Feeling the Heat, Flamemaster Battles Back : Antitrust suit: Small Sun Valley firm alleges that actions by giant Morton International have hurt its presence in aerospace market.

Most people know Morton International Inc. for its packaged salt. But tiny Flamemaster Corp. in Sun Valley views Morton as a predatory rival.

Flamemaster, which makes flame-retardant coatings and high-performance sealants that are mainly used in the aerospace industry, is pressing ahead with a lawsuit against Morton on antitrust and breach-of-contract grounds.

The suits seeks $5.4 million in damages, which could be trebled to more than $16 million under the antitrust laws.

A trial date of Sept. 7 has been set for the case, which Morton (formerly Morton Thiokol) believes “is without merit,” said Morton spokeswoman Nancy Hobor. The company--which had considered buying Flamemaster a few years ago--otherwise does not comment on matters in litigation, she said.

It’s a classic David versus Goliath story. Flamemaster’s annual sales in its fiscal year ended Sept. 30 were $5.3 million. Chicago-based Morton, which also makes sealants, other specialty chemicals and automotive air bags, had sales of $2 billion in fiscal 1992.

At issue in the lawsuit, which Flamemaster filed last September in federal court in Los Angeles, is a temperature-resistant, highly adhesive sealant typically used to seal aircraft fuel tanks and pressurized aircraft cabins, along with that sealant’s main raw material, liquid polysulfide polymer.

Flamemaster, Products Research & Chemical Corp. in Glendale and a handful of other companies buy the liquid polysulfide polymer from Morton--the industry’s sole U.S. supplier, according to Flamemaster--and produce and market the finished sealant.

The sealant is sold in cartridges, cans or drums, with the drums costing up to $5,000 apiece depending on the mix of ingredients the customer wants in the product.

Flamemaster mainly sold the sealant to the U.S. military through the General Services Administration (GSA), and to commercial concerns, notably the aircraft maintenance-and-repair divisions of McDonnell Douglas Corp. and Lockheed Corp. The GSA contract alone accounted for 30% of Flamemaster’s sales in fiscal 1992.

But because of its alleged antitrust actions, Morton has suddenly grabbed a big chunk of that business, Flamemaster’s suit contends. And no matter how the lawsuit is decided, there’s no question that Morton’s presence in the market is already hurting Flamemaster’s financial results.

In its fiscal first quarter ended Dec. 31, Flamemaster said its profit tumbled 58% from a year earlier, to $65,567, on a 43% drop in sales, to $700,657. The declines were “solely attributable” to Morton having won the GSA contract away from Flamemaster, said Flamemaster Chairman Joseph Mazin.

“We’ve introduced a lot of new products, and really we should be ahead of last year,” Mazin said of his company’s results.

In its suit, Flamemaster claims that its problems with Morton began in 1988, when Morton and Flamemaster were in talks concerning a possible merger. The negotiations broke down, but not before Morton spent more than a year examining Flamemaster’s business.

Morton also signed a confidentiality pact under which it was barred for three years from disclosing or using any sensitive information it got from Flamemaster, the suit states.

But while the agreement was still in force, Morton jumped into Flamemaster’s business by “selling compounds at below-cost prices,” the suit alleges.

In addition, Morton “simultaneously raised prices on its liquid polysulfide polymer” sold to Flamemaster and others, creating a “price squeeze,” the suit claims. “No manufacturer can offer such sealants at Morton’s prices due to the increased costs” of the raw ingredient that Morton provides, it says.

Flamemaster also alleges that Morton, after learning during the merger talks about one of Flamemaster’s product-packaging suppliers--Techcon Systems Inc. in Carson--then signed up Techcon to package its sealants and so disrupted Flamemaster’s relationship with Techcon.

However, Techcon President Rick Bernier said it’s “a major error in the suit” that Morton approached Techcon after its failed merger talks with Flamemaster.

“We already had a relationship with Morton as a packager for them,” he said.

The suit also claims Flamemaster also was about to hire a new plant manager in 1989, but before he could report for his first day of work, he instead went to work for Morton.

“We felt that was a raid in violation of the confidentiality agreement,” Mazin said. “They knew full well that our plant manager was going to retire, that we were interviewing and that we hired somebody who was supposed to report to work.”

While the lawsuit proceeds, Mazin’s task is to restore the 30% of his company’s sales that went to Morton via the lost U.S. government contract.

Mazin said he’s being more aggressive in seeking contracts with small firms that maintain and repair aircraft, and trying to peddle more deck sealants and coatings to marine-vessel concerns.

Flamemaster already had planned to broaden its business, Mazin said, “but the GSA contract had kept us very busy.”