INITIAL ECONOMIC IMPACT ANALYSIS
OF WATER POLLUTION CONTROL COSTS
UPON THE FIBER GLASS INDUSTRY
report to
ENVIRONMENTAL PROTECTION AGENCY
Arthur D Little, Inc
-------
INITIAL ECONOMIC IMPACT ANALYSIS OF
WATER POLLUTION CONTROL COSTS
UPON THE FIBER GLASS INDUSTRY
by
Arthur D. Little, Inc.
15 Acorn Park
Cambridge, Massachusetts 02140
Contract No.68-01-0767
Prepared for
Office of Planning and Evaluation
U.S. Environmental Protection Agency
Washington, B.C. 20460
Arthur D Little Inc
-------
TABLE OF CONTENTS
Page
List of Tables iv
List of Figures . v
PART ONE - EXECUTIVE SUMMARY
I. INTRODUCTION 1
II. CONCLUSIONS 3
A. WOOL GLASS FIBER SEGMENT 3
B. TEXTILE FIBER GLASS SEGMENT 6
PART TWO - IMPACT ANALYSIS
I. INDUSTRY SEGMENTS 9
A. MAJOR SEGMENTS OF THE FIBER GLASS INDUSTRY 9
B. WOOL FIBER GLASS SEGMENT 9
C. TEXTILE-GRADE GLASS FIBER 13
II. PRICE EFFECTS 17
A. PRICE DETERMINATION IN THE FIBER GLASS INDUSTRY 17
B. PRICE TRENDS 19
C. ANTICIPATED PRICE CHANGES DUE TO POLLUTION
CONTROL REQUIREMENTS 20
III. FINANCIAL PROFILES 22
A. WOOL GLASS FIBER 22
B. TEXTILE GLASS FIBER 22
C. CONSTRAINTS ON FINANCING INCREMENTAL ASSETS 23
IV. POLLUTION CONTROL REQUIREMENTS IN THE FIBER GLASS
INDUSTRY 24
A. AVAILABILITY OF EFFLUENT GUIDELINES AND COST
CONTROL DATA 24
B. WOOL FIBER GLASS GUIDELINES 24
C. TEXTILE FIBER GLASS EFFLUENT GUIDELINES 26
D. OTHER FACTORS 33
Arthur D Little Inc
-------
TABLE OF CONTENTS (Cont.)
Page
PART TWO - IMPACT ANALYSIS (Cont.)
V. IMPACT 34
A. FINANCIAL EFFECTS 34
B. PRODUCTION EFFECTS 41
C. EMPLOYMENT EFFECTS 42
D. COMMUNITY EFFECTS 43
E. BALANCE OF PAYMENT EFFECTS 43
VI. LIMITS OF THE ANALYSIS 44
PART THREE - APPENDIX
VII. INDUSTRY DESCRIPTION 46
A. DEMAND FOR GLASS FIBERS 46
1. Wool Glass Markets 50
2. Textile Glass Fibers 51
3. Government Influence on Demand 56
B. SUPPLY 57
1. Industry Structure 57
2. Technology Trends 75
3. Capacity Utilization 77
4. Degree of Competition and Competitive Practices 79
5. Government Influence on the Supply of Glass Fiber 79
6. Labor Unions 80
iii
Arthur D Little Inc
-------
LIST OF TABLES
Table No. Page
S-I Summary of Water Pollution Control Capital Investments
and Operating Cost for Fiber Glass Plants 4
I Estimated Cost of Waste Water Treatment for Insulating
Fiber Glass Wool Manufacture 25
II Estimated Efficiency of Waste Water Treatment for
Textile Fiber Glass Manufacture 27
III Textile Fiber Glass - Capital Investment Estimates 28
IV Textile Fiber Glass - Operating Cost Estimates 29
V Textile Fiber Glass - Add On Cost to Meet lOppm
Suspended Solids in Effluent 30
VI Estimated Cost of Waste Water Treatment for Textile
Fiber Glass Manufacture 31
VII Summary of Capital and Operating Cost Effects:
Wool Glass Fiber 35
VIII Summary of Capital and Operating Cost Effects:
Textile Glass Fiber 36
IX Effects on ROI: Wool Glass Fiber 37
X Effects on ROI: Textile Glass Fiber 38
XI Capital Expenditures by Major Corporations, 1969-1971 40
XII U.S. Shipments and Value of Wool Glass Fiber,
1964-1971 47
XIII U.S. Shipments and Value of Textile Glass Fiber,
1964-1971 48
XIV U.S. Exports of Glass Fiber, 1969-1971 49
XV U.S. Textile Glass Fiber Consumption 52
XVI Primary Fibrous-Glass-Wool Products 60
XVII Fiber Glass Plants by Company and Location 63
XVIII Glass Fiber Types and Applications 69
XIX Capacity and Production - Textile Glass Fiber in
the U.S. 78
iv
Arthur D Little Inc
-------
LIST OF FIGURES
Figure No.
1 Effect of Plant Size on Cost of Water Recycling in
Wool Plants 11
2 Variation in Water Treatment Cost/Lb Glass Fiber
for Textile Fiber Glass Plants 15
3 Process Diagram - Glass Wool 58
4 Distribution of Glass Wool Plants in the United
States 62
5 Size Distribution of Glass Wool Plants 64
6 Number of Employees in the Glass Wool Industry 66
7 Flow Sheet for the Manufacture of Fiber Glass 67
8 Location of Textile Glass Fiber Plants in the
United States 72
9 Distribution of Textile Glass Fiber Plants 74
10 Number of Production Workers for Textile Glass Plants 76
Arthur D Little Inc
-------
PART ONE
EXECUTIVE SUMMARY
Arthur!) Little Inc.
-------
EXECUTIVE SUMMARY
I. INTRODUCTION
The objective of this study is to provide an analysis of the economic
impact of the water pollution control requirements anticipated for
January 1976 on the fiber glass industry. Specifically, the economic
impacts analyzed are:
• Price
• Profitability, growth and capital availability
• Plant shutdowns or production curtailment
• Employment
• Community
• Balance of Payment
• Related Industries
The information and data base for carrying out this analysis were de-
veloped principally from two sources: (1) our background and knowledge
of and experience with the fiber glass industry, and (2) the assistance
and cooperation of certain participating companies in the industry.
In this analysis the industry was divided into its two major segments:
wool fiber glass (SIC #3296) and textile-grade fiber glass (SIC #3229).
These segments are quite distinct in production technology, products,
end-use applications, and markets. In addition, the water pollution
problems in each segment are unique, requiring specific processes and
incurring specific costs.
In initiating our study we found that although a "zero-discharge"
criterion had been established for fiber glass wool plants, specific
guidelines or criteria had not been established for the textile fiber
glass segment of the industry nor was pollution abatement technology
available. Pollution control cost information had not been developed
on either segment. Therefore, the first task in this study was to de-
velop a basis for effluent water criteria that had relevance to textile
fiber plants and which could be considered within the "Best Practical
Arthur D Little, Inc
-------
Technology" of water treatment by January 1976. Using these assumed
criteria for textile fiber plants and the "zero-discharge" criteria for
wool plants, we then estimated the pollution abatement cost for the
industry.
The present fiber glass industry was surveyed to establish the number,
size and location of plants, as well as the specifics of the production
technology. The present status of the industry in terms of markets,
recent growth trends, future supply and demand and profitability levels
were evaluated for each segment. The nature, type and degree of parti-
cipation of the producing companies were also examined.
We then evaluated the estimated pollution abatement cost against the
current prices and expected profitability of plants in both the wool and
textile segments of the fiber glass industry. Correlating these effects
with current performance and the future supply/demand projections, we
analyzed the industry in order to identify if and where plant shutdowns
and production curtailments might occur. The impacts on employment,
community and such factors as balance of payments were also considered.
During our analysis we contacted several producers, both large and small,
in both sectors of the industry for information and concerns related to
their experience in water treatment and opinions about the impact of the
controls on the business. Again, at the conclusion of the analysis, we
discussed the major conclusions and significant findings with some of
the industries' executives.
We believe the information and data developed and the conclusions drawn
represent a reasonably accurate picture of the economic effect of water
treatment cost on the fiber glass industry. However, the many assumptions
made in our analysis, although reasonable at this point in time, may not
necessarily be valid for specific plant situations. As a basis of our
cost analysis, we assumed two different treatment systems for waste water
for textile fiber glass plants. One of these systems was based on BOD
reduction sufficient to allow discharge to municipal treatment systems;
and the other, BOD reduction to allow discharge to a receiving stream or
Arthur D Little, Inc
-------
body of water. If subsequent guidelines require waste water treatments
different from those assumed in this study, our cost data may not be
valid .
Because of the limitations of time and information available, this
study is not to be considered definitive. It was intended to provide
an indication of the kinds of impacts to be expected, and to highlight
possible problem areas.
II. CONCLUSIONS
A. Wool Glass Fiber Segment
1. Financial Effects
• Incremental Cost and Investment
The cost of water pollution control (zero discharge - water recycle) in
the wool fiber glass plant varies from 0.18 to 1.15c/lb of glass wool
produced. These costs are sensitive to the plant capacity and are of
considerably greater significance for the smaller plant. The capital
and operating cost effects for wool glass plants are summarized in
Table S-I. The incremental cost as a percent of selling price spans a
range of 0.65 to 3.8% for the range of existing plant sizes. The incre-
mental capital investment cost of water pollution control is 1 to 3.8%
of current plant investment.
The incremental increase in cost due to water pollution control for glass
wool products will be modest. It is unlikely that these increases in cost
will be passed on independently in the form of price increases. However,
if other operating costs increase concurrently, the cumulative total might
become significant. Historically, the industry has offset cost increases
by increased productivity.
• Profitability
The relative effects on company and plant profitability as a result of
incremental cost increases due to water pollution abatement control are
expected to be small. Assuming no price increase, those plants with
Arthur D I.ittlelnc
-------
1-4
I
to
W
J
53
H
CO
CO
CO
n
rH
PM
CO
CO
*j5
3
prf
W
«
H
PM
Pi
O
PH
H
CO
8
o
H
H
•H
PH
rH
o
o
m
o
CM
o
CTi
o
•vf
«^J-
n
CJ rH
•H
4-1 S
co !s
•H
M
,
4-1 4-1
0 -H
cd o
rJ Cd
CO PL,
6cd
0
4-1 4-1
B B
cd cd
rH rH
PH PM
vO
rH
oo
CM
co
oo
CM
rH
-si-
VO
rH
CM
f^
CM
in
CO
B
o
•H
4-1
Cd
N
•H
rH
•H
44
P
S*^
0
00
<2J
4J
3 o
P-rH
4-1
CD ^
4J
cd
rH
PM
oo
o
00
CM
CM
•
rH
rH
m
c^
m
CM
•
rH
^
•
-d-
r--
•
oo
rH
m
oo
O1*
^H
^
•t
CO
cu
3
B
>
cu
PH
4J
CU
i3
m
rH
VO
in
rH
O
vO
"*
0
rH
VO
CM
O
00
4-1
B
gj
4-1
CO
0)
^
B
rH
H
cd
4-1
•H
cd
u
*o
cu
•rl
PM
4-1
pj
CU
J_)
3
CJ
4-1
CO
0
cj
rH
o
4-1
B
0
o
B
O
•H
4-1
13
rH
H
o
PM
M
01
4-1
rt
13
CO
O
•
O
1
vO
O
•
O
1
CO
rH
•
0
1
o
CO
•
o
1
o
•
o
1
vO
rH
•
0
1
•
o
1
o
•
rH
2
§
•CO-
4-1
B
4-1
CO
CU
^
B
M
rH
cd
4-1
B
Q)
S
CU
a
B
H
in
o
•
o
CM
rH
•
O
CO
CO
•
0
o
0^
•
o
m
rH
•
o
CM
CO
•
O
oo
*
o
o
•
CM
1
0
CM
1
O
o^
•
o
1
0
•
o
1
0
m
•
o
1
m
r-
•
rH
|
vO
•
rH
1
•
rH
1
m
CM
•
rH
O
6s?
CO
cd
4J
I
4J
CO
n
•
rH
m
f*x.
•
CO
CM
•
CO
00
•
CO
o
in
•
CM
4-1
B
1
CO
CU
>
B
M
4-1
B
CU
H
3
O
1
CO
H
a
B
H
CO
rH
•
CO
O
OO
•
O
C*
-------
current return on investment of 10-15% or greater will continue to enjoy
good returns. Plants of any size with current ROl's of 5% or less would
become marginal as the ROl's decrease below this level. However, we do
not believe that any wool plants fall into this latter category.
• Capital Availability
The incremental investment cost for water pollution control, i.e., recycle,
in wool glass plants is 1.25 - 3.75% of current plant investment and this
amount will be expended over three years. Thus annual expenditures for
water treatment and recycle are modest and will not have any significant
effect on the normal capital expenditures of the major companies. The
aggregate capital needs of the wool glass segment of the industry are es-
timated to be about $10 million, assuming that there are presently no
treatment facilities. (However, 40% of the plants have in fact imple-
mented water recycle treatment.)
The demands for capital expenditures within a company cannot be evaluated;
however, we believe that the participating companies are committed to the
fiber glass industry and that capital for water pollution control will be
provided.
2. Production Effects
Presently, the wool glass industry is fully utilizing its capacity, and
supply/demand projections (8%/yr) indicate that this will continue. The
incremental operating and investment cost for recycling of machine clean-
ing, binder make-up and cooling tower blowdown is not of sufficient
magnitude to affect production in the face of the present and future
demands. Although the smallest wool plant (5MM Ib/yr) would face signifi-
cant increased cost (3-4% of selling price), this particular facility is
one of nine plants operated by the company and has a specialized function
within the group. We conclude that no plant shutdown or production cur-
tailment is likely to occur. In fact, there are plans by one major
producer to increase capacities in spite of additional pollution cost.
Arthur D Little, Inc
-------
3. Balance of Payment Effects
Exports of glass wool represent about 2% of domestic wool production and
there are no reported imports. It is highly unlikely that this situation
will change and certainly the small cost effect of pollution control will
not influence import/export markets in any way. By and large, the export
market is determined by a company's desire to develop a local market
situation before building foreign plants to serve these markets.
4. Other Effects
Since there are no marginal operations in this industry segment that
might be subject to shutdown or production curtailment, no effects on un-
employment in the industry or secondary effects on communities or suppliers
or customers are expected.
