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William H. Joyce is awarded Perkin Medal for development of Unipol polyethylene process MARC S. REISCH, C&EN NORTHEAST NEWS BUREAU William H. Joyce, chairman and chief executive officer of Hercules, likes to tinker. His early fascination with chemistry and an inquiring mind have always tempted him to ask questions, follow hunches, and take chances. PHOTOS BY MARC REISCH As a youngster, he took gambles that he now admits might not have been so well thought out. Nevertheless, as he got better at assessing new challenges and calculating the rewards he might obtain, he learned to take risks that sometimes led to spectacular results. One such challenge in the 1970s was to take an ailing Union Carbide high-density polyethylene unit and turn it around. He did that by leading a research team to a breakthrough for making linear low-density polyethylene by the now widely used Unipol process. Since its introduction in 1978, Unipol has generated polyethylene sales of $32 billion for its owner and licensees. It has also saved them $7 billion in energy, operating, and raw material costs compared with the earlier high-pressure method of manufacturing low-density polyethylene. The process led to polyethylene with improved properties and thus opened new markets for this versatile plastic, such as low-cost puncture-resistant trash bags, sturdy stretch wrap, and disposable diaper backings. To recognize his involvement in the creation of that breakthrough process, Joyce has been named the 2003 Perkin Medal winner. One of the chemical industry's highest honors, the medal is presented annually by the American Section of the London-based Society of Chemical Industry to a scientist or engineer for outstanding work in applied chemistry in the U.S. Joyce receives the medal this week at SCI's annual dinner at the Plaza Hotel in New York City. The medal commemorates the discovery in 1856 of the first synthetic dye, mauve, by English chemist and SCI founder Sir William H. Perkin (1838–1907). The recipient obtains the nod for the award--first made in 1906--from six sister chemical societies: the American Section of SCI, the American Chemical Society, the American Institute of Chemists, the American Institute of Chemical Engineers, the Electrochemical Society, and the American Section of the Société de Chimie Industrielle. Joyce, the youngest of nine children, always liked a challenge. Three of his brothers were chemical engineers, and so, he says, that is what he wanted to be. Of course, he had a chemistry set, like many other 10- or 11-year-olds during and just after the Second World War. "Those early chemistry sets were not spectacular enough," he says. "I asked my brothers to bring me a Bunsen burner. I thought I'd make my own laboratory." Joyce tapped into the gas main in the basement of his parents' home--an undertaking he now admits was not such a good idea--and set up his own lab conducting experiments that "tended to be more dramatic." He also made gunpowder that he packed into used CO2 cylinders from the local soda fountain. He then ran a wire from a toy train transformer through a piece of tape covering the cylinder's opening. "I would turn the transformer on, and the cylinder would blow up. That was an outside activity," he says. -------------------------------------------------------------------------------- "I would turn the transformer on, and the cylinder would blow up. That was an outside activity." -------------------------------------------------------------------------------- GROWING UP in the town of Jeanette in western Pennsylvania, Joyce says he was intent on following in his elder brothers' footsteps. A scholarship from the Navy made it possible for him to attend Pennsylvania State University, College Park, from which he graduated in 1957 with a degree in chemical engineering. In 1984, he received a Ph.D. in business from New York University. Shortly after graduating from college, he joined Union Carbide's research unit in Bound Brook, N.J., and got his first lesson in the value of R&D. On a visit to his parents' home in Pennsylvania, his father, who had managed and owned a brick factory, asked the young Joyce, "Are you earning your keep?" Joyce says he explained to his father that, "when you are in R&D, they tell you what they want you to do, and you do that." He thought to himself, "My father is more than 50 years older than I am, and he really doesn't understand how big corporations work." Yet when the older man persisted in seeking an answer from his son, Joyce confessed he did not know. His father explained costs for lab and office space, and "he totaled up what it cost to keep me going," Joyce recalls. "Boy, when I saw that number, I knew right away I wasn't earning my keep. In hindsight, that was a really good education." The lesson encouraged him not only to think about costs, but also to realize the value in the projects he undertook. In the late 1950s, Joyce started a project with scientists at Bell Laboratories that led to the development of a new polyethylene insulation for transoceanic telephone cable. He had an idea, he says, for an insulating material with much lower electrical losses than standard polyethylene cable insulation. The improvement would allow increased spacing between signal repeaters spliced into the cable and would result in big cost savings. Carbide refused to fund Joyce's research on the new cable material both because of what was then a difficult economic environment and because satellites were expected to replace transoceanic cable. But Joyce said he knew data communications would still have to go by cable, and so