JPRS ID: 8915 WEST EUROPE REPORT SCIENCE AND TECHNOLOGY

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• Collection: JPRS
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• Content Type: REPORTS

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1i FEBRURi~Y 1980 C FOUO 2r80 ) 1 OF 1
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JPRS L/8915
11 February 1980 -
~est E u ro e R e o rt
- p p
- SCIENCE AND TECHNOLOGY
(FOUO 2/80)
FBIS ~OREIGN BROADCAS~ INFORMATION ~ERVICE _
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- JPRS L/8915
~
11 February 1980
WEST EUROPE REPORT
SCIENCE AND TECHNO~OGY
(FOUO 2/80)
CONTENTS PAGE -
FEDERAL REPUBLIC OF GE~MANY
Government Support for R&D in Small, Medium-Sized Firms
(RATIONALISI~UNG, Nos 11, 12, 1979) 1
Fin~.ncial Support, by Hans-Dieter Steguweit
Dissemination of Information
Overview of Prospects, Policies for R&D, Industri.al Growth
_ (Friedrich Bischoff; RATIONALISIII~IJI~G, No 11, 1979). 11
Prospects For Microelectronics in Machine Tool Industry
(Walter Menges; RATIONALISIERUNG, Oct 79) 23
NORWAY
Secondary Qil Recovery l~.ethods in Use in North Sea Fields -
- ( NORSK OLJ~EVY, Nos 9-10, 1.979 ) . � . . . . . . . . . . . . . . . . . 32
- a -
[III - WE - 151 S&T FOUO]
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- FEDERAL REPUBLIC OF GERrIANY _
GOVERNMENT SUPPORT FOR R&D IN SMALL, MEDIUM-SIZED FIRMS
Financial Support
Munich RATIONALISIERUNG in German No 11/19 pp 272-274,283
~Article by Hans-Dieter Steguweit: "Subsidies to the ~osts for Research
Personnel"7
[Text] Small and mediu~-siaed enterpriaea of the producing aectors, whose
registered place of business ia in the Federal RepuL~lic of Ger~nanq, can now
be granted contributions to the expenditnres on pereonnel eiigaged in research
and development (Rb~D). Applicationa for aubaidieg appropriated in Zhe 1979
Federal Budget and computed on the basis of the preceding year ~1978) must
be received by 30 September (final date!). The following account presenta
the most i.mportant details.l
The subsidies are intended to boost the efficiency and competitivenese of
small and medium-sized enterprises of the producfng sectors by enabling them ~
to consolidate and increase the number of pexsonr.el engaged in research an~
development and thns to create the precenditions for proc3uction and process ~
innovationa. The aroducing aectors include: The manufacturing induatry, _
the building trade, the energy and water supply sector, and the mining in-
dustry.
In the small and medium-sized enterprises of ~erman ind~stry, aalaries an3
wages account for approximately two-thirds of the research and development
costs. At least every fourth of the enterprisps in the manufacturing in- _
dustry employing few~2r than 1,000 workera--i.e. approximatelq 10,000 small
and medium-sized enterpsises--is engaged.in reaearch and developmentv The
new measure is to cloae a gap in the syatem of technological eupport meas-
ures in industry--a ga~ that remained after last year~s introduction nf a
- 30-percent contribution to contractnal reeearch and after the sizeable in-
crease in the contribution to research and development investments~ Table 1
presents a synopsis of all measurea in auppox~t of research and technology ~
in small and mediwn-sized enterpris~e.
1. Even though the deadline (end of September) for applications for cost
contributions for 1978 passed, the following account ie published here,
aince it provfdea an overview of lthe pertinent problema df 1979. `
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- Enterprises Entitled to Support
According to the "R&D Personnel" Guideline, an eaterprise of the producing '
sectors is entitled to applq for support, if it meets the following three
- preconditions: -
--During the last 3 years, its average turnover musi: not have exceeded
DM 150 million, or it muat have employed fewer than 1,000 workers. It is
sufficient, if one of theae conditions is met.
t
--No enterprise(s) with a turnover exceeding DM 150 million r~ay have a con-
trolling interest--directlq or indirectly--in the f~rm concerned, nor may
a holding company have a controlling interest, if the holding company on
its part has a controlling interest in an enterprise with an annual turn-
over exceeding DM 150 million.
--For the preceding year, the enterprise must furnish proof of research and
development work aimed at developing technologically new or improved pro-
_ ducts Qr processes with the object of improving the economic efficiency
- of the applicant enterprise.
Although the subsidy is computed on ths basia of the expenditures of the
preceding calendar year, it is not a subsequent compensation for the pre-
ceding year, but a contribution to the ezpenditures of the current y~ .r.
- Amount of the Contribution
The maximum subsidy paid per year and enterprise is DM 400,000. In order
. to provid~ a relatively stronger incentive for enterprises with an ae }ret
- underdeveloped research and devtlopment program--i.e. for the amaller enter~
- prises in particular~-the first DM 300,GQ0 of salaries and wages �or R&D
personnel are sub:idized through a 40-percent contribution, whereas for the
further expenditures (up to a total cost of DM 1.,420,OG0) the su~sidy amounts
to a mere 25 percent. As regards the respective expenditurea nf enterprises _
in Berlin, the higher allc?wance rate of 40 percent is applied throughout.
- For the3e enterprises, the maximum subsidy granted per year and entezprise
amounts to DM 500,000. To ob~tain this maximum amount, the Bcrlin enter-
prises must furnish proof nf having paid out taycable gross R&D wages and
salaries totaling DM 1,250,000. _
Calculation of the Contribution .
_ As for the calculation of the co nGribution, only the taxable gross wagea
and salaries--not the total labor coats--are take~ into coneideration; in-
- cidental personnel expenditures are not included. The Federal Government
estimates that on average the taxable gross ealariea and wages account for
_ approximately 80 percent of the labor coets. -
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_ Table 1. Measures in Support of. Research,
Development and Innovation K~y:
- - 1. Innovaxion phase
1~ Ncue� 2~ 3) 2. Research and development
runga- Forschu~ig Prototypen Produktiom- 3 Prototypes and demonstra-
y:itir_ ~~~~d~ und und Dcmom ~ufnahmc ~
i:a~~~- Ent~~icklung s~rdc~o~s- ~~a +t~rk~- tion installations
run~.nin- anlagc? cinfuhrung 4. St8Tt of production, market- -
~trumentc ing
~Projrktfordcrung $ ~ 5. IZbcI) 611ppOTt measures
d~~ ~ntrT _ 6. Pro ject support by the Feder-
~F:r�,tinnovations- 81 Ministry for Research and
proE.ramm TechnoloBY
~t;~tw~~ 7. Original innovation program
~g)r~�~nn~,rn~�!~:~c- - (Federal Miniatry of Econom-
I ~ciri;lunc in Berl~n iCS~
; I H\t1V11 ~ .
8. Technical development in
~
z~~~n~.ti~~ z~ a~n Beriin (Federal Miniatry of
I Au(wcn~ungen ECC~IIOtIIiCB)
fur FuI:�Pcnona!
,ii~~W,; 9. Gor~tributions to expenditures
on R&D peraonnel ~Federal
lnvc~tition~� MiAistry of Economics)
. zul~gcn If3M1~)
_ - 10. Investment subaidiea (F.,der-
- ~�~,,:n~ w~~,n~,- al Miniatry of Finance)
= ~in~nzicrunRs-Gc~ 11. German Venture-Fi:~ancing Co.
~clltichaft I 1i~11 1 1 '
(Federal Ministry for R~-
Il~~ cnk~ ~i~in~ir~- i Technolo
I F p search and gq)
. .
_ ~ Programm ' . . . _ . . . .
~~�w,~~ 12. Capital resnurces support
~ I program ~Federal Ministry
13~nsvcrbilligt~, of E~onomics)
- langfristige Dar- 13~ Lang-term low-intert~t loans _
.
Ichen II{RP-Pro- '
grammci ~ (European Recoverq Pr~grame)
~14) ~ 14. Marketing of ~nergy-sav~i~g
~;.uktcinfuhrung ~ technologies and products
en~r~e~parender .
~c~}~n~~~~Fi~i~und (Mini.stry of Econamiy8~
t~ro~i~~;~~ itin~w~~ I 15. ContractuaZ research (Feder-
crtragtifor~chung . . ~ al Minietry for Research and
i ts!~t~~ r~ Technology) ,
� 16. Joint research (Federal
Gemeui+diaft~� Mi11i8tI'y ~f Economies) _
furschung
~Ei;~W;~ 17. Measurea in aupport of _
technology tranafer (Minis-
`1:iAnahmen zur ~
Ford~rung des C2)1 fOI Ites~arch and Techno-
?~~hno~o~i~- logy~ Miniacry of ~conomics, _
~r~~t~~rs Miniatry of Finance, Minis-
it~~ir~~, KMw', trq of Construction)
- y11F. 13~1F3W)
- 3
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A contribution can be granted only to that share o� the taxable gross sala-
ries and wages, which :.s paid--at an appropriate level of compensation-~for
actual research and developmert work (i~ research a~d development depart-
ments, design offices, laboratories, testing ahops, or at work placea spe-
cifically set up for such projecte). No~ ta be taken in*o conafderation are
the wages or salary of an employe~ who in the course o� 1 year was directly _
engaged in research and development for f.Ew~r than 40C~ hou-~s.
- To the extent that the employees are engaged in de~velapment work for other
enterprises or ir. development that is pr~rt of production projects of other :
enterprises, the costs incurred ma3? not be subsidized, for such projects
lack the typical entrepreneur~.al risk of research and development. In order
to prevent duplication of support, contributions cannot be granted to those
labor costs that are already being subsidized by agencies of the atate or of _
_ the European Cornmunity.
