United States
Environmental Protection
Agency
Office Of Air Quality
Planning And Standards
Research Triangle Park, NC 27711
EPA-452/D-00-001
May 2000
Air
Economic Impact Analysis for the Proposed
Spandex Production NESHAP
& EPA
U.S. Environmental Protection Agency
Region 5, Library (PL-12J)
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This report has been reviewed by the Emission Standards Division of the Office of Air
Quality Planning and Standards of the United States Environmental Protection Agency and
approved for publication. Mention of trade names or commercial products is not intended to
constitute endorsement or recommendation for use. Copies of this report are available through
the Library Services (MD-35), U.S. Environmental Protection Agency, Research Triangle Park,
NC 27711, or from the National Technical Information Services 5285 Port Royal Road,
Springfield, VA 22161.
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Acronyms
EIA Economic Impact Analysis
EPA United States Environmental Protection Agency
HAPs Hazardous Air Pollutants
ISEG Innovative Strategies and Economics Group
MDI methylene diphenyl diisocyanate
NESHAP National Emission Standards for Hazardous Air Pollutants
OAQPS Office of Air Quality, Planning, and Standards
RFA Regulatory Flexibility Act
SBREFA Small Business Regulatory Enforcement Fairness Act
TDI toluene diisocyanate
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TABLE OF CONTENTS
Section Page
Executive Summary iv
1 Introduction 1-1
1.1 Scope and Purpose 1-1
1.2 Organization of the Report 2-1
2 Production Overview 2-1
2.1 Product Description 2-1
2.2 Stages of Production 2-2
2.2.1 Dry Spinning 2-5
2.2.2 Wet Spinning 2-5
2.2.3 Reaction Spinning 2-6
2.2.4 Melt Spinning 2-6
2.3 Costs of Production 2-6
2.4 Production of Spandex 2-7
3 Uses, Consumption, and Demand 3-1
3.1 Uses of Spandex 3-2
3.2 Consumption of Spandex 3-3
3.3 Market Prices 3-5
3.4 Foreign Trade 3-5
4 Industry Organization 4-1
4.1 Market Structure 4-1
4.2 Manufacturing Facilities 4-2
4.3 Companies 4-3
4.4 Market Trends 4-4
5 Regulatory Costs 5-1
6 Economic Impacts 6-1
6.1 Facility Impacts 6-2
6.2 Company Impacts 6-3
6.3 Small Business-Applicability 6-4
7 References 7-1
11
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Number
2-1
3-1
LIST OF FIGURES
Page
Flow Diagram of the Two-Step Process for Spandex Fiber Production 2-4
Consumption of Spandex by Major Market: 1998 3-4
LIST OF TABLES
Number
Page
2-1 Production Costs for the Noncellulosic Manmade Organic Fibers Industry
($106): 1992 and 1997 2-7
2-2 Domestic Production of Spandex Fiber (106 Ibs.): select years 3-1
3-1 Average Spandex Content of Spandex-Containing Products (percent) 3-2
3-2 Domestic Consumption of Spandex (106 Ibs.): select years 3-3
3-3 Price of Spandex Fiber for Select Denier Grades: 1998 3-5
3-4 U.S. Imports and Exports of Spandex Fibers (106 Ibs.): 1994 - 1997 3-6
4-1 Measures of Market Concentration for the Noncellulosic Manmade Organic
Fiber Industry: 1992 4-2
4-2 Annual Production Capacity of Domestic Spandex Facilities: 1998 4-3
4-3 Summary Data for Companies Operating Spandex Manufacturing Facilities:
1998 4-4
5-1 Facility Compliance Costs for the Spandex NESHAP: 1998 6-1
6-1 Facility Shares of Compliance Cost to Sales for the Spandex NESHAP: 1998 ... 6-3
6-2 Company Compliance Costs, Annual Sales, and Shares of Compliance Cost
to Sales: 1998 6-3
in
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EXECUTIVE SUMMARY
Pursuant to Section 112 of the Clean Air Act, the U.S. Environmental Protection Agency
(EPA) is developing National Emissions Standards for Hazardous Air Pollutants (NESHAP) to
control emissions released from the domestic production of spandex fiber. The Innovative
Strategies and Economics Group (ISEG) of the Office of Air Quality Planning and Standards
(OAQPS) has developed this economic impact analysis (EIA) to support the evaluation of impacts
associated with the regulatory options considered for this NESHAP. By controlling emissions of
HAPs from spandex production, EPA is protecting and enhancing the quality of the nation's air
resources, as stated in Section 101(b) of the Clean Air Act.
The general purpose of this rule is to reduce the flow of the HAPs toluene and 2, 4-toluene
diisocyanate (2, 4-TDI) from potential emission points within spandex manufacturing facilities.
The potential points of emissions are fiber spinning lines, storage vessels and process vents. The
facilities in the spandex production source category control HAP emissions from these sources, as
required, to meet maximum achievable control technology (MACT) standards.
There are five facilities in the spandex manufacturing source category, four of which are major
sources. This NESHAP only applies to facilities that use the reaction spinning process to produce
spandex fiber, therefore only two of the four major sources are affected. The total annualized
cost of meeting the MACT standards for these facilities is $78,040. The impacts of this NESHAP
are determined by comparing the total annual costs faced by each facility to their estimated annual
spandex production revenues. The share of costs to estimated revenues for the affected facilities
range from a low of 0.22 percent to a high of 0.35 percent. Thus, compared to the estimated
production revenues for each affected facility, the total annual costs are minimal.
The facilities in the spandex production source category are owned by three companies, all of
which are considered large by the Small Business Administration's definitions for small
businesses. The economic impacts of this rule on these companies are also examined in this report
by determining the affected companies' shares of compliance costs to their sales. The shares of
costs to company sales range from 0.0 percent to 0.1 percent for the potentially affected
companies. The estimated compliance costs are minimal relative to the large sales revenues, thus
this regulation is not anticipated to have a significant economic impact on companies owning
spandex fiber facilities.
IV
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ECONOMIC IMPACT ANALYSIS: SPANDEX PRODUCTION
1 INTRODUCTION
Pursuant to Section 112 of the Clean Air Act, the U.S. Environmental Protection
Agency (EPA or the Agency) is developing National Emissions Standards for Hazardous Air
Pollutants (NESHAP) to control emissions released from the domestic production of spandex
fiber. Spandex manufacturing sources release emissions of hazardous air pollutants (HAPs)
from fiber spinning lines, storage vessels, and process vents. The Innovative Strategies and
Economics Group (ISEG) of the Office of Air Quality Planning and Standards (OAQPS) has
developed this economic impact analysis (ElA) to support the evaluation of impacts
associated with regulatory options considered for this NESHAP.
