Kent and Riegel's

HANDBOOK OFINDUSTRIALCHEMISTRY ANDBIOTECHNOLOGYELEVENTH EDITION

Kent and Riegel's

HANDBOOK OFINDUSTRIALCHEMISTRY ANDBIOTECHNOLOGYVolume I

ELEVENTH EDITION

Edited byJames A. Kent, Ph.D.

~ Springer

James A. KentProfessor of Chemical Engineeringand Dean of EngineeringKentjamesargaol.com

ISBN: 978-0-387-27842-1 e-ISBN: 978-0-387-27843-8

Library of Congress Control Number: 2005938809

© 2007 Springer Science+Business Media, LLC.All rights reserved. This work may not be translated or copied in wholeor in part without the writtenpermission of the pub­lisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief excerptsin connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval,electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed isforbidden.The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified assuch, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights.

Cover illustration: Abigail Kent

Printedon acid-free paper

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To my WifeANITA

Preface

The central aim of this book is to present an up-to-date account of the science and engineeringand industrial practice which underlie major areas of the chemical process industry. It attemptsto do so in the context of priorities and concerns which characterize the still early days of thenew millennium and, perhaps more important, it provides various tools for dealing with thosefactors through, for example, an extensive discussion of green engineering and chemistry andrelated topics. The heart of the book is contained in twenty eight chapters covering variousareas of the chemical process industry. It is to be noted that the products and processes associ­ated with a particular area are discussed in the context of the corresponding chapter rather thanin the isolated manner characteristic of an encyclopedia.

This work, Kent and Riegel's Handbook of Industrial Chemistry and Biotechnology, is anoutgrowth of the well known Riegel's Handbook of Industrial Chemistry, the last edition ofwhich, the tenth, was published in 2003. It follows the essential arrangement of earlier ver­sions, i.e., several chapters devoted to general or "infrastructure" topics, with most of the bookbeing given over to the various areas of the chemical process industry. However, this versionintroduces a wealth of new, timely, and very useful "infrastructure" material, and greatlyenhances the process industry content. (The latter is most noticeable in this book by increasedemphasis on biotechnology, although all of the chapters have been reviewed and updated asnecessary by their respective authors.) In keeping with past practice, all of the new chaptershave been written by individuals having demonstrated expertise in their respective fields. Alltold, the work may in many respects be regarded as a sourcebook for practice in the chemicalprocess industries .

Concerning the infrastructure or contextual material mentioned above, the Handbook con­tains three new chapters which lie in the area often referred to as "green chemistry". The firstand most comprehensive of these is titled Green Engineering: Integration of Green Chemistry,Pollution Prevention and Risk Based Considerations. It provides an excellent guide for apply­ing the methods of green chemistry and engineering to process and product development activ­ities, whether for new products and processes, or for upgrading older ones. Written by a teamofexperts in the field, the chapter can be ofenormous help to all practicing chemists and chem­ical engineers, as well as to students studying in either discipline . Another new chapter,Industrial Catalysis; A Practical Guide, is a valuable adjunct to the "Green" chapter since catal­ysis is an important aid in the practice ofGreen Chemistry. The third new chapter in what mightbe termed the "green" group is Environmental Chemical Determinations.

Succinctly put, green chemistry, also termed sustainable chemistry, is described by that chap­ter's authors, as "the use of chemistry to reduce pollution at the source, through the design ofchemical products and processes that reduce or eliminate the use or generation of unwanted orhazardous substances." Green engineering is defined as "the design, commercialization, and

vii

viii PREFACE

use of processes and products that are feasible and economical, yet at the same time minimize1) generation of pollution at the source, and 2) risk to human health and the environment." Riskassessment methods used in pollution prevention can help quantify the degree of impact forindividual chemicals and thus is a valuable tool for intelligent design of products and processesby focusing on the most beneficial methods to minimize risk.

Even a superficial look at the literature on green chemistry shows that catalysis is regardedas a very important tool. After all, if in the idealized case one can produce desired product Bfrom A, with no unwanted side reactions or by-products, by choosing appropriate reaction con­ditions and a suitable catalyst, one will have done a great deal to promote efficiency and pre­vent pollution . Therefore , another of the new chapters, Industrial Catalysis, a Practical Guide,is of special relevance. Finally, this particular portion of the new material is rounded off withthe chapter Environmental Chemical Determinations, which discusses the many complex fac­tors involved in detecting, tracking, and measuring chemical species which have found theirway into the environment.

Additional chapters in the grouping broadly referred to as infrastructure include the newRecent History of the Chemical Industry: 1973 to the Millennium: and an update of the chap­ter titled Economic Aspects of the Chemical Industry, in which some of the material extendsinformation provided in the former. Rounding out the infrastructure group are yet another newchapter Nanotechnology: Principles and Applications, together with the earlier ones whichcover such diverse and fundamental topics as process safety, emergency preparedness, andapplied statistical methods.

Biotechnology first appeared in the Riegel's Handbook some time ago as a chapter titledIndustrial Fermentation . It has since been updated several times and more recently was joinedby a chapter on Industrial Cell Culture. For this Handbook, the biotechnology content, ratherthan being updated, has undergone a major reorganization, including revision of content andemphasis. The former fermentation chapter has become two which are titled, respectively,Industrial Biotechnology: Discovery to Delivery, and Industrial Enzymes and Biocatalysis.This revision was accomplished by two teams from a major biotech company and thus reflectsthat background. It is informative to interpose at this point a statement (edited) by the authorsof the first of these two chapters. They describe it thus: "The chapter uses an approach to inte­grate gene discovery.functional genomics , molecular evolution and design, metabolic pathwayengineering, and production processes including formulation ofdelivery systems. The chapterwalks the reader through biomolecule discovery, development and delivery, by starting fromscreening millions ofnatural and designed gene variants in the mountains ofDNA sequencesavailable today. Also included are several state-ofthe-art examples ofpurposeful modifica­tions ofcellular metabolism, and descriptions ofunit operations and unit processes which linkthe upstream and downstream technologies to manufacture biochemicals, enzymes, peptides,and other products on an industrial scale. "Commercializing new bioproducts is a complex,time consuming process, and therefore an integrated biotechnology approach is necessary. Itis the authors'hope that the chapter will help readers learn how to design and produce biotech­nology products rapidly and successfully." Revision of the cell culture chapter was accom­plished by a team from another biotech company. The new title, Industrial Production ofTherapeutic Proteins : Cell Lines, Cell Culture and Purification, reflects its new content andorientation . Also, as might be expected by persons knowledgeable in the field, the chapterAnimal and Vegetable Oils, Fats and Waxes is rich in related biotechnical content, as is effec­tively described in the chapter's early pages.

Finally, addressing an area of great interest in connection with world energy needs, we haveadded a chapter in a related area, Biomass Conversion. Written by a team whose primary worklies in that area, it provides comprehensive coverage of the subject from biomass structure andcomposition to thermochemical and biological routes for conversion to energy and a host of

PREFACE ix

chemicals and products including liquid transportation fuels. This chapter defines the oppor­tunity for using sustainable sources of biomass as feedstock for new refineries that will pro­duce fermentable sugars and chemical intermediates from which much needed forms of fuelscan be made.

As mentioned earlier, the crux of the Handbook comprises twenty eight chapters which aredevoted to various areas of the chemical process industry. This information, together with sup­porting "infrastructure" material described above, viz., process safety, emergency prepared­ness, statistical methods , green engineering and chemistry, provides in toto many sophisticatedand useful tools to aid in the design of new products and processes and for study and evalua­tion of older ones. The handbook should prove useful also to individuals who possess a back­ground in chemistry or chemical engineering and work in related areas such as regulatoryagencies and environmental organizations. Among other benefits, it will help ensure that thework of such individuals reflects knowledge of relevant contemporary science and engineeringand industry practices. Reflecting new realities in the world energy situation , this edition alsoincludes a chapter titled The Nuclear Industry.

Individuals who have responsibilities in the chemical process industries are usually engaged,consciously or otherwise, in continually reviewing their operations to ensure that they are safe,efficient , and in compliance with current environmental regulations. They are also, or shouldbe, anticipating future needs. It is hoped that the information contained herein will provide thewherewithal by which chemists , chemical engineers , and others who have a peripheral interestin the process industries , for whatever reason, can ensure that they have touched every base,dotted every i , and crossed every t in their quest to make the processes and products for whichthey are responsible as environmentally sound, safe, and efficient as possible.

Because of the scope of the book and the large number of products and processes it covers,some redundancy is inevitable. For example , more than one chapter includes discussions ofgasification and hydrogen production. However, there are significant differences in emphasisin the various discussions . Thus, rather than distract readers by referring them to informationin locations other than the one of their primary interest, such topics have been left intact in thecontext in which they are discussed .

As in all the earlier versions ofthis work for which I have been privileged to serve as designerand editor, I am happy to acknowledge again the unselfish and enthusiastic manner in whichthe contributing authors have shared their knowledge and insights so that many others maylearn and still others may benefit. The picture of a bit of knowledge, acting like a stone tossedinto a quiet pond, spreading the result of the impact ever more widely, is, I think, apt. There isa saying that knowledge is power, and the authors who have contributed their knowledge andexpertise to this work are pleased to have had the opportunity to empower others. All have beenunstinting in their efforts to make their contributions as complete and informative as possible,within the space available, and I am indeed humbled and honored to have had a part in bring­ing it about. Needless to state, errors of omission and shortcomings in organization are mine.

Grateful acknowledgement is made to the publishing houses and technical/scientific organi­zations for permission to reproduce copyrighted illustrations , tables, and other materials , andto the many industrial concerns which contributed drawings, photographs, and text material.And finally, I wish to express my thanks to Springer editor, Dr. Kenneth Howell, for his manyhelpful suggestions and support along the way, and for leveling several bumps on the road topublication.

Jam es A. KentMorgantown, West Virginia USA

ContentsVolume I

Chapter 1 RecentHistory of the Chemical Industry* 1973 to the Millenium:The New Facts of World Chemicals Since 1973FredAftalion

Chapter 2 Economic Aspects of the Chemical Industry 63Joseph V. Koleske

Chapter 3 SafetyConsiderations in the Chemical Process Industries 83Stanley M. Englund

Chapter 4 Managing an Emergency Preparedness Program 147Thaddeus H. Spencer and James W Bowman

Chapter 5 Applied Statistical Methods and the Chemical Industry 178Stephen Vardeman and Robert Kasprzyk

Chapter 6 Green Engineering-Integration of Green Chemistry,Pollution Prevention, and Risk-Based Considerations 210DavidShonnard, AngelaLindner, Nhan Nguyen, Palghat A. Ramachandran,Daniel Fichana, Robert Hesketh, C. Stewart Slater, and Richard Engler

Chapter 7 Industrial Catalysis: A Practical Guide 271Robert Farrauto

Chapter 8 Environmental Chemical Determinations 305William L. Budde

Chapter 9 Nanotechnology: Fundamental Principles and Applications 328Koodali T. Ranjit and Kenneth J Klabunde

Chapter 10 Synthetic Organic Chemicals 345Guo-ShuhJ Lee, James H. McCain, and Madan M. Bhasin

Chapter 11 Chemistry in the Pharmaceutical Industry 404Graham S. Poindexter, Yadagiri Pendri, Lawrence B. Snyder,Joseph P. Yevich, and Milind Deshpande

Chapter 12 Manufactured Textile Fibers 431Bhupender S. Gupta

Chapter 13 DyeApplication, Manufacture of Dye Intermediates and Dyes 499Harold Freeman and Gary Mock

Chapter 14 The Chemistry of Structural Adhesives: Epoxy, Urethane,and AcrylicAdhesives 591Dennis J Zalucha, Ph.D. and Kirk. J Abbey, Ph.D.

