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FMC Corporation

FMC Corporation

1735 Market Street
Philadelphia, Pennsylvania 19103-7501
U.S.A.
Telephone: (215) 299-6000
Fax: (215) 299-5998
Web site: http://www.fmc.com

Public Company
Founded: 1884 as Bean Spray Pump Company
Incorporated: 1904
Employees: 5,000
Sales: $2.35 billion (2006)
Stock Exchanges: New York Chicago
Ticker Symbol: FMC
NAIC: 325181 Alkalies and Chlorine Manufacturing;325188 All Other Basic Inorganic Chemical Manufacturing; 325199 All Other Basic Organic Chemical Manufacturing; 325320 Pesticide and Other Agricultural Chemical Manufacturing; 325998 All Other Miscellaneous Chemical Product and Preparation Manufacturing

BEGINNINGS IN SPRAY PUMPS

ENTRY INTO CHEMICALS

RETURN TO PROSPERITY

CONTINUING GROWTH AND EXPANSION

NARROWING FOCUS TO CHEMICALS AND MACHINERY

EARLY 21ST CENTURY: BECOMING A PURE CHEMICALS CONCERN

PRINCIPAL SUBSIDIARIES

PRINCIPAL DIVISIONS

PRINCIPAL COMPETITORS

FURTHER READING

FMC Corporation is a diversified, global chemical company operating in three areas: agricultural products, specialty chemicals, and industrial chemicals. In agricultural products, FMC produces insecticides and herbicides for agricultural applications as well as pestcontrol insecticides for the home, garden, and other nonagricultural markets. In specialty chemicals, the company is the worlds leading producer of alginates, carrageenan, and microcrystalline cellulose, all of which are ingredients used mainly in the production of food and pharmaceutical products. FMC also ranks as one of the world leaders in the production of lithiumbased products, which have various uses, including in pharmaceuticals, polymers, batteries, and greases and lubricants. In industrial chemicals, the firm is the worlds largest producer of natural soda ash, which is used to make glass and detergents, and also produces hydrogen peroxide, which is used by the pulp and paper industry, among other applications; specialty peroxygens, which are sold principally into the polymer and printed circuit board industries; and phosphorus chemicals, which have many industrial uses through a wide range of chemical compounds. FMC maintains around 30 manufacturing facilities and mines in 18 countries and sells its products around the world. North America accounts for approximately 41 percent of total revenues; Europe, the Middle East, and Africa, 28 percent; Latin America, 19 percent; and the Asia-Pacific region, 12 percent.

Founded in 1884 as a manufacturer of an insecticide spray pump, FMC began its evolution into a conglomerate in the 1940s, with its diversification into chemicals and defense systems. Later came a foray into gold mining. The defense systems and gold businesses were divested in 1996 and 1997, respectively. Then, in 2001, the machinery business was spun off into the separately traded FMC Technologies, Inc., enabling FMC Corporation to focus solely on its chemical businesses.

BEGINNINGS IN SPRAY PUMPS

The roots of FMC Corporation lie in the Bean Spray Pump Company established in California in 1884 when John Bean invented a high-pressure spray pump that delivered a continuous spray of insecticide. Over the next 25 years, he built his product into the preferred pump in the region. Bean, not a businessman by nature, passed the management of the company over to his sonin-law, David Christian Crummey, in 1888. The companys factory was first located in Los Gatos, California, before being moved to San Jose. In 1909 the firm established a midwestern factory in Berea, Ohio, but this facility was replaced five years later by a more modern plant located in Lansing, Michigan. In the meantime, Bean Spray Pump Company was incorporated on May 20, 1904.

In September 1928 the company was taken public with a listing on the San Francisco Exchange under the new name John Bean Manufacturing Company. The following month the firm acquired two makers of canning machinery, Anderson-Barngrover Manufacturing Company, like John Bean Manufacturing based in Californias Santa Clara County, and Sprague-Sells Corporation of Hoopeston, Illinois. In 1929, following these acquisitions, John Bean Manufacturing changed its name to Food Machinery Corporation, reflecting the focus on food production equipment.

Also in late 1928, control of the company passed on to David Crummeys son, John David Crummey. While the younger Crummey was a strong voice leading the firm, the hand of another man was evident in the companys actions. This man was Paul L. Davies, Crummeys son-in-law, who left a banking vice-presidency to become vice-president of Food Machinery. The policies of growth that Davies put into effect kept the company financially healthy throughout the Great Depression.

Davies recognized the cyclical nature of purely agricultural businesses; they depended too much on crop fluctuations. In 1933, therefore, the firm began to expand by purchasing the Peerless Pump Company, whose inexpensive pumps were in high demand during these lean years. This was the beginning of a policy of diversification that was to bring the company into increasingly varied and prosperous areas.

