. - we'v- Iu'l 5 .up -- .1- - PCB PRESENTATION .. 2:9 CORPORATE DEVELOPMENT ?it?riznoxuogiqmz we are here today to acquaint you with the PCB (Aroclor) 'pollution problem and to secure your guidance and approval on a recommended plan of action. . r-I' . . U;Cortain PCB's have recently been identified by various scientists along with.DDT in fish, birds, and other wildlife. ?From the standpoint of reproduction, the PCB's are highly toxic to birds, In a few moments, Elmer Wheeler will describe 'thu problem in detail. Our objective is to describe for you the basic problems, the issues involved, review alternative courses of action, a and sUggest_an action plan program for your approval. This is a serious matter, not only from the pollution Vienpoint, but also because of the $22 3 worldwide Eggtg?gg business involved with resultant gloss profits of.$10 and a-net investment of approximately In addition, there could be possible adverse legal and public relations problems levnled against Monsanto. Our Agenda will he as follows: 741945 NEV 028691 lug-:3 {gnaw-?0v. . I. II. IV. VI. VII. - acqumm w: PCB AGENDA NEVIEN INTRODUCTION TEE PROBLEM DEVELOPMENTS - COMPLEXITY - NATURE OF I - SERIOUSNESS LAN DEPARTMENT VIEWPOINT AND RECOMMENDATIONS ON MONSANTO AND ALTERNATIVES FUNCTIONAL ELUID BUSINESS GROUP DISCUSSION - MARKETS, USES SOURCES OF POLLUTION 4 CUSTOMER PLASTICIZER BUSINESS GROUP DISCUSSION MANNETs, USES - ISOURCES OE POLLUTION- RECOMMENDED ACTION PLAN SUMMARY '741946' NEV 028692 "v: .fg- By may.of introduction, the Organic bivision and the Medical -Department has been actively engaged for the last 18 months Iin developing facts and knowledge on this subject by personal ?visits to Universities and Industrial test laboratories, other worldwide producers, and other industrial cellaborators, as well is keeping abreast of all literature and news sources on the subject as well as funding a toxicological and analytical' test program in excess of $100 M. We established an Ad Hoc Committee of both Business Grouns-and Medical which recently~ issued a report - much of which will be discusSed today. We have learned a lot, but there is muCh yet to learn as you will .hear. .What are They are biphenyls better known to us as AroclOrs. The next slide will quickly re? familiarize you with our Arocldr business. WH947 NEV 028693 -. .. . . i, .., MONSANTO WORLDWIDE AROCLOR BUSINESS GROSS GROSS INVESTMENT WORLDWIDE MONSANTO PRODUCTION LOCATIONS: OTHER PRODUCERS: lou?? 7(70 in Functional Fluids 3M in Plasticizers)? $22 in Functional Fluids (316 6 in Functional Fluids in Plasticizers) net investment) 10.5% I 62% USA (2 plants, Anniston, Alabama Sauget, Illinois) UK (Newport) JAPAN (Yokkaichi) Bayer, Prodelec, Caffaro, Flick, Kaneguhuchi, and several Eastern European producers (all KI .i'wy C4 bx 741948 NEV 028694 (A THE AROCLOR PRODUCT LINE CHEMICAL NAME MONOCHLOROBIPHENYL DICHLOROBIPHENYL TETRACHLOROBIPHENYL PENTACHLOROBIPHENYL HEXACHLOROBIPHENYL HEPTACHLOROBIPHENYL OCTACHLOROBIPHENYL DECACHLOROBIPHENYL TERPHENYLS DHLORINATED TERPHENYL TRADE Ng?g AROCLOR 1221 AROCLOR 1232 AROCLOR 12h2 AROCLOR 12MB AROCLOR 1254 AROCLOR 1260 AROCLOR 1268 1270 SANTOWAX AROCLOR-SMGO NATURE OF MATERIAL LIQUID DILY LIQUID HEAVY MOLASSES THICK TAR SOLID 741949 NEV 023595 4i Thele are theoretically 210 different isomers_of chlorinated? biphenyls. Monsanto entered the Aroelor market in 1930 by acquiring Swan Chemical Company. The first load of Aroelor went out of Anniston, Alabama to General Electric in 1931. Since then, ithe market has grown to one of Monsanto's most profitable I franchises. This franchise is now being threatened by ?j recently found pollution problems which Elmer Wheeler will now discuss. II. The Problem (Wheeler) see attached Appendix A Law Department Viewpoint and Recommendations (French) .IV. Effect on Monsanto and Our Alternative Courses of Action As discussed, Aroelors 1254 and 1260 -- the 5 and 6 Cl ringed biphenyls are the ones most seriously involved in the pollution problem. Both Plasticizers and Fluids Groups are involved as shown: 741950 NEV 028696 AROCLOR SALES (M POUNDS) BEETLELQIZICRS 20mg 1.u5 5.4 6.85 - AROCLOH 1260 ABOVE 3.7 1.7 5.4 5.15 7.1 12.25 . 