| OCR Text |
Show w, ??, y" ' y t s i '3 ?; ' h , ' . . Hi 4, i s r'1' t i!hi,'M " 4 ' sZ.S:Q.j j,w;u??'1 y - oa v-- jw ji,: '(, imluii ' 7 rvj , :n .r'..,3 ., 8ctioaF ;. Lriay Marikj ? April '!' ' an s . IKS ;'.' ItiHvj ,.?,. if maamtAiajammatmetM Saudis Striking It Rich With Petrochemicals By Steven P. Rosenfeld Associated Press Writer Harnessing its vast natural resources and wielding a big oil bankroll, Saudi Arabia has emerged as a force in the world of petrochemicals the building blocks for thousands of products ranging from the plastic bags that protect freshly cleaned suits to the fabrics inside. The Saudi presence already has taken its toll in the industry, with some competitors in Europe, Japan and the United States closing less efficient methanol and ethylene plants. "Now I can understand what the UAW went through," says Mitchell Gauge, a chemical worker in Delaware who is worried about losing his job. He referred to the plant closings and layoffs that cut into the ranks of the United Auto Workers union in the face of inroads in the U.S. market by Japanese carmakers. While Saudi Arabias entry into the petrochemicals business is no surit has been under developprise ment since 1976 the kingdoms commitment to broaden its industrial base nonetheless has been impressive. Saudi Arabias emergence on world petrochemical markets is unprecedented in its speed and initial impact. No other developing country has so suddenly and so forcefully entered this or any other industry, said a recent analysis by Wharton Econometric Forecasting Associates, a consulting service in Washington. Over the past nine years, Saudi Arabia has supervised the investment of nearly $12 billion for constructing plants to put to use the natural gas that it previously had been burning off as an unuseable byproduct of its massive oil production. It has spent $40 billion more to develop from scratch two industrial cities surrounding the plants, Yanbu on on the Perthe Red Sea and sian Gulf. Saudi Arabia also has been taking on some world-clas- s partners in the development, tapping their expertise in marketing chemicals in 0 ventures. They include Exxon Corp., Mobil Corp., Shell Oil Co., Celanese Corp. and Texas Eastern Corp., all from the United States, and private and goverstate-of-the-a- rt 50-5- companies from nment-owned Bahrain, Finland, Italy, Japan, Kuwait, South Korea and Taiwan. The first shipments of methanol left Saudi Arabia for Japan two years ago. Now its plants also are shipping urea, linear low density polyethylene, high density polyethylene, ethylene glycol, ethylene dichloride and ethanol to markets around the world. Other basic products being developed include styrene, caustic soda, ethylene, ammonia, vinyl chloride monomer and polyvinyl chloride monomer. These chemicals with strange names are used to make most plastics, fertilizer, antifreeze, explosives, fabrics, rubber products, paints and insecticides. "Everything you touch or see probably has 50 percent or 60 percent coming from gas or petrochemicals, director said Abdulaziz S. general of projects Implementation for Saudi Basic Industries Corp., known as Sabic. When operating at full capacity, Sabic expects to capture 5 percent of the world's petrochemicals market, representing annual revenue Of $4 bil- "Initially, It hasnt hurt me," he said in a recent telephone interview. "But you dont know whats going to happen from day to day." Some plants have closed permanently. Du Pont Co. abandoned a methanol plant in Beaumont, Texas, in Janu ary, citing a 35 percent decline in prices since 1981. Ashland Chemical, a unit of Ashland Oil Inc., last year wrote off as e with Inunprofitable its ternational Minerals & Chemical Corp. in a Louisiana methanol plant. Union Carbide Corp. mothballed part of an ethanol plant in Texas last joint-ventur- year when It decided to substitute ethanol imported by Shell from a Sabic plant. Millions of metric tons of inefficient ethylene capacity also has been shut down in Japan and Western Europe since 1980. Sir Peter Walters, chairman of British Petroleum Co. PLC, recently urged petrochemical producers to concentrate on a smaller number of products in which they have specific strengths. Established producers must be prepared to move over and concede a proportion of their market to soundly based new competition so that they See Column F-- 6, 1 lion. Each year, it will produce more than 3 million metric tons of ethylene-based petrochemicals and more than 2 million metric tons of methanol-based derivatives. A metric ton is approximately 2,205 pounds. One big advantage is that Saudi Arabia can inexpensively tap methane and ethane gas produced from its oil wells for its chemical plants. puts the cost of the natural gas at 50 cents for each 1,000 cubic feet in Saudi Arabia. That compares with costs of $3 a thousand cubic feet for U.S. petrochemical producers and $4 in Europe. Offsetting the lower cost of methane and ethane feedstocks for refineries is the transportation cost for shipping from the Middle East and the