1.1 Scope and Purpose
This report evaluates the economic impacts of pollution control requirements on
spandex manufacturing operations. These requirements are designed to reduce emissions of
HAPs into the atmosphere. The purpose of the Clean Air Act is to protect and enhance the
quality of the nation's air resources (Section 101(b)). Section 112 of the Clean Air Act
establishes the authority to set NESHAPs. The HAP compounds emitted from spandex
manufacturing facilities include toluene and 2, 4-toluene diisocyanate (TDI).
To reduce emissions of the HAPs listed above, the Agency establishes maximum
achievable control technology (MACT) standards. The term "MACT floor" refers to the
minimum control technology on which MACT standards can be based. Normally, the MACT
floor is set by the average emissions limitation achieved by the best performing 12 percent of
sources in a category when the category contains at least 30 sources. In the spandex
manufacturing source category, however, only 5 sources exist. The MACT floor for this
source category is developed by looking at the emissions standards that were put in place for
similar emission points. This helps to ensure consistency across air emission requirements
across similar emission points. The estimated costs for individual spandex plants to comply
with these MACT standards are inputs into the economic impact analysis presented in this
report.
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1.2 Organization of the Report
This report is divided into six sections, including the introduction. Section 2 describes
spandex fiber, how it is produced, and how much is produced domestically, while Section 3
details the uses, consumption, and demand for spandex. Section 3 also describes the foreign
trade of spandex fiber. A summary profile of the spandex manufacturing industry is provided
in Section 4, and Section 5 reports the estimated costs of emissions control measures for this
NESHAP. Last, the economic impacts of the regulation are described in Section 6 with a
discussion of the small business applicability of this NESHAP.
2 PRODUCTION OVERVIEW
Production of spandex fiber involves a two-step process. Inputs are first used to
formulate a prepolymer, which then is polymerized and extruded to create continuous strands
of spandex filament. A detailed description of spandex and its production is provided in this
section of the report. Section 2.1 explains what spandex is and Section 2.2 describes how it is
produced. Emphasis is placed on the inputs used and the stages involved in spandex fiber
production. This section also details the process of spinning spandex fiber. The costs of
spandex production are described in Section 2.3, and Section 2.4 presents the amount of
spandex fiber produced in the U.S.
2.1 Product Description
Natural fibers, such as wool and cotton, have been used for apparel and home fashions
for thousands of years. Synthetic fibers, such as spandex, have only recently been introduced
as alternatives to the traditional natural fibers. In fact, spandex has only been commercially
produced in the U.S. since 1959. It differs from natural fibers in that it can stretch and snap
back to its original form much like rubber threads can. Typically, spandex is not used alone to
manufacture fabrics, but instead is used in combination with other materials, such as hard
fibers or yarns. Spandex fibers are included in textile applications where high elastic extension
and recovery are useful characteristics for the material produced.
A fiber has a length that is at least 100 times its diameter. Fibers are produced
through the spinning of organic or inorganic materials. The Federal Trade Commission
defines spandex as a manufactured fiber in which the fiber-forming substance is a long chain of
synthetic polymers comprised of at least 85 percent segmented polyurethane polymer (also
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known as spandex polymer). The remaining 15 percent or less may be composed of chemicals
that are used as finishes for spandex fiber (SRI International, 1999).
Segmented polyurethane is a block copolymer, which means it has alternating units of
different composition. These alternating units are referred to as "soft" and "hard" segments.
The soft segments are polyester or polyether glycol components that are long blocks where
molecular interactions are weak. The hard segments, which result from the presence of
diisocyanate or diamine, are shorter blocks where molecular interactions are strong. It is the
soft segments that provide the rubber-like stretchability, while the hard segments provide a
network of cross-links.
Spandex is characterized by its ability to stretch between 400 and 800 percent in
length without breaking (Fabricius, M., T. Gries, and B. Wulfhorst, 1995). When released, it
quickly returns almost to its original length and will do this even if stretched repeatedly.
Spandex is known for its strength and resilience, yet also for its soft and smooth texture. It is
a fabric resistant to deterioration by body oils, perspiration, lotions, and detergents and
generally is stronger and more durable than rubber. The characteristics of spandex are
influenced by the molecular weight, the size distribution, and the orientation of the hard
segments in the material. Spandex fiber manufacturing is included in the industry
characterized by the Standard Industrial Classification (SIC) code 2824, Noncellulosic
Manmade Organic Fibers.
2.2 Stages of Production
The following discussion of the production processes for spandex fiber is derived from
EPA (December, 1998). The inputs used to produce spandex include diisocyanates and
polyols, which are reacted to create prepolymers, and diol or diamine, which are chain
extenders used to polymerize the prepolymers to form segmented polyurethane polymer.
Spandex is generally produced through a two-step synthesis process. In the first step, a
prepolymer is created and in the second, the prepolymer is transformed into segmented
polyurethane through a chain extension reaction. Fibers are then produced through the
spinning process, which refers to the extrusion of solution through small holes that then
solidifies to create continuous fibers. After the fiber is spun, the material is then dried and
finished with chemicals. The resulting spandex fiber is then wound on spools for packaging
and shipping.
A flow diagram of the two-step production process of spandex fiber is provided in
Figure 2-1. In the first step, a prepolymer is created through a reaction of a diisocyanate with
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polyether polyol. Common diisocyanates used to create prepolymers are methylene
diisocyanate (MDI) 2, 6- toluene diisocyanate (2, 6-TDI) or 2, 4-toluene diisocyanate (2, 4-
TDI). MDI and 2, 4-TDI are both HAPs, but 2, 6-TDI is not. The polyether polyol used can
be a polyester, a polyether, or some combination thereof. The reaction conditions for the
production of a prepolymer must be carefully controlled to minimize side reactions because
they often result in insoluble cross-linked polymers. If polymers are insoluble, they cannot be
used to produce spandex.
In the second step of the process, the prepolymer is polymerized through a chain-
extension reaction and spun to create segmented polyurethane polymer (also known as
spandex polymer). The prepolymer is commonly reacted with the chain-extender diamine or
diol to generate the "hard segments" of the spandex fiber. This chain-extension reaction
which polymerizes the prepolymer can occur either before or after spinning of the fiber. The
order of these stages depends on the type of spinning process used. After the fiber is spun,
chemical finishes are added to the segmented polyurethane polymer.
