PB250683
EPA-23D/2-74-D3D
JULY 1975
ECONOMIC ANALYSIS
OF
EFFLUENT GUIDELINES:
THE TEXTILES, FRICTION AND SEALING MATERIALS
SEGMENT OF THE ASBESTOS PRODUCT
MANUFACTURING INDUSTRY
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Planning and Evaluation
Washington, D.C. 20460
$
STAr
VSfc)
REPRODUCED BY:
U.5, Departmsni of Commerce
National Technical Information Servics
Springfield, Virginia 22161
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BIBLIOGRAPHIC DATA '• Report No. . 2-
SHEET EPA-230/2-74/^0
4. Title and Subtitle 1
Economic Analysis of Effluent Guidelines: The Textiles,
Friction and Sealing Materials Segment of the AsbeBtos
Manufacturing Industry
5- Report Date
July 1975
6.
7. Author(s)
S. V. Margolin and B. U. N. Igwe
8. Performing Organization Rept.
No.
9. Performing Organization Name and Address
Arthur D. Little, Inc.
20 Acorn Park"
Cambridge, Massachusetts 02140
10, Project/Task/U'ork Unit No.
Task No. 18
11. Contract/Grant No.
68-01-1541
12. Sponsoring Organization Name and Address
Office of Planning and Evaluation
Environmental Protection Agency -
Washington, D.C. 20460
13, Type of Report 6: Period
Covered
Final Report
14.
15. Supplementary Notes
16. Abstracts
This report summarizes the economic impact of water effluent guidelines on the
textiles, friction and sealing materials segments of the asbestos product manufac-
turing industry.
No industry wide price increases are expected to occur as a consequence
of BPT standards and a 1% price increase is expected for friction materials as a
result of BAT standards. No production curtailment or plant closure are anti-
cipated as a result of the proposed standards.
17, Key Words and Document Analysis. 17a. Descriptors
Economic Analysis
Effluent Guidelines
Asbestos Products
Asbestos Textiles
Friction Materials
Gaskets
Packing
Sealing Devices
17b. Identifiers/Open-Ended Terms
m
17e. COSATI Field/Group f
HPKB SUWKT TO CHANGE
IB. Availability Statement
19. Security Class (This ]21- No. of Pages
Report)
UNCLASSIFIED
20- Security Class (This
Page
UNCLASSIFIED
FORM NTIS-35 IREV. 3-72) USCOMM-DC l*B52-l>72
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ECONOMIC ANALYSIS
OF
EFFLUENT GUIDELINES:
THE TEXTILE, FRICTION AND SEALING MATERIALS SEGMENTS
OF THE ASBESTOS PRODUCT MANUFACTURING INDUSTRY
Report to
U.S. ENVIRONMENTAL PROTECTION AGENCY
SEPTEMBER, 1975
Preceding page blank
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TABLE OF CONTENTS
Page
PREFACE vii
LIST OF TABLES
LIST OF FIGURES x
EXECUTIVE SUMMARY 1
PART I: INDUSTRY STRUCTURE 3
I-A: ASBESTOS TEXTILES 5
1: MANUFACTURING PROCESS AND TECHNOLOGY 5
2: FIRMS 5
3: PLANTS 6
4: EMPLOYMENT 9
5: PRODUCTION 9
6: WATER UTILIZATION AND DISCHARGE 10
7: FINANCIAL PROFILE 10
(1) Manufacturing Economics 10
(2) Salvage Values of Assets and Constraints
on Financing Additional Capital Assets 11
8: PRICES 12
I-B: ASBESTOS FRICTION MATERIALS 15
1: MANUFACTURING PROCESSES AND TECHNOLOGIES 15
2: FIRMS 17
3: PRODUCTION 17
4; EMPLOYMENT 21
5: PLANTS 21
6: WATER UTILIZATION AND DISCHARGE 21
7: FINANCIAL PROFILE 21
(1) Manufacturing Economics 21
(2) Prices 23
I-C: ASBESTOS GASKETS, PACKING AND INSULATING MATERIALS 25
1: FIRMS 25
2: PLANTS 25
3: WATER UTILIZATION AND DISCHARGE 27
4: FINANCIAL PROFILE, 27
(1) Manufacturing Economics 27
(2) Prices 28
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TABLE OF CONTENTS (Continued)
Page
PART II: EFFLUENT CONTROL COSTS 29
11-A: WATER UTILIZATION AND DISCHARGE 31
11-B: CURRENT EFFLUENT TREATMENT PRACTICES 33
II-C: PROPOSED EFFLUENT STANDARDS AND TREATMENT
TECHNOLOGIES 35
II-D: EFFLUENT CONTROL COSTS 41
1. Capital Investments for Representative Sources 41
2. Annual Costs for Representative Sources 41
3. Costs to Operating Plants 41
PART III: ECONOMIC IMPACT ANALYSIS 47
III-A: METHODOLOGY 49
III-B: ECONOMIC IMPACT ANALYSIS 53
1. Financial Impact 53
2. Price Effects 53
3. Production, Employment, Comminity,
and Other Effects 56
4. Impacts of NSP Standards 56
5. General 56
PART IV: LIMITS OF ANALYSIS 57
LIMITS OF ANALYSIS 59
ASBESTOS TEXTILES MANUFACTURING: SUMMARY OF ECONOMIC
IMPACT 60
FRICTION MATERIALS MANUFACTURING: SUMMARY OF ECONOMIC
IMPACT 61
GASKETS/PACKING/SEALING DEVICES MANUFACTURING: SUMMARY 62
OF ECONOMIC IMPACT
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PREFACE
The attached document is a contractor's study prepared with the super-
vision and review of the Office of Planning and Evaluation of the U.S.
Environmental Protection Agency (EPA). Its purpose is to provide a basis
for evaluating the potential economic impact of effluent limitations
guidelines and standards of performance established by EPA pursuant to
sections 304(b) and 306 of the Federal Water Pollution Control Act.
The study supplements an EPA technical "Development Document" issued in
conjunction with the promulgation of guidelines and standards for point
sources within this industry category. The Development Document surveys
existing and potential waste treatment and control methods and technologies
within this category and presents the investment and operating costs
associated with various control technologies. This study supplements that
analysis by estimating the broader economic effects (including product
price increases, continued viability of affected plants, employment,
industry growth and foreign trade) of the required application of certain
of these control technologies.
This study has been submitted in fulfillment of Control No. 68-01-1541
Task No. 18 by Arthur D. Little, Inc. Work was completed as of July,
1975. The study is based primarily upon an earlier study, also prepared
by Arthur D. Little, Inc. entitled "Economic Analysis of Proposed Effluent
Guidelines for the Asbestos Product Manufacturing Industry." The earlier
report was circulated in conjunction with the publication of the Federal
Register of a notice of proposed rulemaking under sections 304(b) and 306
for the subject point source category. The analysis contained in the
original study has been updated based upon information received during
the period of time between publication of the notice of proposed rulemaking
and the promulgation of the final regulation. Because of the constraints
of time, the control and treatment costs analyzed in this study may not
in all instances be identical to those associated with the requirements of
the promulgated regulation. However, those differences, when they exist,
are minor insofar as the final conclusions of the study are concerned.
This report represents the conclusions of the contractor. It has been
reviewed by the Office of Planning and Evaluation and approved for
publication. Approval does not signify that the contents necessarily
reflect the views of the Environmental Protection Agency. The study has
been considered, together with the Development Document, information
received in the form of public comments on the proposed regulation, and
other materials in the establishment of final effluent limitations guide-
lines and standards of performance.
vii
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LIST OF TABLES
Table
No,
A-l U.S. Asbestos Textiles Manufacturing Firms and Plants 8
B-2 Trend in Value of Shipments of Asbestos Friction Materials 16
B-3 U.S. Manufacturers of Asbestos-Bearing Friction Materials 18
B-4 Estimates of Distribution of 1973 Sales of Asbestos Friction
Materials by the Major Manufacturing Companies 20
C-5 Major U.S. Manufacturers of Asbestos Gaskets, Packings,
and Insulations 26
D-6 Description of Effluent Sources in Asbestos Products
Manufacturing 33
D-7 Proposed Effluent Quality Standards for BPT, BAT, and
NSP Standards 37
D-8 Effluent Treatment Technologies for Attaining the
Proposed Standards 38
D-9 Effluent Generation Rates from Representative Source
Categories 39
D-10 Capital Investment Estimates for Effluent Source
Categories (Representative Sources) 43
D-ll Annual Costs for Representative Sources of Asbestos
Manufacturing Effluents 44
D-12 Capital Investments Required by Effluent-Discharging Plants 45
D-l3 Annual Costs Incurred by Effluent-Discharging Plants 45
D-14 Annual Costs of Achieving BPT Standards as Function of
Sales of Relevant Products 51
D-l5 Annual Costs of Achieving BAT Standards as Function of
Sales of Relevant Products 51
D-l6 Impact of Proposed Guidelines on Return on Investment 55
ix
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LIST OF FIGURES
Figure
No.
A-l Geographical Distribution of U.S. Asbestos Textile
Manufacturing Plants
B-2 Geographical Dispersion of U.S. Friction Materials
Plants
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EXECUTIVE SUMMARY
The potential economic impact on the textiles, friction and
sealing materials segment of the asbestos product manufacturing industry
were assessed on the basis of effluent treatment technologies and the
corresponding incremental costs presented in the relevant Develop-
ment Document for Effluent Limitations Guidelines. A survey
conducted by an EPA-sponsored contractor pursuant to the preparation of
the above document identified only nine manufacturing facilities in the
above segments of the industries that generated any disposable effluents.
Two of these plants are producers of asbestos textiles, one is involved
in sheet gaskets manufacture, and six plants manufacture friction products.
Both textile plants discharge their effluents into municipal sewer systems,
and two of the friction products plants have no discharge into surface
waters. All four plants are excluded from consideration in this study
since they are not covered by the provisions of the proposed standards.
With respect to the "Best Practicable Technology" (BPT) standards,
only one sheet gaskets manufacturing plant is expected to incur additional
costs to comply with the guidelines. Its incremental capital expenditures
{1973 dollars) are projected to be $80,300, and its "annualized" water
treatment costs amount to $35,500. To meet the "Best Available Technology"
(BAT) standards, the above sheet gaskets and four friction materials
manufacturing plants are expected to incur total additional capital costs
of $632,500 and "annualized" water treatment costs of $139,200.
