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:

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.