under scrutiny and has scheduled an early retirement program for salaried personnel for the end of this year. The company's attack on costs is not a surprise to insiders and analysts following the company. As the com pany wrote to salaried employees in a letter earlier this month, actions to date have concentrated on reducing discretionary expenses (although not to date research and development, by published figures) and ,,"refining capital spending priorities. However, these moves sparked ru mors that drastic measures were due such as sweeping layoffs. It was largely to quell these rumors that company management sent out its employee letter and a separate statement to the press. Chairman William S. Sneath says, "There is no intention of achieving an arbitrary level of reduction in personnel." Some staffs will increase. Others will drop. Overall, there will be a decrease. It is no secret that Carbide's sala ried personnel are receiving special attention, including R&D staffs. The company's letter says that produc tivity and job needs are being re viewed. According to the company's second-quarter report, costs in this area (selling, administrative, and other) rose 20% from second-quarter 1976 to second-quarter 1977. By contrast, the main bulk of sales and distribution costs rose 17%, and sales themselves, 14%. Profits fell 13%. Besides salaried personnel costs, capital spending is under review. The company says that selected cutbacks and stretchouts are part of the costcutting program. Capital spending likely will remain at the earlier an nounced $900 million or more this year, but a decrease may well come in 1978. The $900 million for 1977 is less than the company's original target of about $1 billion set a year ago. D
Sputtering developed as plating technique Atomic sputtering—a technique used in semiconductor production tech nology—has been developed into a system for metal coating of plastics and other materials that in many cases competes directly with electro plating. The system comes from Varian Associates, Palo Alto, Calif., and employs the company's S-Gun source, used for semiconductors. One of the systems already has been sold to a large Detroit auto maker, which Varian declines to identify, and is planned for delivery later this year. It will be used to apply decorative chromium coating to plastic automotive grills. Besides auto
parts, Varian says, the system can be used to coat appliance parts and other consumer goods with chromium or other metals. The system uses multiple S-Gun sources to enhance coverage of large parts. Each source is loaded with a solid target of the metal to be depos ited. Excited argon ions bombard the metal targets and sputter metal atoms that then coat the parts. A uniform coating is achieved, Varian says, with a typical thickness of 300 A, a fraction of the film thickness re quired with electroplating. Transport platens convey parts through the system, which has a pro cess chamber isolated with air-vacu um locks. Average throughput pro duction rate is one platen per minute, which amounts to more than 500 sq ft per hour. Varian says the system could cut in half the cost of conventional electro plating. The company estimates that it uses only 30% of the energy re-
Varian worker checks plastic part coated with chromium using new technique
quired by electroplating, and, in comparison, there is essentially no air and water pollution. Also, Varian says, conventional electroplating systems cost several times more than its system, which is priced in the $1 million range. D
Thiokol plans merger wi ι ball bearing firm These days most of the merger news is of unfriendly takeovers, blocking actions, and court fights. So it's nice once in a while to find a true merger— one in which the parties simply agree to join forces, with neither taking over the other. This is the case in an announce ment last week by Thiokol Corp. and Hoover Ball & Bearing. According to Robert E. Davis, chairman and chief executive officer of Thiokol, and John F. Daly, chairman and president of Hoover, it is anticipated that the merger will be a tax-free reorganiza tion and will be accounted for as a pooling of interests. The resulting company will be known as ThiokolHoover Inc. The agreement in principle ap proved by the two boards of directors calls for a stock swap. Thiokol share holders will receive one ThiokolHoover share for each of the ap proximately 5.65 million Thiokol shares outstanding. Hoover stock holders will get eight tenths of a Thiokol-Hoover common share for each of 8.8 million common shares outstanding. Thiokol-Hoover thus will have about 12.69 million shares outstanding. The company will be headquar tered in Newtown, Pa., which is the present home of Thiokol. Daly, of Hoover, is expected to be named chairman. Thiokol's Davis probably will be president and chief executive officer of the new company. According to the companies, the Thiokol-Hoover combination will have sales of more than $830 million
based on the latest 12-month results for the two companies. Earnings will be about $46.5 million. The combi nation will have an equity base in excess of $250 million and long-term debt of about $60 million. Last year Thiokol had net income of $20.1 million on sales of $364.8 million. For itsfiscalyear ending July 31, Hoover earned $25.9 million from continuing operations on sales of $415.1 million. Thiokol produces specialty chem icals, solid propulsion systems, syn thetic yarns and fabrics, and other industrial products. Hoover primarily manufactures various metal and plastic products for original equip ment manufacturers. Its markets in clude automotive seating, furniture components, and machinery for molding plastic packaging. D
Court permits patent of new microorganisms In what may be a landmark decision, the U.S. Court of Customs & Patent Appeals has ruled that an inventor can patent new forms of microorga nisms. The court ruling, handed down in a split 3-to-2 decision, likely will open the way for firms to patent new microorganisms produced by recom binant DNA techniques, according to patent lawyers. The case was brought to the court by Upjohn Co., which sought to pat ent the microorganism Streptomyces vellosus, used to produce the antibiOct. 17, 1977C&EN
