CHEMICAL & ENGINEERING
NEWS OF THE WEEK NOVEMBER 3, 2003 - EDITED BY WILLIAM G. SCHULZ & BETHANY HALFORD
CHEMICAL INDUSTRY "We are disappointed anytime a member leaves the organization and are hopeful Industry group wrestles with issues of money, resignations, and image that they will reconsider once HE AMERICAN CHEMISTRY ing at best. At worst, it prevents Council (ACC) put on a sto ACC...fromaccomplishing much the benefits of ic face at its annual meeting that is essential to the industry's our initiatives last week in Houston. Its officers very survival." pledged to cut costs, increase Huntsman also mentioned become more efficiency, and upgrade the indus problems in the area of financial apparent." try's image while confronting res accountability, noting that he had
ACC CONVENES AMID UPHEAVAL
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ignations from companies com plaining about the trade group's failure to do these very things. Just days before the meeting, Lyondell Chemical and Chevron Phillips Chemical quit ACC. Chevron Phillips CEO James L. Gallogly said ACC would have to make substantial improvements in operational efficiency and ad vocacy efforts for his company to consider returning. And Lyondell CEO Dan F. Smith cited ongoing concerns about priorities, gover nance processes, and efficiency at ACC, as well as continued disap pointment with the way in which the merger between ACC and the American Plastics Council (APC) has been implemented. "We are disappointed anytime a member leaves the organiza tion," responded ACC CEO Greg Lebedev, "and are hopeful that they will reconsider once the ben efits of our initiatives become more apparent." In late July, Huntsman Corp. resigned as well. CEO Peter R. Huntsman said in a letter to Lebe dev that ACCs "inability to deal effectively with its diverse mem bership makes reaching consen sus on issues of advocacy ex tremely difficult, ifnot impossible. The resulting gridlock is frustrat
Greg Lebedev, ACC CEO
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not seen ACC undertake any of the cost cutting its members have had to endure. Acompany spokes man said, however, that the res ignation wasn't tied to ACCs planned image campaign. The three resignations take away a reported $3.5 million of ACCs annual revenues. ACC still has about 145 member compa nies, but with overall revenues ex pected to fall, it intends to reduce spending while funding key pro grams. To avoid future revenue upheavals, ACC has changed its membership policy, now requir ing a six-month dues commit ment and notice for resignation. In presenting the planned ACC budget to attendees, Jeffrey M. Lipton, Nova Chemicals' CEO, said there would be a greater fo cus on activities that are of the highest priority for industry and that serve the entire membership. The idea, he added, is to build a budget around "core activities and operations while working at op timum efficiency" Overall core expenses are to de cline from $58 million in 2003 to about $45 million by 2006. The proposed budget would cut spending on a refocused longrange research initiativefrom$24 million this year to $ 18 million by
2006. Spending levels for Re sponsible Care and government relations efforts would fall be tween 7 and 12%, whereas that for communications would increase. However, just before the meet ing, ACC Vice President of Com munications Morrie Goodman left the organization after only aboutfivemonths there. One of his major tasks had been to lead communication efforts to broad en the public's understanding of the industry ACC has been working toward the launch of a long-term repu tation initiative to help improve the industry's image at a cost of hundreds of millions of dol lars. On Oct. 26, how- φ φφ* ever, ACC postponed ^ φ φφ Φ
American . " / Chemistry Council until January a decision on mov ing forward. The delay arose in part from budgetary issues that remain between ACC and APC. The reputation initiative has been a sore spot in some camps because of its cost and design. At roughly $20 million per year, the campaign now is to be funded in part from ACCs cash reserves to avoid any dues increase in 2004. Raj L. Gupta, CEO of Rohm and Haas and chairman ofACCs executive committee, chastised the "defectors," noting that ACC is "listening to member concerns" and trying to "do more with less." He added that the group has served the industry for manyyears, pointing to what he says are re cent successes in advancing chem ical facility security and respond ing to natural gas supply issues and the emerging European Union chemicals policy (see page 15).— ANN THAYER
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