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OAR Box 1872 

Prepped by Keeia Richards 

Document Number: 

33) 11-1-82 

Docket Number: 

A-90-19 

Printed 11/26/2008 8:51:50 AM Sheet 33 of 204 
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A-90-19 

II-I-82 

1990 US. Industrial Outlook 

Prospects for Over 350 

Manufacturing and Service Industries 

U.S. Department of Commerce 

Robert A. Mosbacher, Secretary 

Thomas J. Murrin, Deputy Secretary 

J. Michael Farren 

Under Secretary for International Affairs 

Roger W. Wallace 

Deputy Under Secretary for International Affairs 

Michael P. Skarzynski 

Assistant Secretary for Trade Development 

3' 

January 1990 

ISBN 0-934213-10-0 
P.3 

$0.20 a barrel less than the average for a year earlier. The 

wellhead price of domestic crude is expected to decrease by 

about the same amount. Still lower prices could occur if OPEC 

members do not satisfactorily resolve various quota issues or 

if they increase 1990 quotas beyond the levels that existed 

during the last quarter of 1989. 

U.S. petroleum consumption is expected to be about 17.4 

million barrels a day in 1990, a level only sightly higher than 

in 1989, which is consistent with the expected slow economic 

growth rate (Table 2). Consumption of most of the major 

petroleum products (including gasoline, jet fuel, and distillate 

fuel oil) will increase by small amounts. The principal exception is consumption of residual fuel oil, which will fall by 9 

percent, reflecting a decrease in demand for that fuel by both 

the electric utility and nonutility sectors (see Chapter 4). 

Domestic crude oil production is expected to decline in 1990 

for the fifth consecutive year. The decline will be to about 

7.4 million barrels a day, or by 3.9 percent relative to 1989 

(Table 3). The continuing decrease in production reflects the 

low levels of exploration and development during the past 

several years as a result of much lower prices than in the 

1980-85 period, prices which, when adjusted for inflation, are 

among the lowest since the early 1970s (Tables 4-7). A high 

degree of price volatility has also contributed to the decrease 

in exploration and development and to the consequent fall 

in proven reserves (Table 8). As a result of the decrease in 

production, petroleum imports are expected to increase to 8.2 

million barrels a day in 1990, or by more than 4 percent 

relative to 1989 (Table 9). 

Natural Gas 

U.S. consumption of natural gas is expected to reach 18.7 

trillion cubic feet in 1990, or 1.7 percent more than a year 

earlier, and its highest level since 1981 (Table 2). All sectors, 

except the electric utility sector, are expected to participate 

in the increase, with the largest absolute increase occurring 

in the residential and industrial sectors. The residential 

increase is likely to be close to 3 percent. The slow pace of 

economic growth is likely to limit the increase in demand from 

the industrial sector to less than 2 percent. Strong growth in 

hydroelectric power will cause demand for natural gas by 

electric utilities to fall by about 2 percent. 

Table 4: Refiner Acquisition Cost of Imported and 

Domestically Produced Crude Oil, 1972-90 

Imported Crude U.S. Produced Crude 

Year Price Index Price Index 

(S/bbl) (1982-100) (S/bbl) (1982-100) 

1972 3.22 9.6 3.67 11.8 

1973 4.08 12.2 4.17 13.4 

1974 12.52 37.3 7.18 23.0 

1975 13.93 41.5 8.39 26.9 

1976 13.48 40.2 8.84 28.3 

1977 14.53 43.3 9.55 30.6 

1978 14.57 43.4 10.61 34.0 

1979 .< 21.67 64.6 14.27 45.7 

1980 33.89 101.0 24.23 77.6 

1981 .T. 37.05 110.4 34.33 110.0 

1982 33.55 100.0 31.22 100.0 

1983 29.30 87.3 28.87 92.5 

1984 28.88 86.1 28.53 91.4 

1985 26.99 80.4 26.66 85.4 

1986 14.00 41.7 14.82 47.5 

1987 18.13 54.0 17.76 56.9 

1988 14.64 43.6 14.76 47.3 

1989' 17.70 52.8 17.70 56.7 

1990* 17.50 552.2 17.50 56.1 

'Estimated. 

'Forecast. 

SOURCE: Energy Information Administration. 

Table 5: Wellhead Prices of Domestically. Produced 

Crude Oil and Natural Gas, 1972-89 

Year Crude Oil (S/bbl) Natural Gas (S/thousand cu. ft.)1 

1972 3.39 0.19 

1973 3.89 0.22 

1974 6.87 0.30 

1975 7.67 0.44 

1976 8.19 0.58 

1977 8.57 0.79 

1978 9.00 0.91 

1979 12.64 1.18 

1980 21.59 1.59 

1981 31.77 1.98 

1982 28.52 2.46 

1983 26.19 2.59 

1984 25.88 2.66 

1985 24.09 2.51 

1986 12.51 1.94 

1987 15.40 1.67 

1988 12.57 1.69 

1989 15.72* 178 

'Wet natural gas prior to extraction of natural gas plant liquids. 

*Crude oil price is the average for the first 7 months. 

SOURCE: Energy Information Administration. 

Table 3: Production of Energy by Source, 1972-90 

Natural Gas Nuclear 

Y Crude Oil' Plant Liquids Hydroelectric Electric 

TM (million bbls Natural Gas' (million bbls Coal Power Power 

per day) (trillion cu. ft.) per day) (million short tons) (billion kWh) (billion kWh) 

1972 9.440 21.62 1.740 602.5 272.6 54.1 

1973 9.208 21.73 1.738 598.6 272.1 83.5 

1974 8.774 20.71 1.688 610.0 301.0 114.0 

1975 8.375 19.24 1.633 654.6 300.0 172.5 

1976 8.132 19.10 1.604 684.9 283.7 191.1 

1977 8.245 19.16 1.618 697.2 220.5 250.9 

1978 8.707 19.12 1.567 670.2 280.4 276.4 

1979 8.552 19.66 1.584 781.1 279.8 255.2 

1980 8.597 19.40 1.573 829.7 276.0 251.1 

1981 8.572 19.18 1.609 823.8 260.7 272.7 

1982 8.649 17.76 1.550 838.1 309.2 282.8 

1983 8.688 16.03 1.559 782.1 332.1 293.7 

1984 8.879 17.39 1.630 895.9 321.2 327.6 

1985 8.971 16.38 1.609 883.6 281.1 383.7 

1986 8.680 15.99 1.551 890.3 290.8 414.0 

1987 8.349 16.54 1.595 918.8 249.7 455.3 

1988 .. . 8.140 16.99 1.625 949.8 222.9 526.9 

1989* 7.670 16.91 1.600 973.0 270.7 521.1 

1990» 7.370 17^25 1JS20 987J) 292JJ 549.6 

'Includes lease condensate. 'Estimated. 

'Dry natural gas. 'Forecast. 

Total production is based on a narrow definition of renewable energy. SOURCE: Energy Information Administration. 

3-4 U.S. Industrial Outlook 1990—Oil and Gas 

Other 

(billion kWh) 

Total Energy5 

(quadrillion Btu) 

1.8 

2.3 

2.7 

3.4 

3.9 

4.1 

3.3 

4.4 

5.5 

6.1 

5.2 

6.5 

8.6 

10.7 

11.5 

12.3 

12.0 

11.8 

12.7 

62.42 

62.06 

60.84 

59.86 

59.89 

60.22 

61.10 

63.80 

64.76 

64.42 

63.90 

61.21 

65.85 

64.77 

64.23 

64.82 

66.00 

65.79 

66.40 
P.4 

Trends and Forecasts: Man-Made Fibers (SIC 2823,2824) 

(in millions of dollars except as noted) 

Percent Change 

t C m

 1987] 1988J 19893 1987-88 1988-89 

Industry Oata 

Value of shipments4 11,444 12,411 13,486 8.4 8.7 

Value of shipments (1987$) 11,444 11,716 12,010 2.4 2.5 

Total employment (000) 56.3 58.4 60.8 3.7 4.1 

Production workers (000) 42.4 44.4 46.4 4.7 4.5 

Average hourly earnings ($) 12.35 12.47 12.61 1.0 1.1 

Product Data 

Value of shipments5 10,100 10,923 11,858 8.1 8.6 

Value of shipments (1987$) 10,100 10,344 10,547 2.4 2.0 

Trade Oata 

Value of imports 424 472 522 11.3 10.6 

Value of exports 1^070 V361 1701 27J 25J) 

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 SIC. 'Value of products classified in the man-made fibers industry produced by all industries. 

'Estimated, except for exports and imports. SOURCE: U.S. Department of Commerce: Bureau of the Census; International Trade 

Estimated. Administration (ITA). Estimates and forecasts by ITA. 

'Value of all products and services sold by establishments in the man-made fibers industry. 

historically high levels. Corporate earnings were up for most 

major man-made fiber producers. In 1989 man-made fibers 

accounted for over 60 percent of total fibers consumed in the 

production of textiles products. 

The U.S. man-made fiber industry consists of less than one 

dozen horizontally integrated, large multinational corporations 

which account for about 90 percent of U.S. production. Production capacity in the U.S. has been reduced in recent years. 

On a global basis, however, the growth of man-made fiber 

production in the mid-1980's is primarily in the developing 

world and is increasing at a substantial rate. From 1984 to 

1988 production increased over 50 percent in China and other 

j\sian countries. Within the same time period, share of world 

production dropped in the U.S., Europe and Japan while the 

developing world expanded its share significantly. This trend 

is expected to continue as developing nations seek to increase 

their technical capabilities in this area. 

Cellulosics 

Cellulosic fiber production has been on the decline for 

several years. Squeezed by the industrial end uses of synthetics 

and the attraction of cotton for apparel, cellulosic manufacturers found the market for their products severely reduced. 

However, rayon and other cellulosic fibers turned up in 1989 

as demand for blended rayon for apparel rose substantially. 

Shipments of rayon increased 2.6 percent, to 672 million 

pounds. This continued performance of rayon fiber is 

attributed to rising demand for rayon apparel. Other end uses 

for rayon include home furnishings such as draperies, 

tablecloths, and upholstery and industrial products such as 

nonwoven fabrics, and medical products. 

Non-Cellulosic Fibers 

The polyester staple fiber and filament yarn market 

shipments in 1989 reached 3.7 billion pounds. Capacity utilization rates for polyester filament were at record heights. In the 

United States polyester accounts for more than 30 percent 

of all fibers consumed annually. In recent years j\merican 

fiber manufacturers significantly reduced capacity to produce 

polyester thereby inhibiting their ability to meet this unforeseen upturn in demand. 

Nylon production continued to register gains in 1989 

accounting for 30 percent of total man-made fiber production. Nylon is the chief beneficiary of strong demand for 

carpeting, as it accounts for over 50 percent of all carpet yarn 

consumed. Nylon is also the ideal fiber for applications that 

require the fabric to withstand and recover from high stress, 

such as parachutes, rugged outdoor equipment and outerwear.— Peter Leigh, Office of Textiles and Apparel, (202) 

377-4058, September 1989. 

Additional References 

Carpet and Rug Industry, Rodman Publications, PO. Box 555, Ramsey, NJ. 

