Catalyst

Here in Berlin and the hotels are already humming with the chatter of chemical business. Rain has stopped and the sun is out.

-Lyn

CW’s Billion Dollar Club, compiled by senior associate editor Kerri Walsh, offers an annual glimpse of changes at the top of the global chemical sector. BASF tops this year’s CW ranking of companies by chemical sales at $51.5 billion, taking back the title from Dow Chemical.
CW’s first edition of the Billion Dollar Club, published in 1995, featured Hoechst on top with sales of $26.9 billion (equivalent to $36.6 billion in 2006 dollars, based on changes in the U.S. consumer price index). DuPont was second, and the other members of the then German Big Three rounded out the top four: BASF and Bayer (table). Hoechst, of course, was broken up in the late 1990s. ICI, number eight in 1994, slipped to 25 in 2006, and will also fade away if Akzo Nobel’s planned acquisition succeeds.
Consolidation in the oil sector and high commodity prices have handed oil majors three spots in the top 10, compared with just one in 1994. Chemical industry consolidators such as Lyondell, which itself is about to be taken over by Basell, as well as Ineos, have jumped into the top 10 from nowhere in 1994.
Once-mighty firms such as Hoechst and ICI are giving way to new industry giants with global ambitions and reach, as well as emerging powerhouses in the Mideast and Asia/Pacific. Taiwan’s Formosa Plastics was the only chemical maker outside of the U.S., Western Europe, and Japan to crack the top 25 in 1994, but last year Sinopec (7), Sabic (11), Formosa (17), and Reliance Industries (24) stood in the top 25, and they are among the industry’s fastest growers.

Lyondell Chemical is inviting employees to participate in the selection of a name for the company that will emerge following Basell’s pending acquisition of Lyondell.
“What do FedEx, Pepsi and American Express have in common? All three are organizations with well-respected, international brands that are instantly recognized,” a Lyondell memo to employees stated earlier this week. “And all three are similar in size or smaller, in terms of annual revenues, than our company is expected to be following the close of the merger of Lyondell and Basell.” Basell and Lyondell combined will have revenues of nearly $35 billion, and the deal is expected to close sometime in the next several months.
“As we join the highest ranks of our industry, just behind BASF and Dow, we are presented with a choice: keep our existing company names (or some version thereof) or select a new name – one that helps to unify our organizations and focuses more on our future aspirations than the legacies of our pasts.”
Lyondell lays out some ground rules for employees to follow:
1) The name should not include the word “chemical.”
2) The name should work from a global perspective, i.e., it must be acceptable in multiple languages and cultures.
3) The name should be “scalable.” In other words, it should be able to encompass not only the current Lyondell and Basell businesses, but also the future organization as it continues to grow and possibly acquires additional products and businesses.
4) The name should be sufficiently unique to pass the requisite trademark and domain name checks.
Lyondell is looking for names to be submitted 5 p.m. CT on Friday, Sept. 21. Any suggestions out there?

The Society of Chemical Industry (American Section) awarded the Perkin Medal, the highest honor in American industrial chemistry, to biochemist and Genentech co-founder Herbert Boyer at a reception in Philadelphia last week. Boyer was honored for his work on recombinant DNA.
In accepting the award, Boyer reflected on innovation, the importance of science and technology education, and the progress brought about by efforts across many scientific disciplines to advance work on DNA. “It is not just biology, not just chemistry, but other disciplines that also have made this work possible,” Boyer says. “We would not be where we are today without the use of computers in understanding human life and DNA.”
Boyer, along with geneticist Stanley Cohen of Stanford University, first demonstrated the usefulness of recombinant DNA technology to produce medicines. That work provided the foundation for Genentech, which effectively launched the biotech industry that continues to transform the pharmaceutical and chemical sector.
“Everyday in DuPont’s labs researchers make use of science and techniques pioneered by Boyer,” DuPont executive v.p. and chief innovation officer Thomas Connelly said in introducing Boyer. Early results of DuPont’s efforts in this area include bio-based 1,3-propanediol, a material that DuPont developed in partnership with Genencor, which was originally formed as a jv between Genentech and Corning. “We do not pursue proteins for human health, but rather proteins that catalyze a broad range of chemicals using the unique and elegant chemistry of living organisms as a reactor,” Connelly says.
Advancements in life expectancy rates and quality of life have been driven because of the value society has placed on science, technology, and innovation, Boyer says. “This progress has happened, I think, because of the recognition by our society of the benefit of investing in science and technology,” he says. After World War II, government funding of science and technology education programs spurred extraordinary work by scientists and researchers including Boyer. Investment in science and technology has been “very fruitful,” Boyer says. “The increase in knowledge and technology is so impressive and occurs at such a rapid rate that innovation will go on as long as we don’t find some way to stifle it.”

The Chinese government is pressuring the country’s state-owned chemical sector to consolidate, in a bid to improve competitiveness, speakers told delegates at CW’s 13th annual China Chemical Industry (ChinaChem) conference, currently taking place in Shanghai. “There are too many small and medium-sized chemical enterprises in China,” Fan Xiaosen, v.p. at China National Chemical Industry Corp. (ChemChina; Beijing) says. “We need to build up a group of large chemical corporations.” The average annual sales of China’s top 100 chemical companies is just Rmb27.7 billion ($3.7 billion) compared with Rmb150 billion for the top 100 chemical firms in the rest of the world, Fan says. Scarcity of natural resources in China, tightening environmental legislation, and the need for more efficient spending on R&D will drive consolidation. “We believe the whole industry will become more consolidated,” says Zhang Pei Zhang, chaiman of Shanghai Hua Yi Group (Shanghai). “It’s still fragmented and we think it’s going to get more consolidated, and that’s good for environmental protection.” China’s rapidly expanding, integrated chemical parks will also assist the consolidation process, Zhang says. The number of state-owned chemical enterprises in China is likely to be cut by half. “There are 154 chemical companies under central government control, and it’s expected that this will be consolidated down to about 80,” Fan says. State-owned ChemChina was created in 2004 as a vehicle for consolidating the chemical sector, and accounts for 47% of the 154 companies’ sales, Fan says. Huayi plans to become a “national company” via mergers and acquisitions, Zhang says.