INDUSTRY S BUSINESS

U.S. chemical sales accelerate overseas Squeezed at home, more major chemical companies are increasing their involvement abroad

More economists probing the shape of the world economy and the nature of business over the next 20 years or so are suggesting that the "multina­tional approach" is the only way for a company to go. One seer predicts that the successful U.S. firm of the 1980's will derive as much as half of its income from its foreign operations.

If this at first seems a little far­fetched for the staid domestic chem­ical industry, a second look reveals that U.S. chemical makers are making striking progress toward higher for­eign involvement. And the pace of this involvement is continuing to ac­celerate.

In just this past month, for example, a new $40 million fertilizer complex jointly controlled by Dow Chemical and Swift & Co. was dedicated in Brisbane, Australia; Monsanto chose a West German site for a 35 million

pound-per-year acrylic fiber plant (see page 21) ; Rohm and Haas revealed plans for a 60 million pound-per-year ethyl methacrylate plant at Tees-side, England (C&EN, Sept. 22, page 31); and Air Products and Chemicals detailed plans for a multimillion-dollar expansion of its Carrington, England, industrial gas facility.

Today probably about one third of the capital being invested in new plant and equipment by U.S. chem­ical makers is going into their foreign operations. Foreign investment has held steady over recent years while domestic capital spending by the in­dustry has dipped since its 1966 high.

The level of 50% of sales abroad may still be a way off. But if both exports and sales from U.S.-owned chemical operations overseas are in­cluded, several major domestic chem­ical companies already make more than

Overseas sales of U. S. chemical companies continue to grow considerably faster than domestic sales

Air Products and Chemicals

Air Reduction

Allied Chemical

American Cyanamid

Celanese

Diamond Shamrock

Dow Chemical

Du Pont

W. R. Grace

Hercules

Monsanto

Stauffer Chemical

Union Carbide

Witco

"Estimated bC&EN estimates cExcluding Canada ««Excluding exports

Source: Company data, company estimates, and C&EN estimates

16 C&EN OCT. 6, 1969

Overseas saies {millions vf dollars)

Î9S9* X96B

Total company revenues

(militons of dùitan

Overseas mies m per cent ot Mai revenues-

Estimated growth c

mem&mz : t&tes #/,safes; '"

" V/V^

a quarter of their sales in foreign countries. For most U.S. chemical companies foreign sales are growing considerably faster than domestic sales, according to a C&EN poll.

Figures from 14 major domestic firms, representing some two thirds of the total sales of the basic chem­ical industry, put their combined for­eign sales last year at 19.67c of their total sales. On an industrywide basis this would put basic chemical indus­try foreign sales last year at just about $5 billion, out of the total of $26.2 billion.

From estimates of growth for 1969 by 12 of the 14 it looks as though foreign sales by U.S. chemical com­panies will increase some 11% this year over last. Meanwhile, domes­tic sales for the industry will be lucky to post a 5% gain this year.

Even these figures do not represent the total foreign investment of the domestic chemical industry. Many companies have considerable sales from partly owned foreign affiliates that they do not consolidate into their total sales. For instance, Du Pont

TERNEUZEN. Dow's complex at Terneuzen, the Netherlands, produces a variety of chemi­cals for the European market place

does not consolidate the sales of Du Pont of Canada, Ltd., $208 million last year, even though it owns 75% of the common stock of the Canadian firm.

Hence it seems safe to say that the basic chemical industry generated a little more than 20% of its sales abroad last year. And this penetration will probably gain another percentage point this year.

Largest sales. It is not possible to pin down unequivocally just which U.S. chemical company has the largest international sales. But of the com­panies defined by the Securities and Exchange Commission as being mem­bers of the basic chemical industry, Du Pont, Union Carbide, W. R. Grace, Dow, and Monsanto certainly form the top five group.

Of Du Pontes reported total sales of $3.48 billion in 1968, $440 million came from foreign sales. This con­sisted of $276 million in exports and $164 million in sales of goods pro­duced outside the U.S. However, the foreign sales total is bumped to $700 million if sales are added from partly owned subsidiaries not consolidated in the $3.48 billion total.

Both these totals are growing very rapidly. Du Pont president Charles McCoy pointed out in a recent speech that, "International sales are far and

Capita/ investment by foreign chemical affiliates of U. S. firms has gone up more than five-fold in the past decade Millions of dollars

1200

800

400

aC&EN estimates Source: Office of Business Economics,

Department of Commerce

OCT. 6, 1969 C&EN 17

ο 1960 1961 HWo2t îsfiâ 1964 1965 1966 1967 1968 1969? 1970"

Other areas j Canada Europe

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away the fastest growing segment of our [Du Pont's] business/'

This year, when domestic sales will likely grow as little as 2% over 1968, total foreign sales will be up 18 to 20% from last years $700 million. International sales reported by Du Pont in its total will probably add about $100 million to reach close to $540 million.

This performance will be a con­tinuation of the strong growth in Du Pontes international sales over the past decade. In 1959 they totaled $300 million. By 1966 they had nearly doubled to $597 million. This year they will reach about $830 million to post an average annual gain of 11% over the past decade. In 1959 the company employed about 300 persons in Europe; today it employs close to 10,000.

Carbide, too. Another company looking for strong international gains this year is Union Carbide. In a recent address before security ana­lysts in Boston, vice president W. S. Sneath said that "Our overseas busi­ness has been very good." He goes on, "Europe, which was a trouble spot in 1968, has come back strongly over 1969, with sales gains over a year ago that have been running in the order of 25%. Canada and Latin America have also registered strong performances, as have most of the countries of the Far East, particularly Japan and India." Net result of all this will likely be 1969 international sales of close to $750 million.

W. R. Grace remains the U.S. chem­ical company most heavily involved abroad on a percentage of total sales basis. Last year its $585 million in sales of materials produced overseas alone (not including exports) repre­sented 32% of total company sales. This year growth will be limited— up only to about $590 million—be­cause of the recent sale of several foreign operations.

Dow is also heavily committed internationally. Its $550 million in exports and foreign sales last year represented 32% of total company revenues. And this year's expected $625 million total will push this to 33%. Monsanto expects to maintain its international sales in 1969 at last year's level of about 23% of total sales.

However, it is not entirely all up, up, and away for U.S. chemical opera­tions overseas. Celanese, for one, is pulling in its horns. Earlier this year the company divested itself of its SI ACE pulp operation in Sicily and sold its British Paints group of com­panies. Last month Celanese signed an agreement with KoninkHjke Zout-Organon, N.V., for KZO to acquire Celanese's 50% interest in their jointly owned chemical venture, Konam, N.V.

18 C&EN OCT. 6, 1969

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