|
Items in cart [1] |
Questions? Call 888-624-8373 |
HARDBACK + PDF HARDBACK PDF BOOK PDF CHAPTERS Free Resources |
||||||||||||||||
|
||||||||||||||||
|
|
|||||||||||||||
| ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||
| Copyright © 2009. National Academy of Sciences. All rights reserved. Terms of Use and Privacy Statement |
Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 45
Chemicals I
ASHISH ARORA
Carnegie Mellon University
ALFONSO GAMBARDELLA
University of Urbino
Unlike several of the other manufacturing industries discussed in this vol-
ume, the U.S. chemical industry began to experience its competitive "crisis" in
the late 1960s, well before most other U.S. industries encountered growing com-
petitive pressure from foreign sources and well before the onset of the "oil shocks"
of the 1970s that affected prices for the industry's key raw material. Slower
growth for its dominant products, including polymers, along with the growth of
production capacity offshore, led many leading U.S. chemical firms to pursue
diversification programs during the 1970s, with mixed results. In the 1980s, a
far-reaching restructuring in the industry, consisting of divestitures and actions to
focus firms on a narrower line of products and processes, contributed to improved
results in many U.S. chemical firms. This restructuring process began earlier and
has proceeded further in the U.S. chemical industry than in those of continental
Europe and Japan.
The development during the 1940s and 1950s of a group of independent
developers and sellers of process technology, known as specialized engineering
firms (SEFs) accelerated the international transfer of technologies and planted
the seeds of the competitive challenges faced by the U.S. and European firms in
the 1960s and 1970s. But the technological response of these firms, especially
that of U.S. firms in the 1980s and l990s, to these competitive challenges has
involved the development of new variants of existing products, customized to the
needs of specific users, and greater integration between products and process
iThe authors are grateful to Ralph Landau for helpful comments and to Marco Ceccagnoli for
excellent research assistance. This version has benefited from David Mowery's comments and sug-
gestions. We alone are responsible for all remaining errors and omissions.
45
OCR for page 46
46
U.S. INDUSTRYIN2000
innovation. These steps have not only eroded the markets for the services and
technologies of SEFs but also reduced investment in basic research.
EVOLUTION OF INDUSTRY STRUCTURE SINCE WORLD WAR II2
With sales of more than $1 trillion a year, the chemical industry is one of the
largest manufacturing industries in the world, as well as one of the oldest and
most complex. The modern chemical industry comprises a myriad of products
from sulfuric acid to fragrances and perfumes. But there have been two principal
driving forces behind the industry's growth in the last half century first, poly-
mer science, which developed the synthetic fibers, plastics, resins, adhesives,
paints, and coatings that virtually define "modern" materials; second, chemical
engineering, which made it possible to produce these materials at costs low
enough to ensure their success.
Petrochemicals chemicals produced using oil and natural gas as inputs-
are the base of most of these modern materials and are perhaps the most impor-
tant component of the post-World War II chemical industry. The United States,
which has abundant oil and natural gas reserves, was the first country to develop
a petrochemicals industry, beginning early in the century. World War II had a
major impact on technology and the industry's structure. As part of the war
effort, the U.S. government funded large programs for research and production of
synthetic rubber and created massive demand for oil for aviation fuel.3 After the
war the demand for cars and gasoline skyrocketed, and by 1950 half of the total
U.S. production of organic chemicals was based on natural gas and oil. By 1960
the proportion was nearly 90 percent (Chapman, 1991~. Several oil companies,
most notably Shell, Exxon, Amoco, and Arco, become major producers of basic
and intermediate chemicals derived from petroleum feedstocks.
The United States was the dominant chemical-producing nation at the end of
World War II. The German and British industries had been devastated by the
war, either directly by bombing or indirectly through damage to the economic
infrastructure. But the chemical industry in both countries rebuilt and grew rap-
idly, shifting its organic chemical production to petrochemicals nearly as quickly
as had the United States.4 During the 1950s and the 1960s Japan made an aston-
ishingly rapid entry into petrochemicals, leading to a rapid growth of the chemi-
cal industry. Apart from the three main keiretsu Mitsui, Mitsubishi, and
2This and the next section draw upon some of our earlier work, including Arora and Gambardella
(1998) and Arora and Rosenberg (1998).
3Morris (1994) provides a detailed account of the synthetic rubber case. For aviation fuel, see for
instance, Spitz (1988) and Aftalion (1989).
4In 1949, 9 percent of the United Kingdom's total organic chemical production was based on oil
and natural gas; the proportion rose to 63 percent by 1962 (Chapman, 1991). In Germany, the first
petrochemical plant was set up in the mid-1950s, and by 1973 German companies derived 90 percent
of their chemical feedstocks from oil (see also Stokes, 1994).
OCR for page 47
CHEMICALS
TABLE 1 Chemical Production, 1913-1993: Selected Countries
47
USABritain Japan GermanyRest of the world World
19131.53 (16)1.1 (11) 0.15 (2) 2.4 (24)4.82 (47) 10
19279.45 (42)2.3 (10) 0.55 (2) 3.6(16)6.6(30) 22.5
19388(30)2.3 (9) 1.5(6) 5~9(22)9.2(33) 26.9
195171.8 (43)14.7 (9) 6.5 (4) 9.7 (8)63.3 (32) 166
197049.2 (29)7.6 (4.5) 15.3 (9) 13.5 (8)85.4 (49~5) 171
1980168.3 (23)31.8 (4.5) 79.2 (11) 59.3 (8)380.4 (53.5) 719
1993313.5 (25)49.6 (4) 208 (17) 98.6 (8)580.3 (46) 1250
Note: Sales given in billions of Reichsmark up to 1938, in billions of Deutchmark for 1951, and in
billions of U.S. dollars thereafter. Percentage share in total world output given in parentheses.
Source: Eichengreen (1998).
Sumitomo several other companies, such as Asahi Chemical, Maruzen Oil, and
Idemitsu, made considerable investments in petrochemical plants (Hiking et al.,
1998).
The technological lead of U.S. chemical producers in petrochemicals was
eroded as oil companies and engineering design firms diffused the technology
internationally. Technology for producing a variety of important products from
the basic petrochemical inputs such as ethylene to materials such as polyethylene,
polypropylene, and polyester became more widely available. Moreover, the
development of a world market in oil meant that the oil and natural gas endow-
ments of the United States did not prove to be an overwhelming source of com-
parative advantaged
By the end of the 1960s, European countries and Japan had succeeded in
closing much of the gap with the United States. Since then, relative shares in
world output have largely remained constant, with the exception of a small de-
cline in the U.S. share and a rise in the Japanese share (Table 1~. In the 1980s a
cheaper dollar and declining growth opportunities in their home markets prompted
European firms and, to a lesser extent, Japanese firms to expand heavily into the
U.S. market. The expansion, accomplished through direct investments, as well as
acquisitions and alliances, underlined both the globalization of the industry, as
well as the declining U.S. dominance. Since most of the leading companies in the
world are highly globalized, one must be cautious in linking the performance of
5Government regulation of oil imports in the United States also played an important part. Since the
late 1930s, the oil industry had been regulated by the government. Among other things, production of
individual companies was regulated to prop up the domestic price of oil. After World War II, the
regulations were extended to restrict imports of oil. The net effect, according to Chapman (1991),
was that the crude oil acquisition costs for U.S. refineries was 60-80 percent higher than the landed
costs in Western Europe through the late 1950s and 1960s. However, one should note that many U.S.
firms have access to another cheap source of light hydrocarbons (such as ethane, propane, and bu-
tane) namely, natural gas.
