WALTER J. MURPHY, EDITOR
The Third “Facts and Figures”
THE third
biennial “Facts and Figures for the Chemical Pmoem Industrim” makee its appearance at a time when stmng contradictory influences are a t work. Leading economiste and business analysts are voicing divergent opinions on what lies ahead for industry and commerce, for both the immediate future and the long-range pull. The second and third quartera of 1952 were supposed to be Me8 with plenty of “puns” but very little “butter.” Whether we have the “gnns” in anticipated quantities, only the authorities in the Pentagon can anmer. The man on the street knows that we %id have plenty of “butter“ in the form of coummer more directly-currently we are producing more of nearly everyW i than in being sold, not a t an alarming rate to be sure,but atill at a pace that favom the buyer rather than the d e r . The productive capacity of this country is at an all-time high and is beinn added to a t a rate unDrecedented in the historv of this count+. Th0 queetion naturaily ariss: Are we adding production capacity far in excem of our expected requirements for the next decade? Some of our aonndest forecasters insist that the rate of production of war materiel bas not as yet reached the mnximnm envisioned by the military. When it does, there will be no excess capacity. As to the long-range aspects, they insist that the gmwtb will be of such a magnitude in the next 10 years that all present capacity, plus that whicb will be added this year and next. will be needed. In nhort..~ thev see onlv -~the oosaibilitv of a 8ho+tenn mild recdon, not a long-term s e v e t e d e p r d o ~ . The increase in production capacity in the p t two years in the chemical promse industries has been on a grandiose scale. While there are indications that some contemplated exmsion has been shelved temporarily, it ia certein that i952 wilfwitnaas perhsp the greatest growth in plant capacity in the history of the chemical industry. Some pmfess to be frightened by this growth. In our opinion such fears are gruundleas. The history of the industry is one of exoeptional gmwth, and any excem capacity ban turned out to be tempwary in nature. Just prior to World War I, fear waa e x p d tbat we had a dangerous excem of alkali production capacity. At the close of World War I phenol wan in such plentiful supply that not a plsnt wan expected to operate for yeara. It is now one of the classical stories of the induatry how m n g the pegsimists were on the future for alkalies and phenol. During World War 11,the industry again expanded at a pbenomeual rate, and again the pessimists predicted disaster. Inatead, the industry continued to expand ita manufacturing facilitim a t an accelerated w e . Even this growth was deemed to be inmEicient, once KO& demonstrated in an emphatic manner the possibility of a third world war. We b o b executives of the chemical industry are wiae to undertake at this time a calculated ri& in oxtendiog plant pmduction capacity. II p s t history ia any guide to whaf will happen in the futura, thinadditional capacity will be ntilied in the not too diatant future. The chemical industry needs to be io the fore-
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front of industrial preparedness. If some of thin excem is never needed, it still constitutes good innuance for the safety of this country. If the present crisis ends and consumption does decline, the older ahd less efficientplanta can be closed down, leaving ua with more modem plants and equipment. The calculated risk really is not much of a gamble. The dollam and centa value of m h has been convincingly demonatrated over the past two decades. The companies moving ahead most rapidly in the industry are thoae whicb retained a s h n g faith in the value of reseamh when buninem conditions were unsatisfactory. No longer are we likely to aee many compnnim curtailing research, simply because the New England textile industry momentarily is in the doldrums, the Providence manufactmem of costume jewelry are not a e U i an much as they can produce, or the stock market average bas declined a point or two. We atill have many untouched new k b i l i t i e s for lweacale consumption of chemicals. Lack of apace prevent? mention of more than three or four, hut we vimwlize huge markets for the newer synthetic fibrs, for earth stsbilisers, plaatic automobile bodim, and synthetic detergents. If just these mentioned fulfill their p m n t promiss, market? for millions of pounds of chemical raw 1~8terisl~ will be created. The big problem of the future, as we aee it, ia not one of creating marke+reaearch and market development will mte oew u ~ a sfor cbemids tbat will the imSnination. The bin problem is to 6nd large amouncof risk ca&d and what ha;l been called “patient money.” The expansiou necesssry in the chemical industryrequires huge amounts of new capital and. in recent years. it bas come larmly _ . from retained eaniigs and from loans &om banks snd innuance companies. These sources, prticularly the &at, may not be depended upon to supply indeljnitely the new capital needed. The tax structure needs to be revised-yet we can aee little likelihood of any major relief to corporationsan long as the international situstion remains unchsnged. If we must, for some years, continue to maintain a large military establiahment, we must increase unit productivity, and this requires inorrased attention to reamrch and development. It means executives will find it difficult, at times,to get the necek aary financial support. Obviously, what is available will go to t h w companies whose research records rate high with investors. The &e and diversification of the chemical industry are such that adequate and reliable “Facts and Figures” are a must, if the industrv ia to be administered succesS~~Ilv.The need for such i n f o k t i o n ia indicated by the fact that-the biggpt volume of enla of reprints on our books is for the two previous “Facts and Figured’ imes. We are proud to present number three in this impornot aeriq hopeful that like ita predee-m, it will be enthnektically received and recognized an a solid contribution to the oteady udvaneement of the chemical industry.
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