international
Licensing advice lor developing countries Licensing technology from small- to medium-sized companies is often more profitable than licensing from larger firms Developing countries that want to establish a profitable chemical industry should drop their big-company, bigplant syndrome and place more emphasis on licensing technology from smallto medium-sized companies. Licensing fees for a wide selection of excellent plastics fabrication technology, for instance, that is available from smaller companies cost less and will conserve a developing country's precious foreign exchange. Small plants are better suited for the small domestic markets usually found in these countries. Fabrication processes usually are laborintensive, which enables a developing country to take advantage of its inexpensive labor force. And these downstream facilities will give the country a better return on its investment. This is the advice that Richard M. Kossoff gave to representatives of developing countries attending a symposium on prospects and problems of li-
censing in developing countries. The symposium, held in New York City, was sponsored by the United Nations Industrial Development Organization (UNIDO) and the Licensing Executives Society. The number of requests for information that have poured into UNIDO and Mr. Kossoff s offices at R. M. Kossoff & Associates indicate that the developing countries consider this sound advice. Developing countries throughout the world, says Mr. Kossoff, are spending enormous sums of money for petrochemical core complexes and large polymerization plants, usually licensed from large multinational companies or engineering firms. These capital-intensive units drain the countries' scanty reserves and do not create the employment that the countries want and need. Those countries that neglect the fabrication end of the process usually find themselves with excess petrochemicals and polymers on their hands—excesses that must be sold on the world market at low prices against leading producers. Instead, Mr. Kossoff says, developing countries should pay more attention to such downstream processes as those that convert polyethylene, polyvinyl chloride, and polystyrene into molded, finished products. The technology is less expensive. Often, he says, complete
Small-volume plastics fabrication technology should be considered by developing countries Material fabricated
Product made
Application
Materials generally replaced
Methyl methacrylate
Acrylic sheet
Signs, windows, bathtubs, floor mats, etc.
Glass
Polytetrafluoroethylene
Stand-off insulators
Railroad and highvoltage electrical insulators
Ceramics
High-density polyethylene and polybutene-1
Large-diameter pipe
Industrial waste lines, sewerage lines, gas lines
Metals, concrete, clay
Polystyrene and highdensity polyethylene
Corrugated boxes
Shipping containers
Corrugated paperboard
High-density polyethylene and polypropylene
Synthetic pulp
Paper
Natural wood pulp
Polystyrene
Furniture
Chairs, tables, etc.
Wood
Polymers based on polybutene-1
Film, degradable mulch
Paper, plastic Maximizing crop yields, and weed control without pickup and disposalI
Source: R. M. Kossoff and Associates
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C&EN July 3, 1972
Kossoff: downstream processes fabrication units can be built for $100,000 to $1 million. In addition, a well-developed fabrication industry can convert polymers valued at 10 to 20 cents per pound into finished products worth 50 cents to $2.00 per pound. Thus, the smallest investment may be where the largest value-added is. Many of these fabricated plastics are substitutes for other materials, such as metals, paper, ceramics, and glass, that must be imported. Conversely, the labor-intensive fabricated products, such as acrylic sheet, can be exported. Together, the savings on imports and the new export business maximize a country's foreign exchange position and, at the same time, safeguard its huge, upstream investment. Even polymer technology, once the exclusive province of the big corporations, now is available from small- to medium-sized companies, Mr. Kossoff says. Some small companies are offering small plant technology to produce, for example, polystyrene or epoxy resins with equipment costs ranging from $1 million to $2 million. Glass-reinforcement know-how is another example of technology that developing countries should consider. They expand the options of small companies in developing countries that not only want to produce fabricated products but want to make polymers as well. If small plant technology can be beneficial to developing countries, if the licenses are less expensive, and if the deals are easier and faster to consum-
mate, why haven't the developing countries jumped on the small plant bandwagon? The reason, Mr. Kossoff explains, is that they do not know where to find it. Often, they do not know that it exists. Instinctively, they turn to the larger, better-known companies, which usually aren't interested in small-scale plants. The small companies that own the small-scale technology are scattered throughout the world. They usually don't publicize the availability of their technology for licensing and often don't even realize that the opportunity to license it exists. This makes it all the more difficult for developing countries to locate the technology. But it is worth the effort to try, Mr. Kossoff says. Banks, organizations such as UNIDO, and professional organizations can help. Mr. Kossoff says that "it is mainly a case of perseverance and contacting enough groups." He rates the Japanese as the best in the world at uncovering technology from smaller firms. They send teams of research, production, and marketing experts to seek out the technology, Mr. Kossoff says, and he recommends that developing countries follow the Japanese example. But licensing technology from small companies can have its hazards as well as its advantages, he warns. Developing countries should determine whether there is enough technical backup, what the patent position is, and whether they can continue to improve the technology to keep pace with future developments. Sometimes, low-cost technology can be a mistake in the long run. One company in the Far East licensed an inexpensive polystyrene process that turned out adequate general-purpose grades, but poor impact grades. The trend toward impact polystyrene made this technology obsolete. Some low-cost technology may produce products suitable for local use, where product standards may be lower. However, if a company in a developing country wants to export, the product may not meet the standards of the importing country. Don't take it for granted that technology that works in one location automatically will be successful in another location, Mr. Kossoff says. For instance, a process for packaging sausages in nylon film worked well in the licensor's country, where sausages are boiled. The process did not work, however, in the licensee's country, where sausages are smoked. A spray paint that was successful in one area was unsuccessful in another because the spray would not carry in the colder rooms typical of the licensing country. Differences in humidity prevented another country from using fiber-spinning technology that it had licensed. Problems such as these can be avoided by careful field testing before the agreements are signed, Mr. Kossoff says.
