Crompton Corporation
Address:
One American Lane
Greenwich, Connecticut 06831-2559
U.S.A.
Telephone: (203) 552-2000
Fax: (203) 552-2870
http://www.cromptoncorp.com
Statistics:
Public Company
Incorporated: 1999 as CK Witco Corporation
Employees: 8,612
Sales: $3.1 billion (1999)
Stock Exchanges: New York
Ticker Symbol: CK
NAIC: 325132 Synthetic Organic Dye and Pigment Manufacturing; 325199 All Other Basic Organic Chemical Manufacturing; 325212 Synthetic Rubber Manufacturing; 325320 Pesticide and Other Agricultural Chemical Manufacturing; 325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing; 333298 All Other Industrial Machinery Manufacturing
Company Perspectives:
With the merger of Crompton & Knowles and Witco, we have created a new global force in the chemical industry, a company with world-class product lines and service capabilities in polymer products and specialty chemicals. The superior service, technology and performance of our individual business units provide our customers with the tools to excel in their markets. As a result of the merger, our businesses have new products and services, new talent and knowledge, and new product development and production capability. The customer-focused cultures of both companies have been combined into a market-driven enterprise.
Key Dates:
1897: Two loom manufacturers merge to form Crompton & Knowles Loom Works.
1900: Crompton & Knowles Loom Works is incorporated.
1920: Wishnick-Tumpeer Chemical Company is founded as a chemical distributing concern.
1926: Wishnick is renamed Wishnick-Tumpeer Incorporated.
1935: Wishnick acquires its first overseas operation.
1939: Wishnick builds its first manufacturing plant, in Chicago.
1944: Wishnick is renamed Witco Chemical Incorporated.
1954: Crompton & Knowles acquires Althouse Chemical Company, expanding into the dye and chemical business.
1956: Crompton & Knowles Loom Works is renamed Crompton & Knowles Corporation (C & K).
1958: Witco goes public.
1960: C & K acquires Bates Chemical Company, maker of flavors, food colorings, and fragrances; Witco acquires Sonneborn Chemical and Refining Corporation.
1961: C & K acquires Davis-Standard Company, maker of plastic processing machinery.
1966: Witco purchases Argus Chemical Corporation, maker of polyvinyl chloride additives.
1969: C & K establishes its first European subsidiary, in Belgium.
1971: C & K purchases Ciba Chemical & Dyestuff Company.
1979: C & K acquires dye business of Du Pont.
1980: C & K acquires American Flavor & Fragrance Company.
1981: C & K exits loom manufacturing.
1985: Witco drops 'Chemical' from its name.
1992: Witco acquires Industrial Chemicals and Natural Substances divisions of Schering AG.
1996: C & K acquires Uniroyal Chemical Corporation; Witco initiates a major restructuring.
1999: C & K and Witco merge to form CK Witco Corporation.
2000: Company changes its name to Crompton Corporation.
Company History:
Crompton Corporation is a specialty chemical manufacturer whose main operations involve the creation of additives, ingredients, and intermediates that are incorporated into the end products of the company's customers. Formed in 1999 from the merger of Crompton & Knowles Corporation and Witco Corporation, and briefly known as CK Witco Corporation, Crompton has three main business segments: polymer products, which include additives for plastics and rubber, urethane chemicals, polymers, and polymer processing equipment; organosilicones, which include intermediates used in such applications as fiberglass, polyurethane foam, textiles, coatings, adhesives, and sealants; and crop protection products, which include fungicides, insecticides, herbicides, seed treatments, and other agricultural chemicals. The company operates more than 50 manufacturing facilities in 20 countries and offers its product lines in 120 countries, with 43 percent of revenues originating outside the United States--28 percent from Europe alone.
C & K: Origins in Loom Manufacturing
Crompton & Knowles's roots lie in the cotton weaving industry, one of the first enterprises to be mechanized in western Europe in the late 18th century. William Crompton was a New England businessman who originated an improved loom, which he began manufacturing and marketing in the town of Worcester, Massachusetts, in 1837. For the next four decades, Crompton Loom Works was practically without competitors, and it steadily prospered. Toward the end of this exclusive reign, Lucius J. Knowles, another New England businessman, developed an improved version of the textile loom in 1862, whereupon he, too, established his own company, L.J. Knowles & Bros., in the town of Warren, Massachusetts.
There was no bad blood between the two competitors until 1879, when Knowles decided to move his manufacturing establishment to Crompton's hometown of Worcester. The next 18 years witnessed fierce rivalry between the two firms, both of which meanwhile developed many improvements in their respective looms, perhaps because of the intense pressure of competition. Finally, in 1897, the two companies took the surprising but sensible step of merging into Crompton & Knowles Loom Works, which was incorporated in 1900. The new company prospered and expanded; by 1907 it had opened offices and warehouses in Philadelphia and in Charlotte, North Carolina. In time, Crompton & Knowles, whose mainstay was the manufacture and marketing of the textile loom, became renowned for the production of multicolor weaving machines, which were exported all over the world. By World War II, the company was one of the largest textile machinery manufacturers in the world.