ENTRY INTO CHEMICALS

Food Machinery not only survived the Depression, it prospered, and emerged in the early 1940s prepared for the consistent growth that was to characterize it under Davies. An aggressive and energetic man who worked 12-hour days, Davies used diversification as both a means of expanding the companys market and a hedge against cyclical weakness in any one branch. In 1943 the company made its first foray into the chemical market by acquiring the Niagara Sprayer & Chemical Company, a strong independent manufacturer of insecticides and fungicides. This move was followed by the 1948 acquisition of Westvaco Chemical Corporation, which produced industrial chemicals. The Niagara merger left Food Machinery in the position of producing not only sprayers and pumps, but the chemicals to put through them; the later merger, upon which the company became the Food Machinery and Chemical Corporation, expanded its chemical product line even more.

Alongside this chemical expansion, Food Machinerys equipment division prospered in the 1940s because of World War II. Some months before the United States entered the war, Food Machinery began producing the Water Buffalo, an amphibious tank that provided important troop mobility over the next crucial years. Other products were adapted for wartime uses as well, such as the orchard sprayer, which was to be used for decontamination purposes if necessary, and nailing machines that produced ammunition boxes at an exceedingly high rate.

COMPANY PERSPECTIVES

Feeding the world, protecting health, and providing the conveniences of life. That is the mission of FMC.

With our superior technology and strong partnerships with customers, FMCs people are finding solutions that are helping to change peoples lives for the better. Today, FMC maintains leading positions in three chemical markets: Agricultural, Specialty and Industrial.

After the war, the companys production lines returned to their earlier emphases, although defense systems contracts continued to play an important role in FMCs operations until the late 1990s. With the war ended, however, the company was at no loss for customers. Wartime reductions produced a market for expensive and technologically advanced food processing equipment, and Food Machinerys business grew. Other existing products were adapted to peacetime uses as they had been in war, with sprayers, for example, being turned to firefighting uses. A drop in earnings occurred the year after the Westvaco acquisition, but by 1950 the company was back on its prosperous track. Davies continued to put money both into diversification and into research and engineering, which led to new products and continued growth.

Every year between 1950 and 1966 the Food Machinery and Chemical Corporation (which changed its name to FMC Corporation in 1961) showed a financial gain, and the company was a favorite of investors. Their trend toward diversification continued, most notably with the purchase of the American Viscose Corporation in 1963, despite opposition from the antitrust division of the Justice Department. Daviess vigor, vision, and talent for profitable purchases provided a strong center for the companys rather loose management through 1966. In this year, when revenues surpassed the $1 billion mark for the first time, Davies decided to retire. His strategy was to avoid overstaying his productive years and to leave a strong successor. The man who replaced him as chief executive officer, who had assumed the presidency some few years back, was engineer James M. Hait. It was Daviess intent to leave this handpicked officer to continue the companys expansion and growth.

In 1967 FMCs financial growth came to an abrupt halt. While Hait would remain chairperson until 1971, he was replaced as chief executive officer in 1967 by Jack M. Pope. This year also marked the companys acquisition of the Link-Belt Corporation, an equipment manufacturer that quickly proved to have antiquated plants and serious financial difficulties. This purchase, along with the 1963 Avisco acquisition, became a draining point for FMCs finances, instead of increasing its profitability.

In 1968, with Pope as its leader, FMC did show a brief resumption of its upward growth trend. This improvement on the books, however, proved largely due to an accounting change, and the health of the company was not restored. The growth that had paid off so strongly for Davies was too much for his successors. Even toward the end of Daviess administration, the loose reins under which he had run the company had been a bit too loose for its ever increasing size. Now, under new management, the control necessary for an improved financial condition was lost. The status of the company declined among investors as its finances weakened. By 1973, FMC stock had fallen from $44 per share to $15.

RETURN TO PROSPERITY

By the end of the 1960s, Daviess company was experiencing severe financial difficulties. Its management was unable to maintain profitability. The synthetic fiber branch was losing money, and the recession of 197071 caused even the strong machinery division to suffer. FMCs profits fell to $39 million from their 1968 level of $75 million. It was at this point that the company appointed a third successor to Davies, one who would finally bring FMC back to financial prosperity. This successor was a Harvard Business School graduate who had been with FMC for 20 years, Robert H. Malott.

