This week w e publish t h e g r o u p of papers dealing with factors affecting international chemical development and conclude the symposium in the next issue with studies of factors not normally thought of as affecting commercial chemical d e v e l o p m e n t . . . The transition p e r i o d from a w a r t o a peacetime economy being almost completed, it is a good time to b e g i n the series with a look at . . .
Chemical Production
Abroad CHARLES C . C O N C A N N O N , Chiet, Chemical Branch, Office of International Department
JL H E status of chemical production abroad ht . been, over t h e past few years, a decidedly transitory phenomenon. In the industrially m a t u r e countries of E u r o p e , its progress since the cessation of hostilities has been dynamic, and even in t h e undeveloped areas of the world an awareness of the importance of the chemical industry to economic well-being is apparent. E v i d e n c e of t h e European chemical industry's successful convalescence and return to health is not h a r d to find. Shortages are rapidly disappearing and within a year or two s h o u l d b e nonexistent. In m a n y lines the seller's market is a thing of t h e past, and production and selling techniques must b e modernized if profitable business is to continue. Aided by chemical research and t h e completion of reconstruction, modernization, and expansion programs, practically all chemical manufacturing countries—even those in which w a r damage w a s substantial—are now operating at levels above prewar. N e w production records a r e commonplace; a n d n e w products, particularly among t h e plastics and the synthetics used in medicine, pest-control, a n d agriculture, provide a succession of scientific wonder products. Incidentally, n o t a small part of t h e recovery of the E u r o p e a n chemical industry m a y b e attributed t o ECA assistance. F r o m its inception in early 1948 through 1949, the procurement authorizations issued for chemicals and allied products— although only 3 % of the total—have a m o u n t e d to $253 million. Furthermore, present plans of the Organization for E u r o p e a n Economic Cooperation contemplate increase of chemical output, w i t h particular empasis o n fertilizers, dyes, a n d plastics materials. V O L U M E
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Trade,
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Following a r e a few examples of t h e evidence o f progress. T h e chemical industry of t h e United Kingdom is surpassed in size a n d extent only by t h a t of t h e United States. T h e Association of British Chemical Manufacturers estimates that more than 10,000 persons-3,000 of them professionally qualified chemists—are employed by t h e British chemical industry on research a n d development projects alone, and that a p proximately $30 million are expended a n nually on these activities. T h e y e a r 1949 was a period of marked progress f o r the industry, the full effects of which will not b e felt for some years. I n September, two n e w plants for t h e manufacture of plastics were opened at Wilton by I m p e r i a l Chemical Industries. T h e e n tire W i l t o n project, estimated to cost m o r e than $80 million, will not b e completed until 1952. ICI is also continuing to expand its m a n u f a c t u r e of alkalies, sulfuric aqid, dyes, pharmaceuticals, a n d other synthetic organic chemicals. Since 1939, thje c o m p a n y ' s over-all output has doubled, arid i t s exports a r e now 60% above prewar lej/els. Other British firms have also extended
their manufacturing facilities for light a n d heavy chemicals, paints, pigments, fertilizers, «ind pesticides. Prominent among these a r e the petroleum-chemical projects, like t h e plant of Petrochemicals L t d . , at Partington. T w o such plants c a m e into operation in 1949, construction was started o n a third, a n d plans for a fourth were recently announced. Early i n 1950 t h e T e n n a n t G r o u p will open a n e w p l a n t in t h e Cheshire Salt area. It is known that the Labour government contemplated t h e inclusion of certain parts of the chemical industry in its nationalization p r o g r a m , b u t , in view of t h e indecisive outcome of t h e recent election, t h e fate of t h e program is left in d o u b t . France The French chemical industry is, in all probability, now third in world production and trade. O n Aug. 6, 1949, the Ministry of C o m m e r c e a n d I n d u s t r y took over t h e regulation, control, a n d supervi-
v > . C. CONCANNON, no stranger t o these pages, has h e a d e d t h e Chemical Division of t h e Bureau of Foreign a n d Domestic C o m m e r c e unde* t h e U. S . D e p a r t m e n t of Commerce suite 1922, when he w a s imported t o organize it. His foreign experience has been considerable, and b e g a n with his association with T a k a m i n e Laboratories, a J a p a n e s e concern w h i c h sent him t o J a p a n and China for two year$. I n 1944 he w a s sent as adviser a n d counsellor to the Chilean government a n d in 1 9 4 5 w e n t on a foreign mission as adviser to the Peruvian government. H e m a i n t a i n s commercial contacts in p r i n c i p a l countries throughout the world, a n d h a s written many books and articles in chemical a n d related fields o n economic, industrial, a n d foreign t r a d e .
