CLASS EXERCISES in the INDUSTRIAL CHEMISTRY COURSE I .
of
Economic Survey
a Chemical Commodity
KENNETH A. KOBE University of Washington. Seattle, Washington
T
HE student in industrial chemistry soon becomes familiar with the methods of searching the literature for the technical facts concerning a technical process. He does not usually regard this process from its economic side. He must be shown the dollar sign in the chemical equation. The many factors involved in the supply of raw materials, their specifications, and the manufacture and sale of the finished product have a dollars-and-cents value that allows the technical process to continue operation and enables the producing company to pay dividends. These factors and the sources of information concerning them may be impressed upon the student by means of an economic survey of some industrial chemical. THE ASSIGNMENT
3. 4. 5. 6. 7. 8.
Ferrous sulfate Copper sulfate Magnesium sulfate Potassium carbonate Sodium dichromate Sodium chlorate
9. 10. 11. 12. 13. 14. 15. 16.
Ammonium chloride Arsenic white (ASBO~) Lead acetate Potassium permanganate Sodium fluoride Sodium nitrite Sodium thiosulfate Zinc chloride
TOPIC OUTLINE
An economic survey of an industry may be considered according to the following outline. I.
Raw Materials 1. Sources of supply a. Other possibilities 2. Specifications for raw materials 3. Tonnage requirements for economical handling
11.
Manufacture
Methods with sheets for mercial plants. 2. Control tests 3. Itemized statement of production costs 4. BY-products, utilization, or disposal. 111.
Items of commercial importance 1. Domestic production 2. Domestic consumption 3. Imports and exports 4. Tariff 5. Graphical comparison of monthly selling price with weighted index of prices of all commodities as given in Chem. & Met. Eng. ti. Names and locations of 5 manufacturers.
V.
Financial report on one manufacturer 1. Rating in Dun 2. Rating in Pwr and in Moody 3. Stocks and bonds outstanding 4. Stocks listed on what exchange 5. Earnings and dividends per share 6. Graph of stock activity from Jan. 1929 7. Last hancial report, important items Conclusions
VI.
A list of common industrial chemicals which may be considered is given below: 1. Aluminum sulfate 2. Barium chloride
IV.
Finished product 1. Chemical properties 2. Physical properties 3. Usual run of purity 4. Grades a. Specifications required by some consumers 5. Containers for shipping 6. Shipping regulations 7. Industrial uses
LITERATURE SOURCES
The student will immediately find that the Engineering Index and Industrial Arts Index are of little, if any, value to him, but that Chemical Abstracts will give complete references relating to the technical aspects of his topic. From these references he can assemble his material dealing with raw materials, manufacture, and finished product. The preparation of an itemized statement of production costs requires a careful survey of all references dealing with the chemical The Tariff Information Series and records of hearings before the iff cornmission are authoritative sources of information on detailed costs and offer a basis of comparison of costs in this country and abroad. Chemical & Metullurgical Engineering has made several surveys of important industries.* In a recent survey of chemical costs1° fifteen of the most important chemicals of commerce have been treated. The various items in the total cost have been compared for the several typical types of manufac-. turing industries. Even if the student is unable to find authentic production costs for his chemical he should be able to make a very good estimate of the various items in the cost. The practice of making such an estimate is undoubtedly of more value to the student than a fortuitous finding of actual cost data. In discussing the finished product the student is asked to give the grades and specifications, containers,
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0 TYLER, "Cost analysis in chemical production," Chem. G Met Eng., 33,204,278 (1926). 10 EDITORIAL STAR=,"Chemical casts," ibid., 39, 1-8 (1932).