741951 NEV 028697 mm- Wu .- .g-wu. . -. i. .WW . . Mm 1? ?We consi?ered 4 alternative courses of action; (Slide) D0 nothine.was considered unacceptable from' a legal, moral/ana customer public relations.& company policy viewpoint.v This is also the quickest.route to being forced out of business. Alternative 2: Go out of total Aroclor business was considered unacceptable from a Divisional viewpoint, but from a Corporate viewpoint may be necessary. -, All Aroclor products are not Serious pollutants many degrawg there is too much customer/market need and selfishly too much Monsanto profit to go out. To go-out would require a writer .off of Aroclor net inVestment of (lO?/share) or if biphenyl vincludedl$8.8 In addition,_inventory disposition,- continuing cost of utilities, and back~up capital and serious_ manpOwer resources reallocation at Anniston.? Alternative 3: .Go out of Aroclor?lESM and 1260. This was seriously considered and may eventually occur by our actions .and?eustomer actions, neverthelcSS, we feel_that segments of . . I. In this bUsiness are defensible or are so "confined in use that Hapecific plans oanction are called for thi? Portion. Our run TQS .for eliminating this alternatch will become as we outl;ae "our action plans. 3 rs Nev 023593 741952 ALTERNATIVE COURSES OF ACTION 1. DO NOTHING JUST REACT TO LEGISLATION AND EMOTION. 2. GO OUT OF TOTAL AROCLOR BUSINESS. 3. GO OUT OF AROCLOR 125% AND 1260 PRODUCTION u. DEVELOP SPECIFIC ACTION PLANS TO BUSINESS GROUP AND EACH SITUATION TO THE MESS. 741953 NEV 028699 (f5 ?vf AltornatiVe u: Develop specific action plans tailored to each Business Group and each customer/market situation, - was the alternative selected at this point of time and based on our knowledge from a Divisional VIGWpoint as making Monsanto act in the most positive, rGSponsiblo way to society and our ?customors, as_well as our interests. 'However, because of the magnitude and seriousness of this? .I I, x. [1-101 problem and_its total implications foquOrporat? MonsantoGDC, :Funcyionnl FluiQs'Busincss Groug?piscussion: Aroclors are Used widely in 3 of our-H market areas ln'the Fluids Group: - 741954 vuev 028700' .12- FLUIDS USE OF BY MARKET AREA DOMEQTIC MARKET AREA - . - AROCLOR PRODUCT waan??hu 1242 4.1 1.1 36 1248 1.2 1.6 1254 0.1 0.8 1260 Above 0.6 - .5 5.9 2.2 40.3 741955 uev 028701 41.2 2.2 0.9 4.1 48.4 U0 SOURCES OE FLUIDS POLLUTION INTENSITY OR POLLUTION INDUSTRIAL ELUIDS GREATEST (DIRECT) DIELECTRICS (INDIRECT CONTAINED) HEAT TRANSFER - (INDIRECT CONTAINED) PRODUCING PLANTS LEAST (DIRECT) 741956 NEV 028702 I .. AREA OF APPLICATION 'Industrial Fluidsf ,Transformer Capaoitors" 7 Heat Transferp.v ii_lgf CUSTOMER ALTERNATI OF CHOICE Pydraul Esters/ Water Glycol-' Air/Oil/Aroclor/Gas VES CUSTOMER OPTIONS Customer could get along without us, but Pydvaul . ,312 favored. .HPO G1ycol_ ,has some pollution_problem: PhoSphate ester route ok at present." . Could'drop'Aroolor at -sacrifice of safety, cost" .-or size of equipment or noise level. - I ',aVailab1e. Aroclors If Therminol Oil/Dowtherm/TGG 1 T55 T77 T88 . market. No immediate replacement Longer term oil at expense of size and cost of efficiency land redesign_of equipment. 'No obtidn for FR liquid Other system possibility. Liguid'systems favored;- and T55 increasing . irapidly in use. 'Oil also? a pollution problemr 741957" new 028703' - ~14- Customer Choices_& Alternatives Penalties: Summarizing, some of our customers have no immediate alternative, some could change only at sacrifices of safety, or cost or Ivarlous technical_factors. Only in the Industrial field could the customer make an immediate conversion. PCB Threat to Functional Fluids Business and Profit: 741958 NEV 028 704 q? FLUIDS BQSINESS THREATENED (1970 BUDGET) PROBLEM SALES GROSS PROFIT 1. Confined to A?125u/ 3.0 $1.36 2. Spreads to and 12U8 First to: . a) Industrial Fluids 4.0 $1.6 Then to: . b) Dielectric Fluids 8.0 $3.8 Th?n to: 0) Heat Transfer 1.0 .6 mm it arr-6.3 ?m y; -- '741959 EV 02 8 7 05 .11. STE. I A 1:73-ink) ., 42.4.3.3) 1" . #1 9.1?0 "LLqu . in 9 . 