B. Textile Fiber Glass Segment
1. Financial Effects
• Incremental Cost and Investment
The cost of water pollution control for textile-grade fiber glass plants
depends to a large extent on plant size and type of treatment process
considered. The range of annual operating cost varies from 0.12-0.21<:/lb
of product for the largest plant to 1.4-3.l£/lb for the smallest plant
size (See Table S-I.) Similarly, the incremental fixed capital cost of
treatment facilities is significantly higher for the smaller operation
as a percent of current plant investment. For textile fiber plants with
capacities of less than 5 million pounds per year, the required investment
for water treatment and the associated increase in operating cost will be
expected to have major impact. For larger plants little or no effect is
predicted.
* Prices
The cost of water pollution control will not have any effect on the sell-
ing price of textile-grade fibers. For all but the smallest plants the
incremental cost is less than about 2% of the current selling price.
Independent of other more significant cost increases, the cost due to
Arthur D Little, Inc
-------
water pollution control will not be passed on to the customer. For a
textile fiber plant producing less than 5 million pounds per year, the
incremental cost may be 3-6% of selling price, and although there is an
incentive to increase prices it is doubtful that in the competitive
market these increases could be maintained.
* Profitability
The relatively small incremental cost effects of water pollution control
will have little effect on the profitability of companies or plants.
Plants with ROI's of 10-15% or greater will continue to have attractive
profit margins with the possible exception of plants producing less than
5 million pounds per year. This small operation will become marginal
under almost all circumstances, except perhaps where the lowest degree
of water treatment is adequate.
• Capital Availability
The aggregate requirements for water pollution control for textile fiber
plants to meet 1976 effluent requirements will be approximately $5-6
million, to be expended over the next three years. Plant-to-plant require-
ments will depend on plant size and vary from 0.5-3% of current plant in-
vestment. The requirements for the small independent producer, however,
are significant, and the ability to meet these needs will depend on
profitability rather than capital availability.
For the five major producers, the total investments for both wool and
textile fiber are modest and represent from 1-7% of the company's 1971
expenditures annually for three years. We conclude that there will be
no significant problems of capital availability.
2. Production Effects
Although the textile glass fiber segment of the industry is operating at
less than full capacity utilization, the future supply/demand situation
appears healthy in that growths of 13-15% per year are expected. For all
plants with production capacities greater than 5 million pounds per year,
the incremental cost of water pollution control and the capital invest-
ment required will not influence production.
Arthur D Little Inc
-------
The cost increases to the smallest producers (<5MM Ib/yr) are significant
and it will be difficult for such operations to absorb these costs. Only
one producer has production less than 5 million pounds per year, and this
production represents less than 0.2% of the fiber produced in the United
States.
3. Employment and Community Effects
With one possible exception the incremental cost of water pollution
control in the textile fiber glass industry is not expected to cause any
plant shutdown or production curtailment.
A single plant (<5MM Ib/yr) could be affected by increased cost. This
would involve less than 0.5% of the industry work force. The location
of the possible marginal operation is in the metropolitan New York area
and we believe that the effects on the community would be minimal since
there are less than 25 people involved.
4. Balance of Payment Effects
Textile glass fiber contributes relatively little to the balance of pay-
ments. No increases in the modest import/export quantities are expected
to occur and certainly the incremental cost increases due to pollution
control will not influence these quantities. Any changes in the export
market will be dictated, by and large, by a specific company marketing
strategy and price will have little or no effect.
Arthur D Little Inc
-------
PART TWO
IMPACT ANALYSIS
Arthur D Little Inc
-------
I. INDUSTRY SEGMENTS
A. Major Segments of the Fiber Glass Industry
The fiber glass industry can be considered to be made up of two major
segments: (1) fiber glass wool (SIC #3296) and (2) textile-grade fiber
(SIC #3229). This differentiation is made since the technologies are
in many ways quite distinct, the end products have different applications
and markets, and the water pollution problems in the two segments are
unique. In our discussion of control cost, price effects, etc., through-
out this report, we have dealt with the two segments separately.
B. Wool Fiber Glass Segment
In testing the sensitivity of the industry to the impact of water abate-
ment treatment we have examined factors which differentiate plants in
this industry segment. Such factors as production technology, plant size,
location and age and product may influence the overall impact that might
occur.
For this industry segment we have used as a guideline the complete re-
cycling of process water by January 1976. Although two treatment proceses
are now in use in the industry, both meet the guidelines and are not
significantly different in cost or performance.
1. Technology
Basically, the production of glass wool involves the melting of the raw
materials batch to form a homogeneous glass, fiberizing the molten glass
stream and forming a random mat of fine fibers bonded together with a
thermosetting phenolic binder. The resin is cured in low-temperature
ovens and cut and packaged into the various product forms. (The tech-
nology of wool glass manufacture is described in the Appendix.)
In the wool glass industry there are different schemes for melting and
feeding of glass (direct melt vs marble process) and alternative approaches
to the fiberizing process (flame attenuation vs rotary spinning). Although
there is some cost differential in the specific melting and fiber forming
scheme utilized, some of these economics are offset by the product
Arthur D Little Inc
-------
flexibility and speed. In general, there is a trend toward more use of
direct melt process and rotary spinning fiber forming.
There are, however, no important ways in which the specific production
technology employed in a plant influences either the rate and composition
of plant waste water or the associated cost.
2. Plant Size
There is a wide range of capacities among the present glass wool fiber
plants. There is a factor of about 80 between the largest (440MM Ib/yr)
to the smallest (5MM Ib/yr). The largest number of plants (12) have cap-
acities of 25x-100MM Ib/yr. The majority of plants are multiproduct
operations producing home insulation, pipe duct, wool products, industrial
insulation, etc. A relatively small number of plants produce a narrow
product line, i.e., high-volume products, principally home insulation.
The major effect of plant size is the relationship of size to the incre-
mental cost of water pollution control. Since these costs are not directly
related to the capacity of the plant, smaller plants will bear a propor-
tionally higher operating cost for abatement treatment than larger plants.
The effect of plant size on the cost of water recycling is plotted in
Figure 1. The spread reflects slightly different recycling systems. One
plant has a rated capacity of <10MM Ib/yr.
3. Plant Age
Wool plants span an age of from 2 years to more than 25 years since plant
start up. About 30% of the plants are 10-15 years old while 25% are less
than 10 years old, but time since start up is not necessarily a good guide
to plant efficiency or profitability. All plants have undergone considerable
upgrading of the production process and in many cases facilities have been
expanded with installation of state-of-the-art processes. Any effects of
plant age will be of more significance in the cost of installing water
recycling systems. The situations are such that in specific plants changes
in piping and construction are more difficult to undertake. These costs are
difficult to generalize since each plant presents different problems in the
location of treatment facilities and the exact new construction required.
10
Arthur D Little, Jnc
-------
2.0
1.0
0.5
O-
O
O
00
e
•H
4J
cd
<§•
cd
ti
0.2
0.1
10 100
Plant Capacity (MM Ib/yr)
100C
FIGURE 1 EFFECT OF PLANT SIZE ON COST OF WATER RECYCLING
IN WOOL PLANTS
11
Arthur D Little, Inc
-------
If we assume that the additional installation costs might be increased by
50% to cover additional construction and piping cost, we find that the
effect is to increase the water recycling cost per pound of product in
the older plants by 28% for the largest plant and by 18% for the smallest.
4. Plant Location
Glass wool plants in the United States are largely located near principal
markets. Regional plants serve the principal population centers of the
country, since the shipment of insulation would be a significant cost
factor. There are no major changes in the market which appear to dictate
that any of these plants are threatened because of shifts in the market.
Rather, we would expect that new capacities would be located to take up
any growth in specific areas, as illustrated by the location of the most
recent plants in the Southeast and prior to that in the Southwest. In the
future, major changes may take place which might raise the question of the
viability of certain of these facilities; however, this is unlikely to
happen within the projected period of the next three years.
In the analysis of plant sensitivity to the economic impact of the addi-
tion of water treatment and recycling in the wool glass fiber segment of
the industry, we conclude that plant size and, to a lesser extent, plant
age may be viewed as presenting different sensitivities. However, these
differences appear to be relatively minor. In our discussions with the
management of the major producers these factors were recognized but not
seen as having any bearing on production or expansion.
Considerable progress has been made in installing recycling or machine
clean, binder and cullet quenching water in wool plants. Approximately
40% of the wool facilities have installed recycling water treatment
facilities. Another 20% of the plants are discharging into municipal
systems. We understand that the participating companies are committed
to the installation of water recycling systems in this latter 20%. These
two groups pf plants produce more than 90% of the wool in the United
States.
12
Arthur D Little, Inc
-------
C. Textile-Grade Glass Fiber
Fifteen plants in the United States produce textile-grade glass fibers.
Fifty percent of tfyese plants are owned by major fiber glass producers
which participate in both the wool and textile segments of the business.
The remaining plants are smaller operations and represent single plant
productions.
1. Technology
The technology of the production of textile-grade fibers is very similar
in all these plants. Basically, molten glass is formed into fine, uniform
continuous filaments by a process unique to the textile glass fiber industry.
(The process details are described in the Appendix.)
There are differences in some details of the melting technology in the in-
dustry. However, the use of marble vs direct melting processes will not
influence the amount or composition of the waste water stream of a textile
glass fiber plant.
In the production of textile-grade fibers the waste water streams are:
cooling water from furnaces and bushings; binder overspray and clean up,
and cullet quenching. The waste streams are complicated in that there is
a wide range of binder resins, coupling agents, wetting agents and sizing
applied tp the glass in any one plant. The composition of the plant
effluent will be largely determined by the types of binder, coupling agent,
etc., used; however, in the waste water treatment chosen for the cost
analysis, the range of compound used throughout the industry has been taken
into consideration.
Among the plants there appears to be no significant process or technology
differentiation that would have a major influence on the impact of water
treatment cost.
2. Plant Size
There is a significant spread in capacity among the textile fiber glass
plants. The largest plant has an annual capacity of 170MM Ib/yr, while
the smallest is about 2MM Ib/yr. Fifty percent of the plants have capaci-
ties of 50-100MM Ib/yr and 35% of the total capacity is represented by the
two largest plants.
13 Arthur D Little, Inc
-------
The cost of water treatment for textile glass fiber plants is not directly
proportional to plant size, in that the small plant will experience a
higher cost per pound of fiber produced. Figure 2 shows the variation in
water treatment cost per pound of glass fiber as a function of plant cap-
acity. The band in Figure 2 is a result of different levels of treatment.
(See Section IV.) The increased cost to the small plant (<5MM Ib/yr) is
significant and represents 3-6% of the selling price of fiber. For the
largest plant, this increase is of the order of 0.2-0.5%.
Similarly, the investment cost for water treatment facilities, although
proportional to plant size, can represent a significant investment for a
small plant. For the largest plant the capital investment for water
treatment facilities may be of the order of 0.5-1.5% of current plant in-
vestment. Although the investments are not large in terms of absolute
dollars, they are significant to a small plant.
We estimate that only one facility currently in operation has a capacity
less than 5MM Ib/yr.
3. Plant Age and Location
The time since plant start up is not a good guideline to the sensitivity
of a specific plant to pollution control cost. Of the plants surveyed,
40% have been built in the last 10 years and 40% were built more than
20 years ago. However, of greater significance is that 65% of all these
plants have undergone expansion and modernizing within the past five years.
Two facilities built more than 20 years ago have not had major overhaul
within recent years.
Plant locatipn could be a sensitive factor and is closely related to
plant age. Those older operations are generally located in heavily
built up industrial areas within cities. Thus there is the additional
problem of sufficient space for water treatment facilities. Newer plants
are located in less confining areas where sufficient land is available for
ponds and lagoons. It is, however, relevant to the 1976 guidelines that
municipal systems are available to the older plant within cities while
newer locations generally do not have access to municipal or regional
systems.
14
Arthur D Little, Inc
-------
1.0
0.1
.01
10 100
Plant Capacity (MM Ib/yr)
100(
FIGURE 2 VARIATION IN WATER TREATMENT COST/LB GLASS FIBER
FOR TEXTILE FIBER GLASS PLANTS
15
Arthur D Little Inc
-------
These are offsetting factors in that where full water treatment would be
required before discharging to streams there appears to be sufficient land
available for the required facilities. However, for older plants in heavy
industrialized areas municipal systems are available. We have identified
one plant with full water treatment, four with primary treatment and dis-
charging to municipal systems and three plants discharging directly to
municipal systems. These plants represent 55% of the existing textile
fiber plants.
In summarizing the analysis of the sensitivity of textile fiber glass
plants to water pollution control cost, it appears that the major factor
which differentiates plants is size. The cost of meeting 1976 guidelines
will be more for the small plant than the larger ones. In particular, the
small (<5MM Ib/yr) producer of textile-grade glass fibers will feel the
greatest impact. One plant falls within that category and this operation
represents 0.2% of the total U.S. fiber production.
16
Arthur D Little, Inc
-------
II. PRICE EFFECTS
A. Price Determination in the Fiber Glass Industry
j.. Wool Glass Segment
Pricing in this industry sector is different for each of the three basic
product groups, two of which are distinctly at variance with the textile
sector.
The three basic product groups are:
• Building Insulation
• Architectural Products
• Industrial Applications
An understanding of the basic marketing and distribution strategies for
each of these is required, as these strategies control and influence
price determination.
For building insulation, all distribution channels are used. Companies
will sell directly to major homebuilders, modular housing producers and
mobile home manufacturers; they will also market to mass merchandisers
and to building material wholesalers. Because of this variety of immedi-
ate customers, defining customer types and evaluating the qualifications
of each for the appropriate prices and discounts can be a serious problem.
Pricing in the building insulation sector is extremely competitive, is
determined on a regional basis, and is sensitive to plant locations and
resulting freight costs. There is little variation between the performance
of the products supplied by the four companies competing for this market
and, as fiber glass has largely been substituted for other types of minerals
insulation in all uses, pricing can be extremely keen and will exhibit
some elasticity.
Architectural markets, such as for roof insulation and acoustical ceiling
tiles, is frequently on a specification and bid basis. Interindustry
competition is greater than in most other glass fiber applications and
thus the manufacturers' architectural representatives have the continued
responsibility of maintaining contacts with the specifier and decision-
maker and giving whatever technical assistance is required. Free market
17
Arthur D Little, Inc
-------
pricing would naturally reflect these marketing costs but pricing decisions
are frequently on a project-by-project basis and the bid price will depend
on the amount of competition anticipated; sole source contracts are infre-
quent.