huge capital investment. Meanwhile, the new player in petrochemical markets is entering the industry following a period of falling prices and at a time when a glut of products persists, despite gains last year as economic growth picked up. The prospect of additional compecountition from other energy-ric- h tries, such as Canada, Mexico and Kuwait, has some established chemical producers worrying about price wars. Ethylene prices already have fallen about 25 percent, to around 15 cents a pound from 20 cents in 1982, because of sluggish markets. "The end result will be lower prices, Cambridge Energy Research Associates, a consulting firm in Cambridge, Mass., said in a recent study. "The combined effect will be to force upon the petrochemical industry despite the relief of the current rebound a continuing and hard process of restructuring. And that will require adaptive and flexible strategies on the part of those companies that want to do well, the study said. Mitchell Gauge, a methanol plant worker for the past six years, has been spending a lot of time recently worrying whether his job is secure at Texaco Inc.s methanol plant in Delaware City. The plant, with about 25 workers, is part of a refinery complex. It was scheduled to be closed for maintenance in April, but was shut down ahead of schedule in March because of oversupplies on the market. Gauge and other workers were transferred to other jobs in the complex during h the closing. Even though no one has lost his job at that plant, Gauge, 31, the father of a boy, is worried about a future he once believed was secure. two-mont- by Brendan Boyd GOLF'S LCADIKG TIME M0U2Y WIKIJZRG Ptoyor H&ITC3 Jock Nkktovt Tom Wotoon Loo Trevino jgjgr ICStt- - faftoyd TomKIto mSM Tom Wobkopl t3,rtr Johnny KSfor Lonny Wodklnt SOURCE: USPGA To Lynn Kuske, Discovery Toys approximately 100 toys more than commercial products. She regards them as tools parents can use to help develop their childrens intel-ar- e ligence and coordination. Marketing is done by direct sales. Direct Sales Launch Discovery Toys By Joe Rolando Tribune Staff Writer Direct sales techniques, including conducting parties like Tupper-war- e to show off products to neighbors, drew Lynn Kuskes suspicion two years ago. But today and about $30,000 in sales later, Mrs. Kuske, one of six managers for Discovery Toys in Utah, admits unequivocably that direct sales are the only way to go with the product she sells. She added, In fact, unless someone demonstrates them, youd walk right by them. Thats not for the toys lack of color since they come in a wide variety of the brightest. Rather, Mrs. Kuske said many Discovery Toys are so different in design than conventional toys and have so many uses that even an adult of average intelligence wouldnt know how to use them without some training. Take the beakers Discovery markets under the name Measure Up! Cups. While it may appear their only value is to teach children that cylinders come in different heights, the numbered beakers also can be used to teach a child volumetric math, prereading skills and, of course, how to stack things. What looks like a bright yellow, plastic padlock with a face is that and more. Discovery Toys calls it a Turn-Ke- y Rattle, which works like a baby rattle when shaken but also d allows a youngster to develop coordination when he or she holds the lock with one hand and turns the key with the other. When the key is twisted, the lock makes sounds while little eyes on the face move through small windows on the back. The goal is visual and auditory stimulation. But Mrs. Kuske said the effec Toys two-han- tiveness of the toys is no better than the salesperson who teaches parents how to use them. "Thats why Im in this. Its a career for me in that I believe in it. But its not a career in which I support my family. Mrs. Kuske, whose college thesis was entitled Parenting Education, described herself as a "frus- trated parent two years ago when she had difficulty finding suitable toys for her daughter. She wanted toys that not only were fun to play with but which helped develop her daughters intelligence and coordination. Fifty percent of a child's intelligence is learned by the time the child is explained Mrs. Kuske. That makes the parent the first teacher of the child. If you dont take advantage of that time, you really put the child at a disadvantage. Mrs. Kuske said thats not to say she advocates parents overreacting by teaching their child to read at age 3, for example. But she said the parent should do everything possible, including providing a healthy play environment, for their child so they have a high and learn creative problem solving skills and spacial relationships when they reach adulthood. Mrs. Kuske said at minimum, such skills will help a child do well on a college enterance examinaself-estee- tion later in life. Although Discovery Toys, a Pleasant Hill, Calif.