Synthetic resins and their raw materials

Chapter IV: Part 4

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----------+----------+--------+-----------
Year | Quantity | Value | Unit value
----------+----------+--------+-----------
| _Pounds_ | |
----------+----------+--------+-----------
1934[1] | 42,000 | |
1935[1] | 240,000 | |
1936[2] | 600,808 |$144,782| $0.24
1937[2][3]| 652,730 | 201,213| .31
----------+----------+--------+-----------

[1] Invoice analysis of imports entered through the New York
customs district.

[2] Statistical classification 817.58 (par. 2), vinyl acetate,
polymerized, and synthetic resins made in chief value from vinyl
acetate, n. s. p. f. (excluding imports from Germany) and 838.938
(par. 11), synthetic resins made in chief value from vinyl
acetate, n. e. s.

[3] Preliminary.

Source: Compiled by the U. S. Tariff Commission from official
statistics of the U. S. Department of Commerce.

TABLE 12.—_Mowilith resins: United States imports for consumption, 1932-37_

----------+----------+--------+-----------
Year | Quantity | Value | Unit value
----------+----------+--------+-----------
| _Pounds_ | |
----------+----------+--------+-----------
1932[1] | 555 | $229 | $0.41
1933[1] | 741 | 247 | .33
1934[1] | 2,950 | 1,668 | .57
1935[1] | 3,372 | 3,175 | .94
1936[2] | 7,056 | 2,410 | .34
1937[2][3]| 220 | 308 | 1.40
----------+----------+--------+-----------

[1] Analysis of invoices of imports entered through the New York
customs district.

[2] Imports from Germany under statistical classification 817.58
(par. 2), vinyl acetate, polymerized, and synthetic resins made
in chief value of vinyl acetate.

[3] Preliminary.

Source: Compiled by the U. S. Tariff Commission from official
statistics of the U. S. Department of Commerce.

Prior to January 1, 1936, the rate of duty on imports of vinyl resins was 6 cents per pound and 30 percent ad valorem under paragraph 2, and 4 cents per pound and 30 percent ad valorem under paragraph 11 of the Tariff Act of 1930. Under the terms of the trade agreement with Canada, the duty under both paragraphs was reduced to 3 cents per pound and 15 percent ad valorem. This rate was generalized to the other countries from which we have received imports, with the exception of Germany.

Exports from the United States.

Exports of vinyl resins are not separately shown in official statistics.

11. OTHER SYNTHETIC RESINS

The synthetic resins already discussed are those in substantial commercial production but, by no means, the only ones known or produced. Several thousand new ones have been reported and the search continues in laboratories throughout the world. A successful new product must be one made from inexpensive raw materials or must possess some property or advantage that will permit its sale at a price level above that of other resins.

No attempt is here made to list the host of less important resins. Certain ones of unusual interest or possessing unique properties are described below. These include resins obtained from adipic acid, aniline, citric acid, diphenyl, furfural, lignin, sugar, and sulphonamide.

Adipic acid resins.

The resins from adipic acid are classed as alkyd resins. Those obtained by the condensation of adipic acid and glycerin are soft and rubbery and are used to some extent in surface coatings and in photographic films. In these the resin is formed in three stages as in other alkyd types: A soluble liquid, a viscous rubbery product, and a form insoluble in the usual solvents.

Commercial domestic production of these resins was reported for the first time in 1935 and the output has increased each year since then.

Aniline resins.

Resins obtained by condensing aniline and formaldehyde have been developed in recent years. Much of the research on this type of resin was done in Switzerland by the Ciba Co., which holds a number of patents on it. The Swiss product, called Cibanite, has excellent electrical and mechanical properties. At least one domestic manufacturer is licensed under the Swiss-owned patents.

Citric acid resins.

Considerable interest has recently been manifest in synthetic resins derived from citric acid. The sharp decline in the price of citric acid, as a result of large scale synthesis from sugar has placed it within the realm of possibility as a raw material for synthetic resins.

The citric acid resins, classed as alkyd resins, are obtained by condensing citric acid and glycerin. Commercial production is said to have started in Europe, but there is no known domestic production as yet.

Diphenyl resins.

A series of products known as Aroclors and made by chlorinating diphenyl are available in commercial quantities.

Diphenyl was commercially produced for the first time by Swann Research, Inc., at Anniston, Ala., about 1928. The demand for it as a heat-transfer medium resulted in large scale output. Later it was found that certain of the chlorinated compounds of diphenyl possess valuable resin properties.

The Aroclors range from a clear mobile oily liquid to an amber colored transparent solid. They are thermoplastic, do not polymerize or oxidize, and are therefore nondrying. They may be dissolved in varnish oils, such as tung oil and linseed oil, to give varnishes which are resistant to alkali and water. The diphenyl resins are good adhesives on metal and glass and give strong joints between such surfaces. They have a high dielectric constant, resistivity, and a low power factor. Their chief use is in wire insulation.

The domestic production of chlorinated diphenyls is, at present, solely by the Monsanto Chemical Company, St. Louis, Mo.

Furfural resins.

