If you don’t read Jim Kunstlers blog, Cluster***k Nation, you’re really missing out on some juicy stuff. Thanks to the all-seeing eye of Uncle Al for this particular post. Kunstler writes with a manic urgency rather like Hunter S. Thompson (and … Uncle Al). I’m not calibrated for the negative spin on the mortgage disaster that he makes. Perhaps others can comment.
The chemical business environment is changing in some ways that, I fear, add even more disadvantage to small chemical manufacturers. The regulatory sphere is closing in on our chemical manufacturing industry like shrink wrap around a gutted salmon. Whereas it was once straightforward to bring a new chemical product to the B2B market, now we have TSCA and Department of Homeland Security (DHS) placing complex obstacles in the road.
TSCA compliance for non-listed compounds requires that process details be disclosed for screening and hazard modeling by EPA workers. Unless the EPA finds some compelling environmental or worker exposure issue that requires further consideration, a new compound is allowed.
Operating unsafely is a poor business model. Civil litigation and insurance pressures are usually enough to motivate a plant operator to conduct safe practices. Regardless, if you’re in the business of breaking trail in developing new chemical entities, waiting for allowance by EPA necessitates starting the development timeline up to a full quarter in advance. TSCA filing also starts an audit trail that, for the unwary, can lead to a filing cabinet full of discoverable documents that can return to haunt you. TSCA is powerful code and it is one of the larger hammers that the government wields.
Before the chemical regulatory epoch began in earnest, chemical processing merely delt with the forces of the market and of nature. Corrosives, flammable liquids, runaway reactions, foreign competition, etc. That was dangerous enough and required the full attention of many experts.
Today, in addition to chemical hazards we have administrative hazards that require specially trained staff and, naturally, lawyers. Law office charges to document compliance may cost as much per hour as a whole shift of operators for a medium scale process line.
The federal government is beginning to impose itself more strongly in the operations of chemical plants. Part of this is in response to international terrorism. Like children sitting in a darkened room telling ghost stories, federal regulators have stirred themselves into a twitter. Apparently, they have developed fault trees that line out the universe of consequences from attack scenario’s on our chemical industrial infrastructure. Code has been written and passed by the congress, signed by the president, and embraced by the suffocating bosom of the Department of Homeland Security. Woe is he who runs afoul of these people. Their para-military authority and zeal is what makes me uncomfortable.
If only we could be so analytical and systematic about invading and destabilizing prickly iron-age cultures on the other side of the world.
Of course, one cannot entirely fault the government for trying to apply the Precautionary Principle. It seems so sensible. But the eternal question is, what are the thresholds for action? Where safe meets sorry is also where the rubber meets the road. How much more industry are we going to chase to Asia?
On the non-security side, Europe has adopted REACH. I’m trying not to be a Chicken Little, but before the US adopts this approach to environmental regulation, we should study the suite of unintended consequences that will surely arise from this regulatory framework. The EU is breaking trail for us and we should pay attention.
This was a big day for Th’ Gaussling. The new business unit I have been developing sent it’s first in-house chemical product out the door. Okay, it was a modest 25 grams of specialty product. But for the first time the cash has started to flow the other direction. We are reworking our catalog operation for faster and better service while taking advantage of bulk production by another division for better economy. Watch out, Aldrich! \;-)
Doing chemical synthesis is easy compared to inventing a custom business architecture; especially one that has to be compatible with other systems, yet bringing improvements forward. It is like doing a reaction that requires 12 molecules (dodeca-molecular?) to collide simultaneously- We call it “getting buy-in”. To start a new business unit in a company, you have to get buy-in from accounting, IT, analytical services, quality control, upper management, shipping and receiving, production, R&D, etc. Lots of skeptical folks need to be assured that you’re not going to complicate their lives, threaten their careers, or create accounting hazards.
Business architecture amounts to the work flow mechanisms necessary for order fulfillment. If an order comes in, how do you go about filling it and getting product to the customer while ensuring profitability, regulatory compliance, safety, and a comprehensive web of accounting relationships? Every product has to be a discrete entity that has branched audit trails- costing, analytical, raw material lot #’s, and business intelligence. Every product must have an up to date MSDS, specifications, certificate of analysis, and a manufacturing procedure that does not require a PhD to make it. Well, that last one is a more nebulous goal.
I now have a more visceral appreciation for all the work that has gone on behind the scenes at the major chemical catalog companies. A lot of work goes into every single product entry. Every product has a trail of raw material specs, finished goods specs, and specific analytical test methods. Record keeping must be up to the task. It takes a lot of different skill sets besides savvy with chemicals to operate a chemical company.
