Business
Carbide's Linde poised for earnings rise After trimming a number of unprofitable businesses from the company, Linde's chief, Robert D. Kennedy, is looking for higher profits in 1979 When Robert D. Kennedy took over as president of Union Carbide's Linde division almost two years ago, it was not the best of times for this billion-dollar operation, the largest U.S. producer of industrial gases. Although gases markets were generally good, Carbide had decided to write off or write down a number of businesses in Linde that were not living up to expectations. Such writeoffs led to a period of declining profit margins for the division. But the pruning now is about finished, and a turnaround may be in the works. In an interview with C&EN, Kennedy says that 1978 will be a better year for Linde than 1977 but still not as good as he would like. However, for 1979, Linde is poised for a return to the desired profits track. If the Linde division were a separate company, it would rank 20th among U.S. chemical producers, with sales of $1.1 billion in 1977. Hence, Kennedy heads an operation that is larger than most U.S. chemical companies. In 1977 Linde contributed 15.7% of
total Carbide sales and 17.9% of the corporation's total operating (pre-tax) profits. These percentages have been increasing in recent years as some of the other Carbide divisions have suffered greater setbacks. In 1978 Linde will take the brunt of its writeoffs and writedowns. But then, Kennedy says, "The decks will be cleared for some things that we want to proceed to in 1979 and beyond." Using a conservative estimate of general business activity in 1979, Kennedy says that Linde could grow 10 to 12% in both sales and earnings next year. Profit margins finally will begin to recover from the slippage that began in 1975. According to Kennedy, at 46 a Carbide man his entire career, Linde has been traditionally a heavily people-oriented business with an unusually strong commitment in research and engineering. In fact, the division has been the spawning ground for many of Carbide's most successful businesses. Some of these unlikely but quite successful operations, such as the polyethylene business and silicones activities, have been moved to other divisions. Others, such as the molecular sieves business, have remained under Linde's control. However, the research-oriented nature of Linde got the division into some trouble, too. Linde researchers have come up with some technologically advanced products and processes that have just not made it in the marketplace. Among these failed projects were a
high-speed method of laser welding of aluminum automobile radiators and a portable hemodialysis unit. Kennedy says that large sums of money were poured into these projects before it was decided that Carbide would not see as much return as was initially thought. This is mainly because Carbide is not important in either of these two markets at present and so has had no base on which to build. Carbide is presently trying to sell or license these two technologies. Another Linde project that has run into trouble is the division's highly touted Purox system for pyrolysis of solid waste. Kennedy now says that the Purox system may be an idea that has arrived before its time. Solid waste treatment does not have the government backing enjoyed by water pollution treatment. Thus, there is no influx of federal funds for testing and proving of solid waste systems and no government push for installation of advanced solid waste systems in cities. Then, too, the Purox system of disposing of solid waste, sewage sludge, or a combination of the two, is more expensive than competing systems such as landfill or incineration. Landfill costs about $7.00 per ton of waste and incineration costs about $12 to $14 per ton. Disposal of waste by Purox costs $10 to $20 per ton depending on capital charges and the fuel value of product gas. There is some hope that a Purox system finally will be installed, although not in the U.S. Carbide has licensed the system to Showa Denko of Japan and expects a
Linde's profitability falls, but share of Carbide's total sales and operating profits grows
12
C&EN Nov. 6, 1978
Nuclear fuel recycling may be best alternative
Kennedy: Profits margins will
recover
unit to be installed soon in a Japanese city. This will be the first municipal installation of the system (Carbide has a pilot plant at its South Charleston, W. Va., complex). In spite of Purox and other problem businesses cited by Kennedy, Linde's huge industrial gases business is doing well. Previously faced with excess plant capacity brought on by a wave of construction beginning in 1973 and 1974, production is now catching up. Sales for industrial gases will be up about 13% this year, Kennedy says, and earnings from this segment will increase about 6%. Next year should be better. Kennedy expects sales to be up a more modest 10%, but earnings will also increase 10%. Up to now, he says, Linde has not been able to recover increased costs fully because of overcapacity. Foreign operations reported through Linde are also doing well, Kennedy says. In fact, he says, they probably will do better in percentage growth this year and next than will Linde as a whole. Growth in foreign operations