Appropriation Procedure
The Federal rlinistry of Economics has entrusted the Arbeitsgemeinschatt
Industrieller Forschungsvereinigungen e.V. [Working GroLp of Industriaa. Re-
search Associaticns, Registered Association] (AIF) with the implementation
of the support measures. Upon request, th~ AIF (5000 Cologne 51, Bayenthal-
guertel 23) gives out the guideline, an informative booklet and the applica-
tion forms. The application must be submitted by 30 September.. Since the
Federal Government in designing the forms restric~.ed itself to the ~ssentials,
it is hoped that in contrast to the Original ~nnovation Program the individual
- businessman will be able to handle the application proced�re without diffi-
- culty azd without any need for special advice. The AIF claime to have taken
th~ st~ps necessary to ensure rapid processing. According to the AIF, foi
the measurs to be effective i~ is essentiai that the subsidy b2 paid out
~ within a few weeks. .
According to the budget of the Federal Ministry of Econ~mics, DM 300 million
are available for th~ current year and the guidelines stipulate that the sub-
- sidies be taken from this fund. Since the Federal Government hold~ that due
to the lack of informative statistics no predictions can be made as t~ the
number of applicants and the volume of applications, it was decided that fo* -
the time being no entPrpri~e would have a legal claim to any subsidies. The
Federal Government pointed out, however, that there would be no annual "grey-
hound race, since for the measure to be effective ir. ~as essential that in ~
its resea-~h and development planning each of the qualified enterprises be
asaured of receiving support. Nevertheless, it is advisable to apply ~st an =
_ early date, since according to an Ifo [Inatitute for Economic Reaearch]
study the personnel expenses admitting of being subaidized are likely to ex-~
ceed DM 3 billion in 1979. ~
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' Table 2. Borderline Cases and Their Classifi~cation
Operation ~ Part of R&D Not Part of R&D
Systematic defini- Fornrulation of the idea at Search for idPas; routine,
tion of the desired hand; determina2ion of the genezal market observa-
characteristics oi potential demand for the tion -
_ a product/process technic4l i~ea defined;
planning of r&d work _
Search for solu- Patent and literature re- Routine utilization
tions search; search for suitable and processing of scien-
materials and equipment; tific and technological
analysis and evaluation of informatfon, inclusive of
alternatives observation of certain _
patent classes, unless
this observation is car-
ried out exclusively for
certain r&d p~ojects
- Planning and de- Designing of prototypes Deaigning and manufacture
vel.opment of the or test ine~allations and of the toole necessary
solution intended of the special tools ne- for production; design of
cessary for their produc- tfie end product; advance
tion and testirg product~on planning (op-
erations sche:uling)
' Prototypes or test Produ~tion, teeting with Test quantity production;
- installations for a all tnodificationa required routine inapections and _
production pracess until all essential ~per- quality controls
ational featvrea of t'~e
planned product/procPss _
are developed
Adap~.ation Development work in con- Work concerning th~ smooth
nectfon with the trans- organization ef production
- fer of technologiss to or control; orgenizational
another production scale; changes are not part of
in connection with the r&d, even if they are ne-
tranafer of new technolo- cesattat~ed by the intro-
~ gies conc~rning the adap- duction of new technolo-
tation of exieting pso- gical systems
: ducts to another/new field
of application or concern-
ing the adaptation of pro-
duction processes
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Table 2 (cont.)
Oreration Part of R&D Not Part of R&D
Additional develop- Work in connection wif.h Work cuncerning the '
ment work subsequent technical improvements of smooth or~an4zation of
to start of produc- the product or process with p~oduction or control;
tion the object of attaining the quality controls; -
r&d objective defined elimination of produc-
tion snags
Patent and license Work in connection with the Work concerning the
work obtainment of indus~rial protection of patent
rights (patezts, registered rights and the sale or -
designs) for the solution licensing of the know-
found, including patent how acquired
application
Statement of Expenses
The documentation required in support of the application includes the appli- ,
catio:i form and a statement of the r.esesrch and development personnel ex-
penses admitting of subsidization. In the enterprises, every emplayee who `
is not exclusively engaged in research and development and whoee work is to
be subsidized must ~ceep a record flf the hours apent on research and develop-
ment. At the end of the year, the respective hours of the various employees _
- are to be entered along with thQ respective wage or sal+sry amounts in a _
comprehensive voucher.
This voucher must be certified by a certified public accountant or tax
advisor. The certification does not extend to the necessity of the research
and development work or eo the material substance of the work perio~-med. _
~ The G.P.A. or tax advfsor merely confirms--on the basis of the com~:any's
records and books--the accuracy of the objective data.
As regarda the statement of personnel eap~nses for 1978 and 1979, there
apply less stringent, provisional regulationas A"conscientious eatimate, '
combined with a detailed, but brief description of the research and develop-
ment work of each employee" ia sufficient.
Work Admitting of Subsidization
~ Sinc~ in the individual case the delimitation of operations admitting c+f
au~baidization can be quite difficult, the Federal Government aupplemented
the "R&D Personnel" Guideline with a commentary; a catslog (Table 2) indi-
cates which of the individual operations are part of reaearch and develop-
m,ent and which are not. The Government proceeds from the assumption that _
6
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any work can be considered to be part of research and development, if it
, aims to
--gain new scientific er technical knsywledge and general experience;
--develop new products or production processea;
= --further develop producta or production processea, insofar as significant
modifications of theae producta or processea are desired.
Development is defined as systematic evaluation and applic~stion of research
results and experience of a primarily technical-economic nature with the
- object of obtaining new syatems, processes, mraterials. products and equip-
ment (new development) or of improving exist:-.ng ones (further development).
Testing (prototypes: Pilot-, dem~nstration- or zeference installatfons)
intended to determine the characteristics as defined by the development ob-
jective is part of development.
Taxation
Like other forms of state financial support, the contirAbutiona to r~d per-
sonnel ~xpensea are taxable. Thue the liquidity booat intended through the
subsidies is diminished conaiderably. Upon deductiot~ of the current profits
taxes (corporstion profxts tax or income tax and chnrch tax, and in addi-
- tion a 15- to 20-perce~t tax on trade returna) and of the nondedt~ctible
property tax burden for aeveral years, what remaine of the subeidy amounts
to no more than 25 percent. Consequently, in terms of txxation, bank cred-
- its can be more advantageous, since they are treated as re~ayable loans.
To be sure, such loans bear interest and as a permanent debt they may be
subject to trade tax. However, the tax prepayments for the contributiens to
r&d personnel expensea must likewise be financed, and from a calculation
point of view, interest must be assessed.
The situation iu di.fferent, if a bank credit fs denied on account of the
enterprise's insufficient productive capacity ar the lack of securities.
Under these circumstances, r&d aubsidies are the only alternative. Support
' will be denied only if at the time of application the enterprise has become
inso:~.vent or if bankruptcy, settlement or execution proceedingc~ h~ve been
, institutPd.
All in all, th~ new suFport program enables numerous smali and mediwn-sized
enterprises to meet the rapidly increasin~ peraonnel expensea in the field
of research and development. Among the obvioua ben~fits are the unbureau-
cratic processing of the support applicationa--Whicll is handled by a aelf-
help organization of industry--and the absence of ah~y foxm of invsatment
control: Through its c~ntribution to personnel exp~nsea, the atate rewarde
the performance of the enterprises irrespective of whether the respective
_ proceases or results are consi~ered promiaing or economically valuable.
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Dissemination of Information
Munich RATIONALISIERUNG in German No 12/79, pp 312,313
[Text] The Working Group for Innovation, Technology Transfer and the Na-
tional Economy continues to concentrate its activity on the p~lot project
= ~ntitled /technology transfer for small and medium-sized enterprises/~words _
- in italics]. For the purpose cf supplemer?ting and supporting thie project, -
the Federal Ministry of Economics in 1978 established the project entitled _
- /promotion of the innovation efforts of small and medium-sized industria2
enterprises through systematic innovation counseling/ [gassage in italics].
The project focuses on the needs of the enterprises counseled. In contrast
' to the so-called "technology push" that has f~r some time been practiced by
some information producers, the emphasis in RKW [~fficiency Board of German _
Industry] project work is decidecily on "demand pull." So far, this demand-
oriented attitude has proved successful.
The project includes the following key elements: Analysia of problems in
~ the enLerprises; determination of the need for external know-how; demonstra-
tion of potential solutions; establishment of contacts; advisory support of
the enterprisea' cooperation with problem solvers and suppliers of know- -
how. The experience gained so far has shown that first and foremost there
is a transfer of know-how, whereas the transfer of can;plete technologies
remains the exception. For this reason, technological counseling ahould
almost alWays be part of a more comprehensive inr.ovation counseling.
On the basis of this realization, there developed the /demand-or?ented, in-
tegrated technological and innovation counseling/ Cpgssage in italics] which
comprises technological, economic and social aspects in the introduction of
new technologiES iu small and medium-sized enterprises.
The results obtained testify to rhe necessity and the acceptance of the
innovation measures in the enterprises. The RKW concept of demand-oriented
integrated technological and innovation counseling as a support measure
aimed at promoting self-help has been accepted. The experience gained in
the project is based on contacts with approximately 500 enterprisea and on
over 50 consultations with external specialists. The areas of main emphasis
are the following:
--Examination of the enterprises and determination of the need for know- '
how including the search for and referral to external specia"Lists and the
development of enterprise-specific fnnovation strategiea;
--advice on state supoort measures, referral to appropriate support agen- I!~
cies, and assessment of the acceptance of the state measures; '
--suggestions to the know-how institutions in regard to demand-oriented, ;
focal RF~ areas. ,
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During the consultations with outside experts, there emerged tWO areas of
special emphasis:
a) Intensive technological counseling;
b) counseling on market research.
