Category Archives: Business

Receding Tide Strands All Boats

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Wow. Major dose of reality. For Th’ Gaussling, this economy fiasco just went from made-for-TV to in-your-face reality. Big chemical producers are pitching 10 % chunks of resourceful humanity overboard. They are burning down inventory levels, pushing back raw material purchases, and stopping capital projects. The reciprocal of the old saw about “a rising tide lifting all boats” is in effect.

Well, everywhere except government. Government seems to continue to build up debt obligations into the tens of terabucks range. Now is a good time to have defense related products- things that have MIL SPEC on them.

But now is when it really sucks to be in advertising, RV sales, and office supplies.  Advertising budgets are among the easiest to cut when the flancing of blubber begins. 

This is a great time to hire. Lots of job candidates out there with degrees. I’ve been getting Hail Mary resumes from people wildly disconnected from chemistry.

If you are a well paid 50-something, golly, you might as well put a target on your back. This is one of the ways companies can re-jigger their staff to be rid of those expensive, middle aged folk who burden the health insurance pool with those costly diseases. In a recession, a company can use the situation to reset the payroll and have a chance to restaff with cheaper worker bees when things pick back up. That is, if there is anybody left.

The Chemical Entrepreneur. Part 2.5.

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There are as many ways of starting a chemical business as there are people starting them. Entrepreneurs range in profile from smooth talking slicksters to sober, ROI-calculating engineers. Entrepreneurs can also be rather unruly folk. It is not automatically true that business founders are inherently talented at designing and running orgainzations. In fact, they are frequently poor at it.  But, successful founders are usually highly focused and are able to attract resources.

A common motivation for starting a business is that the founder is possessed with existential certainty that he/she can operate a business venture better than, say, a former boss or rival. A business founder may be a free spirit, refractory to sensible advice, or may be a solemn Harvard MBA operating by the book. It is not uncommon for a founder to have had several previous failed ventures prior to a successful one.

And make no mistake, the sense of power that a founder feels in the execution of a business plan can be as addictive as heroin or crack. Once a person has had the experience of successfully gathering resources and then allocating them to leverage progress to a goal, they are forever changed. Whether or not they continue the role of managing funds or personnel, their eyes have been opened to the real meaning of power.

Power is the ability to allocate resources.

No matter what kind of chemical business one wishes to start, it is crucial to understand that it will require the accumulation of some kind of resource that you can apply to a problem. That resource can range from your technical reputation, 30 days net of commercial credit, VC monies, or a chemical processing plant. It is all a form of leverage toward the greater goal converting streams of goods and services into streams of cash.

Try to get cash flowing from sales as early as possible. Choosing a Market-Pull activity is the best way to do this.

A chemist starting up a business is able to choose several kinds of general business activities.  If you want to be a consultant, you must determine the boundaries of your knowledge and then find demand for that expertise.  If you are truly an expert in a field, then more likely than not you know who might buy your services.

If you choose a Technology-Push approach, try to target customers who are willing to be early adopters.

A chemist may be well situated to start an operation offering analytical services. In that case, the enterprising analyst needs to know about underserved demand out in the marketplace. You need to offer a service that prompts people to send a purchase order to you.

If your startup is a one-act pony, it is critical that the pony actually be able to jump through the flaming hoop as advertised. Try to avoid one-act pony business plans.  Find Market-Pull products to pay the bills while your Technology-Push products are under development.

A chemist is in a great position to get into formulations.  While this might not be strictly a “chemistry’ activity, the walking-around-knowledge of chemicals that a chemist might have probably well exceeds the basic chemistry knowledge of many “experts” in the formulations business. However, a chemists general knowledge may not be applicable for direct application to formulations. A formulator must accumulate specialized knowledge and analytical methods for the materials they handle, including things like rheology, cloud and pour points, fungal contamination, and miscibilities. The level of infrastructure for doing formulations can be dramatically less stringent than chemicals manufacturing as well, requiring less startup capital. That said, formulations may be in demand at the large scale. Puttering around at only the less-than-drum scale may have no future.  Again, to be a formulator you need to know what is in demand.

