products. Both textile plants discharge their
effluents into municipal sewer systems, and two of the friction products
plants have no discharge into surface waters. All four plants are ex-
cluded from consideration in this study since they are not covered by the
provisions of the proposed standards.
With respect to the "Best Practicable Technology" (BPT) standards,
only one sheet gaskets manufacturing plant is expected to incur additional
costs to comply with the guidelines. Its incremental capital expenditures
(1973 dollars) are projected to be $80,000, and its "annualized" water
treatment costs amount to $35,500. To meet the "Best Available Technol-
ogy" (BAT) standards, the above sheet gaskets and four friction materials
manufacturing plants are expected to incur total additional capital costs
of $632,900 and "annualized" water treatment costs of $139,200.
In assessing the potential economic impact of the standards, the pri-
mary determinant of impact severity was taken to be the ratio of the in-
cremental "annualized" costs incurred by an effluent-discharging plant as
a percentage of its estimated annual sales of the base products. A plant
was adjudged to be threatened with closure if the incremental annual ef-
fluent treatment costs approached the pre-tax profit margins derived for
the various subcategories, i.e.:
Asbestos textiles 5.8 percent
Friction materials 6.0 percent
Gaskets/packings/sealing devices . . 11.0 percent
On the basis of this criterion, none of the effluent-discharging
plants was judged to be in danger of production curtailment or plant
closure as a direct consequence of the proposed standards.
While it is recognized that there are competitive materials on the
horizon which could substitute for the subject asbestos products in cer-
tain specialized applications, and while it is further recognized that,
with respect to friction materials, the existence of large captive manu-
facturers (the automotive companies) may tend to dampen price increases
by the non-captive producers, it is nevertheless concluded that these
price-moderating factors will not deter the passing-on of additional
vii
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costs incurred by the industry segment due to the proposed standards.
Accordingly, a price increase on the order of 1 percent is deemed likely
in the friction materials sub-category as a result of the BAT standards.
No industry-wide price increases are expected to occur as a consequence
of the BPT standards.
Furthermore, no adverse impacts are expected on the production and
market growth of the various sub-categories. Similarly, the historical
balance of trades, with respect to the subject products, in favor of the
United States is expected to continue, unaffected by the proposed effluent
standards.
The "New Source Performance" (NSP) standards involve very minimal
additional capital expenditures to a proposed new plant. Accordingly,
these expenditures should not deter investments in new facilities, and
neither are they considered a significant adverse factor in any decision
regarding the preferential location (domestic versus foreign) of a new
plant.
VT11
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PART I: INDUSTRY STRUCTURE
A: ASBESTOS TEXTILES
B: ASBESTOS FRICTION MATERIALS
C: ASBESTOS GASKETS/PACKINGS/INSULATIONS
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A: ASBESTOS TEXTILES
Asbestos textiles include asbestos-bearing yarn, cord-, thread, cloth,
roving, Iap3 wick, ropes tapa, carded fibers, etc. It is estimated that
about 3 percent of the 1972 U.S. consumption of asbestos fibers,--a total
of 792,000 short tans.,—went to textile? manufacturing. Preliminary
1973 statistics indicate a total fiber consumption (for all purposes) of
8 to 10 percent above the 1972 level. Assuming a yearly escalation in
value of textilss shipments equivalent to about 8 percent (per year)
above the 1971 level of $38.2 mill ion, (which accounts for both price in-
flation and tha normal growth in business level), 1973 shipments could
then be prcdsctfid ?.t about $44.5 Kill lion. By comparison, 1967 and 1963
shipnsnt valwes noro 530,9 raillion and $26 Dillon, respectively. It is
probable ttet tlio ahove estimates sxclisde the value of interplant trans-
fers of textiles within the same corporate organization, where the trans-
ferred material undergoes additional processing for transformation Into
other finls^d products such as friction materials.
A-l: MANUFACTURING PROCESS AND TECHNOLOGY
Textiles raanyfacture generally begins with rallied fibers which are
delivered to vibrating screens where the fibers are removed and graded
by an air aspiration system. Either in a preliminary mixing process or
during carding tte separated fibers are blended with organic fibers such
as cotton rayon, which act as carriers and supporting agents for the
shorter asbestos fibers, thus improving their spinning characteristics.
The usual organic fiber content is batween 20 and 25 percent. The blended
fibers undergo an additional opening/cleaning process by the carding ma-
chine which combs the fibers into a parallel arrangement to form a co-
herent mat of material. Strips ars separated from the mat and mechani-
cally comprassed between oscillating surfaces into untwisted strands
which are then wound onto spindles to form the roving from which asbestos
textile yarn is made.
Through tha twisting and polling operations performed by a spinning
machine, the relatively weak roving is transformed into a stronger yarn.
Asbestos twine or cord is produced by twisting together two or more yarns
on a spinning frame. Braided textile products are manufactured on various
types of pr.ckistj arcc! ^raiding machines. Asbestos yarns are woven into
fabric on looms that opertts similarly to those that produce conventional
cloth cpod?.
A-2: FJ_RM5
Listed in Table A-l ara the major U.S. asbestos textile manufacturing
firms, their plant locations* and the estimated number of production em-
ployees involved in textiles manufacture at the respective plants.
The firms listed probably account for 95 percent of the nation's
shipments of asbastos textiles. Furthermore, the so-called "Big Three"
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TABLE A-l
U.S. ASBESTOS TEXTILES MANUFACTURING FIRMS AND PLANTS
Firm
Raybestos-Manhattan, Inc.
Southern Asbestos Company
Amatex Corporation
Uniroyal, Inc.
Un1royal Fiber & Textile Co.
Johns-Manville Corp.
Atlas Textile Co.
Asbestos Textile Co.
Asten-Hi 11 Mfg. Co.
Garlock, Inc.
Nicolet Industries, Inc.
TOTAL
Location
Mannheim, Pa.
Marshville, N.C.
N. Charleston, S.C.
Charlotte, N.C.
Bennettsville, S.C.
Meredith, N.H.
Norristown, Pa.
Hogansville, Ga.
Winnsboro, S.C.
Manville, N.J.
N. Wales, Pa.
N. Brookfield, Mass.
Philadelphia, Pa.
Palmyra, N.Y.
Ambler, Pa.
Estimated Number of
Production Employees1'
300
200
500
300
200
200
300
300
200
150
125
100
100
75
50
3,100
Contractor's Estimates
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of the in^?tr;v5"~Faybestos^anhattan, Inc., Southern Asbestos Company
(subsidiary of H.K. Porter, Inc.), and Amatax Corporation, are probably
responsibls for 75 to 80 percent.
Virtually all the firms listed in Table A-l munufacture other prod-
ucts in addition to textiles, For instance., Raybestos-Manhattan is in-
volved in seven business lines,--friction materials, engineered textiles,
rivets and rivet-setting machinery., rubber-covered rolls, packing and
sealing products, reinforced plastics, and bowling balls. For this firm,
asbestos textiles manufacture is usually an intermediate step in its
production of ZQXQ Unas of friction and engineered textile products.
In generel 9 it; can be stated that for most of the firms involved in as-
bestos tc-xVHa manufacture, this product contributes less than 25 percent
of the arm;sl business; furthermore, there are indications that this ratio
is declining KS the trend towards diversification into other more profit-
able non-.?,5r>estos products end manufacturing intensifies.
Wh"''ie most of the textile-producing firms utilize raw fiber not pro-
duced at f.beir own mines, three of the listed major firms are integrated
backvards to varying degrees into fiber mining and mining, and as such,
consume some captive"!y-produced fibers. Raybestos-Manhattan owns a par-
tial intorant (550,000 shares) in Cassiar Asbestos Corporation, Ltd., a
Canadian supplier of 1 one-length asbestos fiber, with annual fiber produc-
tion capacity of about HG,Q09 tons. H. K. Porter, the parent firm of
Southern Asbestos Company, owns about 75 percent of the common stock of
Pacific Asbestos Corporation, Coppsropolis, California, with a rated
fiber-producing capacity of about 50,000 tons per year, Johns-Manville
is the worlds largest producer of asbestos fiber, with mines in Canada
and California. Canadian Johns-Manville Company, Ltd., has a fiber-pro-
duction capacity of about 850,000 tons, and Coalinga Asbestos Corporation,
in which •Johns-Many?'!"!e owns 80 percent interest, is rated at about
15,000 tons of fiber per year.
A-3: PLArlTS
It can be observed from Table A-l that, in general, an asbestos tex-
tile plant is ssrall in comparison with other manufacturing facilities.
Of the 15 ^If.n'js 11 stod, orHy five are thought, to employ 300 or more pro-
duction workers, The remaining plants average only about 135 per plant,
Inclusive r-" other- salaried and supervisory/management personnel, an
average ?>,r!; vc-uU! etsoloy betv/een 200 and 250, with annual sales on the
order of 1-6.5 million.
Gecc^sphicaliy, all the major plants are located in the Northeastern,
Mid-Atlantic, and Southeastern states, (Figure A-l), with significant
clusters around the Philadelphia and Charlotte, N.C. areas. It can be
surmised that their market perimeters are similarly limited to these re-
gions, and shipments to the Western states are probably few and far be-
tween. The West is primarily a consumer of finished rather than inter-
mediate •'•}'*o<:!ucts s'ich as textiles.
