INDUSTRY & BUSINESS Glass Plugs Along Owens-Illinois' emphasis on research, advances in bottle-making machinery help markets growth UON'T
WRITE
O F F glass
containers.
Despite stiff competition from metal and plastic containers, glass container markets are growing by 4.5f/c a year, Owens-Illinois Glass executives say. C. R. Megowen, company president, and J. P. Levis, board chairman, told the New York Society of Security Analysts that lighter and stronger glass bottles and jars have materially helped to keep and broaden markets. Striking advances have been m a d e in machines which can now turn o u t many more jars p e r minute than older equipment could do. Owens-Illinois* turn to lighter-weight, higher-strength containers have brought reductions in cost and savings on freight. T h e company, which has 40c/c of t h e nation's glass container output, divides its $300 million plus container sales in roughly equal thirds among beverage, food, and drug and chemical outlets. Company management states the first two classifications are growing a bit faster than the last. • Heavy Research Spending. Owens-Illinois' research program costs $12 million a year. An unusually high part—$6 million—goes into pure research, which Levis thinks should eventually lead to n e w material unknown today. Corning Glass's Pyroceram is offered as an example of such materials. O. G. Burch, vice president for research at Owens-Illinois, is high in his praise of t h e job Corning did in controlling crystal growth rates in Pyroeeram. H e says this new structural material permits ceramic bodies to be m a d e to tolerances heretofore unheard of for such materials. He adds that Pyroceram will not replace glass but will expand glass uses. Levis points to the great potential uses of glass if only KKv of the theoretical tensile strength could b e used. L a b studies have shown, the board chairman declares, that tensile strength of 500,000 to 1,000,000 p.s.i. is theoreti26
C&EN
OCT. 2 1 , 1957
cally possible. Today's commercial glass h a s tensiles of only 5000 t o 10,000 pounds, 1 t o 2% of t h e theoretical. If it were possible to get—in p r a c t i c e only 10rc of the theoretical tensile strength, Levis says glass could not be smashed with an axe, that a glass I-beam could replace a steel one. And not only that, t h e glass beam could be one half t h e size of t h e steel beam and cost o n e twelfth as much. • Current Operations. Megowen states that the c o m p a n y has been forced to raise glass container prices because of substantial freight a n d wage increases since last fall. Since a good part of this business is done u n d e r contracts, Owens-Illinois has had to make the price increase announcement in advance of the calendar quarter in anticipation of still higher costs. Megowen feels that a 10c/o increase in prices was needed t o offset t h e higher costs. Company management says the Kaylo Division is oversold. This division makes a hydrous calcium silicate insulation material. T h e Kimble Glass subsidiary accounts for a b o u t 10';; of total sales, or $ 5 0 million. I t makes a n d sells television bulbs, laboratory glass ware, and industrial glass products. Heavy research spending has prevented the normal earning contribution, but new a n d improved items, now on the market, a r e expected t o help the situation. In response to a question of why t h e Plax Corp. reports lower earnings, a n Owens-Illinois executive says that a large share of the earnings a r e plowed into development and market expansion. O-I's interest in Plax amounts t o 50r/r of the outstanding stock. B u t since this is nonvoting stock, there is some reluctance to discuss Plax business. Another large segment of O w e n s Illinois business is represented b y t h e former National Container Corp. I t
accounts for 18 t o 20r/r of the sales total. In this operation, Megowen notes an improvement in recent weeks in the paper m a r k e t b u t a continued weak price situation in t h e container box market. I n the slack business period, process changes were m a d e a n d maintenance activity increased at National. T h e National Container acquisition b y Owens-Illinois has been challenged b y the U. S. D e p a r t m e n t of Justice which is seeking a court order t o require Owens-Illinois t o get rid of the acquired properties and assets.
Nonferrous Picture Will improve Adequate supplies, stable prices seem in store for 1 9 5 8 ; government held responsible for present problems L HE NONTFERROUS M E T A L situation will
improve next year. Supplies should b e adequate and prices more stable. Supply and d e m a n d should b a l a n c e better because of consumption increases a n d , also, curtailed production. Price d e clines in copper, lead, and zinc will help correct t h e over supply problems that h a v e plagued these markets r e cently. S o predicts Joseph Zimmerman of the Daily Metal Reporter. Zimmerman told t h e National I n dustrial Conference Board that " t h e Government is largely responsible for t h e overproduction of copper, lead, a n d zinc. F e a r i n g the U. S. would b e short of copper for years to come, t h e Government encouraged domestic a n d foreign miners with financial loans a n d floor p r i c e contracts to open n e w properties a n d expand old ones." Coupled with h i g h prices in 1955 a n d 1956, this e n c o u r a g e m e n t led to surplus stocks a t the producers' level. T h e s e stocks now are t h e largest in eight years. And, Zimmerman continues, t h e Gove r n m e n t ' s lead a n d zinc purchases for t h e national stockpile stimulated greater p r o d u c t i o n at h o m e a n d abroad. " W h e n t h e Government p u t a stop to b a r t e r i n g some of its surplus farm p r o d u c t s for foreign lead a n d zinc it removed the prop that sustained the domestic a n d foreign price of these metals." Last May, government barter p r o g r a m s were suspended for about three weeks; the program, however, is
Nonferrovs Prices Expected t o Rise Cents p e r lb.