KEY DATES

1884:
John Bean patents a high-pressure pump that delivers a continuous spray of insecticide; he forms the California-based Bean Spray Pump Company.
1904:
Company is incorporated.
1928:
Company goes public as John Bean Manufacturing Company and acquires two makers of canning machinery.
1929:
Name is changed to Food Machinery Corporation (FMC).
1943:
FMC expands into chemicals for the first time with the purchase of Niagara Sprayer & Chemical Company, producer of insecticides and fungicides.
1948:
Industrial chemicals are added to the companys product lines through the acquisition of Westvaco Chemical Corporation, prompting a name change to Food Machinery and Chemical Corporation.
1961:
Company changes its name to FMC Corporation.
1966:
Revenues exceed $1 billion for the first time.
1972:
Headquarters are relocated to Chicago.
1974:
The base for FMCs chemical operations is shifted from New York City to Philadelphia.
1985:
Lithium Corporation of America is acquired.
1986:
FMCs management carries out a recapitalization designed to forestall any hostile takeover attempts.
1997:
Company completes its exit from the defense business, narrowing its operations to chemicals and machinery.
2001:
FMC spins off its machinery business into a separate public company called FMC Technologies, Inc.; FMC Corporation, now focused solely on chemicals, moves its headquarters to Philadelphia.

From the time that Malott took control of FMC, it was clear that it would not be an easy task to revive the company. Obviously a change in management strategy was called for in order to turn around the companys decline. For Malott, that change began with a recentralization of management. The companys size and relatively loose management procedures had contributed to its decline, so Malott reorganized FMC by consolidating the many branches of the company into two groups for better administrative control.

Realizing that the mere continuation of former company policy was an unworkable strategy, Malott approached his first years as chief executive officer with a different set of policies. Between 1972 and 1978, FMC disposed of 20 product lines that were either immediate financial drains or were soon to be in danger. This was one step that Hait and Pope had apparently been unwilling to take, but it gave new life to the company. Chief among these sales and closings was the 1976 sale of the fiber division. Price cutting in the synthetics market and competition from cotton and polyester (FMC produced primarily rayon) had made this one of the chief money drains and one of Daviess few untimely purchases. Malott ended this losing struggle by selling the division to the newly formed Avtex Fibers Inc. He also made other timely decisions, such as the 1976 closing of a pulp mill in Alaska, in the face of strict environmental controls that were about to be imposed. His evaluation of these branches and concentration on the three core areas of industrial chemicals, defense equipment, and machinery provided the first step toward FMCs recovery. Among other moves, Malott also relocated the company headquarters from San Jose to Chicago in 1972 and shifted the base for FMCs chemical operations from New York City to Philadelphia two years later.

Malotts financial policies also began to revive FMC during this period. One such policy was his refusal to reduce prices when faced with competition. Instead, Malott cut production, keeping profit margins up. Another keynote of Malotts financial management was his aggressive capital spending. His outlays in research and development made it possible for new products to be developed. In addition, in the two years prior to 1976, FMC put $400 million into high growth areas, such as petroleum equipment and specialty chemicals. The profitability of Malotts policies was almost immediately apparent; by the spring of 1976, with a personnel increase of only 1,000 workers, Malott raised sales from $1.3 billion to $2.3 billion.

By 1976, FMCs great comeback was obvious. In an April article, Forbes magazine called the corporation a stronger, better run company than it was in its heyday. Even with the company well on the road to full recovery, however, Malott continued to revise FMC policy. In 1977 Malott began to decentralize the administrative control of the company in order to facilitate faster growth. The diversification of the company itself suggested somewhat decentralized management, now that it was financially stable. Malott divided the company into nine well-defined groups, centering around their chemical, equipment, and specialty products. The situation differed from earlier times in that final decisions still rested with top management and close communication was to be maintained. Lower managers were being trained to think in terms of a worldwide market. This restructuring was to lead the company into its next significant period of growth and expansion.

The years between 1977 and 1980 were not, however, marked solely by unchecked growth. As in any industry, fluctuations were seen in the demand for FMC products. Four of the nine groups remained the strongest: defense equipment, petroleum equipment, industrial chemicals, and agricultural chemicals. Much of the strength of this last category came from the sales of Furadan, a popular pesticide for protecting corn, sugarcane, and some 18 other crops. Fluctuations in chemical markets were one reason that FMC, by 1980, was not reporting a financial return at hoped-for rates.

While management was bringing FMC back to prosperity, there were also periods of intense public scrutiny. As the government became more interested in environmental issues, for example, some of FMCs procedures were called into question. Alleged pollution from such chemicals as carbon tetrachloride gave rise to cease-and-desist orders and plant closings throughout the mid- to late 1970s. FMC was also involved in the major controversy over phosphates during the first half of the decade. In 1970 the company was the second largest producer of the chemicals, which caused premature aging of natural water sites. Court battles on the subject continued through 1975, when a Chicago ordinance banning the chemicals was upheld. Such environmental conflicts, while not damaging the company directly, forced additional internal changes in production.