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FIGURE A-l: GEOGRAPHICAL DISTRIBUTION OF U.S. ASBESTOS
TEXTILE MANUFACTURING PLANTS
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By all accounts, the asbestos textiles industry is very mature, most
of the operating plants being over 50 yeprs old, with equipments, machin-
ery, and technology of the same age. The Norristown, Pa. plant of Amatex,
the Ambler, Pa, plant of Nicolet Industries, Southern Asbestos Company at
Bennettsvilles S.C. and Raybestos-Manhattan at Marshville, N,C. are prob-
ably the youngest crop of plants, and they average over 25 years of age.
All things being equal, it is expected that very few, if any, new plants
will come on-stream in the next 5 to 10 years. Similarly, no major tech-
nological breakthrough is anticipated that would alter the general com-
plexion of the industry.
As indicated previously., a number of the major plants manufacture
textiles for captive consumption at the same plant or another plant within
the same corporate family. However, where such internal consumption occurs,
it is generally restricted to the manufacture of friction or packing ma-
terials. For instance, Southern Asbestos Company's facilities in
Charlotte, N.C. and Bennettsville, S.C. are sources of raw materials for
friction material plants in Huntington, Indiana and Richmond, Ky. Except
in cases of such internal consumption, most asbestos textile plants sell
their products to manufacturers of finished products that are resistant
to heat, fire, acids and mechanical abrasion.
A-4: EMPLOYMENT
Total employment in the asbestos textiles industry has been derived
from the basic data in Table A-lI, adjusted by a factor of about 1.3 to
account for salaried and supervisory/management employees. Total indus-
try employment is estimated at 4,000 to 4,500 with the following distri-
bution:
# of EmpJoyees/PIant # of Plants Total Employment Ira Range
Less tfean 150 5 585
150-299 5 1,235
300-500 5 2,210
Plants with 300 or more employees, while accounting for only 33 percent
of the manufacturing facilities, contribute about 55 percent of the in-
dustry employment, whereas the five smallest plants (33% of total number)
account for only about 15 percent.
A-5: PRODUCTION
The valua of 1973 shipments of asbestos textiles is estimated at
about $44.5 million. The following represent judicious estimates of its
breakdown by companies:
Raybestos-Manhattan, Inc. $13.4 million (30%)
Southern Asbestos Company $13.4 million (30%)
Amatex Corporation $8.0 million (18%)
Uniroyr.l $2.2 million (5%)
All others $7.5 million (2Q%)
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Thus, in terms of shipments, the four largest firms (operating 8 plants)
account for 83 percent, while the remaining 7 plants have an average
annual shipment of $1 million each in asbestos textiles.
A-6: WATER UTILIZATION AND DISCHARGE
Compared to most manufacturing operations, asbestos textiles produc-
tion involves relatively little water consumption. In fact, neglecting
sanitary waste water, the largest potential sources of water effluents
are the wet air pollution control devices, such as scrubbers, which are
employed in a limited number of plants to control dust emissions from the
plants to the atmosphere. Fortunately, wet scrubbing is becoming increas-
ingly superseded by fabric filtering devices which are considered superior
from a performance as well as environmental standpoint.
One of the few phases of textiles manufacture that involve signifi-
cant utilization and discharge of process water is in cloth finishing
(coating) operations where water-soluble coatings are involved.
The aggregate potential effluent discharge (sanitary, process, and
emissions control) from asbestos textiles manufacturing probably averages
about 250 gpd/ton of product, equivalent to an annual rate of about 5
million gallons for the entire industry.
Except for textile plants that are part of large multi-product fa-
cilities, whose composite effluents are treated within the plant premises
prior to discharge or recirculation, the usual industry practice is to
discharge most raw effluents, at some fee, into adjoining municipal sewer
systems for treatment. In such cases, the economics apparently do not
justify installation and operation of an independent water treatment sys-
tem.
A-7: FINANCIAL PROFILE
(1) Manufacturing Economics: It is recognized that the costs of
manufacturing in the asbestos textiles industry, as in most other manu-
facturing activities, would depend on, among other factors, the plant
size in question, its product mix (including non-textiles and non-
asbestos manufacturing), sources of raw materials, and corporate organi-
zational structure.
Recognizing but discounting the probable deviations from the norm
due to the above effects, the following synthetic financial balance is
postulated as probably representative of the 1973 experience of an "aver-
age" asbestos textiles manufacturing plant:
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TOTAL SHIPMENT - 5 million !bs.
REVENUE ' $6.65 million
COSTS:
Materials & Supplies $3.26 million
Labor It Maintenance 1.05 million
S.G.feA.* 1.75 million
Total Operating Costs .... $6.06 million $6.06 million
OPERATING MAR8IN $0.59 million
DEPRECIATION « AMORTIZATION $0.20 million
NET PRE-TAX MARGIN $0.3-9 million
Pre-Tax Margin as Percent of Sales 5.8 percent
TAXES (50%) $0.20 million
AFTER-TAX MARGIN $0.20 million
As Percent of Sales 3.0 percent
On the basis of the above estimates, It is apparent that raw materials
and labor contribute a high percentage of the cost of manufacturing as-
bestos textiles^ —71 percent. Secondly, since most plants and equip-
ments are over 25 years old, the depreciation allowance is low, --3 per-
cent of revenue. Thirdly, it is evident that asbestos textiles manufac-
turing is a low cash-flow low-profit enterprise, and any adverse economic
perturbation, (including higher labor and materials costs and the costs
of environmental control), which increases manufacturing costs by over
6% without a corresponding product price increase may threaten the sur-
vival of the industry.
(2) Salvage Values of Assets and Constraints on Financing Addi-
tional Capital Assets; The discussions 1n this section are gen-
eral in nature and are applicable to all three asbestos products segments
which for^ ths subject of this study. Accordingly, the Issues discussed
here will not be considered again in the friction materials and gaskets/
packings/ insulations sections.
^
There 1s littHe information available which could be directly and
meaningfully applied to the question of salvage values of assets in the
event of possible shut-down of facilities arising from the Incremental
pollution abatement investment and operating costs.
Some perspective on maximum possible salvage values of plant and
equipment per unit of production capacity may be obtained by examining
rr?d Administrative expenses, including corporate over-
head expanse-?™.
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census date en ret pUnt and equipment book value, updated and refined In
conjunction with actual company financial statements, including an allow-
ance for working capital tied up in individual plant operations. Prelimi-
nary indications are that salvage value would be on the order of 10-15% of
the value of shipment.
As for the constraints on financing additional capital assets, these
fall into several categories, namely managerial, financial, competitive,
and regulatory.
With respect to managerial constraints, it is management's task to
choose from among investment alternatives and to decide on the optimum
utilization of ths corporation's resources and borrowing power, and to
formulate and implement plans accordingly. The funds available to the
-corporation include, of course, its total cash generation, its borrowing
power, and ability to raise additional equity capital. The realistic
constraints here are tha costs of capita] vis-a-vis the expected rates
of return on its Investment.
With respect to financial constraints, a corporation's earnings and
cash flow are generally programed to meet dividend,reinvestment and
debt service requirements. Mhen external financing is required, there
are many considerations dictating the type and amount—e.g., existing
commitments which carry with them an obligation with respect to mainte-
nance of certain ratios.
Concerning competitive constraints, a process breakthrough which
significantly lowers production costs may dictate that capital invest-
ments be made defensively by competitors and offensively by the innova-
tive firm. If pollution costs are so onerous and if competitive market
conditions do not perait pass-on to customers or taxpayers, a firm may
elect not to spend the money, assuming it could achieve a greater return
elsewhere.
Finally, with respect to regulatory constraints, the financing of
additional capital assets may be, and usually is, influenced by tax laws,
particularly those regarding accelerated depreciation, depletion, and
foreign ownership versus tax considerations. Pollution control regula-
tions add a ne**f dimension.
A-8: PRICES
As discussed previously, the after-tax profit margin associated with
asbestos textiles production is only on the order of 3 percent of sales.
Such low margins may be due, in part, to the fact that textiles, for most
applications, are regarded as intermediate rather than final products with
the high value-added phase of fiber-to-product conversion still downstream
of the textile stage. Secondly, the advent of some man-made substitute
materials that are price-performance-competitive with asbestos textiles
in some of its applications has helped to restrain price escalations,
even in the face of rising materials and labor costs to the textiles
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manufacturers. Such Competitive materials include fiberglass, which is
available in the form of continuous filament at a cost quite comparable
to that of the better grades of spinning asbestos fiber.
Given the escalating raw materials costs now impacting the textiles
industry, and recognizing the industrial value of the products of this
industry, and the fact that the industry cannot afford to absorb future
cost increases, it is likely that such additional costs (which include
the cost of environmental quality control) will be passed-on to textiles
consumers. This assertion in no way contradicts the previously acknow-
ledged existence of potential substitute materials, in view of the fact
that the market appeal of these substitutes is presently very limited.
Moreover, current upward price pressures on both asbestos textiles and
the aforesaid potential substitutes have not changed the price-performance
factor in favor of the substitutes.
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B: ASBESTOS FRICTION MATERIALS
The friction materials segment of the asbestos manufacturing indus-
try includes products that find extensive use in the fields of transpor-
tation, mining, and heavy construction. Specific applications are of
drum, disc, outer jaw, and hand brakes, dry and oil-immersed clutches,
and facings for automatic transmission discs.
The various types of friction materials can be classified according
to structure and method of fabrication. Molded brake linings or clutch
facings encompass all products that are preformed under pressure in molds
or between rolls. Paper and millboard friction materials include plied
asbestos papers that are impregnated prior to or subsequent to plying and
asbestos papers that are formed from pulp to which friction compounds
have been added. Woven linings are constructed of resin-impregnated woven
asbestos fabrics that are hot-pressed or calendered and baked to form
linings.