OCR for page 48
48
U.S. INDUSTRYIN2000
firms with their so-called national industnes. With this proviso, we also note that
the leading U.S. chemical firms have performed better than their European coun-
terparts in the last decade or so, suggesting that perhaps the decline in U.S. dom~-
nance has been stemmed (see Figures 1 and 2 and discussion below).
In 1992, seven European countries Germany, the United Kingdom, Italy,
France, Netherlands, Belgium, and Denmark taken as a group produced about
20 percent more than the U.S. chemical industry output; as indicated earlier,
these figures have been fairly stable over the 1980s and early l990s. Japan, as
Table 1 also suggests, has been increasing its share of world chemical production,
producing a little less than two-thirds of the U.S. level in 1992. Even so, Japan's
share of world chemical production is smaller than its share in world manufactur-
ing. By contrast, Europe as a whole has a higher share of world chemical output
than it does of world manufacturing output, while the U.S. share in chemicals is
about the same as its share in manufacturing output.
Although the relative shares of the leading industrial countries in terms of
output or exports have been largely constant over the past thirty years, there are
some clear patterns that emerge at a more disaggregated level. First and fore-
most, within most subsectors, relative output and export figures have been fairly
stable over the 1980s and early l990s. European production of pharmaceuticals
in 1991 was about 90 percent that of the U.S., with Germany and the United
Kingdom. each producing about 30 percent of the U.S. output, and these figures
were largely constant over the 1980s. For the same penod, Japanese production
had been increasing slightly and by the end of the 1980s was about 70 percent of
~ US-AVG-ROI ~ EURO-AVG-ROI
30.00
25.00
20.00
15.00
10.00
5.00
0.00
~_ ~
CD (D to CD (D CO (DCC ~CD
CO ~CD CO CD CD <0 ~CD (D
~co ~o ~CD ~0
FIGURE 1 Pretax return on investment for leading U.S. and European chemical compa
nies, 1987-1996.
Source: Global Vantage database from Standard and Poor. See text for details of sample.
OCR for page 49
CHEMICALS
350.00,
250.00
200.00
1 50.00
1 00.00
50.00
49
I ~ US-AVG-PROD - ~ EURO-AVG-PROD I
~ __
~-
0.00- , , , I , . . . .
~_ ~
CD (0 CO CD (D ~CO CD CD
CD CD `0 (D CO (D CD CO (O
Go ~0 ~Cal rat ~
FIGURE 2 Labor productivity: total revenue per employee, for leading U.S. and Euro-
pean chemical companies, 1987-1996.
Source: Global Vantage database from Standard and Poor.
the U.S. output. In terms of exports, Germany alone shipped 20 percent more
than U.S. exports, increasing slightly over the 1980s, while the United Kingdom
exported about as much as the United States. Japanese exports, on the other
hand, were only about 20 percent of the U.S. level, albeit increasing slightly over
the 1980s. Similarly, in industrial chemicals (ISIC 351-352), German exports are
about the same level as U.S. exports while Japan and the United Kingdom each
has exports of about 40 percent of the U.S. level.6
Table 2, which provides an output index for selected chemical subsectors,
shows that drugs and pharmaceuticals have grown the fastest of all subsectors in
the United States, followed by synthetic polymer-based sectors such as rubber
and plastic products and plastic materials. Although data for Japan and Europe
cannot be compared directly with each other or with the United States, tentative
conclusions can nonetheless be drawn. In Japan, basic petrochemicals and aro-
matic products (such as benzene) remain the major growth sectors. By contrast,
pharmaceuticals, basic chemicals, and specialty chemicals have shown the great-
est growth in Europe. These patterns are borne out by patent statistics. U.S.
chemical patenting is relatively specialized in drugs, and the degree of this spe-
cialization increased between 1973 and 1996. Chemical patenting in the United
Kingdom is specialized in drugs and agricultural chemicals and away from plas-
tics and fibers. Relative to their share in overall chemical patents, the Japanese
patent heavily in plastics and fibers and away from drugs and agro-chemicals. As
one might expect, German chemical patenting is relatively specialized in indus-
trial organic chemicals.
6All figures from the CMA (1997).
OCR for page 50
so
U.S. INDUSTRYIN2000
TABLE 2 Index of Chemical Production in the United States, European
Union, and Japan 1990 = 100
Japan
1992 1993 1994 1995 1996
All chemicals 102.0 100.1 105.5112.4 113.9
Petrochemicals 104.5 102.2 109.4120.3 122.6
Aromatics 119.3 127.1 132.9149.3 144.3
Alkalis and chlorine 97.0 94.2 93.898.6 97.1
Inorganic chemicals end pigments 96.2 90.8 90.995.6 93.4
Organic chemicals 105.7 102.0 105.4116.5 119.7
Cyclic intermediates and dyes 105.9 104.8 116.3126.0 126.2
Plastics 99.4 96.3 102.2110.4 114.5
Synthetic fibers 106.3 106.9 108.8116.1 112.7
Synthetic rubber 97.5 91.9 94.7105 106.6
Fertilizers 95.5 92.9 91.491.7 89.4
United States
1986 1988 1990 1992 1994 1996
Chemicals and products
Basic chemicals
Alkalis and chlorine
Industrial organic chemicals
Synthetic materials
Plastic materials
Synthetic fibers
Drugs and medicines
Soaps and toiletries
Paints
Agricultural chemicals
Rubber and plastic products
Source of U.S. data: Chemical & Engineering News,
84.69 94.76 100.00 102.77 106.99 111.92
80.83 88.34 100.00 98.81 90.22 86.36
85.94 97.84 100.00 98.33 106.49 110.72
79.60 93.52 100.00 95.33 96.76 97.33
86.44 98.54 100.00 104.28 113.45 122.42
82.58 97.48 100.00 104.93 116.37 128.33
91.14 100.72 100.00 102.99 107.11 109.37
85.84 93.09 100.00 113.25 119.93 132.39
88.39 97.30 100.00 100.10 106.11 104.20
100.77 106.41 100.00 95.69 109.38 119.81
74.50 89.64 100.00 99.60 99.40 102.69
84.82 95.66 100.00 108.46 125.92 130.69
June 23, 1997.
