BUSINESS
European Chemical Output Expected To Grow Slowly Producers forecast 1 to 2% annual rise in production despite concern over rising global competition, trade conflicts, environmental woes Following three years of sustained growth—-15% over the 1983-85 period—chemical output in Western Europe advanced more slowly in 1986, growing only 1% to a value of about $193 billion. Prospects for 1987 are slightly better, with growth forecast at about 1.8% and for 1988 at about 2%. Capacity utilization is high, and expected to continue that way. Capital spending in 1986 was up about 8.5%, and it also will increase this year, although at a slower rate of about 2%. Those figures form a thumbnail sketch of Western Europe's chemical industry, drawn at the annual general assembly of the European Council of Chemical Manufacturers 7 Federations (CEFIC) earlier this month in Madrid. Aarnout A. Loudon, president of Dutch chemicals producer Akzo, serving a twoyear stint as president of CEFIC, noted problems facing the industry. But his general conclusion was: "The chemical industry is optimistic/' A relatively strong performance for plastics and petrochemicals helped offset declines for fertilizers, pharmaceuticals, and parts of the inorganic chemicals industry. In general, sectors more closely related to final consumer markets fared better than those producing more basic industrial and agricultural products. The general session, and the press conference following it, was dominated by several major concerns—
competitiveness, trade, and environmental considerations. Today competition is global, according to Loudon. Europeans cannot escape from a paradox. On the one hand, there are egocentric forces promoting narrow local and national interests—that is, protectionism. ' O n the other hand, we are confronted with global unifying forces and growing interdependence between people and markets/' Smooth trade negotiations thus become even more important. He pointed out that a new round of General Agreement on Tariffs & Trade negotiations have begun, and also noted "the considerable frictions on trade negotiations" among the U.S., Japan, and the European Economic Community. Such trade negotiations also play a part in influencing competitiveness around the world—and that is particularly important for the European chemical industry, he stressed. Environmental matters have not
Loudon: industry is
optimistic
been stellar for the industry, Loudon conceded. "Over the past year, by and large the image of the chemical industry has not improved." Although the Schweizerhalle spill into the Rhine River caused "no loss of life, it raised many questions about our industry. Individual companies looked to their plants and security. "CEFIC," he said, "supports voluntary codes of conduct and guidelines." In part, this is to forestall detailed legislation, by providing guidelines that "leave room for individual measures and actions attuned to national and local circumstances. In this way, legislation and guidelines of CEFIC and companies can be complementary." However, he emphasized, these guidelines must be taken to heart, and can never be used as an excuse for irresponsible behavior. CEFIC has taken the environmental guidelines for world industry developed by the International Chamber of Commerce, and "translated" them into "management practices with special emphasis on our own sector," Loudon said. This includes adaptation to specific situations. "Situations vary from country to country, not only because the legal and industrial tradition might differ, but also because geographical and natural conditions are indeed variable." CEFIC is also sponsoring an env i r o n m e n t award, w o r t h nearly $20,000, "intended to recognize an outstanding innovation allowing the chemical industry to contribute in a positive way to the solving of an environmental problem." The award will be presented in Brussels next spring, to coincide with the closure of the European Year of the Environment. Loudon's general comments on competitiveness within the West EuJune 15, 1987 C&EN
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Business ropean chemical industry took special note of the problems facing the chemical industry in Spain, since it entered EEC last year. As he put it, "Europe will present a challenge for the Spanish industry to be more competitive/' Speaking as a representative of the host chemical industry federation, Lorenzo Gascon, president of Spanish textile company La Seda de Barcelona, said that the Spanish business community had feared "an invasion of industrial products" once it joined EEC. "Now that a year has passed since we joined . . . one can see that these fears were justified," he said. Trade has become liberalized, value-added taxes introduced, and customs tariffs lowered, all of which have produced an increase in community imports of 32% and an increase in exports to the community of only 6%. An upsurge in internal demand for chemicals of 9 to 10%, for example, was only partly met by domestic