Chapter 15 Synthetic Resins and Plastics 623Rudolph D. Deanin and Joey L. Mead

Chapter 16 Rubber 689D. F. Graves

Chapter 17 The Agrochemical Industry 719A. M. Malti and A. T. Lilani

Chapter 18 Petroleum and Its Products 801Stephany Romanow-Garcia and H. L. Hoffman

Index I-I

xi

xii CONTENTS

Volume IIChapter 19 Coal Technology for Power, Liquid Fuels, and Chemicals 843

R. D. Srivastava, H. G. McIlvried III, , 1 C. Winslow, C. P. Maronde,and R. P. Noceti

Chapter 20 Natural Gas 907Robert N. Maddox, Mahmood Moshfeghian, James D. Idol, andArland H. Johannes

Chapter 21 The Nuclear Industry 935Tom Congedo, Edward Lahoda, Regis Matzie, and Keith Task

Chapter 22 Synthetic Nitrogen Products 996Gary R. Maxwell

Chapter 23 Phosphorus and Phosphates 1086G. A. Gruber

Chapter 24 Fertilizers and Food Production 1111Amit H. Roy

Chapter 25 Sulfur and Sulfuric Acid 1157GerardE. d 'Aquin and Robert C. Fell

Chapter 26 Salt, Chlor-Alkali, and Related Heavy Chemicals 1183Tilak V. Bommaraju

Chapter 27 Industrial Gases 1215Steven1 Cooke

Chapter 28 Wood and Wood Products 1234RaymondA. Young

Chapter 29 Pigments, Paints, Polymer Coatings, Lacquers, and Printing Inks 1294Rose Ryntz

Chapter 30 Industrial Biotechnology: Discovery to Delivery 1311Gopal K. Chotani, Timothy C. Dodge, Alfred L. Gaertner, andMichael V. Arbige

Chapter 31 Industrial Enzymes and Biocatalysis 1375Joseph C. McAuliffe, Wolfgang Aehle, GregoryM. Whited, andDonald E. Ward

Chapter 32 Industrial Production ofTherapeutic Proteins: Cell Lines,Cell Culture, and Purification 1421Marie M. Zhu, Michael Mollet, and Rene S. Hubert

Chapter 33 Biomass Conversion 1499Stephen R. Decker, John Sheehan, David C. Dayton, Joseph 1 Bozell,William S. Adney, Bonnie Hames, Steven R. Thomas, Richard L. Bain,Stefan Czernik, Min Zhang, and Michael E. Himmel

Chapter 34 Animal and Vegetable Fats, Oils, and Waxes 1549Edmund W Lusas

Chapter 35 Sugar and Other Sweeteners 1657Mary An Godshall

Chapter 36 Soap, Fatty Acids, and Synthetic Detergents 1694Janine Chupa, Amit Sachdev, Steve Misner.and George A. Smith

Chapter 37 Chemical Explosives and Rocket Propellants 1742Walter Sudweeks, Felix F. Chen, and Michael McPherson

Index I-I

1

Recent History of the ChemicalIndustry* 1973 to the Millenium:

The New Facts of World ChemicalsSince 1973

Fred Aftalion

I. OVERCAPACITIES AND THE SEARCHFOR REMEDIES

The first oil shock that occurred at the end of1973 with the Yom Kippur war served to pin­point the crisis which world chemicals werealready undergoing.

The chemical industry's soaring develop­ment after the war was due to the extraordi­nary burst of innovations occurring between1935 and 1955 and coinciding with an explo­sion of world demand in a variety of sectorsserved by chemicals . Product ion units multi-

*This chapter consists of two chapters taken from abook by Dr. Fred Aftal ion. A History of the InternationalChemical Industry, Second Edition , translation by OttoTheodor Benfv, Copyr ight © the Chemical HeritageFoundat ion, Philadelph ia, PA (2001 ). This mater ial isreprinted by permiss ion of the copyright owner andFred Aftal ion. All rights reserved. The book traces thedevelopment of the Industry from its earliest days,describing the activities of the pioneers of chemicalscience and the entrepreneurs who built on their workto create the chemical industry as we know it. Spacelimitat ions perm it the inclusion of only Chapter 6."World Chemicals Since 1973;' and Chapter 7, "ThePeriod of the 1990s:' Noteworthy changes that haveoccurred in the industry since 2000 are mentioned inthe following chapter, "Economic Aspects of theChemical Industry:'

plied in Europe as well as in the United Statesand Japan.

Two other factors contributed to this rapidgrowth. The use of oil as a substitute for coalprovided the chemical industry with abun­dant, cheap raw material that was easy totransport. With interest rates lagging behindthe rate of monetary erosion over a number ofyears, industry leaders were tempted to carryout investments that they would not havemade had currencies remained stable andinterest rates higher. The fear of these leadersthat competit ion would get the better of themif they slowed down their investment s, therace for market shares advocated by a numberof consultant firms like the Boston ConsultingGroup , the belief-quite widespread amongworld chemicals leaders-that they had tokeep building new units to keep up with fore­cast needs, all had a share in building up pro­duction overcapacities which were alreadybecoming apparent before 1973 in certain sec­tors of heavy chemicals (petrochemical s, syn­thetic fibers, thermoplastics, and fertilizers).

The establishment of an OPEC cartel thatled to a rise in the price ofa barrel ofcrude oilfrom $3 to $12, then the 1979 Iranian

1

2 KENTAND RIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

Revolution which made it soar to $40, andfinally the publication of the gloomy forecastsof the Club of Rome experts which mistak­enly saw oil shortages ahead when, in fact,these had been artificially engineered by theCartel members-all these facts upset chemi­cal leaders in industrialized countries. And yetsome of them still continued to invest in newplants during the stock-building lulls thatoccurred in 1974 and 1979 through con­sumers ' speculating on new price rises.

This only made the necessary adjustmentsmuch harder when they had to be carried out atthe beginning of the I980s. Companies were tosuffer greatly from an error ofjudgment, build­ing new plants at great expense at the same timethat economic growth rates tumbled from over10 percent to a mere 2 to 3 percent. Caughtbetween the increasing cost of their hydrocar­bon raw materials and the ever-lower pricesthey had to use to sell their products in marketswhere offer exceeded demand, leading chemi­cal companies in industrialized countries wereforced to go through agonizing reappraisals.

This led them to act in a number of differ­ent directions. First and foremost , they had tolower their operating costs by cutting down onexcess personnel and taking the measuresneeded to increase the productivity of eachcompany. At the same time, they had toreduce, in a concerted way if possible, theovercapacities affecting the hardest-hit sec­tors. Finally, it seemed advisable to redirectproduction into areas that were less sensitiveto economic change. This meant increasingthe share of specialties in relation to com­modities in overall turnover.

A new generation of leaders was calledupon to carry out the socially painful andpolitically delicate job of rationalizing andrestructuring the chemical industry throughlayoffs and plant closures. These same leaderswere also given the more exalting, but just asdifficult , task of defining the redeploymentstrategy that needed to be followed and ofdetermin ing on a case-by-case basis the sec­tors that should be abandoned and those that,on the contrary, had to be invested in force.

By 1973, it was obvious that the chemicalindustry had reached a degree of maturity to

the extent that all the companies involved inthat area in industrialized countries were longestablished and that no discovery likely toaffect its development had been made over thelast two decades. While new areas of researchlike composite materials and biotechnologieshad emerged, no immediate fallout wasexpected for a number of years. Thus failingany rapid internal growth brought about bymajor scientific breakthrough, the strategyof leaders anxious to refocus or diversifytheir portfolio of activities very often con­sisted of a kind of Monopoly game, as arange of production was shifted from oneenterprise to another without anything newbeing created.

THE RESTRUCTURING OFSECTORS IN DISTRESS

Priority action was required in petrochemi­cals, in the large thermoplastics, in fertilizers ,and in synthetic fibers where the most seriousinvestment mistakes had been made. Thehardest cases were those of petrochemicalsand thermoplastics. For one thing, a steamcracker cannot technically operate under 60percent of its capacity. For another, the prod­ucts that emerge are linked to one another inalmost invariable proportions. Finally, a poly­merization unit cannot have its pace sloweddown without this affecting the upstreammonomer unit to the same extent.

In addition to such rigidities, there was theneed to reduce not only the quantities pro­duced but also the number of productionunits. The problem then arose of sharing thesacrifices among the different producerswithin an economic area.

The problem was most easily solved inJapan because of the discipline which MITImanaged to establish within the country 'spetrochemical industry. Making the most of anew law that allowed competing producers toact in concert , a cartel was set up with theobject of cutting down ethylene production.Four groups of petrochemical producers wereformed within which the necessary arbitra­tions took place. This led Sumitomo to closeits Niihama units, Mitsubishi a number of its

RECENT HISTORY OF THE CHEMICAL INDUSTRY 3

Mizushima plants , and Showa Denko two ofits Ohita installations.

At the same time, producers reached agree­ments on cutting down compet ing PVC andpolyolefin sales networks, while MIT! author­ized the import of naphtha through an organi­zation consisting of Japan's petrochemicalproducers. Its price served as a marker fornaphtha produced in Japan.

In Europe, of course, it was difficult toshow such disregard for market laws. Theviews of the European Economic CommunityCommission in Brussels had to be taken intoaccount , and they upheld the principle of freecompetition as set down in article 85 of theRome Treaty. Moreover, in Western Europethere were a number of petrochemical indus­tries that operated according to the rules ofprivate capitalism while there were others, asin France, Italy, Austria, Norway, and Finland,that were state-controlled and more con­cerned about retaining market share thanensuring profitability.

Despite such obstacles , unilateral decisionswere taken and bilateral arrangements carriedout among firms , leading to some measure ofproduction rationalization. Between 1980 and1984, twenty-five ethylene and eight polyeth­ylene units were scrapped in Western Europewhile ethylene oxide capacities were reducedby 10 percent.

The 1983 agreement between ENI andMontedison put some order in Italy's chemicalindustry, as ENI took over the PVC and poly­ethylene operations of Montedison. Previouslyin France, Rhone-Poulenc had sold its petro­chemicals division and its thermoplastics to theElf Aquitaine group. At the same time, steamcrackers were being shut down in Feyzin andLavera, and a vinyl chloride unit in Jarrie. Theassociation between BP Chimie and Atochemin polypropylene and the exchange ofAtochem's Chocques unit for ICI's Rozenburgpolyethylene unit were other instances ofrationalization.

The Brussels Commission also gave itsapproval to three large-scale operations: theICI and BP Chemicals exchange of polyethyl­ene/PVC, the vertical integration of vinyl chlo­ride involving AKZO and Shell Chemicals,

and the recent Enichem and ICI association,which produced European Vinyls Corporationand was intended to lead to major capacitycuts in PVc.