Spinning of man-made fiber refers to the process of extruding a solution to form
fibers. Jets of solution are sprayed that then harden to form strands of filament. The spinning
process is analogous to a silkworm creating a cocoon through the secretion of liquid. When a
prepolymer or polymer is used to create fiber, it must first be converted to a liquid or semi-
liquid state. This occurs either by dissolving it in a solvent or by heating it until it becomes
molten. The resulting liquid is then extruded through the small holes of a device called a
spinnerette. The fine jets of solution sprayed through the spinnerette solidify to form long
continuous fibers.
Four spinning processes can be used to produce spandex fiber. They are:
• dry spinning,
• wet spinning,
• reaction spinning, and
• melt spinning.
If either the dry or wet spinning processes are used to form the spandex polymer, the chain-
extension reaction of the prepolymer occurs before the fiber is extruded. For these processes,
a prepolymer solution is first created by mixing the prepolymer with a solvent. Diamine is
then added to the prepolymer solution to generate the chain-extension reaction. The result is
a polymer solution, which is then spun into fiber using either the dry or wet spinning process.
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Step One of Spandex Fiber Production
Diisocynates
Polyether Polyols
Chemical Reaction
\f
PREPOLYMER
Step Two of Spandex Fiber Production
Diol or Diamine
PREPOLYMER
Chain Extension Reaction and Spin Process
SEGMENTED
POLYURETHANE
(SPANDEX POLYMER)
Chemical Finishing
SPANDEX FIBER
Figure 2-1. Flow Diagram of the Two-Step Process for Spandex Fiber Production
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For reaction spinning, the chain-extension reaction occurs as the prepolymer solution is
extruded into a spin bath containing diamine. In other words, the fiber and the polymer are
created at the same time. In the melt spinning process, the prepolymer first reacts with diol.
The resulting polymer is transformed into molten form and is then extruded into fiber.
2.2.1 Dry Spinning
Dry spinning is the most common spinning process used to produce spandex.
Approximately 80 to 90 percent of the worldwide production of spandex uses dry spinning
and it is one of two methods used in the U.S. The general principle of this method is the
formation of solid fibers through the evaporation of solvent. In the chain-extension reaction, a
prepolymer is dissolved in a solvent and then reacted with diamine to form a polymer solution.
The prepolymer is initially dissolved in solvent because diamine reacts very rapidly with the
diisocyanate in the prepolymer. The solvent helps dilute the prepolymer so that it can mix
uniformly with the diamine to form the polymer solution.
Once the polymer solution is created, it is extruded through a spinnerette into a heated
column. In this column, called a spinning tower, the solvent evaporates and leaves fibers.
These fibers may still contain some solvent which may have to be removed through washing
or further heating. After the fibers are dried and finished, they are stretched and packaged for
shipping.
2.2.2 Wet Spinning
The wet spinning process creates fibers by extruding a polymer solution through a
spinnerette that is placed in a spin bath. A spin bath is where coagulation of the polymer
occurs. In this bath, coagulation occurs as solvent diffuses out of the extruded material and a
non-solvent, such as water, diffuses into the material. The coagulated material is then
stretched to form fibers. These fibers are then washed and finished before they completely
dry. Once they have dried, the fibers are wound onto spools and are packaged for shipping.
The wet spinning method uses an identical chemical process as the dry spinning
method. Both begin by converting a prepolymer solution into a polymer solution before fibers
are created through extrusion. The major difference between the wet and dry methods is that
in the dry method, fibers are extruded and solidified as the solvent evaporates, while in the wet
method, fibers are extruded into a wet environment where solvent diffuses out so that the
fibers can coagulate.
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2.2.3 Reaction Spinning
The reaction spinning method tends to produce fibers that are thicker than those
produced using the wet spinning and dry spinning processes. When reaction spinning is used,
fiber formation and the chain-extension reaction occur in one step. A prepolymer solution is
extruded into a spin bath that contains a chain extender, such as diamine. The fiber is
therefore formed at the same time that the polymer is created. As the prepolymer solution is
extruded into the spin bath, a skin forms on the filament surface from the reaction with the
chain extender. Once the fibers are created, the solvent and the remaining spin bath solution
are evaporated on a belt dryer. The chain-extension reaction which transforms the prepolymer
to a polymer is completed as the filament is cured and the solvent evaporated. At this point, a
finish is applied and the fibers are wound on spools and prepared for shipping.
2.2.4 Melt Spinning
In the melt spinning process, the chain-extension reaction occurs prior to extrusion
without the presence of solvent. Once the polymer is created, it is melted down into molten
form. This molten polymer is then extruded through a spinnerette into a spinning tower. Cold
air is then blasted into the tower and the molten polymer solidifies into continuous fibers. A
finish is applied and the fibers are then taken up on rollers and wound onto spools. Because
no solvent is used in this method, melt spinning is considered the most economical of the four
spinning processes. Its lack of popularity is perhaps due to the quality of the spandex fiber
this method produces.
2.3 Costs of Production
This section discusses the costs of spandex manufacturing, which includes capital
expenditures, energy costs, labor costs, and the costs of materials. Absent specific cost data
on spandex manufacturing, the focus of this section is on the costs incurred by the industry
characterized by SIC 2824 - Noncellulosic Manmade Organic Fibers. This SIC code not only
includes spandex manufacturing firms, but also the firms that produce nylon, polyolefin,
polyester, and other noncellulosic manmade organic fibers not specified by kind (n.s.k.). The
U.S. Census Bureau has made data available on the costs of production for SIC 2824 for the
year 1992 and, more recently, for 1997. As Table 2-1 shows, the costs of materials consumed
in 1997 account for the largest share of the value of shipments, followed by labor costs,
capital expenditures, and energy costs. This same pattern exists for production costs in 1992.
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Table 2-1. Production Costs for the Noncellulosic Manmade Organic Fibers Industry
($106): 1992 and 1997
Share of 1992 Value Share of 1997 Value
Costs 1992 of Shipments (%) 1997 of Shipments (%)
Material Costs
Labor Costs
Capital Expenditures
Energy Costs
Total Production Costs
Value of Shipments
$5,337
$1,029
$721
NA1
$7,087
$11,113
48.0%
9.3%
6.5%
NA
63.7%
100%
$5,055
$1,002
$595
$257
$6,909
$11,912
42.4%
8.4%
5.0%
2.2%
58.0%
100%
Notes: 'Energy costs for 1992 are included in the total material cost figure for this year.
Source: U.S. Department of Commerce, Bureau of the Census. 1992. "Industry Series for Plastics
Materials, Synthetic Rubber, and Manmade Fibers," Census of Manufactures.
U.S. Department of Commerce, Bureau of the Census. 1999. "Noncellulosic Organic Fiber
Manufacturing," Current Industrial Reports.