Estimates by the U.S. Bureau of Mines and the Asbestos Information
Association of North America (AIA/NA) place the annual U.S. requirement
of asbestos fiber for this application at around 10 percent of the total
consumption,--equivalent to about 80,000 short tons in 1972. The recent
trend in the value of shipments of asbestos friction materials is shown
in Table B-2.
B-l: MANUFACTURING PROCESSES AND TECHNOLOGIES
Many materials, including some whose exact roles are regarded as pro-
prietary knowledge, are used in varying quantities in the manufacture of
friction materials. Dry processes normally begin in ribbon blenders
where bonding agents, metallic constituents, and asbestos fibers are mixed
for production of molded linings. The major binder is a "b" stage resin
that is thermoset when fully cured, but is also intermediately set in the
partially-cured condition. A uniform layer of the material is heated suf-
ficiently, under pressure, to cause the resin to flow and set but not be
fully cured. The resulting flat sheet is removed, cut into product-sized
segments, reheated to soften the resin, and formed to the proper arc by
cold molding. A final baking of the segments in compression molds at
1,000 to 4,000 psi to retain the shape converts the resin to a thermoset
or permanent condition.
In a variation of the wet-board process, wet-mixed molding materials
are usually combined in a blender from which the mixture is fed to a
paper machine where the material is placed in a preform which carries a
perforated metal screen on one side. When suction is applied to the
outside of the screen, solvent is removed and a deposit of the molding
mixture remains on the screen. This is then transferred to a revolving
cylinder, where it builds up to the desired product thickness. The de-
posit is removed from the cylinder, dried, cut into product-sized seg-
ments, saturated in a liquid binder, and either air-dried or oven-dried
to remove the solvents.
10
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TABLE B-2
TREND IN VALUE OF SHIPMENTS OF ASBESTOS FRICTION MATERIALS
Year Value of Shipments ($106)
1963 117.7
1967 144.4
1971 179.1
1972 181.6
1973 205*
*Preliminary
SOURCES: U.S. Bureau of the Census, AIA/NA, and Contractor's Estimates
11
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Woven brake "linings and clutch faces are made in several ways. One
method is to weave a heavy tape of desired width and in considerable
length, impregnate it with resins and other materials to impart the de-
sired frictional characteristics, and supply it in rolls to distributors
and users who can cut it to suit their requirements. Another method is
to weave the asbestos yarn into sheets of fabric up to a few feet wide
and of the desired thickness, impregnate the sheets, and fix the impreg-
nate by heat treatment and then slit the sheets into long strips of the
desired width which are then supplied to the trade in the form of rolls.
B-2: FIRMS
No reliable statistics are available regarding the number of firms
involved in asbestos friction materials manufacture. The larger firms
include not only the essentially captive producers such as the Delco-
Moraine and Inland Divisions of General Motors Corporation and The
Cycleweld Division of Chrysler Corporation, but also diversified indus-
trial product manufacturers such .as Raybestos-Manhattan, Inc. and Bendix
Corporation. In addition, several smaller, typically single-plant firms
manufacture friction products for both the original equipment and replace-
ment markets.
Table B-3 is a listing of the important firms in the industry, along
with their plant locations and the estimated number of production employ-
ees involved in friction materials manufacturing.
B-3: PRODUCTION
As shown in Table B-2, the 1973 value of domestic shipments of as-
bestos friction products was about $205 million, up about 13 percent from
the prior year. The estimated distribution of these sales among the major
manufacturers is depicted in Table 8-4, along with the percentages of
corporate sales represented by friction materials. Clearly, Raybestos-
Manhattan, Inc., with annual friction materials sales estimated at about
$115 million, is the industry leader. The exact order of the other major
producers is not so certain, but they are thought to be as follows:
Bendix Corporation
Delco-Moraine Division of General Motors
Corporation
Abex Corporation
H. K. Porter Company
Cycleweld Division of Chrysler Corporation
The above firms probably account for 90 to 95 percent of the total pro-
duction of friction products. This ratio is consistent with the histor-
ical pattern for the industry, which indicates that in the 1954 to 1967
period, the eight largest firms accounted for between 86 and 91 percent
of the industry's value of shipments. Furthermore, these historical data
suggest that about 99 percent of the shipments were usually made by the
20 largest companies.
12
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U.S. MANUFACTURERS OF ASBESTOS-BEARING FRICTION MATERIALS
Company
Raybestos-Manhattan, Inc.
Bendix Corporation
General Motors Corp.
Abex Corporation
H. K. Porter Co.
Chrysler Corporation
Borg Warner Corporation
Maremont Corporation
Carlisle Corporation
Forcee Mfg. Corporation
World Bestos Co.
Scandura, Inc.
Gatke Corporation
Mar Pro Corporation
Standee Industries
Auto Friction Corp.
Brassbestos Mfg. Corp.
Southern Friction
Material Co.
L. J. Miley Co.
Auto Specialties Mfg. Co.
Plant Location
Stratford, Conn.
Mannheim, Pa.
Crawfordsville, Ind.
Fullerton, Calif.
Troy, N.Y.
Cleveland, Tenn.
Delco-Moraine Div.
Dayton, Ohio
Inland Division
Dayton, Ohio
Cleveland, Ohio
Troy, Michigan
American Brakeblok Division
Winchester, Va.
Huntington, Indiana
Richmond, Ky.
Cycleweld Division
Trenton, Michigan
Spring Division
Be11wood, 111.
Grizzly Products Division
Paul ding, Ohio
Ridgeway, Pa.
Tappahannock, Va.
New Castle, Ind.
Charlotte, N.C.
Warsaw, Ind.
Grizzly Brake Division
Chicago, 111.
Houston, Texas
Lawrence, Ma.
Patterson, N.J.
Charlotte, N.C.
Chicago, 111.
St. Joseph, Mich.
Approximate Number of
Production Employees*
1,000
900
500
200
600
250
300
200
200
175
150
200
225
200
150
150
125
100
100
100
100
100
100
75
75
75
75
75
13
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TABLE B-3 CONTINUED
U.S. MANUFACTURERS OF ASBESTOS-BEARING FRICTION MATERIALS
Company
National Friction
Products Corp.
Reddaway Mfg. Co.
Molded Ind. Friction Corp.
Royal Ind. Brake
Products, Inc.
Lasco Brake Products Co.
California Blok Co.
MGM Brakes, Inc.
Wheeling Brake Block
Mfg. Co.
Baldwin-Ehnet Hill, Inc.
Thiokol Chemical Corp.
Plant Location
Logansport, Ind.
Newark, N.J.
Prattville, Ala.
Danville, Ky.
Oakland, Calif.
Gardena, Calif.
Cloverdale, Calif.
Bridgeport, Ohio
Trenton, N.J.
Trenton, N.J.
Approximate Number of
Production Employees*
70
50
50
50
50
50
50
40
40
30
Contractor's estimates of number employed in friction materials manufac-
ture in 1973.
14
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TABLE B-4
ESTIMATES OF DISTRIBUTION OF 1973 SALES OF ASBESTOS FRICTION MATERIALS
BY THE MAJOR MANUFACTURING COMPANIES
Estimated 1973 Sales* of Friction
Company Sales, $MM Materials, $MM
(all
Abex Corp.
Bendix Corp.
Del co-Morai ne/ Inl and
Divisions of
General Motors
H. K. Porter Co.
Raybestos-
Manhattan, Inc.
All others
TOTAL
products)
25
2,212
N/A
270
175
14
20+
33
20-25
16
115
24
228-233
% of Firm's
Total Sales
>80%
<2
N/A
6
66
N/A - Not Available
SOURCE: Contractor's estimates
*May differ from value of shipments as reported by the Bureau of the
Census due to differences in definition and reporting coverage.
15
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B-4: _EjjPLOvMEKT
About 77 percent of the estimated 7,000 production workers listed
in Tsbls 8-3 ^£ thought to be employed by the eight largest firms.
Again, this %:s quits consistent with the U.S. Bureau of the Census sta-
tistics indicating historical figures over 70 percent. Inclusive of sal-
aried and ether nianagemant personnel, the friction materials industry
probably eraplnys a total of about 9,100.
B-5: PLANTS
The average total number of employees per plant is on the order of
225, indicating that the typical friction materials manufacturing facil-
ity is re'atn"v2ly sn?al* In comparison with other industrial manufacturers.
Its annual r^l^nis would be valued at about $5.4 million, yielding an
average shfppsit par employee of about $24,000 per year.
As WQwTM bo sxpar.ted of a mature industry, most of the plants and
equipments are old., usually over forty years of age with the possible ex-
ception of ne^ar captive facilities belonging to the automobile manufac-
turers. Production processes have changed only marginally over the years,
and labor rather than capital intensity appears to be the norm in most
of the older plants.
Figure B~2 shows the geographical dispersion of friction materials
plants in the U.S. Not surprisingly, they tend to be concentrated in
and around the aajor metropolitan centers of the Northeast and the Mid-
wast, with a few plants located in California to primarily cater to the
needs of the automobile assembly plants in that part of the country..
B-6: WATER UTILIZATION AND DISCHARGE
To all Intents and purposes, the friction products industry may be
conceived as an essentially dry industry, generating no significant pro-
cess waste water. What water is generated is likely to be either of the
non-contact (cooling) typs, or sanitary waste water, or waste water from
wet particulars (dust) collection systems such as scrubbers. A few
plants may also generate waste water from solvent recovery operations.