Large scale commercial production of furfural, an aldehyde obtained from oat hulls and other farm waste, has made it available for synthetic resin manufacture.

Tar-acid furfural resins possess certain outstanding properties, such as great dimensional accuracy, great reaction speed to the infusible solid stage, and unusual strength and toughness. They are available in dark shades only. Printing plates as large as those of metropolitan daily papers are molded from them as are radio tube bases, all sorts of electrical parts, and machined parts requiring great dimensional accuracy. Other uses are in abrasive wheels, varnishes, and adhesives.

Probably the largest domestic maker of furfural resins is the Durite Plastics Division of Stokes and Smith Company, Philadelphia, Pa.

Resins from sugar.

Many attempts have been made to utilize sugar as a raw material for synthetic resins. United States Patent No. 1,949,831, dated March 6, 1934, claims a process for the manufacture of molding compounds by condensing saccharide with aldehydes and urea. Pure sucrose yields a clear, colorless, nonresilient resin, while molasses and cane sugar give dark-colored resins. The trade name Sakaloid is used to designate certain of these resins; there is, however, no known domestic production. Sucrolite is the trade name of a brand of resins from sugar produced in Europe.

Sulphonamide resins.

The sulphonamide resins were developed from para toluenesulphonamide, a byproduct obtained in the manufacture of saccharin (synthetic sweetening agent).

Para toluenesulphonamide, condensed with formaldehyde or other aldehyde, forms a viscous mass which, on heating, is converted to a hard colorless resin. Such resins are compatible with cellulose acetate or nitrocellulose in lacquers, the combination yielding clear, colorless lacquers of good gloss and adhesion. Other possible uses are as an adhesive in safety glass, in certain molding compositions, in insulating materials, and to deluster artificial silk.

Domestic production of sulphonamide resin is entirely by the Monsanto Chemical Co., St. Louis, Mo. It is marketed under the trade name Santolite.

12. ORGANIZATION OF THE SYNTHETIC RESIN INDUSTRY

The discussion of the various synthetic resins on pages 11 to 52 carries in each case, under the heading of production, a notation of the number of companies producing that particular resin; and the discussion on pages 86 to 141 of important raw materials for these resins describes briefly the conditions under which these materials are produced. We shall now consider the interrelationships between industries producing the several resins, and the relation of the resin industries to their raw materials and to some of the important resin-consuming industries.

No description of the organization of a rapidly expanding industry can be expected to remain accurate for long. But regardless of future changes that may be expected, the general pattern seems definite enough to make possible a few broad generalizations. At present the producers of synthetic resins may be classified in two groups: those making alkyd and tar-acid resins, and those making all other synthetic resins.

The alkyd resins and the tar-acid resins are produced in large volume, and for these resins the patent situation is such that there is nothing to exclude new producers. The result has been that new firms have entered the field and there has been a marked tendency for concerns using these resins on a large scale to produce them. This general situation may be expected to continue as long as the volume of consumption of these resins is rising. But when consumption levels off, it would not be surprising if increased competition for new business resulted in consolidations of some of the producing units.

Each of the other synthetic resins is produced by a small number of firms and this may be expected to continue as long as the production of a particular resin is small, or basic patents dominate the situation. When and if the situation in these respects changes for some of the other resins, they will probably develop the same tendencies as now exist in the production of the tar-acid and alkyd resins.

Horizontal relationships between resin producers.

Horizontal relationships between companies are those between different units in the same industry (say two tar-acid resin producers), or in different industries each operating at the same stage of industrial production (say a tar-acid resin producer and a producer of urea resin). As a rule, extensive horizontal relationships are not common in relatively young industries, and this is true of the production of synthetic resins. In general, it has not been necessary to absorb competitors to achieve a greater volume of sales, and efforts have been directed to exploiting the possibilities of expansion in a growing market. This necessitated solving technical problems concerning improvement of the product and its production on an ever larger scale; legal problems regarding patents (protection of those owned, and the policy to be adopted toward unadjudicated patents owned by others); and the marketing problem of convincing prospective customers of the worth of a new product. These and other problems incidental to successful competitive production and sale of a given type of synthetic resin have been sufficient to restrain the desire to produce more than one type.

The patent situation of most synthetic resins is extremely complicated. In the case of tar-acid molding resins the basic Baekeland patents have expired, but for other synthetic resins either the basic patent is still in force, or it is difficult to say which is the basic patent, because of lack of adjudication by the courts. In all cases dozens of supplementary patents are in force and sometimes hundreds. As a result the patent situation, though one of the bars against entering into a new field, frequently forces some relationship between producing units in the same synthetic resin field. Cast phenolic resins afford an example of patent-licensing of several corporations by another with the payment of royalties as compensation. In a number of other branches of the resin industry, such as the laminated tar-acid resins and the alkyd resins, the mutual desire of producers to avoid litigation has apparently resulted in “gentlemen’s agreements” not to sue.

Vertical relationships of resin producers.