In West Germany, rationalization measureswere less spectacular because the heads ofGermany's leading chemical companies hadnot waited for the crisis to delineate theirrespective fields of operation and to establishclose links with international oil companies,either through long-term supply contracts orthrough parity associations.

A number of American companies becameinvolved in restructuring. Union Carbide soldits Antwerp site to BP Chemicals; Monsanto,its Seal Sands acrylonitrile unit to BASF;Esso , its Stenungsund steam cracker toStatoil; while Hercules joined up withMontedison to set up the Himont company,which accounted for 20 percent of the worldpolypropylene market.

In the United States the petrochemicalindustry set its house in order along purelycapitalistic lines. Each company involvedacted alone for fear of infringing antitrust leg­islation and the main concern was to restoreprofitability. Unlike Du Pont, which acquiredConoco , other chemical companies tried toget rid of their petrochemicals. Hercules soldits DMT units to Petrofina, and subsequentlyits 40 percent stake in Himont to Montedison,while Monsanto was shedding its Texas Citypetrochemical site.

Major divestments took place, particularly inthe major thermoplastics, which were takenover by individual entrepreneurs who bought upthe units the chemical giants wished to get ridof. As Hoechst, Union Carbide, Du Pont,Monsanto, ICI, and USS Chemicals withdrewfrom a number of the major oilbased intermedi­ates as well as from polystyrene, polyethylene,and PVC, a number of large, hitherto unknowncompanies emerged: Huntsman Chemical, ElPaso Products, Aristech, Vista Chemical,Sterling Chemicals, and Cain Chemical.

At the same time, oil companies were inte­grating downstream petrochemicals and poly­mers. Such was the case of OccidentalPetroleum , which through its chemical sub­sidiary Hooker (later Oxychem) bought up

4 KENTANDRIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

Tenneco and Diamond Shamrock 's PVC in1986, becoming the largest American pro­ducer in this area. Likewise, BP Chemicalsfully acquired its subsidiary Sohio. The long­standing petrochemical divisions of the largeoil groups returned to profits in 1986 aftersome painful tidying up but no agonizingreappraisal, helped along by falling oil pricesand dollar rates.

Most of them had cut down on operatingcosts and diversified to the point at whichthey were able to face up to the economic upsand downs without too much apprehension.Productivity improvements and a better uti­lization of existing capacities because ofhigher demand put Exxon, Mobil, and Texacoon the way to prosperity in petrochemicals in1986.

Standard Oil of California added the petro­chemicals ofGulfOil, purchased in 1984, to itssubsidiary Chevron Chemical. Other UnitedStates petrochemical producers took advantageof special circumstances. Amoco was servedby a strong terephthalic (TPA) base and itsgood performance in polypropylene; Arco, byits Lyondell subsidiary in Channelview, Texas,and by its development of the Oxirane processthrough which propylene oxide could be pro­duced by direct oxidation with styrene as acoproduct. The process also led to MTBE(methyl tertiary-butyl ether), the antiknockagent used as a substitute for tetraethyl lead.

Even Phillips Petroleum, badly affected byBoone Pickens ' takeover attempt, managed tomake substantial profits from its petrochemi­cals because of drastic restructuring. Newprospects were also opening up for the UnitedStates chemicals industry as needs grew forbutene and hexene comonomers used to pro­duce linear low-density polyethylene(LLDPE),also as consumption of higher olefins to pre­pare detergent alcohols increased and asdemand for MTBE used as a gasoline additivesoared.

The problem of overcapacities in chemicalfibers in each economic region was both eas­ier to overcome because of the small numberof producers and more complicated becauseof outside factors . In Europe, producers suf-

fered heavy losses from 1973 onward. For onething, the Europeans were not particularlysuited to manufacture chemical fibers at satis­factory cost, a fact that was proved by grow­ing imports from Southeast Asia. For another,the capacity increases decided upon did nottally with any comparable increase in demandin the foreseeable future.

In view of such imbalance, one might havethought that a number of producers wouldwithdraw from the market. But this did nothappen because some of them had to heedgovernment instructions to maintain employ­ment. Also textiles accounted for only a shareof the business of the companies involved andcould be kept up through the profits generatedin other areas . From 1978 to 1985 two agree­ments were implemented with the blessingof the European Economic CommunityCommission. The first aimed for a linearreduction of existing capacities; the secondand more important one allowed each pro­ducer to specialize in those areas where it heldthe best cards, giving up what amounted tomarginal productions.

Thus Courtaulds withdrew from polyesterand from Nylon to concentrate on its acrylicsand cellulose fibers ; rer focused on Nylon andBayer on acrylics; Rhone-Poulenc withdrewfrom acrylics but revamped its Nylon and poly­ester units well-integrated in upstream interme­diates; Montedison decided in favor ofpolyester and acrylics; AKZO focused onpolyesters and on aramide fibers while keep­ing up its profitable rayon sector. Suchefforts, which aimed to reduce Europeanchemical fiber capacities by 900,000 tons andto increase productivity through specializa­tion, undoubtedly corrected the situation .

Nonetheless, European producers are stillfaced with two kinds of competition: firstimports of synthetic fibers from Turkey,Taiwan, South Korea, and Mexico, againstwhich it is hopeless to expect that the multi­fibers agreements -which contravene GATTrules-will constitute a permanent obstacle;and second, imports of natural fibers such ascotton, for which prices have fallen spectacu­larly in recent times.

RECENT HISTORY OFTHE CHEMICAL INDUSTRY 5

The Japanese solution to chemical fiberovercapacities naturally involved MIT! whichpushed through a 17% cut in existing polyester,Nylon filament, and acrylic fiber capacitiesbetween 1978 and 1982. These were linearcuts, however, and did not restrict the range ofsynthetic fibers developed by each producer,contrary to the specializations that marked thesecond stage of Europe's approach.

The United States was faced with an addi­tional problem because its market remainedwide open to textile imports from developingcountries. These imports constituted an indi­rect threat to American producers of chemicalfibers. Their first reaction was to reduce theirbases in Europe. Du Pont closed its acrylicunits in Holland in 1978 and in NorthernIreland in 1980; the following year it ceasedproduction of polyester thread in its Uentropunit in Germany. Monsanto did likewise in1979, shutting down its Nylon units inLuxembourg and Scotland and selling itsacrylic fiber installations in Germany andIreland to Montedison.

In the United States itself, capacity cutswere not so substantial and the 1983 upturnboosted utilization of remaining units to 80percent of their capacities. Major Americanproducers such as Du Pont, Celanese, andMonsanto returned to satisfactory profit mar­gins. Other companies for which fibers werenot an essential sector withdrew from thisarea. Chevron Chemical, for instance, shutdown its Puerto Rico Nylon and polypropy­lene fiber units between 1980 and 1982 aswell as the polypropylene fiber unit inMaryland.

The fertilizer market was in no better shapethan the petrochemicals and chemical fibersmarkets, for world producers had largelyallowed supply to exceed demand.

The situation in this area was further com­plicated by the unequal distribution worldwideof the raw materials required to produce fertil­izers and the special attention which govern­ments bestowed on agriculture. Such attentionhad led to a surfeit of production units andtheir increasing control by governments, eitherdirectly through taking a stake in the cornpa-

nies concerned, or indirectly through estab­lishing ceiling prices for home sales or exportsubsidies. The emergence of new producers inEastern countries and in developing areasincreased the share of state-controlled compa­nies in world production from 30 to 64 percentfor ammonia, from 40 to 65 percent forpotash, and from 10 to 46 percent for phos­phoric acid between 1967 and 1986.

In Western Europe, nitrate fertilizer produc­ers had deemed it expedient to set up a cartelarrangement for exporters called Nitrex. Butthe collapse of demand in countries outside itsarea had prevented it from functioning prop­erly, sparking a fight for market shares evenwithin the community.

As a country like Morocco switched from itslong-established role as phosphate exporter todownstream ammonium phosphate and super­phosphate integration, traditional fertilizerproducers were forced to reappraise their strat­egy and take severe rationalization measures.

Japan which had none of the required rawmaterials and, accordingly, had high produc­tion costs, began, as early as the 1970s, grad­ually to cut down capacities along the linesjointly agreed upon by the authorities and thefive main Japanese producers of nitrate andphosphate fertilizers .

In Europe, the pressure of events disruptedthe whole market as the number of producerswas drastically reduced. Because of marketproximity, production both from EasternEurope of nitrates and from Africa of super­phosphates were becoming dangerously com­petitive. Supply conditions for natural gasvaried according to each country's policies.France, for instance, agreed to pay extra forAlgeria 's gas, while Holland 's Groningen gas,which Dutch ammonia producers were gettingat a very favorable price, was linked to theprice of petroleum products. On the other hand,a number of Scandinavian state-controlledcompanies like Norsk Hydro and Kemira,were pushing ahead with ambitious fertilizerprograms, taking advantage of their interestsin North Sea oil or of the conditions underwhich they were being supplied with oil andgas from the Soviet Union.

6 KENT ANDRIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

Between mergers and acquisitions, thestructure of the fertilizer industry in WesternEurope was spectacularly pared down. A fewgiants emerged to dominate the market. InFrance, there was CdF Chimie, later to beknown as ORKEM, which had just taken a 70percent stake in Air Liquide's subsidiary LaGrande Paroisse, and Cofaz, which was takenover by Norsk Hydro; in Western Germany,there was BASF and Ruhr Stickstoff; inBritain, ICI and Norsk Hydro, which boughtup Fisons; in Italy, ANIC and Montedison'ssubsidiary Fertimont; in Holland, DSM's UKFand Norsk Hydro NSM; in Finland, Kemira,which took over both Britain's Lindsay and itsKesteven facilities.

But the scene has not yet become suffi­ciently clear, since the competing companiesdo not all enjoy, within the community, thesame raw materials supply conditions , andEurope is still open to imports from othercountries that do not apply the rules ofmarketeconomy.

In the United States, the situation was inmany ways different. With its large sulfur,natural gas, phosphate, and even pota shresources, America 's fertilizer industry restedon a sound base. It was an exporter of miner­als and fertilizers, and did not have to worryto the same extent as Europe's industry aboutcompeting imports from Socialist countries.But reserves of sulfur extracted by the Fraschprocess have been depleted in Louisiana andTexas, and President Ronald Reagan's "pay­ment in kind" (PIK) farm-acreage cuts reducedthe fertilizer requirement ofAmerican farmers.These farmers are also much in debt and arehaving trouble selling their products on satu­rated markets.

Consequently, very little money has beensunk into extracting phosphate rock in Floridaor in increasing nitrogen fertilizer capacities,for a new ammonia and urea unit can cost asmuch as $250 to $500 million to build in theU.S., depending on the state of the existinginfrastructure.

With such dim market prospects, it is under­standable that W. R. Grace has decided to shutdown its Trinidad ammonia unit, or that acompany as large as International Mineral

Chemicals has tried to diversify through pur­chase of Mallinckrodt and has put half its fer­tilizer assets up for sale.