The Working Papers of the MIT Commission on Industrial Productivity, 

Massachusetts Institute of Technology, 1989, 55 Hayward Street, Cambridge, MA 02142 

Textile Hi-Lights. Economic Information Division, American Textile Manufacturers Institute, 1801 K Street, NW, Suite 900, Washington, D.C. 20006 

Textile Organon, Textile Economics Bureau, Int, 101 Eisenhower Parkway, 

Roseland, NJ 07068 

Textile World. McGraw-Hill Publications Ca, 1221 Avenue of the Americas, 

New York, N.Y. 10020 

U.S. Industrial Outlook 1990—Textile Mill Products 9-7 
P.5 

12 

Chemicals and Allied Products 

The value of chemicals and allied products industry 

shipments is expected to increase 1.7 percent in 1990. The 

largest increases will occur for surface active agents, adhesives 

and sealants, pharmaceutical preparations, and phosphatic fertilizers. Both exports and imports will grow, but at rates 

significantly lower than in recent years. 

T

he chemical and allied products industry is one of the 

largest U.S. industries. The industry produces more 

than 50,000 different chemicals and formulations in 

more than 12,000 US. chemical plants. About 1 million people are directly employed in U.S. chemical production, and 

chemicals from the United States are sold in over 180 countries. The industry has consistently had a positive trade balance 

and currently at least 20,000 chemicals are included in twoway trade. 

The chemical sector (SIC 28) covers inorganic and organic 

chemicals, including industrial gases and pigments (Chapter 

13); plastic resins and synthetic rubber (Chapter 14); drugs and 

pharmaceuticals (Chapter 50); soaps, other detergents, and 

cosmetics (Chapter 37); paints and coatings (Chapter 15); 

agricultural chemicals, including fertilizers and pesticides 

(Chapter 13); adhesives and sealants (Chapter 15); explosives; 

printing inks; and a variety of miscellaneous cnemicals 

(including essential oils, salt, distilled water, etc). This chapter 

covers overall developments in the chemical industry, with 

special attention to petrochemicals and regulations affecting 

the chemical industry. 

Shipments by the chemical and allied products industry rose 

more than 13 percent in 1988 and 6 percent, to an estimated 

$274.5 billion, in 1989. The growth in 1988 was largely the 

result of price increases, whereas prices in 1989 rose less than 

3 percent. Real growth amounted to 2.1 percent in 1988 and 

3.2 percent in 1989. 

Largely because of increased chemical processing worldwide, 

exports by the chemical industry climbed faster than imports, 

rising 21.9 percent in 1988 and 16.8 percent in 1989; import 

gains in the 2 years were 19.8 percent and 13.2 percent, respectively. The resulting trade surpluses were $12 billion in 1988 

and $15 billion in 1989. 

The US. chemical industry is still emerging from a massive 

restructuring that began in 1985. The restructuring has 

included major acquisitions, spin-offs, plant closings, and 

extensive early retirement and layoff programs. In 1989, R&D 

expenditures by the chemical industry increased nearly 9 percent over 1988, but capacity utilization dipped to 87 percent 

from 90 percent in 1988. The decline in utilization resulted 

from decreased requirements in the chemical processing 

industries (i.e., automotive products, construction materials, 

electronics, and other durable goods). 

Outlook for 1990 

The constant-dollar value of chemical industry shipments 

is forecast to increase about 1.7 percent in 1990. International 

Trends and Forecasts: Chemicals and Allied Products (SIC 28) 

(in millions of dollars except as noted) 

Percent Change 

**"* 1987' 1988J igsgs 1990* 1987-88 1988-89 1989-90 

Industry Data 

Value of shipments' 229,015 258,924 274,459 - 13.1 6.0 

Value of shipments (1987$) 229,015 233,877 241,350 245,458 2.1 3.2 1.7 

Total employment (000) 811. 

Production workers (000) 462 

Average hourly earnings ($) 12.91 ----- -

Product Data 

Value of shipments' 213,595 ----- -

Value ot shipments (1987$) 213,595 ----- -

Trade Data 

Value of imports 17.122 20,504 23,219 23,808 19.8 13.2 2.5 

Import/new supply ratio7 0.071 ----- -

Value of exports 26,701 32.551 38.035 39,440 21.9 16.8 3.7 

Export/shipments ratio 0-124 - - Z Z I Z 

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 'Value of products classified in the chemicals and allied products industry produced by all 

SIC. •< industries. 

Estimated, except for exports and imports. 'New supply is imports plus corresponding product shipments. 

'Estimated. SOURCE: U.S. Department of Commerce: Bureau ot the Census; International Trade 

'Forecast. Administration (ITA). Estimates and forecasts by ITA. 

'Value of all products and services sold by establishments in the chemicals and allied products industry. 

U.S. Industrial Outlook 1990—Chemicals and Allied Products 12-1 
P.6 

Photo by J.C. Evans 

One ofthe largest U.S. industries, the chemical industry employs about 

one million and produces some 50,000 chemicals in more than 12,000 

chemical plants. 

trade in chemicals will grow again as the chemical and 

chemical-processing industries become more global in scope. 

U.S. chemical exports are forecast to rise 3.7 percent in 1990, 

and imports may increase about 2.5 percent. This would result 

in another increase in the net positive trade balance, to about 

$16 billion. 

Restructuring is expected to continue in 1990, with acquisitions of U.S. companies by both domestic and foreign concerns. 

Companies in the United Kingdom, West Germany, France, 

and Japan have been the major purchasers of U.S. chemical 

firms. 

The industry is expected to continue moving away from the 

sale of low-unit-price high-volume chemicals to high-unit-price 

specialty chemicals. R&D expenditures will increase again in 

1990, but probably at a slower rate than in 1989. The industry, 

no doubt, will also continue to wrestle with the problem of 

finding recruits with the requisite technical talents. Several 

East-West joint ventures in the chemical area are likely in 1990. 

The Chemical Industry Committee of the U.N. Economic 

Commission for Europe (ECE) plans to host a seminar in 1990 

for government and industry representatives on East-West joint 

ventures in the chemical industry. 

A number of problems and issues will require attention from 

the chemical industry in the 1990s, including: intellectual property rights; products liability/tort reform; temporary suspension of import duties on products for which there is little or 

no domestic production; industry restructuring; removal of 

internal border controls and unification of product standards 

and regulations in the EC by 1992; and domestic and international health and safety regulations. 

The long-term prospect of the chemical industry is a mirror 

image of the general economy. The industry expects growth, 

but at a reduced rate because of a prospective slowing of 

economic growth. However, the industry will benefit from, and 

be a focal point of, the "new material renaissance." New 

materials such as engineering polymers, composites, advanced 

ceramics, and improved adhesives and sealants are changing 

not only the way materials are produced, but also the finished 

products. Because of its heavy involvement in the development 

and production of these new materials: the chemical industry 

is expected to become one of the main indicators of the status 

of the U.S. economy. Its expanded role will become even more 

evident as the many new materials being produced drive the 

technology and use of technology in the aerospace, electronic, 

auto, and construction-materials industries. 

International trade also will play a greater role in the future 

of the chemical industry. U.S. exports will grow, and the trade 

balance should continue to be positive. However, trade wjll 

be affected by stiff competition from other producers, including 

some developing countries, and by U.S. environmental controls and regulations that add to the U.S. cost of production. 

Most countries manufacture some type of chemicals, and 

both the developing and the developed countries recognize the 

importance of chemical industries to their economies. For the 

developing countries, production and processing of chemicals 

is a way to achieve income growth. As a country moves up 

the economic ladder, production usually progresses from the 

raw chemicals to value-added products, and the chemical processing industries become more dominant. Growth in these 

industries stimulates gains in a country's economy and personal incomes and eventually may lead to export sales. This 

evolution adds to the number of international players, 

stimulating competition. 

For domestic companies, meeting international competition 

is complicated by the number of regulations affecting its chemical production. For example, most countries still consider 

environmental problems caused by chemical production to be 

social costs and do not have nearly as many environmental 

controls and regulations as the United States does. This difference shows up in the cost of US. production relative to costs 

in other countries. A detailed discussion of regulations applied 

to the chemical industry appears later in this chapter. 

To a large extent, the long-term outlook for the chemical 

industry depends on how well the industry sells itself to the 

public. Because of the complexity and diversity of the chemical 

industry, the public remains frightened by what they do not 

understand. This lack of understanding is causing the industry 

problems ranging from locations of future plants to recruiting 

the best and brightest young people. 

PETROCHEMICALS 

In 1989, high profitability resulting from maximum utilization of capacity, a strong demand, and high productivity continued in the petrochemical industry (SICs 2821,2822,2824, 

2843,2865,2869,2873, and 2895). Demand was at its highest 

level in recent history during the first half, but tapered off 

during the second half as inventories increased and prices 

trended downward. 

Industry shipments increased 2.8 percent (in constant 

dollars) in 1989, compared with 0.8 percent in 1988. The value 

12=2 U.S. Industrial Outlook 1990—Chemicals and Allied Products 
P.7 

Trends and Forecasts: Petrochemicals (SIC 2821, 2822, 2824, 2843, 2865, 2869, 2873, 2895) 

(in millions of dollars except as noted) 

Percent Change 

^ 1987] 1988' 1989' 1990* 1987-88 1988-89 1989-SO 

Industry Data 

Value of shipments' 96,514 111,748 123,578 - 15.8 10.6 

Value of shipments (1987$) 96,514 97,316 100,049 101,855 0.8 2.8 1.8 

Total employment (000) 253 

Production workers (000) 158 

Average hourly earnings ($) 14.92 ----- -

Product Data 

Value of shipments' 92,631 ----- -

Value of shipments (1987$) 92,631 ----- -

Trade Data 

Value of imports 9,693 11,441 12,641 13,557 18.0 10.5 7.2 

Import/new supply ratio' 0.087 ----- -

Value of exports 13,833 17,607 18,517 19,817 27.3 5.2 7.0 

Export/shipments ratio 0.148 - - - - - -

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 'Value of all products and services sold by establishments in the petrochemicals industry. 

SIC. <Value of products classified in the petrochemicals industry produced by all industries. 

'Estimated, except for exports and imports. 'New supply is imports plus corresponding product shipments. 

Estimated. SOURCE: U.S. Department of Commerce: Bureau of the Census: International Trade 

'Forecast. Administration (ITA). Estimates and forecasts by ITA. 

of exports rose 5.2 percent to $18.5 billion in 1989, but imports 

climbed 10.5 percent to $12.6 billion. The decreased demand 

in the second half of 1989 resulted from a slowdown in use 

of chemical processing materials by the auto and construction industries. Consequently, inventories began to rise. 

Nevertheless, capital expenditures for new plant and equipment in the petrochemicals industry are believed to have risen 

to a record of more than $21 billion in 1989. This appears 

to be aggressive expansion, but it does not nearly equal the 

rates of increase in capital expenditures in the late 1970s. The 

industry's ethylene demand growth projection calls for continuing yearly increases in capacity expansion in the 1990s. 

