The 3rd quarter of 2012 was not so great for chemical, pharma firms

From this week's C&EN, I see storm clouds brewing. From Melody Bomgardner, 3rd quarter earnings for chemical companies were not looking so great:

Against the backdrop of a slowly strengthening U.S. economy, chemical firms saw earnings slide again in the third quarter, in large part because of rapidly declining prices. Out of 21 firms tracked by C&EN, Dow Chemical, DuPont, and eight other companies reported lower sales and earnings in the quarter compared with last year. 

The results prompted promises by chief executive officers to heighten the cost-cutting moves they have been implementing throughout the postrecession recovery. As they announced financial results, Dow CEO Andrew N. Liveris and DuPont CEO Ellen J. Kullman unveiled additional restructuring plans, including layoffs, to be implemented in the fourth quarter and beyond (C&EN, Oct. 29, page 7). Then, one week after Dow’s Oct. 23 announcement, the company amended its tally of layoffs, saying it will cut 3,000 positions in the next two years, an increase of 600 from the original statement and equal to 6.3% of the firm’s workforce.

From Ann Thayer, same thing goes for the pharma companies:

For the third consecutive quarter, no relief came as combined sales and earnings declined at the major pharma companies tracked by C&EN. Overall, quarterly sales fell 5.0%, and earnings for the companies that reported them dropped 9.1%. For the first nine months of the year, sales were down 3.0%, while earnings declined 5.4%. By comparison, in the first half of 2012, sales slipped just 2.1% and earnings were down 3.5%. 

Four companies reported double-digit drops in sales, and five had similar-sized slides in earnings. Hardest hit was Bristol-Myers Squibb. Its third-quarter sales plummeted 30.1% to $3.7 billion, and earnings dropped by an even larger 34.3% to $685 million. U.S. patents expired in March on its high blood pressure drug Avapro and in May on the blood thinner Plavix. Excluding these two products, the company’s sales were up 7% compared with the third quarter of 2011.

Does anyone foresee another round of layoffs from Big Pharma? By now, I can't see how they could cut more (he said naively.)

C&EN's 2012 employment issue: the numbers

I don't want to have the new numbers released from the ACS Department of Member Research and Insights from the March 2012 ACS Salary Survey to be lost in the shuffle, so here they are, pulled out of Sophie L. Rovner's article, which is worth reading in full:

• Overall member unemployment: 4.2% 
• Ph.D. member unemployment: 3.4%
• B.S. member unemployment: 5.9%
• Industrial member unemployment: 5.4%
• Academic member unemployment: 2.2%
• % of members unemployed at anytime during 2011: 8.2%
• % of members unemployed at anytime during 2010: 8.4%
• % of newly graduates unemployed in October 2011: 13.3% 
• % of newly graduates unemployed in 2010: 10.6% 
• % of Ph.D. graduates unemployed in October 2011: 8.8%
• % of B.S. graduates unemployed in October 2011: 13.6%

Also, check out this chart from the article (right), which indicates the brutal reality facing new graduates in chemistry.

Credit: C&EN*

Anyone who buys into facile claims that America needs more scientists and more chemists needs to be able to explain this graph. 

Also, the larger picture for the chemical manufacturing sector:

Zeroing in on the U.S. chemical manufacturing sector, employment totaled 799,600 on a seasonally adjusted basis in September 2012, up 0.2% from the prior month and up 0.7% from September 2011, according to preliminary figures from BLS. That’s good news, but it’s little comfort to the hundreds of thousands of people who lost their jobs in prior months. At the start of the Great Recession in December 2007, employment in the sector was 857,600. Five years earlier, it was 921,500. And 10 years before that—in December 1992—chemical manufacturing employees numbered 1.03 million.

Yikes.

*[NOTE: Corrected number for 2004 for ACS members. Numbers include unemployed and seeking employment. Data for 2012 on new graduates are not yet available. SOURCES: ACS Starting Salary Survey, ACS Comprehensive Salary and Employment Status Survey.]