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~d shipping regulations for his chemical. He may nd the specifications of the American Chemical Soety for analytical chemicals, but he does not know hat other sources are available for specifications. is search will lead him to Murray and Merck's 1dex.11 Despite the fact the student has listed a S.P. grade, he usually does not know the meaning of le letters nor where he can look up the specifications. nly a brief statement concerning shipping containers ~d regulation^'^ is desired. Usually the items of commercial importance call for burces which the student has not previously used. e may have found some of this material in one of the tonomic articles in Chemical & Metallurgical Engineer~g or Chemical Markets. The January, 1931, issue of hemical & Metallur~icalEneineerine included a suolementary sheet, "Ehemica: Raw katerials for tke rocess Industries," listing 83 chemical commodities, ~ e i rraw materials, manufacturing processes, grades, uiff, uses, and for the years 1919, 1927, and 1929 gives ie production, imports, exports, and average prices. he price range from 1913to 1930 is also shown graphiilly for each chemical, and a weighted index of chemical rices for 1921 to 1930 is included. This supplement Des not usually appear in the library bound copy so is not available to the student, who is forced to con11t the original sources for the data necessary in the :port. The instructor can check these student data :ainst his supplement. The publications of the U. S. Department of Comlerce contain much material; there are the "Statistical bstract of the United States," the "Biennial Census i Manufactures," and the "Commerce Yearbook." he Department of Labor publishes "Wholesale Prices i Commodities." Tariff information may be obtained om the local customs house or by consulting the t a r 8 tgulations. "Mineral Resources" (U. S. Bureau of lines)" and "Mineral Industry" (McGraw-Hill Book ompany) carry many statistics. Each month Chemical Cz Metallurgical Engineering uries sections on chemical economics, markets, price .ends, and current prices. Chemical Markets also has tctions devoted to chemical exports and imports, the .end of prices, and current prices. Oil, paint and 'rug Reporter is a standard reference for current maret prices. Chemical & Metallurgical Engineering is sually more readily available to the students, as many t them are subscribers. The weighted index system sed was described in January, 1930. From this system ie student can calculate index numbers for his chemitl commodity and compare this graphically with all >mmodities or chemicals. The economic phases of
the chemical industry are so directly effected by price trends that the student should carry with him into the industry an ability to use and interpret the data which have been collected for him by these varied sources. The financial report on a chemical manufacturer brings the student into contact with periodicals which are entirely new to him, but with which he should be familiar. The rating of R. G. Dun and Company is not available a t the library and must be secured by the instructor. I t was found that R. G. Dun and Company were very willing to lend a back number of their credit rating for student use. Poor's and Moody's industrial ratings will give sufficient information for the other financial items. Chemical Markets carries sections on the financial markets and stock market reports on chemical companies.
:x," 1 9 3 0 , ~ e r c k& Co., ~ & w r 11 specifications yearbook, 1927," C York Citv. ~ 1928. -~ - , "Condensed chemical dictionary," Chemical Catalog Co., ew York City. 1919. EDITORIAL STAFF,"Container and shipping instructions r fifty typical chemicals," Chem. & Met. Eng., 39, 24-5 (1932).
Met. Eng., 40, Bd (1933).
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CHEMICAL ECONOMICS
The economic material covered by the student does not constitute a very large share of his report. He may not fully understand the significanceof the items he has entered in the company financial report. It is not the purpose of the industrial chemistry course to explain this phase. That is for a course in chemical economics. Industrial chemistry has fulfilled its purpose when it shows the student that there is an economic side to the technical process, a very importafit side indeed. It has shown him the sources upon which he can draw for economic data and what he can expect to find in these sources. It may stimulate his interest in this side of the chemical industry. It may be pointed out to the class that the findings of the Department of Business and Engineering Administration of the Massachusetts Institute of Technology13show that the successful engineer should have a background which will allow him to work into the more lucrative fields of his industry, as distribution, finance, and management. If he desires to prepare himself in college for such work, he can select the proper courses. Many departments of chemical engineering now require courses in chemical engineering economic^.'^ In such a course the survey of a chemical commodity can be dealt with in more detail, as suggested in the outline by Klugh.16 CONCLUSIONS
The student is asked to draw some conclusions in his report. These are usually found to be quite brief and based on the technical process. The local manufacture and markets for the chemical are discussed. Only the occasional student discusses the economic side of the process, competitive processes, and materials. A more mature student may mention employment by the company or desirability of stock purchase. Many students mention to the instructor the numerANATLE,"What hecomes of the college graduate?" Chem.& '"TYLER,"Chemical engineering economics," McGraw-Hill Book Co.. Inc.. New York Citv. 1926. BASORE, "~conomicsand chemical engineering," J. Cxsmn. E~uc.,10,282 (May, 1933). '".IoH, "HOWto apply the principles of commercial research, Chem. & Met. Eng., 38, 14-5 (1931).
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ous sources of information with which they have become acquainted and feel that their ability to use these sources has been a successful accomplishment. Numerous students regret their inability to understand the financial report of the manufacturer and decide upon courses in business administration. The instructor may be surprised to find a usually mediocre student making
an excellent economic report and showing his greater ability in a business rather than in a technical capacity. The economic survey is different enough from the usual technical report which the student has been making that he enjoys the change and the hunt for new reference sources. The result is an interested student and an excellent report.
(Part 111 of this series d l appear in the January issue.)