Meanwhile, the Neversink Dyeing Company, a business that would add an important dimension to the Crompton & Knowles firm in future decades, operated in Reading, Pennsylvania. Founded by Nathan Althouse, this company became one of the biggest textile dyeing facilities in the nation by World War I. Unfortunately, as the war in Europe progressed, the company increasingly was deprived of dyestuffs. To relieve this crisis, the firm began manufacturing its own dyes. By the end of the war, the company had changed so much that it adopted a new name, the Althouse Chemical Company, and thereafter it emphasized research into new and improved dye products for natural textiles as well as for the increasingly popular synthetic fabrics.
Crompton & Knowles Loom Works continued to produce and sell its famous textile machines until the advent of World War II, when traditional production gave way to fulfilling military needs. With the return to civilian production in 1945, Crompton & Knowles's workforce stood at 3,000. The company continued to manufacture its textile machines well into the early 1950s.
1950s Through Early 1980s: The Diversifying of C & K
While there was still strong demand for the textile machinery in the early 1950s, it became apparent that the company's future success depended on diversification rather than reliance on only one major commercial product. In 1954 the firm branched off into the dye and chemical business with the purchase of the Althouse Chemical Company. The purchase laid the foundations for the manufacture of dyestuffs, which eventually would become the company's most important enterprise.
Crompton & Knowles continued to manufacture textile weaving machines, and through most of the 1960s the textile machinery division was the company's biggest in terms of sales revenues. Diversification continued, however, and other enterprises gradually dwarfed the textile machinery business. The process drastically altered the company's identity and size. In 1956 stockholders changed the name of the company from Crompton & Knowles Loom Works to Crompton & Knowles Corporation; the company ceased manufacturing textile looms altogether by 1981.
Further expansion took place in 1969, when Crompton & Knowles established its first European subsidiary, Crompton & Knowles Tertre, a dye and chemical company in Belgium; this was followed in 1971 with the acquisition from Ciba Chemical & Dyestuff Company of Intracolor, another dye and chemical enterprise that further strengthened Crompton & Knowles's dye manufacturing base. Seven years later, the company bought the dye business of Harshaw Chemical Company, based in Lowell, North Carolina.
When the Du Pont Company exited the dye business in 1979, Crompton & Knowles was waiting eagerly in the wings to purchase its holdings, which included the high-quality Sevron dye products. The range of Crompton & Knowles's dyestuffs expanded significantly. Two years later, the company bought the rights from the Du Pont Company to manufacture Dybln dyes for polyester and cotton textiles. Crompton & Knowles acquired and absorbed other dye and chemical businesses, becoming in the process a leader in the domestic dye business. The company's dye and chemical business had expanded so much that, by the early 1980s, Crompton & Knowles supplied dyes and chemicals to a variety of industries including paper, leather, printing ink, and heat transfer printing establishments, in addition to the textile and garment industry.
Over the years, dye and chemical operations became the company's biggest division and its mainstay. In 1960, the company diversified further into the manufacture of flavors, food colorings, and fragrances for the food processing and drug industries, the company's second major operation. In that year, Crompton & Knowles acquired the Bates Chemical Company, founded in 1923 when the federal government first certified food colorings. Crompton & Knowles expanded even further in this direction when it acquired the American Flavor & Fragrance Company in 1980.
A third significant operation was added to the company in 1961 with the purchase of the Davis-Standard Company, a major manufacturer of plastic processing, or extrusion, machinery and systems, marking the origins of Crompton & Knowles's extrusion machinery business. This purchase added a great variety of products to Crompton & Knowles's inventory. Within two decades, the company had not only survived but altered its identity significantly, expanding from the production of only one major commercial product, to hundreds of diverse products and three principal operations.
Mid-1980s Through Mid-1990s: Further Expansion and International Growth at C & K
By the mid-1980s, Crompton & Knowles was one of the last remaining U.S. dye producers and marketers, and one of the largest, marketing its products to Europe, Latin America, and Asia. It was also a leading provider of dyes to the clothing and hosiery businesses in North America. How and why this company succeeded--increasing sales revenues 15 percent during the worst year of the recession in the early 1990s--had much to do with the dynamic leadership of President and CEO Vincent Calarco. When he came on board in 1985, having previously headed the specialty chemical division of Uniroyal Inc., the company had not fully recovered from the economic downturn of the early 1980s. Calarco expanded the company's business by buying up dye operations that large companies, such as Du Pont and Allied Chemical, were unloading. By the early 1990s, Crompton & Knowles had a healthy eight percent share of the worldwide market in dye products and had strengthened its own dye business, especially in carpeting and clothing. Moreover, Crompton & Knowles became the sole producer of at least 40 percent of its own dye products, making it the most influential dyestuff producer and marketer in North America. Under Calarco's management, the firm also became a major player in the flavor/fragrance market, following the 1988 acquisition of the Ingredients Technology Corp. of Pelhem, New York. At the same time, the company's specialty process equipment and controls division gradually moved out of the cable business and into the far more lucrative medical tubing, food packaging, and blow molding equipment fields, which were ignored or underestimated by bigger competitors. Calarco also led Crompton & Knowles further into international business endeavors.
