^{note (1) page 30} ‘Engineering’ is used in the contracting industry in a somewhat specialised sense. It means the work done to bring a project to the point where all the detailed drawings are completed and equipment specified to meet the client's requirements.

^{note (1) page 31} The National Economic Development Council Process Plant Working Party estimates that from 1965 to 1967 direct exports of process plant ‘hardware’ were already significantly lower than those derived from contractors' demand. From 1968 to 1970 the direct exports are estimated at less than one third of the total, [3] but they are of course still very important.

^{note (2) page 31} USSR, China, and the East European centrally planned economies.

^{note (3) page 31} Waivers may be granted for special items of equipment unobtainable in the United Kingdom or when it can be shown that construction schedules could not otherwise be met.

^{note (4) page 31} Chemical projects usually have a more complicated pro duct mix, have higher purity specifications, and must operate under wider extremes of pressure and temperature. [6] The simpler standardised chemical plants approximate more closely to the oil refinery cost breakdown. At the other extreme, know-how and licence fees alone may account for 10 per cent of contract value of an important new process plant, design- engineering fees for an additional 15 per cent, and the margin, managerial overheads, and other services of the contractor for 5 per cent.

^{note (1) page 32} We also considered comparisons based on profitability, but over 80 per cent of the contractors are part of larger groups, so that relevant profit figures were rarely available. Earlier research has demonstrated the association between research and development (R and D), and the innovation and market performance of the French, German, and Swiss chemical industries from 1850 to 1914 [7] and of the plastics industry in the last 30 years. [8] But none of this work has dealt with the role of the contractors in process innovations and their diffusion. It dealt primarily with chemical product innovations and world market shares for chemicals. Mr Wyn Roberts of Constructors John Brown was one of the first to draw attention to the importance of the association between process innovations and contractor performance. [9]

^{note (2) page 32} Where two or more contractors co-operated in designing, ‘engineering’, and constructing a chemical complex or a refinery, each is treated as having a separate contract. Thus the number of contracts (6,100) is greater than the number of plants (4,000).

^{note (1) page 33} i.e. contracts won by contractors outside the country in which their head office is located.

^{note (2) page 33} This varies considerably. Countries like India, striving to conserve foreign exchange and increase local manufacture, may specify local procurement for a wide range of items. Even so, about 40 per cent of the hardware for large fertiliser plants in India was still being imported in the 1960s. For most of the plants built by foreign contractors in the Socialist countries almost all the hardware was imported, but very recently there has been a tendency here too to specify some local procurement. Some contracts leave the contractor free to ‘shop around’ anywhere in the world for best price, delivery, and design.

^{note (1) page 34} These offices are now of increasing importance. In addition to the offices of Humphreys and Glasgow, Power Gas, and other British contractors in India and other Common wealth countries, several European contractors have recently established or expanded their organisation in the United States.

^{note (1) page 36} In 1966 Japanese exports were only 10 per cent of chemical industry turnover compared with 20 per cent for the United Kingdom, 29 per cent for West Germany, and 50 per cent for the Netherlands (see OECD, Report on the Chemical Industry, 1966-67).

^{note (2) page 36} i.e. designed and ‘engineered’ by chemical firms for their own use.

^{note (3) page 36} ‘Contract draughtsmen’ are hired out by agencies to meet the peak demand of particular firms.

^{note (1) page 37} For a $20 million project probably about 250 thousand engineering man-hours would be needed in the United States and rather more in Europe.

^{note (1) page 39} i.e. design work on flow sheets for chemical plants prior to detail-engineering and specification.

^{note (1) page 41} If an estimate is included for the United States home market the proportion will be nearer two thirds.

^{note (1) page 42} Zimmer is now a fully-owned subsidiary of Vickers, but much original process development work took place before the take-over.

^{note (1) page 43} Some historians have traced this back to the disastrous attempt to maintain a monopoly on the first synthetic dye discovered in France after superior processes became available (Affaire La Fuchsine) [15] and to the failure to use tariff pro tection to develop independent innovation capacity.

^{note (1) page 44} Humphreys and Glasgow, Power-Gas, CJB, and Simon- Carves.

^{note (2) page 44} A recent comprehensive list of chemical processes and their licensors showed about 70 per cent of the licensors were chemical firms and about 30 per cent were contractors or process development firms. Of the total list of 810 processes the licensor of 90 was not disclosed. (Chemical Engineering, 25 September 1967.)

^{note (1) page 46} See Appendix I on Sources and Methods.

^{note (1) page 50} F. H. Peakin (Oxford College of Technology) has pointed out the great importance of maintenance costs for plant design. One of the benefits of improved client-contractor collaboration would be greater attention to this factor by contractors in their process designs.

^{note (2) page 50} Firms should ‘run hard’ rather than try to monopolise. Ideally this result would be most easily achieved if chemical firms concentrated entirely on product innovation and con tractor-component firms on process innovation. But there are obvious practical difficulties.

^{note (1) page 51} This report, by Dr N. MacLeod, is a confidential document and is not available for issue, although some of its conclusions have, for obvious reasons, been publicly discussed.