Industrial sales, such as for pipe, automotive and appliance insulations,
are similar to textile glass fiber marketing. In this case, large volumes
of material are involved and deliveries are required at a constant rate
and on a predetermined schedule. Selling prices are negotiated directly
between the two companies and will result in a contractual agreement
covering a period of time, perhaps one year.
2. Textile Glass Fiber Segment
The textile glass fiber sector, although a concentrated industry (i.e.,
the largest four companies control more than 70% of industry sales) with
few participants, includes a wide range of types of companies and sizes.
The largest of these companies offers a relatively full product line but
some of the very small, single-plant companies concentrate on a narrow
product line.
The major companies approach product pricing in a classical fashion by
establishing desirable profit margins and returns on investment on a multi-
product and a multi-region basis. Selective pricing for individual products
is less likely to occur with the larger company than with the smaller, al-
though it might occur if a company is attempting to develop a new applica-
tion for its product with its customers. That is, a different pricing
approach might well be taken for an established market than for a new one.
Standard prices are published and are generally adhered to. Classical
price elasticity, responding to specific supply/demand relationships, does
not generally occur in either a rising or a declining market. Thus, weak-
ening demand does not appreciably weaken prices, and vice versa. Cost
increases by a company either are absorbed through productivity increases
or passed on to the customers (assuming no price controls). Price leader-
ship generally resides with the principal company in the industry and is
more frequently followed than not by its direct competitors. If such
18
Arthur D Little, Inc
-------
action does not stimulate a response from other companies, the leading
company may be forced to back down. There does not appear to be a similar
price leadership in a downward direction.
The textile glass industry is sufficiently well established for prices to
respond primarily to intra-industry competition; there is inter-industry
competition in the decorative market with regard to synthetic fibers and
to a very moderate extent in reinforcing fibers. For reinforced plastic
applications, the glass fiber customer is primarily interested in total
systems pricing and the fiber supplier must be sensitive to this. Although
the latter will also supply resins, fiber and resin prices are generally
established independently of each other.
The marketing and distribution of textile fiber glass is most frequently
(at least 75% of the time) conducted directly by the manufacturer to the
industrial customer. Fiber glass is a highly technical product and
requires much pre-selling before a specification is defined and sales begin.
Thus, marketing costs are relatively high and must be allowed for in the
pricing structure. Volume discounts to the customers can be obtained and
these are appropriate distributor discounts for the small portion of the
total volume that goes via that route.
B. Price Trends
Average prices for textile glass fiber declined steadily from 1962 (47.6
-------
There has been and continues to be a distinctly different situation in
the wool glass fiber sector. Prices for both building insulation and for
industrial, pipe and equipment insulation have increased steadily over
the past 10 years and currently stand at all time highs. The strong show-
ing of residential construction especially has put great pressures on the
availability of wool glass insulation and the industry has been allocating
shipments to its customers. We can speculate that, assuming that no price
controls had been in effect over the past 15 months, prices would have
increased during this period and would have been an effective means of
allocating available supplies.
C. Anticipated Price Changes Due to
Pollution Control Requirements
Additional water pollution control costs may or may not be passed on to
the customer in the form of increased prices, but a company or an industry
is not likely to make such a decision in a vacuum. While additional costs
can be directly attributable to increases in capital investment and cost
of operations, the company must also consider its position relative to its
competitors, the interrelated effects of other types of pollution control
requirements and the economic environment in which it operates.
However, it is possible to make some preliminary estimates on operating
costs as a percentage of selling price due to water pollution control re-
quirements. These estimates must necessarily be approximate, as pollution
control cost information has not been available from the Environmental
Protection Agency.
Assuming that the incremental capital investment required for water pollu-
tion control is amortized over a 10-year period, the incremental pollution
abatement costs for textile fiber will be as follows:
Plant Capacity
(MM Ib)
160
40
10
2
0/lb
0.12-0.210
0.19-0.49
0.38-0.80
1.43-3.13
20
of Selling Price
0.27-0.47
0.55-1.40
1.10-2.28
2.86-6.26
Arthur D Little; Inc
-------
The range depends on the type of water treatment that will be adopted.
Thus, the median effect on operating costs might be about 0.4(?/lb on
selling price, or about 1.0%. It is unlikely that these costs will be
passed on in isolation through increases in selling prices, but will, in
all likelihood, be transferred if other operating costs were to increase
concurrently and to make the cumulative total a reasonable amount. The
degree to which a company can increase and then hold its prices will de-
pend on a variety of factors, including the geographic market it serves;
intra-industry competition for that product; the level of demand and the
product's performance specification. There is obviously a greater in-
centive for the smallest plants to opt for price increases, but only one
plant in operation has a capacity as low as two million pounds. This
facility may be forced to increase its average selling prices but those
with capacities of 10 million pounds or more are unlikely to do so.
For wool glass fiber, the following average increments apply:
Plant Capacity Q/lb % of Selling Price
(MM Ib)
440 0.18 0.66
90 0.28 1.08
20 0.47 1.68
5 1.04 3.47
While there will be some variations in these values, depending on the type
of water treatment adopted, the variations are small enough for them to be
averaged. For a "typical" plant, the values will thus be 0.4
-------
III. FINANCIAL PROFILES
Financial profiles for this industry are difficult to make, as almost all
of the major manufacturers are fully diversified corporations, involved
in a wide range of businesses and not willing to divulge confidential
financial data on specific parts of their aggregates. In addition, while
some reasonable attempts can be made to characterize the two principal
segments, it is difficult to do so on a plant-by-plant basis; there is a
wide range of sizes, ages, processes and product mixes.
A. Wool Glass Fiber
Plant capacities in this sector range from 5 million pounds to 444 million
pounds annually. The median capacity is about 50 million pounds. Dollar
volume of sales ranges from approximately $1.2 million per plant to $110
million, with a median of about $15 million. Profits before tax on sales
for wool glass plants have been good relative to textile fibers; they
currently range from about 9% on sales before taxes to 20%, with a
median of 12%.
As a percentage of manufacturing costs, the fixed portion for a larger
plant is 60%, the variable, 40%. For a small plant, fixed costs repre-
sent 50%.
B. Textile Glass Fiber
Plant operating capacities in this sector range from as little as 2 to 170
million pounds per year; those of the four major participants range from
25 million pounds annually to the maximum. The median of this range would
be approximately 45 million pounds.
Sales value from each facility on an fob basis would range from approxi-
mately $0.8 million to $55 million (assuming average 1971 operating rates
of 70%). On this basis, the median sales volume of an individual facility
would be approximately $15 million annually. By most industry standards,
profitability of the textile glass sector is low, ranging from 5% to 7%
on sales before taxes in 1971, but probably at a higher level in 1972.
As operating rates have increased, we believe that the rate of profitability
is currently 7-10%, with a median of 9%.
22
Arthur D Little, Inc
-------
For the medium to large plant, 40% of average manufacturing costs can be
regarded as fixed, the remainder being variable costs. The small plant
would have a lower proportion (perhaps 30%) of fixed costs.
C. Constraints on Financing Incremental Assets
The actual investment required for an individual glass fiber facility will
depend very largely on what pollution abatement there is and what is avail-
able from the city/municipal system. These investment costs can typically
be amortized over a 10-year period before changes in technology demand a
revision of operating standards and methods. Constraints on financing
the incremental investments required will vary between wool and textile
glass, partly because of the sizes of plants involved but mostly because
corporate involvement is characteristically different in each segment.
Few old plants and little obsolete equipment are in use in either wool or
textile glass fiber production and therefore the industry participants
have valuable assets to protect, even if incremental investments are re-
quired. Whatever the amount, the smaller companies will find it a greater
burden. One-half million dollars per facility may be of little signifi-
cance to the larger companies, but one-hundred thousand may be a crippling
amount for the smallest. The likelihood is, however, that incremental
investments will be well within the financial capabilities of all
participants.
23
Arthur DLittklnc
-------
IV. POLLUTION CONTROL REQUIREMENTS IN THE FIBER GLASS INDUSTRY
A. Availability of Effluent Guidelines
a.nd Cost Control Data
Initially this study was to be provided with established pollution control
guidelines and abatement technology for the fiber glass industry. Further-
more, the cost of water pollution control for the textile fiber glass seg-
ment of the industry was to be made available. However, while guidelines
had been established for the wool fiber glass, effluent guidelines and
abatement technology for the textile industry and related cost information
were not developed for the industry to the point where they could be used
as a basis for this study.
Therefore, we have developed the necessary background information and as
sumed guidelines that have been attained by existing treatment processes
as a basis for this study. We further used these guidelines (and waste
treatment systems) to estimate abatement cost for the textile fiber
industry. Using the suggested guidelines for the wool segment of the
industry, we also developed costs for the zero-discharge waste water system
In both cases, we have compared our estimates of capital investment cost
and operating cost with industry experience.
B. Wool Fiber Glass Guidelines
EPA suggested that the effluent guidelines for the insulating wool segment
of the fiber glass industry be "zero discharge" of waste water since the
technology for total water recycle does exist and two different types of
treatment systems (both allowing total water recycle) are in use by the
two major manufacturers of insulating fiber glass wool.
Our estimate of the capital investment and operating cost for wool glass
fiber is given in Table I. In estimating fixed capital investment, two
specific designs of the treatment system were selected and scaled to a
range of water flow rate spanning the plant sizes of interest. This data
compared favorably to the experience of two producers who had installed
similar systems. The operating costs were composed of estimates of oper-
ating and maintenance labor, chemicals and materials, and depreciation of
the capital investment over 10 years.
24
Arthur D Little Inc
-------
TABLE I
ESTIMATED COST OF WASTE WATER TREATMENT FOR
INSULATING FIBER GLASS WOOL MANUFACTURE
Type Treatment System
(A) (B)
Coarse Filtration
Plant Coarse Filtration Flocculation
Capacity Fine Filtration Settling
(MM#/Yr) ' Water Recycle Water Recycle
440 Fixed Cap.Investment($1000) 2000 1050
Annual Operating Cost($1000) 610 680
90 Fixed Cap.Investment($1000) 800 4001•2
Annual Operating Cost($1000) 200 2003
20 Fixed Cap.Investment($1000) 3251 160
Annual Operating Cost($1000) 80 71
5 Fixed Cap.Investment($1000) 150 70
Annual Operating Cost($1000) 46 37
1. Based on Costs reported by the industry
2. Actual investment was closer to $600,000 but the existing system
has more capacity than required
3. Reported cost was closer to 0.3<:/lb, but reported treatment chemical
cost seems high
25
Arthur D Little Inc
-------
C. Textile Fiber Glass Effluent Guidelines
The effluent from textile fiber glass production would typically be char-
acteristic of textile mill waste water, since many of the binders and
sizing agents (e.g., starch, polyvinyl acetate, polyester, etc.) are
common to both of these industries. Table II presents the level of treat-
ment demonstrated in treating textile fiber glass waste and compares this
with the level of treatment typically experienced by synthetic textile
mills.
For these reasons we have based our estimates on waste water treatment
costs for textile fiber glass waste water treatment on the degree of treat-
ment already demonstrated in the textile fiber glass industry, which is
very similar to that experienced by textile mills processing synthetic
textiles.
Our preliminary estimates for the capital investment cost for treatment
types "C" and "D" in the textile fiber glass industry are presented in
Table III. Annual operating costs are shown for treatment types "C" and
"D" in Table IV. In order to see the impact on the waste water treatment
cost if a lOppm concentration of suspended solids in the discharge were
required, the additional investment and operating cost of sand filtration
were estimated (Table V, Type "E"). These industry cost estimates are
based on only two actual treatment systems (treatment types "C" and "D")
constructed several years ago and subsequently modified extensively. Our
capital investment estimates are based on the construction of new facilities
and therefore are slightly lower than those actually experienced by industry
where their systems evolved through modifications. We believe our estimates
of capital investment are close enough to those actually experienced by the
industry however to lead to valid estimates of the waste water treatment
costs. Our estimates of operating costs include costs of operating and
maintenance labor, chemicals and raw materials, maintenance materials, and
depreciation at 10% of capital investment per year. Fixed capital invest-
ment cost and annual operating cost for the various types of treatments
(C, D, and E) are summarized in Table VI for a range of plant sizes. Note
that process "C" effluent requires subsequent treatment in a municipal
sewerage treatment plant.
26
Arthur D Little, Inc
-------
w
CO
w
2
p5
H
^J
PM
^
^
C/5
CO
^
1^1
5
w
pq
H
w
H
M
JV]
H
Pd
O
H
!Z3
co
CU
0
0
Vl
P-I
4->
c
CU
a
4-1
cfl
CU
Vi
H
MH
O
0)
o
>
/— ^
p
s^
y.-^
0
- C CU
S iH iH
O rH MH
•H 4J -H
4J 4J Vl
cfl CU CU cO
N CO OO rH
•H 13 U
H >, 3
cfl V) rH >
Vi eg CO Vi
4J E co
3 -H -13
CU Vl 0) C
52 PJ 00 O
13 CJ
•* •* 3 cu
d C rH CO
O O CO
•H vH •
4J 4J 13 4-1
(0 CO CU d
N H 4J CU
•H 3 co a
rH O > 4-1
§CJ -H Cfl
O 4J CU
W Pu VI d
•H d CU O
4J o O
CN
o
o o o
m
oo
oo
o
oo
I I
O O
00
I I
O O
OO CN
O
o o
o o o o
\O
I
m
I I
o o
o
-3-
m
CN
I
m
CN
I
W
H
c/a
W
H
CO
ameter
^1
cfl
p 1
/00
"**S
d
o
•H
4J
a
^
'O
CU
p3
p
o
M
^"l
13 >J
CU Vl
4-1 4-1
CO CO
rH 3
CU 13
p^ pj
M
rH
4-1
rj
CU
CO
CU
M
PM
/— X
rH
00
^a.