production, which increased only 5%. In fact, in 1986, Spanish chemical imports grew 24% while exports fell 8.3%, added Julio San Miguel, vice president of Expoquimica-87, the national trade fair. Chemicals were one of the more dramatic sectors to show import growth, Gascon said. For example, imports of fertilizers were up 219%, pharmaceuticals 152%, plastics for polymerization 52%, and condensate plastics 49%. "This trend of Spanish foreign trade with the community continues to worsen in 1987. Thus, in the first four months of 1987, our imports from EEC increased 48% with respect to the same period in 1986, reaching $8.77 billion. In this same period, our exports to the community increased only 12%, thereby producing a deficit of $1.75 billion in only four months," Gascon added. Even with all the problems facing the industry since its entry into EEC, however, the promise remains greater, said San Miguel. "If we bear in mind that the per capita consumption of chemical products in the Common Market is of the order of 34% higher than the Spanish per capita consumption, the possibilities for the community's chemical 18
June 15, 1987 C&EN
industry in Spain present positive prospects," he said. There remains, h o w e v e r , the "very real challenge facing Spain as the result of its membership—the need to carry out the structural changes that will make our production system competitive within the community," said Gascon. "This structural adjustment, this modernization, is inevitable since we cannot remain within Europe without becoming more European ourselves." Patricia Layman, London
Mobay opens two labs for polycarbonate push In an effort to capitalize on growth prospects for polycarbonate consumption in the years ahead, Mobay formally opened an optical media laboratory and an extrusion laboratory at its Pittsburgh headquarters earlier this month. The new labs emphasize rapid growth markets. The optical media lab will allow Mobay to better serve users of its Makrolon polycarbonate in compact disks for new state-ofthe-art audio equipment as well as disk applications for computer-readable optical data memory storage systems. The extrusion lab, equipped to process sheet, film, laminations, profiles, and multilayer products, is aimed primarily at giving polycarbonate a toehold in the packaging market, particularly for baby foods and juices and infant formulas. Present U.S. consumption of polycarbonate is 345 million lb a year, according to R. Jay Finch, vice president and general manager of the plastics and rubber division of Mobay. Consumption likely will pass the 500 million lb mark by 1995, says Finch. Mobay, a U.S. subsidiary of West Germany's Bayer, has an annual capacity of 160 million lb of polycarbonate. Although Finch declines to reveal capacity utilization at Mobay's U.S. resin plants, he says capacity is such that Mobay feels confident it can supply Far East demands for the resins over the long term from U.S. sources. This may indicate that polycarbonate uses have not grown so rapidly in the U.S. as Mobay and
its parent would like. Polycarbonate for users in Australia, Korea, Taiwan, Hong Kong, and Japan previously had been shipped from Europe, where Bayer has a capacity of 200 million lb, soon to be expanded to 250 million lb with completion of a new plant in Antwerp. Mobay and Bayer have a vested interest in seeing polycarbonate use grow. The company holds the basic patents on the material dating back to work done in Leverkusen, West Germany, 30 years ago. Commercial production began in West Germany in 1958 and in the U.S. in 1960. But, as Finch points out, "Competition in the engineering plastics business has grown more and more i n t e n s e . " And he observes that "more than 200 engineering plastics have been announced in the past two years." However, Mobay is quick to point out polycarbonate's benefits: It has transparency values close to plate glass, is highly resistant to impact with Izod impact resistance of about 15 to 17 ft-lb per inch for a V8-inch specimen, has excellent dimensional stability, has a dialectric strength of 400 volts per mil for good electrical insulating properties, and withstands temperatures of 265 to 275 °F at 264-psi loading. Blends with other engineering resins such as PET add chemical resistance. Mobay says that polycarbonate is now second in volume among thermoplastics used in the U.S., surpassed only by nylon. Mobay's new extrusion laboratory, according to Gerard E. Reinert, director of technical marketing, "will have three-material, five-layer coextrusion capability, with plans to expand to five-material, sevenlayer capability." The new compact disk lab includes a Meiki 140-ton injection molding machine that can mold disks up to 8 inches in diameter, according to Mark W. Witman, Makrolon technical marketing manager. Other equipment in the dustfree laboratory includes a metalizing chamber to add a light-reflective coating to disks, a CD analyzer to measure block error rates, and other optical imaging devices. Marc Reisch, New York