An overl.y narraw restriction to technological problems did not prove ex- _
pedier~t in practical work. /For innovation counseling to be effective it
is essential that an attitude conducive to innov~tion be established in the
- enterprise/ [passage in italics]. =
The innovation con~ultants help re3uce the operational risk which in the
field of techr_ological innovation is considerable.
The future areas of main emphasis in technological and innovation counseling
will be the follo~ing:
--Intensification and complementation of the counseling work; `
--following up on the results prodaced through counseling; ~
--passin6 on to the support organizations recommendations concerning the _
further developmetit of the inn~vation support programs;
--development of propo~als for somc~ kind of innovation counseling as an
, RKW service.
In the introduction of n~~ techn.ologies and in the development of product
and process innovations, the t~chnological and innovational consulrai:ts take
into account the social consequences. In individual cases, positi~~p effects -
can be demonstrated. However, on account of the fact that the project has
b~en operating only for a short time it is not yet possible to make ~ de-
finitive evaluation.
~ Nevertheless, a number of conclusions c~n be drawn at this point: ~
- Individualized technical-economic counseling is feasible, as are trai~afers -
of technology. It is un2ikely that this individualized infarmation can be
offere~ to the recipient enterprises as a freely financed service. a cost-
recovering imposition of fees ~rill probably always be feasible only after
the attainment of the phase during which the concrete (technical, technical-
economic or economic) counseling is arranged by a thix'd party.
Complementary Measures -
As is evidenced by over 1,000 referrals in the course of 1 year, the
"Innovations-Licenses-Patents" Information Service has proved a success.
The service has lately been used by foreign suppliers and cuatomers as well.
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The Federal Ministry of Economics also established e. public relatione pro-
ject~ Within the framewark of this project, the "Technology Transfer" pro- _
= ject of Che Federal Ministry for Research and Technology was exhibited at
the Hannover Fair, at the SYSTEMS 79 Exhibition and at the Stuttgar~
- IMvOTEK Exhibition. The visitors' great need for informatioc~ testified to
the appropriateness of theae measubes.
Another concern of the Workin~ Group is the transmission of general economic
information tc sma1L and med.ium-sized enterprises. A key element in this
activity is the WIRTSCHAFT AKTUELL in.formation service which is publiahed
bimonthly and which reports on economic changes in industry and in the labor
market, on finance and investment problems and on foreign markets.
Another element supporting this work is the Study Group for Overall Economic
Developments which was established approximately 3 years ago and from,which
emerged WIRTSCHAFT AKTUELL. The Study Group is made up of experts from the
follewing fields: Banking, economic research institutes, industry, minis-
tries, Federal agencies ~e.g. Federal Office for Statistics, Federal Office
- for Foreign Trade Information).
At its meetings, which for the most part are held twice a year, the Study _
Group deals above all with problems that are of interest to privately owned
industr~y. The following subjects have been discussed over the years:
--Labor market trends;
--intern~ediate technologies;
--energy policy trends;
, -�-structural changes.
On the basis of the makeup of ite membership and the resu~ting professional
expertise, the Study Group has taken on another project--'�~tructural Changes . -
in the German Economy."
COPYRIGHT: Copyright by Karl Hanser Verlag
8760
CSO: 3102
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F~DERAL REPUBLIC OF GERMANY
- CNERVIEW OF PROSPECTS, POLICIES FOR R&D, INDUSTRIAL GROW'IH
" Munich RATIONALISIERUNG in German No 11, 1979 pp 2b7-272
[Revi.sed version of a lecture by Ministerial Director Dr Friedrich Bischoff,
_ Bonn, delivered in Mannhei.m on 2 Februsry 1979 at the invitation of the
Dresdner Bank AG]
[Text] Fram the aspect of the nationa]. ecanomy we are particularly interest-
ed in the potential for innwation available in private enterprise, which
_ w:ill secure future grawth and employment. Are there any barriers ar obstac-
les obstructing the full development of this iimovative potential of our
econamy? Could and should the government lend a helping h~nd--aaid if so
where and haw (by the use of which tools)?
Successful innovation is largely a matter of management. Ar.d here let us
- not forget for even a single moment that management has became increasingly
difficult in the recent past. The grawing ~lynanism of markets and wor.ld
trade interrelatians, shorter proc~ct life cycles caupled with longer lesd
times, the unpredictability of the trends of exchange rates, OPEC price -
_ jwnps, the inflation of raw material prices--all these make business calcu-
lations extremely difficult. '
~,very businessman aclmowledges as one of his central principles that new
- products acquire a value only upan sale. Hawever bold an entrepre:leur may
be, he must also, ~d especially, be a man bent on safety. T'ktis sounds
like a paradox but is comprphensible once we consider Yhe challenges by
which he is confranted from the ranks of e~mployees, stockholders ~ud lending
institutions, his suppliers and the government. All of them rely an the
campany, expect it to yield income, return ~d taxes. As a xesult there is
the danger that risky ventures into neta markets, the coamitment to new tech-
_ nologies, the early tra~sfer of research and development may became a ga~-
ble and that necessary irmovations be impeded.
And yet econamic grawth means first ar~d foreqnost that future econ~ic scarci-
ties should be overcame by innovafiions. Economic development proceeds i~n -
the field of tension between "needs" gnd "scarce resources," primarily natu-
- ral resources: Raw materials and energy as well as manpo~w~er and its slcills.
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- Changes in the ratio of scarcity shift need structures and reveal bottle-
necks calling for innavations. Such bottlenecks are the propellant of inno-
vation. They must be consistently and systematically sought.
Resources such as clean sir and water, for exmmple, were taken granted for
many years because everyone believ~ed that their supply was limitless. At ~
- this time it i~ evident that they must already be co~ted a~ang the scarce
r~sources. Needs have changed as a consequence of the excessive drain on
water, the air, in fact our entire enviror~m~nt, by Fraste g~ses, wa~tes ~d -
po.llut~ts. The visible expression of this change is the emphasis on the
i~provement of the quality of life. Inc?ustries mal:ing available new waste
water technologies, developing concepts and processes to reduce and remove
_ wastes, offering law-emissicm process technologies--these are naw mwong the
industries enjoying the prospect of above av~erage grvwth rates. -
World Economic Developments... -
If we consider future bottlenecks the prime motive force for new approaches,
in fact concepts for econamic evolution as such, we will need cansistently
to orient business decisions to future demand structures and markets.
Economists are generally agreed that a forecast of the deveZopment of over-
all economic conditians mus t precede any attempt at esti.mating future needs
and demand structures. In view of the large role of exports in the German
- economy it is imperative especially to watch for changes in the world eco-
namic division of labor. Actually there is already a broad consensus regard-
ing the most vital trends: ~
1, So-called industrial threshold cauntries are in~creasingly in evidence
on the world market offering technologically simple industrial gooda. As a _
J conse~uence conditians for matuie srid high-intensive manufacture ~t hane
wiL' be more difficult.
' 2. The raw material countsies, in particular oil producers, ~re eager to
process their raw materials at home. Energy and monetary capital is in
abundance there. This threatens the cc~petitiveness of important energy in-
tensive or raw material processing indiastries--for ex~nple sectians of the
chemical industry.
3. Additional problems arise from the radical shifts in exchange rate ra-
tios, which rather abruptly reduced the international competitrveness of
wage cost sensitive product categories with mature technologies by compari-
son to lvw wage countries, but also of technology intensive product catego-
J ries vis- a-vis other industrial countries. Glaring consequences of this
trend may be observed in the steel and shipbuilding industries.
Even at home we are confronted with same difficulties and the need to make
s tructural adjustments:
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1. 1'he need to catch up with regard to goods and services, a phenamenon of =
- postwar reconstruction, has yielded to noticeable satiety especially in the
sector of c~urable consimmer goods. What demand there naw is fawrs goods of
excellent technical and design ~uality, usefulness and durability.
2. New needs--bet~er education, more canfortable hausing, a clean emtiroi~-
ment, re~reation and leisure facilities--have came to the fore. This _
_ amounts to a shift to new fields of the demand for goods and services. -
3. It is part of this shift in values (evident, for exmmple, in the emer- -
- gence of many citizen initiatxves) that industrial goods production and ~co-
nomic growth may no longer proceed at the expense of the enviro~nnent, public
- healtYi or at the hazard of future generations.
What are the consequences arising from these domestic ~?d general econom-
= ic shifts for the techn~ological development of tk~e G~iman econany?
What are the key issu~es for research and development? _
_ Where especially should the goverrmment assist and strengthen the research
_ and development efforts of busine: s?
Entrepreneurial Expec~ations...
_ We will be able to maintain our present strength on foreign markets only if
- we put even greater e~mphasis an advanced production techniques which require -
a gxeat deal of skill from the labor force. It is a plus for us that the
demand for such goods is botmd to rise substantially.-- The speesi-up of -
grawth in fuimerly less d~eveloped co~mtries raises the demand for the kind
of goods which we are well situat2d to supply. This holds true not only for
ind~strisl plant but also for technology-intensive cansumer goods.-- Hawever,
~ we will anly be able to reap the fruits of this development if we can main-
tain our present market share with regard to these goods. We are subject to
serious competition fram other highly industrialized ecanomies. In the long
~ � rtm our co~petitiveness will depend on whether we succeed in t~u~ning out a
_ sufficient volume of new and high quality products and processes in the tra-
ditianal sector of export goods.
Our economy is thus confronted with the task of securing for the future als~ -
its strong competitive status with respect to traditional irrvestment goods,
especially by the integration of modern data processing tecYmologies. Car -
ponents of this technology, ranging fran very specific sensors to micropro-
cessors, are gaining increasing importance for wide sectors of tl~e machine -
construction industry. If we wish to ~ain our large share of the ex}~ort mar-
ket for manufacturing plant, manufacturing technology camplete with integre-
ted data processin~ must be a key concern in our research ~d de~~elopment
efforts.