Remember-Sometimes it is dumb to be too smart about things. Be customer oriented. Be honest about strengths and weaknesses.  Learn the difference between smart and cagey. Dick was a cagey businessman. Don’t be a Dick.

Fine chemicals manufacture has many success stories.  Alfred Bader started his Aldrich empire making what we now call Diazald. Bader was extremely customer service oriented and I believe this was the key to his success. He visited laboratories and asked workers what they needed. If the request was reasonable, he would put the material in the catalog collection. If the chemist-entrepreneur desires to start a catalog fine chemical company to sell reagent chemicals and widgets, then I would advise making a study of that business arena.

An understanding of the regulatory compliance world is critical as well, especially relating to the Toxic Substances Control Act, TSCA. A company may have to start out as being a provider of ‘R&D Only’ products. To freely sell commercial quantities of specialty and fine chemicals, a substance must be on the EPA’s public or confidential lists. If not, then permission must be granted by EPA. This will require a special filing which discloses its manufacturing and/or use process, Personal Protection Equipment (PPE), fugitive dust and corresponding controls on exposures to workers and the environment, vapor releases and method of control, a disclosure of how much of the New Chemical Substance (NCS) gets into the environment, any and all available toxicity data, a Safety Data Sheet, physicochemical data, waste NCS disposal, batch size and yearly production. For less than or equal to 10,000 kg per year a Low Volume Exemption (LVE) can be filed. This is an abbreviated version of a Pre-Manufacturing Notification (PMN) filing which will be examined in greater detail and will take much longer for EPA to complete. EPA has the right to require the submitter to collect certain kinds of toxicological data at the submitters expense. These tests are standardized and are performed by certified labs.

Most advisors to entrepreneurs will say that the prospective businessperson is well advised to put down a written plan. This is important on many levels. The act of writing a business plan is useful to the entrepreneur in several ways.  It causes the writer to focus his/her ideas and energy as well as to clarify the goal and how to track towards it. A well written business plan is critical if you need to attract funds to get the operation started. Investors and bankers need a document to study and to bring before others for analysis and buy-in. Just gotta have it.

Starting a drug company is going to be quite difficult for a few isolated chemists to do. It is a complex and insanely expensive and risky business that requires a wide diversity of players to be on board and committed. Somewhere you have to get an MD or MD/PhD, finance people, former pharma executives, regulatory affairs peoples, etc., on the board to add gravitas to your plan. A whole circus of expensive prima donnas. Sounds like a nightmare to me.

New Job Description- Negativist

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Getting buy-in from a diverse cast of characters is one of the between-the-lines features of  my job description. Everyone has this problem to some extent. I will admit that I’m quite lucky- Instead of having a single type of difficult character, I have a wide variety of  them. I should feel blessed.

Problem solving is one of the activities where divergence commonly occurs. I’m pushing for this, you are pushing for that. The usual stuff. You advance your arguments and they stand or fall on their merit. But in the end, there has to be convergence. We all have to agree on a path forward.

But what to do if you are the only one trotting out ideas? What if there is another form of problem solving where one person advances an idea and everyone else spends their creative faculties lobbing bombs at it and citing reasons why it shouldn’t be tried? Rather than posing alternatives, the negativist op-poses but is unable to pro-pose.

I will confess that this relates to one of the great disappointments of adult life.  A lot of ones adult cohorts reach a tidy level of comfort early in their lives and stay there for the duration. Many people are terrified to leave their comfort zone and take a walk on the wild side. Wading into unfamiliar territory and trying to build a structure amidst the reeds and swamp creatures. Intellectual land lubbers are fearful of residing outside of known space.

I have have a long list of  weaknesses and  limitations as well. I doubt that I’ll be quitting my job to live in a hut in Phuket and tend bar, fun as that might be.

Melamine Spill on Isle Five!

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The reality of melamine in animal feeds and milk products has crossed the ocean and landed on the shores of North America. Trace levels of melamine have been detected in certain baby formula products in the US.