The 1997 cost of materials was equal to $5.1 billion, which is equal to 42.4 percent of
the value of shipments for that year. By comparison, labor costs were approximately equal to
$1 billion, which only represents 8.4 percent of the industry's value of shipments. Capital
expenditures by the noncellulosic manmade organic fiber industry in 1997 were even smaller
at approximately $0.6 billion and energy costs were less than $0.3 billion. The nominal value
of shipments for 1997 exceeds that for 1992, however the total costs in 1997 are smaller.
Costs in 1997 represent 58 percent of the value of shipments but in 1992, it was almost equal
to 64 percent. This suggests that profits of the firms in SIC 2824 grew from 1992 to 1997
since costs were a smaller share of the value of shipments in 1997.
2.4 Production of Spandex
The quantity of spandex fiber produced in the U.S. has dramatically increased since the
1970s, as Table 2-2 shows. In 1970, approximately 8.5 million pounds of spandex were
produced. Much of this total went towards the production of intimate apparel, activewear,
hosiery, and medical products. The annual quantity of spandex fiber produced rose steadily
through the 1980s and 1990s reaching a high of 63.3 million pounds in 1998. This increase in
quantity produced partially stemmed from the continuing development of applications in
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which spandex fiber can be used. Also, the spinning technologies for spandex fiber have
become less costly over time. One study projects that the quantity of spandex produced in the
U.S. will increase to almost 90 million pounds by the year 2003 (SRI International, 1999).
This projection is based on the expectation that spandex products will continue growing in
popularity both in the U.S. and worldwide. Approximately 20 percent of the total quantity of
spandex produced domestically is exported so the quantity of spandex produced will likely
increase as foreign demand for spandex rises.
Table 2-2. Domestic Production of Spandex Fiber (106 Ibs.): select years
Year Quantity Produced
1970 8.5
1980 10.5
1983 15.5
1986 19.5
1990 34.0
1997 59.1
1998 63.3
Source: "Specialty Organic Fibers," In: Chemical Economics Handbook. 1999. SRI Int'l. 542.7003 D
3 USES, CONSUMPTION, AND DEMAND
The main use of spandex fiber is in textiles that require high elastic extension and
recovery. Rubber threads used to serve this function in textile manufacturing, but once
spandex was developed, it replaced rubber in textiles. Manufacturers noted that the materials
containing spandex instead of rubber deteriorated at a slower rate, absorbed dyes more evenly,
and had a smoother texture. These characteristics, as well as a greater emphasis placed on
products with elasticity and flexibility, led to a rise in demand for spandex. A description of
the various uses of spandex fiber is provided in Section 3.1. In Section 3.2, the domestic
consumption of spandex is discussed and the immediate and final consumers of spandex are
identified. Section 3.3 provides data on the market price of spandex, while the last section,
Section 3.4, discusses the international trade data available on spandex exports and imports.
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3.1 Uses of Spandex
The most common application of spandex fiber has been and continues to be in
women's intimate apparel and hosiery. More recently, however, it has become a common
component in medical compression hosiery, medical bandage wraps, men's and women's
outerwear, home furnishings, and activewear. In all of these functions, spandex creates a tight
fit but retains its elasticity. Since the late 1980s, use of spandex knit fabric in activewear has
become commonplace. Activewear includes leotards, cycling shorts, swimwear, stretch pants,
and other competitive sportswear. The popularity of spandex in activewear can be attributed
to its enhancement of athletic performance. Spandex is also a useful material in home
furnishings because it absorbs fewer spills and odors than other materials. Home furnishings
produced with materials containing spandex are furniture upholstery, tablecloths, bedspreads,
and mattresses. Spandex is also an integral component of intimate apparel and hosiery
because it allows outerwear to drape smoothly, resulting in a more tailored look.
Spandex is always combined with other fibers to develop fabrics, where the amount
contained in fabrics depends on what they will be used for. As Table 3-1 shows, medical
hosiery contains the highest spandex content, while woven fabrics and underwear contain the
least. Medical hosiery has a relatively high spandex content because it is used as a
compressor, but must still be easy enough to adorn and remove as needed. The spandex
content in underwear is generally low because it is used in the waistband rather than the fabric
used to produce underwear.
Table 3-1. Average Spandex Content of Spandex-Containing Products
Product Percentage
Underwear 2 % to 5 %
Woven fabrics 2 % to 8 %
Women's hosiery 2 % to 12 %
Swimwear and sportswear 12% to 20%
Corsetry 10% to 45%
Medical hosiery 35 % to 50 %
Sources: Fabricius, M, T. Gries, and B. Wulfhorst. 1995. "Elastane Fibers (Spandex)", 2nd issue, In:
Manmade Fiber Yearbook (CFI): 30 - 40.
Rozelle, W. 1977. "Spandex: Miracle Fiber Now Coming Into Its Own," Textile World. 147:80 - 87.
3-2
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3.2 Consumption of Spandex
Since spandex is included in a variety of products, there are numerous groups of
consumers who purchase spandex. Participants in sports and outdoor activities purchase
activewear that contains spandex because it is comfortable, durable, and helps improve
athletic performance. Women purchase intimate apparel including brassieres, slips, girdles,
lingerie, and camisoles. These products help to improve the look and fit of outerwear.
Hosiery is also a spandex product worn by women, although both men and women use
compression hosiery after medical procedures. Since spandex is used to manufacture
underwear waistbands, virtually all individuals purchase and consume spandex products.
While many consumers use products that contain spandex fiber, they are not the
immediate purchasers of this product. Spandex is instead purchased either by textile mills
who produce fabrics that contain spandex or by firms that directly use spandex fiber as an
input to their manufacturing processes. Once final products are manufactured, they are then
sold to consumers who are the ultimate users of these goods.
Consumption of spandex has generally increased over the 1990s. Table 3-2 provides
data for select years showing the quantity of spandex consumed in the U.S. Through the
1990s, there has been an increasing trend in spandex consumption. There was an anomalous
increase in 1992 due to a restocking of inventoried goods, making consumption artificially
high that year. This trend in spandex consumption can be seen by examining the average
quantity consumed over the two time periods for which there are data. The average quantity
Table 3-2. Domestic Consumption of Spandex (106 Ibs.): select years
Year Quantity Consumed
1990 31.7
1991 28.6
1992 43.2
1993 36.1
1997 54.2
1998 58.4
Source: "Specialty Organic Fibers," In: Chemical Economics Handbook. 1999. SRI Int'l. 542.7003 F
3-3
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of spandex consumed between the years 1990 and 1993 was approximately 35 million pounds,
but between 1997 and 1998, the average quantity consumed increased to 56.3 million pounds.
