Southwest Chemical Industry 1950 FRANK W. JESSEN AUSTIN AREA ECONOMIC DEVELOPMENT FOUNDATION, AUSTIN, TEX.
T
HE chemical industry ville; production of synT h e future of the chemical industry in the Southwest of the Southm-est may thetic rubber is beyond appears particularly bright. If past experience is a yardbe characterized primarily quantities originally anticistick for the future, far greater diversification will be atby its amazing growth durpated in the several plants tained. The remarkable developments that have taken ing the past decade. The in the area; the first inplace in the area in new fields will be followed by growth purpose of this paper is to stallation in the country for in the years ahead which should far outstrip anything acreview the growth of the inthe product,ion of cottoncomplished to date. The pioneering spirit so typical of dustry in this region, to seed oil by extraction procthe Southwest is indicative of the true optimism which esses is a major developpoint out the various fields prevails and which is encountered in analyzing the future ment in plant operations in which certain needs are of the chemical industry in this vast and, as yet, hardly utilizing- raw materials from yet to be met, and to predeveloped region. sent data to guide companies agriculture; and, finally the contemplating location of production of steel and atplants in this area. tending by-products has come to the fore in that the plant of Geographically, the Soutlirr est region may be desciibed as the Lone Star Steel Co. a t Daingerfield, Tex., is the first of such plants producing coal tar chemicals in this area. Figure 2 incomprising the four-state area of Arkansas, Louisiana, Oklahoma, dicates the diversification of products. and Texas, though the designation of the U. S. Department of This relatively new chemical industry has taken a commanding Commerce for the same states is ‘West South Central States.” position among other older established industries such as agiiculSubstantial chemical industrial developments also have bren ture, oil, and natural gas, lumbering, cattle, and transportation. made in Kev, Mexico a hich, according to the Eleventh District of the Federal Reserve Board, is included in the Southn-est. Despite the industrialization of the past several years, the SouthHoaever, this reviev will be limited to the region shown in west still is an area in u-hich the extraction of basic minerals and the production of agricultural products is the main source of inFigure 1. come. Petroleum and natural gas, sulfur, potash, salt, and other The chemical industry of the Southwest is founded on a firm mineral products, as well as crops of cotton, wheat, sorghums, basis of abundant raw materials; tremendous reserves of chrap rice, and citrus repreeent the basis of the economy. That the fuel; excellent transpoitation facilities; adequate, high quality chemical industry is rapidly becoming a major factor is recognized labor; and rapidly expanding markets. Felsing ( 5 ) described in that the total sales of products from chemical plants now the chemical resources of the Southbest, and the diversification amount to well over $1 billion annually. This volume ranks third of the industry that has been built in the past 25 years in Texas in value, being exceeded only by petroleum and natural gas and has been reported by Cunningham ( 3 ) . A41thoughthe first plants agriculture. Undoubtedly, in the years ahead, the value of the in the region produced inorganic chemicals, organic chemicals now chemical industry will become even more important, and it may have exceeded the inorganic chemical production in value. This be a strong contender to petroleum and natuial gas was a natural development as petroleum and natural gas constiThe investment in chemical plants during the past decade is tute one of the main sources of supply of aliphatics, and sizable somewhat hard to estimate since the relative monetary value of production of organic chemicals was imminent. The major porinstallations over this period of years is changing so rapidly. The tion of plant investment and processes has also been in this field. Federal Reserve District ( 4 ) reports that during the war yea1s However, there are some striking examples of plants yielding in(1941-1946) approximately $1.5 billion was expended for invest organic chemicals. B few of these are the Longhorn Tin Smelter, ments in the chemical, petroleum, and related fields, and data which is the only tin producing plant in the country; the Texas for the postwar period indicate that an amount a t least equal to Mining and Smelting Company at Laredo, producing antimony; this has been expended since 1945. The impact of such expenclithe sulfur mining and refining operations of the Gulf Coast; the tures, mainly for new plants, has been tremendous. It is recogpotash production of New Mexico; the aluminum ore production, nized by the number of facilities producing chemicals heretofor e refining, and reduction operations carried out in Arkansas, not produced in any part of the area. The report of Federal Louisiana, and Texas; the