Perhaps tf?~ nrfr>c1pls exceptions to these generalizations would
be those? ^srctn t"^: ?>r« Integrated backward into paper and millboard
friction porduct nanufsct'jrlng. However, such plants are more aptly con-
sidered as primarily paper and millboard producers and are therefore out-
side the sccpe rif the present consideration.
B-7: FINANCIAL PROFILE
(1) Manufacturing Economics: The following synthetic annual profit/
loss statement has been developed as probably applicable in 1973 to an
average friction materials manufacturing plant. In considering these
data, it is important to bear in mind that( the total revenue and the
16
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FIGURE B-2: GEOGRAPHICAL DISPERSION OF U.S. FRICTION MATERIALS PLANTS
-------
contribution of each cost item to the total manufacturing cost is a strong
function of the product mix and therefore the manufacturing practices of
a given plant. For instance, it is recognized that the proportion of
total cost due to materials and supplies would, of necessity, vary de-
pending on whether a plant's output is weighted in favor of woven as op-
posed to molded products, or brake linings rather than clutch and trans-
mission facings.
REVENUE
COSTS:
Materials & Supplies
Labor & Maintenance
S.G.&A.
Total Operating Costs
OPERATING MARGIN
DEPRECIATION & AMORTIZATION
NET PRE-TAX MARGIN
Pre-Tax Margin as Percent of Sales
TAXES (50%)
AFTER-TAX MARGIN
As Percent of Sales
(2) Prices:
$5.4 million
$2.59 million
$1.24 million
$1.08 million
$4.91 million
$4.91 minion
$0.49 million
$0.162 million
$0.328 million
6.0 percent
$0.164 million
$0.164 million
3.0 percent
The above balance suggests that there 1s relatively
little profit in the manufacture of friction products. In addition to
escalating materials and labor costs, there are important market factors
serving to moderate product prices. For instance, it might ordinarily
be expected that profitability would be much higher than indicated above,
especially since a high proportion of the demand for friction products
(75-90% for some plants, depending on product mix) goes to after-market,
rather than original equipment sales. This is not necessarily the case,
and it would appear that the profits are made by mark-ups at the next
higher (distributor and dealer) levels. Furthermore, the fact that major
automobile manufacturers are involved in the business could tend to estab-
lish a defacto price ceiling which independent producers would not ordi-
narily violate without jeopardizing their shares of the market.
In addition to the foregoing general considerations, sales of auto-
motive friction products are obviously dependent on Detroit product design
and OEM specifications, captive manufacturing vs. outside procurement
strategy, and, of late, federal transportation safety standards and regu-
lations. But these factors notwithstanding, it is believed that as long
as the demand for friction products remains strong, especially 1n the
18
-------
after-market sector, most manufacturers could conveniently pass-on cost
increases of the size associated with meeting effluent control guidelines.
19
-------
Asbestos has been widely used for several decades as a constituent
of gasketlng. (pointing) materials for joining non-moving parts, such as
pipeline flanges and valves and for various forms of packings In such ap-
plications as steals hydraulic and superheater systems where its high
temperature, hot pit and acid resistance, etc., are advantageous.
Figures published by the Asbestos Information Association of North
America (AIA/NA) show that the 1971 value of shipments of these products
and the asbestos tonnages consumed are as follows:
Gaskets and packings 25,000 tons $ 99.5 million
Insulation's 15,000 tons 40.9 million
$140.4 million
Apoarently, thes^ statistics are consistent with the 1967 Census of Man-
ufactures d&t'-i which showed the following breakdown of value of shipments:
Asbestos, asbestos-metallic, and
asbestos-rubber gaskets $ 62.1 million
Asbestos packing and insulations 63.2 minion
$125.3 million
The tempo of industrial activity, especially in the heavy mechanical
machinery and chemical manufacturing sectors, would suggest a growth rate
of about 3 to 5 percent per year in shipments of gaskets, packing, and in-
sulating materials. Accordingly, 1973 aggregate sales are placed at be-
tween $148 million and $155 million.
C-l: FIRMS
As with most other sectors of the asbestos products manufacturing
industry, no complete and reliable roster of the firms involved in manu-
facturing asbestos gaskets, packing, and Insulating materials is availa-
ble. Nevertheless, an incomplete list of some of the major manufacturers,
is presented 1n Table C-5 with the eight most important members listed
first, a? though not necessarily in order of size. It is estimated that
the?G parti c^ar flrns probably account for 55 to 65 percent of the total
produ
C-2: PLANT
The estimated staployment roster distribution of Table'C-5 suggests
that the average plant in this sector employs fewer than 100 production
employees. Inclusive of other salaried and management personnel, total
employment is about 110, although it should be noted that other manufac-
turing activities at a given plant (both asbestos- and non-asbestos-
related) generally tend to exaggerate the importance of the gaskets/
20
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TABLE C-5
MAJOR U.S. MANUFACTURERS OF ASBESTOS
GASKETS. PACKINGS. AND INSULATIONS
FIRM
Raybestos-Manhattan, Inc.
Nicolet Industries
Johns-Manville Corp.
Garlock, Inc.
Felt Products Mfg. Co.
McCord Corp.
Amatex Corp.
Gatke Corp.
Anchor Packing Co.
Velliimoid Division
Green, Tweed
Crane Packing
F. D. Farnum
Sterling Packing & Gasket Co.
Detroit Gasket & Mfg. Co.
A. W. Chesterton
Hercules Div. of Richardson
Corp.
Braiding & Packing Works of
America
Sacomo Packing Co.
Sepco
Quality Gasket & Mfg. Co.
Armstrong Cork Co.
TOTAL
LOCATION
Stratford, Conn.
Ambler, Pa.
Manville, N.J.
Palmyra, N.Y.
Skokie, 111.
Wyandotte, Mich.
Norristown, Pa.
Chicago, 111.
Philadelphia, Pa.
Worcester, Mass.
N. Wales, Pa.
Morton Grove, 111.
Lyons, 111.
Houston, Texas
Detroit, Mich.
Everett, Mass.
Alden, N.Y.
Brooklyn, N.Y.
San Francisco, Calif.
Birmingham, Ala.
Clawson, Mich.
Braintree, Mass.
ESTIMATED NUMBER OF
PRODUCTION EMPLOYEES*
150
150
150
125
105
100
100
100
75
75
75
75
75
75
50
50
50
50
50
40
35
30
1,785
Contractor's estimates.
21
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packings/insulations sector. Value of shipments per average plant is es-
timated at about $4.2 million.
Because the listing of Table C-5 is considered far from exhaustive,
representing only about 60% of the total shipments, any discussion of the
geographical dispresion of plants based on Table C-5 is apt to be mis-
leading. It can, however, be said that plants in this segment are concen-
trated in and around the major industrial centers.
C-3: WATER UTILIZATION AND DISCHARGE
Gaskets are conventionally manufactured by dry (non-water consuming)
processes. After opening and cleaning, the fibers are mixed with the cor-
rect proportion of rubber and other mineral ingredients to a dough-like
consistency and rolled out in calendars, where heat drives off the solvent
and the action of the rollers compounds the constituents into a homogen-
eous sheet. Woven asbestos gaskets are preferred in cases where soften-
ness and pliability are desirable. In such cases, they are woven from
yarn reinforced with fine brass wire and,(usually contain 10 to 20 percent
of organic fibers. The porous woven fabric is subsequently impregnated
with either rubber or plastic compounds.
Similarly, packings require no process water. Asbestos yarn is sim-
ply worked up into twisted or braided forms that are compressed into
rings or into cloth which is subsequently coated with rubber compound and
folded or bound into various forms of packing for high-pressure steam work.
C-4: FINANCIAL PROFILE
(1) Manufacturing Economics: Of the three major asbestos products-
manufacturing segments considered,—textiles, friction materials, and gas-
kets/packings/insulating materials,—indications are that the gaskets
group is probably the most economically profitable. The 1973 synthetic
profit/loss statement for an average plant is postulated as follows:
REVENUE $4.2 million
COSTS:
Materials & Supplies $1,676,000
Labor & Maintenance $890,000
S.G.&A. $1,040,000
OPERATING MARGIN $594,000
DEPRECIATION AMORTIZATION $126,000
NET INCOME BEFORE TAXES $468,000
Pre-Tax Margin as Percent of Sales 11 percent
TAXES (50%) $234,000
AFTER-TAX MARGIN $234,000
As Percent of Sales 5.5 percent
22
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The estimated after-tax margin of 5.5 percent of sales, in compari-
son with the lower margins indicated for friction materials and textiles,
is probably traceable to the high proportion of product sales that goes
to after-market applications in high-value equipment. Accordingly, de-
mand tends to be relatively price-insensitive, a factor which, under nor-
mal conditions should make cost pass-on easy to accomplish.
(2) Prices: In projecting future price trends, it is essential to
recognize the existence on the horizon of substitute non-asbestos mate-
rials whose price-performance posture might tend to improve as the price
of asbestos-based gasketing/insulating materials increases. Graphitic
packings, which are now used only in special applications, represent one
such example. Furthermore, over the last few years, there has been a
significant erosion of the braided seal packings market by mechanical
seals, especially in nuclear power pump applications. These factors not-
withstanding, it is thought that demand for asbestos gaskets/packing ma-
terials will continue to be brisk and at least commensurate with the level
of growth in industrial activity projected for the rest of this decade.
Accordingly, gaskets and insulating materials manufacturers should be able
to pass-on moderate cost increases which could be attributed to compliance
with the proposed effluent guidelines.