Spandex consumption is projected to continue increasing over time. It has been estimated
that spandex consumption in the U.S. will increase to almost 90 million pounds by the year
2003 (SRI International, 1999).
Figure 3-1 presents the share of spandex consumed in 1998 by major market. The
activewear market consumed the largest fraction of spandex, while the intimate apparel
market used the least amount. A category of "other" products is also included, which
contains shoes, luggage and handbag linings, bicycle seat covers, and elastic rope. The
production of goods in the "other" category have used an increasing share of the total spandex
consumed in the U.S. In the year 1990, the "other" category consumed only 16 percent of the
spandex consumed domestically, but this figure rose to 21 percent in 1998. This indicates the
increasing importance of spandex in the production of a variety of goods.
Activewear
44%
-~^^^H1MBH^1^^HH
Intimate
Apparel
16%
Hosiery
19%
Figure 3-1. Consumption of Spandex by Major Market: 1998
Source: "Specialty Organic Fibers," In: Chemical Economics Handbook. 1999.
SRIInt'l. 542.7003 G
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3.3 Market Prices
Spandex prices depend on their denier. Denier refers to the mass measurement of the
thickness of fiber filament and is defined as the weight in grams per 9,000 meters of fiber. The
thinner spandex fibers are, the smaller the denier. Table 3-3 shows the price ranges for select
denier-grades of spandex fiber for the year 1998. As this table shows, the price of spandex
fiber decreases as the denier increases. The spinning process for smaller denier spandex
requires the extrusion of polymers through smaller holes and is a more delicate production
procedure. For this reason, the price is higher for smaller denier spandex.
The denier grades do not cover the entire range of those produced in the U.S.
Currently, spandex fibers produced domestically range from 10 to over 5,000 denier.
Although spandex can be produced in almost any denier, the deniers over 1,000 are priced
significantly lower. For example, the price of 1,680 denier spandex is approximately half of
the price of 420 denier spandex. The denier grade of spandex has a direct impact on the final
price of the output produced.
Table 3-3. Price of Spandex Fiber for Select Denier Grades: 1998
Denier Dollars per Pound
10 $30.00 - $35.00
20 $21.50-$23.50
40 $11.70-$14.90
70 $10.60-$12.75
210 $8.70-$9.65
420 $7.65 - $8.60
Source: "Specialty Organic Fibers," In: Chemical Economics Handbook. 1999. SRI Int'l. 542.7003 K
3.4 Foreign Trade
This section presents historical data on foreign trade including the quantities of
spandex fiber exported to and imported from other countries. Table 3-4 shows that, for the
years 1994 and 1995, exports are less than imports which means more spandex fiber was
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consumed in the U.S. than was produced. This trend was reversed in 1996 and 1997 as
exports exceed imports of spandex for these years. This increase in exports over imports in
the mid to late 1990s is in part due to the increasing popularity of Western-style spandex
clothing in foreign countries.
A majority of the spandex imported by the U.S. is brought by domestic producers of
spandex from their foreign plants. The additional spandex from abroad is imported in
response to domestic demand. The largest importer is E. I. du Pont de Nemours and
Company (also referred to as Dupont), which is responsible for 85 percent of U.S. imports in
1997. Dupont is the largest spandex producer in the world, with the greatest annual capacity
of any other spandex producer. While it is the largest producer of spandex fiber, Dupont has
only one plant in the U.S. Its other plants are located abroad.
As Table 3-4 shows, the average annual growth rates for both exports and imports are
positive, although the rate for exports is much larger than it is for imports. This extremely
high average annual growth rate for spandex fiber exports can be explained by looking at how
exports increased year to year over this time period. From 1994 to 1995, there was a large
jump in the quantity of spandex exported. Another large increase occurred from 1996 to
1997. The annual growth rates for these years are relatively high as a result, which has
therefore driven up the overall average annual growth rate for exports for the time period in
question. For imports, the average annual growth rate is also positive, but nowhere near as
Table 3-4. U.S. Imports and Exports of Spandex Fibers (106 Ibs.): 1994 -1997
Year
1994
1995
1996
1997
Exports
2.1
6.1
7.2
12.5
Imports
4.8
5.0
6.4
7.6
Average Annual Growth Rates
1994-1997
94%
17%
Source: U.S. Department of Commerce, Bureau of the Census. 1994-1997. "U.S. Imports and U.S. Exports.'
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large. While imports continued to increase each consecutive year, there were no large jumps
in quantity imported from one year to the next. Rather, imports increased gradually over the
years 1994 to 1997.
Average foreign trade concentration ratios can be examined to determine the share of
U.S. spandex production sold abroad and the share of U.S. consumption supplied from
abroad. When calculated, the foreign trade concentration ratios show that approximately 21
percent of the spandex produced in the U.S. is shipped abroad while only 14 percent of the
spandex consumed in the U.S. is imported from abroad. These ratios demonstrate that the
U.S. relies less on foreign supplies to meet its demand than it ships abroad.
4 INDUSTRY ORGANIZATION
This section presents information about the organization of the spandex manufacturing
industry. In Section 4.1, the market structure is described and a determination of its
competitive nature is made. A characterization of the manufacturing facilities in this industry
is given in Section 4.2, while the companies owning these facilities are described in Section
4.3. Last, Section 4.4 provides the market trends in the spandex industry.
4.1 Market Structure
Market structure is of interest because it determines the behavior of producers and
consumers in the industry. In perfectly competitive industries, no producer or consumer is
able to influence the price of the product sold. In addition, producers are unable to affect the
price of inputs purchased for use in production. This condition most likely holds if the
industry has a large number of buyers and sellers, the products sold and inputs used in
production are homogeneous, and entry and exit of firms is unrestricted. Entry and exit of
firms are unrestricted for most industries, except in cases where the government regulates
who is able to produce output, where one firm holds a patent on a product, where one firm
owns the entire stock of a critical input, costs of entry are prohibitively high, or where a single
firm is able to supply the entire market. In industries that are not perfectly competitive,
producer and/or consumer behavior can have an effect on price.
Concentration ratios (CRs) and Herfindahl-Hirschman indices (HHIs) can provide
some insight into the competitiveness of an industry. The U.S. Department of Commerce
reports these ratios and indices at the four-digit SIC code level for 1992, the most recent year
these measures are available. Table 4-1 provides the value of shipments, the four- and eight-
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firm concentration ratios, and the Herfindahl-Hirschman index that have been calculated for
SIC code 2824. From an examination of the concentration ratios, it is evident that this
industry is concentrated. The percentage of sales for the top four firms in the industry was
almost 75 percent of all sales for this industry and the percentage of sales for the top eight
firms was 90 percent.