THE NATIONALIZATION OF FRANCE'SCHEMICAL INDUSTRY

When a left-wing government came to powerin 1981, France 's chemical industry was indire straits judging from the losses of themajor groups: CdF Chimie was losing 1,200million francs; Pechiney Ugine Kuhlmann800 million francs; Rhone-Poulenc 330 mil­lion francs; Chloe Chimie 370 million francs;Atochimie 130 million francs; and EMC 100million francs. Admittedly world chemicalswere in poor shape. But while French leaderswere posting losses amounting to 7 to 10 per­cent of their turnover, Hoechst and BASFwere still making consolidated profits thatyear of 426 million DM and 1,290 millionDM, respectively, even though they hadnoticeably slumped.

There were many reasons, some of themold, for the difficultie s of France 's chemicalindustry as illustrated by losses of 7 billionfrancs in seven years-4 billion francs in1981 alone. Caught between increasinglyheavy charges and price controls on the homemarket, France 's chemical entrepreneursnever managed after the war to achieve suffi­ciently profitable margins . They ran up highdebts to make up for their lack of funds,building up ever heavier financial costs .

A further disadvantage ofFrance's chemicalindustry was its scattered production sites,originally due to the need during the twoWorld Wars to keep plants far from the battle­fields. For both social and political reasons, itwas inconceivable in France to have a site likeBASF's Ludwigshafen where 52,000 peopleare concentrated on six square kilometerswith three thermal power plants and countlessproduction sites. The first concentrationswhich President Georges Pompidou sought tocarry out had not changed things much, nei­ther had they cut down increased operatingcosts. Indeed, the leaders of merged compa­nies had not cared at the time to close sitesdown and reduce personnel , two moves that

RECENT HISTORY OF THE CHEMICAL INDUSTRY 7

might have improved the performance of thenew groups .

Although the state spent considerable sumsfor chemical research , particularly throughCNRS and the universities , the fallout forindustry was scarce because of the persistentlack of communication between industry andthose doing research.

The research and development sectors ofthe companies themselves made few break­throughs, so that the chemical industry had torely for a large part on foreign technologies, afact that left little room for maneuver.

In addition to the difficulties inherent intheir environment, France 's companies alsosuffered the effects of bad management deci­sions in specific areas. Rhone-Poulenc hadbeen badly prepared for the chemical fibersslump and had sunk too much money in heavychemicals. These did not fit in with thegroup's original calling, as its leaders demon­strated when they withdrew, at the height ofthe crisis, from petrochemicals and the basethermoplastics, concentrating on specialties.The purchase of GESA from PUK in 1978, ofSopag the following year from the Gardinierbrothers, and the sale of Lautier were hardlyfortunate decisions for a group that coulddraw no advantage from getting further intofertilizers and that could have diversified togood purpose on perfumes through Lautier.

PCUK had never managed to strengthenFrancolor's international base to good purposeand had finally sold it to ICI. Also, it wasted alot of money in belatedly trying to develop aPVC chain. In 1981, PCUK was negotiatingwith Occidental Petroleum the sale of its chem­ical division, which had long since ceased to beof interest to the group's leaders.

At no time since it was set up was CdFChimie master of its destiny, subject as it wasto political pressures rather than economicrationality. Constantly in the red despite anumber of worthwhile activities, it receivedthe final blow when the untoward decisionwas taken in 1978 to build, on borrowedmoney, a one-billion-franc petrochemical sitein Dunkirk in the framework of SocieteCopenor set up in jo int venture with theEmirate of Qatar.

Elf Aquitaine had established under Sanofia small conglomerate with profit-making sub­sidiaries involved in pharmaceuticals and per­fumes . But Atochem, set up on a joint basis byTotal and Elf, was a loss-making concern, aswas Chloe Chimie , a cast-off of Rhone­Poulenc, which retained only 19.50 percent ofits capital , while Elf and Total each acquired a40.25 percent stake in the new chemicalentity.

EMC was more a mining than a chemicalcompany. It focused on potash, havingrestricted its diversification to the purchase ofthe animal food company Sanders and to asubsidiary in Tessenderloo, Belgium.

It was in this environment that the national­ization measures decided upon by the newSocialist government took place. The statetook control of 40 percent in value of produc­tion of commodity chemicals and 70 percentof petrochemicals in France, an event that hadno precedent in the free world's industrialcountries.

Societe I..: Air Liquide, which figured as oneof the companies to be nationalized on the ini­tial Socialist list, escaped this fate, no doubtbecause the disadvantages of taking over thisstar multinational had been pointed out to thePresident of the Republic by one of his broth­ers, who was adviser to the group. On theother hand, Roussel-Uelaf, which had neverneeded state funds, found the governmentpartly in control of its capital in addition tothe main shareholder Hoechst.

Short of the extreme solutions advocated bysome Socialists in favor of a single Frenchchemical entity, the nationalized part was cutup along the lines announced by the Ministryof Industry on November 8, 1982. Therestructuring signaled the death of PCUK asan industrial enterprise. Its various sectorswere shared out among the other state-con­trolled groups. Most favored was Rhone­Poulenc, which received the agrochemicalsand pharmaceuticals sectors with Sedagri andPharmuka as well as the Wattrelos and LaMadeleine site s in the north of France ,together with a plant in Rieme, Belgium. Atthe same time , its fluorine division wasboosted. The lion's share went to ElfAquitaine

8 KENT ANDRIEGEl'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

with what amounted to two-thirds of PCUK'sturnover, including, in particular, the halogenand peroxide products .

Complex negotiations with Total (CompagnieFrancaise des Petroles) ended with the group'swithdrawing from Atochimie and ChloeChimie, after which Elf Aquitaine set up itsAtochem subsidiary to encompass all its chem­ical activities. After a long and brilliant inde­pendent career, Rousselot was split betweenAtochem and Sanofi.

Already sorely tried, CdF Chimie came outthe worst from the restructuring. It inheritedthe Oxo alcohols and organic acids of theHames unit and had to call upon Esso Chimieto ensure their survival; it also got an ABSunit that was too small, which it exchangedwith Borg Warner for a 30 percent share intheir European subsidiary company-theVillers Saint-Paul site, which could becomeprofitable only with the help of the industriesto be set up there; the polyester resins divisionof the Chauny unit, and the downstream activ­ities of the Stratinor subsidiary, both open tostiff competition. Among the lot there weresome profitable sectors , however, such asNorsolor's acrylics , well integrated on theCarling site, and Societe Lorilleux, a smallink multinational of PCUK's. But CdFChimie was left to manage the difficult fertil­izer sector swollen by Rhone-Poulenc's andEMC's divestments (GESA and APC), as wellas a petrochemical branch set off balance bythe unfinished Dunkirk site. As for EMC, allit got from PCUK was the historic site ofLoos, which nevertheless served to boost itschlorine and potash divisions.

This enormous restructuring job, no doubt,did produce chemical groups with sounderbases and a more promising future. But thefinancial cost to the country was consider­able, for not only were the shareholdersrefunded with public money to compensatefor nationalization, but the companies thatwere now state-controlled had to be bailedout: their losses in 1982 were even higher thanthose registered the previous year. Just as highwas the social cost. Manpower cuts whichthe former company leaders had been loathto carry out had become not only absolutely

necessary but also easier to implement by aleftwing administration.

RESTRUCTURING IN ITALY AND SPAIN

As was to be expected, the path to overcapac­ities aided by state subsidies had broughtItaly s chemical industry to the edge of theprecipice. In 1981, SIR and Liquichima, onthe brink of bankruptcy, had been taken overby ENI, the state-controlled oil group whoseown chemical subsidiary ANIC was also los­ing considerable sums of money. Montedisonhad been able to show balanced books onlyonce in ten years, in 1979. Its debts hadsoared to $2 billion in 1984.

The rather belated restructuring measuresconsisted, in their first stage, in the sale of thestate's 17 percent share in Montedison to pri­vate interests . Then Italy's petrochemicals andplastics companies were shared out betweenMontedison and ENI's chemical subsidiaryEnichem .

These two groups then set out to concentratetheir efforts on polyesters and acrylics in thefibers area . At the same time, Montedisongave up control of SNIA Viscosa, specializingin polyamides, to Bombrini-Parodi-Delfino(BPD). The restructuring, carried out togetherwith manpower cuts and unit shutdowns,made it possible for Montedison in 1985 andEnichem in 1986 to post operating profits afterlong years in the red. Enichem received a fur­ther boost from association with ICI in PVCand with BP and Hoechst in polyethylene, forit had emerged from the restructuring in a lessfavorable position than Montedison because itwas still saddled with commodity chemicals.

Montedison, now 45 percent owned by theFerruzzi sugar group, reinforced its strategicsectors by purchasing Allied-Signal's fluorinepolymers through its stake in Ausimont, byfully acquiring the Farmitalia and Carlo Erbapharmaceutical subsidiaries, and by buyingfrom Hercules its 50 percent share in Himont,the joint subsidiary set up in 1983 inpolypropylene.

The two Italian giants were still very muchin debt, a fact that could lead to further divest­ments. But their leaders could nevertheless

RECENT HISTORY OF THE CHEMICAL INDUSTRY 9

contemplate the future with some equanimity.Their heavy chemical sectors were finallymerged under Enimont in 1988.

The Spanish chemical industry was alsofaced with considerable difficulties. Short ofinnovations, it had developed through foreigntechnologies and had lived a sheltered lifebehind customs barriers and import licensesnot conducive to cost cuts. Neither Spain'spetrochemicals industry, which was in thehands of the Enpetrol state group and the pri­vate company CEPSA, nor the main nationalcompanies Explosivos de Rio Tinto (ERT) andCros, were in a position to face without transi­tion the pressure of competition felt whenSpain joined the Common Market. This wasparticularly true of ERT, which had missedbankruptcy by a hair, and Cros, which hadremained in the red for a long time. Neitherwould be able to avoid severe restructuring.

Their total merger project failed throughlack of financial means, and it was Kuwait inthe end which, through the Kuwait InvestmentOffice, took a 47 percent share in ERT and 24percent in Cros in 1987 and promised to pro­vide the necessary cash for the two groups toform a joint fertilizer subsidiary.

ARAB COUNTRIES GAIN A FOOTHOLD

As soon as OPEC was set up, Middle Easterncountries had sought to find ways to investtheir oil revenues in downstream industries .Kuwait's approach was, preferably, to acquireshares in existing companies. It thus boughtup Gulf Oil's interests in Europe, took a sharein Germany's Hoechst, and injected consider­able capital into ERT and Cros in Spain.

Qatar had chosen to associate with CdFChimie to set up a petrochemical base in theEmirate and to build the Dunkirk site throughCopenor.

Saudi Arabia's policy has been to develop anational petrochemical industry that wouldsell its products worldwide. More than Qatarand Kuwait, it had abundant supplies ofethaneand methane extracted from gases that werebeing flared. The ethane separation capacitiesof its refineries alone accounted for a potentialof 3.5 million tons a year of ethylene.

Sabic, the body in charge of the project, hadcleverly involved itself with major interna­tional groups such as Mobil , Exxon, Shell,and Mitsubishi. Production would then beeasier to place in Europe , North America, andSoutheast Asia without wounding nationalfeelings . The first giant methanol unit cameon stream in 1983, while the other Saudi pro­ductions located in Al Jubail and Yanbu havegradually begun supplying low- and high­density polyethylene, ethylene glycol, ethanol,dichloroethane , vinyl chloride (monomer andpvq, and styrene as the relevant units cameon stream.