In assessing the potential economic impact of the standards, the
primary determinant of impact severity was taken to be the ratio of the
incremental "annualized" costs incurred by an effluent-discharging plant
as a percentage of its estimated annual sales of the base products. A
plant was adjudged to be threatened with closure if the incremental
annual effluent treatment costs approached the pre-tax profit margins
derived for the various subcategories, i.e.:
Asbestos textiles ... 5.8 percent
Friction materials ......... 6.0 percent
Gaskets/packings/sealing devices . .11.0 percent
On the basis of this criterion, none of the effluent-discharging
plants was judged to be in danger of production curtailment or plant
closure as a direct consequence of the proposed standards.
While it is recognized that there are competitive materials on
the horizon which could substitute for the subject asbestos products
in certain specialized applications, and while it is further recognized
that, with respect to friction materials, the existence of large captive
manufacturers (the automotive companies) may tend to dampen price
1
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increases by the non-captive producers, it is nevertheless concluded that
these price-moderating factors will not deter the passing-on of additional
costs incurred by the industry segment due to the proposed standards.
Accordingly, a price increase on the order of 1 percent is deemed likely
in the friction materials sub-category as a result of the BAT standards.
No industry-wide price increases are expected to occur as a consequence
of the BPT standards.
Furthermore, no adverse impacts are expected on the production
and market growth of the various sub-categories. Similarly, the historical
balance of trades, with respect to the subject products, in favor of the
United States is expected to continue, unaffected by the proposed
effluent standards.
The "New Source Performance" (NSP) standards involve very minimal
additional capital expenditures to a proposed new plant. Accordingly,
these expenditures should not deter investments in new facilities, and
neither are they considered a significant adverse factor in any decision
regarding the preferential location (domestic versus foreign) of a new
plant.
2
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PART I: INDUSTRY STRUCTURE
I-A: ASBESTOS TEXTILES
I-B: ASBESTOS FRICTION MATERIALS
I-C: ASBESTOS GASKETS, PACKING AND
INSULATION MATERIALS
3
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A: ASBESTOS TEXTILES
Asbestos textiles include asbestos-bearing yarn, cord, thread, cloth,
roving, lap, wick, rope, tape, carded fibers, etc. It is estimated that
about 3 percent of the 1972 U.S. consumption of asbestos fibers--a total
of 792,000 short tons—went to textiles manufacturing. Preliminary 1973
statistics indicate a total fiber consumption (for all purposes) of
8 to 10 percent above the 1972 level. Assuming a yearly escalation in
value of textiles.shipments equivalent to about 8 percent (per year)
above the 1971 level of $38.2 million, (which accounts for both price
inflation and the normal growth in business level), 1973 shipments could
then be projected at about $44,5 million. By comparison, 1967 and 1963
shipment values were $30.9 million and $26 million, respectively. It is
probable that the above estimates exclude the value of interplant trans-
fers of textiles within the same corporate organization, where the trans-
ferred material undergoes additional processing for transformation into
other finished products such as friction materials. .
1: MANUFACTURING PROCESS AND TECHNOLOGY
Textiles manufacture generally begins with milled fibers which
are delivered to vibrating screens where the fibers are removed and
graded by an air aspiration system. Either in a preliminary mixing
process or during carding, the separated fibers are blended with
organic fibers such as cotton rayon, which act as carriers and support-
ing agents for the shorter asbestos fibers, thus improving their spin-
ning characteristics. The usual organic fiber content is between 20
and 25 percent. The blended fibers undergo an additional opening/clean-
ing process by the carding machine which combs the fibers into a parallel
arrangement to form a coherent mat of material. Strips are separated
from the mat and mechanically compressed between oscillating surfaces
into untwisted strands which are then wound onto spindles to form the
roving from which asbestos textile yarn is made.
Through the twisting and pulling operations performed by a
spinning machine, the relatively weak roving is transformed into a
stronger yarn. Asbestos twine or cord is produced by twisting together
two or more yarns on a spinning frame. Braided textile products are .
manufactured on various types of packing and braiding machines. Asbestos
yarns are woven into fabric on looms that operate similarly to those
that produce conventional cloth goods.
2: FIRMS
Listed in Table A-l are the major U;S. asbestos textile manufacturing
firms, their plant locations, and the estimated, number of production
employees involved in textiles manufacture at the respective plants.
Preceding page blank
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The firms listed probably account for 95 percent of the nation's
shipments of asbestos textiles. Furthermore, the so-called "Big Three"
of the industry—Raybestos-Manhattan, Inc., Southern Asbestos Company
(subsidiary of H. K. Porter, Inc.), and Amatex Corporation—are probably
responsible for 75 to 80 percent.
Virtually all the firms listed in Table A-l manufacture other
products in addition to textiles. For instance, Raybestos-Manhattan is
involved in seven business 1ines—friction materials, engineered textiles,
rivets and rivet-setting machinery, rubber-covered rolls, packing and
sealing products, reinforced plastics, and bowling balls. For this firm,
asbestos textiles manufacture is usually an intermediate step in its
production of some lines of friction and engineered textile products.
In general, it can be stated that for most of the firms involved in
asbestos textile manufacture, this product contributes less than 25
percent of the annual business; furthermore, there are indications that
this ratio is declining as the trend towards diversification into other
more profitable non-asbestos products and manufacturing intensifies.
While most of the textile-producing firms utilize raw fiber not
produced at their own mines, three of the listed major firms are integrated
backwards to varying degrees into fiber mining and milling, and as such,
consume sane captively-produced fibers. Raybestos-Manhattan owns a
partial interest (550,000 shares) in Cassiar Asbestos Corporation Ltd.,
a Canadian supplier of long-length asbestos fiber, with annual fiber
production capacity of about 110,000 tons. H. K. Porter, the parent
firm of Southern Asbestos Company, owns about 75 percent of the common
stock of Pacific Asbestos Corporation, Copperopolis, California, with a
rated fiber-producing capacity of about 50,000 tons per year. Johns-
Manville is the world's largest producer of asbestos fiber, with mines
in Canada and California. Canadian Johns-Manville Company ltd., has a
fiber-production capacity of about 850,000 tons, and Coalinga Asbestos
Corporation, in which Johns-Manville owns 80 percent interest, is rated
at about 15,000 tons of fiber per year.
3: PLANTS
It can be observed from Table A-l that, in general, an asbestos
textile plant is small in comparison with other manufacturing facilities.
Of the 15 plants listed, only five are thought to employ 300 or more
production workers. The remaining plants average only about 135 per
plant. Inclusive of other salaried and supervisory/management personnel,
an average plant would employ between 200 and 250, with annual sales on
the order of $6.5 million.
Geographically, all the major plants are located in the Northeastern,
Mid-Atlantic, and Southeastern states, (Figure A-l), with significant
clusters around the Philadelphia and Charlotte, N.C. areas. It can be
surmised that their market perimeters are similarly limited to these
regions, and shipments to the Western states are probably few and far
between. The West is primarily a consumer of finished rather than
intermediate products such as textiles.
6
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FIGURE A-1: GEOGRAPHICAL DISTRIBUTION OF U.S. ASBESTOS
TEXTILE MANUFACTURING PLANTS
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TABLE A-l
U.S. ASBESTOS TEXTILES MANUFACTURING FIRMS AND PLANTS
Firm
Location
Raybes to s -Ma nha tta n, Inc.
Southern Asbestos Company
Amatex Corporation
Unlroyal, Inc.
Un1royal Fiber & Textile Co.
Johns-Manville Corp.
Atlas Textile Co.
Asbestos Textile Co.
Asten-Hi 11 Mfg. Co.
Garlock, Inc.
Nicolet Industries, Inc.
Mannheim, Pa.
Marshville, N.C.
N. Charleston, S.C.
Charlotte, N.C.
Bennettsvllle, S.C.
Meredith, N.H.
Norristown, Pa.
Hogansville, Ga.
Winnsboro, S.C.
Manville, N.J.
N. Wales, Pa.
N. Brookfleld, Mass,
Philadelphia, Pa.
Palmyra, N.Y.
Ambler, Pa.
TOTAL
~Contractor's Estimates
Estimated Number of
Production Employees*
300
200
500
300
200
200
300
300
200
150
125
100
100
75
50
3,100
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By all accounts, the asbestos textiles industry 1s very mature, most
of the operating plants being over 50 years old, with equipments, machinery,
and technology of the same age. The Norristown, Pa. plant of Amatex,
the Ambler, Pa. plant of Nicolet Industries, Southern Asbestos Company at
Bennettsville, S.C. and Raybestos-Manhattan at Marshville, N.C. are probably
the youngest crop of plants, and they average over 25 years of age. All
things being equal, it is expected that very few, if any, new,plants will
come on-stream in the next 5 to 10 years. Similarly, no major technological
breakthrough is anticipated that would alter the general complexion of
the industry.
As indicated previously, a number of the major plants manufacture
textiles for captive consumption at the same plant or another plant within
the same corporate family. However, where such internal consumption occurs,
it is generally restricted to the manufacture of friction or packing
materials. For instance, Southern Asbestos company's facilities in
Charlotte, N.C. and Bennettsville, S.C. are sources of raw materials for
friction material plants in Huntington, Indiana and Richmond, Ky. Except
in cases of such internal consumption, most asbestos textile plants sell
their products to manufacturers of finished products that are resistent
to heat, fire, acids and mechanical abrasion.
4: EMPLOYMENT
Total employment in the asbestos textiles industry has been derived
from the basic data in Table A-l, adjusted by a factor of about 1.3 to
account for salaried and supervisory/management employees. Total industry
employment is estimated at 4,000 to 4,500 with the follow distribution:
# of Employees/Plant # of Plants Total Employment in Range
Less than 150 5 585
150-299 5 1,235
300-500 5 2,210
Plants with 300 or more employees, while accounting for only 33 percent
of the manufacturing, facilities, contribute about 55 percent of the
industry employment, whereas the five smallest plants (331 of total
number) account for only about 15 percent.
5: PRODUCTION
The value of 1973 shipments of asbestos textiles is estimated at
about $44.5 million. The following represent judicious estimates of
its breakdown by companies:
Raybestos-Manhattan, Inc.
$13.4 million
(30%)
Southern Asbestos Company
$13.4 million
(30%)
Amatex Corporation
$ 8.0 mill ion
(18%)
Uniroyal
$ 2.2 million
( 5Ji)
All others
$ 7.5 mill ion
(20*)
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Thus, in terms of shipments, the four largest firms (operating 8 plants)
account for 83 percent, while the remaining 7 plants have an average
annual shipment of $1 million each in asbestos textiles.