Table 4-1. Measures of Market Concentration for the Noncellulosic Manmade Organic
Fiber Industry: 1992
SIC Code
2824
Value of Shipments
($106)
$11.11
CR4
74%
CR8
90%
HHI
2158
Notes: CR4 denotes the four-firm concentration ratio denotes the eight-firm concentration ratio, and HHI
denotes the Herfindahl-Hirschman index.
Source: U.S. Department of Commerce, Bureau of the Census. 2000. "1992 Concentration Ratios in
Manufacturing,"
The criteria for evaluating the HHIs are based on the 1992 Department of Justice's
Horizontal Merger Guidelines. According to these criteria, industries with HHIs below 1,000
are considered unconcentrated (i.e., more competitive), those with HHIs between 1,000 and
1,800 are considered moderately concentrated (i.e., moderately competitive), and those with
HHIs above 1,800 are considered highly concentrated (i.e., less competitive). In general,
firms in less concentrated industries are more likely to be price takers, while those in more
concentrated industries have more ability to influence market prices. By the Horizontal
Merger Guidelines, this industry is considered highly concentrated. The HHI data supports
the conclusions drawn from the concentration ratio data.
4.2 Manufacturing Facilities
Based on responses to the Section 114 letters, the Agency identified five spandex
manufacturing facilities, four of which are major sources of HAPs. A source is considered
major if it emits more than 10 tons per year of a single HAP or more than 25 tons per year of
any combination of HAPs. The four major sources are facilities located in South Carolina,
Virginia, Massachusetts, and North Carolina. The area source is a facility located in Alabama.
All five facilities use either of two spinning processes to manufacture spandex fiber: dry
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spinning or reaction spinning. The other two spinning processes, wet spinning and melt
spinning, are used by spandex manufacturing facilities outside of the U.S. As stated in the
introduction, only the reaction spinning facilities are affected by this NESHAP.
Facility size can be measured either by examining its annual production capacity or the
number of employees working in the facility. Employment data for the spandex
manufacturing facilities are not available, however information on the 1998 production
capacity of these plants is available. As Table 4-2 shows, the facility with the largest annual
capacity across the five spandex manufacturing facilities is located in Virginia. E.I. du Pont de
Nemours and Company owns this facility, which happens to be the only spandex facility it
operates in the U.S. Of the total capacity for spandex fiber production in the U.S., Dupont
possesses a majority of the capacity with 58 percent. Globe Manufacturing has approximately
32 percent of the total U.S. capacity for spandex fiber manufacturing, followed last by Bayer
Corporation with 10 percent of total capacity.
Table 4-2. Annual Production Capacity of Domestic Spandex Facilities: 1998
Annual Capacity
Facility Location Parent Company (106 lbs./year)
Bushy Park, SC Bayer Corporation 8.0
Waynesboro, VA E.I. du Pont de Nemours and Co. 46.0
Fall River, MA Globe Manufacturing 6.0
Gastonia, NC Globe Manufacturing 4.0
Tuscaloosa, AL (area source) Globe Manufacturing 16.0
Source: "Specialty Organic Fibers," In: Chemical Economics Handbook. 1999. SRI Int'l. 542.7002 X
4.3 Companies
The Agency identified three ultimate parent companies for the five spandex
manufacturing facilities and obtained their sales and employment data from either their survey
response or one of the following secondary sources:
• Dun and Bradstreet Market Identifiers (Dun & Bradstreet, 1999)
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• Hoover's Company Profiles (Hoover's, Incorporated, 2000)
Company Websites.
Table 4-3 lists the company name, number of facilities it owns, states in which the
facilities are located, annual sales, and number of employees for each of the companies that
operate facilities in this source category. It is evident from this data that Dupont is the largest
of the companies with over three times the annual sales of Globe Manufacturing and Bayer
Corporation combined. While there is a great deal of variance in the size across4he-
companies, a company size determination can be made based on the Small Business
Administration's (SBA) small business definitions. The small business definition for
companies characterized by SIC 2824, Noncellulosic Manmade Organic Fibers, is based on
whether or not they employ at least 1,000 employees. According to this criteria, these firms
are all considered large even though Globe Manufacturing is small compared to both Bayer
Corporation and Dupont.
Table 4-3. Summary Data for Companies Operating Spandex Manufacturing
Facilities: 1998
Company
E.I. du Pont de Nemours and Co.
Globe Manufacturing
Bayer Corporation
Number of Facilities
and (Location)
1(VA)
3 (MA, NC, AL)
1(SC)
Annual Sales
($103)
$27,800,000
$75,700
$8,100,000
Number of
Employees
101,000
> 1,000
26,000
Source: Dun and Bradstreet Market Identifiers Database. 1999.
Hoover's Company Profiles. 2000.
Globe Manufacturing Website. 2000.
4.4 Market Trends
This section presents information regarding the growth of the spandex fiber market in
the U.S. and worldwide. Data from Section 3 of this report provide evidence of the growth in
the quantity of spandex produced and consumed in the U.S. over the 1990s. The average
annual growth rate of domestic spandex production from 1993 to 1998 is approximately 12.5
percent and the rate for spandex consumption in the U.S. is 10.1 percent (SRI International,
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1999). New applications for spandex fiber were found during the 1980s and 1990s, which led
to an increase in its use as an input. As spandex fiber became a popular input, its consumption
increased both by immediate users (the producers of products containing spandex) and final
users (the consumers of the final goods that contain spandex).
Up to the end of 1998, the worldwide annual production capacity for spandex fiber
was 338.2 million pounds. Since this time, a number of companies have decided to expand
capacity to meet the growing demand for spandex. In the year 1999, various firms set plans
which would expand worldwide production capacity by an additional 37 to 53 million pounds.
Some of the companies that established expansion plans of their current facilities were Bayer
Corporation (at both its domestic and foreign locations), E.I. du Pont de Nemours and
Company (also, at both its domestic and foreign locations), Tongkook Synthetic Fibers in
Korea, and Acelon Chemicals and Fibers in Taiwan. In addition, three new producers had
plans to build plants in Asia and Russia which would also add to world production capacity.
Although the average annual growth rate for spandex production has been at 10.1
percent over the 1993 to 1998 time period, the projected average annual rate for the next five
year time period is not as high. The projected average annual growth rate of production from
1999 to 2003 is approximately 7 percent. This slower rate may be due to an exhaustion of
new applications for spandex fiber. The industry found a number of applications during the
early to mid 1990s, which resulted in a surge in both production and consumption. Now
however, the discovery of applications for spandex fiber has begun to taper.
