Innovation in Industrial Chemistry

On Friday 28 April 2006 the Historical Group of the Royal Society of Chemistry, in conjunction with the Society for the History of Alchemy and Chemistry, held a one-day conference at the Royal Society of Chemistry, Burlington House, London, entitled Innovation in Industrial Chemistry. The meeting was in association with the Chemical-Historical Group of the Dutch Chemical Society (KNCV) and the Chilterns and Middlesex Section of the RSC. It constituted the second part of a very successful Anglo-Dutch meeting held at the Museum Boerhaave, Leiden, on Chemistry and Medicine in the 18th Century in April 2004. There were over 50 attendees from across industry and academia from both the United Kingdom and the Netherlands. On the Thursday evening before the meeting an enjoyable conference dinner was held at the Polish Club, South Kensington, where attendees had the opportunity to meet the conference speakers.

Following a welcome by Professor Alan Dronsfield, Chairman of the Royal Society of Chemistry Historical Group and an introduction by Professor Jack Betteridge (Chairman of the Anglo-Dutch Working Party), the one-day conference began with a keynote lecture by David Edgerton, the Hans Rausing Professor at the Centre for the History of Science, Technology and Medicine at Imperial College, London. Entitled "Changing Patterns of Invention in the Twentieth Century" his lecture drew attention to how our histories of science and technology are systematically biased towards invention and innovation. However, they cannot be taken to be adequate histories of either, for they focus not on invention and innovation as a whole, but rather on the early histories of inventions and innovations that became successful, and on the early histories of types of inventing organisation which were taken to characterise later periods.

In his paper Professor Edgerton sketched out what a history of invention might look like when these systematic biases are removed. To do this, he examined three areas upon which histories of invention focused and challenged common perceptions regarding them. Starting with academic research, he showed how there is a bias towards considering specific fields as providing the focus for academic research at certain times. As a consequence of this approach it is easy to overlook numerous areas of research activity. For example, during the twentieth century, despite being the largest academic science and a major focus of academic research, chemistry disappears from the history of invention as it is not perceived as a locus of innovative activity. Research in industry can also be overlooked, an omission Professor Edgerton corrected by highlighting the number of Nobel Prizes awarded for work done in industry and the importance of collaboration between the academic and industrial sectors.

The second part of Professor Edgerton's paper focused on how invention is considered to concentrate in a particular area at a certain time: the electrical and chemical sectors in the late-nineteenth century, the nuclear sector in the mid-twentieth century and most recently computing and biotechnology. However if we examine which firms have the largest R & D expenditure today, one finds not a list of biotechnology or computing businesses, but companies such as General Motors, Ford Motors and Siemens. In general, the largest R & D funders today all existed in some form before the Second World War, with many originating prior to World War One. The third area that Professor Edgerton challenged was the common perception of a linear development of invention. In this interpretation initially invention is considered the work of individuals taking out patents on their new ideas. It then becomes the work of corporate research and by the 1970s the key innovative institution becomes the science park or the entrepreneurial academic operating in the biotechnology or computing sectors. Through challenging common public perceptions about the number of patents taken out by individuals, the perceived absence of R & D in firms prior to the Second World War and the presupposed importance of novel sectors, Professor Edgerton called for a re-evaluation of the history of innovation and invention. After all, in some ways the present may not be as radically innovative as the past. For example the late nineteenth and early twentieth centuries saw the invention of x-rays, the motor car, cinema, flight and radio. To underline his argument Professor Edgerton showed the audience a photograph of a chemical factory and asked them to guess its location and date. Whilst the identity of the factory, that of BASF at Leverkusen, was easily established, the date proved more difficult with estimates ranging from the late nineteenth century to just after the First World War. Nobody guessed the correct answer of 1947.

The second paper was given by Professor Keetie Sluyterman of Utrecht University and was entitled " Business Strategy and Innovation at Shell Chemicals, 1973-2000." During the 1950s and 1960s Shell had invested heavily in chemicals and by the early 1970s it had become one of the major players in the chemical industry, with the most extensive chemical activities of any of the oil majors. However, given that profits in the oil industry tended to be high, the financial results from chemicals seldom met management's expectations.