By the early 1990s, 75 percent of Crompton & Knowles's sales came from its specialty chemicals division. The company had become the leading manufacturer of dyestuffs in North America, and it produced a variety of chemical intermediates (essential to the making of dyes) for the textile industry as well as a steady stream of artificial flavor, color, and fragrance ingredients to the food and drug industries. Approximately one quarter of Crompton & Knowles's sales derived from the specialty process equipment and controls division. Overseas expansion continued in the early 1990s, including the 1991 purchase of ICI Colours in Oissel, France, from a major British chemical firm. In one stroke, this acquisition doubled Crompton & Knowles's productive capacity in Europe, making the company a major player in the European dye and chemical markets. Worldwide sales of Crompton & Knowles's products in Latin America, Europe, and Asia soon reached record levels, constituting approximately one-third of sales revenues.
By 1995, sales at Crompton & Knowles had reached $665.5 million. The company surprised many industry observers the following year with a blockbuster acquisition. In August Crompton & Knowles spent about $365 million in stock and agreed to assume $1 billion in debt to take over Uniroyal Chemical Corporation, the former specialty chemical division of Uniroyal. Uniroyal Chemical, which had 1995 revenues of $1.1 billion, had been having difficulty servicing its large debt load, enabling Crompton & Knowles to acquire the much larger company. Aside from the rarity of a smaller company swallowing a larger one, the deal also was unexpected because the two firms had little in common in terms of their product portfolios, with few opportunities for synergistic savings. Uniroyal Chemical's largest area of operation was in polymer products and rubber chemicals and additives; it also produced crop protection products, including fungicides, insecticides, and herbicides, as well as other specialty chemicals, such as lubricant additives. In one of the few synergies, Uniroyal's polymer product business served the same customers as Crompton & Knowles's polymer processing equipment operation. Calarco remained chairman and CEO of Crompton & Knowles following the purchase of the company he formerly headed.
In the immediate aftermath of the Uniroyal takeover, Crompton & Knowles concentrated on debt reduction; by the end of 1998, $400 million had been removed from the debt load. The company also expanded into new international markets, set up a joint venture in Mexico in 1998 to build a rubber plant, and made selective acquisitions, including the 1998 purchase of Betol Machinery, a U.K. maker of polymer processing equipment. In November 1998 the company sold a 50 percent interest in Gustafson, its North American seed treatment business, to Bayer Corporation for $180 million, thereby turning Gustafson into a joint venture of the two firms. Crompton & Knowles continued its full ownership of crop protection operations in international markets. In January 1999 the company exited from the specialty ingredients sector through the sale of that business to Chr. Hansen Holding A/S of Denmark for $103 million. Five months later Crompton & Knowles agreed to merge with Witco Corporation.
Witco's Roots and Early History
Witco was founded as Wishnick-Tumpeer Chemical Company by Robert I. Wishnick in association with brothers Julius and David Tumpeer. Wishnick was president, owning 51 percent of the company's shares, and was chairman emeritus of Witco until his death in 1980. It was Wishnick who shaped the company's growth and direction for over half its life. His two original partners, who together owned only 20 percent of the company's shares, sold their interest shortly after World War II.
Born in Koltchina, Russia, in 1892, Robert Wishnick came to the United States to join his father and oldest brother in 1896. At age seven he lost his right arm at the elbow after breaking it badly in a fall. This childhood accident seems only to have hardened Wishnick's determination to succeed in life. He put himself through school, earning one of the first degrees in chemical engineering from the Armour Institute of Technology, now the Illinois Institute of Technology. Then, employed days as a chemist, he worked toward a law degree, which he received in 1917 from Kent College of Law.
His first job with the American Magnesium Products Company brought near disaster to his employers, but ironically foretold the successful business strategy Wishnick would follow to bring Witco to its position in the chemical industry in the late 20th century. His company sold a floor wax that complemented its product line of magnasite floor materials. Wishnick, however, thought that the company should produce its own floor wax, rather than reselling floor wax originally purchased elsewhere. He had his own mixture of wax and turpentine on a burner when the telephone rang and drew him away. In his absence, the mixture boiled over and set the entire factory on fire, burning it to the ground. This may not have been the most auspicious of beginnings, but it demonstrated clearly Wishnick's drive for independence. From that time Wishnick continually strived to push Witco to self-sufficiency through manufacturing its own products.
In 1920, after working as a sales representative with A. Dager & Company for two years, Wishnick, with Julius Tumpeer, incorporated Wishnick-Tumpeer Chemical Company as a chemical distributing concern on East Illinois Street in Chicago. The company's largest market was in carbon black and various other coloring agents needed by Chicago's vigorous printing industry. Before the company was a year old, however, a recession set in and sales declined considerably. Wishnick responded by cutting costs wherever possible. He reduced his own salary, cut the company's profit margin, then worked to increase volume. These measures were successful and were used later to great effect whenever Witco suffered from changes in the market. Cost-cutting also helped the company record a profit during its first year, despite the recession.
In 1922 the company was able to buy a 20 percent interest in a carbon black plant in Swartz, Louisiana. Witco then marketed the product on a commission basis in its own area. In 1923 Wishnick felt it was time to expand further and asked Julius Tumpeer to head the company's first New York office, though Wishnick later replaced him.
Also in 1924, Wishnick-Tumpeer purchased its first manufacturing concern, Pioneer Asphalt Company in Lawrenceville, Illinois. By 1926 so much of the company's business was in asphalt products that the board elected to drop Chemical from the company name, making the new name simply Wishnick-Tumpeer Incorporated. The steady growth that had marked the company from its beginnings continued through the 1920s until the crash of 1929.