A vertical relationship is one between producers operating at different stages of industrial production, such as a firm producing resin and a firm producing a resin raw material or between the former and a firm that is a resin consumer. The incentive for a consuming industry operating on a large scale to make its own resins is naturally greater than for one using only small quantities. Therefore we may expect to find instances where a process consuming the resin in quantity and resin manufacture are both performed by the same company provided other conditions (such as the patent situation and knowledge of the art of manufacture) are favorable.

_Tar-acid resins for molding._—The present practice of molding resins is favorable to large-scale production. The shaping of the mold is expensive, involving skilled labor upon hardened steel; but once the mold is made it may be used to produce tens or hundreds of thousands of units. Subsequent labor upon the molded product is usually limited to the simple task of smoothing the line where the flash is broken off, since the product comes from the mold in the color and with the surface and shape desired.

The usual arrangement at the present time is to have a battery of presses, grouped around central units which supply hydraulic pressure and steam for heat. A measured amount of molding powder or a pellet of compressed molding powder is applied to each cavity by the press operator, who controls by hand the time of application of heat and pressure and removes the article from the press. The cycle is a matter of minutes, and since each cycle produces a finished article if the molding is large, or a number of them if it is small, daily production per worker is high. The estimated average costs of the different elements in the process have been apportioned as follows: the cost of raw material is about one-third the cost of the finished product; and the combined cost of the mold allocated per unit, the labor cost per unit, and overhead the remaining two thirds.[5] On small runs labor cost and particularly allocated mold cost would be much higher, so that molding is usually uneconomic where only small quantities of the finished product are desired.

In 1937 there were eight molders that produced their own tar-acid resins in whole or in part. One of these molders was the third largest producer of such resins. In the same year six producers of tar-acid resins for molding, including the first, second, fourth, and fifth largest, confined their activities to resin making. One producer of raw materials for tar-acid resins also made the resin on a moderate scale.

This picture of interstage relationship as it existed in 1937 may be somewhat modified by new developments in molding presses. There are now available self-contained presses which are not dependent upon other units for their supplies of heat and pressure and which are either semiautomatic or automatic. The semiautomatic press requires an operator for charging the cavity and removing the molded product, but once adjusted automatically applies the heat and pressure and controls the time of the pressing cycle. The automatic press, adapted as yet only to the simpler moldings, requires no attention whatever. These presses are more expensive, but may be set up anywhere and require less skilled labor. There is the possibility that they may be installed by some industrial users of molded articles, and thus take some business from the custom molder. If this occurs, such molders will presumably buy their resin from companies that are primarily resin makers, since their requirements of the material would not ordinarily be large enough to justify making their own.

_Tar-acid resins for laminating._—The manufacture of laminated resin products is most economic when done on a large scale, in which case the impregnation of the paper or fabric becomes a continuous process, the material feeding from a roll through resin sirup and then through drying towers, where time and heat may be controlled. The impregnated material contains resin in the B-stage. The material is then cut up and the sheets piled together (the number depending on the thickness desired) and sent to huge presses which, with heat and pressure, compact and unite the layers and convert the resin to the C-stage. If it is desired to produce decorative panels with a smooth surface, the top sheet used is one colored or printed with a design (perhaps a photographic reproduction of the surface of a cabinet wood) and placed between polished chromium-plated metal sheets before going to the press. Rods and coil forms as well as flat sheets are commonly made from laminated material. Any of these forms may undergo subsequent fabrication; rods and coil forms cut to required length, thin sheets stamped to shape, gear blanks cut to final form on automatic gear machines, and decorative panels sawed to shape.

Many laminators purchase all their resin requirements, but a number of them make part or all of the tar-acid resin they use. In 1937 there were seven laminators who made tar-acid resins (including the second, third, and fourth largest producers of such resins) and four producers of tar-acid resins for this use (including the largest) which did no laminating.

_Cast phenolic resins._—The firms producing cast phenolic resins market them in sheets, rods, and tubes. The castings are made in molds of lead or glass, and the range of possible shapes is limited. The consumers of these products fabricate them into finished form by cutting, turning, and polishing, much as they might fabricate wood or soft metal. Since considerable labor is required per unit, fabrication is not particularly adapted to large-scale production. In 1937 there were nine producers of cast phenolic resins. One of the smaller producers was also a fabricator of cast resins, and another a producer of raw materials used in making the resin.

_Tar-acid resins for coatings._—The use of tar-acid resins in surface coatings has been overshadowed by the more rapid development of alkyd resins. Nevertheless the volume of tar-acid resins used as raw materials by varnish and lacquer manufacturers is growing rapidly. They are used in marine varnishes unmodified by other synthetic resins, but to a greater extent in combination with other plastics, especially the alkyds and nitrocellulose. The coating industry includes many units producing on a large as well as a greater number producing on a smaller scale. In general, they are not producing their own tar-acid resins. In 1937 there were 11 producers of tar acid resins for coatings (including the three largest) who confined their activities to resin production. In addition there were eight manufacturers of varnishes and lacquers and one producer of resin raw materials, who also produced tar-acid resins for use in coatings.