4_>
d
^
rH
MH
MH
Hil
p
S
00
d
•H
4-1
cfl
Hi
CX
O
MH
MH
4-1
ij
0
Vl
P-I
=«=
o
0
o
rH
"•s^
p
§
•»
CU
rH
•H
4J
^
01
H
'oo
N.^
d
o
iH
4-1
CJ
3
*"CJ
CU
prf
p
8
M
en
03
w
rH
0
Vl
CU
rO
•H
^•^
00
a
•W
d
cu
3
rH
M-J
W
p
o
o
Vi
cu
4-J
£5
cu
4-1
co
3:
MH
W
4J
0
13
O
Vl
PM
5**j
O
o
o
rH
^^x.
P
8
*
4-1
d
c£
4-1
cfl
CU
Vi
H
ds Reduction (Avg
•H
rH
0
CO
T)
CU
d
cu
o-
co
3
w
«*>
m
B
cu
4J
CO
CO
Effluent mg/1
co
•H
rH
O
CO
T3
CU
d
CU
O.
CO
3
ds/# Product Eff
•H
rH
0
co
•u
cu
d
CU
ex
CO
3
CO
•*
d
o
•H
4-1
U
3
CU
p^
p
§
&-S
rH
Cfl
U
•H
a
H
r7
00
^
4J
d
^3
rH
MH
MH
W
P
0
PQ
O
•H
4-1
CU
4J
d
CO
d
o
•H
4J
O
3
CU
PC!
P
8
B-S
rH
H
T-t
^rl
CU
rH
tH
4-1
CU
H
rH
00
^a.
4J
d
j3
rH
MH
MH
W
p
o
0
Vl
CU
4-J
cfl
CU
4-1
co
cfl
£3
Reduction
co
•H
rH
O
CO
13
CU
13
d
CU
cx
CO
3
CO
**
4J
d
a
4-1
CO
CU
Vl
H
5
1
rH
M-l
MH
W
CO
•iH
rH
o
co
13
CU
13
d
CU
p.
co
3
CO
co.
a
CU
4-1
CO
^»
CO
27
Arthur D Little, Inc
-------
CO
H
S
P3
H
to
W
H
fSZ
w
53
E"J
CO
frf
>
M
M
1— 1 i— I
rH ,
^^
==»:
§
CM
S-l
S-|
^^_
*
g
O
rH
SJ
^"t
^^
*<
g
O
*^-
Vi
^
*«^
s**5
g
§
\D
rH
o o o o o
o o o o o
o o o o o
CM H CM O CM
rH
•CO-
O O O O O
Q O O O O
O O O O O
-a- CM -a- o CM
CSI
0 O
O 4-1 O 4J 60 PM
o cd MH a) cd
M N 4-1 CO hJ 60
n) -H cd 0
hJ rH rH >-, T3 -H
cd 3 W CU .13
••O !H O cd 4J CO
0) 4-1 O 0 cd -H
4J 3 0 -H M rH
Cd 0) rH M 0) O
f-i ja Pn PL, < pj
0)
i O
cd 0
ro o
O )-i
rH v^ CU
N-' -H *
00 Q) MH *
0 60 -H rH
0 -H T3 M cd
O rH 3 td CO
0 -H 0 4-1 rH rH O
O 4-1 O 4-J CO O CX
•H cd -H CU CO
•U N 4J Crt T3 >-, -iH
Cd ^H cd Q) i-l Q
N rH rH fe-, 4-1 Cd
•iH Cd 3 W CO Tt CU
rH tH O Cd > 0 60
Cd 4-1 CJ B -rl O T3
3 3 O -H 4J cj 3
U* CU rH M CJ CU rH
W S PL, PM 60 -H -H
C^J C r-H Cb
•W- -H ^H -H
CJ rO P-l
•H Cd
4J -U •>
o to a)
cd cu
M M-l p..
PM o
co
S-l rH -
O rH M
O 14-1 -H O
O MH 4J
O 00 T3 CJ
cj tp^ cd M
f*> CU 0
<"- o) - 5
000
•H O
60 vH •>
0 4J CO
w co a)
CU -iH
>•, 60 O
4-J *H 0
•iH Q 0)
rH 60
cd o 0
Cf J3 4J
O 0
S-i M O
o 2^u
4J td < -
J2 •* 60
TJ - 00 d
Q) " c .5
"2 C -H H
g O 0 0)
3 Q) 0)
5 t) ^ 0
P3 Q) CJ -rl
CO -rl 60
Cd ,0 0
M H W
* * *
* *
*
28
Artlnii f)l
-------
CO
w
H
5§
H
H
CO
w
H
CO
o
o
o
53
M
> H
M i
4J
•rl
O
Cfl
P-i
cO
CJ
4J
a
cfl
H
PH
rl
>-!
=»!
^
CM
(-1
>-i
=*fc
g
O
H
M
>•<
-»s.
=*fe
s
O
•st
M
5H
=«=
g
O
vO
1
r~t
o
CO
m
in
o
CO
rH
O
oo
CM
4->
a
§
4-1
CO
CU
>
a
H
P-
cO
a a TJ
o o a 13
•H C O O Q)
4J O MPM |x!
cfl >H cfl tH
N 4-1 n4 60 fn
•H cO 0
H rH T3 -H x-s
CO 3 Q) 43 O
^ O 4J CO O
4J CJ cfl -H O
3 O M H rH
0 0
O O
O rH
i-» ,-H
rH
•co-
*
M
1—
?-*
O 0
O 0
o m
^ ft
t*~. m
rH
•CO-
*
rl
>>
O 0
O 0
0 0
ft ft
r*. CM
r-l CM
fj\-
^Jr
*
^
>.
o o
o o
o o
ft ft
r-s, 00
rH 00
•co-
ca
rH
t) CO
CO -H
0) rl
4- 0)
IH 4J
OJ CO
£S
T3
T3 fi
C CO
CO
CO
rl rH
O cfl
JO 0
CO -H
J 0
. <])
ax:
o cj
0 0
o o
00 O
rH CO
0 0
0 0
o o
ft ft
co m
o o
o o
o o
* *
OO CO
rH
o o
o o
o o
ft ft
r~^ oo
rH CM
M
>•
H
0
PK
u ^s
>,0
•>s. rH
M
CJ ti
pt< O
•H
S-S 4J
VO CO
•H
« CJ
4J CD
G rl
•H Pu
CO
M
t^
P^
O
o
m
A
O
CO
•CO-
M
>>
o
O
O
ft
o
vO
•co-
M
>-,
O
O
o
ft
o
m
i
r~l
•CO-
m
CO
*
*
*
o
o
o
«t
vO
CO
•CO-
M
>.
O O O
O O O
co I-H in
•S M
CM CO
o
o
CT<
ft
rH
-3-
•CO-
0
O
lab $5000/yr
r+contro
000
•K
•K
•K
O
0
O
«
vO
CO
•co-
CD
O
O
*
rH
o
0
O
ft
vO
\-t
>*
•^
O
o
o
ft
o
rH
0
O
O
ft
CO
in
».^
i
nn
•CO-
^•v
T3
O
(U
00
T3
3
rH
CO
T3
(U
4-1
CO
>
•H
4-1
O
<3
O
in
CM
O
•si-
rs.
4-1
f-t
1— t
a
4-1
CO
A)
1
H
ft
cfl
CJ
-o
S
•H
Pu
/" s
O
O
0
i-H
•w-
s_ /
O
O
o
*\
o
TJ rl
C! 0
cO X>
cfl
rl rH
o
43 6s?
(0 0
h4 m
•
a-
o
o o
o o
o o
•t ft
co m
rH
o o
0 0
0 0
*i M
<• -si"
rH «sf
CO
cfl
•H
M
OJ-K
•W*
cfl«
g M
>.
TJ ~s.
G H
cO cj
Pu
CO
rH BS»
CO vO
Q
o
o
o
rs.
CM
rH
•CO-
M
>.
O
o
o
ft
vO
rH
CM
•co-
OJ
hfl
m.
-H
«.
H
PM
V4
>>
0
O
m
CM
•CO-
CU
CO
rrt
TO
pq
VJ
>^
o
o
o
CTi
tut
?N
•^3"
rH
C^
II
II
4-J
n I
•H
^
W
"d
1
i C
-•s, 0
O 0
o
o +
ft
^•O Vj
, J h^^
i— 1 px,
-CO- ^
v^O
O
X 0
.-* I f%
•sr \L/
i — 1
It
4-» II
M-l
,_1 r^
I" K*^l
(-" crt
A-I ^y
0) T3
"^^
cd cd
8 P
I __.|
t— 1 1 1
Jf
CJ
•X
*
29
Arthur D Little Inc
-------
TABLE V
Sand Filter
Packaged Units
TEXTILE FIBER GLASS - ADD ON COST TO MEET
IQppm SUSPENDED SOLIDS IN EFFLUENT
Sand Filtration (Treatment "E")
Feb. 1970 Maxiflow Sand Filter
12.5 ft2 area x .10 ft high bed
$13,000 Automatic Operation
$ 8,300 Manual Operation
2
Filter Rate: 6-12 gpm/ft
U.S. Filter
120 ft3 Total Volume Bed
66 ft3 Solids Capacity
Model 4
6x12.5 = 75gpm
Textile Glass
Production
Mtf/yr
160
40
10
Flow Rate gpm 1200 300 75 20
1970 Manual Operation $90,000** $37,800** $8,300 (1 unit) $8,300 (1 unit)
1970 Instrumentation 10.000 10,000 4.700
Total 1970
1972 Equipment
$100,000
110,000
xl.5
$47,800
52,700
xl.5
$13,000
14,300
xl.5
$8,300
9,200
xl.5
1972 Fixed Capital
(FCI)Investment $165,000
$79,000 $21,000
$14,000
Labor and Overhead
***Maint.+Depr.
(16%FCI)
Annual Operating
Cost
$16,000 $16,000 $8,000
26,000 13,000 3,000
$42,000 $29,000 $11,000
$4,000
2,000
$6,000
* Existing plant @ 40-50,000 gpd
** Three units, two in continuous operation
*** Includes Sand Replacement
30
Arthur D Little Inc
-------
M
W
,-J
^J
H
CO
co
cu
o
w
EH
CJ
P1-.
j~1
S
^3
is
C/3
cn
^1
j-3
o
prf
w
M
H
PH
pa
H
H
[Vfl
H
pJ
4J N 4-1 CO T) CU rl >, 4-1
Cd iH Ifl CUBHWrH
NrHrH&-,4-)4J Cd-H
rH ^-4 CJ Cd ^ CU 60 B
Cd 4-1 CJ B 'rl M TJ O TJ
3 3 O *rl 4J t~l 3 CJ B
KJ* CU i — 1 &H CJ rH CU CO
W ;s PH en <§ co w to
r*^ ^3 10
<^ CT> ON
rl
cu
•H
0) 4-1 tH
60 C -H
B CU TJ CU VJ
0 60 3 B CO
B -rl C Tl rH 4J rH
•H CO -H rH B CU
.U N 4J CO TJ QJ J-J >-
cd -H cd CU S H M
N rH rH >i 4J 4J CO
•H CO 3 ri CO cd
rrj
0)
TJ
B
cu
ex
CO
3
r>S
H
60
^S
B
O
•rl
4J
cd
4-J
B
CU
o
B
O
a
4J
B a Q
CU O O
3 M O
rH
UH
W
o
o
0
rH
•co-
co 4-1
*O C
•rl CU
rH 3
O 4J
CO CO
CU
a) C
TJ 1— 1
B
cu ex
ex cd
CO U
rj
C/5 TJ
CU
X
•H
PH
O
O
O
rH
CO
O
u
60
B
•H
4-1
cfl
r-4
CU
ex
o
rH
CO
3
B
C
o
O
O
O
rH
4J
B
) t
CO
cu
B
H
ex
co
""0
cu
X
•H
PH
O
0
O
rH
4-1
CO
O
O
60
B
•H
4-1
cd
rl
CU
ex
o
rH
cd
B
B
<
O
o
o
rH
•co-
4-1
fi
4-1
CO
CU
>
£5
M
ex
CO
TJ
CU
•rl
PH
O
O
O
rH
<0-
4-1
CO
0
o
60
B
•H
4-J
}H
CU
ex
o
rH
CO
B
B
ment ($1000)
4J
CO
01
>
H
ex
cd
o
"XJ
cu
•H
PK
Cost($1000)
60
B
•H
4-1
cfl
JH
cu
ex
o
rH
cd
g
B
4J
4J -rl ><
fi CJ --^
cd cd =«=
PH 03 S
CJ ^
O
sO
O
-sf
CM
31
Arthur D Little, Inc
-------
TABLE VI (Cont.)
Notes
1. Reported industry treatment plant data
2. Discharged to municipal sewerage system
3. Includes labor, utilities, chemicals, maintenance and
depreciation at 10% investment per year
4. Capital investment estimates based on cost data reported
in "Water Quality Engineering for Practicing Engineers,"
W. Wesley Eckenfelder, Jr., Barnes and Noble (1970).
5. The reported fixed capital investment for one such system
as it exists today is estimated at close to $200,000.
Most of the difference can be accounted for by the cost
of system modifications necessary after the initial
construction.
6. The reported fixed capital investment for a system of
this size and type is reported by industry to be about
$1 million. This also includes extensive modifications
after the initial construction.
32
Arthur D Little Inc
-------
D. Other Factors
There are additional cost factors which can be important for some plants.
These costs relate to municipal sewerage charges and to the one time cost
of tie-in to available municipal systems. It is unrealistic to apply
these factors across the board to textile fiber plants since each plant
presents a specific problem in a specific location. When considering the
total cost of water treatment for a system such as type "C" in Table VI,
municipal charges should be taken into account.
Municipal or county systems vary considerably in the charges for handling
plant effluent. Costs are generally based on total water load, and con-
centration of the effluent in terms of BOD and suspended solids. For
example, the cost to a textile fiber plant with a discharge of 50,000 GPD
from a treatment facility similar to "C" in Table VI would be approximately
$14,000/yr in one mid-West location, while in a location in the south-
eastern part of the United States the cost might be $l,400/yr. When con-
sidering the cost of water treatment these charges should be factored in
for specific cases according to the local rates.
33
Arthur D Little Inc
-------
V. IMPACT
A. Financial Effects
Tables VII and VIII summarize the capital and operating cost effects of
pollution control requirements on the wool and textile glass fiber sectors.
These summaries are for selected plant capacities using estimates of rev-
enues at 80% capacity utilization at assumed selling prices and at estimated
current fixed capital investments. The incremental costs will, in general,
have only marginal effects on profitability and capital availability, but
the impact could be sufficiently serious for very small textile fiber
manufacturers.