Once again, Wishnick and his company implemented cost-cutting measures. Wishnick reduced wages, salaries, and, of course, margins. This strategy worked again and the company managed to turn a profit in each year of the 1930s. During this time, cash flow was a severe problem, but Wishnick had a unique solution. Most of the company's cash flow problems were caused by its customers' late bill payments. Each month Wishnick made a special trip to the accounts payable departments of the company's major accounts. There he left a small gift of candy or flowers with the secretaries and politely suggested that his bill be moved from the bottom of the pile to the top where it could be paid as soon as possible.
In 1933 the company acquired another carbon black plant, which, after additional negotiations, led to Wishnick's formation of Continental Carbon Company in association with Continental Oil Company and Shamrock Oil and Gas Company. These two other concerns supplied the needed natural gas for carbon black production and Wishnick-Tumpeer became the exclusive sales agents for the new company.
In 1935 Wishnick's first overseas operation was created in Britain: the company acquired an interest in Harold A. Wilson & Company, a supplier of pigments to the United States. Eventually, the entire company was bought by Wishnick.
The company's last important move before World War II came in 1939, when it built its first chemical plant in Chicago to produce industrial chemicals and asphalt products. The war brought large amounts of business for Wishnick-Tumpeer, but it also led to problems of shortages and rationing. Most of the company's business was still in distribution, and at times Wishnick's suppliers were unable to deliver what was needed.
Witco's Postwar Transition to Manufacturing
As the war was ending, annual sales were at approximately $7.8 million. The company was larger than ever before, but its future was uncertain. Many of the larger chemical companies from which Wishnick was accustomed to buying were developing their own competing sales forces. In 1944 Wishnick changed the name of his company to Witco Chemical Incorporated, 'Witco' having been used as a brand name for several years. Then, in 1945, the board of the new company made official its plans to move as quickly as possible into manufacturing and to leave the distributing business.
Soon thereafter, the Chicago plant was expanded to include the production of metallic stearates, and then a number of new companies were acquired. Franks Chemical Products Inc. was purchased and then moved to less expensive quarters in Perth Amboy, New Jersey. A Los Angeles plant was bought from the India Paint and Varnish division of American Marietta, and new equipment was ordered for the plant to begin production of stearates. In 1954, by the time sales had grown to nearly $20 million, a British stearate plant also was purchased. This steady and extended expansion was not without difficulties, however. There were recurring operating problems in the Perth Amboy plant, some of which William Wishnick, the president's son, was asked to help solve. There was also a major fire in the Chicago plant, and then in 1953 the first strike in Witco's history took place in the Lawrenceville plant.
None of this weakened William Wishnick's resolve, however. In 1955 the decision was announced to end the company's distributing business altogether and to begin moving toward complete self-sufficiency. Witco sales were as high as $30 million, but over a ten-year period only 35 percent of that was from its own manufacturing operations. Some major acquisitions were on the horizon, but not until after a management reorganization. The Tumpeer brothers were no longer with the company (Julius had retired in 1947 and David had died in 1951). It was then, in 1955, that Robert Wishnick became chairman of the board, and Max Minnig, a longtime senior employee, became president. At that time, William Wishnick rose to the executive vice-presidency from his position as vice-president and treasurer.
In keeping with its new corporate strategy, Witco spent the next two years making acquisitions and expanding operations. Sales rose to $40 million, 40 percent of which came from Witco manufacturing facilities. Then, in 1958 Witco went public and sold 150,000 shares of common stock. This expansion continued unabated through the mid-1960s. In 1960 the Sonneborn Chemical and Refining Corporation was acquired, bringing sales up to the $100 million mark. International expansion accelerated as well, with new acquisitions in Belgium, France, and Canada.
Witco's Expansion in the 1960s and 1970s
In 1964 further administrative changes led the way for even greater expansion. Robert Wishnick became chairman of the finance committee as well as managing director of international activities. Robert's son, William, succeeded him as chairman of the board, and Max Minnig became chief executive officer while maintaining his position as president. As chairman, William initiated the greatest growth period in Witco's history. He began with the 1966 acquisition of Argus Chemical Corporation at a price of $22 million. This provided Witco with a new plastics operation, specializing in polyvinyl chloride (PVC) additives, and one of its senior managers, William Setzler. Later in 1966 Witco acquired Kendall Refining Company, a maker of lubricants. The younger Wishnick also spent considerable sums on plant modernization and research and development. This tendency toward reinvestment of generated capital was to characterize the next two decades of Witco growth. In the period from 1966 to 1975 William Wishnick increased the company's sales by 250 percent. During this period he also assumed the duties of president and chief executive officer after Max Minnig's retirement in 1971.
In fulfillment of Robert Wishnick's dream, Witco became a firm devoted exclusively to manufacturing chemical products when its 1933 agreement with Continental Carbon Company expired in 1970. Witco kept its 20 percent interest in the company, but did not renew its licensing contract with the company. Witco now sold only Witco-manufactured products.
The recession in 1974 led to the traditional cost-cutting measures at Witco. The recession also brought a fourth-quarter drop of 50 percent in sales compared with the previous quarter. In addition, there was a sharp earnings drop in early 1975. By the end of 1975 matters had returned to normal, but there was still an overall drop in operating earnings of 23 percent. Despite this, Witco continued to expand, albeit more slowly. The Waverly Oil Works was purchased and a new $10 million hydrogenation plant was built in Pennsylvania.