_Tar-acid resins for miscellaneous uses._—The chief uses for tar-acid resins other than for molding, casting, laminating, and in coatings are as a bonding material, and as an adhesive. These resins form a valuable bonding agent for asbestos in brake linings and chemical tanks, for abrasives and for ground cork in special uses. As an adhesive they are used in making moisture-resistant plywood.

In 1937 there were five producers of tar-acid resins for miscellaneous uses, including the largest, who confined their activities to the making of resins and two, including the second largest, who also made products in which these resins were consumed.

_Alkyd resins made from phthalic anhydride._—The rapid increase in the production of alkyd resins for use in coatings is one of the most remarkable in the whole resin industry. They go into varnishes, lacquers, and enamels for spraying, brushing, and dipping. The coatings may be air-dried, with a wide range of drying time, or dried by oven baking. The volume of alkyd resins used by the coating industry has grown so large that a number of coating firms have gone into the production of alkyds and now make part or all of their own requirements. In 1937 there were 24 paint, varnish, and lacquer firms producing alkyd resins. Included in this number were the first and second largest producers of such resins. Eleven producers of these resins, including the third and fourth largest, made alkyd resins for sale only. Each of these groups included one firm which also made phthalic anhydride.

_Alkyd resins made from maleic anhydride._—In 1937 there were seven producers of alkyd resins from maleic anhydride who produced for sale only. This group included the two largest producers and also one firm which produced maleic anhydride. In addition there were five paint, varnish, and lacquer firms producing part or all of their needs of resins of this type. The general conditions under which these resins are consumed are the same as for alkyd resins made from phthalic anhydride.

_Urea resins for molding._—The conditions under which urea resins are molded are not greatly different from those already discussed for tar-acid resins. The molding cycle is somewhat longer and, because of the light colors used, special precautions must be taken to prevent discoloration of the molded product by dirt or flecks of molding powder from other operations, carried through the air or upon the person of the laborer. In 1937 there were four producers of urea resins for molding. Three of them, including the two largest, produced for sale only; the other consumed his own production.

_Urea resins for other uses._—Until recently urea resins were thought of exclusively for molding, but they are now being used for laminating, for surface coatings, and also as an adhesive. Ordinarily the ureas are used only in impregnating the outside laminae of a laminated sheet where they are valuable for the light colors they make possible. The volume of urea resins used in surface coatings is small compared with the alkyd or tar-acid resins used for this purpose, but is increasing. The use of urea resins in adhesives is still new but promises to become important.

In 1937 there were four producers of the ureas for uses other than molding, who produced for sale only; and two producers who consumed their own product.

_Coumarone and indene resins._—Coumarone and indene resins are produced in connection with the production of solvent naphtha. There were three producers in 1937, all of whom sold their product. These resins go into varnishes, where they replace natural resins or ester gum.

_Other resins._—In 1937 there were four producers of vinyl resins in the United States, and two of these also produced their raw materials. The vinyl resins were used chiefly in surface coatings, molding, and in safety glass. The polystyrene resins, used chiefly for molding and laminating, were offered by two producers for the first time in 1937. Two other producers offered acrylate resins, which are cast, molded, or used in surface coatings. In the same year petroleum resins were sold in good volume, their only producer obtaining them as a byproduct of the oil industry.

Relationship of the resin industry to other industries.

The term “synthetic resin industry” is a very broad one, referring in reality to a group of industries producing the varied synthetic resins—much as the term “steel industry” includes the manufacture of pig iron, structural steel, tin plate, and wire. But it is interesting to examine briefly the connection of the synthetic resin industry with some of the other large industrial groupings.

_Relationship to the chemical industry._—Since the processes involved in the production of the synthetic resins are essentially of a chemical nature, the whole industry might be legitimately classed as a branch of the chemical industry. Historically, the synthetic resin industry in the United States developed outside of the chemical industry as it was constituted at the time, but with the passage of years and the development of a greater variety of resins the connections have multiplied. Chemical companies supply some of the important raw materials for synthetic resins; their skilled experts possess the technical training to develop new resin processes; their research programs from time to time lead to the discovery of valuable facts regarding resin; and they possess, or can, more easily than a new company, obtain the capital necessary to exploit a process.

At present the interest of the large chemical corporations in synthetic resins ranges from active participation to apparent indifference; but the growing number of corporations thought of as chemical which are now engaged in experimental production would seem to indicate that in time they will be increasingly important in the production of synthetic resins. Some of the larger chemical companies that are important producers of synthetic resins in 1938 are:

American Cyanamid Co Urea resins.
Carbide & Carbon Chemicals Corporation Vinyl resins.
Dow Chemical Co Polystyrene resins.
E. I. du Pont de Nemours & Co Alkyd, acrylate, vinyl resins.
Monsanto Chemical Co Petroleum resins.

_Relationship to the surface coating industry._—The use of tar-acid, alkyd, urea, and vinyl resins as raw material for the surface coating industry has already been mentioned, and also the fact that the coating industry is manufacturing a substantial part of its consumption of alkyd resins.