European Union
1991 1992 1993 1994 1995 1996 1997a
Chemical industry (NACE 24)
Basic chemicals (NACE 241) (excluding
fertilizers end nitrogen compounds) 97.6 97.7
Pesticides and other agro-chemicals
(NACE 242)(including fertilizers and
nitrogen compounds)
Paints, inks, and varnishes (NACE 243)
Pharmaceuticals (NACE 244)
Soap and toiletries (NACE 245)
Other chemical products (NACE 246)
100.1 102.7
97.7 85.9
97.4 98.3
106.8 113.6
99.2 103.1
100.3 103.5
102.3 109.1 113.4 115.5 119.1
96.2 104.7 107.8 108.5 111.3
89.2 90.9 100.5 104.0 109.7
97.8 105.3 105.3 106.6 110.1
114.7 120.4 129.4 130.9 133.4
102.8 109.0 108.1 108.2 112.1
104.2 108.4 109.0 112.1 116.1
aOnly January-April.
Source of E.U. data: Our calculation based on ESCIMO database (European Chemical Industry Coun
cil).
OCR for page 51
CHEMICALS
51
Overall, however, the relative positions of the major industrial producers has
not changed much in the last 25 years.7 Indeed, the major change has been the
increase in chemical production outside the leading industrial countries (see Table
1~. In 1959 the United States, Japan, and Western Europe accounted for virtually
all chemical exports. By 1993 their combined share had fallen to two-thirds, with
the rest coming from Asia, particularly South Korea and Taiwan, Eastern Europe,
and the Middle East. Much of the capacity addition took place during the 1970s
and especially the 1980s.
Following the big technology push in the industry during the 1950s and
1960s, technology diffused more widely than it ever had before. Specialized
engineering firms played a key role in creating a global market for process tech-
nologies for a large number of basic and intermediate chemicals. The maturing
technology, along with increasing competition and slower demand growth, low-
ered the payoffs to traditional types of innovations. Commercialization became
more expensive and required ever more sophisticated knowledge of customers
and the market. Faced with overcapacity, the industry restructured, beginning in
the 1980s in the United States, and a few years later in Western Europe. The
drive to reduce cost dominated the initial restructuring phase, driven in part by
the relentless pressure from shareholders and their representatives. Major re-
alignments of the product portfolios of many firms followed, with many mergers
and acquisitions and the rise of entirely new firms in the industry.
During this phase, many firms cut down on R&D and refocused R&D expen-
ditures on short-term projects and away from more fundamental research. In the
past couple of years, there are some indications that the industry may be entering
a new phase of technological change and R&D spending appears to be picking up
as well. Nonetheless, the restructured firm portfolios beg the question of who
will perform the basic research that continues to be very important for the future
of the industry. The current situation points to the possible need for increased
government support for R&D in an industry that has hitherto largely financed its
research by itself.
POLYMER CHEMISTRY: "MATERIALS BY DESIGN"
With synthetic dyestuffs as its engine of growth, Germany dominated the
chemical industry from the 1870s until World War I.8 Advances in organic chem-
istry clarified how carbon atoms are linked to hydrogen and other atoms to form
7The production and export figures are based on STATCON, while the patenting figures are based
on U.S. patents. Details of the analysis are available from the authors on request.
The German chemical industry was strong in other fields such as inorganics and high-pressure
chemical processing from coal. BASE for instance had developed the contact process for sulfuric
acid, and it was responsible for many process innovations, which culminated in the development of
the Haber-Bosch process. BASE (within I.G. Farben) also pioneered research in the 1920s and 1930s
on coal hydrogenation to produce synthetic gasoline.
OCR for page 52
52
U.S. INDUSTRYIN2000
more complex molecules. Over several decades German firms developed this
knowledge into a general purpose technology for producing new dyes such as
alizarin and indigo. Moreover, they soon discovered that the organic chemistry
behind the creation of synthetic dyestuffs could also be harnessed for other appli-
cations such as pharmaceuticals and photographic materials.
If synthetic dyestuffs represented the start of "materials by design," polymer
chemistry represents its maturation. The theoretical work of Herman Staudinger
and other German scientists in the 1920s, postulating that many natural and syn-
thetic materials such as cotton, silk, and rubber consist of long chains of the same
molecule linked by chemical bonds, pointed to ways of developing a series of
new products by using different building-block molecules and changing the way
in which these molecules were connected. Long and systematic experimentation
was still needed to produce commercially successful products, but over time the
advances in the scientific understanding of the relationship between molecular
structure and physical properties made the research much more productive.
A key challenge in producing a polymer is controlling the length and physi-
cal structure of the macromolecule. Catalysts are the main instrument used for
this purpose because they permit control over the rate and manner in which mono-
mers connect to each other. The discovery of the Ziegler-Natta catalysts for the
production of linear polyethylene and polypropylene is probably the most suc-
cessful case. Indeed, research into new catalysts remains the focus of research
efforts involving existing polymers, and the recently developed metallocene cata-
lysts are viewed by many as a major breakthrough for plastics (Thayer, 1995~.
As with synthetic dyestuffs, polymer science was marked by knowledge-
based economies of scope. By establishing relationships between properties of
materials and their molecular structures, polymer chemistry provided a system-
atic basis for product innovations in several downstream sectors. For example,
the macro properties of the polymer material, such as its strength or malleability,
can be changed by varying the physical orientation of the molecules in a polymer
chain. In addition, by applying heat and pressure, or by controlling density or
melt indexes, many polymers can be made into any desired shape. The same
basic material can then be used as a fiber, sheet, or film or molded to form a
component or product of a specific shaped The product may be further fine-
tuned in other ways. For example, chemists learned that engineering resins could
be enhanced and extended by adding fillers and reinforcements such as glass or
carbon to the polymer (Seymour and Kirshenbaum, 1986~. By varying the
amounts of these materials, one could produce different grades of the engineering
9For instance, nylon with less than 15 percent crystallinity can be used to produce soft shopping
bags, women's underwear with 20-30 percent crystallinity, sweaters with 15-35 percent crystallinity,
stockings with 60-65 percent crystallinity, tire cords with 75-90 percent, and fishing lines with more
than 90 percent crystallinity (Mark, 1994).
OCR for page 53
CHEMICALS
53
resin. Ultimately, polymer chemistry supplied a common technological base in
five distinct areas plastics, fibers, rubbers and elastomers, surface coatings and
paints, and adhesives.l°
The striking feature of these examples is that the underlying technological
base generated opportunities for linking product markets that, to a final user,
would appear to have nothing in common with each other. Because the technol-
ogy had to be adapted for specific uses, commercializing a new polymer product
required knowledge of the use of the material. In other words, there were econo-
mies of scope but, in order to realize those economies, firms had to become knowl-
edgeable about downstream users in a wide variety of markets.