According to the August 27, 2007 issue of C&EN, page 29, the EPA says that the toxicology data on tetrahydrofuran show “suggestive evidence of carcinogenic potential”. The cited document can be found at this link.
It’ll be interesting to see what happens as a result of this study. It is understatement to say that THF is a mighty important solvent. More than a few important processes require this cyclic ether. Perhaps this is how Methyl THF makes its appearance to a wider audience? But in doing so it will only attract the attention of toxicologists.
With REACH and the EPA’s reexamination of many substances in current use, there is likely to be an extended shakeup coming for US chemical processors in the next 5-10 years. What the rest of us have to reconsider is what constitutes acceptable risk. It’s time for that old aphorism- “A ship in harbor is safe. But that is not where ships are meant to be.”
The hardest problems to deal with seem to be the low signal-to-noise ratio phenomena- low level radiation, low level pollution, trace levels of this or that in the working environment. Most likely, acceptable THF exposure levels will come way down and the material will stay in use. That’s my guess.
Should there be any lingering doubt about our Puritanical Heritage, all a person has to do is to scan 27 CFR, parts 1-31 to view our statutory fretting about ethanol. This is the code that covers the production and sale of alcohol. Part 19 is particularly interesting since it pertains to distilled spirit production and the documentation requirements therein.
It is a funny thing. The more regulation that I come into contact with, the more libertarian I become. Righteous persons might say that gangsterism that arose over liquor in the prohibition days clearly demonstrates how an underground laissez faire production and distribution economy can arise under poor enforcement conditions. I would counter that gangster control of liquor arose quite naturally from the substantial profits from high demand for forbidden intoxicants. It is in the nature of puritans to deny access to natural urges.
One of the unfortunate consequences of this requlatory fixation on ethanol (EtOH) is evident in chemical processing. Purified EtOH is highly taxed and regulated with licensure requirements. Denatured EtOH is available, but is contaminated with additives that may be deleterious to the reaction conditions or could leave undesirable residues. The result is that manufacturers use methanol in place of EtOH. Methanol is inexpensive and is unregulated for coolant, solvent, or reagent use, but it does have the downside of being more toxic than EtOH.
The result is that process chemists may engineer around the need for ethanol in favor of methanol. Absolute or 95 % ethanol for processing carries the penalty of added documentation and expense that few have an interest in. In effect, because of regulations and taxes, chemical workers are exposed to methanol rather than the less toxic ethanol. Using ethanol vs hydrocarbon-derived alcohols carries a benefit of being faintly greener owing to the renewability of ethanol.
Speaking of intoxicants, at a recent street festival I happened to try a New Belgium brand of beer called Mothership Wit. As I tipped it back, the FortJazz band was belting out a brassy Zoot Suit Boogie. It was dusk, 75 degrees, still air, under a cloudless sky. Ordinarily I’m not a big fan of wheat beers. But this had a fruity finish that was remniscent of juicy fruit gum. The orange peel and the coriander somehow conspire to produce this subtle effect. I rather enjoyed the Mothership Wit and the music. It was a grand time.
I suppose there are more than a few out there who are not familiar with REACH. Those of us in the States are a bit confused about the implications on trade and the possibility that the US EPA will attempt to adopt and promulgate the same sort of regulation. REACH has formally begun, as of June 1, 2007.
From the EU Parliament website-
Parliament adopted the compromise it negotiated with Council on the new regulation for chemicals, REACH, which will oblige producers to register all those chemical substances produced or imported above a total quantity of 1 tonne per year. Registration will affect about 30,000 substances. For more hazardous substances, producers will have to submit a substitution plan to replace them with safer alternatives.
When no alternative exists, producers will have to present a research plan aimed at finding one.
Hold the bus!! “Where no alternative exists, producers will have to present a research plan aimed at finding one.” Hopefully, there are provisions for reactive precursors or intermediates.
Reactive chemicals are useful chemicals. Synthesis chemistry is about the management of reactivity. Differential reactivity gives selectivity. Chemical manufacturing is all about selectivity.
What if you need a ton of butyllithium or triphosgene or PCl3? Hopefully there is language that provides for manufacturing non-commodity, specialty chemicals with reagents that are highly reactive.
It will be interesting to watch the unintended consequences pop out of the ground on this program. The business of testing may end up being more profitable than specialty chemical manufacturing. The bedrock of western economics is manufacturing. I hope the EU doesn’t chase away to much of its manufacturing base.
Even the biggest pollyanna in the sales group will discover one day that it is possible to have a bad customer. Yes Johnny, it is a fact that not all customers are desirable. Oh I know, in sales one is always rabid to close the deal. Get the sale and move on to the next prospect with a pulse. But what is the difference between a good customer and a bad customer if their money spends the same?
