BUSINESS
More Chemical Firms Turning from Drums to Larger, Safer Containers Alternative metal and plastic containers, called totes, avoid drum disposal headaches, can be dedicated to particular chemical, refilled, and reused Environmental regulations continue to make it increasingly difficult to dispose of chemical drums in landfills. Chemical companies are feeling the weight of soaring drum disposal fees, the costs and hassles of cleaning residual chemicals from drums before disposal, and the potential liabilities associated with having their names on drums that are improperly used or discarded. Although drums certainly still have their place in the chemical industry, chemical companies are turning increasingly to alternative metal and plastic containers that are much larger than drums and can be dedicated to a particular chemical, refilled, and reused. Producers of some specialty chemicals such as automotive coatings and adhesives, for example, have long relied on intermediate bulk containers (IBCs), which generally hold from 110 to 550 gal, because they provide the kind of high-purity handling and small-volume convenience tailored to their needs. But now these containers, which are also referred to as tote tanks or totes, are being filled and refilled with a longer list of specialty chemicals such as water treatment chemicals, as well as with commodities such as lube oils. More hazardous and obnoxious chemicals are also being packaged in these containers. "We are seeing a trend toward companies switching to IBCs for a number of commodity-type products"
rather than using them only for high-value-added products with extremely high quality standards, notes Rod Willnow, president of the material handling group of Hoover Group, Alpharetta, Ga., a producer of a broad line of IBCs. Some companies are buying these containers, h a n d i n g t h e m over to their suppliers, and collecting their purchases in them. But many other chemical suppliers and distributors, who are in the business of creatively parceling out chemicals to meet the specific needs, "are still trying to decide specifically where totes Nairn's Porta-feed containers find growing use are going to fit into their marketing p l a n s / ' notes Morris place some of the 50-lb and 100-lb Owen, business director for the in- bags commonly used. The advantage dustrial chemicals and solvents divi- is twofold: convenience and freesion on the distribution side of Ash- dom from bag disposal costs. land Chemical in Columbus, Ohio. Nalco Chemical, Naperville, 111., a These firms recognize that offering large producer of water and waste these types of containers, coupled treatment chemicals, is reaping big with a refilling and maintenance ser- benefits by "providing its customers vice, can serve as a powerful market- a safer, more economical alternative ing tool that can give them an edge to drums" with its Porta-feed Adover competitors that aren't similarly vanced Chemical Handling System. equipped. "If we didn't think that, Many units are equipped with a we would not be investing so much communicator box and level probe capital in it," says Bevan Cates, senior that is programed to make a toll-free vice president of marketing, sales, phone call to Nalco headquarters to and material management at the na- report that the tank is running low. tion's largest chemical distribution Then, Nalco takes the empty concompany, Univar Corp., Seattle. So tainer back for cleaning and recypopular is the service that companies cling and delivers the next chemical offering it say they can barely keep shipment on schedule. The Porta-feed system is now enup with demand. The same switch to larger, dedi- joying double-digit growth, says Ali cated, refillable packaging "is occur- Ata, manager of corporate marketring in the dry industry as well," ing systems at Nalco. "It is probably Cates points out. Mammoth chemi- growing faster than any other minical bags called "super sacks" can re- bulk or semi-bulk system in the September 23, 1991 C&EN
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Business world, because we are pushing it," says Ata. Since 1985 when the first unit was used, Nalco's Porta-feed fleet has blossomed to 40,000. "Because we've used these returnable containers, we've probably prevented the disposal of approximately 1 million drums/' notes Ata. And Nalco and its Porta-feed customers can get a lot of public relations mileage out of that fact. "Whether it deserves it or not, the 55-gal black drum has become synonymous with hazardous waste." In another move, the specialty chemicals branch of Phillips 66 has developed reusable metal cylinders in two sizes—57 gal and 250 gal—for commercial mercaptans to replace the disposable drums currently used for these chemicals. "Disposable containers may cause environmental problems because sulfur-based chemicals have highly penetrating, disagreeable odors and can be flammable," points out Greg Collins, sales manager for diversified and sulfur chemicals. To avoid these problems, the metal cylinders are specially designed to eliminate odors during use. Phillips 66 rents or leases the cylinders to customers. It also maintains the cylinders in proper operating condition by a program that includes inspection, periodic testing, and recertification. "This last vear has oroven that we
