Rohm and Haas starts up small plant to enter nylon 6 fiber market The nylon 6 plant that Rohm and Haas is putting into production near Fayetteville, N.C., will increase total domestic capacity only slightly. Its 10 million pounds per year will expand total U.S. capacity by a little more than 3 % , to 305 million pounds this year. The Rohm and Haas plant (C&EN, June 26, page 17), however, is capable of a fourfold expansion, although the company has not yet given enthusiastic indication that any expansion is contemplated in the near future. A much bigger addition to the U.S.
nylon 6 picture will come next year when Dow Badische completes its 30 million pound-per-year plant at Anderson, S.C. But even that plant won't do much to challenge the place of the leaders in the nylon 6 industry. Allied Chemical, with a combined capacity of about 140 million pounds a year at two locations—Hopewell, Va., and Columbia, S.C—is the undisputed leading producer. American Enka (the U.S. arm of the giant Dutch fiber producer, Algemene Kunstzijde Unie) is second with a total of 90 million pounds.
PREPARED. New Rohm and Haas plant at Fayetteville, N.C., has these two reservoirs (500,000 gallons total) and diesel-powered pumps standing by for emergency use. Water is from Cape Fear River
Firestone's 30 million pound-a-year plant at Hopewell, Va., puts it in third place. There are a few medium-volume producers, such as Beaunit, Courtaulds of North America, and now Rohm and Haas, with a number of quite small producers. One of these, Sauquoit Fibers, Scranton, Pa., makes about 1 million pounds a year. As a Rohm and Haas subsidiary, it has provided a good deal of experience and market exposure for Rohm and Haas from an "essentially pilot-plant operation." Sauquoit is not basically a producer of fiber but primarily processes yarn. Output of all nylon fibers (the 6 and 66 forms ) has been growing at a fairly steady rate of 1 1 % a year. Output of all nylons (yarn and monofilament and staple and tow) in 1963 was 692 million pounds. Last year it climbed above the billion mark to 1.07 billion pounds. No breakdown of these figures into nylon 6 and nylon 66 is available. The only indication of relative size is that current U.S. capacity for nylon 66 is about double that of nylon 6. But without knowing at what capacity level these plants are running, it's impossible even to guess what relative shares each has of the total nylon market. Shipments of the nylons has followed a growth pattern similar to output at about 11.5% a year. Five years ago, shipments of nylon 6 and 66 yarn and monofilaments and staple and tow totaled 550.6 million pounds. Last year, they climbed to 978 million pounds. This year, shipments should certainly top 1 billion pounds. The tradename that Rohm and Haas has chosen for its nylon 6 is Ayrlyn, and it's currently promoting it as "Ayrlyn covers the girl." This initial
Allied undisputed leader in nylon 6 fibers Capacity Company
Location
Allied Chemical
Hopewell, Va. Columbia, S.C. Enka, N.C. Lowland, Tenn. Elizabethton, Tenn. Le Moyne, Ala. Hopewell, Va. Yancyville, N.C. Fuquay-Varina, N.C. Scranton, Pa. Fayetteville, N.C.
American Enka Beaunit Courtaulds Firestone Hanover Mills Liberty Fabrics Sauquoit Fibers* Rohm and Haas TOTAL * Subsidiary of Rohm and Haas.
20 C&EN JULY 3, 1967
millions of pounds per year
J140 70 20 10 20 30 2 2 1 10 305 YARN. This yarn is ready for drawtwisting in Rohm and Haas plant, which can make yarns for several uses
promotion does not preclude other markets. In fact, Rohm and Haas intends to penetrate a variety of markets. The Fayetteville plant is equipped to make nylon 6 in deniers suitable for hosiery, apparel, upholstery, and carpet manufacture. During a press conference following the official opening, Frederick W. Tetzlaff, vice president of Rohm and Haas' fibers division, predicted that demand for nylon will continue to increase as the economy expands. He bemoaned the current depressed state of the fibers industry in the U.S. and blamed it on the increased imports of fibers from Europe. He said that efforts were being made to persuade the Government to "do something" about these imports and their damage to the U.S. fiber industry. But Rohm and Haas itself reached overseas to buy engineering and knowhow for the Fayetteville plant from West Germany's Lurgi Gesellschaft fur Mineraloltechnic, mbH, and to import the "most modern, performancetested process equipment" from another West German company, Banner Maschinenfabrik, A.G.
