THE CHEMICAL WORLD THIS WEEK
Du Ponf s Charles McCoy Has happened before
CHEMICAL INDUSTRY:
Bottom of a Well "If general economic activity is in a valley this year, we in the chemical industry are at the bottom of a well in that valley." That's the way Du Pont economist Charles B. Reeder described the posture of the chemical world to financial analysts at a threeday chemical investment seminar in Wilmington, Del., last week. The seminar brought together corporate executives from the chemical industry to discuss business prospects for the coming decade. With minor differences, the chemical executives agree that while the current economic climate is bleak, the much touted upswing is somewhere in the near future. From his vantage point at the bottom of the well, economist Reeder ventured the opinion that during the fourth quarter the chemical industry may well be at the lowest point of three separate cycles—the combination of a long-term decline in prices and profit margins due to overcapacity, the cyclical recession in general business activity, and the temporary depressing effect of the General Motors strike. This triple attack, Mr. Reeder says, has dumped more than a fair share of woes on the industry. "It is difficult to imagine a worse combination of circumstances," he laments, "and the financial consequences of this situation will be painfully evident when chemical companies report their results for the fourth quarter of this year." Despite the drubbing the industry has received this year at the hands of a distinctly unfriendly economy, chem10 C&EN NOV. 23, 1970
ical executives exude optimism about the next decade. Atlas president Edward J. Goett expects his company's chemicals division to enjoy increased profits within "six to 18 months." Atlas' pharmaceutical operation will generate nearly as much profit as the chemicals division in 1970, Mr. Goett predicts, while its aerospace-explosives business will be "increasingly overshadowed by vigorous growth in other sectors of company operations." Du Pont president Charles B. McCoy is also optimistic about his company's prospects for the next decade. "Most of the economic curves happen to be sitting on the bottom for us," Mr. McCoy comments, "but this has happened before and the industry has come back stronger than ever." He forecasts a 907c increase in physical volume for the industry by 1980. Werner C. Brown is making similarly bullish remarks about Hercules. Mr. Brown says his company will reach the $1 billion sales mark in the next four years "with corresponding jumps in profits and earnings." The Hercules president outlines a program: making better use of capacity, pruning certain nonprofitable operations, and requiring "at least 10r/r return" on all future capital expenditures. Rohm and Haas president Vincent L. Gregory, Jr., looks to realization of returns of "large R&D, and construction programs which have depressed earnings in recent years," to account for a sizable growth of his company in the coming decade.
ENVIRONMENT:
Disunity on Solution How to solve environmental problems was the subject of two keynote speeches at the Midwest Regional Conference on Science, Technology, and State Government. One was by Dr. Albert H. Cox, economist and defender of free enterprise; the other, by Ralph Nader, lawyer and consumer advocate. The issues were clearly drawn, but there was hardly any unity. Dr. Cox, who is chief economist for an investment counseling concern, says that pollution control and economic growth are not incompatible. However, he contends, reducing pollution would of necessity also reduce consumption. American society is materialistic and goods-oriented, he adds— there is little evidence that the public is willing to sacrifice buying power to improve the environment.
Ralph Nader Economic remedies will fail
Besides, Dr. Cox continues, the punitive approach to controlling pollution has all the defects of legal control of economic problems in general. Pricing approaches to pollution control are better: for example, the concept of "effluent charges," whereby industries, instead of being compelled to clean up their pollution, would be made to pay governmental bodies for the right to pollute. But governmental intervention, where unavoidable, should be at state or local levels wherever possible, Dr. Cox recommends. Purely economic remedies for pollution will fail, Mr. Nader counters. For example, he says, effluent charges would just be absorbed in the normal cost of doing business and passed on to the consumer, with no beneficial effect to the environment. Pollution is inescapably a legal as well as an economic problem, Mr. Nader insists. "We need more effective sanctions; these sanctions must pierce the corporate framework and reach the individuals in charge." He recommends specifically: • Putting a company that pollutes into "environmental receivership." Plants wouldn't be shut down, but government-appointed trustees would divert all profits to pollution control. • Taking the authority to charter corporations away from the states and giving it to the Federal Government, which could impose strict antipollution requirements as conditions of charter. • Putting the burden on suspected polluters to prove that their activities do not endanger public health or safety. • Giving citizens "initiatory rights" to sue for relief from pollution.