As with synthetic dyestuffs, the rise of polymer chemistry opened up vast
new opportunities in the industry. But unlike dyestuffs, these opportunities were
exploited by a much larger number of firms with comparable commercial and
technological capabilities and from many countries. Consequently, even small
information leaks allowed very rapid imitation. Thus, many chemical companies
and some oil producers found themselves operating and competing in very simi-
lar markets. For example, Union Carbide, Goodrich, General Electric, I.G.
Farben, and ICI performed research on polyvinyl chloride (PVC) and produced
the polymer from the very beginning. Similarly, Dow, I.G. Farben, and Monsanto
were all involved in polystyrene from very early on. Du Font, ICI, BCC,
Monsanto, Kodak, and many others invested in various kinds of polyamides,
acrylics, and polyesters (Spitz, 1988; Aftalion, 1989~. The net result was an
increase in competition in virtually every market segment.
Thus, ironically enough, the diffusion of polymer science meant that the cru-
cial problem in innovation shifted from how to produce different products to what
to produce. Companies had to decide which applications were to be developed
among the many that could be produced. This increased importance of "what to
produce" increased the relative importance of marketing and downstream links
with users to find out how to tailor products for their needs (Hounshell, 1995~.
These trends are well illustrated by Keller's (1996) case studies of innova-
tion in polymers. For instance, Keller notes that Quantum Chemicals, one of the
largest producers of polyethylene, does little fundamental research in polyethyl-
ene processes. Instead, it focuses on process improvement and optimization of
processes licensed from other firms including Du Font, Union Carbide, and BP.
It competes by providing "customer service" rather than lower prices or superior
lessee Landau (1998) for a detailed discussion of two major innovations polypropylene, and puri-
fied terephthalic acid for polyester. Spitz (1988) discusses how different the activities involved in the
development of synthetic fibers were from those for plastics.
~ iAs noted earlier, the only exception to this was the research into catalysis and the improvement of
existing catalysts. However, it is worth noting that cost reduction was not the only motive here.
Rather, catalysts make possible greater control over the properties of the final product and thus cata-
lyst research can be seen as an integral part of product innovation.
OCR for page 54
54
U.S. INDUSTRYIN2000
properties of the product itself. Its research staff helps customers use various
grades of polyethylene more efficiently in their processing equipment. To this
end, Quantum has a large collection of commercial- and semicommercial-scale
polymer processing equipment, including film lines and injection molding equip-
ment, which it uses to demonstrate how its products would work. This and other
examples show that polymers are increasingly seen as part of a system, rather
than a product itself. Thus the desired properties will vary according to the vari-
ous uses to which the polymer will be put. This implies that the effective econo-
mies of scope are more limited than those implied by the technology itself.
As noted earlier, the opportunities opened up by polymers induced a number
of firms to enter, with the inevitable result that profits were sometimes below
expectations. Even though individual firms may have been disappointed by the
returns to their investments in synthetic polymers, there is no denying that syn-
thetic polymers and chemical products based on these polymers were very suc-
cessful, accounting for nearly 20 percent of the total value of shipments of the
U.S. industry in 1970. The success of synthetic polymers owes a great deal to a
steep drop in the cost of basic petrochemicals, which are the building blocks for
synthetic polymers. This cost reduction was realized through process innovation,
both radical and incremental, in petrochemicals and polymers. In turn, the devel-
opment of chemical engineering was key to the progress in chemical processing
technologies.
CHEMICAL ENGINEERING: THE SCIENCE OF
THE CHEMICAL PROCESS
If polymer chemistry is the science of chemical products, chemical engineer-
ing is the science of the chemical process. The job of the chemical engineer is to
develop manufacturing processes for chemical products that emerged from labo-
ratories, using commercially available equipment and inputs instead of the glass
beakers and expensive reagents used in laboratories. The objective is to produce
at unit costs that are low enough to make the product commercially viable, typi-
cally by scaling up production to produce large quantities of output in a continu-
ous flow plant.l2
Beginning with the concept of unit processes, chemical engineering was an
attempt to abstract the essential and common features of chemical processes for a
wide variety of products. The systematic isolation, categorization, and analysis
of the basic processes (unit processes and, later, unit operations) common to all
chemical industries meant that an engineer trained in terms of unit operations
i2Scale up has therefore been a traditional focus of chemical engineering. As we discuss below,
with slower growth and increasing product differentiation, the focus may be changing to emphasize
flexibility and reduction in the cost of small scale production (see for instance Shinnar, 1991).
OCR for page 55
CHEMICALS
55
could mix and match these operations as necessary to produce a wide variety of
distinct final products. The separation between product and process innovation
also made possible a division of labor that was to affect the competitive position
of the leading chemical producers, a theme explored in greater detail later in this
chapter. The general purpose nature of chemical engineering made it possible for
university research and training to play an important role in applying engineering
science to the practical problem of designing large-scale processes.
Chemical engineering was a distinctly American achievement, which testi-
fies to the unique nature of the university-industry interface in the United States.~3
The large size of the market had introduced American firms to the problems
involved in large-scale production of basic products, such as chlorine, caustic
soda, soda ash, and sulfuric acid as early as the beginning of this century. This
ability to deal with a large volume of output, and eventually to do so with con-
tinuous process technology, was to become a central feature of the chemical in-
dustry in the twentieth century.
This focus on large-scale production had additional benefits when it turned
out that the new petrochemical technologies had strong plant-level economies of
scale, with capital costs rising by less than two-thirds when production capacity
was doubled. Because "scaling up" output was not a simple matter, and involved
considerable learning, early experience with process technologies gained Ameri-
can firms a head start when petrochemicals became the dominant feedstock after
World War II. In an earlier era, this head start might have been expected to last
for a long time. In petrochemicals, however, the rise of a new market for engi-
neering and construction services, and eventually for process technology itself
allowed other countries to catch up quickly.
EXTENT OF MARKET AND DIVISION OF LABOR
The rise of this new market involved a new division of labor and involved a
new type of firm specialized process design and engineering contractors, here-
after the SEFs. In addition to supplying proprietary processes, some SEFs also
acted as licensers on behalf of chemical firms and provided design and engineer-
ing know-how. During the past ten or fifteen years, SEFs may have declined in
importance but in the post-World War II period as a whole they have played an
important role in developing new and improved processes and a crucial one in
diffusing new technologies.
As one might expect, given the comparative emphasis on large-scale produc-
tion, the United States enjoyed an early lead in chemical engineering of plants.
The first SEFs were formed in the early part of this century, and their clients were
i3See Landau and Rosenberg (1992) for a discussion of the role of M.I.T. in the development of
chemical engineering as a discipline. The discussion here is based on Rosenberg (1998).