made an excellent decision [to offer the service] in that we are challenged to keep up with demand" for it, says Collins. "With the returnable cylinder program, we feel that we are helping our customers deal with odor control and the increasing problem of waste disposal." But that's not the only reason companies are involved. "From a practical marketing standpoint, the totes system locks the customer in with the distributor or supplier it is dealing with," notes Charles R. Schaller, a consultant with the Southport Group, Fairfield, Conn. He adds that companies selling "specialties will try anything to get a marketing edge and one of those edges is service. So the totes service makes a lot of sense." Collins concedes that the mercaptans program has "been instrumental in penetrating certain markets." "Still, totes are not going to be the answer for every customer; drums are still going to have a place in the industry," says Owen. Recognizing this, Ashland is currently weighing the drawbacks of these containers as it carves out its strategy for their use. For one, drums have been a very convenient way to use product if that product is needed at multiple locations in a single facility. In addition, handling the totes can be a problem without the right capital-intensive equipment, such as tote scales, special forklifts to move the totes, and the proper storage area to support that weight. To be sure, totes make a lot of sense for some operations. "I certainly believe the trend [toward using totes] has accelerated over the past couple of years, heavily influenced by environmental and regulatory issues," says Owen. And many are betting that it is a trend that will continue to expand. Cates claims Univar is "leading the movement to IBCs" and has invested "quite a bit of capital" in the thousands of units it has in service. Moreover, it has employed an internal task force to look "at some innovative ways to use these containers in the future." Phillips 66 workers prepare new 250-gal Susan Ainsworth reusable cylinder for transporting mercaptans 10
September 23, 1991 C&EN
Industry testimony backs free trade pact "A NAFTA [North American Free Trade Agreement] should help ensure that the considerable benefits of free trade—notably improved market access and investment opportunities—are available to the chemical industry throughout the region." That's the bottom line of the testimony that W. H. Clark Jr. gave at recent hearings on the proposed free trade agreement between the U.S., Mexico, and Canada. The hearings were held by the interagency Trade Policy Staff Committee, which is chaired by the Office of the U.S. Trade Representative (USTR). Clark, Nalco Chemical's chief executive officer, testified as head of the Office of the Chemical Industry Trade Adviser (OCITA). The office is a coalition of chemical industry trade associations—the Chemical Manufacturers Association (CMA), the. Synthetic Organic Chemical Manufacturers Association (SOCMA), the National Agricultural Chemicals Association (NACA), and the Society of the Plastics Industry (SPI). Clark notes the U.S. chemical industry was an early and strong supporter of the U.S.-Canada Free Trade Agreement. But the NAFTA negotiations differ markedly from the U.S.-Canada precedent because the economic levels of the negotiating countries are so different. Nevertheless, Clark believes a comprehensive trilateral trade agreement will yield substantial benefits for all three countries. Together, they have 360 million consumers and an annual output of $6 trillion. "For an industry such as ours," says Clark, "creating an enhanced market of that size is a special opportunity that should not be lost." Clark's testimony pretty well echoes the policy statements that CMA issued in June (C&EN, June 24, page 9). Basically, he told USTR that the chemical industry's NAFTA objectives complement those for the U.S.-Canada free trade pact and the ongoing Uruguay round of multilateral trade negotiations now being held by the General Agreement on Tariffs & Trade. The industry, he says, wants