6: WATER UTILIZATION AND DISCHARGE
Compared to most manufacturing operations, asbestos textiles
production involves relatively little water consumption. In fact,
neglecting sanitary waste water, the largest potential sources of water
effluents are the wet air pollution control devices, such as scrubbers,
which are employed in a limited number of plants to control dust
emissions from the plants to the atmosphere. Fortunately, wet scrubbing
is becoming increasingly superseded by fabric filtering devices which
are considered superior from a performance as well as environmental
standpoint.
One of the few phases of textiles manufacture that involve
significant utilization and discharge of process water is in cloth
finishing (coating) operations where water-soluble coatings are
involved.
The aggregate potential effluent discharge (sanitary, process,
and emissions control) from asbestos textiles manufacturing probably
averages about 250 gpd/ton of product, equivalent to an annual rate
of about 5 million gallons for the entire industry.
Except for textile plants that are part of large multi-product
facilities, whose composite effluents are treated within the plant
premises prior to discharge or recirculation, the usual industry
practice is to discharge most raw effluents, at some fee, into
adjoining municipal sewer systems for treatment. In such cases, the
economics apparently do not justify installation and operation of an
independent water treatment system.
7: FINANCIAL PROFILE
(1) Manufacturing Economics: It is recognized that the costs
of manufacturing in the asbestos textiles industry, as in most other
manufacturing activities, would depend on, among other factors, the
plant size in question, its product mix (including non-textiles and
non-asbestos manufacturing), sources of raw materials, and corporate
organizational structure.
Recognizing but discounting the probable deviations from the norm
due to the above effects, the following synthetic financial balance is
postulated as probably representative of the 1973 experience of an
"average" asbestos textiles manufacturing plant:
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TOTAL SHIPMENT - 5 million lbs.
REVENUE
$6.65 million
COSTS:
Materials & Supplies
Labor & Maintenance
S.G.&A.*
Total Operating Costs ; .
OPERATING MARGIN-
DEPRECIATION & AMORTIZATION
NET PRE-TAX MARGIN
Pre-Tax Margin as Percent of Sales
TAXES {50%)
AFTER-TAX MARGIN
As Percent of Sales
$3.26 million
1.05 million
1.75 mil 1 ion
.$6.06 million
$6.06 mill ion
$0.59 mill ion
$0.20 million
$0.39 mill ion
5.8 percent
$0.20 million
$0.20 million
3.0 percent
On the basis of the above estimates, it is apparent that raw materials
and labor contribute a high percentage of the cost of manufacturing
asbestos textiles--71 percent. Secondly, since most plants and equip-
ments are over 25 years old, the depreciation allowance is low--3 percent
of revenue. Thirdly, it is evident that asbestos textiles manufacturing
is a low cash-flow low-profit enterprise, and any adverse economic
perturbation, (including higher labor and materials costs and the costs
of environment control), which increases manufacturing costs by over
6% without a corresponding product price increase may threaten the
survival of the industry.
(2) Salvage Values of Assets and Constraints on Financing
Additional Capital Assets:
The discussions in this section
nature and are applicable to all three asbestos products
form the subject of this study. Accordingly, the issues
will not be considered again in the friction materials
are general in
segments which
discussed here
and gaskets/packings/insulations sections.
There is little information available which could be directly
and meaningfully applied to the question of salvage values of assets
in the event of possible shut-down of facilities arising from the
incremental pollution abatement investment and operating costs.
* Sales, General and Administrative expenses, including corporate
overhead expenses. .
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Some perspective on maximum possible salvage values of plant and
equipment per unit of production capacity may be obtained by examining
census data on net plant and equipment book value, updated and refined
in conjunction with actual company financial statements, including an
allowance for working capital tied up in individual plant operations.
Preliminary indications are that salvage value would be on the order
of 10-151 of the value of shipment.
As for the constraints on financing additional capital assets,
these fall into several categories, namely managerial, financial,
competitive, and regulatory.
With respect to managerial constraints, it is management's task
to choose from among investment alternatives and to decide on the optimum
utilization of the corporation's resources and borrowing power, and to
formulate and implement plans accordingly. The funds available to the
corporation include, of course, its total cash generation, its borrowing
power, and ability to raise additional equity capital. The realistic
constraints here are the costs of capital vis-a-vis the expected rates
of return on its investment.
With respect to financial constraints, a corporation's earnings
and cash flow are generally programmed to meet dividend reinvestment
and debt service requirements. When external financing is required,
there are many considerations dictating the type and amount--e.g.,
existing commitments which carry with them an obligation with respect
to maintenance of certain ratios.
Concerning competitive constraints, a process breakthrough which
significantly lowers production costs may dictate that capital invest-
ments be made defensively by competitors and offensively by the innova-
tive firm. If pollution costs are so onerous and if competitive market
conditions do not permit pass-on to customers or taxpayers, a firm may
elect not to spend the money, assuming it could achieve a greater return
elsewhere.
Finally, with respect to regulatory constraints, the financing
of additional capital assets may be, and usually is, influence by tax
laws, particularly those regarding accelerated depreciation, depletion,
and foreign ownership versus tax considerations. Pollution control
regulations add a new dimension.
8: PRICES
As discussed previously, the after-tax profit margin associated
with asbestos textiles production is only on the order of 3 percent of
sales. Such 1ow margins may be due, in part, to the fact that textiles,
for most applications, are regarded as Intermediate rather than final
products with the high value-added phase of fiber-to-product conversion
still downstream of the textile stage. Secondly, the advent of some
12
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man-made substitute materials that are price-performance-competitive
with asbestos textiles in some of its applications has helped to restrain
price escalations, even in the face of rising materials and labor costs
to the textiles manufacturers. Such competitive materials include
fiberglass, which is available in the form of continuous filament at a
cost quite comparable to that of the better grades of spinning asbestos
fiber.
Given the escalating raw materials costs now impacting the textiles
industry, and recognizing the industrial value of the products of this
industry, and the fact that the industry cannot afford to absorb future
cost increases, it is likely that such additional costs (which include
the cost of environmental quality control) will be passed-on to textiles
consumers. This assertion in no way contradicts the previously acknow-
ledged existence of potential substitute materials, in view of the fact
that the market appeal of these substitutes is presently very limited.
Moreover, current upward price pressures on both asbestos textiles and
the aforesaid potential substitutes have not changed the price-performance
factor in favor of the substitutes.
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B: ASBESTOS FRICTION MATERIALS
The friction materials segment of the asbestos manufacturing industry
includes products that find extensive use in the fields of transportation,
mining, and heavy construction. Specific applications are of drum, disc,
outer jaw, and hand brakes, dry and oi1-immersed clutches, and facings
for automatic transmission discs.
The various types of friction materials can be classified according
to structure and method of fabrication. Molded brake linings or clutch
facings encompass all products that are preformed under pressure in molds
or between rolls. Paper and millboard friction materials include plied
asbestos papers that are impregnated prior to or subsequent to plying
and asbestos papers that are formed from pulp to which friction compounds
have been added. Woven linings are constructed of resin-impregnated
woven asbestos fabrics that are hot-pressed or calendered and baked to
form linings.
Estimates by the U.S. Bureau of Mines and the Asbestos Information
Association of North America (AIA/NA) place the annual U.S. requirement
of asbestos fiber for this application at around 10 percent of the total
consumption—equivalent to about 80,000 short tons in 1972. The recent
trend in the value of shipments of asbestos friction materials is shown
in Table B-2.
1: MANUFACTURING PROCESSES AND TECHNOLOGIES
Many materials, including some whose exact roles are regarded as
proprietary knowledge, are used in varying quantities in the manufacture
of friction materials. Dry processes normally begin in ribbon blenders
where bonding agents, metallic constituents, and asbestos fibers are mixed
for production of molded linings. The major binder is a "b" stage resin
that is thermoset when fully cured, but is also intermediately set in the
partially-cured condition. A uniform layer of the material 1s heated
sufficiently, under pressure, to cause the resin to flow and set but not
be fully cured. The resulting flat sheet is removed, cut into product-
sized segments, reheated to soften the resin, and formed to the proper
arc by cold molding. A final baking of the segments in compression molds
at 1,000 to 4,000 psi to retain the shape converts the resin to a ther-
moset or permanent condition.
In a variation of the wet-board process, wet-mixed molding materials
are usually combined in a blender from which the mixture is fed to a
paper machine where the material is placed in a preform which carries
a perforated metal screen on one side. When suction is applied to the
outside of the screen, solvent is removed and a deposit of the molding
mixture remains on the screen. This is then transferred to a revolving
cylinder, where it builds up to the desired product thickness. The deposit
is removed from the cylinder, dried, but into product-sized segments,
saturated in a liquid binder, and either air-dried or oven-dried to remove
the solvents.
Preceding page blank
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TABLE B-2
TREND IN VALUE OF SHIPMENTS OF ASBESTOS FRICTION MATERIALS
Year Value of Shipments ($10^)
1963 117.7
1967 144.4
1971 179.1
1972 181.6
1973 205*
~Preliminary
SOURCES: U.S. Bureau of the Census, AIA/NA, and Contractor's Estimates
16
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Woven brake linings and clutch faces are made in several ways. One
method is to weave a heavy tape of desired width and in considerable
length, impregnate it with resins and other materials to impart the desired
frictional characteristics, and supply It in rolls to distributors and
users who can cut it to suit their requirements. Another method is to
weave the asbestos yarn into sheets of fabric up to a few feet wide and
of the desired thickness, impregnate the sheets, and fix the Impregnate
by heat treatment and then si it the sheets into long strips of the desired
width which are then supplied to the trade in the form of rolls.
2: FIRMS
No reliable statistics are available regarding the number of firms
involved in asbestos friction materials manufacture. The larger firms
include not only the essentially captive producers such as the Del co-
Moraine and Inland Divisions of General Motors Corporation and The
Cycleweld Division of Chrysler Corporation, but also diversified indus-
trial product manufacturers such as Raybestos-Manhattan, Inc. and Bendix
Corporation. In addition, several smaller, typically single-plant firms
manufacture friction products for both the original equipment and
replacement markets.
Table B-3 is a listing of the important firms in the industry,
along with their plant locations and the estimated number of production
employees involved in friction materials manufacturing.