The year 1975 witnessed additional administrative changes as highly talented managers from acquired companies rose to executive levels. Henry Sonneborn, brought in when his company was purchased in 1960, assumed the presidency and also became chief executive officer while William Setzler of the Argus division was appointed to the board of directors. William Wishnick returned to the position of chairman and his father Robert was appointed chairman emeritus, a position he held until his death in 1980.
Witco's 1980s Acquisitions and Divestments
The period from 1975 to 1986, half of it spent without the founder's presence, was characterized by a somewhat haphazard approach to acquisitions. Under William Wishnick's guidance, the new administration made several purchases, such as the $38 million deal with Kraft in 1980 for Humko Chemical, a manufacturer of oleochemicals that are used in a variety of industries. But other acquisitions made during the period diversified Witco away from its core specialty chemicals and petroleum businesses. This was particularly true of the 1982 purchase of the Richardson Company for $62.6 million. Although the company was a market leader, Richardson's variety of products--including battery casings, conveyor belts, and offset plates for printing--had little in common with Witco's product lines.
At this same time, Witco, along with the U.S. chemical industry in general, was hit hard by the 'double-dip' recession of the early 1980s, which had been brought on by the oil shock of 1979. The company's numerous acquisitions of the 1970s and 1980s had created not only a much larger company but also a more unwieldy one with 18 operating divisions. Wishnick was forced to launch a divestment program to improve earnings. From 1981 through 1985, a variety of operations were sold, including a detergent business, urethane systems operations, Richardson's offset plates business, and Pioneer Asphalt's Lawrenceville plant (which had been Witco's first manufacturing facility). Witco also sold off some of its oil reserves since petroleum prices were falling rapidly. Coupled with the divestments, Wishnick began to invest more heavily in the company's existing operations, in particular upgrading aging facilities; by 1985, 75 percent of the $70 million used for reinvestment went to plant modernization.
Although the company's growth was slowed during this retrenchment--sales increased only to $1.35 billion in 1986 from the $1.2 billion posted in 1980--net income of $65.2 million was a company record. Further, Witco's 1986 profit margin of 4.8 percent was the best in 18 years.
In October 1985 'Chemical' was again dropped from the company name, making the new company title Witco Corporation. At that time lubricants and specialty petroleum products made up 53 percent of the company's business, and specialty chemical products accounted for only 41 percent. The remaining six percent consisted of a variety of engineered materials for special applications.
In 1986 Thomas J. Bickett took over as president and CEO from the retiring William J. Ashe, who had occupied the job since Henry Sonneborn retired. In 1978 Bickett had been asked to join Witco while working for an accounting firm contracted by Witco. His appointment to the position came after he had been with the company for 12 years, serving for much of that time on the board of directors. Although Bickett was considered a possible heir apparent to Wishnick, who was nearing retirement, Bickett left the company in 1989, reportedly because his and Wishnick's operational styles clashed. Although Denis Andreuzzi was named president and chief operating officer following Bickett's departure, it was William R. Toller whom Wishnick recommended be elected chairman upon his retirement in October 1990. Toller had joined Witco in 1984 when the company acquired Continental Carbon from Conoco.
Witco's 1990s Restructuring
Toller inherited a company that had struggled during the latter half of the 1980s. Net sales reached only $1.59 billion by 1989, an increase of just 9.7 percent over a five-year period. The company stayed away from major acquisitions during the period, while organic growth was difficult given Witco's mature markets.
Toller knew that major changes were needed to get the company growing again. Just two months after gaining the chairmanship, he asserted that the company had to globalize its operations. He also set a goal of reaching $2 billion in sales and a 16 percent return on equity by 1995. In 1991, Toller's first major undertaking was to commit the company to developing a state-of-the-art information system that would help the divisions' managers run their operations more efficiently as well as provide upper management a better handle on the overall operations. The new system began operation in 1994.
Meanwhile, the future shape of Witco began to take form as Toller slowly began to win over the other senior managers to his vision of a company dedicated to the specialty chemicals business. Although some managers recommended that the company remain diversified, Witco's largest acquisition to date propelled it into a new era. In 1992, Witco acquired the Industrial Chemicals and Natural Substances divisions of Germany's Schering AG for $440 million. The deal not only solidified the company's future in specialty chemicals (in 1993 chemicals accounted for 58 percent of Witco's sales), it also significantly enhanced the firm's global presence. A key symbol of the company's newfound international strength came in 1994 when Witco stock began to be traded on the Frankfurt Stock Exchange. Also in 1994, Witco moved its corporate headquarters from New York to Greenwich, Connecticut.
A major reorganization in 1993 did away with the divisional structure, replacing it with a structure that revolved around market-focused operating units. Initially, the groups included Oleo/Surfactants, Polymer Additives, and Resins within the chemicals area; Petroleum Specialties and Lubricants within the petroleum area; and the Diversified Products Group, which consisted of noncore businesses to be divested. During the mid-1990s, Witco divested itself of numerous nonchemical units and announced in 1995 that it intended to divest its Lubricants Group as well, after which it would be almost exclusively in the specialty chemicals business (with a relatively small Petroleum Specialties Group).
