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Y2K: PREPARE OR BEWARE With 81 days left until 2000, are U.S. 's small chemical firms ready? Ronald S. Rogers C&EN Northeast News Bureau
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magine you work for, or do business with, a small chemical manufacturer. What would happen if you no longer could get raw materials from your suppliers or deliver your products to customers? What would an accidental chemical release from that firm do to your company's workers, community, or bottom line? If these questions interest you, then so, too, should the socalled year 2000—or more popularly Y2K—problem. The Y2K problem was borne of pragmatism in the infancy of the computer industry, a time when computer memory space was precious. With memory at a premium, programmers conserved memory by writing software that recognized only the last two digits of a year. So 1998 is read as 98,1999 as 99, and so on. Unfortunately, many early programs recognize 00 as 1900 and not 2000. Because of this date error, these programs have the potential to malfunction, which could disrupt business operations dependent on computers or equipment embedded with microchips. Although the Y2K problem may be simple to understand, the solution is complex and much is at stake. Whether it's mainframes or personal computers, clocks or software applications, all may be atriskon Saturday, Jan. 1,2000. Internally, administrative functions—payroll, inventory, and order-control systems— may go haywire. Manufacturing equipment with embedded computer chips— control machinery, process equipment, valves and pumps, and emergency protection equipment—may fail. Externally, Y2K problems may disrupt deliveries from suppliers or services from utilities. Most major chemical companies in-
vested heavily to solve their Y2K problems and say they're ready. But will small firms, with limited financial and human resources, be ready for Y2K? "It's not just the small manufacturers, it's the suppliers and distributors, too," says Jack Gribben, a spokesman for the President's Council on Year 2000 Conversion. "We just don't have enough information as we'd like about smaller companies." Determining whether smallfirmsare ready is a difficult task, and answers vary depending on who is asked. Among the optimists is a consortium of
Martin (left) and Strem
seven chemical trade associations representing small chemical concerns. Early this year, the consortium surveyed its members, and approximately 300 U.S. chemical companies—batch chemical manufacturers, formulators, distributors, and retailers—with less than $75 million in sales responded. Companies were asked eight questions concerning their Y2K preparations. Among respondents' Y2K plans, 93% were prioritized according to critical function, 74% included supporting infrastructure, 82% addressed supply-chain coordination, 66% included safety and environmental systems, 85% involved Y2K testing, 79% included internal communication, 69% included external communication, and 79% included contingency plans. All respon-
dents said they would reach 100% Y2K readiness by the fourth quarter. A summary statement issued by the consortium concludes: 'The data from the survey clearly indicate that the small and medium chemical producers have placed considerable emphasis on preparing for Y2K" Although the results paint a rosy picture, they only reflect the readiness of the respondents—a small fraction of the universe of small chemical concerns. Because of the lack of more complete data, the Senate Special Committee on the Year 2000 Technology Problem recently reported that there are "lingering concerns" about whether small chemicalfirmswill be ready for Y2K. One member of the consortium, the Synthetic Organic Chemical Manufacturers Association (SOCMA), which has more than 250 members, followed up on the consortium's survey by mailing a questionnaire to its members in late summer. The results are similar to the consortium's, but only 32 companies or 12% of SOCMA members completed and returned the survey. Additionally, 29 companies sent in their Y2K disclosure statements, indicating they'll be ready. A spokesman for SOCMA says the association is disappointed with the low response rate, citing "lack of time" as the main reason why more companies didn't respond. He also admitted that it's "difficult to know" whether the nonresponders—about threefourths of all SOCMA members—will be ready forY2K. Small companies that have addressed the Y2K problems say the road to readiness was long and sometimes expensive. Earlier this year, two companies—Jamie Fine Chemicals, Bound Brook, N.J., and Hickson DanChem Corp., Danville, Va.—testified before the Senate Special Committee on the Year 2000 Technology Problem at a field hearing in Trenton, N.J. Speaking for Hickson was the firm's site safety coordinator, Charlie B. Martin. "We tried to foresee every possible situation, however remote," Martin told the committee. "Our plan covers safe process operations, emergency response planning, and community dialogue." Martin took the committee through his company's step-by-step process of working with consultants, government officials, OCTOBER 11,1999 C&EN