3: PRODUCTION
As shown in Table B-2, the 1973 value of domestic shipments of
asbestos friction products was about $205 million, up about 13 percent
from the prior year. The estimated distribution of these sales among the
major manufacturers is depicted in Table B-4, along with the percentages
of corporate sales represented by friction materials. Clearly, Raybestos-
Manhattan, Inc., with annual friction materials sales estimated at about
$115 million, is the industry leader. The exact order of the other major
producers is not so certain, but they are thought to be as follows:
Bendix Corporation
Del co-Moraine Division of General Motors
Corporation
Abex Corporation
H. K. Porter Company
Cycleweld Division of Chrysler Corporation
The above firms probably account for 90 to 95 percent of the total
production of friction products. This ratio is consistent with the
historical pattern for the industry, which indicates that in the 1954
to 1967 period, the eight largest firms accounted for between 86 and
91 percent of the industry's value of shipments. Furthermore, these
historical data suggest that about 99 percent of the shipments were
usually made by the 20 largest companies.
17
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TABLE B-3
U.S. MANUFACTURERS OF ASBESTOS-BEARING FRICTION MATERIALS
Company
Raybestos-Manhattan, Inc.
Bendix Corporation
General Motors Corp.
Abex Corporation
H. K. Porter Co.
Chrysler Corporation
Borg Warner Corporation
Maremont Corporation
Carlisle Corporation
Forcee Mfg. Corporation
World Bestos Co.
Scandura, Inc.
Gatke Corporation
Mar Pro Corporation
Standco Industries
Auto Friction Corp.
Brassbestos Mfg. Corp.
Southern Friction
Material Co.
L. J. Miley Co.
Auto Specialties Mfg. Co.
Plant Location
Stratford, Conn.
Mannheim, Pa.
CrawfordsviTle, Ind.
Fullerton, Calif.
Troy, N.Y,
Cleveland, Tenn.
Delco-Moraine Div.
Dayton, Ohio
Inland Division
Dayton, Ohio
Cleveland, Ohio
Troy, Michigan
American Brakeblok Division
Winchester, Va.
Huntington, Indiana
Richmond, Ky.
Cycleweld Division
Trenton, Michigan
Spring Division
Bellwood, 111.
Grizzly Products Division
Paulding, Ohio
Ridgeway, Pa.
Tappahannock, Va.
New Castle, Ind.
Charlotte, N.C.
Warsaw, Ind.
Grizzly Brake Division
Chicago, 111.
Houston, Texas
Lawrence, Ma.
Patterson, N.J.
Charlotte, N.C.
Chicago, 111.
St. Joseph, Mich.
Approximate Number of
Production Employees*
1
,000
900
500
200
600
250
300
200
200
175
150
200
225
200
150
150
125
100
100
100
100
100
100
75
75
75
75
75
18
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TABLE B-3 CONTINUED
U.S. MANUFACTURERS OF ASBESTOS-BEARING FRICTION MATERIALS
Approximate Number of
Company Plant Location Production Employees*
National Friction
Products Corp. Logansport, Ind. 70
Reddaway Mfg. Co. Newark, N.J. 50
Molded Ind. Friction Corp. Prattville, Ala. 50
Royal Ind. Brake
Products, Inc. Danville, Ky. 50
Lasco Brake Products Co. Oakland, Calif. .50
California Blok Co. Gardena, Calif. 50
MGM Brakes, Inc. Cloverdale, Calif. 50
Wheeling Brake Block
Mfg. Co. Bridgeport, Ohio 40
Baldwin-Ehnet Hill, Inc. Trenton, N.J. 40
Thiokol Chemical Corp. Trenton, N.J. 30
Contractor1 s estimates of number employed in friction materials
manufacture in 1973.
19
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TABLE B-4
ESTIMATES OF DISTRIBUTION OF 1973 SALES OF ASBESTOS FRICTION MATERIALS
BY THE MAJOR MANUFACTURING COMPANIES
Company
Abex Corp.
Bendix Corp.
Del co-Moraine/Inland
Divisions of
General Motors
H. K. Porter Co.
Raybestos-
Manhattan, Inc.
All others
TOTAL
Estimated 1973
Sales, $MM
(all products)
25
2,212
Sales* of Friction % of Firm's
Materials, $MM Total Sales
N/A
270
175
14
20+
33
20-25
16
115
24
228-233
>80%
<2
N/A
6
56
N/A - Not Available
SOURCE: Contractor's estimates
*May differ from value of shipments as reported by the Bureau of the
Census due to differences in definition and reporting coverage.
20
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4: EMPLOYMENT
About 77 percent of the estimated 7,000 production workers listed
in Table B-3 are thought to be employed by the eight largest firms.
Again, this is quite consistent with the U.S. Bureau of the Census
statistics indicating historical figures over 70 percent. Inclusive
of salaried and other management personnel, the friction materials
industry probably employs a total of about 9,100.
5: PLANTS
The average total number of employees per plant is on the order
of 225, indicating that the typical friction materials manufacturing
facility is relatively small in comparison with other industrial manu-
facturers. Its annual shipments would be valued at about $5.4 million,
yielding an average shipment per employee of about $24,000 per year.
As would be expected of a mature industry, most of the plants
and equipments are old, usually over forty years of age with the
possible exception of newer captive facilities belonging to the auto-
mobile manufacturers. Production processes have changed only marginally
over the years, and labor rather than capital intensity appears to be
the norm in most of the older plants.
Figure B-2 shows the geographical dispersion of friction materials
plants in the U.S. Not surprisingly, they tend to be concentrated in
and around the major metropolitan centers of the Northeast and the
Midwest, with a few plants located in California to primarily cater
to the needs of the automobile assembly plants in that part of the
country.
6: WATER UTILIZATION AND DISCHARGE
To all intents and purposes, the friction products industry may be
conceived as an essentially dry industry, generating no significant pro-
cess waste water. What water is generated is 1ikely to be either of the
non-contact (cooling) type, or sanitary waste water, or waste water from
wet particulate (dust) collection systems such as scrubbers. A few
plants may also generate waste water from solvent recovery operations.
Perhaps the principle exceptions to these generalizations would
be those plants that are integrated backward into paper and millboard
friction product manufacturing. However, such plants are more aptly
considered as primarily paper and millboard producers and are therefore
outside the scope of the present consideration.
7: FINANCIAL PROFILE
(1) Manufacturing Economics: The following synthetic annual profit/
loss statement has been developed as probably applicable In 1973 to an
average friction materials manufacturing plant. In considering these
data, it is important to bear in mind that the total revenue and the
21
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FIGURE B-2: GEOGRAPHICAL DISPERSION OF U.S. FRICTION MATERIALS PLANTS
-------
contribution of each cost item to the total manufacturing cost is a strong
function of the product mix and therefore the manufacturing practices of
a given plant. For instance, it is recognized that the proportion of
total cost due to materials and supplies would, of necessity, vary depending
on whether a plant's output is weighted in favor of woven as opposed to
molded products, or brake linings rather than clutch and transmission
facings.
REVENUE $5.4 million
COSTS:
Materials & Supplies
Labor & Maintenance
S.G.&A.
Total Operating Costs
OPERATING MARGIN
DEPRECIATION & AMORTIZATION
NET PRE-TAX MARGIN
Pre-Tax Margin as Percent of Sales
TAXES (50%)
AFTER-TAX MARGIN
$2.59 mil 1 ion
$1.24 million
$1.08 mil 1 ion
$4.91 million $4.91 million
$0.49 million
$0,162 mill ion
$0,328 mill ion
6.0 percent
$0,164 million
$0,164 million
As Percent of Sales 3.0 percent
(2) Prices: The above balance suggests that there is relatively
little profit in the manufacture of friction products. In addition to
escalating materials and labor costs, there are important market factors
serving to moderate product prices. For instance, it might ordinarily
be expected that profitability would be much higher than indicated above,
especially since a high proportion of the demand for friction products
(75-90% for some plants, depending on product mix) goes to after-market,
rather than original equipment sales. This is not necessarily the case,
and it would appear that the profits are made by mark-ups at the next
higher (distributor and dealer) levels. Furthermore, the fact that
major automobile manufacturers are involved in the business could tend
to establish a defacto price ceiling which Independent producers would
not ordinarily violate without jeopardizing their shares of the market.
In addition to the foregoing general considerations, sales of
automotive friction products are obviously dependent on Detroit product
design and OEM specifications, captive manufacturing vs. outside procure-
ment strategy, and, of late, federal transportation safety standards and
regulations. But these factors notwithstanding, it is believed that as
long as the demand for friction products remains strong, especially in the
after-market sector, most manufacturers could conveniently pass-on cost
increases of the size associated with meeting effluent control guidelines.
23
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C: ASBESTOS GASKETS, PACKING AND INSULATING MATERIALS
Asbestos has been widely used for several decades as a constituent
of gasketing (jointing) materials for joining non-moving parts, such as
pipeline flanges and valves and for various forms of packings in such
applications as steam, hydraulic and superheater systems where its high
temperature, hot pit and acid resistance, etc., are advantageous.
Figures published by the Asbestos Information Association of
North America (AIA/NA) show that the 1971 value of shipments of these
products and the asbestos tonnages consumed are as follows:
Gaskets and packings 25,000 tons $ 99.5 million
Insulations 16,000 tons 40.9 million
$140.4 million
Apparently, these statistics are consistent with the 1967 Census of
Manufactures data which showed the following breakdown of value of
shipments:
Asbestos, asbestos-metallic, and
asbestos-rubber gaskets $ 62.1 million
Asbestos packing and insulations 63.2 million
$125.3 million
The tempo of industrial activity, especially in the heavy mechanical
machinery and chemical manufacturing sectors, would suggest a growth rate
of about 3 to 5 percent per year in shipments of gaskets, packing, and
insulating materials. Accordingly, 1973 aggregate sales are placed at
between $148 million and $155 million.
1: FIRMS
As with most other sectors of the asbestos products manufacturing
industry, no complete and reliable roster of the firms involved in manu-
facturing asbestos gaskets, packing, and insulating materials is avail-
able. Nevertheless, an incomplete list of some of the major manufacturers,
is presented in Table C-5 with the eight most important members listed
first, although not necessarily in order of size. It is estimated that
these particular firms probably account for 55 to 65 percent of the total
product shipments.
2: PLANTS
The estimated employment roster distribution of Table C-5 suggests
that the average plant in this sector employs fewer than 100 production
employees. Inclusive of other salaried and management personnel, total
25 Preceding page blank
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TABLE C-5
MAJOR U.S. MANUFACTURERS OF ASBESTOS
GASKETS, PACKINGS, AND INSULATIONS
ESTIMATED NUMBER OF
FIRM LOCATION PRODUCTION EMPLOYEES*
Raybestos-Manhattan, Inc.