Early in 1989, increases in demand for petrochemicals 

pushed production to the maximum, in some cases to as much 

as 110 percent of capacity. However, the economy slowed 

toward the end of 1989, thus reducing the pressure on supply 

of petrochemicals. This allowed companies an opportunity to 

adjust, permitting down time for badly needed routine preventive maintenance. Effort is now being directed toward increasing output through the elimination of bottlenecks. 

As a result of the heavy release of personnel, through early 

retirements or layoffs in the early 1980s, the petrochemical 

industry lost a wealth of technical and production expertise. 

The average staff age/experience level has declined as a result 

of the many regular and early retirements. This expertise was 

sorely missed when the industry was operating at maximum 

capacity in the late 1980s. In addition, accidents, fires, unplanned shutdowns, and other problems have occurred in the 

petrochemical industry during the past 10 years at rates 2-3 

times those of earlier years. 

Research and development expenditures rose 10 percent to 

an estimated $11.7 billion in 1989, slightly below the 10.4 percent a year averaged from 1982 to 1987. 

Because of ready access to feedstock, Canada is fast becoming a major player in the world petrochemicals industry. 

Several U.S. petrochemical companies are looking to expand 

or initiate petrochemical production in Canada in preference 

to the United States. Five new plant proposals for Canada 

are under study by U.S. firms. 

Outlook for 1990 

The markets for petrochemicals should hold up fairly well 

through 1990. The value of shipments (in 1987 dollars) is 

U.S. Industrial Outlook 1990—Chemicals and Allied Products 

forecast to increase 1.8 percent, two-thirds of the increase of 

1989 but still twice that of 1988. There will be some slack 

to take up. With new capacity coming on stream, operating 

rates could drop from the current 98 percent of capacity to 

90 percent by 1991. The value of exports should increase to 

$19.8 billion, 7.0 percent over 1989. Imports will probably 

reach about $13.6 billion, 7.2 percent over 1989. 

The petrochemical industry is watching closely to see that 

1990 expansion commitments do not exceed demand. Some 

experts believe that the lessons learned during the oversupply 

of the early 1980s have given management valuable experience, which will preclude ambitious increases in production 

based on temporary shortages and high prices. Producers are 

looking at long-term requirements based on their estimates 

of the stability of the U.S. dollar. 

According to a major chemical trade journal, the new 

capacity coming on stream this year will have the flexibility 

to use a wide variety of feedstocks, ranging from ethane to 

naptha and gas oil. Therefore, the strong feedstock competition between crude oil fractions and natural gas liquids 

will continue and will tend to hold petrochemical prices in 

check. 

Long-Term Prospects 

The balancing of factors such as prices, capacity expansion, 

operating rates, research and development, and personnel 

utilization will determine to a great extent how the petrochemicals industry fares through 1994. By then, the industry should 

be operating at full capacity, with an average growth rate of 

2 percent a year. 

REGULATIONS IN THE 

CHEMICAL INDUSTRY 

The U.S. chemical industry is regulated under such laws 

as the Emergency Planning and Community Right-to-Know 

Act, the Clean Air Act, the Toxic Substances Control Act, 

the Resource Conservation and Recovery Act, Superfund, the 

Clean Water Act, the Safe Drinking Water Act, and the new 

Chemical Diversion and Trafficking Act. In addition, the 

industry meets standards set by the Occupational Safety and 

Health Administration. 

12- 3 
P.8 

These and many other regulatory obligations increase the 

industry's capital expenditures and operating costs. In 1986, 

the most recent year for which figures are available, the chemical industry spent about $624 million on capital expenditures 

for pollution abatement; annualized operating expenditures 

for pollution abatement accounted for another $2.7 billion. 

Emergency Planning and Community-Right-to-Know Act 

The Emergency Planning and Community-Right-to-Know 

Act is the third title of the Superfund Amendments and 

Reauthorization Act, signed into law in 1986. Known as Title 

III, the Emergency Planning and Community-Right-to-Know 

Act is a free-standing law affecting nearly all US. communities 

and nearly every industry or business that produces, stores, 

buys, or ships hazardous materials covered under the law. 

Title III has two primary functions. First, it mandates 

emergency planning in virtually all communities. Second, the 

law gives communities the right to know more about hazardous materials used by certain industries. 

For covered industries, Title III sets specific reporting 

requirements and deadlines. Since October 1987, companies 

that use, process, or manufacture certain hazardous materials 

have had to submit material safety data sheets or lists of chemicals kept on site. On July 1 of each year, covered companies 

also must report inventories of specific chemicals kept in the 

workplace and annual releases of hazardous materials into the 

environment. Reported information is available to the public 

and has been the focus of much attention. 

Covered industries so far have reported environmental 

releases made in 1987 and 1988. The 1987 data are already 

in an Environmental Protection Agency (EPA) computerized 

data base that can be accessed by the public. The 1988 data 

will also be entered into the data base. 

Industry efforts to reduce emissions began before the enactment of Title HI and are picking up speed. Many companies 

have undertaken significant programs to reduce their 

environmental releases. In addition, the Chemical Manufacturers Association, (CMA) whose members represent more 

than 90 percent of the U.S. productive capacity of basic industrial chemicals, have adopted a chemical release reduction 

policy and program designed to increase protection for chemical-plant workers and residents near plants. The policy commits CMA member companies to reduce releases to all 

environmental media. 

In addition to their reporting responsibilities under Title III, 

covered facilities are required to participate in the local 

emergency-planning efforts mandated by the law. 

Clean Air Act 

EPA lists and regulates hazardous air pollutants under Section 112 of the Clean Air Act, and has developed and promulgated National Emissions Standards for Hazardous Air 

Pollutants (NESHAPs) for both new and existing pollutant 

sources. EPA so far has decided to examine approximately 80 

additional substances. EPA has listed eight substances for 

NESHAPs, of which seven have been formally regulated. 

Action on 10 others is pending. 

The Clean Air Act has not been significantly amended in 

more than a decade, although legislators have worked on 

reauthorizing and amending the law in session'after session 

beginning with the 97th Congress. In 1989, President Bush 

proposed amendments to the law that include provisions on 

air toxics, attainment of ozone standards, and acid rain. 

Although it is not the only bill, the administration proposal 

raised hopes that the 101st Congress would amend the Clean 

Air Act. 

Toxic Substances Control Act 

Congress enacted the Toxic Substances Control Act in 1976. 

The law was due to be reauthorized in 1984, but bills to do 

that died in both houses of Congress. TSCA remains in force 

through a continuing resolution. Of TSCA's many regulatory 

programs, one of the most significant for the chemical industry 

is the Section 5 program requiring companies to submit a 

premanufacture notice for each new chemical. This notice 

must include all available data on health and environmental 

effects, plus information on manufacturing, processing, and 

end use. Under the Generic Significant New Use Rule, EPA 

requires a significant new use notice to be filed for each new 

chemical end use. A recently published final rule assesses filing fees of $2,500 for companies with more than $40 million 

in sales and $100 for smaller companies. 

EPA continues to work with environmental and industry 

representatives to review and recommend testing of many 

chemicals. The cost of implementing the testing program is 

estimated at several million dollars per year. 

EPA uses its authority to collect information under Section 

8 of TSCA. In 1986, the agency updated production, plantsite, and end-use information for existing chemicals. Late in 

1988, EPA established the Comprehensive Assessment Information Rule (CAIR), which allows the agency to gather information on produced substances. CAIR will undergo continuing review at the Office of Management and Budget. Cost 

estimates for the first decade of compliance have run as high 

as $250 million. 

New activities will involve regulating individual chemicals 

under TSCA Section 6. EPA recently banned most uses of 

asbestos under this section of the law. Previously, EPA had 

used TSCA Section 6 to regulate PCBs and metalworking 

fluids. 

Resource Conservation and Recovery Act 

In 1984, amendments to the Resource Conservation and 

Recovery Act made major changes in the law, including: 

° a complete ban on land disposal of hazardous waste unless 

no migration from the waste facility will occur for as long 

as the waste remains hazardous or the waste is treated 

to EPA-established levels; 

° legally mandated deadlines under which congressional 

decisions become effective, even in the absence of EPA 

action; 

° more stringent standards for handling and disposing of 

hazardous waste; 

° a timetable for EPA decisions for listing additional 

categories of chemicals, plus criteria to make delisting 

more difficult; and 

° regulatory control of, and standards for, underground 

storage tanks. 

EPA continues to implement the land-disposal prohibitions 

required under the 1984 amendments. Decisions on wastes 

listed or identified in 1984 will be made by May 1989. The 

treatment requirements for continued land disposal will 

significantly increase the cost of disposal and add considerably 

to the stress on existing treatment and disposal capacity. 

12=4 U.S. Industrial Outlook 1990—Chemicals and Allied Products 
P.9 

13 

Industrial and Agricultural Chemicals 

The constant-dollar value of shipments of industrial 

chemicals is expected to increase about 1.7 percent in 1990. 

Shipments of organics will rise 1.5 percent, shipments of 

inorganics will grow 2.2 percent, and those of agricultural 

chemicals should grow about 1 percent. Like the other 

chemical industry sectors, environmental concerns will remain 

an important challenge for producers of industrial chemicals. 

ORGANIC CHEMICALS 

O

rganic chemicals are defined as those chemicals that 

are compounds of carbon. For statistical purposes, 

industrial organic chemicals (SIC 286) are classified 

as gum and wood chemicals (SIC 2861), cycic crudes and 

intermediates (SIC 2865), and industrial organic chemicals, 

nee (SIC 2869). This section treats only the latter two, which 

are combined for economic review. With the 1987 revision of 

the Standard Industrial Classification (SIC) system, SIC 2865 

and SIC 2869 now include some products that had been 

included in SIC 2911, petroleum refining. 

In 1989, the value of shipments of organic chemicals 

reached $62.6 billion. Measured in constant dollars, shipments 

rose 2.3 percent, slightly less than their 3.8 percent increase 

in 1988. Shipments of organic chemicals accounted for less 

than 15 percent of shipments of all chemicals (SIC 28) and 

for half of petrochemicals shipments. 

The United States exported $10.1 billion worth of organic 

chemicals in 1989, and imported $9.2 billion. Although this 

trade surplus contributed about 10 percent to the overall 

chemicals (SIC 28) positive trade balance in 1989, it was about 

half a billion dollars less than the surplus in 1988. The continuing rise in organic chemical imports and the drying up of 

the China market for US. exports accounted for the narrowing of surplus in organics. 

The increase in organic chemicals shipments in 1989 .was 

concentrated in aliphatic (noncyclic) intermediates, especially 

olefins, which are used to make polymers and plastics. The 

pace of growth of the majority of organic chemicals had begun 

to slow by the second and third quarters of 1989 and remained 

flat in the fourth quarter. Substantial inventories, the general 

economic slowdown resulting in lower demand, and a stronger 

dollar combined to make 1989 a soft market for most organic 

chemicals. Nevertheless, sales for the entire year were higher 

than in 1988, and combined with lower raw material costs, 

provided record earnings for some industrial organic chemical 

commodity producers. 