Toller's goal of international expansion led to another major acquisition in 1995, which improved Witco's position in Europe but, more important, expanded the company's presence in the Pacific Rim and South America. Witco acquired OSi Specialties, Inc. in October 1995 in a $486 million deal. OSi was the global leader in silicone specialty chemicals and had significant operations in Asia, a region in which Witco was eager to expand. Under Witco, OSi became one of the company's operating groups, the OSi Specialties Group. Also in 1995 Witco took a $33.8 million charge related to the closure of five facilities.
In a few short years, Toller and his team had overseen a major transformation at Witco, one at least as important as the shift from distribution to manufacturing that occurred earlier in the century. Witco was now a major player in the international specialty chemicals industry and was more focused than ever before. In 1993, the company had already passed the $2 billion sales goal Toller had set when he took over the chairmanship, and even when the company began in 1995 to report its Lubricants Group as a discontinued operation, Witco fell just barely short of the $2 billion mark that year, thanks to its acquisition of OSi. In mid-1996 Toller retired. Hired as chairman, president, and CEO was E. Gary Cook, who had been president of Albemarle Corporation.
Under Cook's leadership, the restructuring pace quickened. In late 1996 Witco announced that it would close an additional 15 manufacturing plants over a three-year period, with a concomitant workforce reduction of 1,800. This restructuring, which involved a 1996 charge of $345.1 million, aimed to reduce operating costs by more than $200 million per year by the end of the decade. During the same period, Witco planned to invest more than $600 million in plant modernizations, capacity upgrades, environmental and safety enhancements, and information systems upgrades. During 1997 the company finally completed its long anticipated exit from the lubricants sector and divested a number of other noncore businesses. Witco's remaining operations were reorganized into four units: oleochemicals and derivatives, polymer chemicals, performance chemicals, and organosilicones. In May 1998 Witco swapped its epoxy and adhesives business for Ciba Specialty Chemical's PVC heat stabilizer business, thereby bolstering its vinyl additives business. In January 1999 the company announced that it was seeking a buyer for its oleochemicals and derivatives unit. In May came a similar announcement regarding the firm's petroleum additives business. The following month, Witco agreed to a merger with Crompton & Knowles Corporation, leading to a decision to retain the petroleum additives unit, in order to combine it with Crompton's plastics and lubricant additives business. Then in August, immediately prior to the consummation of the Witco-Crompton union, Witco completed the sale of its oleochemicals and derivatives unit to Goldschmidt AG, a unit of Viag AG, for around $249 million.
Late 20th-Century Creation of Crompton Corporation
The specialty chemicals sector was marked by a consolidation trend in the late 1990s fueled by intensifying global competition, cutthroat pricing, and the concomitant need for greater economies of scale. Joining in on the merger wave, Witco and Crompton & Knowles announced in June 1999 that they would combine forces. The two companies were near equals in size (Witco posted 1998 revenues of $1.94 billion, while Crompton & Knowles brought in $1.8 billion in sales that year), but Crompton was operating at a higher profit level. The two firms' product lines were complementary, with 84 percent of the combined operations situated in overlapping end-use markets--most notably, rubber and polymer processing, elastomers, crop protection chemicals, and lubricant/petroleum additives. Through the merger, which was completed in September 1999 with the creation of the newly formed CK Witco Corporation, the companies aimed to achieve pretax operating savings of about $60 million per year by the second full year of combined operations. Cook retired soon after the merger was finalized, leaving Calarco fully in charge of CK Witco as chairman, president, and CEO.
In addition to integration efforts, CK Witco concentrated on divesting a number of noncore businesses. In December 1999 the company sold its entire textile dyes operation and most of its non-U.S. industrial colors business--both of which had come from the Crompton & Knowles side&mdashø Yorkshire Group PLC for $86.5 million. Then in April and May 2000, CK Witco announced that it was seeking to sell two units that had been part of Witco's performance chemicals unit: refined products and industrial specialties. Also in April, the company changed its name to Crompton Corporation--in part because the Crompton name had a better reputation with the financial community than that of the tarnished Witco; it planned, however, to continue to market products under other established brand names, including Witco, Uniroyal Chemical, OSi, and Davis-Standard. With the expected completion of the latest divestments, Crompton would derive nearly 60 percent of its revenues from polymer products, including additives, polymers, and polymer equipment. The OSi organosilicones unit would contribute 17 percent; crop protection, ten percent; the remaining industrial colors business, six percent; lubricant additives, five percent; and glycerine and fatty acids, three percent. Other initiatives for the early 21st century included winning back customers who had been lost when the firm was concentrating on restructuring--at the expense of customer service--in the late 1990s. Crompton also aimed to reduce its debt load and increase its operating margin from ten percent to 15 percent.
