Sourcing and pricing teams at UTCFS are among those keeping a close watch on the demand for corn. They know only too well that the rising demand for corn has meant a stunning rise in the cost of a major ingredient in our powder fire extinguishers. That’s because the fertilizer used to grow corn contains a key ingredient that is also used in the powder that goes into our fire extinguishers. This ingredient is called monoammonium phosphate, or MAP.  

“For the past ten years, the cost of MAP was pretty flat,” said Xavier Vorilhon, director, Supply Management. “Then, sometime in the second quarter of 2007, the demand surged and the price of MAP has increased 300 percent since then.” 

The increased demand for corn and the fertilizer used to grow it is being driven primarily by the growing demand for ethanol and other biofuels. Ethanol made from corn is used as a fuel additive in the United States, where it is blended with gasoline. When added to gasoline, ethanol reduces harmful gas emissions and is said to produce fewer greenhouse gases.

The rising cost of MAP is also related to a growing worldwide demand for food along with a shift in diet. People in emerging economies want to eat a more diversified diet, accelerating the demand for fertilizer to grow agricultural commodities like soybeans, barley and wheat. Increasing meat consumption is adding to the demand for agricultural commodities; livestock feed on grains such as corn and soybeans.

Horacio Fajer, president, Kidde de Mexico, oversees the Mexican plant that produces the MAP-based powders that go into the fire extinguishers. The plant produces some 30,000 metric tons of powder a year, and is the largest of its kind in the world.

Fajer also is responsible for sourcing the raw material from countries like China, United States, Morocco and Russia. MAP comes from phosphate rock, which is also in increasingly short supply. In recent months China and Russia have imposed export taxes and restrictions on MAP, making it virtually impossible to buy from these countries.

“We have scouters all over the world, looking to identify new sources of MAP,” said Fajer. Other actions include teaming up with engineers from the United Technologies Research Center to develop new compounds that can extinguish fires and meet government regulations.

“The research and development effort is going to take some time, but we are fortunate to have a great deal of experience and know-how among our engineers at UTCFS and at UTRC,” added Vorilhon.

“The cost situation is so dramatic that we have had to raise our prices on powder fire extinguishers,” said Amy Lund, UTC Fire & Security Director, Pricing.  “We are currently communicating with our customers worldwide to explain the reasons for the increases.”

April 16, 2008