MARKETING
Polypropylene Marketing Tie-ups Changing Some agreements set up a few years ago have been dropped, others are being reviewed; the market outlook remains bright Polypropylene marketing agreements are changing. Some of the joint selling contracts that were set up by companies a few years ago have been dropped. Joint marketing agreements still in effect are being reviewed. Other polypropylene marketing efforts are being strengthened. The latest example is Alamo Polymer Corp.'s purchase of a minority interest in Gerfil Corp. (C&EN, May 11, page 31 ). The move should help provide a steady market for Alamo's polypropylene. Alamo, jointly owned by National Distillers and Phillips Petroleum, makes and sells polypropylene. Gerfil Corp. was formerly G. F. Chemicals Corp., an affiliate of Gerli, a silk company. Gerfil produces about 6 million pounds a year of fine-denier polypropylene multifilament for lingerie and hosiery at its Port Jervis, N.Y., plant. Tie-Ups. During 1960 and 1961, a
number of joint agreements were set up for selling polypropylene. Spencer Chemical and Humble Oil & Refining made an agreement under which half of Rumble's polypropylene output would be available to Spencer. Union Carbide Plastics and Shell Chemical teamed up to sell polyolefins. Shell agreed to supply Union Carbide with polypropylene; Union Carbide agreed to supply Shell with low-density polyethylene. W. R. Grace made an agreement with Italy's Montecatini to market polypropylene in the U.S. made by the Italian company's U.S. subsidiary, Novamont, at its Neal, W.Va., plant. Du Pont joined with Hercules to sell Hercules-made polypropylene. Rexall Drug agreed to market polypropylene purchased from an unnamed polypropylene producer. The polypropylene agreement between Humble and Spencer Chemical (now part of Gulf Oil) no longer ex-
FIBERS. Fibers should be one of the fastest growing outlets for polypropylene. This year, about 45 million pounds of polypropylene will be used to make fibers 34
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ists (C&EN, April 20, page 19). W. R. Grace will not comment on the status of its agreement with Montecatini. Rexall's polypropylene plant is now in operation and the company is selling its own material. All joint polypropylene marketing agreements are not dead by any means. Besides the National Distillers-Phillips tie, the Shell-Carbide and Hercules-Du Pont agreements are still in force. There are also a number of complex and confidential agreements involving swaps of various grades of polypropylene, sometimes among several companies rather than between two. Even though some marketing agreements have been discarded, the agreements did serve several useful functions. For example, they helped discourage some companies from building polypropylene plants. (On an industry basis, U.S. polypropylene plants are currently operating at less than 50% of capacity.) The agreements also allowed sellers of pslypropylene to evaluate polypropylene markets and carry out commercial development without investing heavily in a new plant. Joint marketing agreements have also made it possible for producers of polyethylene to offer customers a full line of polyolefins without going into polypropylene manufacture. There may also be an advantage in not forcing a customer who wants to buy polypropylene to go to another supplier— who might then also sell the customer polyethylene. Direct profits from reselling another company's product are usually not high. Some sales managers believe it is more profitable to concentrate on pushing sales of products from their company's own plants rather than spread the selling, and thus the profits, too thinly. Profit Problems. Overcapacity in polypropylene has led to low prices. Overcapacity and low prices, combined with high development costs,
have generally made it difficult for producers to make substantial profits on polypropylene so far. U.S. polypropylene capacity is now about 500 million pounds a year. Sales of polypropylene this year should total about 225 million pounds compared to 163 million pounds sold in 1963. Avisun, Humble, Hercules, and Shell are the largest U.S. produc ers of polypropylene. Other produc ers are Tennessee Eastman, Rexall, Dow, Alamo Polymer, and Novamont. Other companies, Monsanto and Du Pont for example, can make polypro pylene, but they are not making it on a large commercial scale. Bright Future. Despite the present difficulties in overcapacity and prices, the future looks promising for polypro pylene. Sales should continue to grow rapidly. New producers are not likely to add to polypropylene capac ity for a few years. Film and fibers probably offer the best growth possibilities for polypro pylene, although molding and extru sion material now accounts for a little more than 50% of