Outlook for 1990 

Falling industrial capacity utilization rates, lagging auto and 

housing sales, slowing export markets, and weakening chemical 

commodity prices indicate that the slowdown in sales of 

organic chemicals could continue in 1990. Constant-dollar 

shipments of organic chemicals should increase, but only by 

about 1.5 percent. Prices will probably rise very little (perhaps 

2 percent), partly in readjustment from their high level of early 

Trends and Forecasts: Organic Chemicals, Except Gum and Wood (SIC 2865, 2869) 

(in millions of dollars except as noted) 

Percent Change 

^ 1987] 1988J 1939s 1990* 1987-88 1988-89 1989-90 

Industry Data 

Value of shipments' 50,972 56.745 63,754 66,252 11.3 12.4 3.9 

Value of shipments (1987$) 50,972 49.797 51,166 51,947 -2.3 2.7 1.5 

Total employment (000) 123 125 126 127 1.6 0.8 0.8 

Production workers (000) 71.0 72.5 73.2 73.6 2.1 1.0 0.5 

Average hourly earnings ($) 15.99 ----- -

Product Data 

Value of Shipments' 46,448 56,103 62,569 64,759 20.8 11.5 3.5 

Value of shipments (1987$) 46,448 48,220 49.332 50,089 3.8 2.3 1.5 

Trade Oata 

Value of imports 7.217 8,477 9,234 9,816 17.5 8.9 6.3 

Import/new supply ratio7 0.116 __-.. . 

Value of exports 7,957 9,906 10,131 10,708 24.5 2.3 5.7 

Export/shipments ratio 0.163 - - - - - -

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 SIC. 'Value of products classified in the organic chemicals, except gum & wood industry pro-

'Estjmated, except for exports and imports. duced by all industries. 

'Estimated. 'New supply is imports plus corresponding product shipments, 

•forecast. SOURCE: U.S. Department of Commerce: Bureau of the Census: International Trade 

tyalue of all products and services sold by establishments in the organic chemicals, except Administration (ITA). Estimates and forecasts by ITA. 

gum & wood industry. 

U.S. Industrial Outlook 1990—Industrial Chemicals 13-1 
P.10 

1989, and profitability for the sector is expected to be low. The 

trade balance in organic chemicals should remain positive. 

R&D spending, which rose modestly in 1989, is expected to 

remain level as a percentage of industry sales in 1990. 

Long-Term Prospects 

Like most of the chemical industry, the organic sector 

expects growth in the future, but at a slower rate than in recent 

years. The industry is projected to grow in the next 5 years 

at an annual rate of about 1.5 to 2.0 percent. Industry profitability should improve as firms acquire downstream capacity 

producing higher value-added products. Productivity should 

also improve insofar as the industry invests in high-tech plant 

and equipment and cuts back on personnel requirements. The 

extent of regulation will influence the nature and amount of 

the organic chemical industry's investment in streamlining and 

adding to its present production capacity. 

INORGANIC CHEMICALS 

Inorganic chemicals constitute almost 25 percent of US. 

shipments of industrial organic and inorganic chemicals. They 

are predominantly basic chemicals (also called heavy, bulk, or 

commodity chemicals) such as chloralkalies, (SIC 2812); 

industrial gases, (SIC 2813); and acids, salts, inorganic compounds, and rare earth metal salts (SIC 2819), which account 

for about two-thirds of all inorganic chemical production. 

The major consumers of inorganic chemicals include the 

automotive, housing, paper, packaging, pharmaceutical, paint 

and ink, and fertilizer industries. Demand for these products 

depends on the overall health of the economy and specifically 

that of user industries. 

The inorganic chemicals industries are characterized by low 

levels of research and development, declining rates of growth 

and productivity, and overcapacity. Only the most efficient producers are likely to survive in the long run. Company expansion is infrequent, and much effort is devoted to achieving 

economies in the costs of feedstocks, energy, and labor. /Acquisitions, mergers, and consolidations have occurred frequently 

in recent years. 

Exports of inorganic chemicals have generally increased during the 1980s. They jumped nearly 15 percent between 1983 

and 1984, reaching $3.3 billion, but then declined by nearly 

7 percent between 1984 and 1985. A period of slow recovery 

followed, and in 1989, exports were an estimated $3.7 billion, 

an increase of 20 percent from their 1985 level. 

Imports of inorganic chemicals increased sharply in the late 

1980s in response to increased domestic demand. After falling nearly 3 percent between 1984 and 1985, to just over 

$2.7 billion, they climbed consistently from 1986 to 1988, 

reaching $3.05 billion and remaining roughly at that level in 

1989. 

Constant-dollar industry shipments of inorganic chemicals 

are expected to increase 2.2 percent in 1990. Output will be 

Photo by J. C. Evans 

Sales increases and lower raw materials costs provided record earnings for some organic chemicals producers in 1989. Growth of 1.5 percent is expected 

in 1990. 

13-2 U.S. Industrial Outlook 1990—Industrial Chemicals 
P.11 

percent of the market; and the Far East, with Japan 

dominating production, accounts for more than 20 percent. The U.S. historically has had a positive trade balance 

in pesticides. The ratio of exports to imports peaked at 11 

to 1 in 1974, however, and by 1989 had declined to about 6 

to 1. 

The International Trade Commission (ITC) classifies 

pesticides as herbicides (including plant-growth regulators), 

insecticides (including rodenticides, soil conditioners and 

fumigants), and fungicides. ITC sales data on pesticide organic 

chemicals show herbicides accounting for over 60 percent, 

insecticides for about 30 percent, and fungicides for less than 

10 percent. 

Of the three subgroups, herbicides have had the most 

research funding and have dominated technological progress. 

They also have been the most susceptible to pirating and have 

had the least favorable ratio of exports to imports during the 

1980s. 

In 1988, 130 companies, 70 with U.S. plant locations, supplied 219 pesticide chemicals to the U.S. market. Six companies, all with U.S. production facilities, accounted for about 

half of U.S. sales, but only three were U.S.-owned companies. 

Eleven more companies accounted for an additional 35 percent of U.S. sales. 

Consolidation of pesticide production facilities under fewer 

companies continued in 1989 because of the increasing difficulties facing producers of agricultural chemicals. These 

include the increasing cost of R&D, the abuse of intellectual 

property rights, and environmental regulations. The expense 

of conducting stringent toxicity tests in compliance with 

environmental regulations and the increasing difficulty of finding new products have boosted average R&D cost for a single 

new pesticide to more than $50 million, compared with an 

average cost of $6 million in 1976; average development time 

has lengthened to 9 years. 

Outlook for 1990 

The constant-dollar value of shipments of pesticides is 

expected to drop about 1 percent in 1990, although their use 

will increase. Reasons for the decrease include (1) the use of 

more effective pesticides, decreasing the cost per acre treated; 

(2) the negative impact of violations of U.S. intellectual property rights in world markets; and (3) pressures on U.S. farmers 

to reduce their use of toxic chemicals because of alleged 

ground-water pollution. 

Long-Term Prospects 

According to a 1989 survey conducted in the U.S. soybean 

market, more than 25 percent of U.S. soybean farmers plan 

to curtail their use of pesticides during the next 5 years because 

of increasing environmental concerns. In response to the prospect of relatively slow growth of conventional pesticides, producers are searching for alternatives among genetically 

engineered products, which are expected to proliferate in the 

1990s. Such products include bacteria, viruses, fungi, and other 

microorganisms that will attack plant pests. The world market 

in these pesticides could reach $8 billion by the end of the 

1990s, according to recognized market researchers of 

microbiological and biochemical pesticides. Patents on living 

organism pesticides remain to be tested, however. 

Commercialization of a biopesticide requires only 3 to 5 

years and much less R&D investment than conventional 

pesticides. The time required to develop a patent is a significant part of the 17-year patent life for both the conventional 

pesticides and the biopesticides, but less for the latter, and producers are reluctant to spend millions of dollars in R&D for 

such a short period of patent protection.—Frank P. Maxey, 

Office of Chemicals and Allied Products, (202) 377-0128. 

September 1989. 

Additional References 

Inorganic Fertilizer Materials and Related Products, M28B, U.S. Department 

of Commerce, Washington, DC 20230. 

Synthetic Organic Chemicals. U.S. Production and Sales, U.S. International 

Trade Commission, Washington, DC 20436. 

U.S. Exports and US. Imports, Tailor-Made Computer Data, International 

Trade Administration, U.S. Department of Commerce, Washington, DC 

20230. 

U.S. Industrial Outlook 1990—Industrial Chemicals 13-7 
P.12 

14 

Plastics and Rubber 

Constant-dollar industry shipments of plastic materials are 

projected to increase 2 percent in 1990, and those of synthetic 

rubber are expected to grow by 2 percent. Shipments of rubber and plastics products should increase 3 — 4 percent, with 

increases of 2-3 percent in rubber products and 3-4 percent in plastics products. 

T

his chapter covers plastics and rubber materials (SIC 

2821 and 2822) and most of rubber and plastic products (SIC 30). The latter category includes the following industries: tires (SIC 3011), rubber and plastics footwear 

(SIC 3021), rubber and plastics hose and belting (SIC 3052), 

fabricated rubber products (SIC 3069), and most of miscellaneous plastic products (SIC 308). 

In 1987, products previously included in SIC 3079 

(miscellaneous plastic products) under the 1977 SIC definition 

were reclassified as SIC 308 according to the 1987 SIC definition. This expanded SIC subsumes the following industries: 

unsupported plastics film and sheet (SIC 3081), unsupported 

plastics profile shapes (SIC 3082), laminated plastics plates and 

sheet (SIC 3083), plastics pipe (SIC 3084), plastics bottles (SIC 

3085), plastics foam products (SIC 3086), custom compounding of purchased resins (SIC 3087), plastics plumbing fixtures 

(SIC 3088), and plastic products, nee (SIC 3089). In addition, 

hose and belting have been recoded from SIC 3041 (1977 SIC) 

to SIC 3052 (1987 SIC). 

PLASTICS 

The plastics materials industry (SIC 2821) had high sales 

volume from late 1987 through early 1989 as demand outstripped supply. This strong market resulted in price increases of 

20 percent for some plastics, lower inventories, and high 

capacity utilization. 

By mid-1989, however, demand was weakening and prices 

had begun to decline. Contributing to the reversal was a softening of the US. economy, increased feedstock and resins 

capacity, and an unstable political environment in China— 

the second largest U.S. export market for plastics. As a result, 

1989 industry shipments are estimated to be up only 2 percent in constant-dollar terms, following an increase of almost 

6 percent in 1988. 

Industry employment in 1989 declined 0.7 percent to 

55,500. Production workers accounted for 63 percent of the 

industry workforce. 

Multiple Uses 

Plastics make up the largest category of materials used in 

the United States today, as they continue to displace metal, 

glass, paper, wood, and other materials. These market inroads 

have come about as a result of new technologies that enable 

plastic to have improved qualities such as high temperature 

resistance, high strength-to-weight ratios, and chemicaLcorrosive resistance. 