1; \Eup741960 NEV 028706 -15- ., .. ,1 .1 CORN DAGQALCL1050 unnm b.p. i" 'l . .. J. comusu difficult 03. 30 J- LO p0 LJ small: 570. direct v.3. customers 741961 NEV 028707 23 direct customers - 47% mum quwuobwcmu agave? wwvod 1 LP womwdoowod >woowow pwoowcm .. .bacowch waowow rdOOwcw >d00H04 waOHOd rowck. . . .. r. . EBB 2m< ONmuom 7 . POSSIBLE CCKTALFWATION SOURCES (PLAJTECILERSCCRILNJALT105 quAJ? gouucz U?u;g .- .- .. av?; MOLE . fu??u5 LC?Chi?g . yes Mater ta linings Lcdc?qlng. yes ?3 I I 'nD'o 4-: Vaporizau104 Vaporizut?on Yes I. u' . 3.03.HAUQ Yes Auhuo?xu3 . v?a pacxnging7., --, lap ac;u W?bh precast A0 .. r. . . - hlhas. ?gaimz? 1. ?-ve pong- dam: 103.0114?; UL: 5?43") (3 1.941331 -, us . - . ?tight..(3.109." 3.5.9.5.) 5.1.30 .1le . .. . . - ,p.10 L: 911036M-n: .L .L 0112.I. Lu'u nun (Lit: .LU3T4413, U: ULIS UL) 00b?1.(3- Isak-1? M. 3. .. - v? -J'gh -I .. . Our-a - ..- . -. -.. - f'x-x" on . UNI.) HA3. . l. nfincd to . $4.3 . - - .- - idoo type only. A 0.-.. I. I: . .. . ELL-1- :.)300 f. V. (L) A .I. H-.-.: SCILIJKL :C.) CUS120.1 .L. 7U) ..-.. "1 . I I ?1 (t :Jopv LL gnu vacSALES 8 G.P. unnch are ve A .. RETAINED (Lorhw (?190.23 77:) - a 741964 028710 RECOMMENDED ACTION PLAN THE JOINT ACTION PLAN DEVELOPED BY THE FUNCTIONAL -AND PLASTICIZEH BUSINESS AND THE MEDICAL AND LAW DEPARTMENTS IS AS FOLLOWS: .7 13.7 3. 4. Appoint a Project Managpy - responsible for the Voverall management of_t?c AroclOr pollution problem. He would be assisted by a Task Force from members of each Business Group plus Medical, 'Law, Engineering and Manufacturing. 7 NOtify all Aroclor customers of PCB problem and relabel containers within 60 days. Clean up Monsanto plants' effluents within 12 months. Develop and implement new packaging systems for- Aroclor - within 6 months. Educate customers on need for clean-up at their _plants - within 4 months. Introduct to market, replacement products for Aroolor 1254/1260 beginning 1/1/70 (Fluids), 4/1/70 (Plasticizers). . - 741965 NEV 028711 7' 10. 11. 1-20 a ,m .. RECOMMENDED ACTION PLAN Continue and expand biodegratation test program with, Aroclor series, particularly 1242, 1248 and 125?. Continue toxicological test program. Accelerate present analytical test program. Determine feasibility and coat of eliminating 5/6 C12 in Aroclors 12M2 and 12H8. (3/70) (3/70) Study incineration products. Develop business plan to offer: Monsanto Fluid Reclamation and Recovery with Enviro Chem (Reclamation already underway at Findett.) 741966 NEV 028712 5 I 4.9L 2, EXPECT FROM . Through this action program, Monsanto would expect_to: l. sg?ain or convert a good portion of our business and profits: 1. CONVERT SALES I on our or - ODDS OF ESZZELEMS RETAIN PRESENT a, Confined to $20g3'? 70% 1260. . b, Spreads tO?A-l2?8 and $10 $22 60% ?1242.' 2" gain further valuable knowledge and time to: A Learn more facts. b, Protect our position. c, Make further decisions regarding our program. a. Contribute to overall pollution knowledge. 3; clean-up the major contributing PCB pollution factors. A. . Minimize customer complaints and hardships. 741967 NEV 028713 . ?Wpqunv?,r-w 7" Wq- ?2-1-9 The progsae Would: 1. Cost some money. Est, SARE - ?Est. Capital $700 $1.1 2. Expose us to continued adverse publicity and posSible law suits. 3. Cause some customer discontent but much less than an abrupt termination of production. 741968 NEV 028714' SUMMARX In summary, the PCB pollution problem is a very serious one. It is a yorldwide ecological problem.? At present the most Serious offenders are the 5 and 6 chlorine containing products (Aroclors 1254 and 1260). There are some indications other memhefs are biodegradable to varying degrees. tCufrently, much scientific testing is underWay and more informetion will be forthcoming. -Monsento muSt act in a positive cooperative fashion.' A plan of action has been discuSSed which we feel '1 indicates reSponsible ection. Our stakes are large and 'beeauseof the many possible effects on the Cerporation yourguidance and approval of the.suggeSted action program is-requested. - Thank you for your consideration, May we answer any questionS? 3741969 NEV 028715.