At present the synthetic resins go chiefly into varnishes, lacquers, and enamels for inside use and into finishes for outside use on metal. Now that coatings incorporating synthetic resins are successfully adapted to outside finishes on wood, the incentive for the production of resins by the coating industry will presumably increase because of the large volume of house paints sold.

_Relationship to the electric industry._—The electric industry offered one of the first large markets for synthetic resin products. Molded and laminated parts for appliances and fixtures gave good insulation at ordinary voltages, and frequently allowed a simplification of the design. This development, coming at a time of rapid expansion in the manufacture of electric equipment, was a distinct benefit to both the electrical and synthetic resin industries. The larger electrical manufacturing firms soon began to do their own molding and laminating and became important as custom molders. Later the General Electric Co. and the Westinghouse Electric & Manufacturing Co. manufactured their own tar-acid resins.

Another important outlet for synthetic resins appeared with the development of the radio industry. Radio now offers a market for special synthetic resins possessing high dielectric constants at radio frequencies, and much larger volumes of tar-acid and urea resins are used in molding the smaller cabinets. As a rule the radio industry purchases its resin products already molded to order.

_The relationship to the auto industry._—The automobile manufacturing industry and makers of automobile parts together furnish a substantial market for synthetic resins. In general, the automobile manufacturers purchase parts made of resin, already fabricated; parts makers usually purchase the resins they require. The Ford Motor Co. makes tar-acid resins for its own use. Working parts, such as timer heads and horn buttons, are usually of molding tar acid resin; the timing gear usually of laminated tar-acid resin. For decorative parts, such as dash instrument knobs and radiator ornaments, urea and cast phenolic resins have been used. Most of these parts are small, but altogether they have taken a substantial volume of synthetic resin. Safety glass for automobile windshields is now being made from vinyl resin.

The future possibilities are difficult to appraise. The automobile industry is constantly experimenting with new materials and methods, and its policy of bringing out models annually makes possible rapid adoption of new developments. Molded window frames have been tried, and such a use, or use for the complete instrument panel, would obviously consume synthetic resins in much larger volume. Even whole motor car bodies of laminated resin have been suggested.

13. THE UNITED STATES TARIFF AND INTERNATIONAL TRADE IN SYNTHETIC RESINS

Synthetic resins enter into the foreign trade of the United States only to a small extent. This becomes apparent if a comparison is made between the United States production of these resins and our imports and exports of them. Table 13 gives the imports and production of synthetic resins in the United States for 1934 through 1937. Exports are so small that they are not separately reported.

TABLE 13.—_Synthetic resins: United States production and imports, 1934-37_

[Pounds]
-------------------+------------+------------+-------------+------------
| 1934 | 1935 | 1936 | 1937
-------------------+------------+------------+-------------+------------
Production in the | | | |
United States[1] | 56,059,489 | 95,133,384 | 132,912,821 | 162,104,713
Imports into the | | | |
United States | [2] 19,795 | [2] 21,120 | [3] 626,608 | [3] 673,880
-------------------+------------+------------+-------------+------------

[1] Does not include coumarone and indene resins, sulfonamide
resins.

[2] Does not include imports of vinyl acetate resins which were
not shown separately until 1936.

[3] Includes vinyl acetate resins and all other types imported.

The small size of the international trade in synthetic resins is also emphasized if we compare the imports of all synthetic resins with the imports or exports of some of the important raw materials used in their manufacture. Table 14 makes such a comparison.

TABLE 14.—_Comparison of international trade of the United States in synthetic resins and in certain raw materials for resins, 1934-37_

[1,000 pounds]
-----------------------------+--------+--------+--------+--------
Imports into or exports from | | | |
the United States | 1934 | 1935 | 1936 | 1937[1]
-----------------------------+--------+--------+--------+--------
Imports: | | | |
Resins | 20 | 21 | 627 | 674
Crude cresylic acid[2] | 7,332 | 7,010 | 13,794 | 16,745
Crude naphthalene | 47,995 | 48,455 | 39,806 | 52,664
Crude glycerin | 15,081 | 8,220 | 11,149 | 13,441
Refined glycerin | 2,214 | 69 | 3,447 | 7,535
Exports: | | | |
Phenol | 329 | 323 | 149 | ([3])
Formaldehyde | 2,597 | 2,598 | 1,844 | 2,865
-----------------------------+--------+--------+--------+--------

[1] Preliminary.

[2] Conversion factor 8.7 pounds per gallon.

[3] Not available.

There are three factors that together largely account for the small size of our foreign trade in synthetic resins. As a result of the comparative youth of the resin industry, the complicated patent situation, and the substantial tariff rates upon imports of resins into the United States, domestic producers have experienced little competition from abroad. The first two of these forces plus the tariff barriers of other countries have caused them to pay little attention to export markets. But it should be observed that both of the first two forces will become less important with the passage of time. When home markets have been more fully exploited, problems of production have become less pressing, and most of the basic patents on resins have expired, international trade in synthetic resins may be expected to increase from its present low levels. If this occurs, the United States, with its large scale production for the home market and with its generally favorable position with regard to the raw materials and the technical skills necessary, is more likely to become a net exporter than a net importer of synthetic resins.

