MANAGEMENT
Sohio Gets Back on Road to Growth Ten-year plan aimed at remaking Sohio into a diversified growth company begins to show results Standard Oil of Ohio gave its stockholders some good news this month. The company announced that earnings in the first half of the year were nearly $21 million (81.90 a share), 40% ahead of those for the first half of 1963. The 40% gain in the first half was on top of an equal gain registered for the whole of 1963 over 1962. Thus, Sohio has now broken free of the shackles which held its earnings at about $24 to $25 million a year between 1957 and 1962. Sohio president Charles E. Spahr calls 1963 the "breakthrough year" in his campaign to remake Sohio into a diversified growth company. (In 1963, earnings totaled $33.9 million, compared to 1962's S24.2 million. Rate of return on investment jumped to 9.6% in 1963 from 7.3% in 1962.) Chemicals and plastics will play a big role in the 10-year plan Sohio has mapped out to achieve Mr. Spahr's goal. "While fuels and lubricants will continue to be Sohio's chief products,"
Mr. Spahr says, "chemicals and plastics will become increasingly important contributors to our income in future years." This year, the plan calls for Sohio to spend $5 million for capital improvements in its chemical and plastics operations. Some sharp corporate realignments are also called for in the 10-year plan. Uneconomic operations will either show improvement or they will be eliminated. Long-range planning is being strengthened. Perhaps the sharpest break with the past at Sohio was the setting up in 1958 of what Mr. Spahr calls "profit centers." A profit center is defined at Sohio as a complete business in which the economic and competitive factors are different from those affecting other parts of the company. It is important that top management be able to measure profit performance of that business. Once profit is measured routinely, and responsibility is assigned to an individual manager, effective action
GOING DOWN. Sohio's historic Cleveland refinery will be dismantled
MANAGEMENT TEAM. Management team, headed by president Spahr, is geared to remaking Sohio into a diversified growth company. Executive v.p. Sauer supervises management of company's various profit centers. Ed Morrill heads newest venture—Colony Development. Bob Haigh, architect of company's long-range plans, will head chemical business
Edward
Charles E. Spahr 40
C&EN
AUG.
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Richard C. Sauer
F.
Morrill
®
on problems comes quickly, Mr. Spahr says. "There is no justification for subsidizing one operation at the expense of another," Mr. Spahr declares. Centralized Planning. Next step was to strengthen planning at the top level. In 1961, Mr. Spahr centralized Sohio's planning. Robert W. Haigh, former vice president of Helmerich & Payne, a Tulsa, Okla., oil company, joined Sohio and was assigned to the job of setting up a long-range corporate plan. By fall of 1963, Sohio had a 10-year corporate plan for growth and this spring Sohio's board of directors approved it. A major feature of the plan is that it calls for coordinating all projects within all profit centers. Funds for expansion are to be allocated to obtain the best return for the company as a whole. The result is that Mr. Spahr's goals of profitability and growth are converted into specific objectives. To help the long-range planning effort maintain momentum, Mr. Spahr in April 1964 set up long-range planning groups in each profit center. Each profit center is now responsible for long-range planning within its area of business. Weeding Out. In the early part of Sohio's reorganization, Mr. Spahr was able to improve efficiency without cutting personnel But in late 1962, Sohio reduced the number of its refinery workers sharply. The move affected 245 employees out of a total of 1840. Last month, Sohio revealed plans to
close its historic Cleveland No. 1 refinery. The refinery is to be dismantled by March 1966 because its 100acre site is too small to accommodate the modern 120,000 barrel-per-day refinery Sohio wants to build. A new hydrocracking unit is being added to the existing Toledo, Ohio, refinery to bring it to that capacity. Referring to the closing of No. 1, Mr. Spahr said, "Our studies gave much attention to the human relations aspects involved . . . ." Previous reductions in employees were cushioned by early retirements, severance pay, and transfers. If all eligible refinery workers take advantage of the early retirement offer, there will be no need to lay off younger employees, Mr. Spahr says. Few technical people will be affected by the closing of the Cleveland refinery. Only two chemists and two chemical engineers work there. The search for efficiency turned up the fact that separate groups in the company had acquired enough professional staff to do not only normal tasks but also to handle peak loads. With centralization, peak loads could be shifted. Thus, in 1963, many professional people left Sohio or were laid off. Some left because they felt that the company's requirement for tight fiscal justification of projects restricted their horizons. In addition, Sohio now finds it can rely on outside firms for specialized engineering. In the past, Sohio had kept its own staff of engineers to assure timely accomplishment of an engineering project. Mr. Spahr states his policy on R&D
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1964
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Now Du Pont offers liquid HCN in tank cars at the most attractive price in years. In 1956 hydrogen cyanide (HCN) was a bargain at 200/lb. Today Du Pont offers this versatile reagent for only 120/lb., in tank car quantities. And today HCN is even more useful to industrial chemists. The most economical member of the cyanide group, HCN also provides cleaner reactions with higher yields. Consider the use of HCN for new processes or products, now that this versatile chemical costs so little. Also, consider lowering the cost of your present processes through the use of HCN in bulk quantities. Bulk storage design and safe handling procedures, based on DuPont's wide experience, are available to you.