23
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II-A: HATER UTILIZATION AND DISCHARGE
Manufacture of the asbestos products which comprise the subject of
this study, - asbestos textiles, asbestos friction materials, and asbestos
gaskets, packing and insulating devices, - generally requires very little
consumption of process water. For example, the only significant Instances
of process water utilization in textile manufacturing are the addition of
moisture during weaving or braiding, and in the textile coating operations.
Only in the latter process is any waste water generated. In friction
products manufacturing, water is not a necessary process Ingredient and
is not directly used in manufacturing. Waste water may be generated in
a few friction materials plants as a consequence of solvent recovery op-
erations and 1n wet dust collection facilities used for air quality con-
trol in product finishing areas.
: However", the latter waste water source 1s decreasing in significance
as the popularity of dry dust collection units increases. As for gaskets/
packings/insulations manufacturing, little or no process water is gene-
rally involved. Sheet gasket manufacturing may, however, include cooling
and solvent recovery operations that generate waste waters.
Liquid effluent from asbestos textile coating generally results from
clean-up and dumping of unused coating materials at the end of a run.
Only two textile plants are known to generate such wastes, and in quanti-
ties not normally exceeding about 200 gallons per day. Both plants dis-
charge their wastes into adjoining municipal sewer systems. Furthermore,
one of these plants employs vapor absorption facilities for scrubbing sol-
vent fumes from its drying oven exhausts. Such units, which generally
use caustic soda solutions, are normally operated Intermittently (once or
twice a month) and require about 60,000 gallons of water per operation.
Solvent recovery effluents are known to be generated at only one
sheet gasketing plant and one friction products plant. Waste volumes
vary, depending on the type and size of equipment. The discharge is gen-
erally steady although not a direct function of the plant (asbestos ma-
terials) production rate. An effluent generation rate of about 10,000
gallons per day may be considered typical of such operations.
Wet dust collector effluent discharge rates generally range from
about 50,000 to 150,000 gallons per day for the asbestos products manu-
facturing industry. Four friction materials plants have been identified
as sources of such effluents;
In addition to the above sources of liquid effluents, there are two
known pilot-plant operations that employ the so-called "dispersion pro-
cesses" for asbestos yarn manufacturing and represent potential waste
water sources. These are not commercial operations and are therefore ex-
cluded from further consideration on the premise that the lack of data
relative to their potential commercial viability and effluent character-
istics precludes any reliable comments as to the potential Impact of the
proposed effluent standards on these plants when and 1f they achieve com-
mercialization.
24 I
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PART II: EFFLUENT CONTROL COSTS
-------
II-B: CURRENT EFFLUENT TREATMENT PRACTICES
The industry characterization section of this study indicated the
following approximate breakdown of plants involved in the manufacture of
the subject asbestos products:
- Textiles: 11 firms 15 plants
- Friction Materials: 30 firms 38 plants
- Gaskets, etc.: 22 firms 22 plants
Of these facilities, it is believed that only eight commercial-scale
plants could routinely discharge any liquid effluents from a total of 10
different sources. As shown in Table D-6, three of these sources are
ascribable to textiles manufacturing (representing 13% of the known plants
in this segment), one to sheet gaskets production (4% of the plants), and
the balance to friction materials fabrication (equivalent to 17% of the
plants). It should be observed also that one textiles plant and one fric-
tion materials plant have no water treatment facilities whatsoever; and
two of the friction products plants have zero discharge. The two textiles
plants (T-l & T-2) and a friction material plant (FM-5) discharge their
wastes into municipal sewer systems. For purposes of subsequent discus-
sion and analysis, zero discharge plants and plants using municipal sewers
(for which no effluent guidelines have yet been evolved) are removed from
further consideration.
TABLE D-6
DESCRIPTION OF EFFLUENT SOURCES IN ASBESTOS PRODUCTS MANUFACTURING
Plant
Code
T-l
T-2
Product
Textiles
Textiles
Effluent
Source
Coating
Coating and
Current
Treatment
None
Effluent
Discharge Point
Municipal sewer
S-l
FM-1
FM-2
FM-3
FM-4
FM-5
FM-6
SOURCE:
Sheet gaskets
Friction Materials
fume scrubber
Solvent recovery
Wet scrubber
Solvent recovery
Dust scrubber
Dust scrubber
Two-stage lagoon
Lagoon
Lagoon
Sedimentation
Two-stage lagoon
Lagoon
None
Lagoon
Chemical precip-
itation with
other wastes
Municipal sewer
Surface water
Zero discharge
Surface water
Surface water
Surface water
Municipal sewer
Zero discharge
Surface water
Draft Development Document for Proposed Effluent Limitations Guide-
lines and New Source Performance Standards for the Textile, Friction
Materials and Sealing Devices Segment of the Asbestos Manufacturing
Point Source Category.
25 ,
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II-C: PROPOSED EFFLUENT STANDARDS AND TREATMENT TECHNOLOGIES
In formicating the effluent treatment standards and treatment tech-
nologies applicable to the subject segments of the asbestos products man-
i"Tactur1~c -'nd-iGt^y, the Draft Developnent Document for Proposed Effluent
Llmitaticns Sidelines did not consider It meaningful to propose individ-
ual standards for the textiles, friction materials, and gaskets/packings/
insulations categories. Since the effluent characteristics are more a
function of product *inishinc and peripheral operations, rather than the
primary manufacturing acti»ities, a guidelines system based on these fin-
ishing and ns-ipboral processes was deemed more appropriate. Accordingly,
standard?, and mn^licaMe technologies were developed on tha basis of the
following unit operations:
- Coating or finishing of asbestos textiles
- Solvent recovery operations
- Vapor absorption (fume scrubbing)
- Wet dust collection
The proposed standards considered the chemical, physical, and bio-
logical characteristics of the effluents associated with each of the above
operations, including:
- Suspended solids
- pM
- Effluent temperature
- tMolcnical oxygen demand (BOD)
- Dissolved solids
- Heavy metals
- Phenols
- Nitrogen
- Phosphorous
- Hhemical oxygen demand (COD)
Suspended solid? and cherr.cal oxygon demand (COD) are probably the most
important par?:Pste>*s of asbestos products manufacturing effluents. The
proposed standards did not include suspended asbestos particles in the
list of important effluent parameters because it is not generally present
in the- wastes under consideration, except perhaps for the wet dust col-
lection category. Evr.n in this case, it is thought that the asbestos
fibers ere net f**eoly dispersed in the effluent, but are encased firmly
within tha dust particles and as such cannot be detected by normal micro-
scopic techniques. Furthermore, pollutants in other non-process wastes
such as non-contact cooling water, boiler blowdown, steam condensate,
and wastes from water treatment facilities, are specifically excluded.
Shewn r«i Tab!a D-7 are the effluent quality standards proposed under
the best practicable control technology (BPT), best available control
technology (BAT;, and new source performance (NSP) standard^ provisions
of the 1972 Federal Water Pollution Control Act Amendments. BPT and BAT
standards must be achieved by existing point sources by July 1, 1977,
and July 1, 1983 respectively. The new source standards apply to those
sources of warte water whose construction commenced after the publication
of those standards.
25
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TABLE D-7
PROPOSED EFFLUENT QUALITY STANDARDS FOR
BPT.** BAT. AND NSP STANDARDS
Waste Source
Discharged Effluent Standards*
COD (mg/1) Suspended j
Solids (mg/1)
I. BPT
II. BAT
III. NSP
Solvent recovery
Textile coating
Vapor absorption
Wet dust collection
Solvent recovery
Textile coating
Vapor absorption
Wet dust collection
Solvent recovery
Textile coating
Vapor absorption
Wet dust collection
50 30 6-9
Zero discharge of process wastes
Zero discharge of process wastes
Not applicable 30 6-9
5 5 6-9
Zero discharge of process waste
50 30 6 -
Zero discharge of process wastes
Not applicable
Not applicable
SOURCE; Draft Development Document for Proposed Effluent Limitations
Guidelines and New Source Performance Standards ror the textile,
Friction Materials and Sealing Devices segment ot the Asbestos"
Manufacturing Point Source Category.Sverdrup and Parcel and
Associates, Inc., St.Louis, Mo.: May 1974.
*Maximum average of daily values for any period of 30 consecutive days.
**BPT = Best practicable technology currently available;
BAT = Best available technology economically achievable;
NSP = New source performance standards.
27
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Table D-8 shows the technologies proposed for attainment of the above
standards. For textile coating effluents, the BPT and BAT standards can
bo achieved by containment of dumped and spilled coating materials and
by adeptly c* dry techniques for equipment, cleaning and other house-
leaping activities. All wa?te would be containerized for salvage, used
as a fuel substitute, or disposed in a controlled sanitary landfill. NSP
standards ira.y be attained by designing new facilities for containment of
all wastes.
Treatment of solvent recovery effluents for compliance with the BPT
e.nd NSP standards you Id involve, in sequence, cooling where necessary,
addition of supplemental nutrients, treatment by the extended aeration
version of the activated sludge process, ar.d disposal of excess sludge
in a KiuRicipal sewage treatment plant. A somewhat similar technology in-
volving cooling, addition of nutrients, and extended aeration is recom-
mended for attaining the BAT standards. In addition, the effluent from
the biological treatment process is subjected to activated carbon treat-
ment.
The control technology required to achieve the BPT and BAT standards
in the vapor absorption subcategory is fume incineration. This would in-
volve replacement of vapor absorption units with fume incinerators to
oxidize the vapors in air exhausted from the drying ovens. NSP standards
would require recovery of all vapor and fume emissions for reuse or as
fuel substitutes.