Stratford, Conn.
150
Nicolet Industries
Ambler, Pa.
150
Johns-Manville Corp.
Manville, N.J.
150
Garlock, Inc.
Palmyra, N.Y.
125
Felt Products Mfg. Co.
Skokie, 111.
105
McCord Corp.
Wyandotte, Mich.
100
Amatex Corp.
Norristown, Pa,
100
Gatke Corp.
Chicago, 111.
100
Anchor Packing Co.
Philadelphia, Pa.
75
Vellumoid Division
Worcester, Mass.
75
Green, Tweed
N. Wales, Pa.
75
Crane Packing
Morton Grove, 111.
75
F. D. Farnum
Lyons, 111.
75
Sterling Packing & Gasket Co.
Houston, Texas
75
Detroit Gasket & Mfg. Co.
Detroit, Mich.
50
A. W. Chesterton
Everett, Mass.
50
Hercules Div. of Richardson
Corp.
Alden, N.Y.
50
Braiding & Packing Works of
America
Brooklyn, N.Y.
50
Sacomo Packing Co.
San Francisco, Calif.
50
Sepco
Birmingham, Ala.
40
Quality Gasket & Mfg. Co.
Clawson, Mich.
35
Armstrong Cork Co.
Braintree, Mass.
30
TOTAL
1,785
~Contractor's estimates.
26
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employment is about 110, although it should be noted that other manu-
facturing activities at a given plant (both asbestos- arid non-asbestos-
related) generally tend to exaggerate the importance of the gaskets/
packings/insulations sector. Value of shipments per average plant is
estimated at about $4.2 million.
Because the listing of Table C-5 is considered far from exhaustive,
representing only about 60% of the total shipments, any discussion of
the geographical dispersion of plants based on Table C-5 is apt to be
misleading. It can, however, be said that plants in this segment are
concentrated in and around the major industrial centers.
3: MATER UTILIZATION AND DISCHARGE
Gaskets are conventionally manufactured by dry (non-water consuming)
processes. After opening and cleaning, the fibers are mixed with the
correct proportion of rubber and other mineral ingredients to a dough-
like consistency and rolled out in calendars, where heat drives off the
solvent and the action of the rollers compounds the constituents into a
homogeneous sheet. -Woven asbestos gaskets are preferred in cases where
softness and pliability are desirable. In such cases, they are woven
from yarn reinforced with fine brass wire and usually contain 10 to 20
percent of organic fibers. The porous woven fabric is subsequently
impregnated with either rubber or plastic compounds.
Similarly, packings require no process water. Asbestos yarn is
simply worked up into twisted or braided forms that are compressed into
rings or into cloth which is subsequently coated with rubber compound
and folded or bound into various forms of packing for high-pressure
steam work.
4: FINANCIAL PROFILE
(1) Manufacturing Economics: Of the three major asbestos products-
manufacturing segments considered—textiles, friction materials, and
gaskets/packings/insulating materials--indications are that the gaskets
group is probably the most economically profitable. The 1973 synthetic
profit/1oss statement for an average plant is postulated as follows:
REVENUE $ 4.2 million
COSTS:
Materials & Supplies
Labor & Maintenance
S.G.&A.
$1 ,676,000
$. 890,000
$1,040,000
OPERATING MARGIN
DEPRECIATION AMORTIZATION
NET INCOME BEFORE TAXES
Pre-Tax Margin as Percent of Sales
$594,000
$126,000
$468,000
11 percent
TAXES (50%)
AFTER-TAX MARGIN
As Percent of Sales
$234,000
$234,000
5.5 percent
27
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The estimated after-tax margin of 5.5 percent of sales, in comparison
with the lower margins indicated for friction materials and textiles,
is probably traceable to the high proportion of product sales that goes
to after-market applications in high-value equipment. Accordingly, demand
tends to be relatively price-insensitive, a factor which, under normal
conditions, should make cost pass-on easy to accomplish.
(2) Prices: In projecting future price trends, it is essential
to recognize the existence on the horizon of substitute non-asbestos
materials whose price-performance posture might tend to improve as the
price of asbestos-based gasketing/insulating materials increases. Graphitic
packings, which are now used only in special applications, represent one
such example. Furthermore, over the last few years, there has been a
significant erosion of the braised seal packings market by mechanical
seals, especially in nuclear power pump applications. These factors
notwithstanding, it is thought that demand for asbestos gaskets/packing
materials will continue to be brisk and at least commensurate with the
level of growth in industrial activity projected for the rest of this
decade. Accordingly, gaskets and insulating materials manufacturers
should be able to pass-on moderate cost increases which could be
attributed to compliance with the proposed effluent guidelines.
28
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PART II: EFFLUENT CONTROL COSTS
II-A: WATER UTILIZATION AND DISCHARGE
II-B: CURRENT EFFLUENT TREATMENT PRACTICES
II-C: PROPOSED EFFLUENT STANDARDS AND
TREATMENT TECHNOLOGIES
II-D: EFFLUENT CONTROL COSTS
29
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A: WATER UTILIZATION AND DISCHARGE
Manufacture of the asbestos products which comprise the subject of
this study—asbestos textiles, asbestos friction materials, and asbestos
gaskets, packing and insulating devices—generally requires very little
consumption of process water. For example, the only significant
instances of process water utilization in textile manufacturing are the
addition of moisture during weaving or braiding, and in the textile
coating operations. Only in the latter process is any waste water
generated. In friction products manufacturing, water is not a necessary
process ingredient and is not directly used in manufacturing. Waste
water may be generated in a few friction materials plants as a consequence
of solvent recovery operations and in wet dust collection facilities used
for air quality control in product finishing areas.
However, the latter waste water source is decreasing in significance
as the popularity of dry dust collection units increases. As for gaskets,
packing and insulating materials manufacturing, little or no process water
is generally involved. Sheet gasket manufacturing may, however, include
cooling and solvent recovery operations that generate waste waters.
Liquid effluent from asbestos textile coating generally results
from clean-up and dumping of unused coating materials at the end of a
run. Only two textile plants are known to generate such wastes, and
in quantities not normally exceeding about 200 gallons per day. Both
plants discharge their wastes into adjoining municipal sewer systems.
Furthermore, one of these plants employs vapor absorption facilities
for scrubbing solvent fumes from its drying oven exhausts. Such units,
which generally use caustic soda solutions, are normally operated
intermittently (once or twice a month) and require about 60,000 gallons
of water per operation.
Solvent recovery effluents are known to be generated at only one
sheet gasketing plant and one friction products plant. Waste volumes
vary, depending on the type and size of equipment. The discharge is
generally steady although not a direct function of the plant (asbestos
materials) production rate. An effluent generation rate of about
10,000 gallons per day may be considered typical of such operations.
Wet dust col lector effluent discharge rates generally range from
about 50,000 to 150,000 gallons per day for the asbestos products
manufacturing industry. Four friction materials plants have been
identified as sources of such effluents.
In addition to the above sources of liquid effluents, there are
two known pilot-plant operations that employ the so-called "dispersion
processes" for asbestos yarn manufacturing and represent potential
waste water sources. These are not commercial operations and are
therefore excluded from further consideration on the premise that the
3i Preceding page blank
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lack of data relative to their potential commercial viability and
effluent characteristics precludes any reliable comments as to the
potential impact of the proposed effluent standards on these plants
when and if they achieve commercialization.
32
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B: CURRENT EFFLUENT TREATMENT PRACTICES
The industry characterization section of this study indicated the
following approximate breakdown of plants involved in the manufacture of
the subject asbestos products:
- Textiles: 11 firms 15 plants
- Friction Materials: 30 firms 38 plants
- Gaskets, etc.: 22 firms 22 plants
Of these facilities, it is believed that only eight commercial-scale
plants could routinely discharge any liquid effluents from a total of
10 different sources. As shown in Table D-6, three of these sources are
ascribable to textiles manufacturing (representing 13% of the known
plants in this segment)* one to sheet gaskets production {4% of the
plants), and the balance to friction materials fabrication (equivalent
to 17% of the plants). It should be observed also that one textiles
plant and one friction materials plant have no water treatment facilities
whatsoever; and two of the friction products plants have zero discharge.
The two textiles plants (T-l & T-2) and a friction material plant (FM-5)
discharge their wastes into municipal sewer systems. For purposes of
subsequent discussion and analysis, zero discharge plants and plants
using municipal sewers (for which no effluent guidelines have yet been
evolved) are removed from further consideration.
TABLE D-6
DESCRIPTION OF EFFLUENT SOURCES IN ASBESTOS PRODUCTS MANUFACTURING
Plant
Effluent
Current
Effluent
Code
Product
Source
Treatment
Discharge Point
T-l
Textiles
Coating
None
Municipal sewer
T-2
Textiles
Coating and
fume scrubber
Two-stage lagoon
Municipal sewer
S-l
Sheet gaskets
Solvent recovery
Lagoon
Surface water
FM-1
Friction Materials
Wet scrubber
Lagoon
Zero discharge
FM-2
It 11
II ll
Sedimentation
Surface water
FM-3
II 11
ll it
Two-stage lagoon
Surface water
FM-4
II ll
4« «
Lagoon
Surface water
FM-5
ll ll
Solvent recovery
None
Municipal sewer
Dust scrubber
Lagoon
Zero discharge
FM-6
II l)
Dust scrubber
Chemical precip-
Surface water
, itation with
other wastes
SOURCE: Development Document for Effluent Limitations Guidelines and
New Source Performance Standards for the Textiles, Friction
and Sealing Materials Segment of the Asbestos Product Manu-
facturing Point Source Category, Sverdrup and Parcel and
Associates, Inc., St. Louis, Mo. August, 1974.