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COMMERCIAL CHEMICAL DEVELOPMENT
sion of the manufacture of a wide range of chemical products, including a number of important organics. Otherwise, the year 1949 accounted for further recovery in the industry, but not all branches fared alike. Preliminary figures indicate an increase of approximately 30% in the output of coal tar products over that in 1948 and 1938; organic chemicals show a small overall increase over 1948; inorganics were slightly below 1948 and about the same as in 1938; and fertilizer production was scarcely equal to that of 1948 and somewhat below that of 1938. Although no plans have been announced for new large-scale chemical projects in France, it is known that plant capacity has recently been o r will be expanded for the production of nitric acid, detergents, and nitrogen-fixation products. It is also known that two large firms plan to manufacture a range of petrochemicals and that several other companies are considering entering the Held. In addition, the governmentowned potash company, Mines Domaniales de Fotasse d'Alsace is expanding operations with t h e aid of a $4 million grant of ECA funds for the puichase of machinery' and equipment; and the French dye industry, which suffered comparatively little destruction during the war, is expanding its capacity. Germany Germany, formerly second in world chemical trade and production (principally because- of its leadership in the coal tar industry), now has, notwithstanding the destruction incurred during the war, chemical facilities and capacity substantially greater than it had in 1939. Throughout World War II these facilities were constantly being expanded, and European markets continued or increased their dependence on chemicals from German factories. With Germany's surrender, however, production came to a halt, and its foreign markets soon felt the pinch of chemical shortages. In fact, the effect of these shortages on industry in other European countries became so marked that the Allied Military Government was forced to alter its earlier concept of a greatly reduced German industrial state and authorized a return to a level of chemical production approximating that of 1936. Since then the German chemical industry has m a d e substantial progress. In November 1949, output was 92% of 1936 production, and ECA now estimates that by 1952—53 dye production in Western Germany (the area which in 1938 accounted for 8o*7e of Germany's total dye output) will b e only 30% less than the 1938 figure, and that 50% of this output wiD be for export. The range of dyes, however, is now more limited than it was during the prewar era. Another product of the Gennan chemical industry which is reentering world markets on a growing scale is potash. In 1950 intensive efforts -will be made to open new and reopen old potash mines in 1016
Western Germany, and it is planned to double the exports from this area. It appears that chemical plant capacity in the Eastern Zone of Germany has, through war damage and reparation removals, been reduced to about 40% of its prewar level. However, in line with the Soviet's present policy of strengthening Eastern Germany, a large part of the chemical industry in that area is being rebuilt. Furthermore, about 60% of Germany's potash fields he within what is now the Soviet Zone. Other European Countries The Netherlands, Belgium, Italy, and Switzerland, despite the war damage suffered by all but the last, have recuperated to a remarkable degree, and once again these nations rank among the first 10 in chemical production and trade. In many instances prewar levels have not only been equaled but surpassed. The Netherlands The Dutch chemical industry was seriously impaired during the war not only by military action but by the looting which occurred during the occupation. This condition, coupled with the demands of an increased population and an economy dependent on chemical products, plus the fact that the volume of chemicals available as imports from Germany is still relatively small, has created a domestic demand far in excess of the highest prewar production figure. Consequently, in spite of the fact that the present output of chemicals is approximately at prewar levels, the Netherlands chemical industry is striving to surpass in large measure its prewar scale of operations, and the government—aiming to achieve a balanced economy and a healthy foreign trade—has initiated a program of industrialization in which chemical manufactures have a key role.