Rapid expansion of business in home markets.

Being young industries and having potentially large home markets awaiting development, the synthetic resin industries in the United States naturally began by concentrating first on their numerous production problems to meet a rapidly expanding domestic demand, improving their products and devising useful applications.

The tar-acid-formaldehyde resins for molding were the first to develop. The industry producing them may be said to have started around 1910, but did not become important until after the World War, when the drop in price of phenol made the resins available at lower prices. The alkyd resins and the urea-formaldehyde resins in the United States began to be important in 1929 and 1930, respectively. The others may be said to be still in their earliest stages of development as industries, however much research work may have been done as to their properties and production.

The effect of patents on international trade.

A second factor involved in limiting international trade in resins is that relating to patents. The basic patents on tar-acid resins have expired; but while they were in force, they prevented imports into the United States. In the United States a valid patent can be enforced at law not only against domestic products which infringe but also against imports. In addition to court action, the provisions of our tariff law prohibiting unfair competition in the import trade were invoked to prevent entry of synthetic phenolic (tar-acid) resin, form C, but when the basic patent for this material expired, the exclusion order no longer applied to single color material, except in the matter of certain marking requirements.[6]

The patent situation may militate against exports as well as imports. Where a company owns foreign patents it may set up a company to exploit them abroad, or it may license their use by others. Again, mutual interest may dictate an exchange (by cross-licensing) of certain patents. International licensing of patents is usually accompanied by divisions of international markets through formal or informal understanding. Such agreements may outlive the life of the patents, especially if bolstered with financial connections. But unless the original producers continue to dominate their respective markets, any agreements between them are likely to diminish in importance, because after the patents expire new competitors would have a free hand in foreign as well as domestic markets.

The original United States producer of tar-acid resins set up or licensed companies to manufacture in a number of foreign countries. The urea-formaldehyde process was developed in Europe and the first American producer was a licensee of a British corporation. Similar arrangements exist with regard to most of the other resins.

The United States tariff on resins and resin products.

_Synthetic resins._—Imports of tar-acid, alkyd, coumarone and indene, styrol, adipic, and aniline resins are dutiable under the provisions of paragraph 28 of the Tariff Act of 1930, which reads in part: “synthetic phenolic resin and all resinlike products prepared from phenol, cresol, phthalic anhydride, coumarone, indene, or from any other article or material provided for in paragraph 27 [coal-tar intermediates] or [paragraph] 1651 [coal-tar crudes], all these products whether in a solid, semisolid, or liquid condition; ... 45 per centum ad valorem [based on American selling price[7] or United States value[8]] and 7 cents per pound.” Where these resins are produced in the United States, imports are “competitive” and the dutiable value is based upon American selling price. If the American selling price is higher than the foreign value, the effect of this method of valuation is to increase the duty to which imports are subject. The duty of 45 per cent ad valorem and 7 cents per pound was equivalent to 54 per cent ad valorem on the American selling price of the small imports of coal-tar resins in 1937. If it could calculated upon foreign value it would be much higher.

Synthetic resins of non-coal-tar origin, except vinyl resins, are dutiable under paragraph 11, which reads “synthetic gums and resins not specially provided for, 4 cents per pound and 30 per centum ad valorem” on foreign value. This rate was the equivalent of 48 per cent ad valorem upon the small amount of imports in 1937. The most important resins included are the urea and acrylate resins.

Between 1930 and 1936 there was some doubt whether vinyl resins were dutiable under paragraph 11 at the rate quoted or under paragraph 2 which provided for “vinyl alcohol ... homologues and polymers of all the foregoing; ethers, esters, salts and nitrogenous compounds of any of the foregoing, whether polymerized or unpolymerized, ... not specially provided for, 6 cents per pound and 30 per centum ad valorem” on foreign value. But the Canadian trade agreement, effective January 1, 1936, reduced the rate on vinyl resins under either paragraph 2 or paragraph 11 to 3 cents per pound and 15 percent ad valorem.[9] The reduced rate was equivalent to 25 percent ad valorem upon the imports in 1937.

Under these rates, imports of synthetic resins, other than vinyl resins, have been insignificant.[10] After the reduction of duty, imports of vinyl resins in 1936 amounted to approximately 600,000 pounds, valued at $145,000 and in 1937 to 650,000 pounds, valued at $200,000. (See table 11.)

_Articles made of synthetic resins._—Laminated products of which synthetic resin is the chief binding agent and manufactures of such products are dutiable under paragraph 1539 (b) at the following rates: 15 cents per pound and 25 percent on laminated sheets or plates[11]; 50 cents per pound and 40 percent on laminated rods, tubes, blocks, strips, blanks, or other forms; and 50 cents per pound and 40 percent on manufactures of such laminated products. Paragraph 1539 (b) also provides a duty of 50 cents per pound and 40 percent on manufactures of any other product of which any synthetic resin is the chief binding agent. These are, for the most part, molded synthetic resin articles. Paragraph 1539 (b) does not cover articles made entirely of synthetic resin (cast synthetic resin articles). Such articles unless specifically provided for in the law are dutiable under paragraph 1558 as manufactured articles, not specially provided for, at 20 percent ad valorem.