5 REGULATORY COSTS
The Agency estimated the cost of complying with this NESHAP for spandex facilities.
The facilities are to control potential points of emissions, which includes fiber spinning lines,
storage vessels, and process vents. The regulation for existing sources is established to
achieve the maximum achievable control technology (MACT) standards for sources in this
category. While existing sources in the U.S. have recently expanded their production
capacity, no new sources are anticipated to be built domestically in the five years subsequent
to promulgation. No emission control costs are therefore attributable to new sources.
In general, process vents, fiber spinning lines, and storage vessels at existing sources
are well controlled. These sources currently meet the MACT level of control, therefore no
costs are expected to be incurred by spandex facilities in order to comply with the NESHAP
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for these emission sources. The compliance costs for this NESHAP relate primarily to
monitoring, reporting, and recordkeeping. Costs are estimated to include direct annual costs
for items such as labor wages and maintenance costs. Indirect annual costs include
administrative charges, property taxes, insurance, and capital recovery for capital equipment.
The EPA estimated the cost of compliance with the MACT emission controls for each of the
affected spandex facilities. These costs are summarized in Table 5-1. The annual costs of this
regulation are expected to be $78,040 for the spandex industry. Capital costs of $32,824 are
anticipated for the industry to comply with the proposed regulation.
Table 5-1. Facility Compliance Costs for the Spandex NESHAP: 1998
Facility
Bushy Park, SC
Waynesboro, VA
Fall River, MA
Gastonia, NC
Tuscaloosa, AL
Totals
Capital
Costs
($)
$0
$0
$16,412
$16,412
$0
$32,824
Annualized
Capital Costs
($)
$0
$0
$6,254
$6,254
$0
$12,508
Annual
O&M Costs
($)
$0
$0
$16,354
$16,354
$0
$32,708
Total
Annual Costs
($)
$0
$0
$39,020
$39,020
$0
$78,040
Source: U.S. Environmental Protection Agency. 2000. Memorandum from K. Schanffher, MRI to E.
Manning, ESD: Cost Impacts of MACT for the Spandex Production NESHAP. EPA Contract
No. 68
6 ECONOMIC IMPACTS
The economic impacts of the proposed MACT regulation for the spandex production
NESHAP are estimated on both a facility basis and a company basis. The impacts are
estimated by comparing the estimated total annual compliance costs (discussed in Section 5)
to the estimated annual spandex production revenues for each affected facility (facility cost-to-
sales ratios). Economic impacts are further assessed through a comparison of the estimated
annual costs of compliance to the total annual revenues of the affected company (company
cost-to-sales ratios).
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The facility cost-to-sales ratio refers to the change in annual compliance costs divided
by the revenues derived from the sale of a particular good or goods whose production process
requires additional pollution control. It can be estimated for either individual firms or as an
average for some set of firms such as affected small firms. While it has different significance
for different market situations, it serves as a good gauge of potential impact. If costs for the
individual (or group of) firms are completely passed on to the purchasers of the good(s) being
produced, it is an estimate of the change in price (in percentage terms after the ratio is
multiplied by 100). If costs are instead completely absorbed by the producer, it is an estimate
of the change in pretax profits (in percentage terms after the ratio is multiplied by 100). The
distribution of costs-to-sales ratios across the whole market, the competitiveness of the
market, and profit-to-sales ratios are among the obvious factors that may influence the
significance of any particular cost-to-sales ratio for an individual facility.
6.1 Facility Impacts
An assessment is made by comparing estimated facility-specific total annual
compliance costs to the estimated facility baseline annual spandex revenues. Revenues are not
estimated for unaffected facilities (i.e., those facilities anticipated to incur no emission control
costs). The only facilities anticipated to incur compliance costs are owned by Globe
Manufacturing. The 1998 annual revenues for Globe Manufacturing are available through
Dun & Bradstreet Market Identifiers Database (1999). Total company revenues are assumed
to be distributed or generated by the individual Globe facilities in the same ratio as productive
capacity.
As shown in Table 6-1, two facilities are anticipated to incur compliance cost as a
result of the proposed regulation. The estimated cost-to-sales ratios for these two facilities
range from a low of 0.22 percent to a high of 0.35 percent. For most industries, cost-to-sales
ratios of one percent or less are indicative of insignificant impacts to the profitability of the
firm. In such situations it is reasonable to assume that the firms will have the ability to
increase prices to offset some or all of the cost increase. For those firms that must absorb the
costs with no price increase, it is reasonable to assume these firms will be able to do so
without significant impact to profitability. Thus, on average, the economic impact of the
regulation is small for the facilities producing spandex fibers.
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Table 6-1. Facility Shares of Compliance Costs to Sales for the Spandex NESHAP:
1998
Facility
Bushy Park, SC
Waynesboro, VA
Fall River, MA
Gastonia, NC
Tuscaloosa, AL
Total Annual
Costs ($)
$0
$0
$39,020
$39,020
$0
Estimated Facility
Revenues ($)
NE
NE
$17,649,000
$11,646,000
NE
Share of
Cost-to-Sales (%)
0.00 %
0.00 %
0.22%
0.35 %
0.00 %
Notes: NE means not estimated
6.2 Company Impacts
Economic impacts for those companies owning spandex facilities in the U.S. can be
estimated by determining the affected company's share of compliance costs to its sales
information is shown in Table 6-2. The shares of annual compliance costs tc
range from 0.0 percent to 0.1 percent for companies potentially affected by this regulation.
Table 6-2. Company Compliance Costs, Annual Sales, and Shares of Compliance Cost
to Sales: 1998
Company
E.I. du Pont De Nemours and Co.
Globe Manufacturing
Bayer Corporation
Compliance
Costs ($)
$0
$78,040
$0
Annual Sales
($103)
$27,800,000
$75,700
$8,100,000
Share of Cost
to Sales (%)
0.00 %
0.10%
0.00 %
Source: Hoover's Company Profiles. 2000.
Dun & Bradstreet Market Identifiers Database. 1999.
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The estimated compliance costs for this regulation are well below the one percent threshold
and minimal relative to the large sales revenues of the parent companies. Thus, this regulation
is not anticipated to have a significant economic impact on companies owning spandex fiber
facilities.