Since 1970, Saudi Arabian Fertilizer hasbeen producing urea and melamine inDammam, in association with Sabic; the twocompanies have scheduled construction of a1,500-tons-a-day ammonia unit in Al Jubail.

Because of the obviously low cost of theprincipal local methane and ethane raw mate­rials, and because the fixed costs of the instal­lations are high with regard to variable costs,European petrochemical producers wereafraid that Saudi Arabia with its low homeconsumption, would flood outside marketswith its ethylene derivatives and methanol atcut prices . So far, however, Saudi exportshave not shaken up the market because theyhave been carefully channeled through thedistribution networks of Sabic's internationalpartner s.

Taking a different course than Algeria withits liquefied natural gas, the Gulf States havethus upgraded their natural resources andalready account for 10 percent , 5 percent, and4 percent of world production of methanol,ethylene, and polyethylene respectively.

THE AMERICAN CHEMICAL INDUSTRYCAUGHT OFF BALANCE

The difficulties resulting from world overca­pacities were enhanced in the United Statesby the behavior of financial circles and thereaction to this behavior of the U.S. chemicalindustry leaders. America 's chemical giantshad reached their advanced stage of develop­ment because of the long patience of theirshareholders and the acumen of their leaders

10 KENT ANDRIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

based on thirty years of product and processinnovation. Just like their German and Swisscounterparts, US. chemical industry leadershad upheld the notion of long-term interestover the more immediate concern of the vari­ous types of shareholders.

The shock waves sent out by the two oilcrises, which had not spared the UnitedStates, the growing influence of financial ana­lysts on the behavior of shares quoted on theStock Exchange, and the arrival at the head ofthe large industrial groups of graduates fromglamorous business schools trained more infinance than in technology gave the scene anew twist. Shareholders were more interestedin the instant profits they could draw frombreaking up a group than with the added valuethat could be patiently built up through itsdevelopment.

Drawn along by their own convictions orunder pressure from bankers and "raiders,"US. chemical leaders were constantly rede­ploying their activities. The leveraged buyout(LBO) system had already been applied bythe leaders of FMC's American Viscose divi­sion when they sought to buy, with the helpof the banking world in the early 1970s, theAvtex rayon and polyester producer, whichthereby became a successful company.Despite the risk to buyers in borrowing fromfinancial organizations as much as 90 per­cent of the amounts needed for the purchase,the system was eagerly seized upon by indi­viduals wishing to set up their own businessand taking advantage of the disenchantedmood of potential sellers . This is howHuntsman became the world's leading pro­ducer of styrene and polystyrene after buy­ing up the relevant sectors from companieslike Shell and Hoechst, which wanted to pullout of them.

Likewise, it is because Du Pont, havingspent $7.4 billion to acquire Conoco, soughtto reduce its debts by selling part of Conoco'schemicals and also because Monsanto, ICI,and PPG were withdrawing from petrochemi­cals, that firms like Sterling Chemicals, VistaChemical, and Cain Chemical have emergedsince 1984. Cain Chemicals was itself to betaken over by Oxychem (Occidental Petroleum)

in 1988. Various acquisitions made at the rightmoment turned Vista within three years intoone of the leading PVC and detergent alcoholproducers in the United States. Throughpurchases made in its behalf by SterlingChemicals, Cain Chemicals became a majorpetrochemical company with assets worth $1billion in 1987, including ethylene, ethyleneoxide, glycol, and polyethylene units , allstrategically located in the Gulf of Mexicoarea. A further newcomer on the Americanscene was Aristech, which emerged throughthe takeover by its management of the heavychemicals division of USX (US. Steel).

All these companies were acquired undervery favorable conditions, as more often thannot they were sold by the large groups at 25percent of their replacement value. Contraryto assumed notions, individual entrepreneurswere thus able to acquire installations whichuntil then only the most powerful groupscould afford to run. These groups gave upwhole sections of their traditional chemicalsto redeploy in specialties for which they hadno particular disposition and, at times, inareas even further removed from their originalareas ofcompetence. Thus Diamond Shamrockgave up its chemicals to Occidental Petroleumat the worst possible time, to devote itselfexclusively to the energy sector, which in factfailed to live up to expectations.

One of the most powerful of America'schemical companies, Allied Chemical, becamea high-technology conglomerate under theleadership of Edward L. Hennessy, Jr., whowas formerly with United Technology. Afteracquiring Bendix and Signal, it took on thename of Allied-Signal and is now focusing onelectronics and space, having entrusted a largepart of its chemicals to the portfolio subsidiaryHenley, which will sell them to the highestbidder. As for Monsanto, it shed a number offibers, plastics, and petrochemical units bothin Europe and in the United States and decidedto hinge its further development on biotech­nologies, a new area for the group. It boughtup in particular the aspartame producer Searlefor $2.6 billion.

At the same time as these changes werebeing wrought by the protagonist themselves,

RECENT HISTORY OF THE CHEMICAL INDUSTRY 11

other major changes were taking place underoutside pressure. Wily businessmen acting as"raiders," with the help of financial concernsthat issued high-risk and high-interest "junkbonds" to finance a large share of the targetedacquisitions, set their sights on large compa­nies quoted on the Stock Exchange: they actedin the belief that the company's parts would beworth more sold separately than as a whole.

The raiders ' takeover bids had instantattraction for shareholders, and their criticismof the way the firms they were after werebeing managed was often not without truth .But it stood to reason that once the raiders hadbought the company, they would break it up toreduce financial charges and to refund themoney borrowed for the raid. The more inter­esting assets were often the first to be sold off,for they found ready buyers . To counter theraiders , the managers of the targeted firmswere likely to raise the ante . But this onlyaggravated the financial problem, and thegroup's dismantling was unavoidable.

The instant advantage which both share­holders and raiders drew from these opera­tions was obvious. But their consequencewas, sooner or later, to destabilize the enter­prises concerned, when these did not disap­pear altogether. The most spectacular casewas Union Carbide, coveted in 1985 by thereal estate developer S. Hayman, who hadalready taken over GAF Corporation.

To fight off the raid, Union Carbide had toborrow $3 billion. To reduce such an unbear­able debt, the group's management was forcedto sell its best sectors (batteries, consumer prod­ucts, engineering plastics, agrochemicals) andeven its headquarters in Danbury, Connecticut.This was how one ofthe best chemical concernsin the United States, with sales amounting to$10 billion, was left with only three areas ofbusiness after divesting to the tune of $5.3 bil­lion. Even these areas-industrial gases,petrochemicals and plastics, and graphite elec­trodes-were faced with stiff competition. Andwith debts that still remain three times as highas the industry's average, Union Carbide is inno position to invest in the short term in any­thing likely to push it back to its former majorrank in chemicals.

Other U.S. companies involved in chemi­cals were also the victims of raiders in 1985.To fight off C. Icahn, UniRoyal was takenover by its management and was forced to selloff its chemicals to Avery, which in tumplaced them on the block, before accepting aleveraged buyout by the management. PhillipsPetroleum had to buy back its shares from C.Icahn and B. Pickens and was forced to sell $2billion worth of assets to refund part of itsdebt. And what about Gulf Oil, which solditself to Standard Oil of California to escapethe clutches of Boone Pickens , or StaufferChemical , which changed hands three timeswithin a single year from CheeseboroughPond to Unilever and finally to ICI, when itwas broken up among ICI , AKZO, andRhone- Poulenc?

Attracted to the U.S. market, Europeaninvestors had also joined the raiders' ranks.This is how the Britain-based Hanson Trustmanaged to acquire SCM. This was a com­pany that had just completed its restructuring;but after Sylvachem was sold off by the newowners, it retained only chemical productionof titanium dioxide.

Anglo-French tycoon 1. Goldsmith, unableto take control of Goodyear, neverthelessmade substantial profits from his raid on thecompany. Goodyear was left with the solealternative ofwithdrawing from all the sectorsexcept chemicals in which it had diversifiedoutside of tires .

In a number of cases, transactions led to anagreement between the heads of companiesthat had stock options and were eager to makea profit, and the potential buyers . This washow Celanese, an able and well-diversifiedcompany that had the means to retain its inde­pendence and competitiveness with regard toany major company, was acquired by Hoechstfollowing a transaction that was satisfactoryboth to the German buyer and to the share­holders of the American group, at least for thetime being .

The fear that their company might be the tar­get of an ''unfriendly'' takeover bid induced theboards of directors of some of the well-man­aged chemical companies to guard against suchattacks either through deceptively appealing

12 KENT ANDRIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

offers-"poison pills"--or through purchase oftheir own shares. This was certainly not the bestfor industrial firms to make use of their funds.

COPING WITH SAFETY ANDENVIRONMENTAL PROBLEMS

Handling chemicals has never been withoutdanger, if only because of the unstable andharmful nature of a number of substanceswhen they are placed in certain conditions oftemperature, pressure, or concentration.

Chemists have always been haunted by therisks of explosion. The explosion whichoccurred on September 3, 1864, in theHeleneborg laboratory near Stockholm, whereAlfred Nobel was handling nitroglycerin,caused the death of five persons, includingEmile Nobel, his younger brother. The ammo­nia synthesis unit set up by BASF within theOppau plant was totally destroyed in 1921 by anexplosion causing the death ofover 600 people.In 1946, the French cargo ship Le Grand Camp,carrying 2,500 tons of ammonia nitrate,exploded in Texas City, killing 512 people .Other disasters, such as that ofFlixborough inEngland, which took place through rupture ofa Nypro caprolactam pipe within the plant in1974, or again the one caused in a holidaycamp in Los Alfraques in Spain when a tank­wagon carrying propylene exploded in 1978,are reminders of the explosive nature of cer­tain chemical products and of the need to han­dle them strictly according to the prescribedsecurity rules.

A number of chemicals, fortunately a lim­ited number, become dangerous either whenthey are used wrongly, or when they are acci­dentally set free. Thalidomide, put on themarket in 1957 by the German companyChemie Gruenenthal, was indeed a powerfulsedative. But it took three years to perceivethat when prescribed to pregnant women, itdramatically crippled the newborn children.The synthetic intermediate for insecticides,methyl isocyanate, which Union Carbide hasused for years without incident in its WestVirginia Institute plant, caused over 2,000deaths when it escaped in 1984 from a storagetank in Union Carbide's Bhopal plant in India.

Other products act insidiously, so that it isharder to establish their effects on human andanimal health and more generally on the envi­ronment. Indeed, progress in understandingthe safe dosage of minute quantities of impu­rities has enabled governments to fix withgreater care the maximum allowed content ofvinyl chloride monomer, formaldehyde, andbenzene beyond which these products couldbecome dangerous for workers to handle.

Lessons have been drawn from accidentscaused by faulty handling ofcertain substances.Through the work carried on by Alfred Nobel,we know how to stabilize nitroglycerin in theform of dynamite, and since 1946 methodshave been devised to avoid the spontaneousexplosion of ammonium nitrate. Ammoniaunits with capacities of 1,500 tons a day havebeen operating for decades without incident.

