Recent announcements by some of the big players in chemical manufacturing are stunning in their magnitude and implication for our western hemisphere. Like the movement of tectonic plates, business landmasses are shifting and grinding their way to other parts of the world.

Last summer AstraZeneca announced that it will leave manufacturing all together. According to C&EN, Merck is downsizing its staff by 7000 jobs and reducing its number of sites by 20 %. Pfizer is reportedly closing or otherwise trimming off 29 sites.

Recently, Dow announced its departure from commodity chemicals with the upcoming US$9.5 billion joint venture with Petroleum Industrial Chemicals (PIC) of Kuwait.

Some of this migration to the far side of the world will place the companies in a better market position to compete with rising demand in the distant corners of the world. Many of the players are already multinational in structure and have existing units elsewhere, so changes amount to consolidation.

What concerns me is the extent to which R&D and product development is being transferred off-shore. Like the frog in slowly warming water, no alarm is noted because from moment to moment the comfort level changes only slightly. But eventually, the warm water becomes hot and the inattentive frog gets cooked.  It is hard to escape the notion the US and EU are the frog in a warming pot of water.

Outsourcing is a choice, not a law.  A company has to choose to outsource rather than find other options. But to be fair, a company has its hands tied in many ways by regulatory or competitive constraints that are hard to contend with economically. 

Compliance with the confusing web of overlapping jurisdictions and increasingly harsh regulations pertaining to the manufacture, transport, and consumption of chemicals is wearing down the willingness of US companies to continue to manufacture in North America. Instead, we export “Chemical Problematics”.

A chemical product can become problematic in several ways- 1) commoditization, 2) patent expiration, 3) liability blooming, 4) raw material scarcity, and 5) regulatory compliance costs. 

In the life cycle of a successful product, it is inevitable that competition will discover the market and find a way to supply competing goods and services. This is commoditization. Eventually, you will lose control of your market exclusivity and others will set up their lemonade stand next to yours and sell for a nickel cheaper.

A major issue for pharma is the near term expiration of patents protecting highly profitable products. High cost manufacturing can be sustained by suitably profitable products. Exclusivity is the keystone that keeps the entry from collapsing. But when the patents expire, the Huns storm the gate and take over with lower priced generics.

What I call liability blooming is a circumstance wherein an existing product suddenly becomes the focus of some liability problem. It can be a drug that suddenly starts showing bad side effects, or it can be a product that has come into the  radar of the regulatory agencies.  Materials that carry a penalty for their use in terms of liability exposure are difficult or impossible to continue using. If an end product carries a legal liability, it is probably dead as a product. But if materials used in its manufacture- but not final composition- develop liability issues, manufacturing under the current regulatory environment can become prohibitively expensive.

Raw material scarcity is becoming a widespread problem for US manufacturers. As outsourcing becomes more prevalent, key raw materials for a given product may become unavailable in the US. As long as one can source the materials, this is not such a bad problem. But what about strateging substances needed for national defense? I have spoken with government procurement people who are increasingly having to resort to off-shore vendors for defense-related products and materials. Electronic products have a high reliance on some rather exotic substances and national defense is increasingly reliant on such technology. Indium and neodymium are examples of elements that are becoming quite scarce and whose loss from the market would have a high impact on many products. 

For any growing chemical company, the first real expense of regulatory compliance is for staffing. Increasingly, regulatory compliance requires a staff of specialists who serve as internal watchdogs for non-compliance and manage compliance programs that trail documentation much like a cable ship pays out cable into the murky ocean deep. 

Chemical products vary in their regulatory compliance paperwork according to type. Chemicals that are not used by the public out in the open like pesticides may be generally less complex to manage. TSCA is for materials that do not meet the criteria for food, drug, or pesticide use. Compounds that are used in B2B markets and will never be darkened by the shadow of consumers are still subject to complex TSCA regulations. But TSCA registry is not forever.  The ever shifting sands of TSCA registry may place a product into further examination by EPA if a new application is contemplated.  The all-seeing-eye of compliance managers may be strained as SNUR’s affecting product use can show up in the Federal Register at any time.

There are lots of good reasons not to start a chemical business in the US these days. Public or private companies are increasingly in competition with nationalized business entities abroad. Petroleum, petroleum products, and defense in particular are markets where western companies are having to compete with nationalized organizations that can swing a big money stick as well as influence national policy.

The US and EU are sliding into a Nanny State mentality microgoverned by those schooled in the Precautionary Principle.  Timid acolytes shuffling along the hallways of regulatory agencies and cock-sure MBA’s strutting like roosters in their corporate headquarters are independently guiding US culture to an epoch of de-industrialization. 