he worked out a deal with Bell Labs to fund his research. AT A TIME when polyethylene sold for 10 cents per lb, Bell Labs agreed to order the special material for mechanical trials at $1.00 per lb. He arranged for Bell Labs' payment to go into an R&D holding account. After subtracting the 5 cents it cost to make material for the early trials, Joyce had an account with a huge amount of money that he used to fund research. He used that account "for all the people expense and the equipment that I bought. I even used it for capital expenses because I needed some instruments and pumps for the plant," Joyce says. A year and a half later, Joyce delivered materials to Bell Labs that met their needs. But it led to some consternation at Carbide when a significant order came for a compound that its manufacturing unit knew nothing about. Carbide stood to make too much money to turn down the order. But Joyce had ruffled some feathers, and the head of manufacturing put him on notice. "From now on," the production chief told him, "though you are in R&D, part of you is in manufacturing. And if anything goes wrong in the middle of the night or at any other time, we're going to call you up, and you are going to get on a plane and go to Texas to fix it." Dow Chemical, which bought Union Carbide in 2001, still makes the polyethylene insulation that Joyce developed for Bell Labs; it is called DFD0160 because the cable that Bell Labs made initially had a 1.6-inch diameter, which was later machined down to 1.5 inches. Joyce's sensitivity to the bottom-line results of his research and his willingness to take chances ultimately led to the development of the Unipol process to manufacture linear low-density polyethylene. He had found a certain freedom in working the accounting system backward to advance technology and business. "Technology is a wonderful thing," Joyce explains. "You can do things that are exciting and make great money. Probably 90% of the constraints that people feel aren't real. Those constraints are in their minds." Seeing Joyce's success making money for the firm and satisfying customers in the wire and cable business, Carbide executives soon pulled Joyce from the lab and put him in sales spots, where, he says, he continued to "get patents and call people up in the research labs to do stuff." Charged with responsibility in the 1970s for returning Carbide's high-density polyethylene unit to profitability, Joyce considered taking further chances. Incremental improvements in technology, he reasoned, had only a 5% chance of success, "and your competitor can follow instantly, and then you are both there with the same thing, so you don't make any money." But big improvements, he figured, might have a 20% or 50% chance of success. Joyce says he decided to target high-pressure polyethylene markets--a business he knew well because as a younger man he had developed high-pressure wire and cable jacketing for customers like Bell Labs. "High-pressure makers have to use 45,000 psi to make their product," he reasoned. "And if I'm correct, we can figure out how to make it with heterogenous catalysis instead of free-radical catalysis. Then we can make it at 600 psi. At that pressure, there is no way we can't win that battle." SUCCESS HERE led to the Unipol process. Joyce also helped supervise further refinements of the route that led to linear low-density polyethylene made in fluidized- bed reactors and significantly sped up production and unit productivity. He credits inspiration for the success of a fluidized-bed production advancement to a late-night conversation with a plant operator. That operator described an unusual circumstance that occurred as he regulated a polyethylene reactor at a temperature and pressure where ethylene comonomers like butene and hexene would have been liquid. These conditions normally "would immediately make a big chunk of plastic in the reactor literally the size of a trailer tractor," Joyce says. "The only way to get it out is to go in with saws and cut it out. So it's verboten. You never go there." But this operator had gone there and suffered no such consequences. Joyce reasoned that if his team could design a fluidized reactor that could take advantage of the liquid comonomers, vaporization would remove heat "and we could make a product twice as fast." While "everyone patiently explained to me why it wouldn't work," he convinced researchers--after six months of trying--to run an experiment to prove the concept. "It was one of the biggest breakthroughs that we made," Joyce recounts. "The first plant that we built had two reactors. We thought we could make 500 million lb annually with this technology. That plant made 1 billion lb." Carbide not only succeeded in building the new Unipol technology business for itself, but it also succeeded in licensing Unipol to others. Joyce said he pushed to license the advance despite resistance from Carbide and Wall Street analysts who were critical of revenues they supposed Carbide would lose if it didn't keep the market for itself. But Carbide, "as big as it was, couldn't have fueled the growth of this business. It would have required too much capital, and Carbide would have had enormous negative cash flows" in scaling up, Joyce says. "Besides, the customer feels more comfortable when he can buy from a lot of different people." Carbide still maintained the lower capital cost position, because it had no licensing costs of its own. At Joyce's urging, the Unipol process was ultimately extended to polypropylene and ethylene-propylene rubber. Joyce went on to become Carbide's president and chief operating officer in 1993 and chairman in 1996. He led a