THE CHEMICAL WORLD THIS WEEK
war incentives, that is, military requirements and the space race . . . . This pattern of support has resulted in a seriously lopsided research program. For example, the fields of chemistry and the social sciences have been regularly underfunded in comparison with other fields. The National Science Foundation, the agency that should have corrected these imbalances, has never been supported adequately so it could do so," he says. Of other federal science agencies, Dr. Wiesner states that the Office of Science and Technology is only partially successful because it is not an operating agency, and he calls longrange planning from the National Academy of Sciences and the National Academy of Engineering "very good but neither continuous enough nor broad enough in scope." The solution is a higher agency, Dr. Wiesner concludes. "Only by an arrangement of this nature which constantly reminds us of the tasks ahead will we, in my opinion, succeed in re-establishing a proper national priority for science and thus ensure that the scientific and technical capabilities of the nation are adequately and properly focused."
THE ECONOMY:
Not Good in 1969 Economic prospects for 1969 are that the hectic, unsustainable rate of growth that developed late last year will slacken. The general consensus is that the gross national product will run between $905 and $910 billion next year compared with about $855 billion this year. This represents about a 6% growth, but a sizable portion will be due to inflation. The wage-price-profit complex has left a troublesome heritage, Arthur Brickner, vice president and economist, Bankers Trust Co., lamented before the 10th Annual Meeting of the National Association of Business economists. He added that next year the consumer must brace himself for further sizable increases in living costs, what with wage inflation unlikely to abate significantly, and costs likely to continue upward. The upshot is that industry, particularly manufacturing, is in for further squeezes on profits. At the same time, wage rates in manufacturing industries this year are rising at an annual rate of about 6% based on hourly earnings, and by more than 7.5% in terms of first-year increases provided under major labor contracts. And it's hard to see anything but further hefty wage hikes 12 C&EN OCT. 7, 1968
ahead, Mr. Brickner emphasized. Even if economic growth should slow to a crawl, the predictable rise in unemployment would at first affect mainly marginal workers rather than trained workers, which is where shortages are greatest. Labor compensation is affected not only by market forces but by the behavior of living costs, business profits, and by competition by labor unions for the biggest increase. The pressure for still higher wages is not likely to abate soon, Mr. Brickner said. Productivity growth in manufacturing industries has slackened noticeably in recent years—from a 5%-a-year rate in 1964 to about 1% in 1967. There has been some pickup due to a resurgence in output, but another factor has been lower operating rates which have meant less reliance on inefficient facilities. However, with little gain expected in industrial production for the balance of this year and much of next, and continued shortage of experienced manpower, little gain in productivity can be expected. Turning to price outlook, Mr. Brickner explains that the cost push will have less influence on prices. Prices are much more sensitive to changes in market conditions than are wage rates. But, the prospect of near-term stability in wholesale prices does not mean an end to cost and price inflation in general. Rising costs of construction, housing, and most services will keep the labor supply tight. Business earnings will have problems in the months ahead. Corporate profits are unlikely to share in the growth of the economy in 1969.
PVC:
Small Firms Troubled Dow Chemical's decision to leave the polyvinyl chloride business underscores a long-held diagnosis by many in the industry that PVC business is ailing and has a gloomy prognosis (C&EN, Sept. 30, page 17). As a producer of less than 2% of total PVC sold, Dow points out that small producers are in trouble with costs and might well be better off putting their capital and operating money elsewhere. Overcapacity and low prices are the problems faced by PVC producers. In 1968, less than 7 5 % of rated capacity will be used to make about 2.25 billion pounds of PVC. Under these circumstances, prices aren't likely to rise, even under the substantial pressure of increasing costs like the recent $4.00-per-ton increase (more than 5%) in the price of chlorine. Assuming some loss of chlorine during manufacture, about 60% of the
weight of vinyl chloride is tied up in chlorine. Probably half of 1968 sales of P V C sold as general-purpose material—will go for a price of about 10 cents per pound. Some may sell for less. Further clues to some of the price problems PVC marketers face are found in the Federal Trade Commission's consent order of a year ago that ended a joint venture formed by Continental Oil and Stauffer Chemical to make vinyl chloride. A major provision of the consent order requires Continental Oil to make available for five years a third of its vinyl chloride production (capacity initially was 600 million pounds per year) to nonintegrated PVC producers and to supply it at the lowest price offered to any other customer. Ways for PVC producers to combat the price problem are limited. Some, such as Dow, could pull out entirely and convert plants to other more profitable products that use PVC as a raw material. [Although Dow declines to comment, a possibility for its Midland PVC plant would be to use it to make poly (vinylidene chloride) —saran—a product in which Dow dominates throughout the world.] Others might well let equipment sit idle, especially if the plants are paid out or nearly so. Another approach gaining favor is to develop special PVC resins designed for a single use or for a single customer. About half of the PVC now produced is specialty material or is compounded by the producer to make a specialty. But the possibility of a diminishing return on investment quickly sets in in the form of developmental costs for the specialties. And the possibility also exists that customers may balk at paying compounding costs. Even so, this technique may be a major help for a product where a variation of 0.1 cent per pound can make a sale or a small profit.
POLLUTION:
Uniformity Urged Attention government pollution fighters: At least one industry president has publicly accused the Government of not taking care of its own pollution problems, of being disorganized, of setting conflicting codes, and of using industry as a scapegoat. At the Water Pollution Control Federation meeting in Chicago, Interlake Steel Corp. president Reynold C. MacDonald talked about what industry has a right to expect from others who share responsibility for preserving the nation's water resources. In his words, "We expect government agencies to get busy on their
