On May 16, 2003, a fire destroyed a Johns Manville (JM) plant in Defiance, Ohio. Not only did the fire devastate a building, it significantly disrupted the North American supply of fiber glass pipe and equipment insulation as well. The JM plant produced as much as 35 percent to 40 percent of pipe insulation in North America. Before the fire, it’s estimated that the industry was producing fiber glass insulation at about 85 percent to 90 percent capacity, so clearly there was no way that other manufacturers could simply step in and cover all the lost supply. This article describes the impact of the fire on the pipe insulation market, explains what manufacturers, distributors and contractors are doing and discusses some long-term implications for the industry.

How Manufacturers Are Managing

The fire’s immediate result was a shortage of insulation. The industry reacted by putting all available product and ongoing production on some form of allocation.

At JM, we quickly evaluated existing inventory, including some from Defiance that escaped damage from the fire and its suppression, to determine what products were suitable and available for shipment. We also adjusted output on the one surviving machine to produce a range of sizes most in demand. Using the one machine gives us less than 10 percent of the capacity we had before the fire, which destroyed the equivalent of 11 machines producing 3-foot insulation sections.

To some extent, other fiber glass suppliers also have "pruned" product lines. Without enough capacity to meet total demand, everyone is concentrating on making pipe insulation in the sizes that allow maximum output and that are most frequently required by contractors. For example, all suppliers have temporarily reduced or eliminated production of 1/2-inch wall insulation in certain sizes.

At JM, we responded to constricted supply by accelerating development on an alternative product and moving its introduction ahead several months. Micro-Flex™ CTS Precision V-grooved Pipe Insulation is based on the company’s Micro-Flex Pipe and Tank insulation. Precision-cutting grooves in the fiber glass makes it capable of curving easily to wrap pipes as small as six inches in diameter. This new product delivers thermal performance and insulation value comparable to the pipe insulation it is designed to replace, so its introduction allowed JM to concentrate remaining capacity on producing insulation for pipes smaller than 6 inches.

All manufacturers have sought additional supplies of fiber glass pipe insulation, largely through imports. Product is being brought in from plants in Europe, Asia and even Africa. These imports tend to be in lengths that are less familiar to North American installers. The most common is 1.2 meters–"a meter-twenty"–which is almost 12 inches longer than the 3-foot length that is commonly used in the United States. Although different in size, these products, as supplied by JM and the other major fiber glass suppliers, have similar physical properties and meet the same performance and fire safety standards as pipe insulation manufactured in the United States.

Distribution, Contracting and Engineering Implications

Some distributors have found that the shortage doesn’t threaten their business as much as they feared it would immediately following the fire. Jack Schunk, sales manager for McCormick Insulation Supply, Inc., Owings Mills, Md., admits that there has been an impact on sales, not only of insulation but accessory items as well. However, he says, "This is not as bad as we had anticipated. My perception is that things are slowly getting better. We’ve been dealing with Johns Manville for a long time, and it’s not too surprising that they have handled this so well. We may not get everything we want, but they’re trying to take care of us."

Vaughan Privett, chief executive officer of the Norfolk, Va.- based insulation contracting firm C.E. Thurston & Sons, Inc., concurs. He notes that lead times are longer and prices higher, but he believes that fiber glass pipe insulation for industrial applications is generally available.

While distributors are optimistic that they can wait out the situation, there are still disruptions in the short term. According to Erik Jensen, chief executive officer of distributor/contractor E.J. Bartells in Seattle, Wash., "This has had an impact on our business and is a major disruption to distributor relationships with vendors and customers. But we are working through it and JM has done a great job of communicating their plans."

Jim Pfister’s first reaction to news of the fire was to try to buy as much Johns Manville insulation as he could. After that, Pfister, president of the distribution and contracting firm Ludeman Insulation and Supply, Inc., of Wichita, Kan., went to other fiber glass manufacturers. He is able to buy competing insulation from another distributor, but at a higher price. The Ludeman strategy is to use existing insulation inventory to complete its own contracting projects and stock a limited amount of more expensive insulation to supply customers having immediate needs. The firm also has started bidding jobs with extra dollars allocated for insulation materials because of uncertainty about cost and productivity.

Some distributors have attempted to import foreign-made product directly. Often this material is unjacketed and differs from domestic materials in other ways, too. Distributors must verify that this independently supplied material meets all applicable thermal and fire performance tests. As Johns Manville returns to the market with significant additional production later this year, we anticipate demand for offshore materials to decline because it’s more difficult for foreign suppliers to meet the high service demands and short lead times that distributors and contractors normally require.

We have also heard reports that some distributors and contractors are being pressured to enter long-term agreements with alternate foreign and domestic suppliers in order to be assured immediate supply. We are working hard to bring new equipment on line as soon as possible to increase supply and help end this practice.