Principal Subsidiaries: 9056-0921 Quebec Inc. (Canada); Agro ST Inc.; Assured Insurance Company; Baxenden Chemicals Limited (U.K.; 53.5%); Baxenden Scandinavia AS (Denmark; 53.5%); CNK Disposition Corporation; CNK One B.V. (Netherlands); CNK Two B.V. (Netherlands); CNK Italiana SRL (Italy); CK Holding Corporation; CK Witco Asia Pacific PTE Ltd. (Singapore); CK Witco China Limited; CK Witco Europe Financial Services Co.; CK Witco Financial Services Co. (Ireland); CK Witco Funding Corporation; CK Witco Hong Kong Limited; CK Witco International Corporation; CK Witco International Services Corporation; CK Witco Singapore Private Limited; Crompton & Knowles Acceptance Corporation; Crompton & Knowles Canada Ltd.; Crompton & Knowles Chemische Produckte GmbH & Co. K.G. (Germany); Crompton & Knowles Colors Incorporated; Crompton & Knowles Europe S.P.R.L (Belgium); Crompton & Knowles International, Inc. (U.S. Virgin Islands); Crompton & Knowles International SARL (France); Crompton & Knowles I.P.R. Corporation (Delaware); Crompton & Knowles Overseas Corporation; Crompton & Knowles Realty Corporation; Crompton & Knowles Receivables Corporation; Crompton & Knowles Services S.P.R.L. (Belgium); Crompton & Knowles Specialties Holdings B.V. (Netherlands); Davis-Standard Corporation; Davis-Standard (France) SARL; Davis-Standard (Deutschland) GmbH (Germany); Davis-Standard Limited (U.K.); Enenco, Incorporated (50%); ER-WE-PA Davis-Standard GmbH (Germany); Ecart, Inc; Firma W/K Witco EPA (Netherlands; 50%); GT Seed Treatment, Inc.; Gustafson International Company; Gustafson LLC (50%); Gustafson Partnership (Canada; 50%); Hannaford Seedmaster Services (Australia) Pty. Ltd.; Australia Industrias Gustafson S.A. de C.V. (Mexico); Immobiliaria Huilquimex, S.A. de C.V. (Mexico); Interbel Trading, Inc.; Jonk BV (Netherlands); Kem Manufacturing Corporation; Kem International Corporation; Lokar Enterprises, Inc.; Naugatuck Treatment Company; Nerap Expeditie BV (Netherlands); ParaTec S.A. de C.V. (Mexico; 49%); OSi Specialties Inc. (Chile) Limitada; ParaTec Elastomers LLC (51%); PT Witco Indonesia; Quebec, Inc. (Canada); Rubicon Inc. (50%); TOA Uni Chemicals Ltd. (Thailand; 48.98%); TOA Uni Chemical Manufacturing Ltd (Thailand; 48.94%); Trace Chemicals LLC; Unicorb Limited (U.K.); Uniroyal Chemica Srl (Italy); Uniroyal Chemical Asia, Ltd.; Uniroyal Chemical Asia Pte. Ltd. (Singapore); Uniroyal Chemical B.V. (Netherlands); Uniroyal Chemical Brazil Holding, Inc.; Uniroyal Chemical Co./Cie. (Canada); Uniroyal Chemical Company, Inc.; Uniroyal Chemical Company Limited (Bahamas/U.S.A.); Uniroyal Chemical (Europe) B.V. (Netherlands); Uniroyal Chemical European Holdings B.V. (Netherlands); Uniroyal Chemical Export Limited; Uniroyal Chemical Holding S.A. de C.V. (Mexico); Uniroyal Chemical Holdings B.V. (Netherlands); Uniroyal Chemical International Company; Uniroyal Chemical International Sales Corp. (Barbados); Uniroyal Chemical Investments Ltd. (Canada); Uniroyal Chemical Korea Inc.; Uniroyal Chemical Leasing Company, Inc.; Uniroyal Chemical Limited (U.K.); Uniroyal Chemical Netherlands B.V. (Netherlands); Uniroyal Chemical Overseas B.V. (Netherlands); Uniroyal Chemical Partipacoes Ltda (Brazil); Uniroyal Chemical (Proprietary) Limited (South Africa); Uniroyal Chemical Pty. Ltd. (Australia); Uniroyal Chemical S.A (Spain); Uniroyal Chemical S.A. de C.V. (Mexico); Uniroyal Chemical S.A.R.L. (Switzerland); Uniroyal Chemical Specialties, Inc.; Uniroyal Chemical Taiwan Ltd. (80%); Uniroyal Chemical Technology B.V. (Netherlands); Uniroyal Quimica S.A. (Brazil); Uniroyal Quimica Sociedad Anonima Comerciale Industrial (Argentina); Witco (Europe) S.A. (Switzerland); Witco Australia Pty Limited; Witco Benelux N.V (Belgium); Witco BV (Netherlands); Witco Canada Inc.; Witco Corporation (Malaysia) Sdn Bhd.; Witco Corporation UK Osil Group Limited; Witco Corporation UK Limited; Witco Deutschland GmbH (Germany); Witco do Brasil Ltda (Brazil); Witco Dominion Financial Services Company, Ltd. (Canada); Witco Ecuador S.A.; Witco Espana, S.L. (Spain); Witco Europe Investment Partners; Witco Foreign Sales Corporation (Barbados); Witco GmbH (Germany); Witco Grand Banks, Inc. (Canada); Witco Handels GmbH (Austria); Witco Investment Holdings BV (Netherlands); Witco Investments BV (Netherlands); Witco Investments SNC (France); Witco Ireland Investment Company Limited; Witco Italiana SrL (Italy); Witco Korea Ltd.; Witco Mexico S.A. de C.V.; Witco Polymers and Resins BV (Netherlands); Witco S.A. (France); Witco Solvay Duromer GmbH (Germany; 50%); Witco Specialties (Thailand) Ltd.; Witco Specialties Italia S.p.A. (Italy); Witco Specialties PTE Ltd. (Singapore); Witco Surfactants GmbH (Germany); Witco Taiwan Ltd.; Witco Warmtekracht BV (Netherlands).