Trends and Forecasts: Plastics Materials and Resins (SIC 2821) 

(in millions of dollars except as noted) 

Percent Change 

^ 1987] 1988* 1989> 1990* 1987-88 1988-89 1989-90 

Industry Data 

Value of shipments' 26,144 33,81X1 36,616 38,096 29.3 8.3 4.0 

Value of shipments (1987$) 26,144 27,614 28,166 28,730 5.6 2.0 2.0 

Total employment (000) 55.9 55.5 55.5 55.5 -0.7 0.0 0.0 

Production workers (000) 34.7 ----- -

Average hourly earnings ($) 15.24 ----- -

Product Oata 

Value of shipments6 27,698 ----- -

Value of shipments (1987$) 27,698 ----- -

Trade Data 

Value of imports 927 1,158 1,273 1,400 24.9 9.9 10.0 

Import/new supply ratio7 0.032 ----- -

Value of exports 3,688 5,034 5,437 5,763 36.5 8.0 6.0 

Export/shipments ratio 0.133 - - - - -__ -

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 'Value of products classified in the plastics materials and resins industry produced by all 

Sic. industries. 

'Estimated, except for exports and imports. 'New supply is imports plus corresponding product shipments. 

'Estimated. "' SOURCE: U.S. Department of Commerce: Bureau of the Census; International Trade 

•Forecast. Administration (ITA). Estimates and forecasts by ITA. 

'Value of all products and services sold by establishments in the plastics materials and resins 

industry. 

U.S. Industrial Outlook 1990—Plastics and Rubber 14-1 
a net trade, surplus of $3.9 billion for SIC 2821. In 1989, —Moira M. Shea, Office of Chemicals and Allied Products, 

exports rose an estimated 8 percent while imports rose 10 per- (202) 377-0128, September 1989. 

cent, for an estimated net trade surplus of $4.4 billion. The 

largest U.S. markets in 1989 were Canada (11.5 percent of Additional References 

the total), China (11.3 percent), and Hong Kong (7.9 percent). Whittingtons Dictionary of Plastics, Technomic Publishing Co. Inc. StamThe leading U.S. suppliers were Canada (34.7 percent), Japan ford, CT 06902. 

(17.6 percent), and West Germany (15.2 percent). Society of the Plastics Industry, Washington, DC. 

1987 Census of Manufactures, MC87-1-28B(P), Bureau of the Census, U.S. 

Outlook for 1990 Department of Commerce, Washington, DC 20233. 

U.S. plastics producers should experience another good year 

in 1990. However, industry growth is expected to be slower ©WMTMiSTnir* ie>n niaisso 

than in 1988 and early 1989 as demand softens and profit &VW II Inlfc 101, HUTOEH 

rutcs level off 

" . ,. V U.S. constant-dollar industry shipments of synthetic rubNew facilities coming on-stream are expected to increase ber (SIC 2822) rose about 2 percent in 1989 after declining 

capacity by an estimated 7.5 percent in 1990, and produc- sijghtly in 1988. Shipments have been affected by reduced 

tion will rise about 5 percent. This added production capacity demand from domestic automobile manufacturers, larger 

should help to relieve the tight capacity, and will limit pnee import volumes of competitively priced tires, and increases 

increases. Some plastic materials may experience a slight price j n imports of motor vehicles already equipped with tires or 

^P- other rubber parts. 

The rate of increase in export sales is expected to slow in A tren d from generic all-purpose resins to more specialized 

1990. Sales to the important Chinese market may sag as elastomers has continued and put upward pressure on 

investors and companies determine the political climate in monomer prices over the last 1-2 years 

China and its implications for business. Leading producers of synthetic rubber resins in 1989, with 

Long-Term Prospects

 a t least

 ^ 3 5 °

 millio n i n

 annual sales, were Polysar, Uniroyai, 

. DuPont-Chambers, and GE Silicone. The numerous end-users 

Overall demand for plastics materials should grow at an inc i u d e th e automotive, energy, mining, aerospace, ordnance, 

annual rate of 4 percent during the early 1990s. Future electronic, and adhesives industries. 

development of new alloys, blends, additives, and composites y s o f hetj c mbb e ^ ha d bee n ; 

will foster new applications for plastics and support this unti l 19g8)areesti ^ atedt0haved ' oppedtQ$g99 ^ £ 

growin ' 1989. Demand for U.S. synthetic rubber resins in 1988 came 

Licensing and joint ventures may increase in Eastern ma ; n i y from Canada (18 percent share of U.S. exports), 

Europe in the early 1990s as doors open to foreign invest- Belgium (12 percent), Japan (8 percent), West Germany (7 perment and trade. cent)) anfj South Korea (5 percent). 

The U.S. plastics industry should retain its technological TJ.S. imports of synthetic rubber have regained ground lost 

lead in the global marketplace. Nevertheless, challenges and m \ ogg anfj ar e estimated to have reached nearly $605 million 

issues face the industry in the 1990s, including: j n 1989. Canada was by far the largest U.S. supplier in 1988 

o The Clean Air Act and its costly impact on the industry (with 36.8 percent of the market), followed by Japan (13.1 

in terms of pollution controls; percent), France (9.4 percent), and Mexico (6.3 percent). 

° Elimination by 1992 of internal border controls and 

unification of product standards and other regulations in Outlook for 1990 

the 12-nation EC market, which may prompt the U.S. Constant-dollar shipments of synthetic rubber are forecast 

plastics industry to invest more in EC plant facilities, to grow about 2 percent in 1990. Inroads into the end-use 

rather than export plastic resins to the EC. tire market will be made by imports, whether imported as tires 

Trends and Forecasts: Synthetic Rubber (SOC 2322) 

(in millions of dollars except as noted) 

Percent Change 

| ^ 1987] 1988J 19893 1990< 1987-88 1988-89 1989-90 

Industry Data 

Value ot shipments5 3,310 3,339 3,390 - 0.9 1.5 

Value of shipments (1987$) 3,310 3,274 3,340 3,406 -1.1 2.0 2.0 

Total employment (000) 10.8 10.6 - - -1.9 

Production workers (000) 7.0 6.9 - - -1.4 

Average hourly earnings ($) 15.22 15.41 1.2 

Product Data 

Value of shipments6 3,452 ----- -

Value of shipments (1987$) 3,452 3,478 3,548 3,619 0.8 2.0 2.0 

Trade Data 

Value of imports 393 461 605 620 17.3 31.2 2.5 

Import/new supply ratio7 0.102 ----- -

Value of exports 858 985 899 905 14.8 -8.7 0.7 

Export/shipments ratio 0.249 - - - - - -

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 'Value of all products and services sold by establishments in the synthetic rubber industry. 

SIC. 'Value of products classified in the synthetic rubber industry produced by all industries. 

'Estimated, except for exports and imports. 'New supply is imports plus corresponding product shipments. 

'Estimated. SOURCE: U.S. Department of Commerce: Bureau of the Census; International Trade 

'Forecast. Administration (ITA). Estimates and forecasts by ITA. 

U.S. Industrial Outlook 1990—Plastics and Rubber H4-3 
P.14 

synthetic rubber will depend primarily on economic activity 

by its principal end-user, the tire industry. Imports of passenger 

tires and motor vehicles with foreign-made rubber parts will 

continue to depress domestic demand for generic resins such 

as styrobutadiene (SBR). However, increases in domestic US. 

automobile production through joint ventures with multinational partners may partially offset the downward pressure on 

the market. A wide range of highly specialized synthetic-rubber 

materials for new nontire applications will continue to gradually displace general-purpose rubber. The combination of new 

synthetic rubber materials and sophisticated technologies will 

result in a new product mix for the industry over the next 5 

years.—Raimundo M. Prat, Office of Chemicals and Allied 

Products. (202) 377-0128, September 1989. 

Additional References 

1987 Census of Manufactures, MC87-1-28BQP), Bureau of the Census, US. 

Department of Commerce, Washington, DC 20233. 

Synthetic Organic Chemicals, VS. International Trade Commission, 

Washington, DC 20436. 

Rubber Statistical Bulletin, International Rubber Study Group, London, 

England. 

Synthetic Rubber, International Institute of Synthetic Rubber Producers, 

Houston, TX 77063. 

Rubber Production, Shipments, and Stocks, MA30A, VS. Department of 

Commerce, Bureau of the Census, Washington, DC 20233. 

Rubber Manufacturers Association, Washington, DC. 

International Institute of Synthetic Rubber Manufacturers, Houston, TX. 

PRODUCTS 

TIRES AND INNER TUBES 

Goodyear 

This 14-foot wheel tests the effects on tires of accelerating, braking, and SIC 3011 includes a diverse group of tire and inner-tube 

carrymgloads ofup to 120,000 pounds. DemanaIfortires slowedin 1989, products. Although tires and inner tubes for use in motor 

but may pick up somewhat in 1990. vehicles (passenger cars, trucks, and buses) still account for 

the bulk of tire output, other markets have become strategically 

or installed as original equipment on imported vehicles. The important over the last 1-2 years. For example, expansion is 

market also will be affected by replacement of synthetic rub- occurring in tire products and inner tubes for the agricultural, 

ber materials by rubber/plastic alloys, composite materials and industrial, military, and recreational markets. 

general-purpose polymer resins. This competition will dampen Because of the capital-intensive nature of the business, tire 

demand for the generic resins and keep prices down. production and distribution are strongly affected by economies 

. _ of scale. With costs of entry extremely high, entry has been 

Long-Term Prospects historically limited to well-financed multinational producers, 

Shipments by the synthetic rubber industry are forecast to state-owned facilities of the centrally planned economies, and 

grow by only 1-2 percent annually through 1993. Demand for a few unaffiliated smaller independent tire producers. 

Trends and Forecasts: Tires and Inner Tubes (SIC 3011) 

(in millions of dollars except as noted) 

Percent Change 

1987] 1988* 1989> 1990* 1987-88 1988-89 1989-90 

industry Data 

Value of shipments' 10,427 10,953 - - 5.0 

Value of shipments (1987$) 10,427 10,583 10,742 10,903 1.5 1.5 1.5 

Total employment (000) 65.4 66.1 66.5 - 1.1 0.6 

Production workers (000) 52.6 53.2 53.5 - 1.1 0.6 

Average hourly earnings ($) 15.40 15.90 - 3.2 

Product Data 

Value of shipments* 10,034 10,515 11,045 - 4.8 5.0 

Value of shipments (1987$) 10.034 10,189 10,338 10,492 1.5 1.5 1.5 

Trade Data 

Value of imports 2,227 2,405 2,711 - 8.0 12.7 

Import/new supply ratio' 0.189 --_.. . 

Value of exports 541 799 899 - 47.7 12.5 

Export/shipments ratio CH154 0X176 - - 407 - -

'Industry and product data are preliminary. Trade data are adjusted to confoimto the 1987 'Value of all products and services sold by establishments in the ties and inner tubes industry. 

SIC. 'Value of products classified in the tires and inner tubes industry produced by all Industries. 

'Estimated, except for exports and imports. 'New supply is imports plus corresponding product shipments. 

Estimated. SOURCE: U.S. Department of Commerce: Bureau of the Census: International Trade 

'Forecast. Administration (ITA). Estimates and forecasts by ITA. 