33
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C: PROPOSED EFFLUENT STANDARDS AND TREATMENT TECHNOLOGIES
In formulating the effluent treatment standards and treatment tech-
nologies applicable to the subject segments of the asbestos products
manufacturing industry, the Development Document for Effluent Limita-
tion Guidelines did not consider it meaningful to propose individ-
ual standards for the textiles, friction materials, and gaskets/packings/
insulations categories. Since the effluent characteristics are more a
function of product finishing and peripheral operations, rather than the
primary manufacturing activities, a guidelines system based on these
finishing and peripheral processes was deemed more appropriate. Accord-
ingly, standards and applicable technologies were developed on the basis
of the following unit operations:
- Coating or finishing of asbestos textiles
- Solvent recovery operations
- Vapor absorption (fume scrubbing)
- Wet dust collection
The proposed standards considered the chemical, physical, and
biological characteristics of the effluents associated with each of
the above operations, including:
- Suspended sol ids
- pH
- Effluent temperature
- Biological oxygen demand (BOD)
- Dissolved sol ids
- Heavy metals
- Phenols
- Nitrogen
- Phosphorous
- Chemical oxygen demand (COD)
Suspended solids and chemical oxygen demand (COD) are probably the most
important parameters of asbestos products manufacturing effluents. The
proposed standards did not include suspended asbestos particles in the
list of important effluent parameters because it is not generally present
in the wastes under consideration, except perhaps for the wet dust collec-
tion category. Even in this case, it is thought that the asbestos fibers
are not freely dispersed in the effluent, but are encased firmly within
the dust particles and as such cannot be detected by normal microscopic
techniques. Furthermore, pollutants in other non-process wastes such as
non-contact cooling water, boiler blowdown, steam condensate, and wastes
from water treatment facilities, are specifically excluded.
Shown in Table D-7 are the effluent quality standards proposed under
the best practicable control technology (BPT), best available control
technology (BAT), and new source performance (NSP) standards provisions
of the 1972 Federal Water Pollution Control Act Amendments. BPT and BAT
Preceding page blank
-------
standards must be achieved by existing point sources by July 1, 1977,
and July 1, 1983, respectively. The new source standards apply to those
sources of waste water whose construction commenced after the publication
of these standards.
Table D-8 shows the technologies proposed for attainment of the
above standards. For textile coating effluents, the BPT and BAT standards
can be achieved by containment of dumped and spilled coating materials
and by adoption of dry techniques for equipment cleaning and other house-
keeping activities. All waste would be containerized for salvage, used
as a fuel substitute, or disposed in a controlled sanitary landfill. NSP
standards may be attained by designing new facilities for containment of
all wastes.
Treatment of solvent recovery effluents for compliance with the
BPT, BAT and NSP standards would involve, in sequence, cooling where
necessary, addition of supplemental nutrients, treatment by the extended
aeration version of the activated sludge process, and disposal of excess
sludge in a municipal sewage treatment plant.
The control technology required to achieve the BPT and BAT standards
in the vapor absorption subcategory is fume incineration. This would
involve replacement of vapor absorption units with fume incinerators to
oxidize the vapors in air exhausted from the drying ovens. NSP standards
would require recovery of all vapor and fume emissions for reuse or as
fuel substitutes.
For the wet dust collection subcategory, sedimentation is the
recommended technology for achieving the BPT standards. To meet the
BAT and NSP standards, it is recommended that in place of wet scrubbers,
baghouses, or other effective dry collection devices, should be adopted
for dust control purposes.
An important parameter necessary for subsequent estimation of the
cost of meeting the proposed effluent standards is the representative
effluent generation rate characteristic of each source subcategory.
These are shown in Table D-9.
36
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TABLE D-7
PROPOSED EFFLUENT QUALITY STANDARDS FOR
BPT,
** BAT, AND NSP STANDARDS
Waste Source
I. BPT Solvent recovery
Textile coating
Vapor absorption
Wet dust collection {
-Max,
LAvg,
Max,
Avg,
II. BAT Solvent recovery
Textile coating
Vapor absorption
Wet dust col lection
III. NSP Solvent recovery
Textile coating
Vapor absorption
Wet dust collection
rMax.
Avg.
rMax,
Avg,
Discharged Effluent Standards*
COD Suspended Solids p_H
(lbs. of pollutant/1000 lb. of finished product)
6 - 9
0.30 0.18 ,
0.18 0.09 °
Zero discharge of process wastes
Zero discharge of process wastes
5.0*
N/A
2.5*
(lbs. of pollutant/106 standard cubic feet of air
scrubbed)
0.30
0.18
c
0.18
0.09
0
Zero
discharge
of process
wastes
Zero
discharge
of process
wastes
Zero
discharge
of process
wastes
0.30
0.18
C
0.18
0.09
0
Zero
discharge
of process
wastes
Zero
discharge
of process
wastes
Zero
discharge
of process
wastes
- 9
* Maximum average of daily values for any period of 30 consecutive days.
** BPT = Best practicable technology currently available;
BAT = Best available technology economically achievable*,
NSP = New source performance standards.
SOURCE: Development Document for Effluent Limitations Guidelines and
New Source Performance Standards for.the Textiles, Friction
and Sealing Materials Segment of the Asbestos Product Manu-
facturing Point Source Category. Sverdrup and Parcel and
Associates, Inc., St. Louis, Mo. August, 1974.
37
-------
TABLE D-8
EFFLUENT TREATMENT TECHNOLOGIES FOR
ATTAINING THE PROPOSED STANDARDS
STANDARD
BPT*
BAT*
NSP*
WASTE SOURCE
Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust Collection
Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust Collection
Textile Coating
Solvent Recovery
Vapor Absorption
Wet Dust Collection
Waste containerization for salvage,
subsequent fuel use, or landfill disposal.
Cool wastes (If necessary}, add supple-
mental nutrients, and extended aeration
version of activated sludge process.
Fume incineration.
Sedimentation.
Same as for BPT.
Same as for BPT.
Same as for BPT.
Replacement of wet scrubbers with bag-
houses or other dry collection devices.
Original plant design for waste
containment.
Either biological treatment (as for BPT),
or carbon absorption, or reverse osmosis.
Recovery for reuse (or as fuel substitute)
of all vapor or fume emissions.
Baghouse or other dry dust collection
devices.
SOURCE: Development Document for Effluent Limitations Guidelines and
New Source Performance Standards for the Textiles, Friction
and Sealing Materials Segment of the Asbestos Product Manu"^~
facturing Point Source Category. Sverdrup and Parcel and
Associates, Inc.4 St. Louis, M6. August, 1974.
*BPT = Best practicable technology currently available;
BAT = Best available technology economically achievable;
NSP = New source performance standards.
38
-------
TABLE D-9
EFFLUENT GENERATION RATES FROM REPRESENTATIVE
SOURCE CATEGORIES
Source Category
Waste Discharge Rate
(gals./day)
200
Textile Coating
Solvent Recovery
Vapor Absorption
10,000
60,000*
50,000
100,000
150,000
Wet Dust Collection: small
medium
large
SOURCE: Development Document for Effluent Limitations Guidelines and
New Source Performance Standards for the Textiles, Friction
and Sealing Materials Segment of the Asbestos Product Manu-
facturing Point Source Category. Sverdrup and Parcel and
Associates, Inc., St. Louis, Mo. August, 1974.
* Total discharge per operating period (2 periods per month).
39
-------
D: EFFLUENT CONTROL COSTS
The basic cost estimates associated with meeting the BPT» BAT, and
NSP effluent standards by the asbestos products manufacturing industry
are taken from the Development Document for Effluent Limitations Guide-
1ines for this industry. Effluent treatment cost estimates were based
on the premise that the only basic variable determining the costs to
each plant and effluent source was the volume of waste water generated.
The age and size of the production facilities, level of implementation
of in-plant control, and local non-water quality environmental factors
were important only insofar as they might determine the volume of generated
effluents.
1. Capital Investments for Representative Sources: Table D-10 shows
the investment cost estimates for the various representative effluent
sources. Investment costs are defined as the capital expenditures
required to bring the effluent treatment or control technology into
operation. They include, as appropriate, the costs of excavation,
concrete, mechanical and electrical equipment installed, piping,
engineering design services, construction supervision and related costs.
The costs of the control facilities were estimated on the basis of
minimal space requirements. As such, no additional land costs were
included.
2. Annual Costs for Representative Sources: These costs are shown
in Table D-ll and include:
• Capital costs, calculated as 8% of the total
capital investment.
• Depreciation on a straight line basis, the
applicable duration being a function of the
treatment system involved.
t Operation and maintenance costs» which
include labor, materials, solid waste disposal,
effluent monitoring, administrative expenses,
taxes, and insurance.
• Energy and power costs estimated on the basis
of $0,025 per Kwh.
3. Costs to Operating Plants: The cost estimation methodology
discussed above was applied specifically to effluent-discharging plants
in each asbestos product sub-category, taking cognizance of each plant's
existing effluent treatment facilities (if any) and the volume of
effluents generated. Zero-discharge facilities and plants discharging
into municipal sewer systems are excluded from consideration.
41
Preceding page blank
-------
Table D-12 and D-13 show respectively the capital investment and
annual costs incurred by the relevant effluent-discharging plants in
meeting the proposed standards. Since all the relevant friction materials
plants currently meet the BPT standards, only the gasket plant would
incur any capital and annual operating expenditures in meeting these
standards. As for the BAT standards, all the listed plants would incur
some costs.
In the aggregate, capital investments for these segments of the
asbestos manufacturing category would equal $80,300, to meet the BPT
standards, plus $471,900 to meet the BAT guidelines. As for annual
costs, these amount to $35,500 and $91 ,000, respectively (all figures
in 1973 dollars).
42
-------
TABLE D-10
CAPITAL INVESTMENT ESTIMATES FOR EFFLUENT
SOURCE CATEGORIES (REPRESENTATIVE SOURCES)
Effluent Source Capital Investment (1971-$) to Satisfy:
BPT Standards BAT Standards
(in addition to
BPT costs)
Textile Coating
2,000
0
Solvent Recovery
73,000
0
Vapor Absorption
152,000
0
Wet Dust Collection:
Small
44,000
43,000
Medium
64,000
94,000
Large
83,000
146,000
SOURCE: Development Document for
Effluent Limitations
Guidelines
and New Source
Performance Standards for the
Textiles,
Friction and Sealing Materials Segment of the Asbestos
Product Manufacturing Point Source Category. Sverdrup
and Parcel and Associates, Inc., St. Louis, Mo.
August, 1974.
43
-------
TABLE D-ll
ANNUAL COSTS FOR REPRESENTATIVE SOURCES
OF ASBESTOS MANUFACTURING EFFLUENTS
Annual
Costs (1971
$) to Satisfy:
Source Category
Cost Item BPT Standards
BAT Standards
(in addition to
BPT costs)
Textile Coating
Capital
160
Depreciation
2001
Operating & Maintenance
8,000
--
Energy & Power
0
--
TOTAL
8,360
—
Solvent Recovery
Capital
5,900
Depreciation
2,9003
--
Operating & Maintenance
12,500
--
Energy & Power
11,000
TOTAL
32,300
--
Vapor Absorption
Capital
12,200
_ -
Depreciation
15,200!
