INDUSTRY & BUSINESS
James P . Mitchell " . . . w e will not 'find' them .
Charles S. Munson "Anybody can spend money
MCA Talks Optimism Sf pace keeps up, sales m a y well set record this year; profits, taxes, labor loom as problems Β UDGET FOR MCA this year is a little shy of $1 million. But big spending alone doesn't mean too much. "Any body can spend money . . .'\ Charles S. Munson, board chairman of Air Reduc tion, told 1000 or so registrants (a rec ord) at MCA's 7th semiannual meeting a n d winter conference in N e w York. By a n d large, Munson believes, M C A gives its 169 member firms their money's worth. A n d one of its most important functions, he says, is to serve as a forum in which executives can sharpen their talents. This year, their talents are apparently paying off. "I do not think it inappropriate/' said M C A president John E . Hull b e tween panel sessions, "to sound a n optimistic note." His chief reason: If chemical industry sales keep u p , 1957 may see a new sales record—close to $25 billion-perhaps 7 % ahead of 1956. There are problems, however, Hull says. Pressure on profits is one» Taxes are another. MCA's tax policy commit tee h a s recommended pointing out t o Congress that high corporate a n d per sonal income taxes remain a major eco nomic problem. "If t h e Government will spend more of its revenue for d e fense and less for other purposes," Hull says, "tax relief can come more quickly." Labor Secretary James P. Mitchell
raises another problem—skilled workers. By 1965 t h e U. S. will h a v e more than 193 million people, h e says. T o sup port t h e m , w e will need a gross national product of $560 billion—up 4 0 % from today's level. W h e r e do w e find the skilled people to man such a level of industry? ". . . w e will not 'find' t h e m at all," Mitchell says. We will h a v e to make them. Training, education, a n d planning are the tools. T h e time to start is right now.
Prognoses Is Cheerful On t h e economic outlook, meeting attendees got a strong dose of optimism —tempered b y a dash of caution. Business may b e in for a b i t of a breather next year, but after that, panelists agreed, continued expansion is t h e prospect. D u Pont economist I r a T . Ellis summed up t h e discussion this w a y : T h e outlook for 1958 is good, if you don't expect miracles. T h e volume of business activity will b e extremely high by all past standards, although there may be some question whether it will still b e rising. And b y 1959 o r 1960, in a n y event, business should take off again. D o n a l d K. Ballman of D o w Chemi cal scores talk that the chemical in
John E . Hull ". . . sound . . . an optimistic note dustry's outlook is downward—or even sidewise—motion. T h e industry h a s grown at a rate of 7 V 2 % a year (syn thetic organic chemicals h a v e done even better) against a 3Ί/2% growth for all industry, Ballman points out. H e expects this pattern to continue. Profits for industry firms, too, have been above average. W h y ? Because chemicals have high utility—they pro vide n e w products, permit cheaper processes, and open u p entirely n e w markets. So profits h a v e been t h e r e ward t h e industry has reaped for im proving the standard of living. Ballman does see some warning signs on the economic horizon, however. Developing new products is costly. And unless profits can b e maintained, finding money for research a n d devel opment will be m o r e of a problem. At the same time, the industry sees its costs rising faster than its productivity. But t h e chemical industry is n o t overgrown, its m a r k e t s a r e n o t satu rated, says Ballman. T h o u g h capacity in some areas m a y temporarily b e greater than demand, there a r e ample opportunities for growth. And over t h e long range, he believes, t h e industry will b e t h e solid investment t h a t it h a s been in past years. Nor is the prospect gloomy for t h e over-all economy. McGraw-Hill econo mist Dexter Keezer predicts a $10 bil lion gain in the Gross National Product in 1958—with the help of a few price increases. But it will b e t h e most com petitive year since W o r l d W a r I I , h e cautions. And capital outlays will b e off moderately, s o t h e economy will DEC.