The National Milk Providers Federation (NMPF) has responded with a statement on their position on adulterants. Having been in the milk processing business as a quality control chemist, I can add that my experience with the industry is consistant with the statement by the NMPF.

To understand the true level of confusion and diverse practices relating to this problem, it is important to note that the analytical methods used by US milk processors are insensitive to the presence of melamine itself. Here is why: Raw milk arriving to a processing facility is tested for the presence of antibiotics, fat content, flavor, pH, and total solids. To my knowledge, there is no batch QC protein analysis anywhere in the US manufacturing flow. In Asia, apparently protein analysis is common. 

The practical consequence of this analytical protein blindness in the US is that there is no benefit to adding melamine to milk because pricing is not determined by protein content. Milk is sold by the pound and its premium value is determined by the butterfat content.

Milk has been subject to many kinds of fraudulent modifications in the past. Sour milk has been neutralized with caustic. Today all milk is taste-tested for off flavor. Milk has been diluted for higher profit. Today all raw milk is tested for % solids and % fat to detect dilution. It should be above a certain minimum on both accounts. Cows have been milked abusively into chronic mastitis and given antibiotics. All milk is now tested for antibiotic residues via chemical and microbial assays. Finally, milk that contains an excessive microbial loading is rejected.

If Chinese milk processors adopted a similar testing protocol, the benefit of direct adulteration of milk with melamine would disappear. The effects of melamine-laced cattle feed is another issue. I have not heard of studies that connect ingestion of melamine contaminated feedstocks to milk contamination. Perhaps this has already been done.

According to the Wall Street Journal–

Dr. [Stephen] Sundlof said the melamine traces stemmed from the products coming in contact with the chemical during processing. The FDA approved melamine as a “food contact substance” about four decades ago.

The article continues-

The FDA said last month that it’s safe for consumers to eat most food with melamine below 2.5 parts per million, but infant formula was the exception. “FDA is currently unable to establish any level of melamine and melamine-related compounds in infant formula that does not raise public health concerns,” it said.

I am heartened to see that the FDA is reluctant to establish a threshold for safe consumption by infants. But at the same time, the matter of a 2.5 ppm threshold for everyone else amounts to a sh*t sandwich for the public.

The levels detected by US companies and agencies seems rather low. Again, from WSJ-

A spokesman for Mead Johnson Nutritionals, owned by Bristol-Myers, said the company’s own tests haven’t turned up any melamine, and the FDA tests turned up melamine levels “lower than the 0.25 parts per million limit that can be measured by the published FDA test method.” Mead Johnson, he said, maintains “stringent standards at all our manufacturing sites to ensure the high quality and safety of our products that our customers have come to expect.”

Dr. Sundloff said the melamine detected was tiny. Out of 87 samples, it found one sample with 0.137 parts per million and 0.140 parts per million on a verification test.

While toxicological threat to US consumers at the sub-ppm level is unclear at the moment, what seems to be lacking at FDA is a discussion as to the need to allow any level of melamine in any consumable.

Here is what is clear to Th’ Gaussling:

There is no overlap in the material streams of melamine or melamine resin manufacture with any dairy product. No dairy operation should reasonably expect to require containers of melamine monomer in its warehouse, nor should any supplier to dairy product manufacture.

Melamine contamination by contact exposure to melamine resin components can be averted by the use of many other food grade materials of construction, i.e., stainless steel.

If melamine is detected in food articles, it is the duty of the manufacturer to promptly audit all suppliers and eliminate the source of contamination.

Rather than tolerate and regulate the presence of a material whose only purpose is to perpetrate fraud, the FDA should ban food products containing detectable amounts of melamine. If the FDA goes forward with acceptable levels of melamine in dairy products, suppliers would begin to game the system. In a short time, ppm levels of melamine will be considered “normal” and suppliers of melamine contaminated feedstocks will be legitimized up to the regulatory threshold. 

