CHEMICAL INDUSTRY. U.S. chemical industry shipments total about $450 billion annually. The industry is a major provider of raw materials for consumers, manufacturing, defense, and exports (about 15 percent of the total). End markets include consumer products, health care, construction, home furnishings, paper, textiles, paints, electronics, food, and transportation. In fact, most industries use chemicals as their key raw materials. For example, the auto has about $1,500 of chemicals such as paints, lube oils, rubber tires, plastic, and synthetic fibers; a cell phone is feasible because of its use of silicon-based chemicals and a durable plastic assembly; microwave ovens are made with silicon chips, plastic housings, and fire-retardant plastic additives.
Chemical industry sales and profitability tend to follow the U.S. consumer economy, with peak sales and profits a few years after strong consumer economic growth periods and low points during recessions. While demand growth for the overall chemical industry has slowed since the 1960s, it is still better than annual gross domestic product (GDP) gains. Operating margins were about 6 percent in 2000 compared with a peak of almost 11 percent in 1995. Research and development and capital spending by the industry are about $30 billion each, or just under 7 percent of sales. The fastest growth areas are life sciences, specialties such as electronic chemicals, and select plastics. The overall employment level of the chemical and allied industries is over 1 million people, with about 600,000 in direct manufacturing. Most of the chemical industry's basic manufacturing plants are located in the Gulf Coast (primarily Texas and Louisiana) due to the proximity of key energy raw materials. Finished product manufacture, by contrast, is located closer to population centers on the East and West Coasts and in the Midwest.
External sales of the chemistry business can be divided into a few broad categories, including basic chemicals (about 35 to 37 percent of the dollar output), life sciences (30 percent), specialty chemicals (20 to 25 percent) and consumer products (about 10 percent).
Basic chemicals are a broad chemical category including polymers, bulk petrochemicals and intermediates, other derivatives and basic industrials, inorganic chemicals, and fertilizers. Typical growth rates for basic chemicals are about 0.5 to 0.7 times GDP. Product prices are generally less than fifty cents per pound. Polymers, the largest revenue segment at about 33 percent of the basic chemicals dollar value, includes all categories of plastics and man-made fibers. The major markets for plastics are packaging, followed by home construction, containers, appliances, pipe, transportation, toys, and games. The largest-volume polymer product, polyethylene (PE), is used mainly in packaging films and other markets such as milk bottles, containers, and pipe. Polyvinyl chloride (PVC), another large-volume product, is principally used to make pipe for construction markets as well as siding and, to a much smaller extent, transportation and packaging materials. Polypropylene (PP), similar in volume to PVC, is used in markets ranging from packaging, appliances, and containers to clothing and carpeting. Polystyrene (PS), another large-volume plastic, is used principally for appliances and packaging as well as toys and recreation. The leading man-made fibers include poly-ester, nylon, polypropylene, and acrylics, with applications including apparel, home furnishings, and other industrial and consumer use. The principal raw materials for polymers are bulk petrochemicals.
Chemicals in the bulk petrochemicals and intermediates segment are primarily made from liquified petroleum gas (LPG), natural gas, and crude oil. Their sales volume is close to 30 percent of overall basic chemicals. Typical large-volume products include ethylene, propylene, benzene, toluene, xylenes, methanol, vinyl chloride monomer (VCM), styrene, butadiene, and ethylene oxide. These chemicals are the starting points for most polymers and other organic chemicals as well as much of the specialty chemicals category. Other derivatives and basic industries include synthetic rubber, surfactants, dyes and pigments, turpentine, resins, carbon black, explosives, and rubber products and contribute about 20 percent of the basic chemicals external sales. Inorganic chemicals (about 12 percent of the revenue output) make up the oldest of the chemical categories. Products include salt, chlorine, caustic soda, soda ash, acids (such as nitric, phosphoric, and sulfuric), titanium dioxide, and hydrogen peroxide. Fertilizers are the smallest category (about 6 percent) and include phosphates, ammonia, and potash chemicals.
Life sciences (about 30 percent of the dollar output of the chemistry business) include differentiated chemical and biological substances, pharmaceuticals, diagnostics, animal health products, vitamins, and crop protection chemicals. While much smaller in volume than other chemical sectors, their products tend to have very high prices—over ten dollars per pound—growth rates of 1.5 to 6 times GDP, and research and development spending at 15 to 25 percent of sales. Life science products are usually produced with very high specifications and are closely scrutinized by government agencies such as the Food and Drug Administration. Crop protection chemicals, about 10 percent of this category, include herbicides, insecticides, and fungicides.