1. Profitability
The relative effects on company and plant pretax earnings, assuming no
price increases as a result of the incremental operating costs, will be
equal to the proportion of selling price represented by these costs. If
incremental costs are passed on, the current rate of profitability will
be maintained. As current returns on investment (ROI) are unknown for
individual plants, the relative effects on ROI can only be obtained by
assuming a certain level of profits on sales before taxes, and measuring
sensitivity at various levels of ROI.
For this analysis, we assume average pretax earnings to be 9% and 12% on
sales for textile and wool glass fibers, respectively. The current ROI's
tested are 5%, 10% and 15%.
Thus, for every 1% increase in operating costs, the ROI for textile glass
fiber will be reduced by 11.1% of the current rate. For wool glass, a 1%
increase in operating costs will reduce ROI's by 8.3% of the current rate.
The actual effects for the various plant capacities and types of treatment
processes summarized in Tables VII and VIII are shown in Tables IX and X.
Plants of any size in either segment that currently have an ROI no better
than 5% will become marginal and could possibly cease production. However,
we believe that no such facilities exist. Plants operating at over 5% ROI
will continue to enjoy reasonable returns except for the smallest textile
glass facilities (only one in the United States). The latter could find
34
Arthur D Little, Inc
-------
TABLE IX
EFFECTS ON ROI; WOOLJJLASS FIBER
Operating Cost „ _.-.T .,- „ .,
, TT TT K „, 6£ New ROI if Currently
Plant Size Waste Water as % of L-
(MM Ib/yr) Treatment Type Selling Price 5% 10% 15%
440 A .64 4.7 9.5 14.2
B .68 4.7 9.5 14.2
90 A 1.04 4.6 9.2 13.7
B 1.11 4.5 9.1 13.6
20 A 1.78 4.3 8.5 12.8
B 1.57 4.4 8.7 13.0
5 A 3.83 3.4 6.8 10.2
B 3.10 3.7 7.4 11.1
37
Arthur D Little Inc
-------
TABLE X
EFFECTS ON ROI : TEXTILE GLASS FIBER
Plant Size
(MM Ib/yr) Treatment Process
160 C
D
E
40 C
D
E
10 C
D
E
5 C
D
E
Operating Cost
as % of
Selling Price
0.27
0.39
0.47
0.55
1.14
1.40
1.08
1.88
2.28
2.86
5.50
6.26
New ROI if Currently
5%
4.8
4.8
4.7
4.7
4.4
4.2
4.4
4.0
3.7
3.4
1.9
1.5
10%
9.7
9.6
9.5
9.4
8.7
8.4
8.8
7.9
7.5
6.8
3.9
2.9
15%
14.5
14.3
14.2
14.1
13.1
12.7
13.2
11.9
11.2
10.2
5.8
4.4
38
Arthur D Little Inc
-------
pollution control requirements to be a financial burden if they are cur-
rently earning less than a 10% return on their investment, or if other
than a polishing pond type treatment process (C) is required. Under
either or both of the latter conditions, the 2-million-pound plant will
definitely become marginal.
2. Capital Availability
The incremental investment required to meet pollution abatement require-
ments for textile glass range in total from 0.3% to 3.3% of current invest-
ment, but to be expended over three years. Thus, assuming that no
pollution controls are now in effect, the average annual expenditures
would range from 0.2% to 1.1% of current plant investments. Actual ex-
penditures will range from as little as $30,000 to $900,000, depending on
the type of treatment process and plant size; the median will be about
$250,000.
For wool glass the aggregate range is from 1.25% to 3.8%, or an annual
average of 0.4% to 1.3% of current plant investments. However, unlike
in textile glass, most of the wool glass facilities already have imple-
mented much of the required controls. Maximum expenditures will range
from $70,000 to $2 million, with a median of approximately $450,000.
The question of whether sufficient capital will be available to meet the
timetable and requirements of water pollution control is basically one of
intra-company needs. Naturally, the exposure of the smaller companies,
especially in the textile-grade segment, will be greatest but it is unlikely
that the aggregate capital needs by the industry segments (about $10MM for
wool glass and about $5MM for textile grades) will have any significant
effect on the normal capital expenditures of the major companies. (See
Table XI.)
We estimate that the greatest capital requirement on an average annual
basis by any one of these five companies will be about $3 million, ranging
to a low of $150,000. On this basis, the proportion of normal capital ex-
penditures for the five major companies would range from 1% to 7% of 1971
expenditures annually for three years, and we believe this is not unreason-
able.
39
Arthur D Little, Inc
-------
TABLE XI
CAPITAL EXPENDITURES BY MAJOR CORPORATIONS, 1969 - 1971
($MM)
1969 1970 1971
PPG 110.7 153.2 123.5
OCF 63.8 33.0 39.3
JM 39.3 44.7 48.8
Ferro 8.9 6.1 5.3
C-T 11.7 9.6 12.9
Total ($MM) 234.4 246.6 229.8
Average Annual Expenditure $237 MM
Sources: Company Annual Reports
40
Arthur D Little, Inc
-------
However, such an evaluation cannot be truly made in ignorance of other
demands for capital expenditures within a company, and the final decision
will obviously depend on the degree of commitment each company has to the
glass fiber industry. According to our conversations with the executives
of many of the major companies, and also of the smaller ones, we understand
that there is such a commitment and that capital for water pollution control
requirements will be provided so that each company, at the very least, will
continue its current level of involvement.
B. Production Effects
1. Wool Industry
The economic impact of the cost of installing and operating complete re-
cycling systems for machine cleaning, binder make-up water and cooling
tower blowdown should not have a major effect on plant shutdown or produc-
tion curtailment. For all existing plants the additional cost of recycling
is less than about l£/lb of product; although for the smallest plant size
(5MM Ib/yr) the increased cost is 3-4% of the selling price. It appears
that the increase in cost of producing wool glass will be absorbed by the
producer without significant effects. In these computations of cost we
have not taken into account savings in binder cost due to recycling of
binder make-up water. The experience of the .industry is varied; however,
any savings could only minimize this small cost increase. There is only
a single plant operating in the capacity range of <5MM Ib/yr and this
plant, one of nine plants operated by the company, is utilized for pilot
operation and specialty products. Because of this it is doubtful if the
cost of recycling waste water would precipitate shutdown. This particular
plant represents less than 0.3% of the industry capacity.
Presently, the wool glass industry is enjoying full utilization of its
capacity and it is likely that this trend will continue. The future market
projection indicates that the demand for glass wool products should grow at
about 8% per year for at least the next five years. In the face of this
market situation, it is highly unlikely that production will be curtailed
or plants will be shutdown due to the modest investment and cost of water
recycling.
41 Arthur!) Little, Inc.
-------
2. Textile Glass Fibers
The impact on production of textile glass fiber due to the cost of install-
ing and operating water control treatment facilities is expected to be
modest for all but the smallest plants (<5MM Ib/yr). The range of cost
per pound of product increment as a result of water treatment is less
than 2%. Although existing capacity is not being fully utilized, the de-
mand has been historically good and future projection of the market,
particularly in reinforced plastics, is substantial. Projected market
demand indicates a growth of 13-15% per year for this industry segment.
The capital investment required to meet the January 1976 deadline is
modest compared with current plant investment and will not influence
existing production.
Small (<5MM Ib/yr) independent producers may feel some impact from the
additional capital requirements and it might be difficult for those oper-
ations to absorb the cost-per-pound increase. Only one independent
producer has production less than five million pounds of textile fiber
per year. This producer represents about 0.2% of the fiber produced in
the United States.
A second small captive operation, producing textile fiber for the woven
fabric market, is integrated with the company's textile mill and would
not be expected to be affected, since water treatment would be also inte-
grated with the textile operation.
C. Employment Effects
It is anticipated that, with one exception, plant shutdown and production
curtailment will not result from the initiation of water pollution control
in either the wool or textile glass fiber industry. In light of the pro-
jected market demand for both products and the high utilization of
capacities, it is doubtful that there will be unemployment in the industry.
In fact, small increases in -employment by the industry might take place as
markets grow and additional personnel are required to operate water treat-
ment facilities.
42
Arthur D Little; Inc
-------
The exception might be the small producer of textile-grade glass fibers.
This would involve less than 0.5% of the work force in the textile fiber
segment.
D. Community Effects
Based on the conclusion that no major plant shutdown, production curtail-
ment, or unemployment will result in the textile glass fiber or wool glass
fiber industry, there will be no effects on any community.
One plant that might be affected by the cost of water pollution controls
is located in the New York Metropolitan area and the loss of less than
25 employees would not create any major perturbations on the job market.
E. Balance of Payment Effects
U.S. exports and imports of glass fibers represent a very small portion of
the total shipments. Imports, all textile-grade yarn, are of relatively
little significance, and while exports have been as high as 7% of U.S. ship-
ments, there is little reason to expect any change. Wool glass exports
were less than 2% of wool production.
By and large, the imports-exports are not expected to change from recent
past years. Fiber glass is not a product that can generally be shipped
widely to meet local competition. Furthermore, we do not see that the
very modest increase in cost due to water pollution control could have
any impact on the export-import situation.
43
Arthur D Little Inc
-------
VI. LIMITS OF THE ANALYSIS
In carrying out our analysis of the economic impact of water pollution
control on the fiber glass industry, we made some general assumptions
about the economy in general and specific assumptions about the industry
itself. For instance, we assumed that real growth in Gross National
Product will average about 4% per year between 1972 and 1976. In addition
to the "zero-discharge" guidelines for January 1976 by the EPA for the
wool glass segment of the industry, we made specific assumptions regarding
the degree of effluent abatement required for the textile fiber glass in-
dustry by that deadline. If the future guidelines differ from those
assumed in this study and require significantly different processes, then
the cost of waste water treatment and resultant impact may be quite dif-
ferent.
We believe that this analysis represents an accurate description of the
economic effect of the cost of pollution on this industry in terms of the
conclusions drawn. In detail, there are a number of factors such as
specific companies' commitments to the business which one must assume.
For both the insulating wool and textile (reinforcing) fiber glass industry,
the capital investment reported by the industry is 10-50% higher than we
have estimated. The main reason for this is the degree of modifications
required by these systems after they were first constructed. We believe
that if these systems were constructed today on the basis of the operational
data now available, the capital investment would be closer to our estimate.
We believe this is a valid rationale, since the impact of the pollution
abatement requirements will be most felt by those mills that do not have
adequate waste water treatment rather than those that do.
The effect of the higher capital investments (10-50%) would at most result
in a 10% increase in operating cost, not significant enought to affect our
conclusions.
There is a wide variation in labor and chemical costs reported by the
industry for waste water treatment; therefore, we were reluctant to use
44
Arthur D Little; Inc
-------
some of the figures reported by the industry as being representative.
Our estimates of total operating costs are lower — by as much as 30% —
than those reported by industry.
Our capital investment estimates (Section IV) pertain to the waste water
treatment system only, not to plant modifications required for the col-
lection of the waste water. In some cases, the cost of the additional
piping will run as high as 50% of the cost of the treatment system itself.
In cases where the waste water is only partially treated (e.g., by coagu-
lation and clarification with or without aerated lagoon treatment) and
discharged to a municipal sewerage system, the capital cost of tie-in can
run as high as the total cost of the preliminary treatment system at the
mill. However, the combination of pretreatment costs and sewerage charges
is not likely to run as high as total on-site treatment at the mill.
The conclusions of this study could be altered by interactions between
water pollution and other factors. If, for instance, in order to meet
effluent guidelines for air pollution the industry were forced to make
basic changes in its processing or treatment of the product, such
restraints could have major implications on the water treatment process
and cost. Under these circumstances the cost data used as a basis in this
study would no longer be viable and the conclusions could be quite different.
The same situation might occur if new products are developed which require
different coating systems and these systems might produce water pollution
problems not amenable to the treatment system presently being considered
for fiber glass plants.
Finally, the future situation regarding the availability of energy for
the industry might create a serious problem if energy sources become in
short supply. It is paramount to the operation of existing plants as well
as future expansion that adequate energy (electricity, oil and gas) are
available to maintain furnaces at operating temperatures.
Arthur D Little Inc
-------
PART THREE
APPENDIX
Arthur D Little, Inc
-------
VII. APPENDIX - INDUSTRY DESCRIPTION
A. Demand for Glass Fibers
This section discusses the historic demand for glass fiber; the importance
of the export market; product applications; and the influence of govern-
ment on market demand. The methods of marketing and distribution,
important factors in product pricing, have been discussed earlier.
Tables XII and XIII respectively show U.S. shipments and value for wool
and textile glass fiber in the period 1964-1971. Textile glass fiber has
experienced an average annual rate of growth of 11% during this period to
478 million pounds and has doubled in dollar volume from $108 million.
The growth of wool glass fibers has been slower, at an annual rate of 7%
to 1518 million pounds, but sales have increased from $227 million to
$427 million in this period.
Future growth of the textile glass fiber industry is expected to average
13-15% annually to 1977; with the fiber reinforcing plastics segment the
fastest rate at over 15%. Wool glass fiber growth will average at least
8% annually in the same period, but with batt insulation growing at 10%
per year through 1974 and averaging 7% over the 5 years. Total shipments
will thus be over 900 million pounds and over 2.3 billion pounds for
textile and wool glass respectively.
Table XIV shows the U.S. exports and imports of glass fiber in the years
1969 - 1971. It is evident that imports, restricted to textile grade
yarn and mostly from Japan, are insignificant and will not be stimulated
by any marginal changes in U.S. product selling prices resulting from the
implementation of water pollution control requirements.
Exports of textile grade glass fiber represented less than 5% of U.S.
shipments in 1971 with Canada the major customer; wool grade glass fiber
exports were less than 2%. Although the proportion of textile glass fiber
exported in 1970 was as.high as 7% (due to an industrial recession and a
drop in domestic demand in the United States), we do not believe that the
volume will be affected much if at all with the projected increases in
selling prices. Exports are used to some extent to develop potential mar-
kets rather than as current business.