recovery of the ailing petrochemical maker, which had weakened under attack from corporate raiders following the Bhopal, India, accident in 1984. And it was Joyce who arranged to sell Carbide to Dow Chemical in a $10.3 billion deal that closed in 2001. A $2 billion investment in a petrochemical venture in Kuwait during the 1990s and another large project in Malaysia had put a financial strain on Carbide. "I could see that a bigger company could grow this thing," Joyce says. So he and then-Dow CEO William S. Stavropoulos made the deal to merge the two companies. That merger was intended to "lower overall costs so that shareholders, customers, and employees would be looking at a more viable business over the long term. Both had good technology. We thought there were some pretty big gains." Joyce says he did not remain with Dow because "I was too old to be in the business. I would have been on the board, but I like doing things." Dow traditionally requires senior executives to give up active participation in operations at age 65, and Joyce was 65 at the time of the merger. He joined the beleaguered specialty chemicals maker Hercules as CEO in 2001. Joyce says he likes the challenge of turning around a company--his father had done just that from age 65 until well into his 80s. And he particularly liked the challenge of a company "that was in severe financial distress. Other CEOs said it couldn't be saved. That's really a sweetheart call. Even though I'm risk averse, I could look at all the numbers, and I could look at the businesses, and I knew it could be fixed." Hercules' troubles dated back to 1998 when it made five acquisitions for a total of $3.6 billion, the largest of which was the $3.1 billion deal to acquire water treatment chemicals producer BetzDearborn. At roughly $3.3 billion, Hercules' total sales that year were less than what it spent on the new businesses. By 2000, weak sales and an inability to pay its debts led Hercules' board to place Thomas L. Gossage at the helm of Hercules once again--he had been CEO from 1991 to 1996--and most expected Gossage to sell off the company's various businesses piecemeal. Joyce joined Hercules after the firm's largest shareholder, International Specialty Products, launched a proxy battle and Gossage subsequently retired. -------------------------------------------------------------------------------- "If you get a dummy running a business, it's pretty hard to do the right thing with technology." -------------------------------------------------------------------------------- THE BOARD agreed to "tolerate" Joyce because he promised to "take costs down, turn this around, and fix it up." He has sold the BetzDearborn water treatment business to General Electric for $1.8 billion and has exceeded by $10 million a target to reduce Hercules' fixed costs from continuing operations by $150 million compared with 2000. Sales from water-soluble polymers, pulp and paper chemicals, rosin and terpenes, and polypropylene fiber were up slightly to $1.7 billion for 2002--excluding divested businesses. Net income excluding unusual charges increased to $69 million from $4 million the year before. "The overall corporate cash flow is still negative because we are cleaning up all this stuff from the past," Joyce says. His initial focus was to reduce fixed costs. Last year, he continued that effort and also placed emphasis on the development of new products. Joyce won't be pinned down on Hercules' long-term plans. Hercules can definitely make it as a going concern, but "does that say you couldn't put another company together with Hercules and make it better than it is?" he asks. And although Joyce is not necessarily looking to partner Hercules with another firm, he is not saying it couldn't happen either. The plan for 2003 at Hercules is to spend more capital on new products. R&D for continuing operations slipped 17% in 2002 to $42 million. But, he says, "a little further down the line, I hope we will be where we can really make big money with technology." "Technology is a lot of fun. It is a great way to make money. It not only helps the customer, but it helps the consumer. And it's not a good place to chop money out unless you know how you are doing it," Joyce says. The lesson to be learned from Unipol is that the industry ought not turn away from technology. Even in today's difficult economic environment, Joyce says, "the only way to make money is to make some bets and take risks, even if it is not very clear whether you will be right or wrong." But Joyce insists that success in R&D requires a measure of discipline. Corporate scientists don't necessarily want to make a bet. "They want to do a little bit of everything. What you really have to do is decide how you are going to make money with R&D. Sometimes, you have to spend more money than the scientists ask for. And sometimes, you have to say, 'We are not going to do that.' I think that if you really get in and manage R&D, it's a gold mine." Reflecting on his current position in life, Joyce says, "If I had my choice of jobs, what I'd really like to be is a general manager, because what I really like to do is technology. I think that is the name of the game." Nevertheless, being a CEO has its advantages, too. "You can still poke around in technology" when you are CEO. However, if you "get a dummy running a business, it's pretty hard to do the right thing with technology." So a CEO needs to take care of the business and still allow technology to thrive. "As I look over my shoulder, technology has always been the thing that has allowed me to win the game," Joyce says. |
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