Specialty chemicals are a category of relatively high valued, rapidly growing chemicals with diverse end product markets. Typical growth rates are one to three times GDP with prices over a dollar per pound. They are generally characterized by their innovative aspects. Products are sold for what they can do rather than for what chemicals they contain. Products include electronic chemicals, industrial gases, adhesives and sealants as well as coatings, industrial and institutional cleaning chemicals, and catalysts. Coatings make up about 15 percent of specialty chemicals sales, with other products ranging from 10 to 13 percent.
Consumer products include direct product sale of chemicals such as soaps, detergents, and cosmetics. Typical growth rates are 0.8 to 1.0 times GDP.
Every year, the American Chemistry Council tabulates the U.S. production of the top 100 basic chemicals. In 2000, the aggregate production of the top 100 chemicals totaled 502 million tons, up from 397 million tons in 1990. Inorganic chemicals tend to be the largest volume, though much smaller in dollar revenue terms due to their low prices. The top 11 of the 100 chemicals in 2000 were sulfuric acid (44 million tons), nitrogen (34), ethylene (28), oxygen (27), lime (22), ammonia (17), propylene (16), polyethylene (15), chlorine (13), phosphoric acid (13) and diammonium phosphates (12).
The Industry in the Twentieth Century
While Europe's chemical industry had been the most innovative in the world in the nineteenth century, the U.S. industry began to overshadow Europe and the rest of the world in both developments and revenues by the mid-1900s. A key reason was its utilization of significant native mineral deposits, including phosphate rock, salt, sulfur, and trona soda ash as well as oil, coal, and natural gas. By 1914, just before World War I, the U.S. industry was already 40 percent larger than that of Germany. At that time, the fertilizer sector was the largest, at 40 percent of total chemical sales, with explosives the next largest sector. Much of the petroleum-based chemicals industry did not develop into a meaningful sector until the post–World War II period. In the 1970s and 1980s, chemical production began to grow rapidly in other areas of the world; the growth was fueled in the Middle East by local energy deposits and in Asia due to local energy deposits and by increased demand. At the end of the century, the United States was the largest producer of chemicals by a large margin, with the overall European and Asian areas a close second and third. On a country basis, Japan and Germany were a distant second and third.
In the early twentieth century, the availability of large deposits of sulfur spurred an innovative process development by Hermann Frasch in which hot water was piped into the deposits to increase recovery. Extensive power availability at Niagara Falls also enabled the growth of an electrochemical industry, including the production of aluminum from bauxite (via Charles Martin Hall's process), the production of fused sodium for caustic soda, and eventually sodium hydroxide and chlorine from salt brine. Other technology innovations spurred by local deposits were Herbert Dow's bromine process and Edward D. Acheson's electrothermic production of carborundum from silicon and carbon.
The coal-based chemical industry, which had been the major impetus for Germany's and England's chemical growth in the nineteenth and early twentieth centuries, was overshadowed before World War II by U.S. petroleum and natural gas–based chemical production. Key organic chemical products made from coal included benzene, phenol, coke, acetylene, methanol, and formaldehyde. All of these chemicals are now made much less expensively and in larger volumes from petroleum and natural gas. Coke, made from coal, was combined with calcium oxide (quicklime) in an arc furnace to make acetylene. Acetylene was replaced as a raw material by LPG-based ethylene. BASF in Germany and American Cyanamid in the United States had been the major innovators of acetylene-based chemicals. Carbon monoxide, also produced from coal, had been the predecessor to chemicals such as methanol, formaldehyde, and ethylene glycol.
The U.S. petrochemical industry, which got its strongest commercial start between the two world wars, enabled companies such as Union Carbide, Standard Oil of New Jersey (Exxon), Shell, and Dow to make aliphatic chemicals, replacing coal-based production. From 1921 to 1939, petroleum-based chemical production skyrocketed from 21 million pounds to over 3 billion. Meanwhile, coal tar–based chemicals remained in the 300 million pound area. Among the commercial petrochemical innovations was the production of isopropanol and other C3s from refinery propylene, beginning in 1917 by Standard Oil. In the 1920s, Union Carbide began to make ethylene by cracking ethane in its Tonowanda, New York, site. In the mid-1920s, it added ethylene and derivative as ethylene oxide/glycol production in Charleston, West Virginia, creating the Prestone brand ethylene glycol product. By the early 1930s, Union Carbide was making as many as fifty petrochemical derivatives. In 1931, Shell built its first natural gas–based ammonia plant. Also in the 1930s, Shell started to make methyl ethyl ketone (MEK) and other oxygenated solvents from refinery butylenes. They also dimerized refinery isobutylene to make the high octane fuel isooctane. Just before World War II, Dow started making styrene monomer and polystyrene from ethylene and benzene.