C&EN Talks With . . . Alfred Spinks Along with most other large chemical companies, Britain's Imperial Chemical Industries recently hasn't been faring too well financially. Net profits fell for a third consecutive year, reaching $256 million in 1971 despite an all-time high of nearly $4 billion in annual sales. Two clues point to the health products sector as the one that ICI's chairman, Jack Callard, is counting on to help reverse the profit trend. One is that sales of the company's pharmaceuticals turned in a brilliant 3 3 % trading profit performance last year. The other is the working history of the man who has recently taken over as head of ICI's worldwide R&D efforts. He is 55year-old Alfred Spinks, who advanced up the ICI management ladder in the ate pretty much as an autonomous unit. pharmaceuticals division where he has He also views the R&D thrust as a conspent 29 of his 31 years with the c o m tinuous spectrum of activity, claiming pany. Before being handed the R&D as artificial its usual division into dereins, he served two years as corporate fined segments such as basic research planner. as opposed to applied research. The impression that comes across on This year's $157 million is the largest meeting Dr. Spinks is that of a friendly amount that ICI ever has earmarked for man whose calm, though purposeful, R&D. Nevertheless, it amounts to less manner harmonizes with the steady, than 4 % of 1971 sales. Du Pont, on the onward course of the Thames flowing other hand, roughly equivalent in size by outside his spacious, elegant office and scope to ICI, spends at the rate of in ICI's London headquarters. The unabout 6.5% of its annual sales income divided attention with which he talks for R&D. The difference, according to to a visitor belies the enormous deDr. Spinks, reflects in large measure mands that are made on his time and the fact that he holds the strings to a the relatively lower cost of funding research in the U.K. "Since salaries con$157 million R&D purse. stitute about 6 5 % of an R&D budget, Dr. Spinks wears a number of differthe generally higher wages in the U.S. ent hats. He is territorial director.for account for a big slice of the differICI's activities in Africa, international ence," he notes. coordination director, and liaison direcOf the $152 million that ICI spent last tor for the agriculture division. But it year on R&D, $120 million (80%) went is in the research arena that his princito projects in the U.K. and $32 million pal interests and responsibilities lie. was spent overseas. This year, the He advises his fellow corporate board amount invested in research outside the members which areas of research U.K. will be considerably higher than should be stressed, which cut back or in the past, reflecting the merging of canceled. Atlas Chemical into the ICI family of To arrive at overall research policy, companies. Dr. Spinks relies on meetings with By far the biggest portion of this the ICI research advisory council. This year's $157 million will go toward supcomprises the research managers of port and extension of ICI's existing the central research labs and of the product lines. However, Dr. Spinks eight U.K. divisions—agriculture, orintends to channel more than 10% into ganics, fibers, Mond (general chemiprojects that will generate new busicals), paints, petrochemicals, plastics, ness for the company. One such project and pharmaceuticals—together with is the development of a route to protein their overseas counterparts. The deciby using bacteria feeding on methanol sions he makes ultimately affect the or natural gas. The product would be lives of more than 8000 company sciused as an animal feed supplement. entists. Alfred Spinks, who earned his Ph.D. Another is the search for a cellulosebased tobacco substitute, which ICI is at Imperial College, London, where he undertaking jointly with Imperial Tostudied under the late Sir Ian Heilbron, bacco Co. Both projects are long term, and who returned to the university in mid-career to study pharmacology and and both will consume large quantities of cash. But the payoff, when it comes, physiology at Oxford, believes in allowshould be sizable. ing each research department to operJuly3, 1972 C&EN
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