46
Arthur D Little Inc
-------
M
M
X
W
nJ
§
r-
vO
os
rH
_Q in
rH •
— . CN
O CN
g OS
0
rH
5
t"*l
<)•
g oo
g . O
•O CM
M
g vO
f-
•W-
o
rH
OO
S vO
i co
60
C
(r(
T3
rH
01 -rl
CO 3
P> M
C rH
o cd
•H M
4-1 3
Cfl 4J
rH O
3 3
CO rl
C 4->
1— 1 CO
t^
o
CO
O
r-
rH
O
H
rH
r^
Os
rH
rQ
rH 1
O-
1
v>
5
I
S I
"
O
r^
a\
rH
Os
\O
Os
rH
,0. r-s
^ •
^ m
O- CN
vO
g m
vO
•CO- rH
,Q 00
t— 1 •
cd
0)
M
cd
CO
V
3
rH
cd
>
OJ
4J
O
a
•
:axes
+->
01
(0
•H
0
X
0)
T3
g
4->
_C
60
•H
01
}-i
<4-l
60
C
•rl
T3
3
rH
O
*
01
T3
d
cd
=
to
4-1
t-l
O
p-
fll
.2
P5
rH
Cfl
•H
(-1
4->
CO
13
C
hH
4J
C
01
S-i
M
3
U
aerce
1
o
u
M-l
O
4J
C
01
e
w
rl
cd
P.
(U
P
••
0)
o
M
3
O
CO
Ailhni I )| ilflf.ln-
-------
w
vO
CTi
rH
,£1 t-»
rH •
' — . CN
o m
o
H o
o
•C/> rH
,0. 00
O^
S °o
§ >-l
H
r*N
OS
H
1
^3* vO
VO vD
CTt O^
rH rH
(*!
M
pQ
H
PH
J2 rH
rH •
-•^ in
o m
in
S *
g vo
rH
•CO- rH
ja m
rH •
rH
S >H
§ CN
CO
3
o
M
h-J
H
EH
r^ lO
W vO
H O\
rH
pL(
O
w
D
i-J
^
,0 O
rH
***^ co
o m
CO
s •
§ •-!
o
rH
o CD
i-H
rH
S
pT] rH
t>
O
2
CO
g
is "**f
P-i vO
M CTi
33 rH
CO
•
CO
to
rH •
-^ CO
o m
|>x
S. *
g m
00
rO O
1-1 vO
a in
IS rH
4-*
cd
S
Tl"
3
CO
e
cd
>H
vO
•
rH
CO
m
r^
co
oo
oo
rH
rH
m
•
o
CN
•
in
co
rH
•
vO
rH
rH
CTi
•
P>.
.
0
rH
0^
CN
CN
rH
cd
4-1
O
H
(^
o\
1 — t
^Q
rH
•* — .
O
g
rO
S
5s
o
0"v
rH
o
^
*^^.
•o-
*gr*
§
<0-
rQ
iH
S
a
CT*
vO
CTi
rH
^
iH
*fc^.
O-
*sr*
§
•co-
o
»~H
"•&
§
oo
vO
01
rH
^j
^^
•O-
*5T|
§
rQ
rH
*y1
g
1
1
1
1
1
1
1
1
1
1
1
1
cd
•
C
•
cO
C
•
cfl
rj
!-•
rH
m
CN
•
rH
CN
rH
~^
•
CO
CN)
^J
cd
A
1
rl
4J
CO
g
CO
|
1
1
1
1
1
1
1
1
1
I
*
trj
*
n
•
CQ
*
c
•
CO
C
•*
CN
CO
CO
•
rH
m
rH
O
rH
A
13
C
(-1
4J
CO
13 rt
cu cu
f^t r^
P- -H
O PH
CJ T)
„ a;
00 rH
C rH
•H -H
Ǥs
m
•
xj-
^
vO
^
rH
CN
vO
1-^
r>^
CO
o
CO
rH
m
^
CTi
CO
rH
cd
4-1
O
H
CO
0)
O
C
0
j
r*~1
rH
cd
T)
c
id
CD
4J
C
3
0
a
to
•H
rl
a)
4J
UH
cfl
«
c
S
pt
t
£>
O
•
UH
n
to
cu
CJ
•H
(X
60
c
•r-4
rH
rH
CU
CO
4_>
01
c
_
CO
r<
CU
3
O
UH
3
C
e
cu
(JO
cd
SH
Q)
cfl
CU
cfl
to
cu
rH
cO
CU
4J
0
53
,
CO
CJ
cd
^
cu
to
•H
O
X
0)
rrj
G
cd
4-1
oo
•H
cu
)H
UH
60
C
•H
*rj
3
rH
a
CD
cfl
-
to
4J
VJ
o
P-.
|V]
rH
Cfl
.H
M
4J
CO
3
rrj
G
M
4J
C
CD
j_l
3
CJ
cu
o
(H
cu
B
O
o
M-t
0
c
CD
e
4J
Cfl
P.
CD
p
• •
CU
o
rJ
O
CO
48
Arthur D I.ittle,lnr
-------
TABLE XIV
U. S. EXPORTS OF GLASS FIBER, 1969 - 1971
1969 1970
MM Ib $MM MM Ib $MM
Textile Grade
Yarn 5.0 3.0 11.8 5.8
Roving and Strand 6.1 2.2 15.9 5.0
Mats — 1.2 — 1.4
Other — 1.3 — 1.3
Total — 8.7 — 13.5
Wool Grade - Total — 7.4 — 7.2
Source: U.S. Department of Commerce FT 610
1971
MM Ib $MM
6.1 3.5
6.7 2.7
2.2
1.4
9.8
8.4
U. S. IMPORTS OF GLASS FIBER, 1969 - 1971
Textile Grade Yarn 1.4 0.4 0.7 0.6 1.8 0.7
Source: U.S.Department of Commerce FT 135
49
Arthur D Little Inc
-------
1. Wool Glass Markets
Wool glass fiber is used primarily as a building insulation (in batt form
for frame house walls and roofs and as boards for flat roofed commercial
and industrial buildings) and also in acoustical ceiling tiles, heating
and cooling pipe and duct insulation, and in process equipment and appli-
ance insulations. No industry data of the breakdown in consumption exists
but we estimate the following for 1971 (MM Ib).
ESTIMATE OF U.S. CONSUMPTION OF
WOOL GLASS FIBER, 1971
Batt Insulation 1000
Acoustic Tiles 90
Board Insulation 175
Pipe, Appliance and Equipment 165
Miscellaneous 60
Total 1490 MM Ib
The major use of building insulation is in the residential sector in both
conventional construction and mobile homes. Here it competes against
other forms of mineral wool but has an estimated 90% of the insulation
market. Building insulation in board form competes against perlite and
an increasing amount of urethane and other foams, although the latter
products are still not cost competitive with fiber glass. In non-
residential construction (especially for roof decking) insulations can be
either glass fiber, wood fiberboard, Tectum, lightweight concrete or
gypsum, perlite board, foam glass and ceramic insulation materials. Fiber
glass thus receives much greater competition in the non-residential sector
than in housing construction and as a result has only a relatively small
market share.
Acoustical tile insulation is predominately aimed at the non-residential
sector, particularly for stores, classrooms, offices, laboratories and
government buildings. Roof tile, by tradition, has been made from wood
fiberboard although this market is seriously challenged by the fire
50
Arthur D Little Inc
-------
problems associated with wood fiber. Increasingly, such products are
made from gypsum wallboard and, to a lesser extent, glass fiber.
Glass fiber use in industrial and equipment insulation includes the wrap-
ping of chemical and process piping, lining of the galvanized surfaces of
heating and air conditioning distribution ducts, insulation of water heaters
and many miscellaneous other applications. The principal competition facing
fiber glass is from urethane and styrene materials up to 250°F and calcium
silicate in the high temperature ranges.
Future growth of this product segment will be better than the growth rate
of U.S. building construction. Thus, the growth of products largely
serving the non-residential building sector (acoustic tiles, board insu-
lation, pipe, appliance and equipment insulation) will be at the average
rate of 5% to 6%. Batt insulation, the major product, will experience a
rate of growth of up to 10% per year for 1973 and 1974 due to the increased
demand brought about by changing insulation regulations and energy con-
servation policies (these are discussed later). This rate of growth is
considerably faster than that anticipated for residential construction
but will not be sustained beyond 1974. In fact, we forecast the average
rate of growth of batt insulation in the period 1971 to 1977 to be about
8%, as will be that of all wool glass fiber products.
2. Textile Glass Fibers
The textile glass fiber business can be divided into four components:
• Home Furnishings
• Industrial Applications
• Reinforced Plastics
• Miscellaneous Markets
The importance of these markets obviously varies considerably and their
growth rates have been, and will continue to be dissimilar. Table XV
shows the actual consumption in millions of pounds for 1968 to 1971 by
each of these sectors.
51
Arthur D Little, Inc
-------
TABLE XV
U.S. TEXTILE GLASS FIBER
(MM/lb)
1968
64
69
8
25
4
ipe 28
2
is 2
.cs 232
CONSUMPTION
1969
54
93
34
20
4
30
2
3
283
1970 1971
Home Furnishings 64 54 49 50
Industrial 69 93 90 92
Tire 8 34 35 36
Electrical 25 20 17 15
Filtration 4444
Paper and Tape 28 30 29 31
Coating 222
Miscellaneous 23 3
Reinforced Plastics 232 283 245 298
Other
Wallboard 87 9 12
Other 3333
Source: Textile Organon and Arthur D. Little, Inc., estimates
Total Consumption 376 440 396 455
52
Arthur D Little; Inc
-------
In 1971, home furnishings represented about 11% of total consumption on
a weight basis and the industrial market about 20%; reinforced plastics
are the largest segment at 66%. It is evident that 1970 was a relatively
poor year for textile glass, but 1971 consumption is estimated at 455
million pounds, was 15% over 1970 and exceeded 1969 levels. Future growth
in demand for these products will be healthy and will average over 13%
annually during the next five years. By consumption sector however, the
reinforced plastics use of textile glass will grow at about 15% and the
industrial sector at approximately 11%. The home furnishings segment will
grow at about 5% as the miscellaneous portion will expand at approximately
9%.
Ninety percent or more of the glass fiber consumed for the household fur-
nishings market is for draperies. Other household applications include
lamp shades, bedspreads, binding for wall-to-wall carpeting and upholstery.
Most of the household market uses finer fibers which are woven into con-
ventional textile products. Therefore, the average price of glass fiber
is considerably higher in this market than in the reinforced plastics
market.
Glass fiber has been successful in the drapery market mainly because it
resists shrinkage and does not need to be ironed. These characteristics
have permitted glass fiber to increase rapidly its share of the ready-made
drapery market, which is 70-75% of the total drapery market. Penetration
of the other segments — the commercial and custom markets — has been
slower, although it is beginning to accelerate somewhat because of the
fire retardant characteristics of glass fiber. It is our general assess-
ment that glass fiber will cause only a modest additional increase in the
drapery business because of the increasing importance of man-made fibers.
In tire cord use, glass fiber is used to construct belts for belted-bias
tires. The consumption of glass fiber per tire varies by tire size, but
we estimate the average belted-bias tire for passenger cars uses 0.45
pounds of glass fiber as belt material. Total use will decrease however
as steel belted tires Increase their market share.
53
Arthur D Little Inc
-------
In the electrical sector, glass fiber is used in several ways, the prin-
cipal ones being reinforcement of building wire and other cables and as a
coated tape which is ultimately used as a cable wrap for high-performance
cables. The third major electrical application is as a braid for outside
protection of certain cable constructions. Another use of glass-reinforced
tape is for electrical apparatus. Here, because of the demand for higher
temperature and higher performance insulation, glass-coated tape has
replaced cotton and other lower performance materials. This replacement
will continue during the near future and consequently be a relatively
rapidly growing application for glass-reinforced insulation.
Much of the glass fiber used as a braiding material or overwrap has been
replaced in recent years by extruded compounds. This is particularly true
in service entrance cable and similar products associated with the home
building market. On the other hand, a new insulation construction based
on a glass scrim adhered to a neoprene rubber sheet, is being used in in-
creasing volume as an overwrap for underground service entrance cable,
which is a very rapidly growing application.
Applications can be divided into several categories: reinforcing tape to
bind cartons for shipping, glass added in the beater addition step in the
manufacture of paper to reinforce the paper, and the manufacture of all-
glass paper. The first of these markets is the most significant. Because
of its high tensile strength, glass, when bonded to plastic film or paper
which in turn can be coated with an adhesive, proves to be a very strong
strapping or binding material, competitive with steel and other strapping.
It has gained a major segment of the market, particularly in the lower-
strength applications. However, it suffers potential competition from
synthetic fiber construction which, because of its elastic characteristics,
also proves to be good binding material.
Applications of textile glass fiber in reinforced plastics are extremely
diverse as the following data shows for 1970.
54
Arthur D Little Inc
-------
U.S. CONSUMPTION OF TEXTILE GLASS FIBER
IN REINFORCED PLASTICS, 1970
(MM Ib)
Marine and Accessories 55
Transportation 45
Construction 25
Consumer Goods 25
Corrosion-resistant Materials 30
Electrical 22
Aircraft and Aerospace 10
Appliances 10
Other 23
Total 245
Source: Arthur D. Little, Inc., estimates
Included in the marine and accessories category are both recreational boats
and military vessels. Fiber reinforced plastics (FRP) can be used with
wood, aluminum, steel and thermoformed plastics. We estimate that the
majority of recreational boats now being manufactured are based on FRP,
which dominates the 14-18 foot runabout and the sailboat categories.
Aluminum, FRP's major competitor in marine applications, dominates the
small boat market.
The most important transportation market for FRP is claimed by passenger
cars, where the current level of FRP consumption is estimated at 9 pounds
per vehicle. FRP is less expensive than metal for small production runs,
and we anticipate increased usage in this application. Another major
transportation market is represented by trucks and buses where FRP is
used in cables, power train components, and seat structures. FRP is also
used in the manufacture of mobile homes, campers and snowmobiles.
The most important use for FRP in construction applications is for flat
and corrugated sheets for panels, partitions, patio roofs, and curtain
55
Arthur D Little, Inc
-------
walls. Other construction applications include bathroom accessories
such as shower stalls and tubs and storage sheds. We believe there wtll
be increased penetration of existing markets and the revision of building
codes may allow opportunities in new markets.
FRP is used for the manufacture of pipe, tanks, ducts and other process
equipment where corrosion resistant materials are needed. This use is
meeting with increased industrial acceptance because of the relatively
low costs of achieving the required performance. Reinforced plastics are
used in a variety of other miscellaneous applications such as sporting
goods, furniture, aircraft and aerospace applications, and many consumer
goods and appliances.