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r
Already the United States and J apan are ahead of us. In view of the grawing
_ importance of this sect~r a group of exper.ts was called in by the Federal
Mir.istry for Research and Technology to find out wheth~r it might be neces-
- sary to set up a special promotional program "manufacturing technology;' de-
~igned to help ~the manufacturing industry, machine and plant constructian -
- and equipment industry integrate the tecluiiques of microelectronics, sensor
tecl~ology and data processing in future-oriented products ~nd grocessing
- concepts able to hold their awn on the world market.l
The icmmense future ~mportance of this sector for aur economy is demonstrated
- by the results of a study carried out by the German Institute for Economic
Research on behalf of the machine irulustry research board. The institute
studied the effects of foreign d,emand for large-scale plant on output and -
etuployment in the Federal Republic of Geimany. The study was based on five
~ campleted projects of large-scale unit construction (ethylene plant, cement
- factory, desalination plant, pelleting plant, continuous casting plant).
The relevant results were as follaws:
The additional demand for large-scale plants with a contract value of
about DM500 million induced production effects to a total value of I~i1.7 bil-
~ lion in the industries involved.
Related tcs manpo~wer, the employment of a total of 15,000 pecyple, the
equivalent of 15,000 man years, was calculated.
Rslated to the total receipt of orders by large=scale plant constructian
f irms in 1977, ~a~mting to DM9.4 billion, the grosa production induced
- thereby was estimated at about DM32 billion and the effect on employment at
nearly 276,000 man years.
These results convey a good idea of the impact of large-scale plant construc-
tion and its products on output and employment.
_ As a leading i~~d.ustrial nation we must also tuxn our attention to the prob-
- lem of the poorer developing coimtries--not only for htananitarian reasans -
= and with an eye on long-term peace but also by reason of the econ~ic--
_ ecological consequences of poverty and overpopulatian.
As Lconanic References
Especially inportant tasks for the industrial coi.mtries include ecologically
srnmd agricultural development, effective pest control, the adjustmei~~~ of
traditianal and modern technologies to the pazticular needs of the develop-
ing countries as well as aid in the establis~mment of a viable infrastructure.
The ~se of modern solar and biotechnologies, for example, offers consider-
able innovation potentials for the German ecanomy. -
Even on the domestic market (despite a certain satiety of demand) we note
s~everal d~mand and bottleneck f.actors offering opportunities for innovatian,
for instance in the sector of durable consimmer goods.
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-
The sectar of energy supply and cons~ptian cantinues to display a con- -
siderable demand,for innova~ion and investment. Wide apen fields for inno-
vation iti the energy sector are mainly the wider eco~amic utilizatian of ,
solar energy, the further development o~ advanced coal technologies--coal
gasificatian and coal liquefaction--, the increased use of the principle of
the~al-pawer coupling in long disrance heatbng systems as well as the devel-
opment of i.mproved procedures for insulation ~d heat recovery. _
f Zn ~'1@ ffi@8 OI enviroi~er.to~ C:~II~i'vl `u`iC ~rC~'uiiulv~j% ivi u.z i,L2t,~�ti nn _
and support of legal regul~tians and assigr~?ents will have to advance furth-
er, so that business may be able to respond with the appropriate investrnents
and process changes. This develop~ment must start with low-emission produ.c- -
tion methods, control systems, purification processes for waste gases and
= waste water, the reprocessing of waste and te~chniques for noise abatement. ~
- a great deal of innova~tian is required in Yhe sector of housing moderni-
zation and urban canstruction. The potential of housing units requiring mo- _
dernizatian is estimated at 6 million. Raising the standard of housing is
a crucial task of social equalization.
Transportation tasks include the improvement of co~nuter service systems _
(such as demand-~ontrolled systems) as well as e�forts to reduce noise and
pollution ~issiQns caused by motor vehicles.
- New Accents in Research Aid
The Federal Government's research policy is already establishing clear key
points in all these sectors. ~y technological key progrmms, for exmmple in
the sector of energy research and energy technologies, the sectors raw mste-
rial supply, mariT?e research or envirorunental technologies, the Federal Gov-
ernment encourages especially those research snd development projects in the
economy, wY:ich
Help fu�rther develap the capacity offer of the economy in the matter of
challenging technologies, such as appears necessary in the long run with re-
gard to the world econamic division of labor;
Aim to conserve or discover resources, especially energy and raw materials;
- Result in techn~logies which reduce or acvoid adwrse side effects of ear- -
lier processes, for ex~mple on the environment or the workers involved;
Are geared to improve the accomplishment of public tasks and the infra-
- structure, especially in the sectors public health, the wdrk enviro~?ent,
_ nutrition, supply and disposal, co~nmications and transportatian. _
- The i.mple~mentation of2R&D projects is always a matter for the fizm itself.
Governacent assist~ce is granted only if the market economic forces are not
strong enough to launch the necessary r.esearch and development at all or at
the right time. This a~plies especially to R&D projects where
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- The scientific-tec:~elogical and ecanomic risk is high,
The financial camiitment is great, ~
The development is bound to take a li~ng ti.me, �
--DDemand is still insufficient.
Examples ~e ~he aid to ~he deveio~n~ af breede~ ~eact~~s ~.u. : rgl~ LCWFJY~r~
rature reactors, the en~couragement of the development of efficient gas ultra
centrifuges or the promotion of magnetic tracks and cat,in tra.ins.In 1976
55 percent of federal aid allocations for R&D in the sector of industry were
granted to 11 major R&D development sectians. This also u~onstrates tihat
_ the volume, complexity, financial c~nitment and risk of such pro~ects re- _
quire far reaching gavernment cooperation with large firms. _
Inclusian of the R&D Interests of Tiedi~? Size Fians...
Even mediimm and small fixms now enjoy m~y opportunities for help from the ~
technological key programs. The following statistics reveal some remarkable
facts:
1. In the period 1972-1977 the amoia?t of financial aid grar?ted to medi~ and
s~all firms by the EQrIFr [Federal Ministry for Research and Technology] quad-
nipled, rising fram I7M20 million to DM80 million. Firms with turnovers of
less than DM50 million got 80 percent of the ~;rants. In the smme period of
time aid to the business sector as a whole rose by only 13.7 percent.
" 2. In 1977 the 33~SFT sided 286 small and meditm? fiims, abaut 40 percent of
all recipients of allocatians in the business sector. -
3. The major paxt by far of the projects of small and medium fiiv,s receiving '
aid was related 'co application-oriented developm..~nts in the area of data
processing, electronics and physical technologies. ~
The analysis ~~f individual aid projects shaws that medi~ and sma11 fians
- may well do pianeering work. Aided werz, for exmmple, ultra sensitive mea-
suring devices to show up tra,ces of heavy metals in foods and waste ~?aters; ~
seduced-noise and safety-oriented operational devices; electronically con- _
trolled air conditioning and ventilation equipmen~; devices for heat recove-
ry in industrial furnaces and dryers; modern electranically controlled
- tracking f~rce systems. These exmmples demonstrate that the Federal Govern-
- ment's patronage in this sector also is increasingly oriented to economic
grawth geared to qual.itative criteria.
Despite these coaffiendable examples mediimm and small fiims frequently have
the tendency to accord priority to short-term development ~argets. It is,
after all, their str~ng point that they have the ability rapidly to adjust
products to changes in demand. At the same time their limited financial
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resources ccxnpel them to seek quick success for their praiucts. Mediimm arri
snall firms a=e therefore often inferior to their larger confreres wnen it
is a matter of sxplo~ ting promising innovations, Yet the short-term aa.ms of
r.esear~h and development to meet current mar?cet needs are among the chief
dangers to medii.an and small firms. They may fail early to recognize impend- -
ing structural changes or underesti.mate their conssquences. Often small
- and medi~mm firms are Lmprepared to deal with technological rewlutions. _
...By Taking Into Accoimt the Manpower UsPd in Research...
Even if the necessity of reorientatio~cz is recognized, firms often lack the .
necessary personnel for quickly coping with new and further developwents.
Especially at times of recession we may observe that many smaller fums re-
duce their 3evelopment expenditure and let go personnel in development de-
partments and laboratories. This attitude lessens the cou~etitive chance~
of inedii.mm and small firms. The Federal Governm~nt therefore set up a pro-
gr~n designed to equalize this structural wealuiess of scaall and medi~ firms
a-id to improve their opportunities for employing more scientific-technical
_ persormel in research and development. Since early this year all firms en- _
gaged in productian with turnovers nat exceeding llM150 millian or no more _
_ than 1,UU0 employees may ob;.ain F llowaa~ces for the wages and salaries paid -
to research and development persormel up to a ma~.im~ of 1~1400,U00 per an-
nwn. The Federal Goverrffient ~ias made available DM300 millian from tha 1979
budget for just that purpose. The allowance ~ounts to 40 percent for the
first DrS300,0U0 of doc~mmented wage and salary payments, 25 percent for ex- _
penditures in axcess thereof. To have this measure take effect this year
the allawances are granted on the basis of 1978 expenditures on research and
development. Firms interested in such grants should apply to the Associe-
tion of In~dustrial Itesearch Unions (pIF) in Cologne, which handles the ar-
rangements for the allowances on behalf of the govermuent.
By this aid measure the Federal Goverr~nt has created a new type of indirsct
- aid intended to complement the available supply of aid. _
llirect and indirect research aid complement ane ~other; they do not repre-
sent alteriiatives. Direct research and development subsidies are indicated -
especially when research and deveiopment pr.ojects are related to the easing
of potential bottleneck situations, such as in the area of raw material and
- energy supply. Here project-related financial aid is the most suitable ap-
~ proach to helping fix~s cope with technical-economic risks or compensate
_ them as the case may be. While direct aid starts with definite research pro-
jects proposed by firms, which fit in with existing technological key pro- _
grams , it is the aim of indirect aid by general incentives to exp~d th,e
financial scope for research $nd develop~ent. Indirect measures such as al-
lowances and talc concessions are therefore indicated especially when it is a
matter of quickly achieving a broad impact by ;~ay of the sid granted and to -
benefit many recipients simultaneously.