14-4 U.S. Industrial Outlook 1990—Plastics and Rubber 
P.15 

The worldwide tire market in 1989 is estimated to have surpassed $40 billion and was dominated by a small number of 

large multinational manufacturers. Goodyear accounted for 

about 18.3 percent of the total, followed by Michelin (18.1), 

Bridgestone/Firestone (16.5 percent), Sumitomo-Dunlop (7.5 

percent), Pirelli-Armstrong (7.4 percent), Continental-General 

(6.6 percent), Uniroyai Goodrich (4.3 percent), and Yokohama 

(3.7 percent). Unidentified participants accounted for the 

remaining 17.6 percent. 

Constant-dollar shipments of tires and inner tubes rose 

about 1.5 percent in both 1988 and 1989 after several years 

of gradual decline. Volume of U.S. production of motor vehicle tires has not changed significantly since a slowdown in 

1983, holding at around 200 million units. Industry sales 

leaders in 1989 were Goodyear, Firestone, Uniroyai, 

Goodrich, Michelin, General, Armtek, Kelly-Springfield, 

Cooper, Armstrong, and Dunlop. 

Tire imports have regained ground since the mid-1980s and 

are estimated at $2,711 million in 1989, up 12.7 percent from 

1988. Top suppliers to the United States in 1988 were Japan 

(31.6 percent), Canada (17.0 percent), South Korea (8.3 percent), Spain (7.0 percent), and France (5.5 percent). 

Exports of tires in 1989 rose for the third straight year, to 

an estimated $899 million. Japan, Canada, and Mexico were 

the largest export markets, with 33 percent, 19 percent, and 

7 percent of total exports, respectively. 

Over the last 2 years, a number of major domestic tire 

manufacturers have been acquired by or merged with foreign 

concerns. This has led to consolidation of an already concentrated world industry and has made a number of highly diversified foreign companies participants in the domestic market. 

Growing imports and vigorous merger and acquisition activity 

have resulted in an extremely competitive environment for 

the more specialized market segments. 

Outlook for 1990 

Constant-dollar industry shipments are forecast to rise 

another 1.5 percent in 1990. Imports of both tires and motor 

vehicles with mounted tires will probably continue to affect 

domestic tire production adversely, although increases in 

mileage driven, which boost demand for replacement tires, 

may counteract this trend. Tire imports thus are projected 

to remain stable in 1990, while exports may grow modestly, 

provided the dollar remains competitive. 

Long-Term Prospects 

Demand for standard tires will grow no faster than 2 percent annually for the next 3-5 years. Demand for high-value, 

specialized tire products for the recreational and industrial 

transportation markets, however, is projected to grow faster 

than the average because of diversification in these end-user 

markets. Demand for more sophisticated aircraft tires appears 

likely to be particularly promising in the coming decade. Sourcing patterns will continue to change over the next few years 

as a result of continuing merger/acquisition activity and 

increasing cooperation between domestic and foreign firms 

in automobile production. 

RUBBER AND PLASTICS FOOTWEAR 

The rubber and plastics footwear industry (SIC 3021) 

includes protective footwear and rubber-soled, fabric-upper 

footwear. Protective footwear is used in industrial 

environments and in certain cases incorporates shock-resistant 

materials other than rubber or plastic. Rubber-soled, fabricupper footwear is normally used for leisure or athletic purposes and includes tennis shoes, basketball shoes, espadrilles, 

and running shoes. 

Constant-dollar shipments of rubber and plastics footwear 

are estimated to have declined 5.9 percent in 1989 after a 4.8 

percent decrease in 1988. Production of rubber-soled fabricupper footwear has dropped noticeably since 1982, while output of protective footwear actually grew during the mid-1980s. 

Employment of production workers appears to have recovered 

to about 11,000 in 1989 after declining in 1988. 

Imports of rubber and plastics footwear have grown steadily 

since 1985, reaching nearly $451 million in 1988, but declined 

to 1989 to an estimated $408.7 million. In 1989, South Korea 

accounted for nearly one-half of imports, followed by China, 

Taiwan, and Mexico. Exports in 1989 declined 19.2 percent 

to an estimated $10.1 million. Major U.S. export markets in 

1988 were Italy (13 percent of exports), Canada (9 percent), 

Mexico (8 percent), and West Germany and Japan (7 percent 

each). 

Trends and Forecasts: Rubber and Plastics Footwear (SIC 3021) 

(in millions ol dollars except as noted) 

Percent Change 

_ 1987] 19882 1989J 1990* 1987-88 1988-89 1989-90 

Industry Data 

Value of shipments' 585 590 - - 0.9 

Value ol shipments (1987$) 585 - 557 524 505 -4.8 -5.9 -3.6 

Total employment (000) 11.0 10.9 - -0.9 

Production workers (000) 9.2 9.1 - - -1.1 

Average hourty earnings (S) 6.22 6.30 - - 1.3 

Product Data 

Value of shipments' 536 541 - - 0.9 

Value of shipments (1987$) 536 515 510 495 -3.9 -1.0 -2.9 

Trade Data 

Value of imports 347 451 409 - 30.0 -9.3 

Import/new supply ratio' 0.393 0.455 - - 15.8 

Value of exports 13.9 12.5 10.1 - -10.1 -19.2 

Export/shipments ratio 0.026 0.023 - - -11.5 - ; 

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 "Value of products classified in the rubber and plastics footwear industry produced by all 

SIC. industries. 

^Estimated, except for exports and imports. 'New supply is imports plus corresponding product shipments. 

SEstimated. > SOURCE: U.S. Department of Commerce: Bureau of the Census: International Trade Admlnlstreforecast. tion (ITA). Estimates and forecasts by ITA. 

syaiue of all products and services sold by establishments in the rubber and plastics footwear 

U.S. Industrial Outlook 1990—Plastics and Rubber 14-5 
P.16 

Trends and Forecasts: Adhesives and Sealants (SIC 2891) 

(in millions of dollars except as noted) 

Percent Change 

| ^ 1987] 19882 1989] 19904 1987-88 1988-89 1989-90 

Industry Data 

Value of shipments' 4,685 5,154 5,514 - 10.0 7.0 

Value of shipments (1987$) 4,685 4,862 5,106 5,462 3.8 5.0 7.0 

Total employment (000) 21.0 21.1 21.1 - 0.5 0.0 

Production workers (000) 11.9 11.9 12.0 - 0.0 0.8 

Average hourly earnings ($) 10.56 10.70 11.12 - 1.3 3.9 

Product Data 

Value of shipments' 4,510 4,962 5,301 - 10.0 6.8 

Value of shipments (1987$) 4,510 4,681 4,954 5,257 3.8 5.8 6.1 

Trade Data 

Value of imports 105 99.4 128 137 -5.3 28.8 7.0 

Import/new supply ratio7 0.029 0.018 0.022 - -37.9 22.2 

Value of exports 129 169 155 169 31.0 -8.3 9.0 

Export/shipments ratio 0.037 0.032 0.027 - -13.5 -15.6 -

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 'Value of all products and services sold by establishments in the adhesives and sealants 

SIC. industry. 

Estimated, except for exports and imports. 'Value of products classified in the adhesives and sealants industry produced by all Industries. 

'Estimated. 'New supply is imports plus corresponding product shipments, 

•forecast. SOURCE: U.S. Department of Commerce: Bureau of the Census: International Trade 

Administration (ITA). Estimates and forecasts by ITA. 

industry's inability to satisfy domestic demand for certain product lines. In 1988, the bulk of imports came from West Germany, with a 26.5 percent share, followed by Japan (26.3 percent), Canada (12.1 percent), the United Kingdom (8.6 

percent), and Switzerland (4.4 percent). 

Outlook for 1990 

Industry shipments of adhesives and sealants in 1990 are 

expected to grow faster than the economy as a whole in 

response to vigorous demand from the aerospace, aviation, 

automotive, and packaging industries. Growth in the nonresearch-intensive products, on the other hand, will most probably lag behind as a result of a slowdown in construction 

activity. 

Long-Term Prospects 

International competition in both domestic and foreign 

markets will probably continue to be intense for U.S. adhesives 

and sealants firms over the next 5-10 years. The industry faces 

strong competition from the Europeans and the Japanese in 

the high-technology area of specialty adhesives. Recent 

developments in adhesives technology such as bonding of 

metal-to-polymer or plastic-to-plastic surfaces and ultraviolet 

radiation curing will reflect changes in materials and assembly 

methods used in the automotive and aerospace end-use 

sectors. The markets for adhesives used to replace certain 

surgical procedures, the so-called bioadhesives, and for packaging will probably grow within the next 3-5 years. 

Environmental legislation and public concern over the 

environment will continue to drive manufacturers to change 

product mix in the foreseeable future. Domestic manufacturers with sufficient resources to face the growing trend 

toward environmental legislation at the municipal and state 

levels, and at the same time able to expand in overseas markets 

through joint-ventures or licensing, will be in a position to 

survive through the 1990s.—Raimundo M. Prat, Office of 

Chemical and Allied Products, (202) 377-0128, September 

1989. 

Additional References 

"Paints and Allied Products," SIC 2851, "Adhesives and Sealants," SIC 2891, 

Annual Survey of Manufactures, 1983, Bureau of the Census, VS. Department of Commerce, Washington, DC 20233. 

"Paints and Allied Products," SIC 2851, 1987 Census of Manufactures 

MC87I-28E(P), "Miscellaneous Chemical Products", Series 

MC87-I-28H(P), Issued April 1989, Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. 

"Current Industrial Reports: Paint," Bureau of the Census, U.S. Department 

of Commerce, Washington, DC 20233. 

American Paints and Coatings Journal, 2911 Washington Avenue, St. Louis, 

MO 63103. 

Adhesive Age Magazine, 6255 Barfield Road, Atlanta, GA 30328. 