5
otic lincomycin. Upjohn earlier had been turned down on its patent application because the patent office considered it not within its statutory authority. Previously, only certain types of plants and seeds produced asexually could be patented under the Federal Plant Patent Act of 1930. In its Oct. 6 ruling, the court declared that Upjohn's microorganism u is not found in, and is not a product, of nature. It is man-made and can be produced only under carefully controlled laboratory conditions." Central to the issue, in the opinion of the court majority, is whether the U.S. patent code precludes patenting something simply because it is alive. Says the court, u Our conclusion is that it does not." The court adds, "We see no sound reason to refuse patent protection to the microorganisms themselves—a kind of tool used by chemists and chemical manufacturers in much the same way as they use chemical elements, compounds, and compositions which are not considered alive, notwithstanding their capacity to react and to promote reaction to produce new compounds and compositions by chemical processes in much the same way as do microorganisms." The court decision opens the way for inventors to patent all sorts of novel organisms, including those produced by recombinant DNA techniques. But the ruling may have even broader implications that the court tried to avoid as "far-fetched" in the Upjohn decision. Nevertheless, suppose someone wanted to take out a patent on a new and specially bred type of chicken? Strictly speaking, according to Washington patent lawyers, the patent appeals court decision would seem to allow this. Moreover, suppose you wanted to take a patent out on yourself? If you could prove that you were new, useful and "unobvious" (in the legal sense of patent law), then you could probably do that, too. But it would be terribly selfish. D
HEW secretary urges revamping drug law Secretary of Health, Education & Welfare Joseph A. Califano Jr. is calling for sweeping changes in the law governing drug regulation. The basic 40-year-old law under which the Food & Drug Administration operates "needs a top-to-bottom, thorough overhaul," Califano says, adding that "it is time to establish a single, coherent system for regulation of all drugs." The present law, Califano charges, 6
C&ENOct. 17, 1977
Tenneco move clouds Ashland-Corco scheme
Califano: single coherent system
"highlights irrelevant historical distinctions, and perpetuates time-consuming repetitive processes that are closed to effective public review." He points out that under the present system, an application for approval of a new drug averages 34 volumes, takes years to process, and costs millions of dollars. And in many cases, he says, FDA has been "extremely conservative" in its approval process, because the agency has found it very difficult to remove a drug from the market once it has won approval. To correct these problems, he is urging Congress to write a new law that first will recognize that no drug is ever absolutely safe or always effective, and second that any decision to approve a new drug must balance benefits against risks. In addition, means must be specified for getting promising new drugs into the market faster. This could include eliminating the requirement for unnecessary repetition of research to prove safety and efficacy. Now, he says, a new manufacturer of a drug is required to prove the safety and effectiveness of the drug even when other manufacturers have proved the same chemical safe many times over. In addition, FDA needs the authority to set up a comprehensive, accurate surveillance system for adverse drug reactions. The agency also should be given a clear and comprehensive mandate to require patient package inserts for drugs that provide information in understandable language, he says. Califano has requested that FDA commissioner Donald F. Kennedy hold public hearings, before Thanksgiving, to gather other views on what statutory changes may be needed. D
Ashland Oil's potential takeover of Commonwealth Oil Refining Co. (Corco) received bad news and good news earlier this month. The bad news is that Tenneco, which Corco and W. R. Grace were counting on to purchase their money-losing joint venture Oxochem, decided that the whole thing was too uncertain. Tenneco says that it is pulling out of the affair. Tenneco backed away from Oxochem less than a month after the Justice Department had said that it would not oppose the sale of Grace's Hatco group and Oxochem to the Houston-based company. The good news is that the Justice Department has decided that the combination of Corco and Ashland doesn't violate any antitrust laws and that, as far as the government is concerned, the transaction now can proceed. Corco had very much wanted Tenneco to purchase Oxochem, one of Corco's worst profit drains with a pre-tax loss of $9.7 million in 1976. In fact, the sale of the facility is one of the conditions that Ashland put on its investing in the Puerto Rican refiner. The other conditions are approval by the Justice Department and agreements with the Federal Energy Administration on oil and naphtha entitlements, and renegotiation of contracts with PPG Industries regarding the joint venture Puerto Rican Olefins plant controlled by Corco and PPG. The approval of the Justice Department, of course, removes another of the conditions. Assuming that FEA, now the Department of Energy, gives its sanction and PPG renegotiates its supply contracts to Ashland's liking, it remains to be seen if satisfying three out of four of the conditions is enough. It probably will be. Earlier this year, other chemical companies had expressed an interest in Oxochem, if not in the entire Hatco group, if Tenneco decided to back away. The parties affected by Tenneco's pullout are particularly closemouthed at this point. Grace says merely that it will continue to operate the Hatco group. Tenneco will not amplify on its announcement of withdrawal. Corco is referring all inquiries to Ashland, as it has done in the past, on questions relating to the proposed option. And Ashland refuses to comment other than saying that it is continuing to study the situation. D