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P'ar that reason tr?e Federal Government has purposefully used indirect mea- :
' sures for the widest possible aid to nediLmm and sm~ll fiims. It also did s~
because in such firms quite often relatively small financial incentives are
- enough to balancP the utilizatien risk of research which, there, tends to be
cLose to the ground and oriented to quick ag~plication.
The allawazices for expenditures on research and development persormel men- -
tion~ed earlier are specifica:~ly designed Lc~ p~ov~..~ bia~. i.~c2.
~~='~s fQ= t~~
' modernization and imprwe~nt of productian stn?~tures in the sector of ine- _
di~ ~d small fiims. Improvements, though, were decided upon a7-so in the
area of the research 211awance as per article 4 of the irnestment allawance
1aca, These ~~provements emphasi2e aid to meditmm and small firms.
And Lasing of Larmarking
It was noted that the research aliow~?ce as earlier constitut?~ was claimed
primarily by large fix~s. As a result it tendecl to di.stort conpetition a~d
. encourage concentration. Consequently, in the course of working on its re-
search and technology concept the Fecleral GoverrIInent submitted draft legis-
lation which was enacted a~d took effect an 31 October 1978. T'his includes
the follvwing improvements for medi~ and small finns:
A raise in the rate of allawance to 20 percent coupl.ed with the simulta- -
neous ~xltroduction of an annual upper limit for the investment expenditures
_ enjoying the increase; this new provision will have the result of yielding
more benefits to small and medi~? firms whose expenditures on research eatid
development investments rarely exceed 7M500,000 per mnrnun.
The inclusion also of intangible activated assets (such as expenditure on _
patents, acquired lmow-haw); this is designed effectively to aid measures
for the improvement of the transfer of new te~hnolagical lmo~wledge to the
area of small and medi~mm ezterprises by offering financial i.ncentives. ;
Easing of the earmarking clause with respect to buildings, so that build-
ing modifications and e:~tensions should benefit nore than tkiey did in the
past. Up to now two thirds af a building had to be used exclusiv~ely for re-
search amd development to benefit; this is no-longer to be a hard a~ fast
rule. It is expected that this will lead to the inclusion of m:Jre small and
medi~ firn~s whose research and development dspaztrnents ~usually occupy anly
part of a building.
~ Cooperation With Researc~ Agencies...
In addition to the measures for the pranotion of research, development ar~d
- innovations in the fizms themselves the Federal Goverr~ent is much concerned _
ahout the transfer and dissemination of scientific-technological results, ex-
periences and skills from research to the econo~ic and public sectors i.n
order to improve products, processes and skilled services. Effective candi-
tions must be established fer the intensification of cr~unimications between
buyers and sellers of new knawledge and tecl~ologies. It is true that
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technology transfer has always largely proceeded on the basis of personal `
contacts between scientists and users. Yet it is necessary to e~mphasize
techiwi~gy transfer because obstacles to transfer and applicatiun tend to
delay or prevent the ex.change process.
, r'or wany smaller firnis assembly of their ow~ research anci developtnent ca~~
cities is offen not feasible fram the ecanomic standpoint. They will have
= to increasingly cooperate with outsicle research agencies. Also i~ the iix~s ~
awn reseazch and development departments do not have avai.lable the necessary
e.Ypertise in specialized fields such as data gr~cessi.~g and electronics, re-
search a~d development contracts are perfectly fitted to help them alo~g.
It i~ one of the pri.me concerns of the publicly supported Fraunhofer Society
- for th~ Pranotion of Applied Science e.V. [registered association] (FhG) to
" provide contract research services to medi~ and small fixms an~d ac3vise th~
about the use of new technologies and the mark,eting chances of new products. _
The FhG and its 25 associated ins titut~s boast many research aapacities for
application oriented contract research and development. Af,edi~? and small
f irms placing research and development contracts with the FhG may receive al-
lowances from the budget of the Federal riinister for Research and Technolo-
gy ~our~ting to a rebate of up t 3 60 percent of the contract stmm. The pro-
cedure for obtaining this allawance is free of red tape and fast.
The satisfactory experiences resulting fram this type of aid have encouraged
the Federal G~~verrmient further to activate cooperation bet~aeen meditmm and
small firms and research intensive agencies, an~d to broaden the liase of such
- cooperation. Since spring 1978 the government has beg~ to allocate subsi-
dies ~naunting to 30 percent of the contract su~ to general research and de-
velop~ent contracts con~cluded by such firms. In the very first year same
- 100 research and development cantracts received aid; the cantract v~olume in-
_ volv~ed mmaunted to about Dt485 million. We are certainly entitled to claim
that this measure was successful when we consider the fact that smaller firms
- submitted particularly many applications. Same 50 percent of applicatians
were received from firms with DM20 milli.on turnover per aruium and about
80 percent fram fums with less than DM50 millior, annual turnov~er.
Furthermora the major research facilities financed by the Federal Govex-c~ent
- ~d the Laender to a ratio of 90:10 provide lmaw-haw to many firn~s. Indus-
try profits especially fram the results of applied research and development
within the scope of cooperation in major projects. Even small and medi~
firos which do not cooperate with a major research orgenization may benefit
fran the know-how acquired there. Consequently the major resesrch racilities
have set up special offices which endeavor to encourage the use of their re-
search aazd development results and aim to be available for consultatian by
small and meditan fizms . _
In canjunction with the independent ~drninistrative organizations of science
and business the Federal Goverrmient al.so initiated addition8l transfer mea-
- sures: Special info~ation centers and tecYinology agen~cies were established
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to store, appraise and transfer existing technological tmowledge. Openings
were developed, differin; in their organizational, regional and technical
structure, in order to meet the requirements of potential clients and inter-
ested parties. The personal cammitment, the fiutd of analyses and contacts, _
the technical experiences and staffs are paramount in these agencies as in
technolQ~ transfer generally.
And Facilities for the Exchange of Experien~ces...
_ Jointly with the Laender and busizLess the Federal Goverr~ent provides an in-
- formation aid docimmentati~n program and thereby the prerequisites for better
access to scientific-tecYuiological data by the expansian of 16 technical in-
formation systems. Also plaiaie�3 is a"patent information centex." This is
designed to combine in the lcmg r~m the display af patent specificatians ~d
the study group patent evaluation (ARPAT) at the Fraunhofer Society, which -
doctmments publicly sponsored patents for buszness, and with the patent of- _
fice frir Geiman reseacch of the Fh~G, which aids independent inventors to tak.e
- out and sell patents.
Since s~er 1977 the Federal Ministry for Research and Technology has been
promoting a pilot project which set up sev~eral trm~sfer consultative offices.
The project is designed to help small an~d medi~ fiims especially to ~alyze
~ their tecYuiological requirements and seek out the possessors of appropriate
~aw-haw. The service may be called on ~ the Board for Rationalization of
the German Econamy (RKW) Land group offices in Fr~kfurt, Hannover, Saar-
bruecken and Stut:gart, and at the chmmbers of industry and trade in Koblenz,
~ Moenchengladbach, Siegen and Heidelberg. Also within the scope of the ~ilot
progrmm advice may be obtai.ned from the Berlin VDI technology center in mat-
- terns concerning tne application of microprocessors, the Berlin technology
agency ~d the ~;ast Bavarian Technology Transfer Institute in Regensburg.
The offers of infoimation by the innovatian consultativ~e offices foiaLd an im-
- mediate response pointing up the readiness of small and mediu~n fi=ms to
tacklE their vwn researcti and develapment provided they are ~sured of assist-
. ance and need n~ot carry all the risks inwlved. The Stuttgart RKW, for ex-
~ple, advised 179 firms in the period from July 1977 to May 1978. Deslt -
. with here were primarily questions ~baut new products and processes, informa-
tion on available grants, patent questions and help with licencing negotia-
tions, the search for types of cooperation and institutes handling contract
' research. The pilot projects are intended first of all to persu~tie the -
leading business organizatians of the need for innwation-oriented advice
and encourage them to take their awn initiatives. In the meanti.me we may
claim success for the govercwnent i.nitiative by virtue of the fact that some -
ch~bers of industry and co~rmerce have on thei.r awn accord established self-
financing advz.sory offices.
- For Project Realization
The transformation of research and developnent results into marlcetable pro-
ducts often calls for substantial im~estments in fixed and current assets,
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. which tend to place a cansiderable financial burden on small a~~d mediu~
finns in particular. Desibned to help the construction of appropriate pro-
duction facilities in these cases are especially the Wagnisfinanzier,angs-
Gesellschaft (WI'G) [Venture Financing Cc~mpany] which provides direct ircvest-
; ment capital and, in som~e sectors, the II2P [European Recover}~ Prc~gram] which
mal:es available law-interest loans. The first experiences of the WFG shaw
that 3ic3 fn?' tg~hnn_~giral ~nnovStiO[LS at cmall ~d medil~l f].Im.S inwlves
particular dit'ficulties and specific features. Such aid applies to new p~o-
ducts and procedures; marketing prospects here tend to be extremely uncertain
and marketing risks extremely great. Many products fail at the hurdle of
the necessary patent protection. i~ioxms and testing regu.lations may not be
caupatible or disadvantage the new product, thereby malcing its introduction
on the market even more difficult. Often the necessary basic capital re-
sources are lacking. Since its establishment in July 1975 the WF'G has co~a-
mitted itself to 20 inves~ents in small finus or new fixms for the purpose
of marl:eting a technological innovation. It has made available a total of
DP�117 million in capital funds. Currently WFG mar?agement planning is pro-
- viding for a dozen n~w investments per anrnmm. The build-up servi.ces of this
"venture financing" enterprise will be fully appre~iated by those who are
aware of the results of old established private capital inveatrnent companies
which, after a long prelimir_ary s`age, may have achieved possibly 10-15 in-
vest~ents in other camp~ies.
