Technology is the key

As Chief of the Division of Chemicals and Polymers within the CSIRO at a time when it is increasingly orienting its research to commercial purposes, Dr Tom Spurling is at the interface between public sector research and industry. He feels that industry and government must look closely at technology to have any chance of redressing the chemical deficit ­ otherwise Australia will find itself importing both technology and products.

Accompanying table: Australian chemical companies by sales (269k)

We live in a world with a particular perspective: that market forces rule. Given that situation, what can we as research providers contribute to the reversal of the chemical deficit?

Due to the increasing globalisation of the world economy, and because Australia is a small country, it is to be expected that imports of chemicals will increase, both for direct consumption and as inputs to the downstream manufacturing sector. But the questions must be asked of policy makers: 'How big can we allow the chemical deficit to get?' and 'What do we export to balance the books?'

To increase our chemical exports, it is essential that Australia manufactures new products and develops new processes. Our policies should focus on ensuring that manufacturing is in Australia when we have a competitive advantage, and that we license the technology to others when we don't.

In following this strategy, we must recognise the key role played by technology, particularly over the medium term. If we fail to develop our own technology, we will find ourselves importing technology as well as products.

The chemicals and plastics sector is presently being driven by regulations and customer expectations covering the areas of environment, health and safety. This is leading to cleaner, more efficient manufacturing processes and safer products. Globalisation, another major influence on the industry at present, is offering increases in both opportunities and competition, with export propensities ranging from 30 to 50 per cent, and potential import penetrations of 60 to 75 per cent.

World trade in chemicals is growing at about four times the rate of growth in the world economy. Australia must expect to both import and export more chemical and plastic products.

The chemicals and plastics industry is knowledge based; its growth depends on new products and new processes. Business in Australia spends some $200 million a year on research and development, but this is less than 1 per cent of its turnover, comparing unfavourably with international industry, which typically spends 4 per cent of turnover on R&D.

Australia's technology base means it is well placed to contribute to growth in the chemicals and plastics industry, especially in pharmaceuticals. This includes a strong public sector component, including the CSIRO, cooperative research centres and universities, which are increasingly focusing themselves on the needs of industry and solving industrial problems. For example, of the CSIRO's expenditure in the sector of $23.8 million in 1995­96, some 38 per cent, or more than $9 million, came from external sources. (The CSIRO effort comprised 18 projects running across 9 divisions and involving 190 staff.)

The chemicals and plastics sector needs both to increase its own industrial research base overall and to make good use of public sector research as part of this.

Two relevant examples of CSIRO R&D effort paying off in commercial enterprises are the now-familiar plastic banknotes and the Plascon waste destruction technology.

The polymer banknote project, which commenced in 1968, has involved large investments by the Reserve Bank, Note Printing Australia and CSIRO. The result has been considerable savings in the total cost of producing Australian currency, as well as a growing export business for the technology.

Plascon, produced from joint research between CSIRO and Siddons, is a unit process that can be incorporated within a chemical plant to efficiently destroy toxic by-products. An Australian company has used this to produce high-quality materials for the US market.

The strength of the research base enhances three other factors that bode well for Australia's ability to capture a greater share of global markets:

In order to develop new products from the results of laboratory-based research it is necessary to scale up those processes to provide enough material for testing and registration. Australia lacks sufficient facilities for this purpose and our researchers have often had to go offshore to access the necessary facilities. This usually results in a drain of the technology. We need to invest more in building up semi-works as a top priority.

In addressing the chemical deficit, it would be useful to explore the chemical flows within our existing industry, with an eye to some horizontal integration and to the opportunities for making better use of the waste streams, such as the large amounts of oxalic acid produced by the aluminium industry.

The way ahead has four main steps:

1. Establishing better industry/government/research-provider networks focused on understanding Australian chemical flows.
2. Preparing a new study of the existing chemical manufacturing base.
3. Establishing a cooperative research centre for specialty chemicals.
4. Giving priority to funding a semi-works facility in Australia.