polypropylene sales—probably 125 million pounds in 1964. The market for polypropylene film will probably total 30 million pounds this year. Fiber (including monofilament) will account for 45 million pounds. Sheet will account for 5 million pounds and exports will be about 20 million pounds. Of the 30 million pounds of poly propylene to be used for film this year, more than 20 million will go into cast film, which has found a big market in bread wrappers. In the long run, biaxially oriented film will probably of fer a bigger market for polypropylene than cast film. Biaxially oriented film is stretched in two directions; it can be heat-shrunk to make a neat package for many products such as phonograph record covers. About 20 million pounds of polypro pylene was used to make monofila ment last year. Growth in this area has now leveled off. This year, mono filament sales should account for about 23 million pounds of polypropylene. Multifilament polypropylene is now going into carpet, lingerie, and a num ber of other textile products. Integration. Many polypropylene producers also make polypropylene film or fibers. Cast polypropylene film, however, is made chiefly by pa per companies and others who are not basic producers of polypropylene. Biaxially oriented film will probably re
main a product of basic polypropylene producers or other companies that are able to carry out the more complex technology involved in making this type of film. The technology needed to make monofilament is less complex than that required to make fine-denier multifila ment. In addition to W. R. Grace's Dawbarn division, there are a host of small producers of monofilaments for automobile upholstery, rope, and other products. Hercules makes multifilament. So does Enjay, in a joint venture with a textile company, J. P. Stevens. Alamo Polymer now holds an interest in Gerfil, a producer of fine-denier, polypropylene multifilament. The other major multifilament producers, Beaunit and Reeves Brothers, are tex tile companies. A big potential market for polypro pylene fiber is carpet backing. Sev eral companies have made woven or nonwoven material for this applica tion. If polypropylene replaced all the jute for the carpet market—which is highly unlikely—it could become a 50 million pound-per-year market for polypropylene fiber. Even a moder ate penetration of polypropylene into carpet backing will offer polypropyl ene producers a market that is well worth developing.
Auerbach Reorganizes to Form Three Divisions Auerbach Corp. has reorganized its op eration into three separate divisions: • An information sciences division which will design information systems and provide related consulting serv ices. • An information products division which will translate the firm's capabil ities in information handling tech niques (mechanized search, abstract ing, indexing, and composition) into products such as technical publica tions. • An international division, Auer bach, A.G., a wholly owned subsidiary with headquarters in Zurich, Switzer land. It will provide Auerbach's serv ices to European firms and U.S. com panies interested in foreign markets. Auerbach, primarily an information systems design and consulting organi zation in Philadelphia, Pa., has also set up a new program-development de partment, on the staff level. The de-
Auerbach Corp.'s John S. Sayer " . . . information is a basic resource, like raw material, people, or capital."
partment's responsibility is to adapt the company's techniques of handling and using information (mechanized search, abstracting, indexing, and composition) to specific industries. The products will range from elec tronic data processing reports to spe cialized information-search and dataprocessing services. The presently published Ε DP reports are encyclope dic reference sources on computer equipment and system performance. In describing the reorganization, John S. Sayer, a vice president and head of the program-development de partment, says he is particularly con cerned with applying Auerbach's know-how to the chemical industry: "We might do a lot to improve the use of information technology in the chem ical industry," he says. (Mr. Sayer was with Du Pont for 20 years. ) According to Mr. Sayer, from 1 to 2 million articles are published in techni cal journals each year. The largest segment of these relates to chemistry or chemical engineering. This calls for large-scale literature searches to obtain the information management and technical people need. Mr. Sayer asserts that a single company's facilities for information storage and retrieval won't be able to cope with the problem in the future. Com panies will require outside services to define information needs and design effective information systems. JUNE
8, 1964
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