Progress No Longer an End in Itself
Admittedly the problems naw confronting the economy and the government with
re~ard t~c~ technological i:uzovations are not conf ined to finances . An in-
creasingly critical attitude to technical development may be observed ~ang
_ the public, especially the young. Many people naw expect technical develop-
ment to destroy the natural ernriror~ent, to threaten public health mZd jobs.
Just because we knaw that science and technology continue to be the guaran-
tors of prosperity in our country we are bound to seriously consider the po-
tential dangers of scientific-technological development to peoples jobs and
recreation. The Federal Minister for Research and Technology therefore be-
lieves it i.unperative to strengthen the process on discussion on technical
change and the problems related thereto, aiul to provide a broader basis for
this clialog by involving the major social groups. A beginning will be the
technological dialog which is designed in particular critically to discuss
the l;ey points and criteria of technological policy as well as the possible
consequences of the pranotion of technology. Such a dialog offers an oppor-
tunity for the sober discussion of technical developments with the social
groups concerned.
Within the framework of such a dialog we will also have to rephrase the
question about the meaning and the goals of the joint efforts of governanent
and business. This is all the more necessary because ihe public is in-
creasingly discussing the relation of econamic growth to working hours.
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We must learn to appreciate that our industrial productian method is based
on th~ rational use of resources and consequently realizes "lasting advan-
ces"; this also and primarily implies rising productivity. It woulci be most
inappropriate for us to obstruct such process innovations, and the attempt
would do us the utmost harm. In that case new tecl~ologies would simply be
purchased abroad. There is no alteanative to the use of technology. Indus-
tries and firms which fall behind in the developmQ~t of ?tet~ p3'~~t a~d
process concepts lose their international competitiv~ edge. In such cases
it is more sensible to seek entirely new fields of operation, future innova-
tiorl potentials, to ensure grawth and employment.
After a phase favori.ng the deffiand and supply of ma-inly material goods, d~
mand naw appears i.ncreasingly to shift to intangi:bles such as advanced edu-
cation, more leisure and self~realization accc~lished by service to others.
Undisclosed reserves aze most likely to be fo~.:nd in the services sector.
According to the United Nations Statistical Year Book, in the mid-1970's
the Federal Republic and Japan, at 27 percent and 24 percent respectively,
had the smallest percentage of services in the social proc~uct but the larg-
est percentaoe of industry at 45 percent and 37 percent respectively. There
is a considerable need to catch up in the sector "social servi.ces." It .
should also be gossible to obtain a cansensus ~d the appreciation that work-
ing hours should gradually be reduced and rises in productivity cautiously
transl ated into more leisure. It w-ill be a delicate matter to deteimine the
extent of these changes so that, o~n the one hand, we do not injure the cam- _
petitive capacity of aur economy and on the other keep unemployment within -
manageable limits.
Nobody has a ready prescripti~m for all the problems discussed; even the
governnental aid measures skntched ca~ only serve as orientatian and assist- -
ance to the firms awn innovative policye Yet the latter must receive gr~at-
er emphasis if we wish to r~aintain our opportimities in m1 increasingly com-
plex w~orld. "Irmovare ne~~�esse est" [irmovation is a necessity]: '~"his maxim
represents a permanent t-~.sk for our economy; the gwernment cannot afford to
slacken its efforts to rlrive home tllis challenge. -
FOOTNOTES
1. See G. FYiedrichs, "Use of Microprocessors," RATICNALISIERUNG No 29/1978,
- pp 157 ff and 9 ff, pp 207 ff; also Mengels/Rebel, "Microprocessor and
riachine Constr.~ction," RATIONAI~ISIERUNG No 4/1979, pp 87 ff, No 7/8/1979,
pp 185 ff, No 10/1978, pp 258 ff.
2. See pp 722 ff of this issue.
3. See RATIOIvALISIERUNG No 10/1979, col~.unn "Daily Reports fram the Federal
ri~nistry ~'or Science and Technology," pp 262.
COPYRIC~iT: Con;~x�i ~;ht b.; Karl Hanser Verlag
11698 22
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FEDERAL REPUBLIC OF GERMANY
PROSPECTS FOR MICROELECTRONICS IN MACHINE TOOL INDUSTRY
Munich RATIONALISIERUNG in German No 10, Oct 79 pp 258-261 -
[Article by Dipl Eng Walter Menges: "Microprocess~r and Machine Tool
Construction"]
[Text] In the first article under this title (No 4/79), the
role of microprocessors (y~p) as significant functional or
control elements of microcomputers (pc) was presented. In
the second article (No 7-8/79), examples were u~ed to show -
the areas of machine-tool construction where a penetration
_ by microelectronics (�E) is to be expected. In the present
(third and last) artic.le on the topic, an attempt is made
to quantitatively estimate the impact of microelectronics
on the technical area of machine-tool construction.
In the previous article of this series*, generalized system components which
are used in all machine-tool products were defined:
Class 1. Force reacting, generating and transmission systems, such as frames,
motors, axles, crank shafts, couplings, etc. -
Class 2. Mechanical. hydraulic, pneumatic, electrical (separate ar.d
combined) sense, sequence and control systems, such as cams, templates,
relays, etc.
Class 3. Electronic (information storage and processing systems), such as
hard-wire~ logic components of an elevator controller, a printing-press _
process computer aiid machine-tool controller.
To illustrate these ocice more, th~ components of a typical machine toul are
presented in Figure 1.
* Rationalisierung No 7-8, pp 185 ff
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r'uK ur~r~lc:i~,i. u~r: ULVLY
~ 1. Kraftsyst~m ~1 ~
. 3 5 c~~r.n (4;. ~9>
Nol r So~~ae~ 4d fpanen bt�ule
2 siororon~~ (6 ~
7 Mt~up
r--
SN I i~ r M~O~e1GW~M~a
_ I(ib~ 1 ~ + (11) ~ ,
~
' ~ ~ (21)
1 g ; ~ ~ ~
~ ; ~ ; ~ : , i
~ ~ i, ~~a~.,~~
Sten~tra~h~i I i lopncne rer~ ~i ~ kn�ej~ T
' . ~~~oiWy~ ~
~ i 1 i E
I ~ (2(~~ ~ f
).Inlmma~~on~- ;
2. M~0-und R~pd~ysl~m ~17 ~ ~ vuorDalunys~ystem ~
L - - - - - - - - - - - - J 22 )
_ Figure 1 Machine-tool system components
Key:
1. power system 12. servo output variable
2. motor 13. high-current section
3. spindel 14. interface control
4. frame t5. target value/present value comparison
5. work place 16. logic switc'nes
6. perturbations 17. control input variables
7. tool 18. target (reference) value -
- 8. carriage 19. sense and control system
= 9. present value 20. informati~n processing system
, 10. actuator 21. manual input
11. transducer 22. punched-tape input
Here it i.s immediately obvious that the power system components can never be ~
replaced by microelectronics. Their function is to transmit or absorb forces. ;
The situation is different with the second and third classes of system
components. The third class of components, of course, represents information
processing, thus, the actual electronics which operates at low current levels _
_ and, in the language of controls engineering, has the task of processing
input variables into command variables. The sense, sequence and control
= system is the high-current section. Here the command and control variables
- are transformed into output variables. This transformation is called inter-
_ face control, that is adapting the low-current information data to the high-
- current data or impulses which make it possible for the output transducers
such as positioning motors, hydraulic va.lves, etc, to carry out their functions. ;
= If one assumes that in the future the actual control, or information _
- processing section, can be replaced by microelectronics to the extent of
about 80 percent, then the interface control, tnat is the transformation _
section ahead of the sequence and control section, can be replaced only to
the extent of about 20 percent. ~
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If one simplities the consideration and combines tihe microelectronics
potential of both sections, the result is that, on the average, about 50
percent of the system can be replaced. The following consideration can be
added.
If the fractional value for the system components of classes 2 and 3, thus -
the information processing components and the bu11c of the sense, sequence
and control system components, for representative products of the machine-
tool industry is available, then a model calculation is possible, using the
dbove derived estimate, which can predict the value of machine-tool parts
which can be replaced by microelec~ronics in the future.
- Fractional Value of the Sensing and Information Systems by Product Group
Estimates made of the fractional value of the system components approximating -
those of classes 2 and 3, based on the value of various products of the
- machine building industry, resulted in the values listed in Table l.
The listed percentage values af the estimates vary considerably in the
individual case. In elevator installations, for instance, the system
components related to information processing, sensing, sequencing and control
- can have a fractional value of up to 40 percent in exceptional case... -
_ If one breaks down the products used in the estimate into subsystems and
ratios the subsystem costs on product costs, then the percentages for the
subsystem component classes are:
Class 1. Power system 91%
_ Class 2. Sensing, sequencing and control system 6%
Class 3. Information processing (electronics) 3%
Manpower Consequences in Machine Construction
With the accounting parameters "total manpower expenditure" and "manpower
expenditure per product," it is easy to make a rough calculation of the
number of people involved in the manufacturing of the individual system
~ components.
Table 1. Fractional value of sensing, control and information processing
systems in products of the machine building industry
_ Up to 5% - Moving steel structures, such as rotating restaurants, traveling
_ platforms, steel hydraulic structures (dams, etc), large antennae
(radio telescope)
- Railway vehicles (cars)
- Mine and shaft conveyors _
- Dock and shipbuilding equipment
- Smelting equipment
- Compressors
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_ 6 to 15% - Printing presses
- Diesel engines
- - Cranes
- Transporting and conveying equipment (mining engineering) -
- - Oil and gas combustion systems
- Turbo compressors
- E~ectric trains
16 to 30% - Elevators
- Automated warehouse equipment (pallet stackers)
- NC machine tools
over 30% - Automatic instrumentation and test ~ystems (x-ray and ultra-
sonic systems) for steel structures, etc.