In her paper Professor Sluyterman discussed the various strategies that Shell followed in its chemical activities during the last three decades of the twentieth century. These strategies shifted over time in response to changing external circumstances and different management perceptions. In the 1970s, Shell Chemicals struggled with problems of overcapacity and high oil prices. The company sought competitive advantage in two innovative processes, SM/PO (Styrene Monomer/Propylene Oxide) and SHOP (Shell Higher Olefins Process). In rethinking its portfolios at this time, it withdrew from its activities in fertilisers.

In the 1980s Shell followed the general trend of moving 'downstream' in the value chain, producing speciality chemicals for specific markets where profit margins were expected to be higher. For success in speciality chemicals, Shell required access to world markets, market-driven R & D and a centralised business culture. However, with its decentralised organisational structure, it was clear that Shell was not naturally geared towards specialty chemicals. Nonetheless, Shell pursued this strategy for a number of years, mostly though acquisitions. It launched a number of new products, but it was difficult to produce them cheaply enough to compete with existing products. It made small losses in the early 1980s, but by the early 1990s these losses were significant. As a result Shell returned 'back to basics.' Forty percent of its chemical interests were sold. Then, with the focus on base petrochemicals, Shell Chemicals was integrated with oil manufacturing to form Downstream One in 1998. Over the period of half a century the company had turned full circle in its approach to chemicals.

The first afternoon session was chaired by Professor William Brock, Chairman of the Society for the History of Alchemy and Chemistry and it began with a jointly authored paper "Respecting each other's markets: Shell, Unilever and the development of Teepol" by Professor Ernst Homburg and Dr Frank van der Most. In this paper innovation in industrial chemistry was discussed from both a technical and a commercial point of view and the influence of another Anglo-Dutch giant of the detergents market, Unilever, was explored. Its focus was the synthetic detergent Teepol, which was developed at the Amsterdam research laboratory of the Bataafsche Petroleum Maatschappij (BPM), the Dutch operating company of Shell, between 1932 and 1938.

During the 1920s the growing use of hard water became an ever increasing problem for the textile industries. This problem was particularly acute in wool manufacturing as soaps could not be used under these conditions. Consequently, several chemical companies embarked on research projects directed at finding new detergents that lacked the disadvantages of natural soaps. Between 1925 and 1931 IG Farben entered the market with new synthetic detergents, Nekal and Igepon, which could be used in hard water. In 1931 another German firm, H.Th. Böhme, successfully launched the fatty alcohol sulphate Gardinol. The following year Böhme was also the first company to market a synthetic detergent for consumers. Following these developments, Unilever joined forces with IG Farben and concluded agreements in 1933 and 1935 which gave Unilever the right to undertake the world wide marketing of IG Farben's synthetic detergents for domestic purposes.

Meanwhile Shell's Dutch operating company, BPM, entered the production of synthetic detergents in 1932, in order to make economic use of the C 13 -C 18 olefins which were by-products of paraffin cracking. Between 1933 and 1937 a process for the production of the synthetic detergent Teepol was developed in a pilot plant in Amsterdam. From 1938 onwards a commercial plant for Teepol was constructed at Stanlow, Cheshire, and this came on stream in 1942. Most of the products manufactured at Stanlow found their way to industrial users. However, after 1945, following tedious negotiations, BPM and Unilever successfully joined forces in the development of Teepol for household purposes. By charting the development of Teepol from laboratory to marketplace, this paper showed that successful innovation is a complicated and heterogeneous process in which accidental events, dedicated hard work, and tough negotiations all play a role.

