Document peQB6VJXwEKQvyRQGjmnQXeqa

INDUSTRY WEEK / July 8, 1974. critical." But they also believe that there is "a substantial pos sibility" that the decision will be reversed. If it isn't, the alternative is more federal money to compen sate for the interim losses. Losses over the next two years are projected at $400 million for the Penn Central alone. And if the creditors win their fight to be compensated with cash, rather than $500 million and stock in the new rail corporation, the cost of acquisition could increase even more dramatically. OSHA turns attention from safety to health A SUBTLE CHANGE in priorities is taking place in the Occu pational Safety & Health Ad ministration (OSHA) as the agency shifts more cf its atten tion, people, and money toward programs dealing with health hazards. Not as great a ratio of work ers dies from occupational health hazards as OSHA originally thought, an official says--a Bu reau of Labor Statistics survey for 1972 says that six of every 100 occupational fatalities can be traced to illnesses rather than accidents--but health's time apj parently has come. Why the change in emphasis? `'The National Institute of Safety & Health (NIOSH) is charged under the law with pub\ lishing an annual list of known toxic substances found in Amer ican workplaces," says an OSHA spokesman. ``In 1972, they listed 8,000. In 1973, the list grew to 25,000. And if we're going to make a dent in that, we've got to get started." To get off dead center, OSHA is currently involved in a crash program intended to promulgate standards for some 16 "sub stances" for which NIOSH de livered criteria documents as long as two years ago. Among the 16 are ultraviolet radiation, electromagnetic pulses, heat, noise, carbon monoxide, sulfur dioxide, lead, beryllium, and others. Teamwork--In addition to ef forts to get these 16 sets of standards on the books, OSHA has also entered into a $3.5 mil lion, 30-month contract with NIOSH for the development of standards for 400 more sub stances thought to be toxic. "A team of 48 people---24 from OSHA, 24 from NIOSH--is working now to take these 400 substances--for which we now prescribe only threshold limits --and to develop full-blown standards with requirements for monitoring, medical records, medical exams, and other regu lations." Standards for the first 40 substances will be released all at one time. The rest will trickle into law as standards for each are developed, the spokes man says. "And eventually they will affect almost every indus try in the country." Along with the shift to health hazards has come a reorganiza tion of the standards staff "along more functional lines," the spokesman says. And some 40 new people have been added in the standards office itself. "Once you promulgate stand ards, naturally, you increase the number of inspections against those standards," the spokesman says. "And with the shift to health hazards, we're trying to upgrade the number of indus trial hygienists on our staff." Originally, OSHA planned to have at least one hygienist in each of 60 area offices. "But now we're shooting for two," the official says, "because not only will more inspections have to he made but inspectors will also have to go back to some places once the new standards are in force." ' i * ' j j 24149001 \ INDUSTRY WEEK / July 8, 1974 group dropped from December's anticipated gain of 13% to an actual 2% gain. Business hires, expected to increase 9%, fin ished only 3% higher, including MBAs who had been projected for a 13% increase. Strong recruiting efforts were noted in the petroleum, building materials and construction, food and beverage processing, pack aging, and metals industries, and by the federal government. Shortage of capacity to hurt petrochemicals TWO WORDS might be used to sum up the situation in petro chemicals for the next few years: "not enough." There will not be enough ethylene, from which several major plastics are produced. There will not be enough pro pylene, from which plastics, sur factants, and pesticides -- to name a few products--are pro duced. And there will not be enough benzene, from which other plastics and rubber goods are produced. Those two words--not enough --don't actually give a clear pici ture of what the industry will face. But the complexity of the industry has even the experts puzzled as to which particular products might be curtailed and which might escape unscathed by shortages. The petrochemical industry starts, of course, with several organic raw materials such as crude oil, natural gas, or naph tha. And from these it makes several major products, such as ethylene, propylene, benzene, and butadiene. These in turn lead to dozens of other products and those into dozens upon dozens of others. The ultimate result: thousands of products that range from drugs and fibers to antifreeze and surfactants, j Few outside the industry t understood this process until the Arab oil embargo began. Then, fearing a drastic reduction of its feedstocks, the petrochemical in dustry began to broadcast its story. That story in a nutshell: the industry uses 10% of the na tion's natural gas and 4% of its petroleum. These raw materials - are upgraded by 300,000 workers at 1,900 plants into more than $20 billion of products each year. Neither the embargo, how ever, nor the energy crisis brought on the shortage of petrochemicals. It was simply a mat ter of not enough capacity to meet ever-growing demand. Capacity -- New plants have since been proposed and con struction has started on many. The shortages, however, don't appear to be over yet. Richard J. Huges, vice president. Union Carbide Corp., New York, has summed up the situation: `The combination of capacity shortages and shortages of some feedstocks and other raw materials means that some petrochemical products will continue to be in short supply for several years to come. Several plastics will be short, including polyvinyl chloride, polystyrene, polyethylene, and phenolics. A shortage of ethylene capacity will limit pro duction of important industrial chemicals such as ethylene ox ide, ethylene glycol, and ethyl alcohol. Isopropanol, acetone, and phenol will be in limited supply due to a shortage of ben zene and propylene." To meet such shortages, the industry will spend more than $5 billion on capital expendi tures this year versus $4.1 bil lion last year. But it takes three to five years to locate, design, construct, and start up a petro chemical plant. Thus those plants that are needed now would have to have been planned in 1970, when the industry was going through a rather bleak period with low profits and ; overcapacity. Furthermore, when ; the plants being built today are complete, demand will have j soared to new levels. So, some experts say, even today's build ing program won't meet the de ! mands of the future. ; But balancing this attitude is , the fact that the chemical in dustry has gone through some ; severe periods of overcapacity ji in the past. That bitter experi ence is well-remembered by many companies in the industry, \ and may temper a rush to add capacity. All of this leads industry' ex perts to several conclusions. To day's announced plant additions might not be enough to meet fu- ture demand; as raw material prices increase, so will prices of petrochemical products and their end products; these develop- t ments, in turn, will provide the ! basis for a substantial improve- !! ment in earnings for petrochemi!| cal producers, compared with ]j those of recent years. | Between 19C0 and 1966 the | average return on assets in | chemicals and allied products !( was 11.4%, and income grew an !f average 9.5% each year. From |i 1966 through 1972, however, av- |j erage return on assets fell to [j 9%, and income growth averi! aged only 3.5% annually. | So any higher earnings gen} erated by price hikes will quite ^ likely be needed for expansion to meet growing demand. ; I ! ' ; j ! j i ; | ! j ! ; | 2006W Z Copies to: A. Vittone R. D* Scott J. L. Kelson E, W. Harrington H. Waltemate B. M. G, Zwicker G. Pow W. J. Wilcox P J. Weaver R. B. Downey E. B. Osborne R. P. Kenney - A. L. Hatfield - C. R. Flynn