Considering product structure and converting to labor units, the fractional
- value of components in "sensing, sequencing and contrnl systems" corresponds
to about 5 percent manpower equivalent; and the iractional value of the
- subsystem ~omponents in "infor~iation processing systems," which contain
predominantly microelectronics, corresponds to about 3 percent labor equi-
valent. Compon~nts of these systems, of course, were formerly, and will
J also be in the future, purchased by special companies in the electronics
industry--up to 80 percent, estimated on the total fractional. value. ~
Including the 50 percent replacement'dsrived above, a computed 0.8 percent
of the jobs in the machine building industry will be affected.
= This means that through the introduction of microelectronics in machine
products not even 1 percent of the jobs, overall, is endangered.
Now, it has often been made to appear that such a displacement would happen
_ all at once. This absolutely does not refle~t reality. Rather, such a -
f undamental conversion from mechanical/electrical system components ta
- microelectronics requires a certain amount of time. In addition, many
interface system elements still require development; and afso the necessary
process of retraining workers must precede as a prerequisite to broad
realization. In the machine building industry, a time span of at least 5
years must be considered. At this point it should be pointed out once more
that with the advance of microelectronics technology, a progressive replace-
ment of "hardware" by "software" takes place, and the development of "soft-
ware" is extremely labor and time intensive.
If we introduce these S years into our model calculation and relate this to
the 0.8 percent total affected jobs just computed, the result is that by _
the inj2ction of microelectronics into machine products, a yearly total of
0.16 percent of jobs will be affected. -
A second aspect for study is the more economical manufacturing of products
or product components by use of microelectronic controlled processes, for
example, microprocessor controlled machine tools (CNC). The question here
is how many jobs will be lost di~e to the higher productivity of this new
. generation of machines. Let us make a model calculation here also.
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If one star.ts with the lathe, the most widely proliferated machine tool of
the machine building industry, anc~ considers the percentage of presently
used lathes which can reasonably be replaced by CNC machines and further
considers the average shift loading of these lathes, then studies show
that, overall, about 12.5 percent of current lathe ~obs will be lost by
introducing GNC machines. However, partly offsetting this is about 4.3
percent of new jobs which will be required in the application of the CNC -
machines (machine operators, riggers, programmers).
If the economizing potential for the lathe is carried over into a broader
model including milling, boring and similar machines; if it is assumed that
an equally high substitution effect is possible for these machines and a
- calculation is made for the entire German machine-building industry with an
inventory of about 68,000 machines, then the result is that in the machine
building industry of the FRG, about 8 percent of the industrial ~obs will
_ be affected during the conversion period by using this new technology. At
first glance, this appears to be high; however one must not forget that
these machines will be installed in the manufacturing plants over a period
of several years. Further, if the established conversion period of about 7
- years for a large German tool building firm is taken as the industry average,
then that means for the industry or its industrial workers that, because of
adopting these highly productive machines, annually about 1.1 percent of them ~
will have to loo'~c for other work, or that these jobs will no Ionger be filled-- -
which presents no problem in view of the fact that there is clearly a
shortage of skilled workers.
--If one combines the results of these two model calculations, that is the
substitution effect and the economizing effect, then it is realistic to _
expect that barely 1.3 percent of the jobs in the technical area of the
- machine building industry will be affected annually due to using micro-
electronics--however, one must keep sigi~t of the limited accuracy of such a
mo4~i calculation.
If one should, however, consider this level to be worrisome, then it should
. be considerP~i in the light of the folio*.:?ng:
--An acute shortage of skilled manpower prevails in the Ger.man metalworking
industry and will persist for the foreseeable future. For the business firms
selected for this study, it can be shown that, to date, not a single skilled
- worker has been put out of work because of the new machines. Instead, a
most pressing shortage of skilled workers has been somewhat mitigated by
this development.
Decisive for Competitiveness
The reason why there is no longer any need to fear that qual.ified workers _
will be put out of work by using this new technolugy but, to the contrsry,
the market strength, and thus the growth of the German machine building industry,
- can be improved is supported by the following example:
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In a main product area of a machine building company, careful studies have
been carried out over a period of several years to determine what factors
have led to the loss of contracts, especially against international competitors. �
- In recent time the factor of price has more and more turned out to be the
cause for loss of contract. Cnnsequently, studies were conducted to determine
the increase in contract volume as a function of decrease in price. The
result:
--In total, about 37 percent of available contracts were lost due solely to
pr~ce disadvantages.
--With a price about 15 percent lower than actually bid, contracts for about
13 percent more of the market could have been won. This lower price was not
acceptable, however, because it was significantly below the production cost.
Using the known structures of labor expenditure, labor costs, number employed i
and fractian of these products in the total market, one can roughly calculate
that the volume of contracts which could have been won at a bid 15 percent
lower than the competition would have produced 20 percent more jobs. -
Thus the assertion can be ventured that, through the improvement o� the
f unctional quality and the price/utility ratio of machine products by -
conscious redesign for the widest possible use of microelect;~onic system
components on the one hand and consistent use of microelectronic controlled
production machines on the other, the German machine building industry, in
spite of its higher labor cost level, can regain a position from which it _
can stop, and even reverse, the trend toward squeezing German products out
- of international markets.
_ Without including new products or additional possibilities through the use
of microelectronics, the results of this model calculation--of course, subject
to some ifs and buts--can be nresented as follows:
--Using microelectronics components in products on the one hand and for
manufacturing economies on the othei�,will affect about 1.3 percent of jobs
annuall,. At the same time, however, by an improved competitive capability
- driven by consistent application of microelectronics, the number of new ~obs
which can be created each year will be a multiple of this figure.
In order to realize an increase in contracts and to secure an increased share
of the market compared to the international competition, it is necessary to
integrate microelectronics into machine building products as fast as possible.
Only in this way can a lead over the international competition be achieved. -
The United States and Japan are already far out front in this field. Fast
reaction is thus necessary to realize the "pioneering profits," that is to -
extract substantial profits before the new technology has proliferated and
is taken over by low-wage countries which can offer the product~s at a much
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lower price than we can. We need these profits to protect our technology ~
edge, to finance additional investments~ especially education programs and
- development--in the end, to retain jobs in our country, yes, and to create
new jobs.
Qualitative Effects on Jobs -
Finally, the qualitattve effects of microelectronics on the manufacturing -
organization and its workers will be sketched briefly in the following.
- The application of electronics in computer technology has made possible the
_ amplification of human intelligence--until now, pr3marily through centralized
electronic data processing installations. The miniaturization of electronics
now makes possible decentralized intelligence amplification with its
- increased flexibility*. More and more, man will have to learn to interact
with computers, as he has already learned to interact with to.~lay's small,
hand-held F.lec:tronic calculator, especially in view of the fact that
programing languages is becoming ever simpler, thus simplifying handling
of the systems.
Ever greater latitude for operator interaction is made possi.ble by virtue of
the decentralized intelligence of manufacturing machines equipped with -
microprocessor control systems. Therewith, the i.ndividual capabilities of
man are better used than before. Th~ computer will become for him an indis-
pensable tool. Since man--here, the skilled worker--will once again be
put in a position to transmit his own knowledge and skill to the machine via ~
the intelligence-amplifying CNC control, the job will become more interesting
and the monotony will decrease.
The heretofore strong division of labor between programing and work queuing
on the one hand and job execution and machine control on the other can be
brought together again tn certain areas, such as single item or low-volume
production, right at the machine by using an integrated work process. The
result will be smaller organizational units in manufacturing with previously
- unknown flexibility. The master craftsman and foreman will finally be
relieved of the dubious task of factory schedule chasing and be forced back
into their neglected leadership functions.
This restructuring will only be successful, however, if the train~.ng of our
young and the further training of our experienced an3 older skilled workers
is attacked as soon as possible in every important aspect. It is important
to adapt the training and capabilities of the skilled workers to the new
requirements .nd to prepare them for their responsibilities. At the same
time, the conventional manager must learn to practice a style of management
* See Warnecke, H.J, et al: "Mikroelektronik ist unverzichtbar" ("Micro-
electronics Is Unavoidable"] in "Blick durch die Wirtschaft" ["A Survey of the
Economy"J 23 Ju1y, 1979
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in keeping with the times. A new type of interdisciplinary team worker with
high technical knowledge and dedication to the task is required to bring
about the restructuring of industrial practice. Naturally, the man/machine
system also requires finer tuning on both sides, and for this a basic analysis
of all relevant parameters as a function of quality and importance is
necessary.
This process must receive support to the end that control systems and -
computer processes are tailored to the needs of the users and operators.
Computer jargon and the mystic rites of IDV must be relegated to the past;
interaction with computerized control and with the computer must become
commonplace.
It is even foreseeable that the monetary value of microelectronics, both in
products of the machine building industry and in manufacturing, will become
- a relatively small percentage. However, microelectronics will assume a key
role in product function and in the economic manufacturing of product com-
- ponents. Also, in harnessing organizational processes such as manufacturing
control, microelectronics will make possible the attainment of completely
new horizons, a greater measure of economics and greater latitude for
decisions by workers.
' Conclusions
In sununary, it can be said:
- l. Microelectronics will assume in rhe future--although not in order of .
importance with respect to value--a key position in machine construction
mainly in relation to product improvement, to a lesser extent with respect
- to product innovation.
2. Replacemene of inechanics by electronics will naturally only take place ~
" with some time lag since the required change in thought and learning process
is just beginning; and, besides, the reliability of many composite mechanical-
- electronic subsystem must be improved. This does not mean, however, that
_ society can sit and wait for these developments, r~ather everything possible
must be done to accelerate this thought and learning process.