World War II was a catalyst for even more major expansions of the U.S. chemical industry. Growing demand for synthetic rubber–based tires spurred more ethylene, propylene, and C4 production to make GR-S synthetic tire rubber. Butylenes were dehydrogenated to butadiene, and ethylene along with benzene was used to make styrene monomer.
Commercial developments in the plastics industry were very rapid in the postwar period. The start of the big-volume plastics had only occurred a decade earlier, when the British company Imperial Chemical Industries (ICI) discovered a process to make polyethylene (PE), which was first used as a high-frequency cable shield material for radar sets. Now most PE is used to make products such as food and garbage bags, packaging films, and milk containers. Shipments of PE, which were as little as 5 million pounds in 1945, grew to 200 million by 1954, 600 million in 1958, 1.2 billion in 1960, and 14.5 billion in 2000. Similar gains occurred with PVC, which went from 1 million pounds before World War II to 120 million late in the war, 320 million in 1952, and 7.9 billion in 2000. Polystyrene, which was first made in 1839, was not commercialized until Dow made it in 1937, producing about 190,000 pounds that year. Shipments rose to 15 million by 1945, 680 in 1960, and 7.3 billion in 2000.
Other commercial applications during the period around World War II included DuPont's commercialization of nylon for hosiery, which was subsequently the material of choice for parachutes. Most nylon now goes into the manufacture of carpeting. Methyl methacrylate (MMA) was first made in Germany but not truly commercialized until the 1930s, when ICI used it to make sliding canopies for fighter aircraft. The Rohm and Haas Company and DuPont both supplied the acrylic sheet. Another prewar discovery was DuPont's plastic PTFE (branded Teflon) in 1938, which was not introduced until 1946. Another important chemical, an epoxy based on ethylene oxide, was first made by Union Carbide in 1948.
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Shreve, R. Norris, and Joseph A. Brink Jr. The Chemical Process Industries. 4th ed. New York: McGraw Hill, 1977.
"Chemical Industry." Dictionary of American History. . Encyclopedia.com. (May 21, 2018). http://www.encyclopedia.com/history/dictionaries-thesauruses-pictures-and-press-releases/chemical-industry
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Many heavy industries, such as iron, produced as byproducts inorganic chemicals which, with further processing, found markets. Amongst these were agricultural fertilizers such as basic slag and essential components of products such as washing powders. Output of raw materials such as common salt became of increasing importance and firms led by Lever Brothers formed the Salt Union which lasted for some years, dominating its supply in the late 19th cent. Research and development in these fields of chemical manufacture were undertaken by Brunner and Mond. Their United Alkali Company merged with the explosives company Nobel Industries and the British Dyestuffs Corporation in 1926 to form Imperial Chemical Industries.
Applications of research in organic chemistry during the 19th cent. enabled the development of firms making solvents, synthetic dyes, and new materials. The most important of these were developments from combinations of cellulose which made possible a wide range of new products including parkesine (the first commercial plastic), photographic film, and viscose rayon.
During the 20th cent. the demands for new chemicals continued in order to reduce imports and to cut costs. Thus rayon was invented and marketed as artificial silk. Courtaulds sold this cheaper fibre which was used for clothing and furnishing fabrics. Similarly Lever Brothers and the Dutch company of Jurgens combined in 1929 to form Unilever, whose core businesses had depended on making soap, margarine, and cattle feed, but which then produced pharmaceuticals and food chemicals. Developments in long-chain polymer chemistry during the middle decades of the 20th cent. gave rise to many products: polythene, nylon, and terylene. The raw materials for these products derived from coal or crude oil. Major international oil companies became closely involved in chemical manufacturing and often undertook research to tailor-make some product for special uses such as materials for aircraft tyres.
The most modern chemical industries are those concerned with biochemistry, microbiology, and particularly pharmaceutical research. Associated with household names such as Boots, Fisons, Glaxo, and ICI and Zenaca, they all demand heavy research and development investment.
Ian John Ernest Keil
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Laura Ashley, 1925–85, British fashion designer and manufacturer. After serving in the Women's Royal Naval Service, she and her husband founded a company to produce silkscreened placemats, scarves, and tea towels. Her romantic and old-fashioned look carried over into women's clothing, home furnishings, children's wear, fabrics and wall coverings and to decorative accessories. Her more popular designs included a smock blouse, patch pockets, and dresses designed in the Edwardian style.
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