A firm stand by regulatory agencies will strengthen the motivation of manufacturers to maintain strong audit trails and take away the financial incentive to use this fraudulent additive.

Failing to Ask Better Questions

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We may be entering a time of greater economic hardship than many have known in their lives. The great age of mass consumption, non-returnables, and disposable goods may have peaked.  Boarding the Hummer or the Escalade to drive 5 miles to buy cigarettes and a Big Gulp may be a thing of the past for a greater number of citizens. Americans will have to adopt a lifestyle much more akin to Europe or Japan- reduced living space and reduced (kg of crap)/(person year), reduced portion sizes, more walking, local shopping, and increased use of rail transportation.

The Oil Shock of Summer 2008 snagged the suspenders of this nation of hydrocarbon addicts, sending us reeling into the election/market crash machinery like a drunken farmer pulled into the thresher. Out the back end of this nightmare comes the bloody oat chaff to hint that something horrific happened. Reality strikes, then … silence.

In spite of the plurality of media outlet channels into our collective consciousness, few infotainers are drilling into the core of the problem. The pace and timing of commercial media sets the rhythm of infotainment metered to the masses. Photogenic talking heads selected for their appeal read predigested content for broadcast to attention deficit channel surfers. People dulled by the sheer magnitude of content-dilute information streams and dazzled by the production value of infotainment are compelled to switch on HBO and hide from the world.

Here is what we must do. We must see to it that better questions are being investigated. Instead of asking about the replacement for gasoline, we must ask for a frank disclosure on the sustainability of high consumption. Instead of asking for better or hybrid automobiles, we must frame questions around the concept of a mass transportation network. How can we get intercity rail up and running? How can the Detroit automobile manufactures be cajoled into entering the rail infrastructure business? Where is the hydrogen going to come from to fuel the hydrogen economy? Does it make sense to consume energy to generate hydrogen and then turn around and burn it for propulsion?

The best answers come from the best questions.

The Cost of Scientific Information. Who Pays and Who Gets Paid?

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For anyone outside of academia who has not actually received an invoice from Chemical Abstracts for literature retrieval services, let me assure you that literature searches will cost you real money.

CAS has weighted the basic search operations and defined them in a menu of task equivalents. When you subscribe, you purchase a bundle of tasks. Tasks can be used like a chit- they can be applied for a variety of search operations. Some search operations are assigned a higher value than others. Obviously, a group of big wheels at CAS sat down in a room and hammered out what they perceive the value of a given operation to be.

At this point, it is useful to remind folks that price is not properly based on cost, it is based on what the customer is willing to pay. CAS has an army of clerks punching abstracts into the database, so they do have some real overhead. While CAS honchos are mindful of paying the overhead, they are also trying to find a pricepoint for their information services. On this I do sympathize with them.

However, where I part ways with this organization relates to the monopolistic arrangement they have with information paid for by citizens of this country. The major pipelines of chemical research information seem to plumb directly into CAS and the ACS.  Research that does not get published by the ACS goes to a variety of private publishing houses. The common thread is the transfer of copyright to the publishing house. By turning over the copyright of publically funded research to these organizations, the public relenquishes the right to free access to results it has paid for.

In a very real way, the published results of our university research complex represents national treasure. What do we do with it? We hand it over to publishing organizations who print it in exchange for the copyright. In this way, we can keep paying for access indefinitely.

In fact, lets highlight some of the features of this transfer of wealth and the cost to society of scientific literature-