3. In specific areas such as the expansion of functions in conventional
- products, for example, automatic data acquisition and evaluation systems or
operator displays, etc, the application of microelectronics will take place
relatively fast. -
4. In the service and control field, from installations or processors to
complete manufacturing and production processes, completely new job areas
will be opened up through the use of microelectronics.
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5. Design, development and manufacturing will be meshed much more closely
than before due to the capabilities ~f microelectronics.
~ 6. Microelectronics will make it possible, through its role as a decentrali~ed
intelligence amplifier, to create a new flexibility in many operations which
~ also means work enrichment and increased productivity.
~ 7. The capability and willingness of, and opportunity for, our workforce
to train for jobs in the field of microelectronics in all areas affected
; b~ microelectronics will in the future take on a much more important meaning
than in the past as concerns the development of our economy. Here everything
~ possible must be done as quickly as possible to lay a broad base for these
_ activities. _
8. To create a panic with respect to the effect on existing jobs caused by
applying microelectronics and microprocessors in machine construction is to
' misinterpret the facts--if for no other reason, the structure of the product -
itself. To the contrary, the systematic, rapid and consistent integration
of microelectronics with all its possibilities is indispensible. This means, -
in particular, "social acceptance" toward removing existing distrust and
advancing this helpful technology.
It is necessary that the potentials and effects of microelectronics be
analyzed factually and constructively. The "Dialog on Technology Policy"
just introduced by the Minister for Research and Technology is an appropriate
vehicle for this--but it must not be a matter of endless discussion.
. COPYRIGHT: Copyright by Karl Hanser Verlag _
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- NORWAY
SECONDARY OIL RECOVERY METHODS IN USE IN NORTH SEA FIELDS
Oslo NORSK OLJEREVY in Norwegian Nos 9-10, 1979 pp 15, 16
[Excarpts] The secondary recovery methods which are treated in thia
article are all used in the United States, but the results are
_ extremely varying. ~'xperiences from the United States where the
reservoirs are well defined with an extenaive production and in3ection
history indicate that it is too optimistic to trust in an immediate
success for secondary recovery in the North Sea. But if today's or
the future's secondary recovery methods gain widespread use in the
North Sea and in addition are technically auccessful, this will have a
_ significant effect on oil production from the weJ.:i-known Norwegian
reservoirs in the years 1985-2000. Secondary recovery is planned in
more reservoirs in the North Sea, and the steadily increasing experi-
ence from the Ekofisk area is putting both companies and authorities in _
a better position to assess attempts Co increase the degree of recovery.
It is a fact that the best effect from secondary recovery is gained
- early in tr~e production phase. Therefore many of the companies which
are operators in the productive fields in the North Sea have evaluated
secondary recovery before the development plan has been worked out. -
Because secondary methods have equipment requirements, platforms and
building projects, besides, must be dimensioned accordingly. If
development plans do not include secondary recovery, it is both diffi-
cult and expensive to modify and expand the equipment for secondary
recovery.
The planning of secondary methods is based on estimates of the reser-
voir's volume of oil and estimated degree of recovery, and these
parameters ars often uncertain ear~y in the production phase. As long
as uncertainty prevails regarding the reservoirs' size, porasity,
permeability, fluid saturation and reaidual oil saturation, a technical
_ and economic analysis of inethods to increase recovery will be unreli-
able. Although we know the reservoir's size and behavior sufficiently _
well, the use of an advanced displacement method will remain a very
demanding pro~ect.
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As an example we can look closer at the water in~ection project which
started in the Forties Field in December 1976. This reaervoir has a
void content on the order of magnitude of 1.3�109 m3. In order to
achieve satisfactory displacement effectiveness, it is necessary to
inject a displacement cushion with a minimum volume of S percent of
the void content. For this reservoir we must accordingly have a
chemical fluid in the front with a volume of 65�106 m3. With a chemi-
cal concentration of ~ percent in the front fluid, there will be a need
for 3�109 kg of chemicals, and it will take 3 years to in~ect them.
In other words 3,000 tons of chemical per day are requir.ed. This is
more than the capacity of the largest plants which produce surface-
active chemicals. In order for chemical displacement to be a truly
applicable method in the North Sea, research efforts must be increased
in ciiemistry and reservoir technology for the puxpose of developing _
more effective injection fluids.
Several of the Norwegian fields in the North Sea have been ~lanned with `
secondary recovery by gas or water in~ection. The following gives a
- brief summary of the plans which are under consideration for individual
reservoirs.
Ekofisk: The gas produced for which there is no sales capacity is
injected into the reservoir, and according to the Oil Directorate this
is favorable for the degree of recovery. Since the injection started,
10 billion m3 (NTP) of gas has been injected. This, according to the
Oil Directorate's calculations, hss resulted in an increase in oil
recovery of about 10 million tons. Laboratory studies of gas displace-
ment under reservoir conditions have been conducted and indicate that
the natural miscibility of gas and oil results in effective displace-
ment of the oil.
Ekofisk is a limestone reservoir with a microscopic fissure system and -
water in~ection in this type of formation ie met with skepticism
- because one expects the breaking through of wster early in ths process.
At the same time calculations have shown that the degree of recovery
can be increased by pumping water into the reservoir. But several
problems arise in this connection: 1) The result is best if water
injection starts while the pressure is high. Now the pressure in
Ekofisk today is already far below the bubbling point, so that time
is quickly running out for this pro~ect. 2) Production at Ekofisk has
been planned with the relieving of pressure, which means that aeveral
platforms are necessary if one wants to inject water. 3) Investigations
thus far do not provide enough of a basis for estimating how effectively
it is poesible to diaplace oil by in~ecting water into the reservoir.
V-Ekofisk and Albuskjell are condensate fields where the degree of
recovery is high with the relieving of pressure. The degree of recovery
can be increased further by injecting amounts of gas of the magnitude of _
the amount~ of condensate produced.
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The Tor and Eldfisk reservoirs should both be potential candidates for
both gas and water injection, since the degree of recovery with the
relieving of pressure is expected to be low. A model study of water
- in~ection in Eldfisk indicates that the recoverable amount of oil can
be doubled.
When it is a question of secondary recovery by preasure maintenance and
gas displacement, one ought to estimate the degree of recovery for the
whole Ekofisk area. The wells should be closed in the ~il fields which
produce a large amount of gae, and rather cover the need for gas (for
sale and in~ection) by production from the condensate fields. This will
increase the degree of recovery far the Ekofisk area as a whole.
Frigg is a gas-bearing sandstone reservoir with a high degree of
recovery. An uncertainty factor is how atrong the inflow of water from
underlying formations will be. Reservoir studies indicate that the
degree of recovery will Se 90 percent if the water penetration is
limited, while it will be 60 percent if there is a strong inflow of
water. The reason for this is that the production of water will be so
great that the wells must be closed.
Statf~ord has been planned with secondary recovery from the start, with
water in~ection in the Brent Reservoir and gas in~ection in the under-.
lying Statf~ord Reservoir. The water will be injected in the botCom of
- the Brent Reservoir and the oil will be produced from a higher level.
Mobil assumes that 70 percent of the oil present wtll be displaced by
the w~ter front. Measurements in the laboratory have given a displace-
ment effect of 50 to 80 percent. T'he areal coverage and the contacC
factor haye been estimated at 0.85 so that the total degree of recovery -
~ will be (0.85)70 percent = 60 percent. Reservoirs are very often more
complex than the models which are used in calculations, so that the
- plans for the Statf~ord Field have been based on a degree of recovery -
like 50 percent. In the Statfjord formation gas will be injected at
- the top of the reservoir. The gas is naturally miscible with oil and
will displace all the oil it comes in contact with. It is however
_ difficult to estimate the areal coverage and contact factor for this
type of displacement. The well placement and production rate kill be
significant for the areal coverage in gas displacement. If the
_ Statfjord Field were Co be produced without secondary recovery, the _
degree of recovery would be on the order of magnitude of 25 to 30 per- -
cent. It is clear that the Statfjord Field is an excellent candidate
for chemical displacement, since the residual oil saturation after
water displacement is as high as 25 to 30 percent. If it ia possible by
chemical additions to remove this residual oil saturation entirely, the
~ reserves will increase by about 100 million tona of oil and 25 billion tn3
(NTP) of gas.
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Concluding Viewpoints
It is obvious that the use of secondary recovery methods is a field ~
which must be assessed very seriously in connection with the recovery
of petroleum on the Norwegian Shelf. These meChode ha~ve a potential
economic significance which is important. The fact that these methods -
have not been completely developed and are also not entirely understood
must not be a decisive argument for Norway's having no part in this
field of work. Much of the research which has been done has various
regional limitations. By far the major part has its starting point in
the reservoir in the United States. Only to a limited degree can the
conclusions be carried over to conditions of the North Sea. The
Norwegian contribution which is being made today to studies of secondary
recovery methods is being made at SINTEF [Society for Industrial and
Technical Research] in Trondheim. In part this has its basis in studies
of the fundamental mechanisms, and is based in part on displacement
experiments with water and added chemicals. At year's end begin experi-
ments with miscibility displacement in cooperation with the Institute
for Continental Shelf Investigations. These studies are forming the ,
foundation for Norway's contribution to important international research
cooperation taking place under the direction of IEA (International Energy
Agency in Paris).
It must be a minimum ob~ective that Norway have at its disposition
professional competence in secondary recovery methods. It must be
effective enough to be able to accompany the extensive research which
is being done internationally in this sector, and to develop it for use
~ on the Norwegian Shelf in cooperation with the oil companies. This
- presupposes term investments for both laboratory equipment and personnel,
- to an extent which permits the building of competence and recruitment as
needed. In today's situation Norwegian research environments have not
been provided opportunities for even approximately fulfilling such an ~
ob~ective.
COPYRIGHT: Ingeniorforlaget A/S, Oslo 1979
8985
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