QUOTOONS ( R E G . U. S . P A T E N T
OFFICE)
A friend is a person who wouldn't think of saying nasty things about you except to your face. The automobile has divided mankind into three classes—the dead, the lame and the lazy. Two good openings for a young man are the legs in a pair of overalls. —O. (ALL. R I G H T S
A. BATTISTA
RESERVED)
C H E M I C A L
Among the new chemical projects recently undertaken in die Netherlands are three plants of the Royal Dutch Shell Co. which will produce synthetic detergents, polyvinyl chloride resins, and nitrogenous fertilizers. T h e company has also contributed to t h e development of domestic resources by extracting petroleum in the Netherlands proper for the first time. The Dutch have also exhibited considerable interest in producing plastics materials, and, in order to promote their manufacture and application, the government has established a plastics research and information bureau. Belgium In Belgium, prewar levels of output have not only been reached but exceeded in most branches of chemical manufacture. One of the major chemical producing countries of Europe—particularly in the field of coal tar products—Belgium traditionally depended on foreign sources for most basic raw materials and exported more than half of its chemical output each \ear. During the occupation foreign trade was perforce reduced, but chemical plants and transportation facilities suffered comparatively little war damage, and, despite some difficulty in obtaining raw materials immediately after the war, exports were, by 1947, almost equal to the prewar figure. With the aid of some reconstruction and expansion and considerable modernization and research, Belgium was able to overcome the effects of the war at a relatively early date. Since 1947, however, competition from Germany has become increasingly strong and import restrictions limiting shipments to many markets have had a deterring effect on Belgian foreign trade. Italy The principal problem facing the Italian chemical industry is a shortage of electrical power, t h e industry itself having suffered less destruction during the war than might have been expected. Despite the power shortage, however, chemical production has increased steadily since the close of the war, and in the early months of 1949 reached a point closely approximating prewar output. In 1948, Montecatini, Italy's dominant chemical company, saw completion of its reconstruction plans which included plant expansion and modernization, and improvements in production techniques; in 1948 and again in 1949, sulfuric acid capacity (of considerable importance in the Italian economy) was enlarged; the forthcoming construction of a nitrogen-fixation plant using domestic lignite as the principal raw material has recently been announced; and the government has expressed the opinion that over-all chemical activity will exceed 1938 levels in the near future. Switzerland In Switzerland, 60 years ago, there were 11 chemical plants; in 1949, 569 such plants \v e in operation. The principal A N D
E N G I N E E R I N G
NEWS
COMMERCIAL CHEMICAL DEVELOPMENT branches of the Swiss chemical industry are dyes aod pharmaceuticals, produced primarily for export, and heavy chemicals, mainly for domestic use. Swiss chemical manufacturers must cope with the fact that Switzerland is a hardcurrency country, that competition is rising as a result of devaluation and restrictions limiting sales of its products in foreign markets, and that the entire Swiss chemical industry is dependent upon foreign supplies of coal and other basic materials. With customary efficiencx and thoroughness, however, Swiss producers have taken steps to counterbalance these disadvantages. Special attention has been given to chemical research, and efforts to increase efficiency in production have been stepped up. Branch offices have been established in those areas to which exports are restricted, particularly in those countries where Swiss firms are not already represented. Ne^-v products have been developed and some manufacturers are engaged in large-scale construction programs in order to get them on the market as soon as possible. Latin America Turning t o this hemisphere, the Latin American chemical industry is, comparatively speaking, in its infancy. Although there has been progress in some areas—particularly since 1929 when world-wide depression brought home the follies of monoculture and dependence on foreign trade for essential imports—heavy industry as conceived in the United States and Europe is, with a few exceptions, practically nonexistent. The industrial achievements of Latin America's leading industrial countries, Brazil, Argentina, Chile, Mexico, and Peru, even with the impetus given to domestic production by the drastic shortage of imports experienced in World War II, lie principally in the fields of food processing and nondurable consumer goods fabrication. Efforts TO promote industrial expansion and diversification have resulted, a t least in the early stages, in the establishment of chemical-consuming rather than chemical-producing industries; e.g., leather, rubber, cement, glass, and textiles. The chemical-producing industries which do exist are limited for the most part to concerns handling natural products and their simple derivatives, such as petroleum, alcohol, nitrates, crude drugs, natural insecticides, aod sulfuric and acetic acids. The development of this infant chemical industry has been fostered to a great extent by the respective Latin American governments. They have participated actively in the formation of companies, promotion institutes, and control boards; in furnishing financial and technological assistance; aod in instituting protective measures sixch as import duties, trade agreements, and exchange controls. For example, t h e Chilean Nitrate and Iodine Sales Corp., a semipublic entity, controls VOLUME
