Great Lakes Chemical Corporation

Great Lakes Chemical Corporation

P.O. Box 2200
West Lafayette, Indiana 47906
U.S.A.
(317) 463-2511

Public Company
Incorporated: April 11,1933 as McClanahan Oil Company
Employees: 3,700
Sales: $300 million
Market Value: $735 million
Stock Index: New York

Great Lakes Chemical is one of the world’s largest manufacturers of bromine and brominated chemical products. Bromine, an acrid red liquid which irritates the skin, mixes easily with hundreds of organic compounds, producing thousands of toxic and non-toxic chemicals. While bromine compounds are not its only products, Great Lakes Chemical relies heavily on bromine for much of its revenue.

Great Lakes Chemical was originally founded as an oil and gas exploration company called the McClanahan Oil Company. Its founder, W.L. McClanahan, established the company to take advantage of a growing oil industry centered near Mount Pleasant in Central Michigan. The company remained small for many years, restricted both by competition from larger companies and limited oil reserves in Michigan.

In 1946 a geologist and Wall Street financier named Charles Hale became the largest shareholder of the McClanahan Oil Company, and later assumed its presidency. As part of his goal of creating a natural resources conglomerate, Hale engineered the company’s acquisition of the Great Lakes Chemical Corporation in March of 1958. Great Lakes Chemical held titles to oil and gas reserves, as well as some bromine wells near Filer City, Michigan. In May of 1950 the two companies merged to form the Great Lakes Oil & Chemical Company.

During the 1950’s Great Lakes expanded its petroleum interests by purchasing the Olds Oil Corporation in December of 1951, and the Cleveland Oil Company in October of 1952. These companies were later merged with Great Lakes Oil & Chemical as part of a program to rationalize production. The company’s ability to compete in its traditional petroleum markets began to erode during the late 1950’s. Faced with impending bankruptcy, Great Lakes was forced to alter substantially its business strategies.

Earl T. McBee, a professor of industrial chemistry at Purdue University, and a consultant to Great Lakes since 1953, advocated the company’s gradual withdrawal from the petroleum industry, favoring instead the expansion of its bromine operation. Charles Hale agreed with McBee and in 1957 authorized the sale of the company’s oil properties in California. Through the sale of additional California real estate during 1960, Great Lakes raised enough capital to purchase a 50% share of Arkansas Chemicals Inc., which owned several bromine-rich brine wells in Arkansas. As a result, Great Lakes became a major bromine products company by gaining a stake in the best deposits before the industry leader Dow Chemical.

The company changed its name to Great Lakes Chemical Corporation on May 9, 1960, and continued its reorganization process by attempting to diversify into financial services. The venture was unsuccessful, however, and was discontinued in 1963.

At the time, the largest application for bromine was ethylene dibromide, an additive to leaded gasoline. Ethylene dibromide, however, was a simple commodity chemical with a low profit margin. In an effort to create a line of more profitable specialty chemicals, Great Lakes Chemical devoted 5% of its sales to develop new bromine compounds in a joint venture with PPG Industries. Applications were found for bromine in a wide variety of products, including biodegradable soil fumigants and herbicides, dyes, cleansing powders, synthetic rubber, refrigerants, photographic papers, and flame-retardant additives for plastics.

In 1969 Great Lakes Chemical purchased the Cavedon Chemical Company and the Microseal Corporation, in addition to Lunevale Products Ltd. of Lancaster, England. The following year Great Lakes Chemical formed a joint venture with Pechiney Ugine Kuhlmann of France called Sobrom. Sobrom was established to develop brominated soil fumigants for the European market. The company increased its presence in France in 1972 when it formed another company called Microfral with Compagnie Français des Lubricants. Through these companies, Great Lakes Chemical enlarged its marketing network on an international scale.

Earl McBee died of a heart attack in 1973. He was replaced by Emerson Kampen, an employee of many years who gained a reputation for strong central management. Kampen continued many of McBee’s policies, including that of cooperation with French companies. In February of 1976 Great Lakes Chemical agreed to form an American joint venture with Pechiney Ugine Kuhlmann called the Forex Chemical Corporation, which was established to develop fire extinguishing compounds.

In the later half of the 1970’s other chemical manufacturers accidentally released bromine fire retardants into rivers, causing cattle to be poisoned in Michigan and raising questions about the safety of these retardants in children’s pajamas. Great Lakes Chemical maintained that its bromine products were safe, but was forced to observe costly new regulatory measures imposed on the industry.

Great Lakes Chemical had become highly profitable, taking advantage of higher demand and new applications for bromine. The company nearly doubled its brine reserves near El Dorado, Arkansas when it purchased the bromine operations of Northwest Industries’ Velsicol subsidiary in 1981. In doing so, Great Lakes Chemical prevented competitors like Dow and Ethyl from increasing their bromine assets. The Federal Trade Commission, however, filed suit to prevent the takeover on antitrust grounds. After several years of litigation the matter was finally settled in March of 1984, when the FTC agreed to permit the takeover on the condition that Great Lakes would license its technologies to PPG Industries, in order to make it a “viable competitor.”

In 1984 the federal government banned ethylene dibromide for non-fuel uses. As a result of the ban. Great Lakes Chemical only lost 2% of profits; the increased use of unleaded gasoline during the late 1970’s forced the company to de-emphasize production of ethylene dibromide.

One of the areas Great Lakes Chemical chose to expand was biotechnology, and in 1982 took control over the Enzyme Technologies Corporation. Another promising area was oil field chemicals. Clear fluids containing bromine salts are effective agents in flushing oil out of the ground. In July of 1982 Great lakes purchased a fluids company called Mobley Chemical, and in October acquired a 63% share of the Oilfield Service Corporation of America.

In September of 1983 Great Lakes Chemical purchased the Inland Specialty Chemical Corporation for $10 million. The acquisition marked the entry of Great Lakes into the area of electronic chemicals, where it sought to apply its halogen-based X-ray resist technology to semiconductors.

The leadership of Emerson Kampen was repeatedly called into question and described as “abusive” by senior managers. As a result of Kampen’s refusal to delegate greater authority, five vice presidents resigned from Great Lakes Chemical between 1975 and 1984. One of those vice presidents was Kenneth Karmel, who left in 1982 to head Ethyl’s new Bromine Chemicals Division. Fearing that its industrial secrets would be compromised, Great Lakes Chemical challenged Karmel’s contract with Ethyl in court.

Largely through the benefit of licensing agreements with other companies, Great Lakes Chemical claims to be the largest producer of bromine products in America. While Emerson Kampen denies that he dominates Great Lakes Chemical, he is equally insistent that his is not a one-product company. Bromine chemistry accounts for over 80% of Great Lakes’ products, but the company has several hundred different products. In the meantime, the company’s attempts at diversification continue. In April of 1985 Great Lakes purchased Purex Pool Products for $20 million.

Principal Subsidiaries

Great Lakes Chemical (Europe) Ltd.; Great Lakes Chemical International, Inc.; GLK International Corp.; Arkansas Chemicals, Inc. (50%); E/M Corp.; WIL Research Laboratories, Inc.; Enzyme Technology Corp.; Oilfield Service Corporation of America; Hydrotech Chemical Corporation; Inland Specialty Chemical Corp.