Dow Badische adding cyclohexanone capacity Dow Badische will have expanded capacity for producing cyclohexanone early next year to meet the demand for smog-reducing solvents by the coatings industry. Dow Badische's capacity will be added at its Freeport, Tex., caprolactam plant. Cyclohexanone is an intermediate in the production of caprolactam, which, in turn, is an intermediate for nylon 6. The company, owned by Dow Chemical and West Germany's Badische Anilin-& Soda-Fabrik, says the 18 cent-per-pound price for cyclohexanone and the new interest of the coatings industry in smog-reducing solvents have spurred demand for the chemical. Cyclohexanone's price dropped from 31 cents per pound to 18 cents in May (C&EN, May 29, page 14) under pressure from foreign competition. Cyclohexanone is exempt under Los Angeles Rule 66 and Regulation 3, which seem to be the style-setters in pollution control restrictions on industrial solvents. Thus, coatings manufacturers are using it in place of isophorone and other solvents. Dow Badische refuses to reveal its cyclohexanone capacity but claims to be one of the world's largest producers. Other U.S. producers are Du Pont, Celanese, Columbia Nitrogen, and Allied Chemical. Union Carbide will also make it when the Taft, La., caprolactam unit starts up soon.
THE CHEMICAL ECONOMY
By WALTER FEDOR, Senior Editor
Financial change: accept it as a fact of corporate life Change is inevitable. We know that tomorrow will not be the same as today, yet we often are not willing to accept a change. We become used to the regimen of yesterday and feel that the future should always mirror the past, that a pattern, once established, should not be disturbed. However, such a philosophy is not too sound for the chemical industry. The industry was bred on technological innovation. Without question, it will always remain highly innovative. But innovation has penalties. Pioneering a new idea is expensive, and if the concept has widespread application, it will surely mean intensive competition. This is particularly true today, with the industry twice the size it was a decade ago. Also, there is much more competition from companies outside the chemical and allied products industry. This competition has led to a change in return on investment concepts. No longer can the industry look forward to handsome profits on various ventures. Return on investment (gross tangible assets basis before taxes) was 16.6% in 1956; it was 13.5% last year. Surely, the returns will be lower in the years ahead. However, this should not be greeted sadly. Financial parameters used to judge the industry's performance don't apply now. Standards have changed, and for the better. Take working capital as an example. It is simply the difference between current assets and current liabilities. To many, it is a measure of solvency. Working capital grows chiefly from profits after taxes and depreciation. It declines mainly from spending for new plant and equipment and dividend payments. Working capital can be analyzed in many ways, but one significant method is a ratio of working capital to net sales. In 1956, for example, working capital averaged 27.3% of sales. In 1966, it averaged 24.5% of sales. As a rule of thumb, a company's or an industry's working capital should not exceed 20% of sales. If it does, it means that money is not being put to proper use. A downward trend in the ratio of working capital to sales is a sign that the industry is employing cash and marketable securities to better advantage. Another change affecting working capital is the extension of credit days by the industry. Ten years ago, 30 days of credit was the standard; today 40 days is more acceptable, and in some cases, particularly in international dealings, 180 days is not unusual. Most of the longer credit terms affect smaller companies and lead to the question of whether the larger or smaller companies should carry the terms. Obviously, the larger companies are much more solvent and in better shape to extend credit. This is a good sign also, for the receivables will ultimately be turned into cash. The same can be said for inventories. The industry is averaging a sales-to-inventory ratio of nearly 1.8 now. Ten years ago it was about 1.7, not much different. However, the dollar volume is much higher and will likely total $8.7 billion this year, give or take $300 million. The alarming point is that it is growing at 14% a year now, compared with 9.4% a few years ago. Some curtailment is in order, but inventories will continue to grow around 1 1 % a year in the future. This, too, is another change, but it is at a rate needed for future business. In the future, the industry must accept a different view of working capital and its makeup. Receivables and inventories will contribute more to working capital and less to cash. This means a more effective use of existing cash to operate and run the industry. It is somewhat surprising that the chemical industry, which proudly boasts of technological change, finds it difficult to understand and accept financial change. All things considered, the chemical industry will still outperform most other manufacturing industries.
JULY 3, 1967 C&EN
21
