IHS Chemical Week


Forget Bail Out or Hand Out - the Answer is Innovation and Conservation

3:45 AM MST | January 9, 2009 | By GIRISH MALHOTRA

Recent turmoil in the financial markets is taking its global toll. However, this event, once in lifetime event, is also giving us a message and presenting us with an opportunity. The message is ‘it is time to have innovative technologies that also conserve our resources.’

The U.S. automobile industry lost its focus when it quit innovation in the sixties and was not farsighted enough to raise the fuel efficiency of its vehicles. It fought tooth and nail against raising gas mileage standards. Japanese producers came with better quality, pizzazz and hybrids. But Detroit thought it was not a good idea to have a ‘better idea.’
Lately we have read about plants of many chemical companies being shuttered for lack of demand. We will probably hear more such closures before things come back. Bankruptcies will likely be around also.

I wonder if the closures are a reflection of not having the best technologies to manufacture the products? Had the technologies been such that the feed rates could be lowered or increased to meet the prevailing demand, plant shutdowns could have been avoided. Lack of applying the best methods suggests that there is an opportunity to have better manufacturing technologies. Better technology equals high conservation i.e. producing more from less.

Pharmaceuticals, which produce disease-curing chemicals, cannot think conservation when they are able to make their profit margins on “human desire” to extend life. Poor yields, high in-process inventory and meeting quality standards only by checking every milligram are accepted but, I would suggest, are significant opportunities. The consumer pays for every in-efficiency e.g. inventories, poor quality and costs related to the inefficient use of raw materials. In 2007-2008 we saw an acceleration of the losses of employment and the industry’s knowledge base. When pharmaceutical companies close more than 50 plants, this suggests that such companies have technologies that need total overhaul. They need to develop and implement technologies for their survival.

Their blockbuster model is dying on the vine and their new product pipeline will change from a gush to a trickle in the next few years. Pharma needs to create a new business model. Due to toxicity of their chemicals Pharma needs to improve their manufacturing technologies to levels better than “non-disease-curing” chemicals. Higher yields mean higher profitability and less effluent or/and emissions in our eco system.

In my recent trip to China, I saw electrically charged bikes to move around town. Similarly in Europe and China they have low cost and simple solar water heaters on their rooftops to provide them with the hot water for their daily use. Roof top heaters do not look aesthetically bad but tell us about the inherent character of inhabitants and their nature to conserve and use nature’s gift of the sun’s heat. A missing rooftop heater suggests a ‘missing link.’ Communities in the U.S. have prevented such installations with the thinking that they look ugly and will lower real estate value. Aesthetics is more important than conservation.

Chinese company BYD is introducing an electrical car and an Indian company TATA is introducing a car for sale for about $2,500. This suggests innovation is possible if we step up to the challenge.

We need to move from being ‘consumption zealots’ to ‘conservation zealots.’ Conservation and preservation will not result in any hardship but will lead to innovation that will improve profitability. The present slow down is the best time to innovate and we need to spend effort so that we can reap benefits in future.

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