Principal Competitors: American Vanguard Corporation; BASF Corporation; Ciba Specialty Chemicals Corporation; Holliday Chemical Holdings PLC; Jilin Chemical Industrial Company Limited; Milliken & Company Inc.; PMC Global, Inc.; Struthers Industries Inc.; Terra Industries Inc.; Terra Nitrogen Company L.P.; United-Guardian, Inc.
Further Reading:
'An Acquiring Lifestyle,' Forbes, July 19, 1993, p. 230.
'Bright Acid Dyes,' Textile World, March, 1992, p. 64.
Brown, Alan S., The Witco Story: Hard Work and Integrity, Lyme, Conn.: Greenwich Publishing, 1995.
Brown, Robert, 'Executive Q & A: Gary Cook,' Chemical Market Reporter, March 8, 1999, p. 20.
'C & K Operation Net Up 21% in Quarter,' Daily News Record, January 29, 1993, p. 10.
Chang, Joseph, 'C & K and Witco Combination to Create $3.2 Billion Entity,' Chemical Market Reporter, June 7, 1999, pp. 1, 19.
'Crompton & Knowles Corp.,' Wall Street Journal, December 16, 1992, p. C11.
'Crompton & Knowles Corp. to Purchase a Unit of Imperial Chemical Industries PLC,' Wall Street Journal, May 11, 1992, p. B3.
Fink, Ronald, 'Pass the Rolaids: The Chemical Businesses Witco Has Acquired Will Sharpen Its Focus and Broaden Its Reach--If They Aren't Too Much to Digest,' Financial World, June 22, 1993, pp. 54--55.
Freedman, William, 'Witco Absorbs OSi,' Chemical Week, September 20, 1995, p. 8.
Gain, Bruce, 'Cook's Recipe for a Trimmer Witco,' Chemical Week, December 10, 1997, p. 34.
Henry, Brian, 'C & K and Uniroyal Sign Merger Deal,' Chemical Marketing Reporter, May 6, 1996, pp. 3, 40.
Hunter, David, 'Witco's $5-Billion Ambitions,' Chemical Week, June 26, 1996, p. 12.
Labate, John, 'Crompton & Knowles,' Fortune, July 12, 1993, p. 100.
Lerner, Ivan, 'Crompton Moves to Sell Off Its Industrial Specialties Unit,' Chemical Market Reporter, May 29, 2000, pp. 1, 21.
Lipin, Steven, 'Crompton to Purchase Uniroyal for Stock Valued at $363 Million,' Wall Street Journal, May 2, 1996, p. B4.
Lipin, Steven, and Susan Warren, 'Crompton & Knowles and Witco to Merge in $1 Billion Stock Deal,' Wall Street Journal, June 1, 1999, p. A4.
McCarthy, Joseph L., 'Better Living Through Chemistry,' Chief Executive, April 1996, p. 25.
Mitchell, Gordon, 'The Right Chemistry: It's Now the Main Line for Crompton & Knowles,' Barron's, January 30, 194, pp. 43+.
Morris, Kathleen, 'Crompton & Knowles: Playing the Niches in Slumping Markets,' Financial World, November 12, 1991, p. 16.
Plishner, Emily S., 'Crompton & Knowles: The Pessimism Could Also Fade,' Financial World, November 7, 1995, p. 20.
------, 'Passing the Baton: Bill Toller Has Transformed Witco into a Growing Specialty Chemical Company. Who's Next?,' Financial World, November 21, 1995, pp. 52--53.
Protzman, Ferdinand, 'Witco's Move in Europe Grows into Better-Than-Expected Fit,' New York Times, November 16, 1993, p. C6.
Reingold, Jennifer, 'Niche Rich: Crompton & Knowles Hunts for Treasure in Staid Markets--and Strikes Gold,' Financial World, June 22, 1993, p. 56.
Scheraga, Dan, 'Witco and C & K Merger Draws Industry Praise,' Chemical Market Reporter, June 7, 1999, pp. 1, 23.
Stringer, Judy, 'Managing Change at Witco,' Chemical Week, June 7, 1995, pp. 44--45.
Tinsley, John F., Looms for the World: Crompton & Knowles in Textile Machinery Manufacture, Since 1837, New York: Newcomen Society in North America, 1949.
Walsh, Kerri, 'Yorkshire Takes Textile Dyes Off CK Witco's Hands,' Chemical Week, December 8, 1999, p. 18.
Warren, J. Robert, 'Witco Has Bold Asian Goals,' Chemical Marketing Reporter, April 17, 1995, pp. 7, 20.
Wishnick, William, The Witco Story, New York: Newcomen Society in North America, 1976.
'Witco Opts for Asset Focus to Carry Out Streamlining Plan,' Chemical Marketing Reporter, February 24, 1997, pp. 8, 27.
Wood, Andrew, 'Trimming Down into One Witco,' Chemical Week, March 5, 1997, p. 45.
Wood, Andrew, and Kerri Walsh, 'Crompton Cleans Up: Winning Back Witco Customers,' Chemical Week, June 14, 2000, pp. 24--26.
Source: International Directory of Company Histories, Vol. 36. St. James Press, 2001.