Because of the painful thalidomide episode,long and costly tests are now carried out tostudy the possible secondary effects of phar­maceutically active substances. A great num­ber of drugs that today save many lives wouldnot have been available had they needed to gothrough the long periods of tests that are nowrequired by legislation.

Likewise, in industrial countries, increas­ingly stringent regulations limit noxiousvapor discharge from chemical plants , whichare required to treat their effluents effectively.The transport of dangerous substances is alsoclosely monitored by the authorities . Suchprecautions stem not only from the publicitywhich the media now gives to any catastropheworldwide, but also from the public's instinc­tive distrust ofchemistry, which it still regardsas a mysterious science .

But just as an air crash does not mean theend of commerical aviation, neither does thedamage caused by improper use of certainsubstances mean the end of the chemicalindustry. The image of chemicals is tarnished,however. Citizens who deliberately risk theirown death, when they are not actually killingothers, because of speeding on the roads orbecause they are addicted to alcohol, tobacco,or drugs, are less and less inclined, for all that,to accept accidental security breaches whenthese are not caused by themselves.

RECENT HISTORY OFTHE CHEMICAL INDUSTRY 13

Politicians in our parliamentary democracieswho wish to please public opinion feel the urgeto take into account demands that are moreemotional than scientific, and advocate restric­tions even when these go against the best inter­ests of the citizens. The Three Mile Islandnuclear power plant accident in the UnitedStates which resulted in no fatalities, the morerecent Chernobyl explosion which, as of 1988had directly caused two deaths, have, with nogood reason, prevented any resumption of theU.S. nuclear program and have aroused fears inEuropean countries in people least likely togive way to mass hysteria.

The Seveso leak, which occurred in Italy onJuly 10, 1976, in the trichlorophenol unitbelonging to Hoffmann-La Roche's sub­sidiary Givaudan, did have an impact on theimmediate environment and a number of peo­ple were temporarily affected by the dioxinvapors. But the accident caused no lastingharm. It was the publicity which the mediagave to it that forced Hoffmann-La Roche toclose down the unit, turning Seveso into adead city.

The litigation over residues left in theground by Occidental Petroleum's affiliateHooker, in Love Canal, in the state of NewYork, led to the evacuation of all the area'sresidents, beginning in 1978. But no clearexplanation has yet been given of the ailmentssome of the inhabitants have been complain­ing about.

The lack of universally accepted scientificexplanations for certain phenomena has oftenmeant that the precautionary measures takenby one country do not necessarily apply inanother. Where sweeteners are concerned, forinstance, some governments have banned sac­charin and other governments allow its use.The same is true ofcyclamates and aspartame.

DDT was banned as an insecticide as earlyas 1974 by most industrial nations. But it isstill widely used in many developing coun­tries. The risks of eutrophication are per­ceived differently by governments, so thatlegislation applying to products for the pro­duction of detergents, like alkylbenzene sul­fonate. tripolyphosphate, or nitriloacetic acid(NTA) differs from country to country.

The agreement which a number of nationsreached in 1987 to ban the use of chlorofluo­rocarbons in aerosols is so far the onlyinstance of harmonized legislation, eventhough no one has so far managed to provescientifically that the chlorofluorocarbonsreally destroy the atmosphere 's ozone layer.

Thus while it is understandable that author­ities must be careful to soothe the fears of apublic that is insufficiently informed of thedangers that threaten it, it must also be awareof the economic and social costs of refusingto accept the risks inherent in any humanactivity, and also conscious of the uncertain­ties surrounding the rules and regulationstaken to satisfy its demands .

Some companies are turning the necessityof cleaning up the environment into newopportunities to improve their profitability.Thus Du Pont has found a useful applicationas a building material for the calcium sulfatethat was piling up as a by-product in one of itsTexas plants .

SCIENTIFIC AND TECHNOLOGICALBREAKTHROUGHS

Short of fundamental discoveries over the pastfifteen years, the chemical industry has goneforward by systematically developing its storeof knowledge in processes and products.

Process Improvement

Higher crude oil prices had revived studies inthe use of coal as a chemical feedstock. Butwhile the Fischer-Tropsch synthesis was stillused in South Africa by Sasol, the only otherindustrial gasification unit was the one EastmanKodak brought on stream in Kingsport,Tennessee, in 1983, to produce coalbasedacetic anhydride. The coal came from theAppalachian mountains and was cheap enoughrelative to oil prices at the time to warrant suchan installation, and the plant is now to beexpanded.

Together with these studies on synthetic gas,some progress has been achieved in the use ofa group of alumino-silicates, the zeolites, as

14 KENTANDRIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

selective catalysts to boost certain reactions.Half the world production of p-xylene and aquarter of the production of ethylbenzene, anintermediate required to prepare styrene, arecarried out using the zeolite-based ZSM-5catalysts developed by Mobil Oil, whichplayed a pioneer role in this area.

Applications of the olefin metathesisreversible chemical reaction, discovered byPhillips Petroleum in the 1960s, were alsodeveloped in the subsequent years. By thisreaction, Arco produces propylene from ethyl­ene and butene-2; Hercules prepares its plas­tic, Metton, from dicyclopentadiene ; and Shellsynthesizes its C1Z-CI4 SHOP (Shell HigherOlefin Process) alcohols used for detergents.

The application of electrochemistry inorganic synthesis had already served to bringon stream in the United States in 1965Monsanto 's first industrial adiponitrileprocess from acrylonitrile. This was followedin 1977 by a similar installation in SealSands, England, which was later bought upby BASE

The former Reppe chemistry, still practicedin Germany by BASF and in the United Statesby GAF, also led to new developments asdemand for certain intermediates such as the1,4-butanediol increased. This diol, now alsoobtained from maleic anhydride, is used toproduce PBT polyesters through reaction withterephthalic acid and leads to other majorderivates (tetrahydrofuran, butyrolactone, N­vinylpyrrolidone).

New synthetic processes for the preparationof established products were also industriallydeveloped: in Japan the manufacture ofmethylmethacrylate from C4 olefins , by Sumitomoand Nippon Shokubai; in France, the simulta­neous production of hydroquinone and pyro­catechin through hydrogen peroxide oxidationof phenol by Rhone-Poulenc; in the UnitedStates the production of propylene oxidethrough direct oxidation of propylene operat­ing jointly with styrene production, developedby Ralph Landau and used in the Oxirane sub­sidiary with Arco, which the latter fully tookover in 1980; in Germany and Switzerland, thesynthesis of vitamin A from terpenes, used byBASF and Hoffmann-La Roche.

Processes apparently well established werestill further improved, such as the electrolysisof sodium chloride, dating back to the lastcentury: diaphragm and then membrane cellswere substituted for mercury cells, whichwere a possible source of pollution.

Important progress was also made in chem­ical engineering, such as use of rotary com­pressors in ammonia synthesis or ICI'sfermentation reactors in Billingham to pro­duce the Pruteen protein from methanol reac­tors, having no mobile parts.

Product Development

Although research was not as fruitful after1960, new materials put on the market in the1970s were the outcome of research in highpolymers essentially conducted within industry.

It was through such research that ICI'sPEEK (polyether ether ketone), one of thefirst high-performance aromatic polymers ,was put on sale, as well as Du Pont's aramidefibers Nomex and Kevlar, more resistant thansteel in like volume.

To the range of engineering plastics wereadded polyethylene and polybutylene tereph­thalates (PET and PBT), as well as GeneralElectric 's polyethers, the PPO (polypheny­lene oxide) produced through polymeriza­tion of 2,6-xylenol and the Noryl plasticproduced by blending PPO with polystyrene.Other special polymers, derived like thepolycarbonates from bisphenol A, wereadded to this range: polyarylates, polysul­fones, polyetherimides.

A major step forward was taken in the areaof base thermoplastics with the application ofUnion Carbide's Unipol process . Variations ofthis were subsequently offered by other low­density polyethylene (LOPE) producers suchas Dow and CdF Chimie (now ORKEM) .

Under a process that consisted in copolymer­izing in the existing highpressure installationethylene with 5 to 10 percent of an a-olefin(butene-l , hexene-l), a stronger linear low­density polyethylene (LLOPE) was producedwith a higher melting point than LOPE.Thinner films could thus be produced that werejust as strong but required less material.

RECENT HISTORY OFTHE CHEMICAL INDUSTRY 15

The new polymers opened up an unex­pected market for producers of C4, C6 and Cgo -olefins like Shell, Ethyl, and Chevron.Their higher linear o-olefins were also usedeither for polyalphaolefins (PAO) intendedfor synthetic lubricants or to prepare deter­gent alcohols.

While no great new plastic has emergedover the last fifteen years, researchers inmajor chemical companies did their utmost toimprove both the features and the perform­ance of known polymers.

As we have just seen , they improvedLLDPE by adding comonomers in the carbonchain. But also through additives they man­aged to render polymers more resistant to fire,to oxidation, and to alteration through ultravi­olet rays.

This slowly gave rise to a new industry thatconsisted in supplying polymer producers andplastic processors, not only pigments andcharges, but also antioxidants , light stabiliz­ers, and fireproofing agents. Added in smalldoses to the polymer, they added to its valueby extending its life span. Such an activity, inwhich the Swiss firm Ciba-Geigy plays anoteworthy role, was boosted by the spectac­ular development of polypropylene, a particu ­larly sensitive polymer that has to bestabilized with appropriate additives.

Another way of improving the performanceof polymers consisted in blending themeither with other polymers, or with inertmaterials such as glass fibers, carbon fibers,or various mineral fillers . Thus were pro­duced a series of alloys and composite mate­rials . Glass fiber-reinforced polyester haslong been in common use. But the possibilityof introducing carbon fiber obtained throughpyrolysis of polyacrylonitrile (PAN) fibersalready developed in aeronautics, opened upfresh prospects, particularly in the area ofsports articles. The need, in turn, to linkorganic polymers and mineral fillers led tocoupling agents such as the silanes whichUnion Carbide and Dynamit Nobel have puton the market.

This is how, little by little, spurred on by thedemands of the processing industries whichare also under pressure from major clients

like the automobile industry, a number ofcompanies have brought a large number ofimprovements to plastics . While not veryspectacular, these improvements have appre­ciably added value to existing materials.

More generally, the requirements of manydownstream industrial sectors have hastenedthe development of derivatives that otherwisemight have remained laboratory curiosities.Discoveries of new molecules have been par­ticularly inspired by the needs of plant protec­tion. This was because agriculture, before itbecame a crisis sector, offered worldwidemarkets for crop protection agents, and alsobecause product approval was easier toobtain, and therefore less costly, than in thecase of pharmaceuticals. The success ofglyphosate, which Monsanto put on the mar­ket in 1971 under the trade name Round Up,has made it the world's leading selectiveherbicide, for it can be used throughout theyear and becomes harmless when absorbedinto the ground. A new range of syntheticpyrethroids, developed in the United Kingdomby Elliott of the National Research andDevelopment Corporation, (NRDC), a gov­ernment agency, was marketed from 1972onward under the trademarks of Permethrin,Cypermethrin, and Decis. These wide-spec­trum insecticides owe their success to the factthat they are exceptionally active in smalldoses and are not toxic to humans. Withincreasingly strict legislation and stiff compe­tition among pesticide producers at a time ofslumping agricultural markets, the goldendays could well be over for crop protectionproducts, so that the years ahead are likely tobe more favorable for restructuring than fornew discoveries.