15-4 U.S. Industrial Outlook 1990—Coatings and Adhesives 
P.17 

Trends and Forecasts: Soap, Cleaners, and Toilet Goods (SIC 284) 

(in millions of dollars except as noted) 

Percent Change 

lte m

 1987] 198JP 1989J 1990* 1987-88 1988-89 1989-90 

Industry Data 

Value of shipments' 34,427 37,180 39,675 - 8.0 6.7 

2841 Soap & other detergents 11,510 12,645 13,303 - 9.9 5.2 

2842 Polishes/sanitation goods 5,514 5,849 6,339 - 6.1 8.4 

2843 Surface active agents 2,980 3,376 3,829 - 13.3 13.4 

2844 Toilet preparations 14,424 15,310 16,204 - 6.1 5.8 

Value Of shipments (1987$) 34,427 35,376 36,615 37,725 2.8 3.5 3.0 

2841 Soap Si other detergents 11,510 11,796 12,182 12,423 2.5 3.3 2.0 

2842 Polishes/sanitation goods 5,514 5,624 5,763 5,897 2.0 2.5 2.3 

2843 Surface active agents 2,980 3,120 3,267 3,430 4.7 4.7 5.0 

2844 Toilet preparations 14,424 14,835 15,403 15,975 2.8 3.8 3.7 

Total employment (OOO) 119 125 125 126 5.0 0.0 0.8 

2841 Soap & other detergents 31.4 31.8 30.9 31.1 1.3 -2.8 0.6 

2842 Polishes/sanitation goods 20.3 21.4 22.1 22.8 5.4 3.3 3.2 

2843 Surface active agents 8.9 9.4 9.7 10.0 5.6 3.2 3.1 

2844 Toilet preparations 58.4 62.6 61.9 62.0 7.2 -1.1 0.2 

Production workers (000) 72.2 75.7 76.1 77.4 4.8 0.5 1.7 

2841 Soap & other detergents 19.2 19.5 19.0 19.2 1.6 -2.6 1.1 

2842 Polishes/sanitation goods 13.0 13.8 14.4 15.0 6.2 4.3 4.2 

2843 Surface active agents 4.6 4.9 5.1 5.4 6.5 4.1 5.9 

2844 Toilet preparations 35.4 37.5 37.6 37.8 5.9 0.3 0.5 

Average hourly earnings ($) 10.67 10.92 10.91 - 2.3 -0.1 

2841 Soap & other detergents 13.80 14.31 14.35 - 3.7 0.3 

2842 Polishes/sanitation goods 9.88 10.02 9.99 - 1.4 -0.3 

2843 Surface active agents 13.40 13.60 13.57 - 1.5 -0.2 

2844 Toilet preparations 8.87 9.02 9.00 - 1.7 -0.2 

Product Data 

Value of shipments' 32,228 34,915 37,190 - 8.3 6.5 

2841 Soap & other detergents 9,572 10,516 10,980 - 9.9 4.4 

2842 Polishes/sanitation goods 5,090 5,400 5,852 - 6.1 8.4 

2843 Surface active agents 2,836 3,214 3.651 - 13.3 13.6 

2844 Toilet preparations 14,730 15,785 16,707 - 7.2 5.8 

Value of shipments (1987$) 32,228 33,267 34,365 35,490 3.2 3.3 3.3 

2841 Soap & other detergents 9,572 9,810 10,055 10,310 2.5 2.5 2.5 

2842 Polishes/sanitation goods 5,090 5,192 5,320 5,450 2.0 2.5 2.4 

2843 Surface active agents 2,836 2,970 3,110 3,260 4.7 4.7 4.8 

2844 Toilet preparations 14,730 15,295 15,880 16,470 3.8 3.8 3.7 

Trade Data 

Value of imports 734 863 1,076 1,231 17.6 24.7 14.4 

2841 Soap & other detergents 82.5 84.2 86.0 88.0 2.1 2.1 2.3 

2842 Polishes/sanitation goods 34.4 35.9 40.0 43.0 4.4 11.4 7.5 

2843 Surface active agents 171 225 300 350 31.6 33.3 16.7 

2844 Toilet preparations 446 518 650 750 16.1 25.4 15.4 

Import/new supply ratio' 0.023 ----- -

2841 Soap & other detergents 0.006 ----- -

2842 Polishes/sanitation goods 0.035 ----- -

2843 Surface active agents 0.057 0.065 0.076 - 14.0 16.9 

2844 Toilet preparations 0.029 0.032 0.037 - 10.3 15.6 

Value of exports 819 993 1,170 1,345 21.2 17.8 14.6 

2841 Soap & other detergents 144 134 140 145 -6.9 4.5 3.6 

2842 Polishes/sanitation goods 89.3 113 140 160 26.5 23.9 14.3 

2843 Surface active agents 202 244 290 350 20.8 18.9 20.7 

2844 Toilet preparations 384 502 600 690 30.7 19.5 15.0 

Export/shipments ratio 0.025 0.028 0.031 - 12.0 10.7 

2841 Soap & other detergents 0.015 0.013 0.013 - -13.3 0.0 

2842 Polishes/sanitation goods 0.018 0.021 0.024 - 16.7 14.3 

2843 Surface active agents 0.071 0.076 0.079 - 7.0 3.9 

2844 Toilet preparations 0.026 0.032 0.036 - 23J 12J> -

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 SIC. 'Value of products classified in the soap, cleaners, and toilet goods industry produced by 

'Estimated, except for exports and imports. all industries. 

'Estimated. ' N e w supply is imports plus corresponding product shipments. 

'Forecast. SOURCE: U.S. Department of Commerce: Bureau of the Census: International Trade 

svalue of all products and services sold by establishments in the soap, cleaners, and toilet Administration (ITA). Estimates and forecasts by ITA. 

goods industry. 

The increasing bans on use of phosphates in laundry Outlook for 1990 

detergents will spur the use of enzymes, which aid the clean- „„„••« 

ing pfocess. An industry estimate has trie use of enzymes in . Product shipments of soaps and deergents are forecast to 

laSndry detergents growing at an annual rate of 16 percent. '"crease 25 percent (constant dollars) in 1990. The value of 

Protease for protein breakdown ancPamylase for starch exports is forecast to increase about 3.6 percent while imports 

breakdown account for the greatest proportion.of enzymes

 chm b

 minimally. 

used in laundry detergents. However, use of lipase for fat Shipments of liquid laundry detergents are expected to rise 

breakdown and the other enzymes needed for complete clean- another 16 percent to $ 1.8 billion in 1990, and rapid growth 

ing is expected to increase at a fast pace. of about 21 percent is seen for use of dishwasher liquids, both 

37_2 U.S. Industrial Outlook 1990—Cleaners and Cosmetics 
PJ8 

institutional and household. Further improvements will be 

pade in dispensing of liquid detergents. Consumers also will 

make greater use of unit dosage packets, which heretofore have 

been slow to catch the market's fancy, and of detergents containing fabric softeners. 

Higher costs for ingredients such as surfactants are forcing 

reformulation of detergents to improve cost/performance 

characteristics. Enzymes in detergents are being improved to 

lower costs and enhance stability in conjunction with newly 

developed oxygen nonchlorine bleaching compounds. 

Shipments of liquid soaps are expected to reach $160 million 

in 1990, up 5.4 percent from 1989. New developments such 

as multifunctional liquid soaps containing moisturizers and 

antibacterials have shown good trial results. 

Long-Term Prospects 

Constant-dollar product shipments are projected to grow at 

an average rate of 2.5 percent annually through 1994. Heavyduty liquid laundry detergents are seen gaining over 40 percent of the heavy-duty laundry detergent market by 1994, 

compared with about 30 percent currently, because of the 

increased restriction on use of phosphates in detergents. 

(Liquids are more popular in areas where phosphates have been 

restricted). 

Detergents containing nonchlorine bleaches such as peroxygen bleaches will eventually replace chlorine bleaches. 

Research is going on to activate peroxygen bleaches effectively 

at low wash-water temperatures, thus extending their use to 

most laundering situations. 

Acrylate polymers and copolymers are becoming increasingly useful for processing, anti-redeposition, detergency, and 

improvement of phosphate-replacement builders. 

Developments in detergent additives promise to reduce the 

potential for buildup of engine carbon deposits. Consumption 

of gasoline additives, including detergents, is expected to grow 

by about 7 percent a year through 1994, when it will total 

about $150 million. 

(POLISHES AND SANITATION GOODS 

Industry shipments of polishes and sanitation goods (SIC 

2842) totaled an estimated $6.34 billion in 1989, an increase 

of 8.4 percent over 1988. In constant dollars, the growth rate 

was 2.5 percent. 

Exports in 1989 are estimated to have increased to $140 

million, 24 percent above the 1988 value. Imports increased 

about 11 percent to $40 million. 

Average earnings of production workers are estimated to 

have held steady in 1989, at $10 an hour, while total employment rose 3.3 percent. Productivity declined about 2 percent, 

and prices increased 5.8 percent. 

The keynote in this industry is convenience. Manufacturers 

are producing multipurpose products because consumers wish 

to decrease the amount of time spent on housework. Use of 

multipurpose products cuts cleaning time from busy schedules 

and is less expensive than using several single-purpose products 

to achieve the same results. 

The institutional and industrial (I&I) sector of the cleaning industry consumes a significant portion of polishes and 

sanitation goods. A leading chemical trade journal estimates 

the I&I market targets 38,000 hotels with 3 million rooms; 

400,000 restaurants; 7,000 hospitals with 1.1 million beds; 

17,000 nursing homes with 2 million beds; 2 million office 

buildings; 2 million retail establishments; thousands of schools; 

and 400,000 food processing plants. 

I&I manufacturers are mainly small, keenly competitive 

regional companies, which produce some 50,000 different 

brands of products. In 1988, they used more than $3.5 billion 

worth of chemicals and over 4 billion pounds of detergents. 

More than 2,000 manufacturers produce I&I cleaners. 

I&I producers are paying greater attention to environmental safety. The industry has been affected by increased regulation and publicity concerning labeling and disclosure, protection of the environment from volatile organic chemicals, and 

use of biodegradable products. 

Growth of only about 1.7 percent a year characterizes the 

market for disinfectants, which are necessary for proper cleaning and protection, especially in hospitals and nursing homes. 

Extensive regulation of this sector is discouraging production 

and forcing the withdrawal of marginal producers. Specialty 

biocides used in formulating disinfectants are quaternaries 

(with 55 percent of the volume of sales to disinfectants 

industries), chloroisocyanates (30 percent), and phenolics (15 

percent). 

Outlook for 1990 

The constant-dollar value of product shipments is expected 

to rise 2.5 percent in 1990. Total employment is forecast to 

increase 3.2 percent to 22,800 while the number of production workers increases 4.2 percent to 15,000. Productivity is 

expected to decrease slightly. 

Exports in 1990 are expected to climb to $160 million, 14 

percent above 1989. Imports are forecast at $43 million, up 

7.5 percent. 

Long-Term Prospects 

Industry shipments of polishes and sanitation products are 

projected to grow at an average annual rate of 2.4 percent (constant dollars) through 1994. 

Producers are aiming at supplying the public with polishes 

and sanitation goods that are efficient, convenient, easy to use, 

time and energy savers, and reasonably priced. In the case of 

sanitation products, producers are attempting to satisfy 

demand for products that remove a diversity of soils from a 

variety of surfaces. One industry expert forecasts strong 

demand for products that have multiple functions and are 

easily dispensed. The market will be affected by population 

increases among the older generation and young adults, a 

decrease in the average household size, and an increase in the 

number of two-income housholds. 

SURFACE-ACTIVE AGENTS 

Surface-active agents (SIC 2843), known as surfactants, are 

organic chemicals that reduce surface tension and thereby 

loosen and suspend dirt deposits and stains so that water can 

wash them away. Worldwide surfactant consumption is 

estimated at 15.5 billion pounds annually, almost half of which 

is consumed in the United States. Consumption is divided into 

three major sectors: I&I cleaners; household products, and 

personal-care products. 

US. production of surfactants in 1989 is estimated at 8 billion 

pounds, compared with 7.3 billion in 1988. About a third of 

the production goes into the manufacture of detergents. Most 

U.S. Industrial Outlook 1990—Cleaners and Cosmetics 37-3 
P.19 

r 

of thcremainder goes into emulsifiers and wetting agents. Two 

of the most-used and versatile surfactants with good cleaning 

qualities are linear alkylbenzene sulfonate (LAS) and linear 

alcohol ethoxylate (AE). 

Surfactants are classified in terms of electrical charge of the 

molecule. Anionics such as LJ-\S have a negatively charged 

hydrophyllic group and represent more than half of all surfactants used. Nonionics such as AE are neutral in electrical 

charge. Amphoterics such as betaines have a charge that varies 

according to the acid content in formulation. 