large scale production of sulfuric acid; Reserve District Eleven ( 4 ) emphasizes an additional pointthe increasing quantities of ammonia; and the recovery of mngnamely, the concentration of facilities in the coastal arra of nesium and bromine from sea water. All are evidence of progress Texas. Here again, the impact of the location of industry in a made in production of heavy chemicals for industry. rather concentrated manner has brought about problems which I n the few years after World War I1 the gulf coapt region, exare a matter of concern to many in the chemical field. tending from Brownsville, Tex., to New Orleans, La., has seen a The growth and expansion of the chemical industry in the greater rate of expansion in the chemical field than any other area Southwest serves as a guide for projecting the future of the industhroughout the nation. Approximately $650,000,000 have been try, and a t the same time, definitely points to undeveloped fields spent in this area on additions to existing plants and,for the inand areas which may well be given careful consideration of installation of new plants. This sum, added to that invested in dustrialists and planners during the coming decade ( 2 , 9-12). plants during the 1939-1949 period, represents a total investment As indicated in Figure 2, there is a diversification a t the present of more than $1 billion dollars. Production of the first synthetic time which perhaps was not anticipated 10 years ago. By the glycerol is credited to the Shell Chemical Co. ; organic chemicals same token, the number of products may grow four- or fivefold from gas, using a modified fieher-Tropsch method, soon u ill be during the next few years and thus broaden the rapidly expanding produced in the plant of the Carthage Hydrocol Co. a t Browns1724
August 1951
INDUSTRIAL A N D ENGINEERING CHEMISTRY
ewnomy of the area. Such broadening will bave a vast stabilizing in9uenes on the gmwtb of related financial and service organirations. Data presented in Figure 3 show the exceedingly rapid development during the past l&year period. Basically, the mea needs a much larger production of steel. The inoreasing induatrialiaation of the area will mean that steel eoneuming and processing industries in the m a will require even larger tonnape% than are now employed. Utiliaation of low gmde o m will mean much during the next few years in filling the dem d for steel in the area. Additional plant facilitien will be required, and the construction of such plants will inevitably occur.
Fi-
1. The Southwest AZWI
The emergency which has been created by the wdict in Korea haa once again directed the attention of the producers of l i i t metals such as aluminum and magnesium to the tremendous
1725
Kesoutgs
wntrol of quality of products there will of necessity sriae a demand for new analytical reagents and fine chem&s. Production of thin type of chemical PUTHWEr is practically nonexistent in this ma,’and great strides should be made by produoera in establishing facilities. With greater industrialization, creation of new markets, increased population, and higher average living conditions, d e w & for all types of pasmuuZuticals and biological chemicals will also be found. To date, the production of biological chemicals and of the newer antibiotien and phannaoeutical chemicals ie extremely limited. The field is wide open and there appeara no -on why facilities for production of tbia type of chemical will not eee a marked increase in the next few yeara. Although them are a few s c a t t e d soap plants, reprewnting only a small portion of the production required to =tidy the demands of thie area, the possibilities for producing p t h e t i c detergents have not led to a c t d installation of plant f d t i e a . The abundant source of basic raw materials found in the petroleum industry and the ready adaptability and ‘bowhow” which may be t r - f e d from the petroleum %Id to the p m d w tion of synthetic detergents, should bave invited large scale production of detergents. Undoubtedly, t h i s activity will develop. and the industry should thrive. Another industry that haa experienced little growth throughout the Southwest is the fermentation iqdustry. It is believed that this held beckons to thwe who would make a careful in.eatiSation of the poaeibilitiea e S i throughout the a m in many localities. Raw material supplies, transportation, and markets are adequate and should w m a n t enlargement of the small exist-
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& x
L r