—
Operating & Maintenance
1,800
Energy & Power
16,800
--
TOTAL
46,000
—
Wet Dust Collection:
Small
Capital
3,500
3,400
Depreciation
1,8003
1 ,7003
Operating & Maintenance
7,700
4,300
Energy & Power
4,000
0
TOTAL
17,000
9,400
Medium
Capital
5,100
7,500
Depreciation
2,6003
4,7002
Operating & Maintenance 12,000
6,100
Energy & Power
5,200
0
TOTAL
24,900
18,300
Large
Capital
6,600
11,700
Depreciation
3,300s
7.3002
Operating & Maintenance 16,000
8,500
Energy & Power
6,500
0
SOURCE:
27,500
TOTAL 32,700
Development Document for Effluent Limitations Guidelines and
New Source Performance Standards for the Textiles, Friction "and
Sealing Materials Segment of the Asbestos Product Manufacturing
Point Source Category. Sverdrup and Parcel and Associates, Inc.
St. Louis, Mo. August, 1974.
1
2
3
10-year depreciation period
20-year depreciation period
25-year depreciation period
44
-------
TABLE D-12
CAPITAL INVESTMENTS REQUIRED BY EFFLUENT-DISCHARGING PLANTS
Plant Code
S-l
FM-2
FM-3
FM-4
FM-6
TOTAL
Capital Costs ($) To Meet:
BPT Standards
(1971 $) (1973 $)*
73,000
0
0
0
0
73,000
80,300
0
0
0
0
80,300
BAT Standards (incremental)
(1971 $)
0
146,000
94,000
43,000
146,000
429,000
(1973 $)'
0
160,600
103,400
47,300
160,600
471,900
TABLE D-13
ANNUAL COSTS INCURRED BY EFFLUENT-DISCHARGING PLANTS
Plant Code
S-l
FM-2
FM-3
FM-4
FM-6
TOTAL
Annual Costs ($) To Meet:
BPT Standards
(1971 $) (1973 $)'
32,300
0
0
0
0
32,300
35,500
0
0
0
0
35,500
BAT Standards (incremental)
0971H (1973 $)*
0
27,500
18,300
9,400
27,500
82,700
0
30,300
20,100
10,300
30,300
91,000
SOURCE: Development Document for Effluent Limitations Guidelines and
New Source Performance Standards for the Textiles, Friction
and Sealing Materials Segment of the Asbestos Product Manu-
facturing Point Source Category. Sverdrup and Parcel and
Associates, Inc., St. Louis, Mo. August, 1974.
*1973 figures assume an average cost escalation of 10 percent over 1971
45
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PART III: ECONOMIC IMPACT ANALYSIS
III-A: METHODOLOGY
III-B: ECONOMIC IMPACT ANALYSIS
47
Preceding page blank
-------
A: METHODOLOGY
Previous analysis of the financial profiles of the various segments
of the asbestos products manufacturing industry synthesized the following
profit margins (as a percentage of sales):
To a first approximation, it is assumed that these figures are applicable
across the board to each item of. the product mix manufactured at a plant.
Thus, a textiles plant is assumed to realize an identical margin of 5,8
percent of sales on yarn, cord, rope, thread, tape, wicks, and various
fabrics.
Furthermore, it is assumed that any additional cost increases due
to the proposed effluent standards, which the manufacturer cannot pass-on
to the customer and therefore must absorb, ultimately comes out of the
above profit margins. Clearly, as such cost increases approach and
exceed these margins, the plant must make a determination as to the
economic wisdom of continued operation, taking account also of several
other impinging factors.
Indications are that, in general, the average profitability in
these segments of the asbestos products manufacturing industry is low
compared with the returns achieved by other manufacturing industries.
It is therefore reasoned, for purposes of this analysis, that any
additional water treatment costs closely approaching the above pre-tax
margins would in general present a threat to the continued operation of
a plant or product line. {Discussions with some industry sources
suggest perhaps an even greater sensitivity than this for all product
lines). Thus, for friction material facilities, if the projected
additional annual water treatment costs necessary to meet any of the
proposed standards approach 6.0 percent of a plant's value of sales of
friction materials, that plant's continued production of these products
would be regarded as jeopardized.
In those plants where,the water treatment costs cannot be easily and
directly attributed to a given product line or operation, these costs are
assigned uniformly to all of the plant's products. Thus, in such circum-
stances, the additional costs associated with treatment of solvent recovery,
vapor absorption, and wet dust collection effluents are distributed equally
among all the products manufactured at these plants.
Tables D-14 and D-1S present estimates of the average annual value
of sales of the base products at the respective effluent-discharging
plants, as well as a representation of the additional annual costs (as
Pre-tax
After-tax
Asbestos textiles
Friction materials
Gaskets/packings/insulations
5.. 8%
6.0%
11.0%
3.0%
3.0%
5.5%
49
Preceding page blank
-------
a percentage of these sales) of meeting the BPT and BAT standards respec-
tively. As indicated in Table D-13, water treatment costs, in 1973 dollars*
are derived by escalation of the 1971 costs by 10 percent to reflect cost
inflation between 1971 and 1973.
To ascertain and isolate specific financial impacts, one would
ideally wish to examine the expected profitability of present or "baseline"
operations versus that projected under BPT and BAT, other conditions
initially held constant. One would also wish to compare the required
capital expenditures with the cash flows available, and compare the
ordinary capital investment which would be expected to be made over the
same period with the expenditures made to meet BPT and BAT standards.
Additionally, one would then wish to examine the results in the
context and from the perspective of each company's total business.
An effort was made to examine the various plant situations from
these standpoints, to the extent that data and information were avail-
able. This examination included estimates of both operating margin
and return on investment effects, as cross checks on the findings.
50
-------
TABLE D-14
ANNUAL COSTS OF ACHIEVING BPT STANDARDS AS A
FUNCTION OF SALES OF RELEVANT PRODUCTS
Estimated Average Additional Costs Costs
Annual Sales* of to Meet BPT (1973 $) as
Plant Base Products Base Products Standards % of Sales
(in millions)
(1973 $) (1973 $)
S-l
Sheet Gaskets
5.0
$35,500
0.7
FM-2
Friction Materials
2.4
0
0
FM-3
Friction Materials
3.6
0
0
FM-4
Friction Materials
1 .7
0
0
FM-6
Friction Materials
60.0
0
0
TABLE D-15
ANNUAL COSTS OF ACHIEVING BAT STANDARDS AS A
FUNCTION OF SALES OF RELEVANT PRODUCTS
Estimated Average Additional Costs Costs
Annual Sales* of to Meet BAT (1973 $) as
Plant Base Products Base Products Standards % of Sales
(in mill ions)
(1973 $) (1973 $)
S-l
Sheet Gaskets
5.0
0
0
FM-2
Friction Materials
2.4
$30,300
1.3
FM-3
Friction Materials
3.6
20,100
0.6
FM-4
Friction Materials
1.7
10,300
0.6
FM-6
Friction Materials
60.0
30,300
0.05
SOURCE:
Company and Trade Reports and Contractor's
Estimates.
*In cases where products are consumed captively, estimates reflect
internal transfer prices.
51
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B: ECONOMIC IMPACT ANALYSIS
(1) Financial Impact: The indications are that if any plants
would be significantly impacted, it would probably be plants FM-2, and/or
S-l. Such impacts would be only in respect to BAT standards, which im-
plies that the time frame for capital expenditure is, approximately,
1980-1983, and the accounting for annual charges related to BAT would be
post-1980.
To put this in some perspective at the plant level, the estimated
incremental annual costs for these plants are on the order of $30,000-
$35,000 per year, in 1973 dollar terms; and each plant has 100 or more
employees and annual pre-tax operating earnings estimated to significantly
exceed one hundred thousand dollars. Indications are that other things
being equal the diminution of earnings, given present sales and earnings
levels, could be in the range of 7 to 15 percent for these plants. However,
assuming pre-tax profit margins in the range of 5 to 12 percent, indica-
tions are that the earnings diminution could be offset by very minor
price increases (less than 2 percent). Moreover, the impact will be lower
to the extent that there is real growth in the business into the 1980's
since the level of earnings (in constant dollar terms) would be higher.
It is believed that the additional capital expenditure required to
achieve the BAT standards at these plants would represent a minor portion
of the existing investment; furthermore, indications are that the rate of
expenditure in general will not be large in comparison with normal patterns.
On the basis of the estimates in Tables D-14 and D-15 and impact
severity criteria set forth in Section 1II-A (i.e., costs should not too
closely approach margin of sales), none of the discharging plants is
regarded as being in danger of curtailing or terminating operations as
a direct result of the proposed effluent limitation guidelines.
Table 0-16 presents a summary in terms of estimated impact on
return on investment, given the data available. The indications are that
there is likely to be little financial impact from the proposed standards.
(2) Price Effects: On the basis of discussions with asbestos
products manufacturers and other followers of the industry, there appear
to be no legal or market constraints in the way of passing-on to the
consumer cost increases of the magnitudes estimated as attributable to the
proposed standards (maxima of 0.7 percent and 1.3 percent of sales to
meet the BPT and BAT standards respectively).
It is reasoned that the industry segments will not be disposed to
absorb these added costs in the face of other margin-depleting costs,
such as those for energy, and given the already low after-tax margins
realized. Accordingly, a price increase on the order of one percent
may be imposed without serious customer resistance by the one gaskets
plants incurring additional expenses to meet the BPT guidelines (Table D-14).
53 Preceding page blank
-------
But since no industry-wide follow-the-leader price increases are expected
to materialize from this limited price action, the price effect of the BPT
standards are projected to be nil. As for the BAT standards, since more
friction materials plants must expend funds to comply with the guidelines
(Table D-15), it is estimated that an industry-wide price rise on the
order of 1.0 percent (for friction materials only) could occur as a result
of these standards.' Other asbestos products segments should witness no
price increases.
Additional justification for the original contention that no serious
constraints to increased cost pass-on exist may be obtained from the fact
that the asbestos products in question are in fact specialty items, con-
sumed in most cases by industries for whom the cost of asbestos products
constitutes a very low percentage of the manufacturing cost of their end-
products. In other markets, (e.g., the after-market sale of friction pro-
ducts), sales of asbestos products are relatively insensitive to price
increases in the order of 1 percent.