A great many articles, which are made in whole or in part of synthetic resin, are not dutiable under either paragraph 1539 (b) or paragraph 1558. These are articles which are specifically mentioned in other paragraphs and subject to the duties provided therein. Table 15 lists a number of them.

TABLE 15.—_Tariff classification and rates of duty in Tariff Act of 1930 on certain articles made of synthetic resin_

In general, the available statistics of imports do not segregate imports of the specified articles made of synthetic resin from those of the same articles made of other materials; and the same situation is true of imports of unspecified articles wholly of synthetic resin which enter under paragraph 1558. Imports of manufactured articles, n. s. p. f. in which synthetic resin is the chief binding agent under paragraph 1539 have been small. Figures for recent years are given in table 16.

TABLE 16.—_Manufactured articles n. s. p. f. in which synthetic resin is the chief binding agent: United States imports for consumption, 1931-37_

----------------------------+--------+--------+--------+--------
Type | 1931 | 1932 | 1933 | 1934
----------------------------+--------+--------+--------+--------
_Quantity (pounds)_ | | | |
Laminated products: | | | |
Sheets and plates | | 10 | | 13
Rods, tubes, blocks, etc. | 215 | 13 | |
Manufactures, n. e. s. | 203 | 453 | 787 | 783
Nonlaminated | 17,623 | 8,511 | 5,352 | 5,729
+--------+--------+--------+--------
Total | 18,041 | 8,987 | 6,139 | 6,525
| | | |
_Value (dollars)_ | | | |
Laminated products: | | | |
Sheets and plates | | 9 | | 16
Rods, tubes, blocks, etc. | 612 | 71 | |
Manufactures, n. e. s. | 1,001 | 883 | 2,133 | 2,299
Nonlaminated products | 31,992 | 10,113 | 7,914 | 10,673
+--------+--------+--------+--------
Total | 33,605 | 11,076 | 10,047 | 12,988
----------------------------+--------+--------+--------+--------

----------------------------+--------+--------+----------
Type | 1935 | 1936 | 1937[1]
----------------------------+--------+--------+----------
_Quantity (pounds)_ | | |
Laminated products: | | |
Sheets and plates | | |
Rods, tubes, blocks, etc. | 609 | 514 | 668
Manufactures, n. e. s. | 1,703 | 3,260 | 10,397
Nonlaminated | 8,423 | 8,069 | 8,759
----------------------------+--------+--------+----------
Total | 10,735 | 11,843 | 19,824
| | |
_Value (dollars)_ | | |
Laminated products: | | |
Sheets and plates | | |
Rods, tubes, blocks, etc. | 579 | 1,329 | 1,920
Manufactures, n. e. s. | 3,778 | 9,468 | 39,232
Nonlaminated products | 11,064 | 10,846 | 18,001
----------------------------+--------+--------+----------
Total | 15,421 | 21,643 | 59,153
----------------------------+--------+--------+----------

[1] Preliminary.

Source: Compiled from Department of Commerce statistics.

14. SYNTHETIC RESIN PRICES, PROPERTIES, AND USES

Synthetic resins as substitutes.

Any new material will in the course of time be applied to the uses for which it has special advantages, displacing older materials which formerly served those purposes. The resulting product may sometimes be used in the same manner as before, or the properties of the substitute material may widen the usefulness of the finished product, or even make possible a product almost wholly new.

Before the development of molded synthetic resins, electrical plugs and sockets were usually made of porcelain or molded of marble dust and shellac. In this use substitution has been almost complete. Wall plates for electric switches and outlets were usually of brass. Today molded tar-acid or molded urea resins are substituted in part. In neither of these examples has the substituted material any important effect upon the use of the product.

An example of a substitute material widening the usefulness of the product is afforded by a new computing scale, where a molded urea resin casing (substituted for metal in the older model) has aided in decreasing the weight and has improved the appearance. Another example is the use of laminated synthetic resin coil forms in radio frequency transformers which, because of their better electrical properties at high frequencies, have aided in the design of more compact units.

Examples of synthetic resins making possible a wholly new product are more difficult to find, but the following will serve as illustrations: Cast acrylate sheets to form curved cockpit enclosures for airplanes; molded acrylate buttons for reflecting road markers; and new special coatings, which make possible the use of metal cans for preserving foods and beverages hitherto impossible to can without loss of flavor.

Motives for substitution.

One of the most important reasons why a manufacturer may decide to substitute a synthetic resin for another material is the resulting economy in the sense of economy in total costs. As a rule, the synthetic resin will be more expensive pound for pound than the material for which it is substituted; but frequently the manufacturing cost is enough lower to more than make good the difference in material cost, because the resin part will come from the mold almost in finished form, whereas the part made of wood or metal will require considerable fabrication. In some cases there may be a saving in marketing costs. For example, the shades for large office fixture lights are now made of synthetic resin as well as of opal glass. The resin shades are less expensive to ship because they are lighter and require less expensive packing.