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1957
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INDUSTRY & BUSINESS have t h e uncomfortable job of coming clown from the peak of a capital goods boom. T h e adjustment n e e d only b e brief, however, if g o v e r n m e n t a n d con sumer spending stays h i g h . D e m a n d for credit, too, should r e main high, says Roy A. Rierson of Bankers' Trust. T h e Federal Reserve Board's move to lower t h e discount rate (C&EN, Nov. 25, p a g e 28) signals a shift away from restraint in govern ment credit policy. But t h e F R B is not y e t aggressively p u m p i n g money into t h e economy. And although busi ness firms may need less capital next year, government n e e d s could continue to rise. S o while bond rates may d e cline moderately, Reserve Board action may b e more of a psychological signal to business men than a sign of immedi ate return to easy money, unless busi ness drops off from present levels.
Pushing CPI's Views Chemical industry hunts f o r better w a y s to reach the public J. H E PUSH TO COMMUNICATE i n d u s t r y
viewpoints will b e a major chemical industry effort in 1958—aimed at em ployees, t h e general public^ and legis lators. T h a t assurance grows out of reaction to an MCA panel on communi cating industry viewpoints. Emphasiz ing t h e n e e d , Vick's Thomas Wolff notes that while unions p u t more than a third of income into communication projects, companies spend less than 1 % of payroll. G E ' s John T . McCarty sees a crying need for businessmen to accept a fifth dimension for success: getting t h e understanding a n d support of em ployees a n d community neighbors. Without it, h e says, t h e tremendous in vestment in t h e basic four dimensions of business (designing, manufacturing, accounting, and selling) has been "jeopardized a n d even eliminated through strikes, slowdowns, and the re luctance of most employees to give their full skill, care, a n d effort on the job." McCarty asks officials to: • Act a n d live right voluntarily. • Interpret company action. • Create a n d deserve favorable cli mate. His m e t h o d s : study u p , speak u p , join u p , a n d build u p . • Communicating 28
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Government. 1957
MCA's Claude E. Hobbs calls for in creased legislative activity on both t h e Federal and local level. H e notes t h e effectiveness with which various pres sure groups have sponsored a n d sup ported legislation which adversely affects the industry, and calls for chemi cal officials to make their voices a n d views felt. Hobbs pinpoints S. I l , a bill which he says would a m e n d t h e Robinson-Patman act b y seriously cur tailing the right of a company to grant a lower price t o one of its customers than it gives others, even w h e n acting in good faith to meet competition. H e says t h e industry will have to fight again in 1958 t o keep proponents from getting the measure passed.
Advertising Hits $800 Million Firms pull more sales arrows from their quivers; s p e n d ing a n d media grow V^HEMICAL
MANUFACTURERS
nOW
spend $6 million a year for space in seven chemical trade publications. A n d more and more space is being bought in general business and consumer p u b lications. Television usage is increas ing. T h e net result: The chemical a n d chemical process industries will prob ably spend over $800 million in adver tising this year, John Gillis, vice presi dent of Monsanto Chemical, told t h e Manufacturing Chemists' Association. Gillis monitored a panel discussion on chemical advertising. H e r e are his reasons for t h e extended a n d growing use of advertising: • Selling is getting more competitive; every tool in t h e marketer's kit must b e used. • Chemical manufacturers are selling farther afield now than ever before; some sell to n e w industries, some even to t h e consumer. Hence, as chemistry permeates more industries, chemical manufacturers must make more use of mass communication media. > Like α S a l e s m a n . Good advertis ing works t h e same way a good sales man works, adds W . E . Gordon, assist ant general manager of D u Pont's Grasselli Chemicals department. T h e objectives, he says, are to gain atten
tion, then interest, desire, and n e e d in that order. Once it's d e c i d e d to advertise, the question most frequently asked next is: H o w much should b e spent? At Du P o n t , the task method is used to pre p a r e ad budgets. For each p r o d u c t or product g r o u p , t h e sales manager, the a d manager, a n d their sales groups deterroine t h e sales objective for t h e year ahead. Also, they agree on those areas of tHe broad selling program where ad vertising can h e l p reach sales objectives. A s for planning a d programs, con tinuées Gordon, these are based on meeting specific objectives. These may be: • Introducing a n e w product. • Penetrating a n existing market. • Expanding sales of established products. • Protecting existing markets from competition. • Reaching more buying levels. Having determined that a company will advertise, a n d h o w much money will be spent that way, t h e next question is: H o w effective will expendit u r e s be i n increasing sales? This question migbt b e answered b y pretesting, says Gordon. This consists of having ad a n d sales people find out from customers and prospective customers whi