advantagen accruing to wmpanien operating plants in the Southneet. The availability of natural gas, petroleum, and solid fuels as well ea the eaee of tramportation of raw materials and finished products are advantages which are di5cult to find elsewhere in the nation. The already existing plants for the production of aluminum are being enlarged and substantial increases in production will be forthwming when new facilities, now under wneideration by n u m m companies, are establiabed in the m a . A field which is raDidly b e ~ m i nextremely ~ b d in scope and one in which &ch and development have made important wntributions is thst of synthetic Jibera and textiles. The nearness of the market for such materials in the h t h w e n t and throughout the South has ocUSALES IN MILLIONS easioned the establishment of a number of plants I RbNTS in recent years in the South. Currently wnetmcbion in T e r n of plants to produes intermediates for synthetic fibera is progressing rapidly, and the advent of Orlon, dynel, Acrilan, fiber INDUSTRIAL CIlDlWLS V and Vi-, and other advaness in the field DRGulD AND wuld mean the entablisbment of plants throughRmRWlC o u t thia area which will produce not only intermediatea but fibern to supply manufacturere turning out wneumer goods. Fies one of the basic industries throughout t h e Swthwest is agriculture, the fertilizer chemiFERTILIZER cals induntry, of wurae, is a natural outgmwth. Th0 advances made in insecticides, fungicides, a n d other specific plant chemicals, however, may c u t d i s t ~ ~ ~the e sproduction of the ordinary fertilizer chemicals. New plants for the producFigurn 2 tion of DDT. 2.PD. and many other chemicals of t$ie nature’& kdoubtediy be built in the ing nucleus of this type of enterprim while attracting other near future. This field, long overlooked by many of the major manufacturers to the field. producers of chemicals, is p r o m i d a substsntiil market since h t , but certainly not least, the availability of research and t h e economic status of the farmer is at a much higher level than development facilitiea for industw throughout the area may be ever before. The market for all types of agricultural chemicals wnsidered. Existing wmpmy research facilitiea are extremely will probably inat a rapid pace. important in guiding the developments for the future, and the With the divemihxtim of industry and the introduction of fundamental wearch carried cut in the universities and wlleges aew chemicals, W e r reeenrch and development program8 will is of untold value to the industry. Likewise, there ex&# a nube undertaken. To a a t i i y the requirements of the industry in
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INDUSTRIAL AND ENG INEERING CHEMISTRY
cleus of independent research organizations which are providing well directed and planned programs of research for those industries not employing full-time research personnel: or for those companies having their research facilities located elsen here than in the immediate area. However important may be the work of each of these types of research organizations it cannot be overemphasized that the chemical industry has grown to its present stature by virtue of research. To a large measure the continuation of the grov,-th of the industry will depend primarily on such
1929
Figure 3.
1939
1949
G r o w t h of Chemical I n d u s t r y in t h e S o u t h west- 1929-49 (1,2)
research. Hence, it seems logical to predict that greater expansion of all types of facilities, the introduction of new products, and the creation of new materials will be largely a function of expanded research activity in all three categories-private, industrial, and institutional. GUIDE TO COMPANIES SEEKING OR CONTEMPLATING SOUTHWEST PLANT LOCATIONS Though much has been written and ascribed to the Southwest area (4,6-8) there still remain several salient features that will control the choice of location of plants in this area. Perhaps the most significant feature for further expansion of the industry is the expanding market for all products of a chemical nature. Just as the Chicago and Alidwest area blossomed with the production of iron and steel in that region so the Southwest will undoubtedly grow because of the chemical industry. A distinct advantage is gained from climatic conditions. Plant installations need little or no shelter or enclosures, and, a t the same time, operations may be carried out throughout the year with minimum delays or shutdowns because of weather. This, in many instances, simplifies design and construction and provides greater flexibility and continuity of operation. The tremendous wealth of the area in raw materials has scarcely been scratched and the processing of nonmetallic minerals n ill probably be greatly expanded in the near future. Excellent transportation and communication facilities abound in the region, and it is singularly fortunate in its geographical position between the East and West Coasts and the availability of excellent ports and river facilities for domestic and international trade. The growing importance of exports of chemicals to Central and South America in providing additional markets will mean much in years to come. The importance of natural gas and petroleum are paramount. The actual petroleum resources of the area account for approximately 70% of the nation’s total; some 7973 of the nation’s total production of natural gas is credited to the four states comprising the area. An adequate supply of skilled labor has grown up with the expansion of the industry. No problem should be encountered by companies considering plant locations in finding operating personnel or technical and scientific men.
