n e w s o f t h e w e e k

ber manufacturers share OSHA's inter­pretations of the toxicologic and epide­miologic evidence, nor do they agree with the agency's quantitative risk assess­ment. They believe data provided to OSHA that show butadiene to be less toxic have not been utilized. The risks, therefore, have been overestimated, and the final rule will be even more protec­tive than OSHA estimates, they claim.

David Hanson

Chemical third-quarter earnings picture mixed Recently released economic results from the Commerce Department give an unclear al­though generally slowing picture of the U.S. economy. Growth in gross domestic product in the third quarter was a low 2.2%, and inventories built up during the quarter. However, the rate of inflation slowed. The third-quarter results of the chemical industry are equally murky.

The cyclic nature of the chemical in­dustry seems to have been at play during the quarter. As the profitability of U.S. specialty chemical producers turned up, the profitability of larger commodity-oriented companies turned down.

For example, Dow Chemical—the larg­est U.S.-based diversified chemicals manu­facturer—posted a slim increase in sales for the quarter compared with third-quar­ter 1995—rising to $4.99 billion from $4.88 billion. But earnings dropped pre­cipitously, falling 18% to $469 million.

Dow says prices declined 9% on a quar­ter-to-quarter basis, and feedstock and en­ergy costs increased. This led operating in­come to fall from $946 million in third-quarter 1995 to $746 million this year, despite 11% growth in sales volume.

"Our strategy of continuously improv­ing productivity while focusing on value growth enabled us to turn in a strong per­formance despite year-over-year price de­clines and feedstock cost increases," ex­plains J. Pedro Reinhard, Dow's financial vice president and chief financial officer. "Solid results from performance chemicals and performance plastics helped to buffer declines in other segments." Those seg­ments are chemicals and metals, plastics, and hydrocarbons and energy.

Many other commodity-based produc­ers also posted double-digit earnings drops during the quarter. They include Arco Chemical, Eastman Chemical, Geon, Georgia Gulf, and Union Carbide.

By contrast, a number of non-com­modity-based producers showed double-

Some chemical earnings rose, others fell,

Air Products Arco Chemical Crompton & Knowles Cytec Industries Dow Chemical

Eastman Chemical Ethyl Freeport-McMoRan H. B. Fuller Geon

Georgia Gulf Great Lakes Chemical Herculesc

IMC Global Loctite

Lubrizol Monsanto Nalco Chemical Rohm and Haas Union Carbide

Sales

in third quarter

THIRD-QUARTER 1996

Earnings3

($ millions)

$1,051.0 1,035.0

468.4 321.7

4,992.0

1,167.0 304.2 222.6 318.1 307.8

237.9 564.4 518.1 603.6 201.8

392.9 2,176.0

343.3 969.0

1,538.0

$ 94.0 97.0 17.0 25.9

469.0

96.0 28.5

3.9 22.0

6.1

19.9 68.3 84.9 28.6 23.2

31.7 170.0 41.0 87.0

161.0

a After-tax earnings from continuing operations, excluding significant earnings as a percentage of sales. (

Change from 1995

Sales

7% 4 3 0 2

-8 26 -8

2 -1

-12 -4 -2

1 3

-5 6

11 3 3

Earnings

1% -17

44 16

-18

-35 35

550 150 -58

-55 -8

6 -11

20

14 28 15 47

-29

Profit margin"

1996

8.9% 9.4 3.6 8.1 9.4

8.2 9.4 1.8 6.9 2.0

8.4 12.1 16.4 4.7

11.5

8.1 7.8

11.9 9.0

10.5

extraordinary and nonrecurring items, b : Results restated to reflect divested businesses.

1995

9.5% 11.7 2.6 7.0

11.7

11.7 8.7 0.2 2.8 4.6

16.4 12.7 15.2 5.4 9.9

6.7 6.5

11.5 6.3

15.2

After-tax

digit growth in earnings. Among them were Crompton & Knowles, Cytec In­dustries, Ethyl, Loctite, Lubrizol, Monsan­to, and Rohm and Haas.

Specialty chemical maker Hercules' sales fell in the third quarter to $518 mil­lion from $528 million in the same peri­od last year. The company's 1995 figures have been restated to reflect divestiture of Hercules' former aerospace, electron­ics and printing, and composite products businesses. Earnings for the quarter were up, rising to $84.9 million from $80.3 mil­lion last year.

"In chemical specialties, both paper technology and resins achieved revenue and profit increases over 1995 for the first time this year," says R. Keith Elliott, Her­cules' president and chief executive offi­cer. "The polypropylene fibers business, while still soft, continues to improve each quarter from its disappointing start in 1996. In the food and functional products segment, profits were up 18% in the quar­ter on a comparable basis, despite lower revenues."

Meanwhile, diversified producer Du-Pont reported 6% growth in sales volume quarter-to-quarter in its chemicals and specialties businesses. Total sales— which include DuPont's petroleum busi­nesses—were up 3% for the quarter to $10.5 billion. Total earnings rose 23% to $945 million.

Sales for DuPont's three chemicals segments dropped 3% to $4.33 billion. But earnings for the three segments dur­ing the quarter rose 3% to $557 million from third-quarter 1995.

George Peaff

Henkel makes billion-dollar bid for Loctite After 11 years of quietly sitting as an in­vestor, Germany's Henkel has offered to buy the 65% of Hartford, Conn.-based ad-hesives producer Loctite Corp. it does not already own.