Surfactant shipments in 1989 are estimated at about $3.65 

billion, 13.6 percent over 1988. Real gain in both industry and 

product shipments is estimated about 5 percent. Surfactant 

exports in 1989 rose about 19 percent to an estimated $299 

million. Imports are estimated at $300 million, an increase of 

33 percent. 

Prices increased about 5.8 percent in 1989. Total employment increased 3.2 percent, and the number of production 

workers rose an estimated 4 percent. Productivity increased 

significantly. 

The surfactants industry is operating at or near capacity, 

although market growth has slowed somewhat in the past few 

years. Inventories recently have been reduced, after being 

expanded to protect against shortages. 

Intermediates for the production of surfactants appear to 

be in plentiful supply. This is partly because sales of liquids, 

which contain more surfactant than do powders, have not 

increased as much as expected. 

Outlook for 1990 

The values of both industry and product shipments are 

forecast to increase nearly 5 percent in 1990, after adjusting 

for price change. Productivity is expected to decrease slightly. 

The value of exports is expected to increase 21 percent to 

$350 million in 1990. Import value will climb about 17 percent to $350 million. 

The market will be getting a new and wider range of surfactants for specific applications. Specialty surfactants will offer 

the greatest opportunities for growth. For example, new 

specialty nonionics for use in dishwashing liquids will produce 

superior mildness and biodegradability. 

Prices for ethylene-based surfactants are expected to continue 

to decline in 1990 as a result of expansion in ethylene production. The tightened profit margins could cause some firms, 

especially smaller ones, to stop manufacturing surfactants. 

Long-Term Prospects 

The real value of industry shipments is projected to increase 

at a rate of 3.8 percent a year through 1994. By then, anionics 

are forecast to comprise 60 percent of the total, down from 

62 percent in 1988. Nonionics' share is expected to increase 

to 32 percent from 27 percent in 1988. 

COSMETICS 

The cosmetics (toilet goods) industry (SIC 2844) consists 

of three major categories: cosmetics, fragrances, and toiletries. 

The value of product shipments in 1989 is estimated at $16.7 

billion, up 5.8 percent from 1988 (3.8 percent in constant dollars). Exports in 1989 rose an estimated 20 percent to $600 

million. Imports were about $650 million, 25 percent over 

1988. 

Productivity increased an estimated 3.5 percent in 1989, 

Employment was fairly stable, as were production workers' 

average hourly earnings. The average net profit, after taxes, 

was an estimated 6 percent in 1989. 

Although one of the best self-regulated industries in the past, 

the cosmetics industry, in cooperation with the Food and Drug 

Administration, is placing even more emphasis on self, 

regulation. Evaluation of ingredients is improving, and 

awareness is increasing among cosmeticians and cosmetologists 

of the safe and optimum use of cosmetics and hair-care 

products. 

Cosmetics are becoming high-tech products. Research and 

development is aimed primarily at skin care and protection, 

as well as minimizing any allergic responses to ingredients. 

The skin- and hair-care markets are the largest segments 

of the cosmetics industry. The value of skin-care product 

shipments, spurred by sales of sun-care products, has been 

growing at an annual rate of 12 percent since 1982 and is 

estimated to have reached $2.8 billion in 1989. Shipments of 

sun-care products have been growing by more than 16 percent a year and should have reached $205 million in 1989. 

Hair-care products, increasing more than 8 percent a year, are 

estimated at $4.2 billion for 1989. 

The ethnic market for products designed specifically for 

darker skin and special hair care is growing faster than the 

rest of the cosmetics market. Shipments in 1989 rose about 

ChMWOuQh-Pwd 

rase about 

3.8 percent in 1989 and are expected to gain another 3.7 percent in 1990. 

Constant dollar shipments of toilet goods, including toothpaste, rose about 

ther ' ' 

37-4 U.S. Industrial Outlook 1990—Cleaners and Cosmetics 
Trends and Forecasts: Drugs (SIC 283) 

(in millions of dollars except as noted) 

Item 

1987' 

Industry Data 

Value of shipments' 39,090 

2833 Medicinals & botanicals 3,348 

2834 Pharmaceutical preps 32,070 

2835 Diagnostic substances 2,083 

2836 Bio prod ex diagnostic 1,589 

Value of shipments (1987$) 39,090 

2833 Medicinals & botanicals 3,348 

2834 Pharmaceutical preps 32,070 

2835 Diagnostic substances 2,083 

2836 Bio prod ex diagnostic 1,589 

Total employment (000) 170 

2833 Medicinals & botanicals 11.6 

2834 Pharmaceutical preps 132 

2835 Diagnostic substances 14.1 

2836 Bio prod ex diagnostic 12.8 

Production workers (000) 79.1 

2833 Medicinals & botanicals 6.1 

2834 Pharmaceutical preps 59.8 

2835 Diagnostic substances 6.7 

2836 Bio prod ex diagnostic 6.5 

Average hourly earnings ($) 12.25 

2833 Medicinals & botanicals 15.48 

2834 Pharmaceutical preps 12.41 

2835 Diagnostic substances 10.78 

2836 Bio prod ex diagnostic 9.03 

Product Oata 

Value of shipments6 35,054 

2833 Medicinals & botanicals 4,222 

2834 Pharmaceutical preps 26,475 

2835 Diagnostic substances 2,621 

2836 Bio prod ex diagnostic 1,736 

Value of shipments (1987$) 35,054 

2833 Medicinals & botanicals 4,222 

2834 Pharmaceutical preps 26,475 

2835 Diagnostic substances 2,621 

2836 Bio prod ex diagnostic 1,736 

Trade Data 

Value of imports 2,795 

2833 Medicinals & botanicals 2,468 

2834 Pharmaceutical preps 164 

2835 Diagnostic substances 0.0 

2836 Bio prod ex diagnostic 164 

Import/new supply ratio7 0.074 

2833 Medicinals & botanicals 0.369 

2834 Pharmaceutical preps 0.006 

2835 Diagnostic substances 0.000 

2836 Bio prod ex diagnostic 0.036 

Value of exports 3,229 

2833 Medicinals & botanicals 1,982 

2834 Pharmaceutical preps 676 

2835 Diagnostic substances 0.0 

2836 Bio prod ex diagnostic 571 

Export/shipments ratio 0.092 

2833 Medicinals & botanicals 0.469 

2834 Pharmaceutical preps 0.026 

2835 Diagnostic substances 0.000 

2836 Bio prod ex diagnostic 0-131 

'Industry and product data are preliminary. Trade data are adjusted to conform to the 1987 

SIC. 

^Estimated, except for exports and imports. 

'Estimated. 

'Forecast. 

Percent Change 

1988' 19893 1990* 1987-88 1988-89 1989-90 

43,091 

3,721 

35,500 

2,196 

1,674 

40,503 

3,423 

33,240 

2,187 

1,653 

172 

12.4 

133 

14.4 

13.1 

80.7 

6.5 

60.5 

7.0 

6.7 

12.55 

15.90 

12.72 

11.05 

9.30 

38,344 

4,698 

29,066 

2,757 

1,623 

36,083 

4,322 

27,215 

2,746 

1,800 

3,485 

3,056 

199 

0.0 

230 

0.083 

0.394 

0.007 

0.000 

3,934 

2,463 

858 

0.0 

614 

0.103 

0.524 

0.030 

0.000 

46,774 

3,928 

38,781 

2,318 

1,747 

41,887 

3,501 

34,350 

2,318 

1,718 

176 

13.2 

134 

15.2 

13.4 

82.0 

6.9 

61.1 

7.3 

6.7 

12.88 

16.30 

13.06 

11.34 

9.60 

41,516 

5,116 

31,584 

2,910 

1,906 

37,185 

4,426 

27,975 

2,910 

1,874 

4,454 

3,849 

250 

-

300 

0.097 

0.429 

0.008 

-

4,681 

2,963 

1,000 

-

660 

0.113 

0.579 

0.032 

-

-

-

-

-

-

43,338 

3,575 

35,500 

2,480 

1,783 

179 

14.0 

135 

15.6 

13.7 

83.1 

7.2 

61.6 

7.5 

6.8 

. 

-

-

-

-

_ 

-

-

-

-

38,254 

4,537 

28,702 

3,070 

1.945 

5,321 

4,620 

300 

. 

340 

_ 

-

-

-

5,553 

3,570 

1,200 

-

720 

-

-

-

-

10.2 

11.1 

10.7 

5.4 

5.3 

3.6 

2.2 

3.6 

5.0 

4.0 

1.2 

6.9 

0.8 

2.1 

2.3 

2.0 

6.6 

1.2 

4.5 

3.1 

2.4 

2.7 

2.5 

2.5 

3.0 

9.4 

11.3 

9.8 

5.2 

5.0 

2.9 

2.4 

2.8 

4.8 

3.7 

24.7 

23.8 

21.3 

40.2 

12.2 

6.8 

16.7 

21.8 

24.3 

26.9 

7.5 

12.0 

11.7 

15.4 

8.5 

5.6 

9.2 

5.6 

4.4 

3.4 

2.3 

3.3 

6.0 

3.9 

2.3 

6.5 

0.8 

5.6 

2.3 

1.6 

6.2 

1.0 

4.3 

0.0 

2.6 

2.5 

2.7 

2.6 

3.2 

8.3 

8.9 

8.7 

5.5 

4.6 

3.1 

2.4 

2.8 

6.0 

4.1 

27.8 

25.9 

25.6 

30.4 

16.9 

8.9 

14.3 

19.0 

20.3 

16.6 

7.5 

9.7 

10.5 

6.7 

3.5 

2.1 

3.3 

7.0 

3.8 

1.7 

6.1 

0.7 

3.9 

2.2 

1.3 

4.3 

0.8 

2.7 

1.5 

2.9 

2.5 

2.6 

5.5 

3.8 

19.5 

20.0 

20.0 

13.3 

18 6 

201) 

20 0 

91 

'Value of all products and services sold by establishments in the drugs industry. 

'Value of products classified in the drugs industry produced by all industries. 

'New supply is imports plus corresponding product shipments. 

SOURCE: U.S. Department of Commerce: Bureau of the Census; International Tafr 

Administration (ITA). Estimates and forecasts by ITA. 

Outlook for 1990 

The value of medicinal and botanical product shipments is 

forecast to increase 2.5 percent, in constant dollars, in 1990. 

Total employment will rise to 14,000, with production workers 

numbering 7,200. Exports are expected to rise 20.5 percent, 

to $3.6 billion, while imports will increase 20 percent, to $4.6 

billion. The negative trade balance will continue to rise, but 

at a more moderate rate. 

Long-Term Prospects 

The constant-dollar of value shipments of medicinals a rui 

botanicals is forecast to increase 2.2 percent a year for the ncM 

5 years. 

Some industry experts believe that as more product patentexpire, we may see the original patent holders begin produi 

ing medicinal chemicals, formerly covered under the Pr0CJ|^ 

patents, for sale to generic formulators. This may incrwsl 

50-2 U.S. Industrial Outlook 1990—Drugs