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the nitrate industry through its monopoly on all sales and exports of nitrates; the Rational Institute of Salt in Brazil controls production in order to prevent excessive competition; and in practically all LatinA.merican countries alcohol manufacture is a state monopoly. An exception to the general absence of heavy industry in Latin America, and the center of interest from the point of view of organic chemical production, is probably the important government-sponsored National Steel Mill at Volta Redonda, Brazil, which began operation in June 1946. Besides steel, the company will produce various by-products from its coke ovens, including a number of important coal tar derivatives. A similar government sponsored steel mill is contemplated in Colombia, and the recent announcement of U. S. Steel concerning its iron ore "find" in Venezuela raises the possibility of organic chemical production in that country at some future date. Nevertheless, the growth of an integrated chemical industry in Latin America is problematical and the establishment of a pennanent and self-supporting chemical manufacturing operation, without continued assistance and concessions from the Latin American governments, is doubtful, at least at any time in the near future. The inaccessibility of high-quality fuels and raw materials, and the inadequacy of the present transportation system, present almost insurmountable obstacles. Furthermore, even the natural materials which constitute the area's greatest chemical resources are now meeting increased competition from the synthetic chemical products which are being manufactured in ever growing quantities in the United States and European countries. Far East The growing interest in the importance of the chemical industry which one now encounters in the Far East, particularly in Japan, India, and Pakistan, cannot be omitted from any discussion of chemical production abroad. Japan In 1949 Japan's chemical industry was again operating at levels higher than those of the base period, 1930-34. One finds among its products plastics materials, paints, dyes, industrial explosives, alkalies, coal tar crudes and intermediates, glycerol, acetic acid, alcohols, and natural camphor. The rehabilitation of the fertilizer industry is expected to be completed by 1951, and the reappearance of Japanese products in most Far Eastern markets is adequate evidence of the resurgence of Japanese foreign trade. India In India, interest in chemical development continues to mount, largely under the sponsorship of state and federal governments. Of special significance is
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the opening in January 1950 of the National Chemical Laboratory at Poona, the first of 11 national research laboratories to be established in India. In the field of technical development, the aid of various foreign countries, particularly that of the United States and the United Kingdom, has been sought, and the need for coordination, for increasing the size of various units and cutting production costs, has been recognized as a special problem. The nation's first consideration is to expand fertilizer output so as to increase the food supply, so desperately needed for an improved standard of living. Pakistan In Pakistan chemical development is following a similar course. The collaboration of American, British, and other foreign firms has been solicited; Imperial Chemical Industries has granted funds for a period of five to seven years for the establishment of a series of research fellowships at Pakistan universities and institutions; and the government is sponsoring various projects in the field of chemical maufacture. Conclusion This, in general, describes the status of chemical production abroad. The transition period from war to a peacetime economy is almost over. Expansion and reconstruction are slowing up, and the industry is seeking a firm foundation in a stable economy. Uneconomic production, often a necessity in war, is no longer condoned. A recent report from Johannesburg summarizes this "settling down" attitude in a statement—commenting on the phenomenal growth of the African explosives and chemical industries to a paramount position in the industrial life of South Africa—to the effect that no manufacture which "cannot stand on its own feet" is now undertaken. The present problem is to direct the energies of the world chemical industry toward those products and markets which will produce the most economic good for everybody, the chemical producer included. Indeed, to assure a profitable operation for himself, the manufacturer of chemical products, in the United States as well as abroad, will do well to approach the future with economic foresight, to plan, barring the possibility of a hot war, on the basis of a world economy, to discover new products and new markets, and to operate in so far as circumstances and controls permit, in line with the law of comparative advantage. In the final analysis, a stable and productive world economy would undoubtedly be the greatest single deterrent to a third World War. To this end the world chemical industry can make an inestimable contribution, for, until the atomic age gains its majority and reshapes the industrial pattern, products of chemistry will continue to supply a succession of miracles which make the world a better place in which to live. 1017