Another incentive toward substitution is to give novelty, and hence sales appeal, to an old product. In many cases the use of synthetic resins fits in with the present tendency to redesign an old-style product so that it will be more compact, have more pleasing lines, and more color.

Still another incentive toward substitution is to give the product greater usefulness, or lower costs in use. The great expansion in the use of synthetic resins in surface coatings has come about because, with these materials, coatings can be developed to fit special purposes, and dry rapidly, which means an important saving to those who use them.

Materials displaced by synthetic resins.

The wide range of uses to which synthetic resins are now applied implies that the materials displaced are numerous. For example, cast or wrought iron or steel is displaced in timing gears and in many small machine parts, such as cradle-type telephones; nonferrous metals in small machine parts and novelties, such as inexpensive bracelets; glass in lamp shades and in cosmetic containers; natural resins in lacquers; plastics, such as cellulose acetate in safety glass or cellulose nitrate in colored lacquers; other adhesives in bonding plywood; and cork or metal in bottle closures.

In general, the quantity of material displaced is a very small part of that material’s total market. Frequently, however, industries producing the finished product have had to make substantial changes in their equipment in order to use synthetic resins. This has been true in the button industry, in the bottle closure industry, in the varnish and lacquer industry, and in the various electrical supply industries; and readjustment is now proceeding in the fancy container industry and in the safety glass industry.

Competition between synthetic resins.

Any particular synthetic resin must compete for its market with other synthetic resins, as well as with other materials. The basis of choice or substitution will be the same as that which has already been briefly discussed in connection with the displacement of other materials by resins. As between a number of resins with properties fitting them for a particular use, the total costs of using each will be compared and the choice will go to the least expensive; but where a resin has special advantages in a particular use it may win out over a less expensive resin.

It should be emphasized that this battle of materials for markets is a never-ending one. The fact that a specific synthetic resin has achieved a certain position is no guarantee that it may not lose it wholly or in part to some newer resin or other material. Thus cast phenolic resin was for a time the only resin available in light colors but urea resins became available in pastel shades and more recently water-clear polystyrene and acrylate resins have come on the market. Until recently tar-acid resins were without competition in laminating, but urea resins now are used to some extent for the surface laminae and the tar-acid resins now face a potential threat in a new product offered to laminators. If the use of this cellulose sheet, which looks much like blotting paper and which has lignin incorporated in it to act as a binder in the press, should materially decrease the cost of laminated sheets, it will mean serious new competition for the tar-acid laminating resins.

The general effect of the increase in number of types of synthetic resin has been to modify the market outlook of the producers of each type. They are now more inclined to view the market as being limited by the price at which they can supply their product and by the physical properties of each resin rather than attempt to exploit it as a universal resin for all purposes.

Resins classified by cost.

At present the resins produced in largest volume are the alkyd resins for use in surface coatings; the tar-acid resins for molding, laminating, and surface coatings; the urea resins, chiefly for moldings; and the cast phenolic resins. Roughly, the price per pound of pure resin material[12] for these various resins may be compared as follows:

_Average sales price
of net resin, 1937
(per pound)_
Type of resin:
Cast phenolic $0.41
Tar-acid:
For molding .18
For laminating .13
For coatings .17
Alkyd .20
Urea .45

Because the cost of the filler is less per pound than the cost of the resin, the cost of the tar-acid and urea molding powders will be less than the figures given for the pure resin. On the other hand, wholesale prices paid by consumers will include transportation and distribution costs not included in the figures of manufacturers’ sales.

Vinyl resins, acrylate resins, and polystyrene resins are at present produced in much smaller volume than those just listed. If and when the volume of production is increased the price may be decreased. In 1937, the price per pound of pure resin[12] was as follows:

_Average sales price
of net resin, 1937
(per pound)_
Type of resin:
Vinyl $0.69
Acrylate 1.66

Early in 1938, acrylate resins were being offered for sale at 85 cents per pound for molding powder and $1.25 per pound for the cast material; polystyrene resins at 72 cents per pound.

Petroleum resins, in 1937, sold for an average of 2 cents per pound net resin content.[12] This low price puts them beyond competition of the other synthetic resins in the uses in laminating and coating to which they are adapted.

The physical properties of a resin and its uses.

A more expensive resin will be used in preference to a cheaper one, only if the higher cost is more than offset by some physical property, such as color, which makes it more desirable in a particular use. The most common molding resin at present is the tar-acid type, but it is available only in the darker colors and therefore has been at a disadvantage, where a light color is desired, in competition with cellulose nitrate (celluloid) and cellulose acetate plastics or with urea and cast phenolic resins. In recent years the production of cellulose acetate molding compounds and of urea resins has increased rapidly, largely under this stimulus. The desire for color also promises well for the future of the acrylate and polystyrene resins which are produced in water-clear grades or colored with dyes or pigments.

TABLE 17.—_Synthetic resins and other plastics: Properties that affect appearance_

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Synthetic resins and their raw materialsChapter IV: Part 4

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