J3. Government Influence on Demand
The principal federal government influence on demand is brought about
through changes or modifications in building code requirements. Such a
change took place recently when the Department of Housing and Urban Devel-
opment, Federal Housing Administration, revised the Minimum Property
Standards for multi-family and single-family housing in order to fulfill
the Department's commitments to the National Energy Conservation policy.
The revisions, which took effect in July 1971 for single-family construc-
tion and in June 1972 for multi-family construction, went into effect
immediately for all mortgage insurance projects for which a letter of
feasibility had not been issued and for low rent public housing projects
for which a program reservation had not been issued. This implementation
will definitely provide more economical operating costs for the heating
of residential units and will also conserve the nation's energy resources.
The effect of such a policy change is to increase considerably the use of
and demand for building insulations of all types but principally the glass
fiber batts. Quantification in terms of increases in usage rates is
difficult to make as it depends very largely on the part of the country in
which a particular structure is located, on the balance between federal
program housing and that privately financed in each locality, and on the
rate at which non-federal housing will follow suit at the urgence of
56
Arthur!) Little, IPK
-------
electrical utilities. However, we did estimate earlier the approximate
growth rate of demand resulting. This could be understated if, for
instance, tax incentives are given to improve building insulation and
conserve energy.
(A more which will have similar effect, although not resulting from the
direct influence of the Federal Government, is the change in mobile home
insulation requirements recently implemented by the Mobile Home Manu-
facturers' Association and will take effect in units shipped to 38 states
beginning the first quarter of 1973. This change is designed to improve
the insulation performance of mobile homes to match those of conventional
construction.)
Demand for textile grade fibers have not been influenced by such direct
government action, although some influence can result in changes in
building codes that will permit a more widespread use of fiber reinforced
plastics in plumbing fixtures, pipes and fittings and in other areas of
building construction. Also, products that once depended on asbestos
(clutch pads, brake linings, etc.) may switch to glass fiber due to the
health hazards of asbestos.
A potential negative influence on demand involves air conditioning ducts
made of fiber glass. Some groups claim that the air velocity causes fiber
rub-off and creates a potential health hazard. Although there is no
evidence to support this contention, a synthetic facing may be required
and this may cause an impediment to the future growth of this use.
B. Supply
1. Industry Structure
a. Fiber Glass Wool
1) Production Technology
A flow sheet of an operation for the production of glass wool insulation
is shown in Figure 3. The basic raw material batch and melting is essen-
tially the same as the textile fiber glass industry. By and large the
melting technology has followed the same trends as the textile segment,
57
Arthur D Little; Inc
-------
§
8
3
58
Arthur!
-------
i.e., some operations use glass marbles formed in a marble machine to
feed the fiber making operation. In most cases marble feed operations
are limited to special products, i.e., battery separators and electrical
equipment insulation. Direct melt processes are used for high volume
production such as home insulation. In this latter case molten glass
from the furnace is fed to the fiber forming unit in a continuous stream.
There are a variety of fiber forming operations for glass wool. In all
cases a stream of molten glass is fiberized and attenuated to form dis-
continuous fine fibers which are collected on a moving conveyor belt in
a continuous mat. Phenolic binders are sprayed on the formed fibers
just prior to collection. The mat is then cured as the conveyor moves
through an oven. Fiber forming rates and chain speed determines the
density and thickness of individual products.
There are two principal fiber forming processes in use today. The first
method involves the forming of a large number of individual fibers from
a platinum bushing and the primary fibers are heated and attenuated by
high velocity gas burners. In the second process a single stream of
molten glass is fed into a rotating platinum distribution basket which
distributes the glass on an outer rotating spinner. The spinner contains
a large number of small holes arranged in rows in the wall. The molten
glass is forced through the holes forming fibers which are then attenuated
90° from their forming direction by high velocity gas burners. The output
of a single spinner may be 500-1000 Ib/hr and several spinners are used
to feed fiber to one line.
The discontinuous fibers are sprayed with a phenolic water binder and
drawn to suction onto the conveyor chain. The continuous mat is cured
in the in-line ovens and compressed, cut and packaged. The continuous
chain returns to the forming area. A single machine may have fiberizing
rates of 8,000-14,000 Ib/hr and conveyor speeds of 50-200 lineal ft/sec.
A description of glass wool products is given in Table XVI.
59
Arthur D Little, Inc
-------
TABLE XVI
PRIMARY FIBROUS-GLASS-WOOL PRODUCTS
Product
Unbonded wool
("white")
Bonded wool
(molded)
Bonded wool
Bonded wool
Bonded wool
/
Bonded wool
(fine fiber)
Bonded wool
Bonded wool
(fine fiber)
Bonded woo!
(fine fiber)
Basic fine
Fibers (bulk)
Nominal
Fiber
Diameter,
In.
0.0005
0.00038
0.00034
0.0005
0.0006
•>
0.0006
0.00004
0.00008
0.00012
0.00012
0.00012
0.00017
0.00002
0.00012
(M-3 /.)
Deruiry
Range,
Ib per
Cu Ft
1.5 up
(3.0 std)
1.5-3.75
2.0-3.75
6.0
2.0-12.0
0.6
0.5
0.75-2.0
0.75-2.0
0.3-0.5
0.75-2.0
Conductivity,
75°F, Mean,
fl/u/(Hr)(Sq Ft)
rn/f/nj
0.30-0.27
0.25
-------
2) Number and Location of Firms and Plants
In the United States there are 19 plants producing glass wool products.
There are two major producers of glass wool, Owens-Corning Fiberglas and
Johns-Manville, and these two firms produce approximately 95% of the
production in fifteen plants. There are really no small producers of
glass wool since this is a high volume production operation, difficult
to scale down.
The location of the 19 plants are shown in Figure 4. The distribution
of plants is dictated by regional markets and plants must be near the
end-use market. It is evident from the map that plants are located near
major population centers to serve the building industry. The participating
companies and their plant locations are also given in Table XVII.
It is anticipated that new capacity will be added to the present wool
production in the near future. One firm, Johns-Manville, has announced
a program of plant expansion and new plant construction that might add as
much as 40% to the company's capacity.
3) Types of Firms
Glass wool production is also dominated by Owens-Corning, the leader in
textile glass as well. The remaining portion of the industry is shared
by Johns-Manville, Certain-Teed and PPG Industries. All these firms are
relatively large companies with integrated product lines. There are no
small producers of glass wool products.
4. Types of Plants
The distribution in sizes of glass wool plants are shown graphically in
Figure 9. The four plants with capacities greater than 100MM Ib/yr
account for ^70% of the production of wool and the largest number of plants
are clustered around the 50MM Ib/yr capacity. The larger plants tend to be
more efficient especially in the high volume products such as home insula-
tion. The industry is operating at 100% capacity at the present time and
these high operating rates are expected to continue.
Plants can be differentiated by the type of process. Ten of the 19 plants
utilize rotary spinners for fiber forming. In all these plants direct melt
61
Arthur D Little, Inc
-------
rt
0)
s-s
I
55
cfl
QJ
M
CO
4-1
C
n)
.H
PL4
<4-l
O
0)
1
o
>^
P.
cfl
4J
O
H
td
H 55
Q M
O
62
Arthur D Little Inc
-------
TABLE XVII
FIBER GLASS PLANTS BY COMPANY AND LOCATION
Company Textile Fiber Plants
Owens-Corning Aiken, S.C.
Flberglas,Inc. Anderson, S.C.
Ashton, R.I.
Huntingdon, Pa.
Jackson, Tenn.
Johns-Manville Waterville, Ohio
PPG Ind.
Certain-Teed
Lexington, N.C.
Shelby, N.C.
Ferro Corp.
Kaiser
Nashville, Tenn.
Irwindale, Cal.
(Modiglass Fibers),. ...
Reichold Chem. Bremer' Ohio
Fiberglass Ind. Amsterdam, N.Y.
United Merchants Statesville, N.C.
Oliver Glass Farmingdale, N.Y.
Fiber
Wool Fiber Plants
Barrington, N.J.
Fairburn, Ga.
Kansas City, Kan.
Newark, Ohio
Santa Clara, Cal.
Waxahachie, Tex.
Cleburne, Tex.
Corona, Cal.
Defiance, Ohio (3)
Parkersburg, W.Va.
Penbyrn, N.J.
Richmond, Ind.
Wender, Ga.
Shelbyville, Ind.
Berlin, N.J.
Kansas City, Kan.
Mountaintop, Pa.
63
Arthur D Little Inc
-------
o
o
o
o
l\\\\\\
•H
O
03
(X
n)
O
§
en
C/3
O
ft.
O
N
rt
3
C
H
£3
PQ
H
CO
M
O
w
M
CO
I\\\\\V
l\\\\\\\s
in
w
P4
g
IV\\\\\\\\\\\\\\\
00
jo
64
Aillmi f )|
-------
techniques are used to supply the glass. Rotary or centrifugal process
accounts for ^ 80% of the glass wool. The remainder of the production
is produced by flame attenuated fiberizing fed by both direct melt and
marble techniques.
All indications are that the majority of plants are multi-product plants
manufacturing home insulation, roof insulation, pipe and duct, etc. Single
product plants are limited to one or two plants which produce a high
volume product — home insulation.
5) Number of Employees and Skill Level
The number of production employees from a cross-section of plants are
shown in Figure 6. The number of employees is surprisingly scaled to
the plant size. This is due to the line nature of the production process.
Plant capacity is related to the type and number of individual lines and
although there is a variation in product type at various plants most
operations are multi-product.
The degree of skilled labor required is high in the melting and forming
area; however, the large portion of the labor force in a wool plant does
not require a high level of skill.
b. Textile Glass Fiber
1) Production Technology
Glass fiber production is perhaps the most technically sophisticated of
the many glass-forming methods. It is required that a number of chemical
compositions formulated and melted at relatively high temperatures to a
homogeneous melt, free of bubbles, seeds, stria, etc., and continuously
delivered at a controlled rate to a platinum bushing, where small uniform
continuous filaments are formed and collected at a very high rate. The
fine (0.00023-0.00038" in diameter) filaments are then further processed
to form a variety of end products, such as yarn, roving, chopped roving
and mat. A flow sheet of an integrated glass fiber operation is shown
in Figure 7.
65
Arthur D Little Inc
-------
.0,000 •
o
1-1
o.
-------
1
CD
z
CD
Q-
O.
CO
O
fe
CO
C3
cn
8
3E O
O S.
oO
(O
CD DC.
Z UJ
H-I Q
M Z
•—I 1—4
CO CO
OH. UJ
UJ U3
CO
; ,
s e
o co
Q.
CD
i—i
a
CD
z
t—I
Q
CD
Z
h-1
>-
O
Q.
O.
O
CJ
CO
CO
UJ UJ
CJ CD
O <
a: o;
a. O
z co
CD
a:
CJ
w
o
67
Arthur 0 Little.
-------
There are two alternative fiber-forming processes in use today. The older
process involves the feeding of viscous glass to a forming machine to
produce glass marbles 3/4" in diameter. The marbles are then fed to a
premelter, which supplies glass at the correct rate and viscosity to the
platinum bushing. In the more recently adopted process, the direct melt
process, the glass is delivered directly to the bushing from the glass
tank through a forehearth and feeder system. This latter process has
proven to be more efficient and economical for high rate production of
continuous filament.
Raw material and receiving is a relatively straightforward operation and
does not differ from other glass processing. In the direct melt system
the raw materials, principally glass sand, limestone, soda ash, a source
of A^O^, and J^O-j are weighed and mixed in predetermined compositions
and fed to the glass melting furnace. Types and products of textile grade
glass fiber are given in Table XVIII.
Although fiber can be drawn from any glass having the requisite working
properties, there are basically three compositions of continuous filaments.
"E" glass is a low-alkali lime-alumina borosilicate developed for corrosion
resistance and good electrical properties. In the United States, practically
all glass fibers produced are of the "E" type. A very small amount of "C"
glass (soda-lime-borosilicate) is produced, mainly for applications requiring
acid resistance. A manganese-alumina-silicate glass ("S") is a high strength
glass developed for aerospace applications. Although minor compositional
variations may exist in "E" glass produced by different manufacturers, these
differences have minimum consequence.
The melting operation is a relatively critical one, for homogeneous glass,
free of defects, is required for a good fiber. Direct melt furnaces are
being converted from gas fuel to electrically heated furnaces in order to
reduce air pollution from the combustion process and cut down on particulate
content of the stack gases.
The fiber forming operation is unique to the fiber glass industry. Through
evolution in process technology the present platinum bushings have been
developed which produce fiber at very high rates. Production rates vary
considerably with the size of the fiber and bushings may have 202-808 or
68
Arthur D Little, Inc
-------
H
3
en
CO
cu
CO
&
i-H
cd
p.
•rl
U
a
•H
M
P-i
cu
rH
•rl
4-1
X
CU
4-1
rH
Cfl
O
•H
M
4-1
O
CU
rH
W
a
._.!
CO
o
•rl
4-1
4-J CO
C -H
SH
d)
•rl 4-J
8 o
o cd
O rl
cfl
6
•n
rl
4-1
CJ
CU
rH
01
•H
13
4J
C
cu
rH
rH
CU
o
X
W
CO
cu
rH
•H
4-1
X
0)
4-1
rH
cd
M
0)
{3
cu
o
M
a
•H
tH
a>
43
4J
cd
CU
>
13
C
CO
plastics,
M
O
UH
4-1
CJ
0>
8
o>
o
M
o
14H
a
•rl
2
CO
cu
•H
4-1
rl
CU
CX
O
i-l
CX
CO
t-l
cu
cx
CO to
CX 4J
cd
« 8
a
3 cu
en to
CX 0
>-. CX
60 )-i
3
« cx
en
M rH
CU CO
43 rl
43 CU
3 C
rl CU
O
attery
43
0)
60
cd
M
0
4J
en
rl
o
14H
co
4J
1
CU
o
C
CO
4-1
to
•H
'&
t-l
T)
•H
O
<3
rosion
t-i
o
CJ
l-i
O
>4H
CO
rl
CU
C
•H
Cfl
4-J
CU
tH
60
a
•H
14H
0
O
I-l
cx
I-l
cu
4J
cd
>
A
fi
O
•rl
4-1
0
CU
4J
o
t-4
cx
t-l
cu
4J
rH
•H
MH
s-\
T3
•rl
O
cd
**^r
rH
cd
CJ
• -H
u 8
4-1 CU
0.4J
to
60
cd
43
0)
-a
o
C
cfl
*
to
43
4-1
O
rH
O
rH
efl
)H
3
4J
O
3
M
4J
CO
CU
u
cfl
cx
en
o
rl
4!