For the wet dust collection subcategory, sedimentation is the rec-
ommended technology for achieving the BPT standards. To meet the BAT
and MSP standards, it is recommended that in place of wet scrubbers,
baghouses, or other effective dry collection devices, should be adopted
for dsjst canted ourooses.
An inportsnt parcmater necessary for subsequent estimation of the
cost Q* meeting the proposed effluent standards is the representative ef-
fluent generation rate characteristic of each source subcategory. These
are shown In "^able D-9.
28
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TABLE D-8
EFFLUENT TREATMENT TECHNOLOGIES FOR
ATTAINING THE PROPOSED STANDARDS
STANDARD WASTE SOURCE
BPT* Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust Collection
Waste containerization for salvage, sub-
sequent fuel use, or landfill disposal.
Cool wastes (if necessary), add supple-
mental nutrients, and extended aeration
version of activated sludge process.
Fume incineration.
Sedimentation.
BAT* Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust Collection
Same as for BPT.
Same as for BPT, plus activated carbon
treatment of resulting effluent.
Same as BPT.
Replacement of wet scrubbers with bag-
houses or other dry collection devices.
NSP* Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust Collection
Original plant design for waste contain-
ment.
Either biological treatment (as for BPT),
or carbon absorption, or reverse osmosis.
Recovery for reuse (or as fuel substitute)
of all vapor or fume emissions.
Baghouse or other dry dust collection
devices.
SOURCE; Draft Development Document for Proposed Effluent Limitations
Guidelines and New Source Performance Standards for the Textile,
Friction Materials and Sealing Devices Segment of the Asbestos
Manufacturing Point Source Category.Sverdrup and Parcel and
Associates, Inc., St.Louis, Mo.: May 1974.
*BPT - Best practicable technology currently available;
BAT * Best available technology economically achievable;
_ NSP = New source performance standards.
29
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TABLE D-9
EFFLUENT GENERATION RATES FROM REPRESENTATIVE
SOURCE CATEGORIES
Source Category
Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust
Collection:
small
medium
large
Waste Discharge Rate
(gals./day)
200
10,000
60,000*
50,000
100,000
150,000
SOURCE: Draft Development Document for Proposed Effluent Limita-
tions""Guidelines and Hew Source Performance Standards for
the Textile, Friction Materials and Sealing Devices Segment
of the Asbestos Manufacturing Point Source Category.
Sverdrup and Parcel and Associates, Inc., St. Louis, Mo.:
May 1974.
*Total discharge per operating period (2 periods per month)
30
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II-D: EFFLUENT CONTROL COSTS
The basic cost estimates associated with meeting the BPT, BAT, and
NSP effluent standards by the asbestos products manufacturing industry
are taken from the Draft Development Document for Proposed Effluent Limi-
tations Guidelines for this industry. Effluent treatment cost estimates
were based on the premise that the only basic variable determining the
costs to each plant and effluent source was the volume of waste water gen-
erated. The age and size of the production facilities, level of implemen-
tation of in-plant control, and local non-water quality environmental fac-
tors were important only insofar as they might determine the volume of
generated effluents.
1. Capital Investments for Representative Sources: Table D-10 shows the
investment cost estimates for the various representative effluent sources.
Investment costs are defined as the capital expenditures required to
bring the effluent treatment or control technology into operation. They
include, as appropriate, the costs of excavation, concrete, mechanical
and electrical equipment installed, piping, engineering design services,
construction supervision and related costs. The costs of the control fa-
cilities were estimated on the basis of minimal space requirements. As
such, no additional land costs were included.
2. Annual Costs for Representative Sources: These costs are shown in
Table D-ll and include:
t Capital costs, calculated as 8% of the total
capital investment.
• Depreciation on a straight line basis, the
applicable duration being a function of the
treatment system involved.
• Operation and maintenance costs, which include
labor, materials, solid waste disposal, effluent
monitoring, administrative expenses, taxes, and
insurance.
• Energy and power costs estimated on the basis of
$0.025 per Kwh.
3. Costs to Operating Plants: The cost estimation methodology discussed
above was applied specifically to effluent-discharging plants in each
asbestos product sub-category, taking cognizance of each plant's existing
effluent treatment facilities (if any) and the volume of effluents gene-
rated. Zero-discharge facilities and plants discharging into municipal
sewer systems are excluded from consideration.
Tables D-12 and D-13 show respectively the capital investment and
annual costs incurred by the relevant effluent-discharging plants in
meeting the proposed standards. Since all the relevant friction materials
plants currently meet the BPT standards, only the gasket plant would incur
31
-------
TABLE D-10
CAPITAL INVESTMENT ESTIMATES FOR EFFLUENT
SOURCE CATEGORIES (REPRESENTATIVE SOURCES)
Effluent Source
Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust Collection: small
medium
large
Capital Investment (1971-$) to Satisfy;
BPT Standards
2,000
73,000
152,000
44,000
64,000
83,000
BAT Standards
(in addition
to BPT costs)
0
146,000
0
43,000
94,000
146,000
SOURCE; Draft Development Document for Proposed Effluent Limitations
Guidelines and New Source Performance Standards for the Textile.
Friction Materials and Sealing Devices Segment of the Asbestos"
Manufacturing Point Source Category.Sverdrup and Parcel and
Associates, Inc., St.Louts, Mo.: May 1974
32
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TABLE D-11
ANNUAL COSTS FOR REPRESENTATIVE SOURCES
OF ASBESTOS MANUFACTURING EFFLUENTS
Source Category
Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust Collection:
Small
Medium
Large
Cost Item
Capital
Depreciation
Operating & Maintenance
Energy & Power
TOTAL
Capital
Depreciation
Operating & Maintenance
Energy & Power
TOTAL
Capital
Depreciation
Operating & Maintenance
Energy & Power
TOTAL
Capital
Depreciation
Operating & Maintenance
Energy & Power
TOTAL
Capital
Depreciation
Operating & Maintenance
Energy & Power
TOTAL'
Capital
Depreciation
Operating & Maintenance
Energy & Power
TOTAL
Annual Costs (1971 $) to Satisfy:
BPT Standards BAT Standards
(In addition to
BPT costs)
8,360
5,900.
2,900*
12,500
11,000
32,300
12,200.
15,200'
1,800
16,800
46,000
32,700
11,700,
10,500*
20,600
1.000
43,800
3,500,
1 ,8004
7,700
4,000
17,000
5,100.
2,600*
12,000
5,200
24,900
6,600. •
3,3004
16,000
6,500
3,400
1 ,7003
4,300
0
9,400
7,500,
4,700J
6,100
0
18,300
11,700,,
7,3003
8,500
0
27,500
SOURCE: Draft Development Document (previously cited)
1
10-year depreciation period
14-year depreciation period
3-yea»
* 20-year depreciation period
25-year depreciation period
33
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TABLE D-12
CAPITAL INVESTMENTS REQUIRED BY EFFLUENT-DISCHARGING PLANTS
*
Plant Code
Capital Costs ($) To Meet:
BPT Standards BAT
S-1
m-?.
FM-3
• FM-4
FM-6
TOTAL
(1971 $)
73,000
0
0
0
0
73,000
Standards ( 1 ncremental )
(1973 $)* . (1971 $)
80,300
1 '0
- o
0
0
80,300
TABLE D-13
146,000
146,000
94,000
43,000
146,000
575,000
(1973 $)*
160,600
160,600
103,400
47,300
160,600
632,500
ANNUAL COSTS INCURRED BY EFFLUENT-DISCHARGING PLANTS
Plant Code
Annual Costs ($) To Meet:
BPT Standards BAT
S-1
FM-2
FM-3
FM-4
FM-6
TOTAL
SOURCE:
iliZUl
32,300
0
0
0
0
32,300
Draft Development
(1973 $)*
35,, 500
0
0
0
__JL_
35,500
%
Document, (previously
Standards
(1971 $)
43,800
27,500
18,300
9,400
27,500
126,500
cited) .
(incremental)
(1973 $)*
48,200
30,300
20,100
10,300
30,300
139,200
•
*T9T3TTgures assume an average cost escalation of 10 percent over 1971
34
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any capital and annual operating expenditures in meeting these standards.
As for the BAT standards, all the listed plants would incur some costs.
In the aggregate, capital investments for these segments of the as-
bestos manufacturing category would equal $80,300 to meet the BPT stan-
dards, pi us $632,500 to meet the BAT guidelines. As for annual costs,
these amount to $35,500 and $139,200 respectively (all figures in 1973
dollars).
35
-------
PART III: ECONOMIC IMPACT ANALYSIS
-------
III-A: METHODOLOGY
Previous anelysi.i of tho financial : TO Tiles of t:r ••-•>r-.'o'^ foment
of the ar-bestos products ra:iuf?ct'«r1r^- 1r-<-' •.'.".':-;' 3y~ ^r^ r/sr1 •>•: followi
profit margins (35 ? percentage of 5 ale:' ):
Pro-tsx A^tcr^ '**-''> v
Asbestos textiles 5.£? .7.^;;
Friction materials 5. OS C.C;
To a first approximation. it is a.?s;mri that t!ic.-r; fir • -"-.s ;;•*'• ^.prl
across the board to each iterri of the product, mix Ta.r!r? -::'•.":">-; ,-t - p]r,nt.
Thus, a textiles plant is assumed to realize an identic-;"! ir-irrin ^ 5.8
percent of sales on yarn, cord, rope, thread, tape, wicks, *p? «?riou:>
fabrics.