Ideally, a “Great” customer comes back for repeat business, is flexible on terms and conditions, pays 30 days net, gives long lead times for delivery, accepts FOB terms, accepts delays and price increases without protest, and picks up the dinner tab when out for a visit. [~~Sound of needle scraping across phonograph album~~]
If only such compliant customers existed (Sigh). In reality, most chemical customers are in what I would call the “Good” category. That is, they have reasonable expectations of price and delivery as well as an understanding of what constitutes fair business practice.
But on occasion one runs into what you might call a “bad” customer. Such customers are found across the entire spectrum of size and business model.
A bad customer is one that consumes excessive resources during the course of service.
A small bad customer might want you to do free product development for them, or may try to negotiate bulk pricing only to turn around and try to get bulk pricing on small quantities. Bad customers may finagle front-run samples from you and then disappear for months or years without a peep.
Large bad customers like to throw their weight around. They know they are above you on the food chain and behave accordingly. They dangle promises of big and long term sales and wangle free services from you. Services like gratis process development, holding inventory for free, tolling or other business agreements that tie your hands and force you to open your books for their auditors.
Bad customers large and small have other maddening habits that consume resources. Specifications that change over time, always to the side of higher stringency, are a favorite of bad customers. Bad customers will discover that they can shave costs by elaborate just-in-time delivery schemes with favored shippers, a circumstance that will require full time attention by logistics people and production managers.
Bad customers want the transaction to follow their particular terms and conditions. Bad customers will want 60 days net- a particularly transparent scheme to float their resources in interest bearing accounts while the vendor has to finance manufacture up front. The fetid odor of MBA finance people lingers here.
Bad customers will want their vendors to provide indemnity to shield them against any conceivable liability related to the product. Bad customers will want to own any and all inventions pertaining to process improvements relating to the product. They’ll want to be free to take this improvement and hand it to your competitors in order to generate a tidy little bidding war over their business.
Practices that I have been calling “bad” are generally accepted in the business world. On the buy-side they are considered good practices. On the sell-side they are arguably bad practices because they increase risk and expense related to the transaction. A good buyer tries to implement these bad attributes. A good seller tries to eliminate or minimize these bad attributes.
In the real world, one rarely has the option of walking away from bad customers. But it is possible to stand firm and prevent profit erosion. Very often a customers apparent demand is just a straw man. If not entirely a bluff, it might be negotiable to some reasonable concession. The best practice is to be up front with your concerns and communicate with the customer. They are nearly always reasonable.
The 80/20 rule often applies to customer service: 20 % of your customers will take 80 % of your time. This is life in the fabulous world of sales. Every sales person must eventually come to terms with it. Sales consultants talk about “qualifying” sales prospects, but that only applies to real estate and vacuum cleaners. The world of custom business-to-business chemical sales is such that if someone can identify your product and seek your services, they are almost always a legitimate player.
I am one of the odd characters who rather admires lawyers. I have had a few occasions to be on both sides of a lawyers gun barrel and have come to admire them as a group for what they do. Contrary to what most people believe, they do much more than simply provide exquisite obfuscation. Yes, they can generate plenty of fear, doubt, and anger. Divorce lawyers generally have a stable of enemies. But more to the point they are trained to drill down to the facts of the case. They can pierce through the knotted fur ball of imperfect memory and slanted testamony to find the thread that connects the facts. Well, at least some of them can.
But what is perhaps more interesting than how lawyers perform is how their clients behave around them. If two parties are trying to plow through a complex negotiation without lawyers, for instance, it is likely that the tone of the proceedings will differ from a meeting with lawyers present. It is practically axiomatic that once one side has their attorney present, the other side feels compelled to have theirs present as well. This only makes sense. If the meeting concerns contractual issues or matters of liability or indemnity, it is best to have some legal firepower to oversee agreements or disclosures.
What happens when the attorneys are present is this. Like a startled bivalve, each side clamps down their shell and communication becomes a thin gruel of vague and hesitant exchanges. Suddenly everthing takes twice as long because both sides have to hunker down with counsel to discuss the plan off-line. Everyone is afraid of a slip up. Representatives of each company not only fear the other sides attorney, but their own as well. They fear the other sides attorney for advantages they might seize, but fear their own attorney for the consequences of a blunder on their side. Your own attorney will be able to describe your blunder in living color to management in the postmortem, so everyone is super cautious.
What is often missing in negotiations involving lawyers is plain talk. It often happens that in trying to be careful with disclosures and declarative statements, both sides fail to actually make a clear statement of what they want. Consequently, each side ends up negotiating a slightly different problem. It can take multiple meetings before everyone is on the same page negotiating the same deal.