Vol. 43, No. 8
It is pertinent to consider, also, the disadvantages which appear on the horizon for further expansion of the chemical industry. Foremost in the considerations for plant expansions and establishment of new industries is the availability of water. In some parts of the region, primarily that portion adjacent to or near the Mississippi River, a a t e r resources seem adequate for all types of contemplated industrialization. I n other portions, however, water availability has become a serious problem. Some portions of the Gulf Coast region are blessed with both surface and subsurface supplies of 1%-ater,mhereas in other areas neither source is a t present adequate for any large scale expansion or industrialization. -4counterpart to the availability of adequate supplies of watei is the related problem of pollution of streams by plant wastee. Each state in the region presents somewhat different views and regulations for indwtry, yet the over-all point of view is one of maintaining unpolluted streams, rivers, and harbors. Most state regulatory bodies are extremely cooperative and milling t u nork out reasonable control methods for xaste disposal. Industry should therefore realize its obligation when entering negot iations for contemplated sites. particularly when plant effluents demand treatment before final disposition. Another factor of extreme importance in the consideration of building ne!\- chemical industries is taxation. Here again, B variation is found in the tax programs of the several states in the area ( 1 ) . This is exemplified by the data shown in Table I. In the main, the tax structure is comparable to the national averagu although widely different bases of taxation have been established by the individual states. In some instances tax remission9 01 exemptions may prove initially beneficial in securing industry, but this may boomerang in later years to cauw undue hardships on industry. Certainly such an important factor should he investigated thoroughly by any conipany contemplating a move into this region. Recent rulings by the United States Supreme Court on steel freight charges may considerably increase the cost of construction of chemical plants in the Southwest. Added charges may reduce the rate of growth of the industry temporarily, but it is believed that existing steel facilities in the region may be enlarged to aatisfactorily meet the demands of the industrialization program. Certainly the need for more steel production in the region 18 emphasized herewith; peihaps the necessity will mean earlier fulfillment of many yeare of anticipation for more steel facilitie~. Table I. Taxes Favored by S t a t e s of Southwest Region (1) State Arkansas Louisiana Oklahoma Texas
Stock
Franchise Tax Yes yYes es
Income Tax Yes Yes I’es
Property Tax Yes Yes
Transfer Tax NO No Yes
Sales Tax Yes Yes
Use Tax Yes Yes Yes
Yes
No
Yes
Yes
So
NO
-4further factor met in analyzing the major disadvantages is that of freight rates. The inequity of differential rates, long standing, still imposes a distinct disadvantage to producers of consumer goods. lIeanvhile, the basic point system for various commodities other than steel may prove of little help in overcoming higher freight charges. Production of goods appears to be a t least a partial answer to the problem for securing better freight rates from the area to the present large consumer markets. SUMMARY The future of the chemical industry in the Southwest appears particularly bright. If the experience of the past decade is a yardstick of the advances to be made in the future, far greater diversification n 4 l be attained. The development of synthetic fibers, detergents, fertilizers, insecticides and fungicides, pharma-
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August 1951
INDUSTRIAL AND ENGINEERING CHEMISTRY
ceuticals and biological chemicals, and nonmetallic mineral p m BBsing presage an era of unusual growth and P I O ~ S S . Manufacturing plants, p m s s i n g the materials of the present planta into finished consumer goods, should be introduced in substantial numbers. The remarkable developments which have taken place in the area in such new fields as aircraft Production, primary metal reduction, organic chemicals, metal fabrication, and production of heavy machine goods will be followed by a growth in the years ahead which should far ontatrip a n y t h i g accomplished to date. The pioneering spirit EO typical of the Southwest ia indicative of the true optimism which prevails and which is encountered in analyzing the future of the chemical industry in this vast, and, 88 yet, hardly developed region.