Furthermore, it ir» assumed that any ?J,dit;or,?" zr-s* f. •* ,"-:*z~-.c Auc to
the proposed effluent standards, which the manufacturer Cc,rr~t par. --on to
the customer and therefore must absorb, ultimately comes out of the above
profit margins. Clearly, as such cost increases approach zr,rl excc;d these
margins, the plent must make a determination as to the cr.oncT> ••'\-doro of
continued operation, taking account also of several other -r:ip-!neinci factors.
Indications are that, in genar?i, tho a.v^rag^ ;?rcntaM'ii \v 4n these
segments of the asbestos products manufacturing industry TL, "ow vr-^pa^d
with the returns achieved by other manufacturing industries. It is there-
fore reasoned, for purposes of this analysis, that any additional "-ate*"
treatment costs closely approaching the above ors-tax fii'""ginn wou'd in
general oresent a throat to th« contirued operation ov 4 P1a".'. <-••" product.
line. (Disr.us.iii ""^r, viuh 5 one vn^'.^try ^ourc»r< r.^pfrif-1"; ;«^rr;-,ps en oven
greater nonsltivity t-::.n this for r.'.l product Vines), "h'jr. . •''.""• f'-^'ction
material fscilitiss, if the projected additional anr.y?,'' -^.t-,'- tr "=?,-' "lent
costs necessary to meot any of the proposed standards '-pprcs-h 6«G ?e^-
cent of a plant's value of sales of friction materials, that plant's con-
tins^sd production of thess products would be recorded re jor,.vrd-f^c.
In those plants whare the watar treatment costs cannot be easily .-nd
directly attributed to a given product line or operation tlT-r-a c:sts
are assigned uniformly to all of the plant's products. Thus, -in such cir-
cumstances. the additional costs associated with trentinor.t of solvent re-
covery, vapor absorption, and wet dust collection effluents are distributed
equally among all th« products manufactured at those plr.r.tc .
Tables D-14 end u->15 present estimates of th.; ay^ra^c ?."nuo,1 "ilje of
sales of the basa products ?.t the ror.psctivn s^fluent-d^.ch^rrin',, p'ants,
as well as a representation of the additional annual costs (as P pe^crn-
tage of these sales) of meeting the BPT and BAT standards «"srpRCt'vely.
As indicatad in Tablo D-13, water treatment costs, -'n I'll". Hdl-^s, are
derivod by escftlatlon of the 19"'l costs by 10 pe^ce^t '''•(• rr.*"'!cct cost in-
flation bf!':;vv2.:n "071 end "9
36
-------
To ascertain and isolate specific financial impacts, one would ideally
wish to examine the expected profitability of present or "baseline" ope-
rations versus that projected under BPT and BAT, other conditions initially
held constant. One would also wish to compare the required capital ex-
penditures with the cash flows available, and compare the ordinary capi-
tal investment which would be expected to be made over the same period
with the expenditures made to meet BPT and BAT standards.
Additionally, one would then wish to examine the results in the con-
text and from the perspective of each company's total business.
An effort was made to examine the various plant situations from these
standpoints, to the extent that data and information were available. This
examination included estimates of both operating margin and return on in-
vestment effects, as cross checks on the findings.
III-B: ECONOMIC IMPACT ANALYSIS
(1) Financial Impact: The indications are that if any plants would
be significantly impacted, it would probably be plants FM-2, and/or
S-l. Such impacts would be only in respect to BAT standards, which im-
plies that the time frame for capital expenditure is, approximately, 1980-
1983, and the accounting for annual charges related to BAT would be post-
1980.
To put this in some perspective at the plant level, the estimated
incremental annual costs for these plants are on the order of $30,000-
$48,000 per year, in 1973 dollar terms; and each plant has 100 or more
employees and annual pre-tax operating earnings estimated to significantly
exceed one hundred thousand dollars. Indications are that other things
being equal the diminution of earnings, given present sales and earnings
levels, could be in the range of 7 to 21 percent for these plants.
However, assuming pre-tax profit margins in the range of 5 to 12 percent,
Indications are that the earnings diminution could be offset by very
minor price Increases (less than 2 percent). Moreover, the Impact will
be lower to the extent that there is real growth in the business Into the
1980's since the level of earnings (in constant dollar terms) would be
higher.
It is believed that the additional capital expenditure required to
achieve the BAT standards at these plants would represent a minor portion
of the existing investment; furthermore, indications are that the rate of
expenditure in general will not be large in comparison with normal pat-
terns.
On the basis of the estimates in Tables D-14 and 0-15 and impact se-
verity criteria set forth in Section III-A (I.e., costs should not too
closely approach margin of sales), none of the discharging plants is re-
garded as being in danger of curtailing Or terminating operations as a
direct result of the proposed effluent limitation guidelines.
37
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TABLE D-14
ANNUAL COSTS OF ACHIEVING BPT STANDARDS AS A
FUNCTION OF SALES OF RELEVANT
Estimated Average
Annual Sales* of
Plant Base Product Hasa Products
; •• (in trillions)
0?73J)
S-l Sheet Gaskets 5.0
FM-2 Friction Materials 2.4
FM-3 " " 3.6
FM-4 " " 1.7
FM-6 " " 60.0
TABLE D-15
PRODUCTS
Additional Costs
to Me@t BPT
Standards
U973JJL
$35,500
0
0
0
0
Costs
(1973$) as
% of Sales
0.7
0
0
0
0
ANNUAL COSTS OF ACHIEVING BAT STANDARDS AS A
FUNCTION OF SALES OF RELEVANT
Estimated Average
Annual Sales* of
Plant Base Products Base Products
(in mi SI ions)
(1973$)
S-l Sheet Gaskets 5.0
FM-2 Friction Materials 2.4
FM-3 " " 3.6
FH-4 " " 1.7
FM-6 " " 60-0
SOURCE: Company and Trade Reports and Contract
!
PRODUCTS
Additional Costs
to Meet BAT
Standards
(1973$)
$48,200
30,300
20,100
10,300
30,300
ar's Estimates.
Costs
(1973$) as
% of Sales
1.0
1.3
0.6
0.6
0.05
*In cases where products are consumed captiyely, estimates reflect internal
transfer prices.
38
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Table D-16 presents a summary in terms of estimated Impact on return
on investment, given the data available. The indications are that there
is likely to be little financial impact from the proposed standards.
(2) Price Effects: On the basis of discussions with asbestos pro-
ducts manufacturers and other followers of the industry, there appear to
be no legal or market constraints in the way of passing-on to the consumer
cost increases of the magnitudes estimated as attributable to the proposed
standards (maxima of 0.7 percent and 1.3 percent of sales to meet the BPT
and BAT standards respectively).
It is reasoned that the industry segments will not be disposed to ab-
sorb these added costs in the face of other margin-depleting costs, such
as those for energy, and given the already low after-tax margins realized.
Accordingly, a price increase on the order of one percent may be imposed
without serious customer resistance by the one gaskets plants incurring
additional expenses to meet the BPT guidelines (Table D-14). But since
no industry-wide follow-the-leader price increases are expected to ma-
terialize from this limited price action, the price effect of the BPT
standards are projected to be nil. As for the BAT standards, since more
friction materials plants must expend funds to comply with the guidelines
(Table D-15), it is estimated that an industry-wide price rise on the
order of 1.0 percent (for friction materials only) could occur as a result
of these standards Other asbestos products segments should witness no
price increases.
Additional justification for the original contention that no serious
constraints to increased cost pass-on exist may be obtained from the fact
that the asbestos products in question are in fact specialty items, con-
sumed in most cases by industries for whom the cost of asbestos products
constitutes a very low percentage of the manufacturing cost of their end-
products. In other markets, (e.g., the aftermiarket sale of friction pro-
ducts), sales of asbestos products are relatively insensitive to price
increases in the order of 1 percent.
Another factor which often tends to discourage price increases is
the availability of imports and/or substitute products. Regarding imports,
the U.S. traditionally has been a net exporter of .asbestos products, as
illustrated by the following statistics for 1973:
Product Value of Imports Value of Exports
Gaskets , Negligible $ 1,442,446
Packing " 9,040,541
Heat or Sound Insulation " 2,850,444
Textiles & Yarns $5,584,866 6,454,182
Clutch Facings & Linings Negligible 1,870,055
Brake Linings H_ 7.862.805
TOTAL About $6,000,000 $29,500,000
39
-------
TABLE D-16
If'3ACT 0~ P^OS
OM 3E7UPJ)
Plant
S-l
FM-2
FM-,3
FM-4
FM-6
Plant
Investment
for Asbestos
Products s
Range ($KM)
n.,.3
0.7 -1.4
0.9 - 1.4
0.5 - 1.0
18.0 -30. Q
Average and
Mew invest- Range of
"lent for ROI for
BAT as % for "otal
of Current Corpor?-
Range (%} ROI (%)2
n.a. n.a
11 - 23 n.a.
7-11 9 + 100%
5-9 7 i 40%
0.5 - ] 7 i 50%
Range of Rotwr-
^or Arbos^r. r't
Baseline Br'i
n.a. n.a.
n.a. n,a.
8-12 8-12
5-10 B-10
6-10 6-^0
1 op
rrfucto
<§.
n.a.
n.a.
7-10
4- 8
6-10
Basis:
Notes:
Recent Industry supply-demand and pricing environment, present ope-
rating standards with respect to other than the guidelines under
study.