The next paper " From Petroleum to Protein 1959-1977," presented by Professor Jack Betteridge (formerly Chief Research Associate, British Petroleum), was based on a collaborative effort between himself and Dr John D. Levi (formerly of University College, Swansea and British Petroleum). In the late 1960s growing concerns about the expected increase in the world's population and the large difference in consumption levels of proteins between the developing and industrial worlds (known as the "protein gap") led scientists to begin thinking of ways to increase protein production. One of the first groups of scientists to experiment with a novel route to protein production was that led by Champagnat at BP's oil refinery at Lavera near Marseille. Although the initial interest was to aid the refining process, Champagnat recognised that the ability of a few yeasts to grow on n-paraffins as well as on sugars was a route to single cell protein. As oil was cheap and abundant at this time, this process appeared to have the potential to close the protein gap.

The senior management of BP were impressed with the research and authorised a programme of work designed to bring about the full-scale production of single cell protein from petroleum. At the time, BP had no research experience in biochemistry or microbiology, no experience of bioengineering or of marketing food products. However it did have the immense resources of one of the world's largest companies and expertise in project management. Work at Lavera was to continue, but a new research group was formed at BP's Grangemouth refinery in 1964. The microbiologists in this group were first headed by G. L. Solomons and then by John D. Levi. The group's roles were to carry out basic research into the process and to take it through the pilot plant stage. It was also to provide an independent check of the work at Lavera. Parallel to this work a programme of toxicological and nutritional testing of the product was initiated in 1964. Having overcome various engineering challenges, successful small-scale manufacturing plants were built at both Grangemouth and Lavera in 1971-1972 and the product was named "Toprina."

By 1971, it was evident that the concept of converting petroleum to protein was a technical success, and the economic forecast for the sale of Toprina was favourable. Decisions were taken to prepare for full scale production and to acquire four specialist companies in the animal feed business. Although toxicological testing demonstrated that Toprina was safe to eat, it was considered prudent to feed it to animals rather than directly to humans and potential markets were identified in Italy, Japan and the USSR. The Grangemouth design was scaled up for full scale production (100,000 tpa) at Sarroch in Sardinia, with the first run commencing on 19 th December 1976.

Despite the project's technological achievements, the politics surrounding the plant's operation caused numerous problems for BP. Various complaints about pollution, carcinogenic products, and unknown and undetectable sources of toxicity were made even though they were unsupported by scientific evidence. Furthermore, BP had extensive difficulties operating within the Italian political system. The political battle was lost when the Consiglio Superiore voted to ban the commercial use of bioproteins. After just forty days and forty nights the run in progress at Sarroch was halted, and a similar Japanese venture in Sicily was abandoned before the plant was completed.

There were two further factors in BP's decision to abandon the process. In 1974 the oil price rose from approximately $2 to $20 per barrel and this completely altered the economic evaluation of the product. When it was evident that there would be no return to low oil prices the project was doomed. Meanwhile, a different approach to the solution of the protein gap was looking very promising. The green revolution in agriculture had led to soya bean being produced in large quantities at a competitive price. Although its protein content was lower, because it was a natural product there were no complaints about its toxicity. As an innovation, Toprina was a technical success but a commercial failure. BP stopped work on bioengineering and withdrew from Italy. However BP retained the amalgam of the animal feed companies that it had acquired during the venture under the name of BP Nutrition, with headquarters in Holland. This company was hugely profitable, level pegging with BP Oil and far outstripping BP Chemicals. By the time BP sold it off in the 1990s, it must have yielded a handsome return on the petroleum to protein venture.

The final session was chaired by Professor Ernst Homburg and it began with a paper by Dr Arjan van Rooij of the Eindhoven University of Technology entitled "The company that changed itself. R&D and the transformations of DSM, 1925-2000." DSM (De Nederlandse Staatsmijnen - Dutch State Mines) was founded in 1908 to operate in the coal mining industry, but during the twentieth century the company transformed its operations from coal to chemicals in three stages. The first change saw a move from coal and coke to fertilisers and this was followed by a transformation from fertilisers to diversified chemicals. Then in the last three decades of the twentieth century, fuelled by low profitability, the firm changed its operations from bulk chemicals to chemicals with a high value added. Within this transformation of the firm's activities, R & D played a crucial role in the company's development. Although DSM moved into R & D relatively late, after the Second World War it expanded its activities in this area significantly. R & D at DSM was linked to the company's economic performance and managerial approach and thus it reflected the cyclical trends exhibited in these areas. The period 1945-1970 was very favourable for the firm and there were endless technological opportunities for R & D. The firm culture was self-confident and R & D was seen as very important. Within this culture there was also a high tolerance of failure in R & D. This approach began to change during the 1970s when the market slowed down and economic conditions were difficult. However in the 1980s there was a crucial change in the approach of top management to R & D. As forward planning became more important, R & D was seen as vital for renewing the business, while its objectives became oriented towards high value added products.