In catalyst development literature it is often stated that the particular catalyst under study can be recovered for re-use with full or nearly full activity.  I have heard this proclamation at meetings and in conversation as well.  Having spent a bit of my adult life analyzing process economics, I would like to comment on this matter. 

The world of chemical processing can be coarsely divided into two regimes- continuous and batch processing.  Since my hands-on continuous processing experience amounts to less than a year of time, I’ll limit my comments to batch processing. 

In this post I’ll define catalyst recycling as an operation wherein a catalytically active substance is recovered from a process stream and made available for another run. There are a great many catalysts and a great many applications, so generalizations are hazardous.  Nonetheless, there are a few generalizations to be made.

For a batch liquid-phase process performed in a multipurpose reactor, there are operations that are common to all processes.  Charging the reactor with raw materials, heating or cooling, agitation, reflux/distillation, discharging the contents, and cleaning. All of these operations consume resources and plant time. Generally speaking, any change that reduces consumption without harming the product could be considered a process improvement.

For catalyst recycling to qualify as a process improvement, some kind of consumption would have to be reduced over the useful lifetime of the material: i.e., reduction of time and/or materials. Obviously, reuse of a catalyst holds the potential to reduce the consumption expense of the catalyst over the course of the campaign. 

Before we draw any conclusions, it is useful to review the requirements put upon any material that might be used in a process. In bulk processing, raw materials are obtained from suppliers who have the necessary experience to provide the material.  But of equal importance, the vendor must have the necessary quality control mechanisms in place to warrant that the delivered product meets the promised specifications.

For instance, if you use butyllithium, you must be assured that all of the raw materials going into the process- reagents, solvents, etc.- meet a low water specification.  You have to know that the aryl bromide you are using isn’t contaminated with HBr or a polybrominated side product. There has to be assurance that all raw materials going into the pot meet some minimum purity.  A chemical processing company must know how to manage change.

Bulk processing is all about stability and predictability. You can’t rely simply on having ordered the proper grade of raw material. You need a certificate of analysis showing that the composition of the lot meets your in-house spec. When a vendor issues a cert, they are warranting the purity and accepting some risk as a result of sending bad product.

Management of change is a business methodology compelling an organization to adopt a standard procedure for the evaluation and approval of chemical process changes.  For instance, just because the chemists say that a change should be made to a scaled-up process doesn’t mean that it has to happen tomorrow if ever. The proposed change has to go through a protocol that exposes it to safety and economic scrutiny.  Frankly, it also spreads the potential blame for mishaps and economic disasters, so others have motivation to evaluate the process from a fresh view and sign-off.

The re-use of a catalyst brings forth the possibility that the activity of the catalyst could be altered in some way from one run to the next. There could be a downward trend in activity or some kind of variability. This means that a reused catalyst charged into the reactor could be a different catalyst from one run to the next. Potentially, what you saved in catalyst costs you might lose in extra plant hours or lower yield due to degraded performance or from outright process upsets.

Naturally, any kind of catalyst recycle has to be researched and understood by the R&D group and by the cost accountants.  Catalyst recycling will involve an operation to retrieve the material from the product or raffinate streams and to prepare it for the next run. Stable activity will have to be demonstrated, preferably under the influence of a variety of off-normal conditions.

Someone- a chemist or engineer- will have to sit down and do the calculations to see if there is a net benefit to the re-use of the catalyst against the backdrop of diminished performance, variability, or added operation costs. 

The point is that catalyst recycling isn’t automatically desirable. A recycling scheme that requires many labor hours to purify the catalyst may sour the benefit of the action. Another issue that may arise is the matter of validation of the re-used catalyst.  The company will have to decide if or when activity validation is necessary.  For a pot full of expensive precursor, a wink and a grin from the analysts may not be enough. A qualification run at the bench may be needed.

Here are my favorite catalyst attributes for batch processing- 1) high turnover number, 2) selective, 3) cheap enough to use once and send to waste disposal, 4) not a PGM (Platinum Group Metal)- PGM’s are subject to large market price variations, and 5) doesn’t contain one of the bad actors that trigger EPA thuggery or public protests- Hg, Cd, Cr(VI), etc. Metals are forever.

Catalyst recycle makes no sense, of course, in a one-time process run. A wise operator will calculate a price to cover the catalyst cost. But it may make sense if a plant is to start an extended run of batches, or if the catalyst is rare or expensive. Sometimes recycle has merit.  The point is that a sober cost calculation should be made prior to the implementation of recycle schemes.

At the beginning of the article I stated that some generalizations were possible. I will modify that in saying that PGM’s in the catalyst may necessitate the recovery, though not necessarily the re-use, of the metal for return credit to the supplier.