Another factor which often tends to discourage price increases is
the availability of imports and/or substitute products. Regarding
imports, the U.S. traditionally has been a net exporter of asbestos
products, as illustrated by the following statistics for 1973:
Product Value of Imports Value of Exports
Gaskets Negligible $ 1,442,446
Packing Negligible 9,040,541
Heat or Sound Insulation Negligible 2,850,444
Textiles & Yarns $ 5,584,866 6,454,182
Clutch Facings & Linings Negligible 1,870,055
Brake Linings Negligible 7,862,805
TOTAL About $6,000,000 $ 29,500,000
The aggregate statistics clearly suggest that import volumes are not
sufficiently high as to deter justifiable cost pass-through to the
domestic asbestos products consumers. Even in the textiles category
where imports nearly equal exports, the supply/demand balance is such
that domestic consumers are not expected to resist payment of price
increases of the order of one percent. As for substitute products,
no currently available substitutes enjoy the price-performance advan-
tage of the asbestos products in each of the applications under con-
sideration. For instance, graphitic packings and mechanical seals
have only succeeded in capturing small highly-specialized segments
of the packing/sealing devices markets.
54
-------
TABLE D-16
IMPACT OF PROPOSED GUIDELINES ON RETURN ON INVESTMENT
New Invest-
Average and
Plant
ment for
Range of
Investment
BAT as %
R0I for
Range of Return on
for Asbestos
of Current
Total Corp-
Plant Investment
Products1
Investment
oration
for Asbestos Products
Baseline
BPT BAT
Plant
Ranqe ($MM)
Range (%)
R0I (%)2
(X)
M i%l
S-l
n.a.3
n.a.
n.a.
n.a.
n.a. n.a.
FM-2
0.7 - 1.4
11 - 23
n.a.
n.a.
n.a. n.a.
FM-3
0.9 - 1.4
7 - 11
9 + 100%
8-12
8-12 7-10
FM-4
o
1
LO
O
5 - 9
7 + 40%
5-10
5-10 4-8
FM-6
18.0 -30.0
0.5 - 1
7 + 50%
5-10
6-10 6-10
Basis: Recent industry supply-demand and pricing environment, present
operating standards with respect to other than the guidelines
under study.
Notes: JPlant investment and working capital associated with relevant
asbestos products manufacturing.
2Average of the annual after-tax earnings divided by stockholders'
equity at beginning of the year for the last five years.
Variability expressed as a percentage around the average value.
Figures rounded.
3"n.a." denotes data for meaningful estimates not available.
SOURCE: The information presented above represents contractor estimates
derived in part from information presented in company reports,
SEC filings, statistical services, industry studies, and other
sources believed reliable. The accuracy and completeness of
such sources and information are not guaranteed.
55
-------
(3) Production, Employment, Community, and Other Effects: Since,
as stated before* production curtailments and plant closures are not
expected to occur as a direct consequence of the proposed effluent quality
standards and since it is believed that additional costs incurred as a
result of the BPT and BAT standards can be readily recouped by passing
than on to product consumers in the form of higher prices, it is therefore
concluded that there will be no direct impact (of these standards) on the
production and market growth of the subject asbestos products. Accord-
ingly* no adverse employment and community effects will result, and,
other things being equal, the United States' favorable balance of trades
position with respect to manufactured asbestos products should continue
for the foreseeable future.
(4) Impacts of NSP Standards: As shown in Table D-8, new plants
to which the NSP Standards are applicable will be designed, in most
cases, on the principles of zero effluent discharge, achievable by
either total waste containment, recovery, or use of dry dust collection
systems. Only in the instance of solvent recovery operations are any
treatable effluents expected, and for such operations, the effluent
standards applicable are similar to those proposed as achievable by
1977 (BPT).
The above considerations, supplemented by the judgement that a
no-discharge design philosophy {for new plants) will not significantly
add to the initial and/or operating costs of a new plant, lead to the
conclusion that there will be zero impact of the NSP Standards on new
plant construction (and therefore, industry growth), product prices,
plant location perferences (domestic versus overseas), and the national
balance of payments posture. In other words, the costs associated with
the minor manufacturing flowscheme redesign or waste handling and
treatment alternatives called for in these standards will not act as a
deterrent to the construction of new plant capacities for the subject
asbestos products; neither will the standards, of themselves, be a
significant constraint that could force a prospective plant to be
preferentially located outside the United States.
(5) General: It should be stressed that, in arriving at the
above conclusions with respect to the potential impacts of the pro-
posed effluent guidelines, only the direct effects of these guidelines
have been taken into consideration. It should be recognized that the
subject segments of the asbestos products industry are concurrently
being impacted by other factors including economics (e.g. escalating
energy, materials, and labor costs), other governmental regulations
(air pollution, health and safety), and social and public relations
factors. Thus, whereas the incremental costs of meeting the effluent
limitations guidelines may be of minor significance by themselves, the
combination of all the above factors may, in fact, produce the adverse
impacts that are not anticipated if only the effluent guidelines were
in effect.
56
-------
PART IV; LIMITS OF ANALYSIS
57
-------
IV. LIMITS OF ANALYSIS
The above estimates of the potential economic impact of the proposed
BPT, BAT, and NSP effluent standards for the asbestos textiles, friction
materials, and gaskets/packings/seal1ng devices segments of the asbestos
products manufacturing industry are predicated on basic technology and
cost estimates contained 1n the Development Document for Effluent Limita-
tions Guidelines for these segments. Accordingly, the analysis contained
herein 1s accurate only to the extent that the document truly reflects
the efficacy of the proposed technologies, as well as their associated
costs. No effort has been made by this contractor to independently
verify the data.
Additionally, the list of effluent-discharging plants in these
subcategories (which 1s the basis for aggregate cost estimates) is
taken from the said document.and has not been independently verified.
It should be Indicated that while the methodology of impact
assessment adopted in this study is judged to be meaningful for
identifying impact-sensitive facilities, the final decision to cur-
tail or discontinue operations at a given plant is governed by a
number of interacting factors. No actual financial data for specific
plants were made available for this study, and hence the analysis of
financial impact is based on necessarily Imprecise estimates. While
additional water treatment costs may, on the surface, appear as
manageable additional burdens in light of a given plant's apparent
sales volume and profit margin, the decision to continue, curtail,
or terminate operations is generally made in light of corporate goals
and expectations, present and future market conditions, etc.
Finally, as alluded to in prior discussion, the judgment in this
study regarding the probable impact of the proposed effluent limitation
guidelines has not taken Into account the often concurrent and reinforc-
ing effects of other legislations and governmental controls (specifi-
cally, air pollution, occupational health and safety, etc.) which,
with the additional water treatment costs, may create a "last straw"
effect, even though the water treatment costs may, by themselves, be
negligible.
59
Preceding page blank
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ASBESTOS TEXTILES MANUFACTURING: SUMMARY
OF ECONOMIC IMPACT
Industry - Asbestos Products Manufacturing
SIC Code - 3292
# Plants in segment - 15 plants
% Total plants in industry - 20 percent
# Plants direct discharging - None
% Total plants in segment - 0
# Plants with BPT treatment in place - 15 plants
% Total plants in segment - 100 percent
BPT BAT
COST OF POLLUTION ABATEMENT
Capital costs for segment
Total capital cost 0 0
Total capital expenditures
as % of average annual
investment 0 0
Total capital expenditures
as % of total capital in
place . - o 0
Annualized costs for segment
Total incremental increase
including capital charges 0 0
Total incremental increase
excluding capital charges 0 0
Total .incremental increase
including capital charges
as % of sales 0 0
EXPECTED PRICE INCREASE
Expected increase due to
pollution control None None
PLANT CLOSURES
Total closures anticipated None None
% reduction of segment capacity
due to closures 0 0
EMPLOYMENT
Total # of employees affected 0 0
% of total employees in segment 0 0
COMMUNITY EFFECTS None None
IMPACT ON INDUSTRY GROWTH None None
BALANCE OF TRADE EFFECTS None None
60
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FRICTION MATERIALS MANUFACTURING: SUMMARY
OF ECONOMIC IMPACT
Industry - Asbestos Products Manufacturing
SIC Code - 3292
# Plants 1n segment - 38 plants
% Total plants in industry - 51 percent
# Plants direct discharging - 4 plants
% Total plants in segment - 11 percent
# Plants with BPT treatment in place - 38 plants
% Total plants in segment - 100 percent
BPT BAT
COST OF POLLUTION ABATEMENT
Capital costs for segment
Total capital cost 0 $471 ,900
Total capital expenditures as
% of average annual investment , . . . 0 7.4 percent*
Total capital expenditures as
% of total capital in place 0 <1 percent
Annualized costs for segment
Total incremental increase
including capital charges 0 $91,000
Total incremental increase
excluding capital charges 0 $83,720
Total incremental increase
including capital charges
as % of sales 0 0.04 percent
EXPECTED PRICE INCREASE
Expected increase due to
pollution control 0 About 1 percent
PLANT CLOSURES
Total closures anticipated None None
% reduction of segment capacity
due to closures 0 0
EMPLOYMENT
Total § of employees affected None None
% of total employees in segment .... 0 0
COMMUNITY EFFECTS None None
IMPACT ON INDUSTRY GROWTH None None
BALANCE OF TRADE EFFECTS ......... None None
*Based in part on the average New capital expenditure-to-value of
shipments ratio for SIC 3292 in the 1958-67 period (U.S. Bureau of
the Census).
61
-------
GASKETS/PACKING/SEALING DEVICES MANUFACTURING: SUMMARY
op EC0NQHIC IMPACT
Industry - Asbestos Products Manufacturing
SIC Code - 3293
# Plants in segment - 22 plants
% Total plants in Industry - 29 percent
# Plants direct discharging - 1 plant
% Total plants in segment - 4.5 percent
# Plants with BPT treatment in place - 21 plants
% Total plants in segment - 95.5 percent
BPT
BAT
COST OF POLLUTION ABATEMENT
Capital costs for segment
Total capital cost
Total capital expenditures as
% of average annual Investment
Total capital expenditures as
% of total capital in place .
Annualized costs for segment
Total incremental Increase
including capital charges . ,
Total Incremental increase
excluding capital charges . .
Total incremental Increase
including capital charges
as % of sales ......
EXPECTED PRICE INCREASE
Expected increase due to
pollution control
PLANT CLOSURES
. Total closures anticipated . .
% reduction of segment capacity
due to closures
EMPLOYMENT
Total # of employees affected
% of total employees in segment
COMMUNITY EFFECTS
IMPACT ON INDUSTRY GROWTH ....
BALANCE OF TRADE EFFECTS ....
$7 3,000
0.05 %
0.3 %
$35,500
$32,700
0.02 %
None
None
0
None
0
None
None
None
0
0
0
0
0
None
None
0
None
0
None
None
None
62
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