In the next section of his paper Dr van Rooij examined the organisation of R & D within DSM. In the period 1945-1970, R & D had a loose structure, with an internalised culture not linked to the company. In the 1970s, as DSM's coal activities shut down, greater organisational links were necessary and R & D had a much tighter structure. With the introduction of corporate development programmes in the 1980s, a strategic framework was introduced and mutual commitment developed between R & D and production. Having laid out this cyclical framework of the relationship between economics and management and the organisation of R & D at DSM, Dr van Rooij then characterised the nature of R & D at DSM in the three periods. In 1945-1970, R & D was independent. During the difficult 1970s, R & D became dependent. Finally in the 1980s and 1990s, following a programme of corporate development, R & D at DSM took on a balanced nature.

The final paper was given by Dr Peter Morris of the Science Museum and was entitled "Research at IG Farben Revisited." IG Farben had been founded in 1925 by the merger of dye companies under the direction of Fritz ter Meer. In the 1930s it was the largest chemical firm in the world and one of the biggest investors in R & D, although outside of the chemical industry its activities in this field were not as large as firms such as General Electric and General Motors. By examining the various histories which have been written about IG Farben in turn, Dr Morris compared how different historians had characterised IG Farben's approach to invention and innovation and the effectiveness of its research programme. He then contrasted these interpretations with the arguments he put across in his 1982 DPhil Thesis, "The development of acetylene chemistry and synthetic rubber by IG Farbenindustrie Aktiengesellschaft, 1926-1945." The strength of IG Farben's research was built around the importance of both the technical committee and the "tea buro" and the firm's use of the same team from laboratory bench to pilot plant. Producing patents as bartering tools for inter-company relations was also significant. Additionally, the work of the regional main laboratories and their research directors was important, but the merits of having two laboratories working on the same idea at the same time were debatable. Although some historians have praised the parallel laboratory system, Dr Morris argued that parallel research had a negative effect overall as it created a central laboratory for each research community rather than bringing the research effort together.

After having mentioned IG Farben's activities in high pressure research and highlighted the differing economic and political conditions in the USA and Germany in the 1920s and 1930s, Dr Morris provided some new insights into R & D at IG Farben. Within its research activities, several key concepts were highlighted: the significance of pilot plants, the importance of development as opposed to invention and the general lack of distinction between basic and applied research. Dr Morris stressed how all chemical firms collect ideas from outside and innovate from these. Thus, in this sense invention does not matter. Instead, it is the ideas that exist within a corporation that are important and whether the firm is able to convert them into valuable processes. Consequently, at IG Farben there were intensive investigations of other firm's patents and research for customers even when it had not been requested, all in an attempt to obtain new markets. For example, when a company manufacturing dental plates approached IG Farben for a new dye, IG Farben responded by stating that there was a problem with the plastic not the dye and developed a new plastic. The firm, however, was not happy: it had wanted a new dye not a new plastic.

When surveying the existing work on R & D at IG Farben, Dr Morris highlighted various which areas demand further research. Many of the histories of the firm stop in the early 1930s, so the corporation's development during the Third Reich and the new areas of research explored during the Second World War remain little studied. The issue of basic versus applied research also merits further investigation, as does the significance of customer-centred research. Furthermore the role of academic consultants has been little examined. Most importantly a comprehensive study of research at IG Farben is required, as currently the subject has only been examined in fragments.

Anna Simmons