is largely part of Linde's profitable industrial gases business. In the Far East, Linde has joint-venture plants in Taiwan and in Korea. One Korean liquid oxygen-nitrogen plant that started up in 1977 will be selling all it can produce by the end of 1978, according to Kennedy. The division consequently approved a second plant for Korea, near Seoul, that will make Carbide the largest supplier of industrial'gases in that country. The plant in Taiwan is just starting up. In other parts of the world, Linde is the largest industrial gas producer in Brazil, where Kennedy says the market is still growing nicely. And a 10year-old investment in Mexico has led to substantial expansion of activities there in the past three years. Now that the operations that were holding Linde back are about gone, Kennedy will soon see if Linde can do as well as he hopes. William J. Storck, C&EN New York
Just as a baseball pitcher goes with his best pitch when he's in a tight spot, the world's nuclear power industry should go with its best fuel cycle. At least, it should until one that is proven to be better comes along, according to Joseph R. Dietrich, chief scientist at Combustion Engineering's Nuclear Power Systems in Windsor, Conn. Right now, Dietrich says, the nuclear industry's best pitch is the uranium fuel cycle, coupled with recycled uranium and plutonium. Dietrich's practical advice was nestled among many philosophical and politically oriented papers on the problem of nuclear proliferation at the Atomic Industrial Forum's International Conference on Nuclear Nonproliferation and Safeguards in New York City. Dietrich, a nuclear scientist, has no argument with studies now being made to come up with alternate fuel cycles, such as the International Nuclear Fuel Cycle Evaluation Program and, in the U.S., the Nonproliferation Alternative Systems Assessment Program. But he does believe that, although all of these studies are being made, it is necessary to keep the nuclear energy option in this country alive and well. Dietrich tells C&EN that "this means you can't go to alternatives that will postpone the largescale use of nuclear power for long periods of time." In time, Dietrich says, workable alternatives indeed may come out of these study programs. For instance, a thorium fuel cycle may prove to be a workable and useful option. But any alternative fuel cycles that are developed will be introduced only at a far greater cost and with a great deal of uncertainty. A weakened or stagnant nuclear industry simply won't be able to shoulder these added costs or uncertainties, says Dietrich. "I don't see why we have to shut down everything while we evaluate these options." As he sees it, only a strong and economically healthy nuclear industry will be able to implement fuel cycle al-
ternatives when they do become practical. The best way, Dietrich says, to keep the nuclear industry healthy is to allow it to use the most economical fuel cycle available to it right now. In the U.S., the present fuel cycle is the uranium cycle without reprocessing or recycling. But he says that the best alternative to "this wasteful cycle" is the uranium cycle coupled with recycling of both uranium and plutonium. "This is the cycle that we would like to use and that we planned to use until approximately two years ago," he says. That's when government concern about the possibility of nuclear weapons proliferation led to an indefinite deferment of reprocessing and recycling. Dietrich also says that deferment "was further rationalized" by the claim that reprocessing and recycling were marginally economic at best. He calls this claim "the first illusion" about the fuel cycle. To Dietrich, it also seems inconsistent with actions that the government subsequently took. He points out that the government is studying other fuel cycles that involve recycling. And he thinks that most, if not all, of them will be considerably more expensive than the recycling involved in the uranium fuel cycle. Dietrich claims that arguments on uranium recycling costs were made by taking "a snapshot in time" of an assumed nuclear economy, with estimated uranium and reprocessing costs, without having the benefit of significant commercial experience. Then, he says, the results of these analyses were used to block the Barnwell, S.C., nuclear fuel reprocessing plant which is the only plant that could have given the country valuable commercial experience. The Barnwell plant is being built by Allied Chemical and General Nuclear Services. Its future has been placed in limbo by President Carter's indefinite deferment of fuel reprocessing. Congress, meanwhile, has been appropriating funds
Safeguarded sites prevent loss of weapons-grade material Safeguarded sites Contain: All activities involving handling of fissile » bulk material isotopically Other fertile pure enough for explosive materials use and having low • radioactivity level— Fission • Fuel enrichment products • Spent fuel reprocessing to disposal • Fabrication of fuel assemblies containing fissile material in isotopic concentration high enough for explosive use May contain power plants Natural uranium
Contain: Fresh fuel
Spent fuel
• Power planta • Posstofy fabricator» offueiaaacmbHea · containing only isotopically c8Me