Clark: opportunity shouldn't be lost NAFTA to ensure access to the Mexican market for U.S. chemical producers. And NAFTA should secure the right to open investment there as well. The agreement also should serve as a vehicle to address trade remedy laws and intellectual property provisions that may distort trade. Market access and investment have been high-priority issues for the U.S. chemical industry in several recent trade negotiations. NAFTA is no exception. As far as market access is concerned, the industry wants NAFTA to "progressively" eliminate both tariffs and nontariff barriers. For instance, says Clark, tariffs should be reduced and eliminated in stages over five to 10 years. Some tariffs could be eliminated immediately, because some U.S. tariffs are relatively low. Mutually eliminating these, he points out, should not have any adverse trade consequences. But the U.S. chemical industry wants NAFTA to spell out the procedures for accelerating tariff cuts. In the U.S.-Canada free trade agreement, the acceleration process isn't detailed adequately enough, notes Clark. As a result, any producer, no matter how small an interest it may have in a product, may block a proposal to speed up tariff cuts. OCITA believes that those who object to a proposal to accelerate cuts in tariffs
should "at least be significant producers" before they can block the proposal. On the other hand, the chemical industry considers some products to be "import sensitive." These, says Clark, should be protected from "precipitous" tariff cuts. OCITA now is compiling a list of such products. But the U.S. chemical industry believes that tariffs and nontariff barriers go hand in hand. And, says OCITA, NAFTA should tackle several nontariff barrier items before the U.S. makes a tariff offer. Transportation is one example. Current Mexican law prevents U.S. trucks from t r a v e l i n g Mexican roads. As a result, U.S. products bound for Mexico are dropped in trailers at the border, where Mexican trucks pick them up and complete the trip. On the return trip to the border, U.S.-origin trailers are not allowed to back-haul. Clark concedes that the trade impact of this regulation is difficult to measure. But, given the number of companies in the U.S.-Mexican border region, granting U.S. truckers free and open access to Mexico is bound to be a significant benefit, he says. A n o t h e r OCITA p r i o r i t y for NAFTA negotiations is investment. Specifically, it wants U.S. chemical companies to be able to invest freely and openly in Mexico. U.S. companies should receive "national treatment"; that is, they should be treated the same as Mexican companies. Clark acknowledges that Mexico already has come a long way toward liberalizing its laws governing foreign direct investment. Nevertheless, production of 86 petrochemicals still is limited to majority Mexican ownership and requires government approval. Another 19 petrochemicals are completely reserved for Petroleos Mexicanos (Pemex), the governmentowned oil company. These investment restrictions, says Clark, detract from the progress that Mexico has made in freeing up its foreign investment rules. OCITA wants NAFTA negotiators to focus on the trade-distorting impact of policies that reserve production rights to the government and limit foreign equity ownership. Earl Anderson
European engineering thermoplastics outlook Sluggish car sales and the aftermath of the Persian Gulf War will restrict growth in the European market for engineering thermoplastics. Last year, European output of these materials was nearly 1.3 million metric tons, with a value of $5 billion. That volume likely will rise to just over 1.58 million metric tons by 1995, according to a new report, "The European Market for Engineering Thermoplastics/' prepared by Frost & Sullivan International (London). But that amounts to only a 4% average annual growth rate. According to Frost & Sullivan, European revenues from engineering thermoplastics will increase overall between 1990 and 1995, but growth last year was p a r t i c u l a r l y low. Growth will be low again this year, the firm says. The reason: Sales of motor vehicles have been particularly depressed this year. On a more encouraging note, the company's report says that European aircraft companies sell their planes t h r o u g h o u t the world. And, although most of the world's airlines are experiencing a d o w n t u r n in business, they nevertheless are ordering new planes. Order books for new aircraft, says Frost & Sullivan, look healthy for the next five years. Since the end of the Cold War, countries have been reappraising their defense procurement requirements. But both European fighter aircraft and missile production "appear to be going ahead," according to the Frost & Sullivan report. What's not clear, it adds, is how much will be required to replace equipment that was lost in the Persian Gulf War. In the near future, it's likely that Belgium and the Netherlands will continue to produce a disproportionately large percentage of Europe's engineering thermoplastics. However, by 1995, Germany will be the largest consumer in Europe by far. It will consume about 660,000 metric tons of the material, almost 42% of the total. In second place will be France, but it will account for only 17% or so. Earl Anderson September 23, 1991 C&EN
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