OCR for page 64
64
U.S. INDUSTRYIN2000
leading European countnes, similarly shows R&D spending has grown there,
primarily in the life sciences area.24
The slowdown in R&D spending also reflects a growing international panty
in technological capabilities. Recent estimates suggest that Japanese firms are
now at par with their European and U.S. counterparts in R&D spending as a
percentage of sales. R&D intensity in the Japanese chemical industry has been
rising steadily during the last ten years, from less than 4 percent in 1985 to well
over 5 percent in 1995, making it more research-intensive than the European and
U.S. industries (Figure 3~. However, this trend may not be sustained in view of
the recent, well-publicized, recession in Japan.
60
4
3o~
gold
of
| US A Jap" EU
EU
1% _ _ _ _ (' ~ ~ ~ ~
ooze _ _ _ . _ ~ _ ~. . . . .
5* ~_~ = ~ _ . .
Note: Estmadc for r1 ,A<~ ED .d~ _ l
from Gerrr~ry, UK, Belgium I
Nearly From S~n~Ital~'
15B5 15~6 15B? 1!~8
15~9 1~0 15~1 1~2 1~3 1~4 1~5
FIGURE 3 Chemical industry R&D spending as a percent of sales: International com
par~sons.
Source: R&TD and Innovation in the EU - Economic Bulletin - June 1997 Article 2 chart 4, http://
www. cefic.be/Eco/eb9706b .htm
24We lack comparable data for Japanese chemical companies but as Figure 3 below suggests, R&D
spending by Japanese firms is likely to have gone up during this period.
OCR for page 65
CHEMICALS
65
Nonetheless, other trends point to the increasing international panty as well.
Royalties and license fees paid by U.S. subsidiaries grew at an annual rate of 23
percent between 1986 and 1996 and stood at about $1.5 billion a year in the m~d-
l990s. Royalties and license fees paid to American firms grew at 15.7 percent
annually during the same period and stood at about $3 billion a year in the m~d-
l990s. Thus, the United States is still a net seller of chemical technology, but its
outflows are growing faster than its inflows. This is consistent with the fall in the
relative share of U.S.-based companies in U.S. chemical patents, a figure that has
fallen from 66 percent in 1970 to 55 percent in 1980 to about 52 percent in 1995.
Dunng the same time, Japan's share increased from 6 percent to 12 percent to
nearly 17 percent.
Further examination of the structure of R&D reveals other trends consistent
with this story. In real terms, chemical R&D has grown, but much of that growth
has been in the drugs and medicines sectors (Figure 4~.25 R&D spending in real
terms has remained constant at best in industrial chemicals and sectors such as
paints and inorgan~cs. Indeed, the share of industrial chemicals (inorganic, or-
ganic chemicals and plastics and synthetics) in total chemical R&D spending has
declined from 43 percent in 1970 to 30 percent in 1995.
To some extent, these trends reflect the increasing importance of drugs in the
chemical sector and the concomitant decline in the share of plastics, fibers, and
~ ~ Chemcals and allied products ~ industrial chemcals
18.000
16,000
14,000
12,000
1 0,000 ~
8,000 -
6,000
| ~ Mugs and n~dicines
-~- Other chemcals
2,000 ~1: ~--a ~
o 1 1 1 1 1 1 1 1 1 1 1
~oo a)
oo oo a: ~oo ~a) ~
~a) ~a,
V
~-- -
con ~
a) can en
FIGURE 4 Company finance R&D expenditures ($ millions in 1992 constant dollars).
Source: Our calculations from CMA, 1997 data.
25Figure 4 shows company financed R&D only but this accounts for the vast bulk of R&D spending
in chemicals.
OCR for page 66
66
U.S. INDUSTRYIN2000
organic and inorganic intermediates. For instance, the share of industrial and
others in shipments, declined from 60 percent in 1980 to around 50 percent in
1995. But there is more to the story. With the maturation of the technology in
polymers and chemical engineering, R&D intensity in the industry has declined,
if pharmaceutical related R&D is excluded. In industrial chemicals it has hov-
ered between 4.4 and 4.1 percent, while in the other non-drugs sectors it has
declined steadily from 3.3 percent in 1986 to close to 2 percent in 1995. For
drugs, the figure has risen steadily from about 8.4 percent in 1986 to well over 10
percent for the same time period, approaching 12 percent in barely two years.
For the U.S. chemical industry as a whole, National Science Foundation
(NSF) figures show that the "D" of R&D accounts for about 53 percent of the
total. In industrial chemicals, however, the share of development tends to be
higher and appears to have risen over time. Although changes in definition and
coverage make precise comparisons difficult, the available data show that for
company-financed R&D, the share of development increased from about 53 per-
cent in 1989 to 62 percent in 1995.
These figures point to the changing role of technology in the industry. Sim-
ply put, there is a market for certain types of technologies. As noted in the dis-
cussion of SEFs, chemical firms are much more willing than before to license
their technology for profit. Moreover, many firms explicitly consider licensing
revenues to be a part of the overall return from investing in technology. In turn,
this readiness to license technology implies that generic or basic research will
not be replicated as widely as it used to be. Instead, firms will license the ge-
neric process technology and, as illustrated by the example of Quantum, focus
on adapting and improving the technology to best suit their needs and those of
their customers.
Perhaps the most vivid example is the metallocene catalysts, which have
been used in many of the most significant process innovations in recent years
because they provide greater impact strength and toughness, melt characteristics,
and clarity in films than do existing catalysts. Total investment worldwide in
metallocene research has been estimated at close to $4 billion (Thayer, 1995~.
Commercially first used in the production of polyethylene in 1991, metallocene
catalysts are being applied to a wide variety of polymers, exemplifying the inher-
ent economies of scope in the technology.
Several firms are active in this research area. Dow and Exxon are regarded as
being ahead of the rest in polyethylene, while BASE, Hoechst, Mitsui Toatsu,
Fina, and Exxon are also active in polypropylene, and Du Pont and Nova are
developing alternative catalyst systems. Both Dow and Exxon have allied with
other process innovators to combine the catalyst system with processing tech-
nologies largely specific to the major polymers like polyethylene and polypropy-
lene. For instance, Exxon has formed a technology joint venture, Univation, with
Union Carbide, combining its Unipol technology with Exxon's catalyst (Chemi-
cal Week, 1997a). Dow and BP have a similar arrangement.26 What is notewor
OCR for page 67
CHEMICALS
67
thy is that both groups are actively trying to license their technology for commod-
ity-grade but not specialty-grade polyethylene. This has encouraged other firms
to develop complementary technologies. For example, BASE, Phillips Petro-
leum, and BP are developing ways of using metallocene catalysts in existing
slurry processes, many of which will be licensed.27 Interestingly enough, al-
though SEFs are not among the major innovators, their role in improving pro-
cesses in the past suggests they are likely to develop improvements and modifica-
tions in metallocene catalyst-based processes in the future. They are therefore
likely once again to play an important role as diffusers of new process technology.