Over the last fifteen years, the pharmaceu­tical sector also made great demands on theingenuity of chemists . But from the time ofthe thalidomide drama, the testing timesrequired by health authorities have increased,to the point that since 1980 ten to twelve yearsare needed instead of the three to four previ­ously required to bring a drug on the marketfrom the time of its discovery. Research anddevelopment costs, accordingly, have grownfourfold over the last ten years, dangerously

16 KENTANDRIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

reducing the number of new specialties pro­vided for patients each year. Because of suchdelays, a patent protecting a new substancemay be left with but a few years of validitywhen final approval is granted to the labora­tory that made the discovery.

Such difficulties have apparently notaffected the zeal of researchers . Nor have theydiminished the sums devoted each year toresearch and development , which on the con­trary have been constantly on the increase.This is because any major discovery may haveworldwide portent. And in most developedcountries there is a system of refunding topatients the cost of ethical drugs, so that anew active principle may provide the labora­tory that has exclusive rights over it with aconsiderable source of profits even if suchrefunds are coupled with tight price controls.

And while it is also true that thirty pharma­ceutical companies alone account for 60 per­cent ofworldwide ethical drug sales, the sumsof money invested in research do not alwaysget their full return . Thus it is that a smallcompany like Janssen's laboratory, JanssenPharmaceuticals, in Belgium, which wasacquired in 1979 by Johnson and Johnson andwhich has among its discoveries diphenoxy­late (1963) and loperamide (1975), hasproved more innovative over the last fifteenyears than the Rhone-Poulenc group, whichhas produced no major new molecule duringthe same time, although it devotes far moremoney to its research .

Indeed, success depends at least as much onchance, the ability of researchers, and thestrategy of management in that area as on thesums expended. Valium and Librium, whichhave been providing Hoffmann-La Rochewith its largest profits since the end of the1960s, were the outcome of Leo Sternbach'sacumen. Instead of merely modifying themeprobamate molecule as management hadrequested, he began studying the sedativeproperties of benzodiazepines used asdyestuff intermediates and on which he hadworked for twenty years previously at CracowUniversity.

One of the most prolific inventors of the1960s was most certainly Sir James Black, a

Nobel laureate in 1988. While working forICI, he discovered the first l3-blocking agentPropranolol in the early 1960s. He also dis­covered Cimetidine, sold under the tradename of Tagamet as an anti-ulcer agent bySmithKline & French from 1974 onward, andwhich has become the world's largest-sellingspecialty. After working successively for ICI,SmithKline & French, and for Wellcome inBritain , Sir James now has his own business,and he is convinced that small competentteams are, by nature, more innovative than thelarge armies of researchers which many of thebig companies have set up.

Likewise, the successful ventures of MerckSharp & Dohme cannot be dissociated fromthe work of its president, Roy Vagelos. Thisbiochemist, a latecomer to research , super­vised the whole process of work to bringMevacor, the new cholesterol miracle drug,onto the market. It has just been approved bythe U.S. Food and Drug Administration.Mevacor was but the crowning touch toMerck's scientific tradition with its long seriesofdiscoveries: ex-methyldopa against hyperten­sion, indomethacin and sulindac to fight arthri­tis, and cefoxitine, an antibiotic.

At a time when pharmaceutical research isbecoming increasingly costly and the likeli­hood of a great discovery remains hazardous,success will come to laboratories which notonly sink large sums of money into researchbut also rely on teams where competence doesnot necessarily rhyme with size, and whosemanagement has reached a sufficient level ofscientific maturity.

THE CRAZE FOR BIOTECHNOLOGY

The catalytic action of living organisms, orrather of the proteins they contain, hadreceived the beginnings of an explanationwith the experiments of Payen and Persoz onmalt amylase separation in 1833 and with 1.1.Berzelius's catalyst theory in 1835. In 1897Eduard Buchner demonstrated that a yeastextract could turn sucrose into ethyl alcohol.Fermentation took place without the presenceof living organisms through enzymes . In thiscase zymase was the catalyst.

RECENT HISTORY OF THE CHEMICAL INDUSTRY 17

Ethyl alcohol, already known to alchemists ,was used by industry towards the middle ofthe last century when continuous distillationin columns was devised by Ireland 's AeneasCoffey in 1830 and when it became exemptfrom excise duties on alcohol ifmethanol wasadded to it.

After alcohol, lactic acid was the secondproduct obtained industrially from sugar fer­mentation, starting in 1880. The levo-isomeris still made this way to the tune of 20,000tons a year.

In 1890, the Japanese chemist JokichiTakamine had introduced a fermentationprocess in the United States by which anenzyme blend was produced. This takadias­tase catalyzed starch and protein hydrolysis .Some years later in 1913, Boidin and Effrontdiscovered the "bacillus subtilis" that pro­duced an a-amylase stable under heat. Thisenzyme was used to desize cloth and later inthe sugar fermentation process .

During World War I, Chaim Weizmann hadsucceeded in producing for the Brit ishAdmiralty acetone and butanol on a largescale through anaerobic fermentation ofstarch. The Germans were then producing asmuch as 1,000 tons a month of glycerin fromsugar. These war productions proved nolonger competitive in peacetime. But citricacid, which Pfizer began producing in 1923from sucrose, is still biochemically madetoday from Aspergillus niger, which Currieadvocated in 1917.

The discovery of penicillin and its indus­trial development during World War 11 haveled the pharmaceuticals industry increasinglyto resort to biosynth esis for the preparation ofits active principles. Through rigorous selec­tion of the microorganisms extracted fromthe soil or from various molds , the cost of anantibiotic like penicillin has been broughtdown to $30 per kilo , compared with$25,000 per gram initially-an imposs ibletarget if the exclus ively synthetic processhad been used. Moreover, it became possibleto extend the range of antibiotics that couldbe used. The antianemia vitamin B12 andmost of the amino acids were prepared inthe same way through culture of microor-

ganisms in selected environments containingprecursors.

In the case of steroids, biosynthesi s permit­ted reactions that could not be achievedthrough direct synthesis . In 1952, this washow Upjohn researchers in the United Statesmanaged to introduce on carbon atom 11 ofthe steroid nucleus , a hydroxyl group - OH,using the Rhizopus arrhizus fungus, makingthe switch from the pregnancy hormone prog­esterone to cortisone and its derivatives.

Microorganisms are also capable of separat­ing optical isomers. In the case ofsodium glu­tamate, where it is necessary to start fromlevo-glutamic acid to obtain the desired fla­vor, and where synthesis produces only aracemic blend, it was a particular yeast calledMicrococcus glutamicus that led to therequired isomer through carbohydrate fer­mentation.

Considering that sodium glutamate, likeother amino acids , is contained in soy sauce ,which is a traditional Japanese food, it is notsurprising that Japan should have becomeinterested very early in this type of fermen­tation. Firms like Ajinomoto and KyowaHakko dominate the world market for aminoacids and particularly for glutamic acid andI-lysine. It is also through enzymes that theresolution of dl-methionine into its opticalisomers is achieved since its laboratory syn­thesis yields the racemic form.

Heat-stable amylases are frequently used inboth the United States and Japan to producesyrups with a high fructose content from cornstarch.

Single-cell proteins such as ICI's Pruteenwere produced through culturing microorgan­isms on a bed of organic material.

Interest in biosynthesis grew still furtherwith the discovery in 1953 of the structure ofDNA, then in the 1960s of the genetic code ofproteins . It then became possible to clonemicrobe or plant cells, through genetic engi­neering, by recombination of fragments ofgenetic material from different species. Thus,towards the end of the I970s, the biotechnol­ogy firm Genentech succeeded in isolatingthe human insulin gene and to insert it into theDNA ofthe Escherichia coli bacteria: through

18 KENT AND RIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

reproduction, these bacteria produced the firsthuman insulin, which Eli Lilly and Companyhas been marketing since 1982.

The human growth hormone (HGH), whichcan only be extracted in minute quantities fromthe pituitary glands, can now be isolated inlarger quantities through genetic engineering.

Monoclonal antibodies (mabs), which repli­cate the antibodies in the organism with theadded advantage of being "immortal," werediscovered in 1975 by scientists working atthe Cambridge Medical Research Council inthe United Kingdom. They serve more partic­ularly as reactive agents for medical diagnos­tic purposes .

Through plant genetics, it has also beenpossible to render plants resistant to chemicalagents (Calgene, Monsanto) as well as toimprove crop yields (Pfizer) with new seeds.

With the prospects which biogenetics wasopening up for medicine and agriculture, anumber of private laboratories sprang up inthe United States between 1971 and 1978­Genentech, Cetus, Genetic Institute, Biogen,Amgen, and Agrigenetics to mention but theprincipal ones. These laboratories managed tofinance their work with the help of venturecapital, research contracts with the majorchemical firms like Du Pont, Monsanto,Eastman Kodak, W. R. Grace, or shares pur­chased on the stock exchange.

Vast sums of money have been spent overthe last ten years but with small tangibleresults, prompting the definition of biogenet­ics as a business likely to bring in a small for­tune as long as a large one is invested!Thus farthe only commercial fallout of biogeneticresearch involved human insulin (Eli Lilly),the human growth hormone HGH (Genentech,KabiVitrum), the hepatitis B vaccine (Merck,Smith, Klein-RIT), interferon (Boehringer,Ingelheim), the amylase enzyme (Novo), anumber of veterinary vaccines (AKZOPharma), and monoclonal antibodies for diag­nostic reactive agents. Hopes raised by inter­feron and interleukin-2 as cancer cures havenot materialized, but the tissue plasmogenactivator (TPA) as a blood clot dissolver inheart attacks was approved by the U.S. Foodand Drug Administration (USFDA).

Plant genetic research is encounteringopposition from the U.S. Department ofAgriculture and the Environmental ProtectionAgency. Pressured by environmentalists, theU.S. administration is loath to approve devel­opments which could affect the environmentin unknown ways. In addition to these admin­istrative obstacles, there is uncertainty overpatent rights, for there are no legal prece­dents. Finally, the biocompanies recently setup will need to associate with large pharma­ceutical groups to develop and market theproducts born of their research.

Generally speaking, although biotechnol­ogy has acquired credibility in many areas, itsdevelopment is being slowed by scientific,economic and administrative obstacles. Firstand foremost, proteins are complex sub­stances that cannot be handled as easily as thesimple molecules involved in traditionalorganic syntheses.

It is true that Japan's Ajinomoto and KyowaHakko, in particular, have become masters ofthe art of producing amino acids. Likewise,enzymes have remained the specialty of Novo(now Novo Nordisk) in Denmark, GistBrocades in Holland, and Bayer's subsidiaryMiles in the United States, which togetheraccount for 60 percent of the world needs inthe area.

Even when they are technologically sound,however, bioproducts may turn out to be eco­nomically uncompetitive. The profitability ofl-lysine from one year to the next , forinstance, depends on soy market prices. In thesame way, the single cell proteins which BPproduced in 1963 in Lavera from a petroleumbase, using a process developed by France'sChampagnat, never managed to compete withsoy cakes for animal food. ICI has also justbeen forced to close down its 50,000-tonPruteen unit in Billingham.

