CHEMICAL ft ENGINEERING
NEWS VOLUME
38, NUMBER 9
The Chemical W o r l d This W e e k
FEBRUARY
29, i960
Lab Suppliers See Good Year Ahead Rising sales on tap for 1960 as capital spending increases and research outlays rise; price hikes possible This year should be a record smasher for lab suppliers and instrument makers. Companies expect rising sales to push the value of shipments of laboratory and scientific instruments beyond $210 million in 1960-about 12% higher than in 1959. Key lab suppliers cite several reasons for improvement: • Business conditions are good. • Capital spending will rise about $2.4 billion. • Research outlays for the 1959-60 period should top $12 billion. • Domestic and foreign markets for most firms are still growing. • More new instruments and lab equipment will be introduced this year than in some time; firms are counting on these new items to spur sales. Such is the picture turned up by a C&EN survey, as the Pittsburgh Conference on Analytical Chemistry and Applied Spectroscopy—and its accompanying exposition of lab equipment—gets under way this week in Pittsburgh's Penn-Sheraton Hotel. There will be 102 exhibitors on hand —more than in any year since the conference began in 1950—to show their wares. They promise to take the wraps off 30 new analytical instruments ranging from spectrophotometers to a direct read-out automatic titrator. Most of these new instruments are designed for lab use. But they aim, too, at a slice of the production and process control market. More Capital Dollars. Hikes in capital outlays by industry often mean more sales for lab suppliers, particularly those selling equipment which costs over $1000. Of those
industrial segments which buy most lab equipment, the most startling gain will come from the iron and steel industry. It expects to increase expenditures some 58.5% to $1.6 billion— a pleasant figure for makers of emission spectrometers, x-ray equipment, and other devices for metallurgical analysis. The increase reflects, in part, postponements caused by the recession and steel strike. With both in the past and labor peace assured for the next 30 months, the iron and steel industry can resume its capital programs. And primary nonferrous metal producers, kept on edge by the steel strike, will come through with a 15% boost in capital investments. Meanwhile, the chemical industry plans a 10% hike and the rubber industry an 8% rise. But the petroleum industry, another key buyer of lab
equipment, only figures a modest 1.5% increase in capital expenditures. All told, capital outlays by all industries should total $35 billion this year compared to $32.6 billion in 1959. Most of these dollars will go to modernization, replacement, and cost cutting rather than for new plants and facilities. Modernization has been the trend since late 1957 as a great deal of excess capacity continues in many areas. The gains in output last year still fell short of eating up the surplus. A case in point is the chemical industry, which despite record production and sales last year had anywhere from 10 to 30% excess capacity left in most key product areas (C&EN, Jan. 4, page 46). Several more months may be needed to use up the capacity which remains and apply enough pressure to shift capital
Domestic Sales Rise for Key Instruments
Infrared Instruments Ultraviolet Instruments Gas Chromatography Emission Spectroscopy X-Ray Diffraction and Fluorescence C&EN Estimates
FEB.
2 9, I960 C& EN
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dollars from modernization to new plant building. Lab suppliers do better during modernization programs than during plant building sprees. If lab suppliers are a guidepost, no business setback is likely this year. Most of those surveyed by C&EN don't expect sales to taper off in the second half. Instead, they see a steady gain month by month. Several suppliers are downright annoyed by whispers of a business downturn, prompted, perhaps, by the present stock market jitters. Says one supplier, "Keep talking about a downturn and, sure enough, there will be one." R&D Spending Up. Another factor which promises to increase lab equipment sales is the steady rise of re-
search and development expenditures. In the period 1953-54, about $5.2 billion was spent for R&D, according to the National Science Foundation. NSF predicts outlays for the 195960 period will hit $12.3 million. The Federal Government is the big spender, accounting for 61.0% of these dollars; industry will put up 36.47