News of Henkel's more than $1 billion offer pushed Loctite's shares on the New York Stock Exchange up 25%, or $11.75, to $58 on Oct. 28, the day the offer was announced. Investors bet that either Hen­kel will improve its $56-per-share offer or another bidder will up the ante for the highly profitable firm.

Loctite has had consistently good profit margins, between 10 and 12%, over the past 10 years. It had sales of $785 million in 1995, with net earnings of $83.9 mil-

8 NOVEMBER 4, 1996 C&EN

lion. A former executive explained a sim­ilar highly profitable stretch in the past by saying Loctite 'sells by the drop and not by the pound.'' Henkel, based in Dus-seldorf, is an adhesives, oleochemicals, and detergents maker with annual sales of $9.5 billion.

Loctite has established a special com­mittee of directors who are neither em­ployed by Loctite nor affiliated with Hen­kel to review the acquisition proposal. A review completion date has not been announced. Henkel, which professes confidence it will succeed in its bid, has three seats on Loctite's 12-member board of directors.

Just before Henkel made its offer pub­lic, its president and chief executive offi­cer, Hans-Dietrich Winkhaus, met with Loctite Chairman and CEO David Free­man in the U.S. and offered to negotiate a friendly takeover. After that meeting, Winkhaus said his firm may make an of­fer directly to shareholders if 'negotia­tions do not proceed or [if they] fail."

Henkel first bought a 25% stake in Loc­tite in 1985, acting as a white knight to defend Loctite from potentially unfriendly takeovers, notes a Henkel spokesman. Since then, Henkel has purchased addi­tional Loctite shares to reach the maxi­mum 35% stake allowed under a standstill agreement that expired in 1994. A new agreement permits Henkel to tender an of­fer for all outstanding shares.

Henkel considers itself a leader in the world adhesives market but is "underrepre-sented" in the U.S., where Loctite is strong, says the spokesman. "From a regional point of view, Henkel's acquisition of Loctite would be a good move,'' he adds.

Marc Reisch

Nuclear waste repository found safe, feasible A proposed nuclear waste storage site near Carlsbad, N.M., poses minimum risk of harmful radioactive leaks unless it is breached by humans sometime in the fu­ture, a National Research Council panel reported last week.

This conclusion makes it more likely that the Waste Isolation Pilot Plant (WIPP), the nation's first permanent re­pository for radioactive waste, will open late next year. However, some environ­mental groups and states believe the re­pository is unsafe and have filed lawsuits to prevent its opening.

"Provided it is sealed effectively and

WIPP nuclear waste repository rooms are c

remains undisturbed by human activity, the committee finds that the WIPP repos­itory has the ability to isolate transuranic waste for more than 10,000 years,'' says Charles Fairhurst, chairman of the NRC committee on WIPP and professor of mining engineering and rock mechanics at the University of Minnesota, Minneap­olis. Human exposure from any releases from WIPP is unlikely to exceed U.S. and international radiation protection stan­dards, he says.

"The only known possibilities of seri­ous release of radionuclides appear to be from poor seals or some form of future human activity that results in intrusion into the repository,'' Fairhurst says. But, he notes, "there are ways to engineer the facility . . . that could be used to re­duce the chances of radioactive releases from human intrusion."

WIPP is a network of underground excavations at a depth of about half a mile in a geologically stable bed of rock salt. Essentially completed in 1988, WIPP is designed to hold thousands of tons of transuranic waste—clothing, lab equip­ment, sludges, and reagents left over from the production of nuclear weapons. Most of it is contaminated with plutoni­um and other transuranic elements such as americium and neptunium. But some is contaminated with thorium-232 and uranium, which are not technically trans-uranics. (Technically, transuranic waste is low- and mid-level waste that is con­taminated with α-emitting radionuclides of atomic number greater than 92 and half-lives longer than 20 years in concen­trations greater than 100 nanocuries per g.) The waste is now stored in cardboard

rved In salt bed half a mile underground.

boxes and 55-gal barrels at about 10 De­partment of Energy (DOE) sites.

The consequences and likelihood of hu­man intrusion can be reduced by backfill­ing each room with treated material as it is filled and by preemptively mining any eco­nomically valuable deposits of potash above the repository, Fairhurst says. How­ever, predictions of what human activities and technologies will be thousands of years from now are conjectural; they should not be used as a primary basis for judging the acceptability of the site, he says.

George E. Dials, manager of DOE's Carlsbad area office, says the application for certification of WIPP that DOE submit­ted to the Environmental Protection Agen­cy last week shows that future mining would not cause releases to the environ­ment. It is very important for WIPP to open on time so we can get on with the disposal program,'' he notes. So far, WIPP has cost the nation $1.8 billion. With EPA approval, the site may open late next year.

However, Don Hancock, director of the nuclear waste safety project at the Southwest Research & Information Center in Albuquerque, contends the current site plan has major problems. First, he says, liq­uid wastes need to be solidified before be­ing placed in the repository so the radio­nuclides are less mobile. Also, he says, DOE needs to characterize what is in the drums—something it hasn't done so far— so it can predict what will happen if water gets into the repository. His group as well as some other parties and the states of New Mexico and Texas have filed suit against EPA over the compliance criteria the agency established for WIPP.

Bette Hileman

NOVEMBER 4, 1996 C&EN 9