40-
consumer w o r r y is availability. But projections indicate enough metal will b e around. Properties which operate now, plus those that will run by 1960, should provide enough copper, lead, a n d zinc, Winship explains. Producers, on t h e other h a n d , will worry over d e m a n d . N o doubt pro duction will b e interrupted a t times, a n d there will be periods w h e n con sumption will vary from expected rates. B u t these periods will be short ones. T h e industry can expect production
a n d consumption to be relatively stable —without feverish inventory reductions or accumulations. • Consumption Estimates. Winship predicts the free world will consume newly mined nonferrous metals by 1960 a s follows: * Copper, 3.6 to 4.0 million short tons. * Lead, 2.1 to 2.3 million short tons. * Zinc, 2.5 to 2.7 million short tons.
The Biggest Do Best Rate o f Return on Stockholders Investment, 1 9 5 5
4 Largest Companies Capper
Lead
HHB HHB
Other Companies
Zinc
Black bars indicate current prices; white bars 1 9 5 9 to 1 9 6 1 prices
now back in operation, although u n d e r new rules . Suspension of the barter program was followed by a sharp d r o p in lead and zinc prices. In turn a serious situation was created for domestic min ing companies. T h e s e firms have de manded—and will get, says Zimmerman —higher import duties that will check foreign metal influx into the U. S. With lead, duties now run 1.06 cents a pound. Zinc's d u t y is 0.7 cent; do mestic firms w-ant 2.1 cents per p o u n d . The Emergency L e a d and Zinc C o m mittee h a s asked t h e Tariff Commission meanwhile, to look into the effect of lead and zinc i m p o r t s on domestic miners. However, t h e commission is still studying the request and has not yet decided w h e t h e r to take any action. Firms also w a n t a higher duty for copper, a d d s Zimmerman. T h e present duty is 2 cents p e r p o u n d ( n o w sus pended h u t reimposed if price goes helow 24 cents a p o u n d ) . T h e industry wants a 4-cent duty if price goes below 30 cents a pound. Higher import du ties on l e a d , zinc, a n d copper will serve to raise domestic p r i c e s of these metals, Zimmerman concludes. • Longer O u t l o o k . U. S. needs for copper, lead, and zinc have exceeded domestic production for several years. "It seems safe to p r e d i c t that this con dition will continue through the mid term 1959 to 1 9 6 1 , assuming there are no large scale international upheavals, no deep depressions, a n d no prolonged labor trouble," Charles H. Winship, Jr., Phelphs D o d g e , told N I C B . For t h e mid-term period, t h e biggest
Industrial Chemicals
Petroleum Refining
Tires and Inner Tubes
Paper and Allied Products
Glass
Sources F e d e r a l T r a d e Commission
In the process industries, largest companies show the highest return on stockholders' investment Χ ou
DON'T HAVE x o
B E BIG to make
money, but perhaps it helps. At least, that's what a recently released report from the Federal T r a d e Commission indicates. During t h e postwar years, the FTC study indicates, the four largest corpo rations in five major chemical process industries consistently t u r n e d in a greater rate of return (after taxes) on stockholders' investment than the aver a g e return for a group of other firms in t h e same industry. Figures for 1955 ( chart ) are typical for process industry firms over t h e entire 1947-55 period. Among industrial chemical firms, for instance, F T C finds that the four larg e s t ( D u Pont, Union Carbide, Allied Chemical, D o w ) h a v e earned an aver a g e return ranging from 26.49c in 1950
down to 17.7% in 1953. In 1955, their r a t e hit 24.69c. On the o t h e r hand, 2 1 smaller firms made their best showing i n 1950, also, when t h e y averaged I T . 1 % . Average return on investment for this group dropped t o low of 9 . 8 % i n 1954, b u t rebounded to 12.8% in 1955. Chemical firms, as a g r o u p , do very well. In 1955, only motor vehicle and equipment manufacturers did better than t h e 2 5 chemical companies' aver a g e of 2 0 . 2 % . T h e even higher re turn chalked u p b y t h e four biggest companies is largely due to Du Pont's excellent showing. Du Pont earned 3 4 . 1 % on stockholders' investment in 1955. Carbide's return amounted t o 20.0% . D o w and Allied trailed off t o 14.6% and 12. K i respectively. OCT.
2 1,
J 957
C &EN
17