At current crude oil prices, the productionof ethanol from biomass is not profitable,either. Whether produced from beets, sugarcane, or corn, it can become competitive onlyif it is subsidized. And these subsidies wouldonly be forthcoming for political reasons: toplease their farmer voters, the French,Brazilian, and United States governments

RECENT HISTORY OF THE CHEMICAL INDUSTRY 19

would adopt such a policy to absorb excessagricultural products . From cereals, com inparticular, starch is produced and hydrolyzedto form glucose which ferments to ethanol.

Powerful groups like American CornProducts and France's Roquette Freres pro­duce starchy matters in this way. The formeris also the leading producer of isoglucose (ablend of glucose and fructose) in the UnitedStates, while the latter is the largest producerof sorbitol. Starch can, therefore, competedirectly with saccharose both for foodstuffsand for industrial uses as a fermentation orenzyme-reaction base.

This gives rise to a permanent conflict inEurope between the starch manufacturers onthe one hand and the sugar and beet refiners onthe other, a conflict that the EEC Commissionwith its Common Agricultural Policy of quotasand subsidies has been unable to settle. Theonly point of agreement between the two par­ties is the price which they demand for theirproduction from downstream Communityindustries, a price that is far higher than worldrates.

Spurred on by the Italian sugar groupFerruzzi-Eridiana, Montedison 's and nowEnimont's main shareholder and an associateof France's Beghin-Say sugar group, there is acampaign under way to introduce ethanol intogasoline. Farmers, of course , support themove because incorporating 7 percent ofethanol in gasoline would mean for a countrylike France the use of two million tons ofsugar or four million tons of cereals. Butethanol happens to be in competition withmethanol and the new MTBE antiknock agentas a gasoline additive. More important, a taxrebate would be needed at current gasolineprices to induce the oil industry to incorporateethanol in prime rate gasoline. So the "farm"lobby can receive satisfaction only at theexpense of the taxpayer, whether American ,Brazilian, or European.

The rules that have always governed the useof ethanol, government policy favoring oneagricultural raw material over another, thenew constraints that limit the marketing ofgenetically engineered products-all thesefactors serve to remind those interested in the

development of biotechnology how narrow istheir room for maneuvering.

THE FINE CHEMICALS APPROACH

In their search for products that could providebetter margins than those achieved from com­modity chemicals , the industry had hit uponfin e chemicals. These typically involvedderivatives from organic synthesis, obtainedin multipurpose units and sold in relativelysmall quantities at high prices.

The German and Swiss dye manufacturers(Hoechst, BASF and Bayer, as well as Ciba­Geigy and Sandoz) were in the most favorableposition to develop such advanced chemicals .They had a long tradition behind them of mul­tiple-stage syntheses involving intermediatederivatives that could also serve to preparepharmaceutically active principles or pesti­cides. Starting from a number of major rawmaterials and working according to the chem­ical-tree concept, these producers can workdown the line to well-defined moleculeswhich they use in their own downstream pro­duction or sell as synthetic intermediates tooutside clients.

In Europe, the giant ICI group, which hadretained a strong position in dyes, alsobecame involved in this kind of chemicals.

France, with PCUK having closed down in1980 its Societe des Matieres Colorantes inMulhouse and then having sold SocieteFrancolor to ICI, had restricted its ambitionsin this area. It retained only a few products ofRhone- Poulenc and of its 51 percent sub­sidiary Societe Anonyme pour l 'IndustrieChimique (SAIC), located in Saint-Fons andin Mulhouse-Dornach, respectively.

As was to be expected, the U.S. chemicalleaders, Du Pont, Allied Chemical , AmericanCyanamid, GAF, and Tenneco Chemicals , hadall withdrawn between 1976 and 1979 fromthe dyes sector. Only three medium-sizedcompanies were still active in this area :Crompton & Knowles, American Color, andAtlantic Chemical .

Yet at the end of World War II, America'sdye production had been the leading oneworldwide. For over thirty years it had

20 KENTANDRIEGEL'S HANDBOOK OF INDUSTRIAL CHEMISTRY AND BIOTECHNOLOGY

enjoyed high customs tariffs protectionthrough the American Selling Price clause.But dyes were produced by giant companiesused to large-scale continuous productions.Their engineers were not trained to runmonth-long syntheses campaigns involvingmany stages. Moreover, American marketingexecutives were little attracted to the Germanmethods for "motivating" their clients. Therewas also the fact that during the 1960s, U.S.dye manufacturers had come to rely onimported intermediates . With rising pricesand the textile slump, they found themselvescaught between rising purchase costs andfalling selling prices. Finally, unlike theirEuropean counterparts, U.S. manufacturershad never given international scope to theirdye business. It remained restricted to thehome market.

For all these reasons and also because theywere not tied down like the Germans by anyprestigious tradition, they unhesitatingly gaveup dyes, losing at the same time the know­how needed to succeed in fine chemicals.

With more modest means, other firms weremore successful. They either developed theirown "chemical tree," or put to good use theknow-how acquired through development ofcertain processes.

Ethyl became a bromine and derivativesspecialist and an expert in orthoalkylation(orthoalkyl phenols and anilines). Its acquisi­tion of Dow's bromine activities has givenEthyl a leading role in this field . DSM devel­oped its fine chemicals from the benzoic acidproduced during manufacture of syntheticphenol by toluene oxidation. Atochem tookadvantage of the sulfur resources of its parentcompany Elf Aquitaine to build up success­fully a thioorganic chemicals industry (thio­glycol, mercaptans, DMSO). Its position willbe further strengthened by the takeover ofPennwalt. PPG in the United States andSociete Nationale des Poudres et Explosijs(SNPE) in France are producing a wide rangeof phosgene-based derivatives to be used inthe most varied manner (carbonates, chloro­formates). More than any other company,Lonza has extended its range of fine chemi­cals (diketenes, HeN derivatives, pyrazoles,

pyrimidines). Reilly Tar has become a worldleader in pyridine and derivatives. Dottikon inSwitzerland and Kema Nobel in Sweden haveput to use their nitration experience to extendtheir range of nitrated intermediates. Amongothers, Rhone-Poulenc and Montedison areinvolved in organic fluorine derivatives whileHids' fine chemicals division has specializedin alkylation, hydrochlorination and catalytichydrogenation.

Thus a number of firms with special know­how in a family of products or in processesthat were not among the biggest have suc­ceeded in taking a more than honorable placeas suppliers of fine chemical derivativesalongside the organic synthesis specialistsoriginating from the dye business.

THE ATTRACTION OFSPECIALTY CHEMICALS

Besides fine chemicals sold according tospecifications but accounting for only a smallpart of the sales of major companies , spe­cialty chemicals held attractions for compa­nies wishing to diversify. These chemicalsinvolved substances or mixtures whose com­position mattered less than the function forwhich they were intended: the test of successlay in performance . Thus old family busi­nesses or more recent companies born of aleader's entrepreneurial spirit had been suc­cessful in performance products, whetherthese were paints, inks, or glues; or in spe­cialties, cosmetics, detergent, or electronicsindustries.

Indeed, not much capital is needed to man­ufacture specialty chemicals compared withwhat is required for commodity chemicals.The development of new products is bothquicker and less costly than it would be tofind new processes for large-volume productsor to bring to the market an original activeprinciple for an ethical drug.

This largely explains why specialty chem­icals managed to remain until the early1970s products for medium-sized privatecompanies. In the long run, however, theinternationalization of trade, the size ofadvertising budgets for consumer products,

RECENT HISTORY OF THE CHEMICAL INDUSTRY 21

and the necessary adaptation to new tech­nologies requiring highly qualified personnelall called for funds that were not always avail­able to family businesses. Many small ownerswere forced to sell out, and their need coin­cided with the attraction they held for largechemical groups trying to diversify away fromheavy chemicals. They hoped to find in spe­cialty chemicals the profit margins whichtheir traditional branch of chemicals nolonger supplied .

Barring a few exceptions such as Gulf Oilor Diamond Shamrock, which withdrew fromdownstream chemicals, all the major compa­nies, both in Europe and in the United States,decided to make specialty chemicals a prior­ity in their development strategy. In truth,some of them had not waited for the energycrisis for them to take a firm foothold in thespecialty market.

In the United States, Du Pont and PPG hada long-established reputation in industrial andconsumer paints. W R. Grace since buyingDewey & AImy,and Rohm & Haas because ofits age-old tradition in acrylics , drew substan­tial profits from their specialties . This wasalso true of American Cyanamid (additivesfor plastics, cosmetics) and of Monsanto(products for rubber, special polymers) . Sinceits withdrawal from the tire business , BFGoodrich, aside from its PVC lines, is con­centrating now on specialties.

In Europe, ICI had already acquired alarge paints sector (Duco, Dulux). The threemajor German leaders-Bayer, BASF, andHoechst-had not yet made great inroads intothe specialties market, but the Swiss Ciba­Geigy could be said to be particularly wellestablished in certain areas like additives forpolymers, in which it was a world leader.Rhiine-Poulenc had assembled some of itsactivities within a "chemical specialties" divi­sion. But on the whole, they could be said tobe offshoots of fine chemicals rather thanactual specialties, with the exception of theperformance products brought out by sub­sidiaries such as Orogil, SFOS, Soprosoie,and Vulnax. Orogil is now fully owned byChevron, however, and Vulnax has beenacquired by AKZO. Failing to develop through

internal growth, AKZO had very early devel­oped its specialties by buying up companiesinvolved in peroxides, paints, oleochemicals,and now rubber additives.

To increase their specialty sectors as fastas possible, the leaders of large companiesfound it more expedient to do so throughacquisitions. The prices paid for the mostinteresting purchases can be considered highbecause, very often, they amounted to fif­teen to twenty times the profits. But thefinancial sacrifices made by the buyersseemed worthwhile, for they gained afoothold in the market without the long pre­liminary work that would otherwise havebeen needed .

There were, of course, many companies thatwere sufficiently important or prosperous toescape being bought up. Even then their inde­pendence was often at stake. Thus Nestle tooka share in the cosmetics group l'Oreal; and inthe United States, the raider Perelman man­aged to buy Revlon.

Considering that the grass always looksgreener on the other side of the fence, formany leaders of the chemical giants diversifi­cation into new areas might seem more attrac­tive than mere concentration in well-knownsectors; and it was in this sense that specialtychemicals seemed a good proposition. In1983, Olin began to get involved in electronicchemicals by buying up 64 percent of PhilipHunt Chemicals, and took a firm foothold inthe sector through successive acquisitions.Other groups became interested in enhancedoil recovery and exploration, for the future ofoil seemed assured at the time. In both cases,however, the electronics and oil explorationslowdown did not confirm established fore­casts. The investments made in these areashave yet to prove their profitability.

Moreover, many firms were unable to con­tribute anything except capital to the develop­ment of sectors far removed from theirtraditional areas of business. They becamediscouraged and ended by selling out, notwithout suffering heavy losses. Hercules wasseen to back out of its water treatment sectorand Rhone-Poulenc from its very recentlyacquired media business .