Contractors, even more than distributors, find themselves on the front lines. Their customers–mechanical and general contractors and building owners–sometimes challenge them on delays and alternative materials. Chuck Rawlings, president of the insulation contracting firm TBN Associates, Inc., Beltsville, Md., says his company and its sister business, TRA Thermatech, initiated proactive communications with customers as soon as the fire occurred so they could anticipate shortages and delays. Their strategy has been to communicate as openly as possible and work with customers on solutions in order to avoid invoking force majure. Rawlings says they have managed until now by allocating their remaining inventory and actively searching for fiber glass supply. They have a buyer working almost full time to find fiber glass insulation.

"We have dedicated a lot of time and resources to finding materials that were normally available off the shelf," Rawlings says. The result is that TBN, formerly an exclusive JM customer, now uses fiber glass from a variety of sources. "There are a whole lot of different-colored boxes around here than what we’re used to," Rawlings says. One question this raises is whether using fiber glass from different manufacturers has an impact on productivity as installers try to work with unfamiliar materials.

Alternative Materials

The shortage of preformed fiber glass pipe insulation has prompted customers to evaluate alternatives they never considered before. Bartells’ Jensen explains that demand for fiber glass was based not only on performance but also on habit, availability and price–all of which have been affected. Now distributors and their customers are willing to evaluate substitutes.

"Alternative materials are getting a lot more attention and consideration than they did in the past," he says. There are not direct substitutes–every alternative presents differences in material costs, installation productivity, physical properties, longevity, lifecycle cost and thermal and fire performance. Bartells works with contractor customers and Bartells’ own contracting division to evaluate all these factors and help resubmit specifications with alternate materials where appropriate.

Micro-Flex CTS is a fiber glass substitute that is suitable for certain applications. We have found that installers accept it for virtually all applications with pipe diameters of 24 inches and greater. We have also found that it is substituted for preformed fiber glass insulation about 50 to 75 percent of the time on pipe sizes between 18 and 24 inches. The product can be used on pipes as small as 6 inches, but the application is so new that we have not yet measured acceptance. Jack Schunk of McCormick Insulation Supply reports that, despite initial misgivings about the ease of installing this different material on smaller pipes, early feedback from his contractor customers is positive.

Another obvious alternative is to substitute 1-inch-thick fiber glass for hard-to-find 1/2-inch. Where that’s not possible, flexible foam insulations are being used on smaller pipe sizes in commercial applications such as domestic water systems. Ludeman’s Pfister has found that most engineers are willing to accept this alternative as long as the thickness is the same. Foam insulations are suitable for many commercial uses, but they shouldn’t be substituted for fiber glass in higher temperature applications. Furthermore, these materials aren’t available as preformed pipe insulation for larger pipe sizes.

Distributors carry a variety of other products that can be substituted for fiber glass in some applications. Mineral wool, polyisocyanurate and cellular glass are occasionally being substituted for fiber glass. However, these products tend to carry a higher price tag and are more difficult to install. As a result, the rate of substitution so far is fairly low, and in most cases contractors are accepting longer lead times for fiber glass instead of substituting products.

Besides shifting materials, some contractors are coping by shifting the balance of the business they do. C.E. Thurston says it is well-positioned to ride out the pipe insulation shortage because its business is diversified: they offer refractory and cold storage contracting in addition to installing pipe insulation. Ludeman Insulation and Supply is bidding more often on jobs that don’t require fiber glass pipe insulation in order to keep cash flowing during the shortage.

Rising From the Ashes

Johns Manville has a long history of commitment to the pipe insulation market, and that hasn’t changed. Within three weeks of the devastating fire, senior management authorized the first major investment in replacement capacity. Semi-automatic manufacturing equipment has been ordered and will be installed in a new facility in Phenix City, Ala. The first product should be available in November. With this capacity added to the machine already in operation, we expect to be able to supply at least 50 percent to 60 percent of the pipe insulation we were delivering before the fire.

This is a good start, but clearly still an interim solution. Within days of the fire, JM assembled a task force to work over a longer time frame to restore full capacity with fully automated, next generation equipment. Those plans are on schedule, and we expect to be offering a full line of pipe insulation in adequate quantities to meet demand as soon as practical. C.E. Thurston & Sons’ Privett is convinced that Johns Manville is committed to restoring capacity. "In talking with people from JM, I can see their enthusiasm for rebuilding," he says.

We’re not aware of plans by other manufacturers to make capital investments to increase capacity.

What’s Next?

Even with fast action by fiber glass manufacturers and distributors, many unknowns still face the industry. How soon can we return to the equilibrium that existed before the fire? When will we no longer require overseas supply? Will alternative materials, like Micro-Flex CTS, establish a permanent place in certain applications? While we don’t know the answers, we believe that JM’s commitment to and investment in this market will be instrumental in keeping fiber glass in the forefront as the insulation of choice in commercial and industrial pipe applications.