43
4-1
60
a
cu
M
4-1
en
43
60
•H
33
O
•H
4-J
cd
CJ
•H
rH
CX
cx
cd
00
(3
•rl
rl
01
VJ O
•rl M CO
cd cu 4->
& c
MOO
O 4J O
co en
C 4-1
o o
•H 3
4-1 T3
CO O
rH I-l
3 CX
W
C rH
•rl CO
O
rH -rl
Cd 4-1
8 eo
cu o
43 0
H , M 43 cd
rH O> CO CX
C 4-1 Cd
o rH > m
•rl 1 O
U) y-i t-i 4-i
(H -H Cd
CU T) CO a
43 -H -rj
•rl 3 « 0
<4H CJ- 60 -rl
•H C rH
0) rH -rl CU
CO ^
IH T3 O 13
cd C cfl C
O cO CX cO
o
4J
en
o
o
CO
i~H
3
CO
J3
•rl
rH
CO
£3
M
cu
43
4-1
4-1
43
60
•rl
cu
£
4-J
43
60
•rl
hJ
60
C
•H
rl
01
1 \
4— I
cfl
Q)
&
4-J
01
rH
rH
01
a
X
W
„
eo
M
cu
43
rl
0
eo
43
Cfl
"O
C
3
0
en
*
en
C
O
•rl
4-1
CO
rH
4-1
Q
60
C
•rl
C
O
•H
43
en
3
o
1
^
o
o
43
en
T3
C
cd
1^
5
G
CU
•rl
O
•rl
U-4
<4H
CU
1
43
60
•rl
42
en
en
cd
rH
60
1
rH
rH
<
rl
CU
cx
cO
cx
T3
C
cd
en
M
Q)
CX
tfl
o.
M
0)
4-J
rH
•H
<4H
en
cu
M
3
4J
en
•H
S
TJ
CO
0)
4-1 •
0> C
a H
« CU.
&q
M ef
CU cfl
oo
CO CO
4H
O
cfl
•rl -rl
MH MH
•^ CO
M
rH 4J
O rH
O 3
I
CU
8
•rl
rH
CU
P.
£
CO
CO
cO
iH
O
•rl
rH
cfl
^
rH
CO
|
&
O
1
•H
rH
•rl
CO
o
n
o
43
CO
C
»
p
rH
CO
O)
4-1
Cfl
O
CU
4-1
cd
a
cu -H
•H -rl
rH CO
I O
cfl M
"O O
o ,0
C/3
01
4-1
co
o
0> -rl
•rl -rl
rH CO
I O
CO rl
t> o
O 43
CO
•H
rH
it
T>
O
CO
cd
TJ cu
O 4J
co cd
o
01 -H
01 rH
H -rl
UH CO
I O
a> M
8 o
•H JO
LO
69
Arthurbljttlrlrx
-------
more tips each forming an individual fiber. The bushings are heated by
electrical resistance and control of bushing temperature and glass level
are used for process control.
A successful glass fiber operation depends to a large extent on the ability
of management to operate at high throughput for extended periods of time.
We estimate that a plant operating at 80% of rated capacity is about as
good as one can expect. Normal loss of efficiency may be estimated as:
• Periodic tank relining and rebuilding - 5% loss;
• Doffing or replacement of filled packages - 7% loss; and
• Bushing replacement, end finding, breakouts, and routine
maintenance 8% loss.
Unforeseen sources of inefficiency can result from operating the glass tank
at full capacity. For example, insufficiently fined glass and cords may
increase the frequency of breakouts, reduce quality of yarns, increase
end-finding losses, and increase labor in packaging. Another common
problem arises from batch mixing mistakes that can result in total produc-
tion loss for a day or two, until the glass has been swept through the tank.
The producer of glass fiber does not generally sell to a wholesaler or
retailer but to other manufacturers who are frequently quite sensitive to
the quality of the glass yarn that they buy. In addition, since the variety
of glass reinforced products has grown and is growing, a major demand on the
producer, to provide suitable filament to participate in this growth is for
strong emphasis on quality control. A few years ago a major glass fiber
producer announced the availability of glass yarn with improved specifica-
tions could be applied to only a very small segment of the market, a large
segment of the market purchased yarn with these specifications, based on
the assumption that the new material was an improved product. A number
of companies experienced serious cutbacks in production until they were
able to meet the new market requirements. Quality control is essential
in a number of areas of the production operation.
70
Arthur D Little Inc
-------
Although the properties of the yarn are not particularly sensitive to
small variations in the composition of the batch, changes in batch com-
position may influence the softening temperature of the glass. The
uniformity of the yarn is influenced since the throughput of glass is
quite sensitive to softening temperature. Periodic chemical analysis of
the batch and periodic measurements of softening temperature should be
made to insure uniformity of the glass composition and yarn.
The formulation and application of the binder is possibly subject to more
uncertainties than any other phase of the production of glass yarn for
reinforced plastic applications. Binders may behave differently from
batch to batch depending perhaps on slight variations in composition or
even age. The binder must be capable of wetting and forming tight bonds
with both the glass surface and plastic resin to be reinforced, otherwise
the reinforcing value of the glass is reduced. Although a good deal can
be learned from the chemical companies who sell binders for glass yarn,
a substantial amount of in-house experience must be acquired in the selec-
tion and preparation of binders for the variety of end-uses that the market
presents.
The binder problem may be particularly severe in a relatively small pro-
duction facility where the binder must be made up relatively frequently
and in small batches.
2) Number and Location of Firms and Plants
The textile glass production is dominated by Owens-Corning Fiberglas and
PPG Industries which account for about 80% of the total fiber glass cap-
acity of 750MM Ib/yr. Two additional firms, Johns-Manville and Ferro
Corp., account for approximately 13% of the total and five producers
produce the remaining 7%. There are a total of fifteen textile fiber glass
plants in the United States.
The location of textile fiber glass plants in the United States are
shown in Figure 8. The plants are grouped into areas and the number of
plants within each area and the % of total capacity represented by the
plants in that area are given on the map. There is obviously a high
71
Arthur I) Little, Inc
-------
c
-H
to
w
n) a
0) n)
CA
4J
C
O
)H
0)
II
55
o
!*.
4J
•H
O
n)
&
a
o
H
&-S
pq
M
PH
< CO
3 w
0 s
W H
t-3 CO
M
H P
X W
W H
O
H CO
H H
o
S
00
C5
72
Arthur D Little Inc
-------
concentration of textile plants in the Carolinas and all but three plants
are located east of the Mississippi. Participating companies and asso-
ciated plant locations are listed in Table XVII.
3) Types of Firms
There is a wide variation in the types of firms producing textile fiber.
The major producer, OCF, is principally a fiber glass producer while the
second major producer, PPG, is a large integrated chemical company. Except
for two of the small producers the remaining companies also are part or
division of integrated companies. One of the modest size producers is an
integrated company in building materials and also produces glass wool
products.
4) Types of Plants
The size distribution of the fifteen textile fiber plants in the United
States are given in Figure 9. The largest number of plants are in the
medium capacity range of 40-50MM Ib/yr. The production of textile fibers
are obviously dominated by the four large plants with capacities over
100MM Ib/yr. The small single plant producers have plant capacities of
50MM Ib/yr and smaller.
A portion of the textile fiber plants are not new in terms of plant age
since existing plant sites were used in the early development of the
industry. It should be pointed out that the textile fiber glass industry
is relatively young — starting in 1938 and it was only in 1949 that a
second producer was able to enter the business. It was found that plant
age per se was not a good guide to judge a marginal operation since plant
expansion and upgrading appear to be a continuous process in this industry.
Our survey showed that all plants had been renovated within the past ten
years.
Perhaps a better guide to efficiency is the type of technology practiced
in the plant. It is apparent that the direct melt process is a more
efficient technology compared with the use of preformed marbles. There
has been a change over to the direct melt process in a large number of
plants and certainly future expansion will only involve direct melt
techniques.
73
Arthur D Little, Inc
-------
IV\\\\\\\
1\\\\\\\\
1\\\\\X\\\\\\\V
l\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
t\\\\\\\\\\\\\\\\\\\vs
\ \\x\\\\\\
o
oo
4-1
•H
O
CO
rt
o
C
T-l
a.
o
vO
O
CM
P_
w
CQ
CO
en
O
W
tJ
w
H
z
PQ
H
en
w
pd
!=)
jo
Ik
ArtJuirDI
-------
By and large textile fiber plants are multi-product plants. The largest
capital investment is in the melting and forming process which is common
to all the products. Secondary operations such as curing, twisting,
chopping, etc., are modifications of the primary product. There are
exceptions, principally in tire cord production and in mat operations.
5) Number of Employees and Skill Level
The total production workers in the textile fiber glass industry is approx-
imately 10,000. By and large the number of employees is very nearly pro-
portionatal to the size of the plant since additional capacity adds a
similar number of production employees to the plant. In Figure 10 the
number of employees for a cross-section of the plant are graphed to indi-
cate the relationship. The industry is not a labor intensive one and
further plant experience will include significantly more computer control
in the future.
The skill level is relatively high in the melting and forming operation.
New plant startup usually involves transfer of a small number of
experienced furnace and forming room personnel from existing operations.
The major work force in this industry is relatively lower skilled and
plants in southeastern United States have drawn on the textile industry
for their labor.
_2. Technology Trends
a. Wool Segment
Processing technology in the glass fiber wool industry is unlikely to
undergo any major changes. Improved throughput and high efficiency will
no doubt result from more process control thereby reducing down time and
improving quality control. New plants may well be single product opera-
tions producing high volume products such as home insulation. Direct melt-
rotary spinner process will no doubt be utilized more broadly in the
industry.
75
Arthur D Little Inc
-------
3,000
CO
0)
0)
L ,.000
100
10
100 1000
Plant Capacity Ib/yr x 10-6
FIGURE 10 NUMBER OF PRODUCTION WORKERS FOR TEXTILE GLASS PLANTS
76
Arthur D Little, Inc
-------
b. Textile Segment
In the future new plant construction and expansion will no doubt be
largely direct melt process. However, because of the wide product mix
and product runs, marble process will remain variable. Where sufficient
energy is available electric melting will find more widespread use. As
new product opportunities arise there will be an even greater demand for
a large number of coating systems to make the fiber compatible with resin
systems. It is certain that plants will utilize even greater process
control to increase plant efficiency.
3. Capacity Utilization
Capacity Utilization in the wool glass industry is mostly sensitive to
the variable rate of building construction and thus has been at an all-
time high for the past 18 months. For example, it is estimated that current
capacity utilization is close to maximum and that this condition will be
maintained over the next two years, despite probable plant additions and
expansions. Housing starts and the recent resurgency of nonresidential
construction has strengthened demand and the changing requirements for
insulation in mobile homes and conventional construction (referred to
earlier) will maintain this demand, despite a small anticipated drop in
housing starts in 1973.
Capacity utilization in the textile glass fiber industry, Table XIX, has
not been as robust mainly because of the general economic cycles but also
because capacity additions have been faster than market growth.
Current industry capacity is estimated to be about 750 million pounds.
The lowest rate of capacity utilization over the past ten years was ex-
perienced in 1967 when only 66% of available capacity (467 MM Ib) was
actually utilized. In 1971 utilization was only one percentage point
above the 1967 level. The industry has enjoyed utilization rates over
80% in four of the past ten years, experiencing a high of 86% in 1965.
Currently the capacity utilization is between 75-80%; it is anticipated
that the high rate of industrial expansion being enjoyed in the United
77
Arthur D Little, Inc
-------
TABLE XIX
CAPACITY AND
Year
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972 - July2
1973 - Nov.2
PRODUCTION - TEXTILE
(MM Ib)
Capacity
319
287
292
327
408
467
516
631
657
696
750
776
GLASS FIBER IN
Production
190
192
240
282
332
309
403
501
467
468
THE U.S.
%
Utilization
60
67
82
86
81
66
78
80
71
67
1 November of each year
2 Planned
Source: Textile Organon
78
Arthur D Little, Inc
-------
States will stimulate demand for textile fibers through 1974 and, although
we can expect changes in the capacity mix, overall utilization will con-
tinue to improve as actual capacity additions will be maintained.
4. Degree of Competition and Competitive Practices
Despite the concentration of the glass fiber industry in the hands of
only a few companies, the degree of competition displayed in both the
wool and textile glass fiber segments is healthy.
The four companies offering wool insulation compete actively on price
and service and advertise widely and frequently. Basic profitability of
the wool fiber glass sector, however, indicates that pricing is not
entirely analogous to that for other commodity products responding to
competition and reasonable margins are still enjoyed in relatively poor
years.
Under normal conditions in the textile glass sector companies establish
themselves on a price, product and performance basis with their customers
and changes are not frequent unless dissatisfaction with the supplying
company arises. However, available capacity and a greater number of
companies in this segment has meant that recent competition (better
service and technical assistance, more rapid deliveries, etc.) and
pricing has been sharper than normal.
5. Government Influence on the Supply of Glass Fiber
Two potential constraints on the supply of glass fiber exist: shortage
of wrapping paper for shipments and shortage of gas energy. The second
is potentially very serious and could limit production. The first con-
straint arises from the demise of many suppliers of these paper products
(mainly due to pollution control and resulting profit problems) and the
need of other suppliers to ration their producton. Although temporary,
their shortage could result in a search for substitute wrappings.
79
Arthur D Little Inc
-------
6. Labor Unions
Production workers in both segments of the fiber glass industry are mem-
bers of the Glass Blowers Union (GBBA). The skilled workers however
belong to the various trade unions such as Electrical Workers, Machinists,
etc. By and large the industry has been free of major labor problems and
most disputes have been local grievances. The industry has not had a
major shutdown due to labor problems since its inception. Recently the
Teamsters Union had made inroads in the industry and has had some success
in a plant by plant campaign. Therefore the future position of labor
unions in the industry may be quite different than it has historically
been.
80
Arthur D Little Inc
------- |