6.3 Small Business Applicability
The manufacture of spandex fibers are categorized in Standard Industrial Classification
(SIC) code 2824, Noncellulosic Manmade Organic Fibers. The Small Business
Administration categorizes companies with 1000 employees or less as small for this SIC
(Small Business Administration, 2000). As shown earlier in Table 4-3, each of the companies
affected by this regulation employ more than 1000 employees, thus none of the affected
companies are small businesses. Small business considerations as required by provisions of
the Regulatory Flexibility Act (RFA) as modified by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA) are not applicable to this regulation.
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7 REFERENCES
Dun & Bradstreet Market Identifiers Database. 1999.
Encyclopedia Britannica. 2000. "Man-made Fibre," at
Fabricus, M, T. Gries, and B. Wulfhorst. 1995. "Elastane Fibers (Spandex)," 2nd issue, in
Manmade Fiber Yearbook. CFI: 30 - 40.
Fibersource. 2000. "Spandex Fiber (Elastane)," at
Globe Manufacturing Website. 2000. "A Heritage of Accomplishment," at
Hoover's Company Profiles. 2000. "Bayer Corporation," at
Hoover's Company Profiles. 2000. "E.I. du Pont de Nemours and Company," at
Rozelle, W. 1977. "Spandex: Miracle Fiber Now Coming Into Its Own," Textile World. 147:
80 - 87.
Small Business Administration. 2000. "Small Business Size Standards Matched to SIC
Codes,"
SRI International. 1999. "Elastomeric Fibers: Spandex," in Chemical Economics Handbook,
542.7002 U - 542.7003L.
U.S. Department of Commerce, Bureau of the Census. 2000. "1992 Concentration Ratios in
Manufacturing,"
U.S. Department of Commerce, Bureau of the Census. 1992. "Industry Series - Plastics
Materials, Synthetic Rubber, and Manmade Fibers," Census of Manufactures. MC92-
I-28B.
U.S. Department of Commerce, Bureau of the Census. 1999. "Noncellulosic Organic Fiber
Manufacturing," Current Industrial Reports.
U.S. Department of Commerce, Bureau of the Census. 1997. "Noncellulosic Organic Fiber
Manufacturing," Economic Census: Manufacturing Industry Series. EC97M-3252D.
7-1
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U.S. Department of Commerce, Bureau of the Census. 1994 - 1997. U.S. Imports and U.S.
Exports.
U.S. Department of Justice and Federal Trade Commission. 2000. "Horizontal Merger
Guidelines,"
U.S. Environmental Protection Agency. 1998. Memorandum from K. Schmidtke and M.
Wiggins, Midwest Research Institute (MRI) to M. Kissell, Emissions Standard
Division (ESD): Summary of Background Information for the Spandex Production
Processes NESHAP. EPA Contract No. 68-D6-0012.
U.S. Environmental Protection Agency. 1999. Memorandum from K. Schmidtke, MRI to M.
Kissell, ESD: Selection of Subcategories for the Spandex Production Processes
NESHAP. EPA Contract No. 68-D6-0012.
U.S. Environmental Protection Agency. 1999. Memorandum from K. Schaffner and A.
Marshall, MRI to E. Manning, ESD: Major and Area Sources for the Spandex
Production Industry for the Spandex Production Processes NESHAP. EPA Contract
No. 68-D6-0012.
U.S. Environmental Protection Agency. 2000. Memorandum from K. Schaffner and A.
Marshall, MRI to E. Manning, ESD: Growth Projections for the Spandex Production
Industry for the Spandex Production Processes NESHAP. EPA Contract No. 68-
D6-0012.
U.S. Environmental Protection Agency. 2000. Memorandum from K. Schanffner, MRI to F.
Manning, ESD: Cost Impacts of MACT for the Spandex Production NESHAP.
EPA Contract No. 68-D6-0012.
U.S. Environmental Protection Agency 2000. Memorandum from E. Manning, ESD to L.
Chappell, ISEG: Updated Costs for the Spandex Production NESHAP. EPA Contract
No. 68-D6-0012.
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TECHNICAL REPORT DATA
(Please read Instructions on reverse before completing)
\. REPORT NO.
EPA-452/D-00-001
3. RECIPIENT'S ACCESSION NO.
4. TITLE AND SUBTITLE
5. REPORT DATE
May 2000
Economic Impact Analysis for the Proposed Spandex Production
NESHAP
6. PERFORMING ORGANIZATION CODE
7. AUTHOR(S)
8. PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING ORGANIZATION NAME AND ADDRESS
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Research Triangle Park, NC 27711
10 PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
None
12. SPONSORING AGENCY NAME AND ADDRESS
Director
Office of Air Quality Planning and Standards
Office of Air and Radiation
U.S. Environmental Protection Agency
Research Triangle Park, NC 27711
13. TYPE OF REPORT AND PERIOD COVERED
Proposed regulation
14. SPONSORING AGENCY CODE
EPA/200/04
15. SUPPLEMENTARY NOTES
16 ABSTRACT
Pursuant to Section 112 of the Clean Air Act, the U.S. Environmental Protection Agency (EPA) is developing a National
Emissions Standard for Hazardous Air Pollutants (NESHAP) to control emissions released from the domestic production of
spandex fiber. The purpose of this rule is to reduce the flow of the HAPs toluene and 2, 4-toluene diisocyanate (2, 4-TDI) from
potential emission points within spandex manufacturing facilities.
There are five facilities in the spandex manufacturing source category, four of which are major sources. This NESHAP only
applies to facilities that use the reaction spinning process to produce spandex fiber, therefore only two of the four major sources
are affected. The total annual costs of meeting the MACT standards for these facilities $78,040. The impacts of this NESHAP
are determined by comparing the annual costs faced by each facility to their estimated spandex production revenues. The share
of costs to estimated revenues for affected facilities range from a low of 0.22 percent to a high of 0.35 percent. Thus, compared
to estimated production revenues, the impact of the total annual costs are minimal for the facilities.
The facilities hi this source category are owned by three companies, all of which are considered large by the Small Business
Administration's definitions for small businesses. The economic impacts of this rule on these companies are also examined by
determining the affected companies' shares of compliance costs to their sales. The shares of costs to company sales range from
0.0 percent to 0.1 percent. The estimated compliance costs are minimal relative to the large sales revenues, thus this regulation
is not anticipated to have a significant economic impact on companies owning spandex fiber facilities.
17.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
b. IDENTIFIERS/OPEN ENDED TERMS
c. COSATI Field/Group
air pollution control, environmental
regulation, economic impact analysis,
spandex production
18. DISTRIBUTION STATEMENT
Release Unlimited
19. SECURITY CLASS (Report)
Unclassified
21. NO. OF PAGES
32
20. SECURITY CLASS (Page)
Unclassified
22. PRICE
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