Ibrahim Salamah bounced around Texas universities and colleges between 1963 and 1967, studying English language skills and geology and acquiring a masters degree in mathematics. He also got an earful from one of his teachers:
"Your future is plastics. That's what we're doing in Texas, and you'd be crazy not to do the same."Mr. Salamah is now managing director of Saudi Basic Industries Corp. and is busy proving his sanity by making plastics - more than 12 billion pounds of plastics last year alone.
SABIC also cranked out 1 million tons of steel bars and half a million tons of chemical fertilizers in 1986 - a total of 7.3 million tons of manufactured goods that yielded net profits of $80 million.
Mr. Salamah expects more plastics and profits this year as SABIC's nine world-scale petrochemical plants enter a second year of operations. Cheap feedstocks like natural gas and high demand are expected also to aid Texas plastics makers this year - a happy and somewhat unexpected coincidence.
Throughout the 1980s, petrochemical pundits have argued that even cheaper gas and ambitious building plans in Saudi Arabia, Canada and Mexico would push Texas plastics out of many world markets, forcing a major retrenchment of a crucial state industry.
Mexico's petrochemical ambitions were largely derailed by the country's debt crisis. Canada continues to press ahead.
The Saudis, too, stayed on schedule. They built petrochemical plants in equity partnerships with Shell, Mobil, Exxon, Texas Eastern, Celanese and other companies from Japan, South Korea and Finland. When Dow Chemical abandoned its stake in a Saudi ethylene plant, SABIC pressed ahead to finish the project on its own.
SABIC sells its share of production in 60 countries, including small amounts to the United States. SABIC and U.S. marketing specialists agree there has been no real pressure yet from the Saudis on U.S. producers in their home market. From the early planning days in the mid-1970s, the Saudis targeted plastics markets in Europe and Asia.
But those are important markets for U.S. petrochemical manufacturers as well. Exports have accounted for as much as 15 percent of U.S. production and were worth more than $10 billion in the boom year of 1980.
The fear among some Texans was that Saudi production would shut down some U.S. plants, particularly since U.S. firms in partnership with the Saudis would prefer to keep their new Saudi plants in operation over their older Texan ones.
"I don't know a single plant in Texas where that's happened," said a vice president with one U.S. firm working in Saudi Arabia. "Demand is so good right now, there's a market for everything that can be produced."
U.S. producers want to keep it that way. The Saudis face U.S. tariffs of 18 percent on their petrochemicals, and for several years Congress has threatened other duties to offset the low price of Saudi natural gas (50 cents a million BTUs or less than half the cost faced by U.S. producers).
Japanese producers did shut some of their petrochemical plants in order to shift production to Saudi Arabia. But European producers stayed clear of the Saudi petrochemical industry and have urged their governments to erect tariff barriers to keep Saudi plastics out of the European market.