available with relatively short delivery times. Control valves, generally included in the instrumentation category, have had a different price performance from that of instruments themselves. Prices have risen and continue to rise because manufacturers face much the same problem of getting castings as do makers of standard cast-steel valves. Manpower availability has improved in the past year, too, says Siegfried E. von Kutzleben of Lummus. There are, however, geographical limitations, he adds. Hence, flexibility in assigning personnel to different regions can help both the owner and the contractor. Longer term, manpower shortages may hit the engineering and construction industry. The reason would be the cyclical nature of the business, von Kutzleben says. The industry will be in trouble if it cannot counter its traditional cyclic nature with career advancement, job stability, and other buffering features that young engineers look for today. A shift to more use of para-professionals and technicians is coming, say both von Kutzleben and Clark P. Lattin Jr. of M. W. Kellogg. This development will make an engineer more valuable to himself or herself and to society. If freed from routine and nontechnical activities, the engineer can put maximum time on the purely technological aspects of his or her project, Lattin explains. Construction personnel in the crafts seldom have a balance between supply and demand, von Kutzleben points out. Currently, unemployment in construction is the highest of any industry. Yet, this is an oversimplification, for availability varies widely between geographical areas and within companies. The keys to solving this problem are creativity in deployment of construction labor and more attention to productivity. Deployment includes devices such as getting more trainees and letting these trainees do simpler tasks while experienced employees do the difficult work. Productivity can be increased if a worker identifies well with the work and the company rather than just with the labor union, von Kutzleben adds. Lummus tries to help construction employees develop pride in their craft and to develop high morale on the job site with measures such as instruction on good construction practices and on skill improvements. The many unknowns facing the engineering and construction industry make reliable forecasts on personnel and materials needs difficult, if not impossible, several speakers say. The reasons are many. Some factors cited frequently at the Houston meeting were the effects of Project Independence, of giant petrochemical plants proposed for the Middle East, and of the longer-term course of the economy. Bruce F. Greek, C&EN Houston 14
C&EN Oct. 27, 1975
International
Hoechst suffering in business downturn Just how badly West European petrochemical firms have been hit by the current business recession is exemplified by Hoechst's latest financial results. From January through August, domestic sales of Hoechst A. G., one of West Germany's largest chemical companies, declined 9.5% from that for the like period last year. Global sales were off 15.6%, and exports fell 21.4%. "The upturn we had hoped for has not appeared, and an upward trend is nowhere to be seen," is how chairman Rolf Sammet dolefully put it in Frankfurt recently. Hoechst's earnings also reflect the adverse business trend. Pretax profit of the parent company in this year's first quarter were $77 million. In the second quarter, the figure went down to $34 million. "There can be no doubt that profits in the third quarter will be even lower than in the second," Dr. Sammet says. He cites several factors that have contributed to the earnings decline. One is the low utilization of plant capacities. This level fell from 70% in the first quarter to 64% in the second, and averaged only 54% in July and August. The downward drift in prices of products compounded the problem as did the rising costs of raw materials. During the first eight months of this year, Sammet estimates that his company paid an additional $42.7 million for feedstocks. Increased labor costs also added to Hoechst's higher operating expenses. "In West Germany," Sammet claims, "unit labor costs displayed the greatest increase when compared with those in most industrial countries, particularly the U.S. We are now feeling the results." On the sales side, the fibers sector is giving Hoechst management the greatest cause for concern. "For the first time since the end of the 1950's we have been forced to take considerable losses," Sammet says. "Worldwide competition has led to catastrophic
price reductions. On all markets right across the board, prices for our main products today are about 20% below last year's level." There are some bright spots in the otherwise gloomy fibers business. Sammet notes that in the U.S. and Brazil, where his company has major fibermaking facilities, demand has improved in recent months. And in the West European market, there has been an upturn in demand for texturized filament yarn to supply the knitted goods industry. Nevertheless, utilization of plant capacity for polyester fibers and rayon staple fibers continues to be poor. Part of the problem stems from imports of textiles into Europe from "lowpriced countries," Sammet explains. Too, exports of yarns and fabrics from European plants have declined. Further compounding the situation is the increase in fiber output from plants as a result of technological innovation, and the building of fiber units in countries that were important export targets. "The result," he maintains, "is that the balance between supply and demand of man-made fibers will not be restored very quickly even after the present recession has been overcome." The plastics business is equally dismal. Utilization of Hoechst's plant capacities for large-tonnage plastics is even worse than is the case for fibers. Output from polyethylene, polyvinyl chloride, and polystyrene units currently is running at 50 to 55% of the design capacities of these plants. Moreover, "the hard competitive battle at home and abroad has brought about a large fall in prices," he says. By comparison, other areas of the company's activities have held up well. Sales and earnings of the pharmaceuticals division remained unchanged from last year. And the return on sales of inorganics and organic chemicals and agrochemicals is "relatively favorable." The situation has led Hoechst management to reconsider its investment plans. No major projects are now conSammet: upward trend noUto be seen templated in West Germany or elsewhere. One casualty of this decision is the Port Arthur, Tex., complex of American Hoechst (C&EN, Oct. 6, page 8). And in the Netherlands, the company has delayed development of an extensive network of chemical plants at Flushing at least a year. Looking ahead to next year, Sammet expects to see "a distinct upward turn in business. On an absolute scale, however, we can only anticipate sales that, when price adjusted, will not be higher than those of 1973. We shall not achieve full utilization of plant capacity, so that many of the problems of 1975 will still be with us in 1976." D