  1. Citizens and corporations pay taxes to support the various funding agencies like NSF, NIH, DoE, DoT, DoD, etc., as well as provide private grants.
  2. Funding agencies award grants to institutions and researchers to pay for the conduct of research.
  3. Researchers take a combination of funds and pay for stipends, fellowships, materials, and overhead to support the people who do research.
  4. Research is performed and results are communicated as publications.
  5. Researchers sign over the copyright to their work in exchange for publication.
  6. Publishers such as the ACS, Wiley, Elsevier, etc., then hold a copyright on the content in perpetuity.
  7. For the rest of time, the citizenry who paid for the results have to pay a fee to get a copy of the paper, or travel to the nearest University library and hope that the publication isn’t in deep archival storage and unavailable that day.
  8. Thanks to the Bayh-Dole Act, institutions can patent the results of federally funded work. This means that the hopeful citizens of the USA are barred from the practice of the art they paid for. In fact, they have to work out a license agreement which will include a royalty (with audit trail) and probably a hefty upfront, non-refundable, fee to get the ball rolling.
  9. Despite this royalties cash stream that universities have access to, tuition and fees continue to rise well above inflation.
  10. If you are a chemical scholar out of the cover of academic discounting, you face the full brunt of literature search costs yourself. A monograph or book on any given chemistry topic could easily cost $10,000 in non-academic SciFinder charges (ie., $68 per reaction search). A typical technical book may provide an author $3,000 to $10,000 in royalties over 5 years.

Well, you say, the benefit is to society as a whole. The science we pay for goes into society where, like an incoming tide, lifts all boats.

Nonesense! This tide lifts the good ship Elsevier and the USS Chemical Abstracts. It helps large universities get larger. The generation of information has become a cash cow for a handful of organizations who are subject to precious little scrutiny by those who freely supply the scientific content that keeps the system going.

GM, Ford, and Lonely Chrysler

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With all of the pious talk of the importance of the big 3 auto makers, it is hard to dissociate ones feelings with the subject. American car culture and our affinity for happy motoring is woven into the Stars and Stripes. But our automotive manufacturers have come to the end of the road. Their myopic practice of pure market-pull business operations, as opposed to the technology push of industrial leadership, has left them stranded on a slender spit of sand surrounded by the rising tide of change. The very immensity and gravitas that allowed these corporate creatures to dominate the market now threatens to sink them as our unsustainable mania for consumption and wretched excess comes to a squealing halt.

Three ailing patients show up in the congressional emergency room and plead for help. But the market and the government must do triage on this group of patients lying on cots before us and throw resources at those who may live and wheel the living dead to expire in the dark hallways of the corporate morgue.

The delegation of big wheels from Detroit were apparently unsuccesful in their reconnoiter to DC looking for national treasure. Their bizjet faux pas was the finishing dab of paint on this silly cartoon. It was a signature blunder marking arrogance and an artless attempt to exploit the transient alignment of stars motivating congress to fund business institutions “too large to fail”.

These business dinosaurs need to become extinct so as to allow other more competitive creatures a chance at survival. I urge the Congress to stand back and allow these companies to enter into Chapter 11 and reorganize. Their cost structures are simply too bloated with overhead to go forward. If a company is willing to reorganize, then it may be worth advancing a loan of public funds to aid their survival. But as they are presently configured, they should not be encouraged to live on to produce more of the same.

Microsoft Telescope Effect

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As I plod along in my daily swim upstream, I have the occasional epiphany that makes me pull over into an eddy behind a rock and contemplate my situation. Gradually, I have been making better use of the Microsoft Office suite of products generously provided to me. Among those tools is MS Access. I have been devising database tools to help me keep various kinds of data available for quick retrieval as well as access to the source documents. For some of us, it helps for retrieval tools to be as visual as possible.

As I put the finishing touches on my latest creation, it dawned on me what a rube I was. Again I had fallen into the technology trap. Instead of making a case for administrative help, I had merely taken another step along the path of telescoping increasing job responsibilities into my work week.

It suddenly became crystal clear. Microsoft products have facilitated the near complete extinction of whole job descriptions. In times past, highly trained employees were given assistants to leverage or multiply their activity. Assistants would attend to organization of information and limit access to their boss. In this way, employees could focus on performing the expensive skills they were hired for.  To a very large extent, personal computers have rendered obsolete what used to be an ordinary working duo- a manager/specialist and an administrative assistant.