This willingness to license demonstrates that firms consider technology to be
valuable but not necessarily the key source of competitive advantage. As docu-
mented in Arora (1997), the metallocene licensing is only the continuation of the
trend that began in the 1970s. In addition to companies such as Union Carbide,
Amoco, Montedison (later through Montell, its joint venture with Shell), Phillips,
Exxon, and BP that have been licensing their technologies for quite some time, a
number of leading chemical producers such as Dow, Monsanto, Du Pont, and
Hoechst are actively rethinking their traditional reluctance to license. For in-
stance, Dow expects to earn $100 million in licensing revenues by 2000, while
Du Pont hopes to reach the same target by 2005. Monsanto has licensed its
acrylonitrile technology and is looking to license its acrylic fiber and detergent
technology (Chemical Week, 1997c.~. Even Hoechst is reported to be contem-
plating a reorganization of its R&D structure, with an explicit emphasis on licens-
ing technologies developed in-house (Chemical Week, 1996~. As a result, tech-
nological capability is more evenly distributed than ever before.
A complementary trend is that R&D itself is being globalized. As Table 5
shows, American companies are directing a substantial fraction of their R&D
spending overseas; in 1995 American firms spent $4.2 billion nearly a quarter
of their total R&D budget on research overseas. We lack comparable figures
for foreign firms but a recent survey found that, excluding biotechnology and
pharmaceuticals, there were 42 foreign-owned chemical research laboratories in
the United States, accounting for about $400 million in R&D spending and em-
ploying more than 11,000 people. Counting biotechnology and pharmaceuticals,
the aggregate figures increase to nearly $3 billion in annual R&D spending, or
about 15 percent of the industry total, and more than 30,000 employees (Florida,
9971~28
26There are other technology sharing alliances as well in this area, including Dow-Idemetsu and
Exxon-Mitusi Petrochemicals in polyethylene, and Dow-Montell, Hoechst-Exxon, Hoechst-Mitsui
Petrochemicals, and Fina-Mitsui Toatsu in polypropylene.
27For instance, a spokesman for Phillips is quoted as saying that the company is likely to offer its
proprietary metallocene LLDPE slurry technology for license (Chemical Week, 1997b).
28According to a recent news report, in 1995 Hoechst spent a majority of its R&D budget outside
Germany for the first time in its history.
OCR for page 68
68
U.S. INDUSTRYIN2000
TABLE 5 Company Financed R&D Performed Outside the U.S. by U.S. R&D
Performing Domestic Companies and their Foreign Subsidiaries
All Industrial All Industrial
chemicals and others Pharmaceuticals, chemicals and others Pharmaceutical
($ millions) ($ millions) ($ millions) (percent) (percent) (percent)
1985 843 444 399
1986 1071 579 492 12.36 11.56 13.45
1987 1243 625 618 13.16 11.68 15.09
1988 1548 855 693 14.30 14.42 14.14
1989 1532 609 923 12.83 9.47 16.75
1990 2007 720 1287 15.24 9.93 21.75
1991 2401 1009 1392 16.63 13.47 20.04
1992 2676 1045 1631 17.73 14.60 20.56
1993 2833 1318 1516 17.13 17.80 16.60
1994 2456 917 1539 14.83 13.22 15.99
1995 4194 1632 2562 24.19 22.87 25.11
Source: NSF/SRS, Survey of Industrial Research and Development (1995).
Internationalization of R&D is not entirely new to the industry. The famous
technology cooperation agreement in the 1930s between Standard Oil and I.G.
Farben was based on bringing together U.S. expertise in refining technologies
and German expertise in organic chemistry and coal gassification and liquefac-
tion. The patents and processes agreement between Du Font and the British ICI
also had a patents and processes agreement that lasted for more than a decade
until the end of World War II. Similarly, in 1928 Shell Chemicals set up its
petrochemical R&D unit in Emeryville, California, rather than in the Nether-
lands or Britain. The international technology cartels that Solvay and Nobel put
together in the nineteenth century in alkali and dynamite, respectively, show quite
clearly that international technology cooperation has a long history in chemicals.
This internationalization has gained strength in recent decades, reversing the frag-
menting effect of World War II.
Several forces are driving the current internationalization. Products now
have to be customized to meet the needs of local customers. Different regions of
the world appear to be becoming technologically specialized. Both factors reflect
a division between basic or general purpose research not tied to specific appli-
cations and downstream application and development research, which is de-
centralized and globally dispersed. Fundamental research, on the other hand, is
becoming geographically concentrated. Thus, many leading German firms view
Germany as the best suited for fundamental research in organic synthesis, Japan
for electronics chemicals, and the United States for life sciences.
OCR for page 69
CHEMICALS
69
This separation between general-purpose research and research specifically
tailored to products and applications has important public policy implications.
Traditionally, R&D, including basic chemical research, has been privately fi-
nanced. Firms were larger, had more diversified portfolios, and hence could
better appropriate the benefits of the new knowledge they produced. Under the
current competitive pressures in the output and capital markets, companies are
moving their R&D toward more applied, product-oriented research. Yet, many
industry analysts argue that a key challenge facing the chemical industry is the
development of a number of new methods and generic technologies that can be
used as critical tools and knowledge bases for innovation in many chemical in-
dustry segments. For example, areas such as chemical synthesis or catalysis, as
well as broad fields, such environmentally friendly products or processes require
in-depth understanding of products, processes, and related phenomena before
more specific problems and applications can be solved effectively. Similarly,
although the life sciences have already witnessed several important scientific ad-
vances, there is still a significant need for fundamental research to enhance new
product development opportunities in areas such as drugs, biocatalysts, and
bioprocessors. The development of computerized modeling techniques has also
become a key challenge. Although molecular models have been used for some
time in the pharmaceutical sector, their use is now expanding in areas such as
organic chemicals, as well as new materials and processes. Chemical modeling
techniques require greater understanding of the fundamental aspects of the phe-
nomena that have to be modeled as well as the creation of simulators, which are
inevitably general in nature (Vision 2020, 1996~.
In fact, the need for more general tools and methods is not confined to the
newest technologies and scientific disciplines. Basic research will also be key in
the development of new processes, in the design and engineering of new plants,
and in enhancing the manufacturing efficiency of chemical production. The plant
design and engineering tools in use today have not changed much from those of
chemical engineering in the 1960s. A more systematic use of computerized soft-
ware engineering tools in the design and operation of plants is in its early stages.
On many occasions new plants are still built almost entirely "from scratch," with
little re-use of concepts, tools, or even equipment used in similar plants. Thus,
another R&D goal is to develop "modularized" equipment or process structures
that can be employed repeatedly in many plants of similar type or nature.