\I
WTHWE!
ACKNOWLEDGMENT The author wishes to acknowledge, with thanks, the assistance of J. 8. Clark, Director of Research, Oklahoma Planning and Resourns Board, Oklahoma City, Okla.; F. J . M a y , Research Dept., Lion Oil Co., El Dorado, Ark.; and Mildred Hogan, Research Librarian, Dept. of Commerce and Industry, Baton Rouge, LE., in furnishing information relative to the growth of the chemical indnstly in the Southwest.
L I T E F l A m CITED (1) Business Week, Staff Report. p . 53 (Aug.27. 1949). (2) Colvin. C. E.,Jr.. "Outlook for Business Conditions in Louisi-
R ~ c m u s oApril 16. 1951.
Raw Material Availability ALBERT L. BURWELL OKLAHOMA GEOLOGICAL SURVEY, NORMAN, OKLA.
R A W
, materials of Availability of raw materials is of primary importance by the strange name "CTOSSchenucal industrymay among the factors affecting the location of chemical intimber" and extends from duotry. A discussion of the raw materials-natural or he divided into two groups: the north line of Oklahoma the first g o u p contains tho primary raw materials and manufactured (processed) or south acroea that state and secondary nsourc~-available for chemical industry in far into Texas. The p ~ e natmlorprimary raw materials, and the second group the Southwest plus numerous illustrations showing the dominant growth is post location of these resouxes a m presented. contains the manufactured oak and blackiack oak. and (processed) or secondary recan be considered as comsources. Natural or primercial in only a few places. mary raw materials may be subdivided as follows: (a) materials These oaks carry fairly high tannin content but its extraction obtained from the soil-Le., products of the forest, farm, and appears feasible only if other pmducts are found able t b absorb a range-and ( b ) materials obtained from the earth's crust-Le., share of the cost of harvesting. However, in this district in minerals and water. Manufactured or secondary re8ou~ces central Texas are dense stands of cedar (Juniperus m i m n a ) comprise products k i n g produced from natural resources of this covering many acres. Diatrict F in southwestern Texas supports area or elsewhere, and which may bo direct pmducts, by-prodgrowth of juniper and pinyon pine, and is of interest only locally. ucts, or possibly waste from existing industry. In the more or less arid regions in the western and aouthwestern Figure 1 shows the four-state area under discussion with the parts of the area the mesquite covers many sections. It is consppmximste loctttion of mveral cities. This figure is shown in sidered m a pest which lowers the value of the land for range order that the reader may be better able to visualize the relpurposes. It has been reported that a large yield of gum can be ative positions of the material occurrences.
RAW MATERIALS OBTAINED FROM SOIL Figure 2 o u t h o s tho districts having commercial forests (8). The total forested acreage amounts to over 83,000,000,but only about 51,000,000 acres can he classed as really commercial under preent conditions. District A supports growth of bottomland hardwoods. I t borders the Mississippi River and tributaries. District B cover8 much of northwestern Arkansas and extends into eastern Oklahoma. The growth is mixed hardwoods and Bhortleaf pine. District C comprises much of southern Arkaneas, the Ouaohita Mountains of southeastern Oklahoma, and a large region in east Texas. The growth is mainly shortleaf and lohlolly pine, District D in east Texas and western Louisiana supports ---iri*h -f Imhl,.lh longleaf, and slash pine. District E is known
Table I.
Agricultural Crop Production (1949)
Cotton lint Wheat Corn Sweet potatoes Pe*n"ta Cotton seed Barley Rice Potatoes Sioyheana Sorghum for grain Sorghum B L ~ U P C*r.BSil"I) , Pulpwood, m e Pulpwood, Eardraood Miso. items: Cowpeas, castor b e a m citrua fruit. Raraeed, anirnsl produots