This working pair has been replaced with “personal productivity tools” that allow- require, really- that the specialist take care of all of the correspondence, filing, categorization, phone-tag, drop-in visitors, requisitions, expense reports, etc., required for the job. In most organizations I am familiar with, expensive specialists are expected to be their own office managers, file clerks, and receptionists.

Th’ Gaussling can be a bit slow on the uptake, so I’m sure others have already noted this effect long ago.

In a similar vein, James Kunstler writes about another consequence of technology. Here, he is making reference to electronic voting machines, but the notion applies well to another marketing scam: compulsory excess capacity or capability. Another way to say it is, a high tech “solution” to a low tech problem.  

  What many people are nervous about, of course, is the chance of shenanigans with the voting tally. Just one minor feature of the general paralysis gripping this society has been our inability to get rid of those mischievous Diebold computerized voting machines that leave no paper trail. By the way, these touchscreen voting units are an example of the diminishing returns of technology. There was nothing wrong with the old mechanical units, but by making over-investments in complexity we’ve just created more problems for ourselves. This ought to be a warning to those in the thrall of techno-triumphalism.

How many people make full use of most of the features of, well, any of their software? When you are a hammer, everything looks like a nail. When you are the largest software company in the Milky Way Galaxy, everything looks like a software solution opportunity.

Gaussling’s 9th Epistle to the Bohemians. The Cardinal of Chemistry

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In the fabulous world of industry there are many, many job descriptions held by many, many people. The practical consequence of this is that there are a great number of channels in which the river of your career can flow. Opportunities come and go like eddies in the stream. We advance and sometimes retreat.  Our enthusiasms can reach flood stage or can reduce to a trickle in draught. Our intentions can be muddy or clear.

In the end, though, all rivers run into the sea. Careers can flow narrow and fast or broad and slow. But the unique social status and circle we enjoy in this stream of time is eventually lost into the brackish waters of retirement. 

For academicians and industrialists alike, a PhD buys a seat as a lower level dignitary- a prince. For the academic prince, with hard work and luck, one rises through rank and tenure to become a lord or cardinal living the courtly life of intellectual privilege under the glow of eternal admiration. A prince of academe has but to walk into a classroom to gather the attention and fear of post-pubescent underlings. Through midterms, they hang on your every word. You are golden, and every year brings a new crop of young admirers.

In industry, the fierce hydraulic pressure of what-have-you-done-for-me-lately constantly tips the crown from your head. An industrial prince or princess can be expected to labor in a more diverse variety of capacities. Negotiating raw material prices, feasting with customers, or building a corporate trebuchet. Ominously, an industrial prince may find him/herself in oversight of activities that might one day be filmed by helicopters from a safe distance up wind.

An industrial prince can find himself suddenly in full battle dress swinging an axe from a wounded horse. The Viking warlords of mergers and aquisitions will storm the palace with their corporate siege engines and announce a restructuring of the kingdom. Programs throughout the principality will be halted. Serfs will lay down their scythes in the field and let the barley rot where it stands. Lesser princes will be sacrificed to Odin and upper middle-age cardinals will be sent to the moors in the north to live in sanctuary with the Brothers of Eternal Consternation.

What remains will be a thinner core of chastened cubicle-courtiers huddling behind the organizational battlements. Survivors of the siege. One day the new archbishops and cardinals will arrive in their red silk vestments during the antiphon, bearing their strange implements and unfamiliar liturgy. Thus begins a new age.

NEP on Dust Explosion Hazards

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Earlier in 2008 OSHA issued directive CPL-00-008, Combustible Dust National Emphasis Program. This program is meant to induce industry to develop a greater awareness of dust explosion hazards via the threat of greater scrutiny by OSHA inspectors.

Dust explosion hazards have been poorly appreciated by plant operators in a wide range of industries. The recent explosion at Imperial Sugar in Port Wentworth, GA, on February 7, 2008, has helped to raise awareness both from regulators and plant operators. Part of the problem has to do with a poor understanding of the explosibility of dusts generally, and with the lack of data on the explosibility of a great many common products in particular. Safety consultants I know have been busy with clients from the sugar refining field. It caught their attention.