A related issue is how to reduce the engineering costs of designing and con-
structing new plants as well as the unit production costs in plants that produce at
smaller scales than has been the tradition. As noted earlier, unit production costs
in chemicals have been lowered typically by increasing the scale of plants. But
today' s overcapacity problems imply that companies have to devise ways to ob-
tain low unit costs of production even with plants of smaller scale. Advances in
this area can come about only through a better understanding of process science
OCR for page 70
70
U.S. INDUSTRYIN2000
and engineering to standardize the underlying structure of the processes as well
as equipment and plant components.29
The questions that arise are who will carry out this basic R&D, and who will
pay for it? The problem is serious because basic R&D is marked, much more than
product-specific R&D, by high fixed costs and economies of scale. These costs
can be amortized only if they can be spread over a very large downstream market
or a large number of different markets. The chemical industry does have large
and diversified companies, but in recent years these companies have been narrow-
ing their product portfolios at the same time as the knowledge required is growing
more complex and interdisciplinary. Reduced market opportunities for many
chemical companies, caused by slower demand growth and increased competi-
tion, have intensified the problem (see, for instance, Lenz and Lafrance, 1996~.
In short, today the chemical industry is facing the classic problem of market
failure in R&D. Basic and long-term R&D offer the potential for significant
long-term benefits, but individual firms may not have enough incentives to ex-
plore that potential. The solution will almost certainly involve industry-wide
research projects in areas such as environmental technologies. Such agreements
are already in place in the United States under the auspices of the Chemical
Manufacturer's Association, and there are similar pressures in Europe, in envi-
ronmental and many other chemical fields, coming from the European Chemical
Industry Council (CEFIC) and the European Union itself (AllChemE,1997~. In-
ter-firm joint ventures and university-industry collaborations will also be impor-
tant parts of the solution (Vision 2020, 1996; Lenz and Lafrance, 1996~. Thus,
wider collaborative arrangements will be key factors in providing new, critical
enabling technologies that encompass many distinct product applications. Gov-
ernments and public research agencies will play an important role in this respect,
both in funding pre-competitive research and in improving cooperation in the
upstream research.
One possible future outcome is that the major investments in basic R&D will
be concentrated in a few regions or countries, with the new knowledge then being
diffused or transferred more broadly. In some cases, the concentration is likely to
depend on the location of the first movers, those that are the first to make the
investments in a particular research area. We argued earlier that different coun-
tries or areas may become increasingly specialized in different research fields. It
is likely that the United States will play a key role in this respect. The U.S.
chemical industry has been the first to raise concerns about the need for funda-
mental chemical research, a problem that Europeans are only recently beginning
to discuss (AllChemE,1997~. As a result, the United States as a nation may well
bear a large fraction of the fixed cost that is needed to advance basic research in
29For instance, Shinnar (1991) reports the example of ICI, which succeeded in building a new 500-
ton ammonia plant that was competitive with traditional world class ammonia plants producing 2000
tons of ammonia daily.
OCR for page 71
CHEMICALS
71
chemistry, particularly in key areas such as the life sciences, environment, and
computerized modeling of products and processes, including software. Other
countries will get access to this knowledge at marginal rather than average cost,
but with a lag. This phenomenon has already been observed in the life sciences,
where much of the basic research is being conducted in the United States, some
of it by foreign-owned companies, with the results being used by companies from
other countries.
As a final note, one should not forget the lessons of the SEFs in the 1960s.
The knowledge that flows from one country to the rest of the world is not just "in
the air." The transfer typically requires intermediating institutions that carry the
burden of moving the knowledge across locations. The SEFs had the right incen-
tives to "sell the technologies" because they had no stake in the product markets
and hence were not restrained by the fear of creating greater downstream compe-
tition. Other intermediating institutions will probably play a very similar role in
the next few decades. Small and medium sized research-intensive biotechnology
companies have already acted as intermediating institutions in the early rise of
the biotechnology industry, and the SEFs themselves are quite likely play this
role again once new chemical process technologies become more standardized.
Similarly, many independent software vendors specialized in commercial soft-
ware for molecular modeling, process simulation, and the like are increasingly
diffusing the computerized tools for more efficient automated chemical research
. .
ant engineering processes.
CONCLUSIONS
The evolution of the chemical industry has been driven by advances in tech-
nology and by the institutions that have facilitated the growth of new markets. In
addition to the conventional market growth in the form of demand from develop-
ing countries, the evolution of the chemical industry has also been profoundly
affected by the growth of a market for technology and a market for capital. When
technology becomes widely available, albeit at a price, it ceases to be a decisive
source of competitive advantage, be it for firms or for countries. Instead, com-
petitive advantage must be sought elsewhere, in cheaper inputs or in closeness to
markets. Similarly, a global market for capital gives shareholders the opportunity
to look for the best returns, putting managements under pressure to cut costs and
improve shareholder value.
In the chemical industry, technological superiority was often a key compo-
nent of competitive advantage, and the clear relationship between advances in
chemistry and chemical engineering had led the market leaders to fund a substan-
tial amount of basic research. Developments in the industry in recent years have
weakened this incentive. These developments have tended to raise the payoff to
applied, business-driven research relative to more basic and fundamental research.
The industry has responded by forming industry-wide research initiatives in spe
OCR for page 72
72
U.S. INDUSTRYIN2000
cific areas and by inter-firm joint ventures. However, there appears to be an
important role for the public sector because basic research remains vital for the
future of the industry. An equally important role may exist for international
cooperation, at least in areas such as environmentally benign technologies and
products.
REFERENCES
Aftalion, F. (1989). History of the International Chemical Industry. Philadelphia: University of Penn-
sylvania Press.
AllChemE. (1997). "Chemistry: Europe and the Future," Special Report, http://www.cefic.be/
allcheme/ indextext.html.
Arora, A. (1997). "Patent, Licensing and Market Structure in the Chemical Industry," Research Policy
(December).
Arora, A., and A. Gambardella. (1997). "Domestic Markets and International Competitiveness," Stra-
tegic Management Journal Special Issue 18 :53-74.
Arora, A., and A. Gambardella. (1998). "Evolution of Industry Structure in the Chemical Industry."
In Chemicals and Long-Term Economic Growth, Arora, Landau, and Rosenberg, eds. New York:
Wiley.
Arora, A., and N. Rosenberg. (1998). "Chemicals: A U.S. Success Story." In Chemicals and Long-
Term Economic Growth, Arora, Landau, and Rosenberg, eds. New York: Wiley.
Arora, A., A. Fosfuri, and A. Gambardella. (1998). "Division of Labor and International Technology
Spillovers." mimeo. Pittsburgh: Heinz School, Carnegie Mellon University.
Bower, J.L. (1986). When Markets Quake: The Management Challenge of Restructuring Industry.