1P1c.nt '"nvestront ar^ vorVfnf" capital associated with rc'^'ant as-
bestos products rnanufa
2Average of the annual aftsr-tax earnings divided by stockholders'
equity at beginning of the year for the last five years. Variabi
lity expressed as e. percentage around the average value. F7';;vros
roundsd .
3"n.a." denotes data for meaningful estimates not available.
SOURCE: The information presented above represents contractor estimates
derived in part from Information presented in comp&r,y reports,
SEC filings 9 statistical services, Industry studies, and other
sources believed reliable. The accuracy and completeness of such
sources and information are not guaranteed.
40
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The aggregate statistics clearly suggest that import volumes are not suf-
ficiently high as to deter justifiable cost pass-through to the domestic
asbestos products consumers. Even in the textiles category where imports
nearly equal exports, the supply/demand balance is such that domestic con-
sumers are not expected to resist payment of price increases of the order
of one percent. As for substitute products, no currently available substi-
tutes enjoy the price-performance advantage of the asbestos products in
each of the applications under consideration. For instance, graphitic pack-
ings and mechanical seals have only succeeded in capturing smeT highly-
specialized segments of the packing/sealing devices markets.
(3) Production, Employment, Community, and Other Effects: Since,
as stated before, production curtailments and plant closures are not ex-
pected to occur as a direct consequence of the proposed effluent quality
standards and since it is believed that additional costs incurred as a
result of the BPT and BAT standards can be readily recouped by passing
them on to product consumers in the form of higher prices, it is there-
fore concluded that there will be no direct impact (of these standards)
on the production and market growth of the subject asbestos products.
Accordingly, no adverse employment and community effects will result,
and, other things being equal, the United States' favorable balance of
trades position with respect to manufactured asbestos products should con-
tinue for the foreseeable future.
(4) Impacts of NSP Standards: As shown in Table D-8, new plants
to which the NSP Standards are applicable will be designed, in most cases,
on the principles of zero effluent discharge, achievable by either total
waste containment, recovery, or use of dry dust collection systems. Only
in the instance of solvent recovery operations are any treatable effluents
expected, and for such operations, the effluent standards applicable are
similar to those proposed as achievable by 1977 (BPT).
The above considerations, supplemented by the judgement that a no-
discharge design philosophy (for new plants) will not significantly add
to the initial and/or operating costs of a new plant, lead to the con-
clusion that there will be zero impact of the NSP Standards on new plant
construction (and therefore, industry growth), product prices, plant lo-
cation perferences (domestic versus overseas), and the national balance
of payments posture. In other words, the costs associated with the minor
manufacturing flowscheme redesign or waste handling and treatment altern-
atives called for in these standards will not act as a deterrent to the
construction of new plant capacities for the subject asbestos products;
neither will the standards, of themselves, be a significant constraint
that could force a prospective plant to be preferentially located outside
the United States.
(5) General: It should be stressed that, in arriving at the above
conclusions with respect to the potential impacts of the proposed effluent
guidelines only the direct effects of these guidelines have been taken
into consideration. It should be recognized that the subject segments
41
-------
of the asbestos products industry are concurrently being impacted by
other factors including economics (e.g. escalating energy, materials,
and labor costs), other governmental regulations (air pollution, health
and safety}, and social and public relations factors. Thus, whereas
lhc; incronantal costs of meeting the effluent limitations guidelines may
be of rcinor significance by themselves, the combination of all the above
factors may, in fact, produce the adverse impacts that are not antici-
pated if only the effluent guidelines were in effect.
42
-------
PART IV: LIMITS OF ANALYSIS
-------
LIMITS OF ANALYSIS
The above estimates of the potential economic impact of the proposed
BPT, BAT, and NSP effluent standards for the asbestos textiles, friction
materials, and gaskets/packings/sealing devices segments of the asbestos
products manufacturing industry are predicated on basic technology and
cost estimates contained in the Draft Development Document for Proposed
Effluent Limitations Guidelines for these segments. Accordingly, the
analysis contained herein is accurate only to the extent that the
document truly reflects the efficacy of the proposed technol-
ogies, as well as their associated costs. No effort has been made by
this contractor to independently verify the data.
Additionally, the list of effluent-discharging plants in these sub-
categories (which is the basis for aggregate cost estimates) is taken from
the said document and has not been independently verified.
It should be indicated that while the methodology of impact assess-
ment adopted in this study is judged to be meaningful for identifying
impact-sensitive facilities, the final decision to curtail or discontinue
operations at a given plant is governed by a number of interacting factors.
No actual financial data for specific plants were made available for this
study, and hence the analysis of financial impact is based on necessarily
imprecise estimates. While additional water treatment costs may, on the
surface, appear as manageable additional burdens in light of a given
plant's apparent sales volume and profit margin, the decision to continue,
curtail, or terminate operations is generally made in light of corporate
goals and expectations, present and future market conditions, etc.
/
Finally, as alluded to 1n prior discussion, the judgment 1n this
study regarding the probable impact of the proposed effluent limitation
guidelines has not taken into account the often concurrent and reinforcing
effects of other legislations and governmental controls (specifically,
air pollution, occupational health and safety, etc.) which, with the addi-
tional water treatment costs, may create a "last straw" effect, even
though the water treatment costs may, by themselves, be negligible.
43
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ASBESTOS TEXTILES MANUFACTURING: SUMMARY
OF ECONOMIC IMPACT
".nc'j'st-" - Asb^rtes Products Manufacturing
SIC Cod- - 3292
•'/ n"ants in segment - 15 plants
f, Tou~1 pltrts in industry - 20 percent
•' ^c.r:':s c'-rect discharging - None
% ">£:;" D?ar«t.% ~n seament - 0
* Plants with BDT treatment in place - 15 plants
% Tot?,] plants in segment - 100 percent
:OST OF POLLUTION ABATEMENT
BPT BAT
Capital costs for segment
Total capital cost 0 0
Iotas capital expenditures
as % o* average annual
investment 0 0
Tot?.!1 capital expenditures
55 % of total capital in
place 0 0
costs for segment
Tr^ta' Incremental increase
sTr.~vr*~.a capital charges 0 0
"a';?.' ^crc^sntal increase
axc'i'cJins capital charges 0 0
Total incremental increase
including capital charges
r.s % o^ sa'es 0 0
HXPF.CTED "R:CF, INCREASE
Expcctsc! increase due to
pollution control , None None
PLANT CLOSURES
Tote1 /:cs vires anticipated None None
% reduction of segm«;nt capacity
due to closures 0 °
EMPLOYMENT
Tote" >? of employees affected 0 0
% o" tctr":! employees in segment 0 0
OO^1 '":,"" "-"-ICTS | None
IM-AC™ 0?\ :7:D!.?".TRV GROWTH ' None None
BALANCE OF TRADE EFFECTS None None
44
-------
FRICTION MATERIALS MANUFACTURING:
OF ECONOMIC IMPACT
SUMMARY
BPT
Industry - Asbestos Products Manufacturing
SIC Code - 3292
#Plants in segment - 38 plants
XTotal plants in industry - 51 percent
#Plants direct discharging - 4 plants
%Total plants in segment - 11 percent
#Plants with BPT treatment in place - 38 plants
%Total plants in segment - 100 percent
COST OF POLLUTION ABATEMENT
Capital costs for segment
Total capital cost 7 0
Total capital expenditures as
% of average annual investment ... o
Total capital expenditures as
% of total capital in place o
Annualized costs for segment
Total incremental increase
including capital charges o
Total incremental increase
excluding capital charges o
Total incremental increase
including capital charges
as % of sales 0
EXPECTED PRICE INCREASE
Expected increase due to
pollution control 0
PLANT CLOSURES
Total closures anticipated None
% reduction of segment capacity
due to closures 0
EMPLOYMENT
Total # of employees affected None
% of total employees in segment 0
COMMUNITY EFFECTS None
IMPACT ON INDUSTRY GROWTH None
BALANCE OF TRADE EFFECTS None
. BAT
$471,900
7.4 percent*
< 1 percent
$91,000
$83,720
0.04 percent
About 1 percent
None
0
None
0
None
None
None
*Based in part on the average New capital expenditure-to-value of ship-
ments ratio for SIC 3292 in the 1958-67 period (U.S. Bureau of the Census)
45
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i'^FJSyPACKI NG,^EAl JNG .DEVICES MANUFACT!JR I m •
Irdustry - Asbestos Products Manufacturing
SIC Code - 3293
i;-'.J-;r:t3 -in segment - 22 plant,-,
",Fc ';.-,! plrrts in industr- - r-i'J percent
^Plants direct discharging - ] plant
;' Total Diane.; in segment - 4.5 percent
-'Hants with BPT treatment in place - 21 plants
.1"ota'' p"^r,t.> in segment - 95.5 percent
COST OF POLLUTION ABATEMENT
i?! '.ont^u
PLANT CLOSUKtS
None
$160,600
3.7 percent*
< 1 percent
$48,200
.MA, 300
0.03 percent
Non'
Total c
"!- reciuc
due to
EMPLOYMENT
% of to
COMMUNITY
>!1PAC~r ON
BALANCr OF
losirres anticipated
tion of segment capacity
closure'
of rjtip Joyces affected ....
U! '.Miployoes in segment . . .
EFFECTS
INDUSTRY hRiWH
TRAOr F>FECTS . . . ,
None
C
None
0
None
None
None
None
0
Hone
0
None
None
Nnnp
in p-irt on the average New capital expenditure-- to-value of ship-
rotio r>r SIC 3293 in the 1962-67 period (U.S. Bu»-oau of the Census)
46
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