-base- d company, reported sales in 1984 of about $35 million, its founder Lane Nemeth, 38, told the Tribune last week the companys roots are in education rather than business. Ms. Nemeth, a social worker and e center teacher, said when See F-- Column 1 day-car- 6, Electronic Shopping Markets May Be Sale of the Century By Janet Key Chicago Tribune Writer Retailers, still reeling from the e cavalry charge of operators d that overran their standard" prices, are beginning to experience the first rumblings of another shock wave, one that may well revolutionize the way people shop by 1990. By that time, consumers across the country will be able to sign on to a computer, either in their homes or at a special kiosk in their favorite store, look at pictures and read detailed descriptions of selected merchandise, comparison shop for features and prices, then use their credit cards to order, all in a matter of minutes, and all by spending little or no time in a store. off-pric- once-sacre- Far from being a version of Star Wars," what is called electronic retailing is expected to grow from $285 million in sales in 1985 to $17 billion by 1990, according to estimates by Chicago-base- d R.R. Donnelley & Sons Co. "Currently, the size of the electronic shopping market is minimal, but the potential is enormous," said William Jacobs, a consultant with Management Horizons in Columbus, Ohio. We've just barely scratched the surface." Form of Shopping Forecasts from the national accounting firm of Touche Ross & Co., which maintains one of the countrys largest retail consulting services, are more modest than Donnelleys, but no less dramatic for a form of shopping virtually unheard of five years ago. Touche Ross estimates that consumers will buy between $5 billion and $10 billion of merchandise a year from 50,000 electronic shopping kiosks throughout the United States by 1989. An additional 50,000 terminals in retail stores and other public facilities such as shopping e) informalls will provide mation on products sold nearby. Electronic shopping isn't likely to account for more than 10 percent of all general retail sales at most, said Thomas Rauh, a management consulting partner in the San Francisco office of Touche Ross and author of its electronic-shoppin- g study. But in todays dollars, thats easily $100 bilte lion. Profound Changes The explosive growth of electronic shopping, which has paralleled the development of home computers and videotext services, will bring profound changes to the retail industry, Rauh warns. Retailers will have to take a triple-threapproach to selling, he says, using a combination of stores, mail-orde- r catalogues and electronic shopping services to attract more quality- - and shoppers. "It's going to continue the trend fa value-conscio- voring the large retailer over the small one, because only the large companies are in a position to participate in the high technology, Rauh said. Eventually, well see electronic shopping machines in the smaller stores, but it's going to take a while. Two companies on the cutting edge of this electronic-shoppinrevoluInternational Inc. tion, Comp-U-Car-d in Stamford, Conn., and printing giant R.R. Donnelley, illustrate two approaches to it. d has spent the last decade, with several false starts, building a predominantly electronic shopping business, while Donnelley announced its Electronistore" kiosks last November. g Comp-U-Car- Systems and Donnelley are rapidly being joined by others, including Com; uServe in Columbus, Ohio (a subsidiary of H&R Block Inc. Comp-U-Car- d designed to go after the market), CompuSave in Los Angeles (essentially another ByVideo and retailers' own systems. During the past year, the electronic-shopping industry doubled in size and extended its reach to a number of new market segments, according to the Touche Ross study. More than 100 companies now provide shopping systems and services, including a dozen from the Fortune 500. home-comput- Comp-U-Corp- ), was founded upon the idea that the next major revolution in retailing would offer the consumer the choice of shopping electronically from the convenience of the home, Chairman Walter A Forbes said in the company's annual report. "The past decade brought a burgeoning in catalogue sales, the coming decade will bring a dramatic growth in electronic shopping. s swelling member Comp-U-Car- d ship seems to bear out the growing popularity of electronic retailing. Partly through expanded direct-masolicitations, membership has more than tripled to 1.5 million this month from 450,000 at the end of 1983. Despite recent flat sales of personal computers, some 25.000 of those members belong to "Comp-U-Stor- e On Line, its shopping service. In addition, the company is now licensed in 29 markets worldwide, including Canada. Japan and England. "People have proven ready and willing to shop from the home," said Forbes, a former executive with a il home-comput- Harvard-connecte- er venture-capita- d l firm who took over the foundering in 1977, when its original investors were piling up little besides losses. Comp-U-Car- d Today, Comp-U-Car- s 170 employ- d ees are busy developing the ElectronSee Comp-U-Card'- jv F-- Column v"yx,Tr 1 |