Boston: Harvard Business School Press.
Chandler, A., T. Hikino, and D. Mowery. (1998). "The Evolution of Corporate Capability and Corpo-
rate Strategies within the World's Largest Chemical Firms." In Chemicals and Long-Term Eco-
nomic Growth, Arora, Landau, and Rosenberg, eds. New York: Wiley.
Chapman, K. (1991). The International Petrochemical Industry. Oxford: Basil Blackwell.
CMA. (1997). "Statistical Yearbook." Washington, DC: Chemical Manufacturer's Association.
Chemical Week. (1996). "Hoechst Studies Venture Model For Research." Chemical Week (October
30):41.
Chemical Week. (1997a). "Univation's New Metallocenes." Chemical Week (November 12).
Chemical Week. (1997b). "Phillips Enters LLDPE Market with Metallocene Process." Chemical Week
(February 5):8.
Chemical Week. (1997c). "Turning Process Know-How Into Profits." Chemical Week (July 23):45.
Cohen, W. M., and S. Klepper. (1992). "The Anatomy of Firm R&D Distributions." American Eco-
nomic Review 82(4):773-799.
Da Rin, M. (1998). "Finance in the Chemical Industry." In Chemicals and Long-Term Economic
Growth, Arora, Landau, and Rosenberg eds. New York: Wiley.
David, P. A., and G. Wright. (1991). "Resource Abundance and American Economic Leadership."
CEPR publication number 267, Stanford University.
Eichengreen, B. (1998), "Monetary, Fiscal, and Trade Policies in the Development of the Chemical
Industry." In Chemicals and Long-Term Economic Growth, Arora, Landau, and Rosenberg eds.
New York: Wiley.
Florida, R. (1997). "The Globalisation of R&D: Results of a Survey of Foreign-Affiliated R&D Labo-
ratories in the USA." Research Policy 26:85-103.
Freeman. (1968). "Chemical Process Plant: Innovation and the World Market." NIER,45(August):29-
51.
OCR for page 73
CHEMICALS
73
Haber, L.F. (1958). The Chemical Industry during the Nineteenth Century. Oxford: Oxford Univer-
sity Press.
Haber, L.F. (1971). The Chemical Industry, 1900-1930. Oxford: Clarendon Press.
Haynes, W. (1948). American Chemical Industry. Vol 1-6. New York: D. Van Nostrand Company.
Hikino, T., et al. (1998). "The Japanese Puzzle: The Development of the Japanese Chemical Indus-
try." In Chemicals and Long-Term Economic Growth, Arora, Landau, and Rosenberg, eds. New
York: Wiley.
Hounshell, D. (1995). "Strategies of Growth and Innovation in the Decentralized Du Pont Company."
In Innovations in the European Economy between the Wars, Caron, F., P. Erker, and W. Fischer,
eds. Berlin: Walter de Gruyter.
Hounshell, D., and J. K. Smith. (1988). Science and Strategy: Du Pont R&D, 1902-80. Cambridge:
Cambridge University Press.
Keller, J. (1996). "A Historical Perspective on Polymers: The Science, Technology, Markets, and
Institutions." Unpublished manuscript. Dept. Of Engineering and Public Policy, Carnegie Mellon
University.
Landau, R. (1966). The Chemical Plant: From Process Selection to Commercial Operation. New
York: Reinhold Publishing Co.
Landau, R. (1998). "The Process of Innovation." In Chemicals and Long-Term Economic Growth,
Arora, Landau, and Rosenberg, eds. New York: Wiley.
Landau, R. (1997). "Education, Moving from Chemistry to Chemical Engineering and Beyond."
Chemical Engineering Progress (January):52-65.
Landau, R., and N. Rosenberg. (1992). "Successful Commercialization in the Chemical Process In-
dustries." In Technology and the Wealth of Nations, Rosenberg, Landau, and Mowery, eds.
Stanford: Stanford University Press.
Lane, S. (1993). "Corporate Restructuring in the Chemical Industry." In The Deal Decade: What
Takeovers and Leveraged Buyouts Mean for Corporate Governance, Margaret Blair, ed. Wash-
ington, DC: Brookings Institution.
Lenz, A., and J. Lafrance. (1996). Meeting the Challenge: U.S. Industry Faces the 21st Century.
Washington, DC: The Chemical Industry, Office of Technology Policy, U.S. Department of
Commerce.
Lieberman, M. (1987). "Patents, Learning by Doing, and Market Structure in the Chemical Process-
ing Industries." International Journal of Industrial Organization 5:257-276.
Lieberman, M. (1989). "The Learning Curve, Technological Barriers to Entry, and Competitive Sur-
vival in the Chemical Processing Industries." Strategic Management Journal 10.
Manufacturing Chemists Association. 1971. Chemical Statistics Handbook. 7th Ed., Washington,
DC: 432.
Mark, H. (1994). "The Development of Plastics." American Scientist 72:156-162.
Martinelli, A., ed. (1991). International Markets and Global Firms. London: Sage Publications.
Morris, P. J. T. (1994). "Synthetic Rubber: Autarky and War." In The Development of Plastics,
Mossman and Morris, eds. Cambridge, U.K.: Royal Society of Chemistry.
Nelson, R. R. and G. Wright. (1992). "The Rise and Fall of American Technological Leadership: The
Postwar Era in Historical Perspective." Journal of Economic Literature (December): 1931- 1964.
Richards, A. (1998). "Governance of Chemical Firms" In Chemicals and Long-Term Economic
Growth, Arora, Landau, and Rosenberg, eds. New York: Wiley.
Rosenberg, N. (1972). Technology And American Economic Growth. New York: Harper Row.
Rosenberg, N. (1998). "Technological Change in Chemicals: The Role of University-Industry Rela-
tions." In Chemicals and Long-Term Economic Growth, Arora, Landau, and Rosenberg, eds.
New York: Wiley.
Seymour, R. and G. Kirshenbaum, eds. (1986). High Performance Polymers: Their Origin and Devel-
opment. New York: Elsevier Science Publishing.
Shinnar, Reuel. (1991). "The Future of Chemical Industries." Chemtech (January):58-64.
OCR for page 74
74
U.S. INDUSTRYIN2000
Spitz, P.H. (1988). Petrochemicals: The Rise of an Industry. New York: Wiley.
Stokes, R. G. (1994). Opting for Oil. Cambridge, U.K.: Cambridge University Press.
Thayer, A. (1995). "Metallocene Catalysts Initiate New Era in Polymer Synthesis." Chemical & En-
gineering News (Sept 11):1-8.
Vision 2020. (1996). Technology Vision 2020. The U.S. Chemical Industry, American Chemical
Society.
Wright, G. (1990). "The Origins of American Industrial Success, 1879-1940."American Economic
Review 80(4):656-668.
Representative terms from entire chapter:
chemical firms