NaCN Improved Du Pont has also made sodium cyanide (NaCN), another economical cyanide, more attractive for industrial use. Du Pont NaCN is now 98% (min.) pure. And in addition to standard 200 lb. net drum packaging, it is available in bulk shipments in "Flo-bin" container cars with up to thirty-four 3,000-lb. "Flobins" per car. It may also be shipped in 55,000 lb. net "Wet-flo" tank cars in dry form, unloaded as a 30% solution in water. For full information on the technical and economic advantages of Du Pont HCN or NaCN, call your nearest Du Pont office or write Du Pont, Electrochemicals Dept. H-22, Wilmington, Del. 19898
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Better Things for Better Living...through Chemistry 42
C&EN
AUG. 17, 1964
this way: "Invest in research to develop new products and opportunities for diversification, but force this research to justify itself in its potential for commercialization." Key Men Picked. A key man in the execution of Sohio's long-range plan is Richard C. Sauer, executive vice president. He is responsible for seeing that planning remains dynamic in line operations. His tasks include supervising the management of profit centers. Under Mr. Sauer, Sohio's team of managers is being realigned. A major shift is that of Edward Morrill from vice president in charge of chemicals and plastics to president of Colony Development, a joint venture of Sohio, Oil Shale Corp., and Cleveland-Cliffs Iron (C&EN, April 27, page 2 8 ) . Colony Development is to complete a semicommercial oil shale plant by early 1966. Ed Morrill is Sohio's prototype for the kind of managers needed to handle independent profit centers in new areas of business. Chemicals and Plastics. Replacement of Ed Morrill by Bob Haigh, a Sohio vice president and chief architect of Sohio's long-range plan, signifies the prominence of chemicals and plastics in Sohio's future. Mr. Haigh has a liberal arts degree from Bucknell and holds an M.B.A. and Ph.D. from Harvard business school. He is to become vice president in charge of chemicals and plastics, and this month became president of Solar Nitrogen Chemicals, a joint venture with Atlas Chemical Industries. Mr. Haigh comes into the thriving chemical business that has been Sohio's major diversification to date. Sohio has invested $33 million in chemicals and plastics since 1955, and it's now beginning to pay off. For example, Solar Nitrogen Chemicals, after generating its own capital for several expansions, paid an initial $500,000 dividend in 1963 to each of its owners, Atlas and Sohio. Here is the chemical picture at Sohio today. Sohio Chemical, a wholly owned subsidiary, holds a strong position in acrylonitrile, its principal product. World-wide demand for this chemical is 30% greater than supply. Much of this demand will be satisfied when the 10 licensees of Sohio's patented acrylonitrile process (which uses propylene and ammonia) put plants on stream. Sohio's own plant (Lima, Ohio) has been expanded from a capacity of 47 million
pounds a year in 1960 to more than 75 million pounds now. Sohio Chemical also sells acetonitrile and hydrogen cyanide. Each is a coproduct of the company's acrylonitrile process. Solar Nitrogen Chemicals has ridden the boom in fertilizers. It has grown even faster than Sohio Chemical. Ammonia capacity, for example, grew from an initial capacity in 1955 of 300 tons per day in one plant to a total of 780 tons per day in two plants (Lima, Ohio, and Joplin, Mo.). Solar Nitrogen now has a daily capac ity for 300 tons of urea, 600 tons of nitrogen solutions, 175 tons of nitric acid, 150 tons o£ carbon dioxide, and 350 tons of prilled ammonium nitrate. Champion Molded Plastics, a custom injection molder, gives Sohio a strong position in the growing market for fabricated plastics. Champion makes components for appliances, automobiles, plastic toys, and other products. Sohio acquired Champion from Tappan Co. in 1962 and has expanded Champion's facilities substantially since then. Pro-Phy-Lac-Tic Brush strengthens Sohio's hand in fabricated plastics. It was acquired in 1963 from WarnerLambert Pharmaceutical Corp. Its products include personal brushes, combs, melamine dinnerware, and other custom molded products. Sohio says both of its plastics fabricating subsidiaries operated at a profit in 1963. Bright Future. Sohio says little about future projects in chemicals and plastics. But Mr. Haigh says there are several "contingent" chemicals and plastics projects in the corporate longrange plan and the company is ready to move fast if conditions are right. "Sohio seeks expansion through commercialization of R&D discoveries, joint ventures, or acquisitions," he says. Spending for chemicals and plastics between 1964 and 1973 could easily add up to considerably more than $50 million. Future levels of spending could rise dramatically if Sohio's contingent plans for chemicals and plastics swing into action. Mr. Spahr now feels Sohio qualifies as a growth company. The proof of his confidence in Sohio's future growth: In July stockholders approved a two-for-one split in the stock; earlier this year Sohio increased its quarterly dividend rate from 65 cents a share to 75 cents a share (on the basis of the old shares).
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C(CH3)3
Appearance
White Crystalline Solid
Purity, %
98 minimum
Specific Gravity, 80/4°C
0.899
Freezing Point, °C
68.8 minimum
Flash Point (Cleveland Open Cup),°F
275
Odor
Slight
Ash, %
0.002 maximum
/p?TT-CONSOL cx/wt 191 DOREMUS AVENUE • NEWARK 5, N . J . A SUBSIDIARY OF CONSOLIDATION COAL COMPANY
Export Dept: FALLEK CHEMICAL CORPORATION 4 West 58th St., New York 19, N. Y. • Cable: "FALC0S0L"-AH Codes
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