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business emergency responders, and community officials in order to Internet resources help small firms cope with the Y2K problem become Y2K compliant At the heart of the problem Y2K services offered Organization (web address) are four critical tasks, according Offers tools and links, primarily for small and Electronic Information Clearing House on to Martin. These are identifying medium-sized companies. Provided by the Chemical Emergencies and checking systems for Y2K Organization for Economic Cooperation & (http://www.oecd.org/ehs/y2k/index.htm) Development. compliance, remedying prob lems with Y2K-sensitive equip Gives free software and tools for assessment, National Institute of Standards & Technology testing, contingency planning, and remediation; (http://www.nist.gov/y2k/) ment, testing repaired or re includes Management Extension, a service placed systems, and developing that helps small manufacturers. and implementing contingency Has information and resources, including a list President's Council on Y2K Conversion plans. Hickson says it took from of computer manufacturers. (http://www.y2k.gov/java/product_ February 1997 to late this sum compliance.html) mer to complete the work. Offers 1999 Y2K Readiness Survey, Senate Synthetic Organic Chemical Manufacturers Along the way, thefirmhad to testimony, and resources for chemical companies. Association (http://www.socma.com/y2k.html) form several Y2K project teams, Reports on problems and the potential for Chemical Safety & Hazard Investigation Board conduct testing, and replace one accidental chemical releases; lists Y2K links. (http://www.chemsafety.gov/y2k) of its major computer systems. Describes EPA's efforts to address Y2K; has Environmental Protection Agency Hickson's Y2K readiness also links to other EPA sites such as testing (http://www.epa.gov/year2000/) enforcement policy. was audited by several of its ma jor customers, including Dow Provides list of vendors and consultants. Year 2000 (http://www.year2000.com) Chemical and International Spe cialty Products. 'Ύ2Κ has been exaggerated in terms Strem Chemicals, a privately owned resources available, Strem found he of its impact on this industry," says one specialty chemicals firm in Newburyport, lacked the internal staff to do the job. Mass., is another example of a small firm "We had to hire consultants," Strem executive who asked not to be identi ready for Y2K. The company's owner, notes. 'They did the assessment, quot fied. "Most of our equipment is not com Michael Strem, says he began the Y2K ed a price, came up with a plan, and im puter controlled, it's not date or time process in January and had to make sig plemented the solution." Still, he says, driven, and we don't believe Y2K is a nificant financial investments. the process was not seamless, and bugs problem." Firms choosing not to do Y2K testing 'We had a choice of upgrading or get with the new system had to be fixed be say they'll wait to see what happens af ting a whole new computer system," fore he could claim Y2K compliance. Strem says. 'We chose the latter." In contrast to Hickson and Strem ter the rollover before fixing any prob He says his company spent about Chemicals, industry observers say some lems. Waiting, Gribben says, is "a very $150,000 to replace its old computer sys firms are not concerned or conducting test high-risk strategy." James L. Makris, director of the En tem. That's a significant investment con ing because they either operate manual sidering the firm does about $10 mil systems or, if fully automated, tend to have vironmental Protection Agency's Chem ical Emergency Preparedness & Prelion in annual sales. Even with financial newer systems that are Y2K compliant
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OCTOBER 11,1999 C&EN
vention Office, says companies with manual operations or new equipment still have external risk in the form of util ities, telecommunications, and transpor tation. For example, a water supply could shut down, causing a loss of criti cal cooling water to chemical reactors. To companies ignoring the warnings, EPA's position is clear, Makris says. "We're telling companies they are obligated to operate safely," he explains. "If they have a Y2K incident, then they failed to carry out their operations in an acceptable way." Makris adds that EPA will not be "very understanding" of com panies that didn't meet their responsibil ities to the public and the environment. For late starters wanting to meet their obligations, there is hope. "Having enough time [to prepare for Y2K] de pends on the size of the company," Gribben says. "It's not too late for many smaller companies to start and finish their Y2K work in time." Numerous resources are available from commercial services, trade associ ations, and government agencies to help small companies get going. One re source is the Commerce Department's National Institute of Standards & Tech nology (NIST), which operates a Y2K Help Center for small businesses. Be tween March and June, NIST received more than 3,000 calls from small busi nesses. About 150 of these inquiries were made by chemical companies or businesses in related industries. As luck would have it, there is one thing benefiting many small companies. Jan. 1 falls on a Saturday—a day when many small firms typically are closed. Ashland Specialty Chemical, Hickson, Strem Chemicals, and others say they'll shut down prior to the date change. Even major firms such as DuPont, Mon santo, and Rhône-Poulenc say they will temporarily idle some plant operations as a precaution against toxic accidents. Although these plans do not solve the date problem on subsequent days, they might buy companies time to assess the immediate impact before reopening after the New Year's weekend. Despite the hard work of many individuals, companies, associations, and government agencies, some failures probably will happen. EPA's Makris offers his prediction: "It's not going to be cataclysmic and will largely be handled in the context of the individual company or local community." His prognosis is somewhat reassuring unless, of course, it's your company or your community.^