Sales people are configured by nature to bring home the deal. They are inclined to do and say what it takes to git’er done. Procurement people are coy by nature and acclimated to their companies policy on purchasing. They want the best price, terms, and delivery possible. They will want concessions from the vendor and firm agreements on inventory and pricing schedules. They want and want and want. But in the end they have to get. They have to make the deal because raw materials have to arrive before invoices can go out for finished goods.
In negotiation, both sides bring their magic to the table. When lawyers are present, in my experience at least, everyone becomes so bloody careful and hesitant that a spirit of distrust can form. People become reticent to engage in plain talk. Lawyers are concerned with the “what if’s” and in fact it is their duty to make their client aware of such things. Soon after the lawyers jump in, people begin behaving like first year medical students who startle at every twinge and sniff.
The lawyers bring up the issues, but it is the duty of the experienced business manager to step back and assess the likelihood of a breach. The mistake people often make is to get the lawyer to make the decision for them rather than use the lawyers input to assess the big picture. The lawyer gets paid irrespective of the outcome of the decision. In the end, the business person must make the business decision and live with it.
Because lawyers are involved in key negotiations, they accumulate considerable “combat time” in business transactions. This is partly why lawyers end up on the board of directors of corporations. People feel more comfortable having them in the loop for the dicey decisions.
There is serious op-ed talk mulling the return of the insectide DDT, particularly for malaria-infected parts of the world. What is even more interesting is that this idea has caught on in the ultra-conservative media market and has become the liberal-bashing topic du jour of media darlings like Rush Limbaugh. Since I don’t waste perfectly good heartbeats listening to that swaggering gas bag, I have missed this “discussion”. Suddenly, Rush is concerned about the poor and destitute in Africa.
What has escaped discussion is the possibility that modern methods of high throughput experimentation might find permutations of the DDT “pharmacophore” that would afford something with higher activity and shorter environmental half life. Who knows, may be this has already been done? Maybe there is a sample of a DDT analog sitting on a shelf somewhere that has less aptitude for bioconcentration and a greater aptitude for photo or hydrolytic degradation. Then there is the potential for substantial wealth generation for Limbaugh’s wingnut paymasters.
DDT was clearly effective in suppressing mosquito-born illness for quite a long time. Surely there are labile analogs that are effective but less objectionable?
It is a wonder indeed to behold the awsome forces of the corporate cosmos. Against the vacuous backdrop of mom & pop businesses and meager franchise operations are the corporate galaxies in this business universe. There are the super massive galaxies consisting of giant business units orbiting around the central holding company. On occasion, these galaxies collide, sending fragments hurtling into space and leaving a merged core of black holes sucking dividends into the shareholder event horizon to points unknown.
I said it is a wonder to behold. But I didn’t say it is necessarily a “good” wonder. Occasionally a fellow gets a look into that gaping maw, the churning core of the organizational furnace and sees more than he bargained for.
To perpetuate the methodical ratcheting in of ever more profit, large corporations filter the continuous stream of applicants for people who can administer the hard-as-steel facts of corporate life. Certain personality profiles, or folks with certain predilections, need to be advanced in the system to promulgate the mechanical and financial needs of the corporate entity. Hatchet men and enforcers, rain-makers, and sneering sycophants seem to find these organizations and achieve buoyancy.
At some point a person will run into the reptilian brainstem (management) of the corporation. Large, impersonal corporate management is the perfect venue for many of our brothers and sisters to express their most antisocial and misanthropic inner selves. As long as the behaviour is in parallel with the fiduciary goals of the organization, the most vile actions are validated with flippant phrases like “business is business” or “nothin’ personal, it’s just business”.
The seasoned employee knows that the Human Resources department, for all of the caring talk, really isn’t your friend. HR is the mechanical arm of the corporate entity that dips into the human melting pot to stir things up from time to time, occasionally pulling out the unsuitable or the plain unlucky for a “rightsizing” exercise. If you’re aged 50 and well up the pay scale, look out. That mechanical arm is never far away.
Corporate life has its rewards for certain kinds of people. Some corporate cultures are better than others. Some understand that they are institutions and have a beneficial role in the advancement of civilization. Other corporate cultures are driven only by the mathematics of growth and are essentially extractive industries charged with the rapid accumulation of wealth by the end of the present quarter. There is always a rationale for ugly corporate behaviour and there always hordes of aspiring hard-asses trying to get in to do it. The greedy corporation is a physical manifestation of dark human desires which supplies the tools and opportunities for the acquisitive.
If some recent experiences are any guide, I have to conclude that civilization is still paper thin. To paraphrase a comment by another blogger, we’re only three missed meals away from anarchy.
Lamentations on Chemistry 