CONTINUING GROWTH AND EXPANSION

FMC also became the primary contractor for an advanced armed personnel carrier called the Bradley Fighting Vehicle, developed during the 1970s to counter the introduction of a similar but less sophisticated Soviet model called the BMP. In the early 1980s, the Bradley was criticized for a lack of battlefield survivability. FMC and Pentagon officials responded that even the most heavily armored tanks were not impervious to attack, but nonetheless began to investigate ways to improve the Bradley. About 3,000 Bradleys were delivered, each capable of defeating enemy tanks and other fighting vehicles while moving at high speeds in any kind of weather.

Despite such conflicts, FMC continued its growth and expansion during the 1980s. Plans for new acquisitions were announced in 1984, and, the following year, FMC acquired Lithium Corporation of America, the worlds leader in the mining and production of lithium products. Among other applications, lithium was used in batteries, pharmaceuticals, lubricants, and high-strength plastics. Also in 1985, FMCs stock standing was upgraded to attractive by an analyst specializing in chemicals firms, who had for a decade seen the field as only a fair risk. Profits and returns increased to record levels and long-term debt was insubstantial, an equation that drew the attention of corporate raiders in the 1980s. Amid concerns about a possible hostile takeover, CEO Malott planned a general restructuring of the entire company. Managements recapitalization effected a leveraged buyout. The company borrowed against its own assets, and paid public shareholders (who owned about 82 percent of FMC) $80 cash each in exchange for a 15 percent stake in the company. Management declined the cash to raise their cumulative share to 35 percent. The plan, which was okayed by shareholders in May 1986, saved FMC from outside takeover but saddled it with debt.

At the same time, FMC became embroiled in the insider trading scandal of 1986, when investor Ivan Boesky used illegally gained information about FMCs restructuring to turn a profit of $975,000. In the process, according to the company, his influence cost FMC some $225 million in additional recapitalization costs.

In the late 1980s, Malott expanded FMC into gold mining. While prospecting for antimony, a flame retardant chemical, the corporation discovered gold and elected to develop the resources under a new subsidiary, FMC Gold Company. In 1989 the company acquired Meridian Gold Company from Burlington Resources Inc. through an exchange of stock. By the end of the decade, FMC Gold contributed 25 percent of the conglomerates annual revenues and helped offset declining defense income as the Cold War ended.

Malott retired in 1991 at the age of 65, turning over a business he regarded as dull to FMC President Robert N. Burt. In the early 1990s, industrial chemicals (26 percent of 1993 revenues and 17 percent of operating income) were sluggish, as detergent manufacturers continued to remove FMCs phosphates from their products. The defense segment (25 percent of sales and 43 percent of income) continued to suffer as well, as competition from a less expensive Russian tank combined with U.S. Defense Department cutbacks to herald FMCs exit from that industry. Early in 1994, FMC created United Defense, L.P., a joint venture with Harsco Corporations Combat Systems, to control its defense unit. FMC Golds primary mine played out in 1993, and in spite of the precious metals strong performance that year, the subsidiary ran in the red, losing $50 million on operations. FMCs remaining machinery business contributed 23 percent of revenues but just 2 percent of operating income in 1993.

Specialty or performance chemicals were FMCs mainstay, contributing 23 percent of sales and 25 percent of operating income. FMC continued to lead the world in the production of cellulose gel, a fat replacement for food products marketed under the Avicel and Novagel brands. The company was also the leading manufacturer of agarose, a product used in genetic research, as well as phosphate ester flame retardants.

In May 1994 Dyan Machan, writing for Forbes, characterized FMC as an untidy conglomeration of disparate businesses. She also quoted analyst Paul Rayman, of S.G. Warburg Securities, who called FMC a hangover from the 1960sa company with little strategic focus, betting on losing businesses. Nevertheless, Burt outlined three fundamental strengths and future strategies in his 1993 letter to shareholders: strong positions in attractive markets; high returns and excellent cash flow through the economic cycles of the markets in which we operate; and a long-term strategy to increase FMCs historic growth rates by making investments that will increase growth in our major markets at returns above the cost of capital.

NARROWING FOCUS TO CHEMICALS AND MACHINERY

In 1995 and 1996 FMC completed a series of significant acquisitions centering on its machinery operations. In June 1995 the company closed on a $310 million purchase of Moorco International Inc., a Houston-based manufacturer of fluid measurement and pressure control products for the petroleum, industrial process, and electric power generation industries. The following year, FMC acquired the Frigoscandia Equipment unit of ASG AB for approximately $160 million. Frigoscandia, a Swedish concern with annual revenues of roughly $235 million, ranked as the worlds leading maker of commercial food-freezing equipment. Another company purchased in 1996 was the Italian firm Sandei SRL, the worlds leading maker of small-scale tomato harvesters.

Difficulty swallowing all of these acquisitions dented profitability and led to a stock price swoon, but by the summer of 1997 FMC appeared back on track, and its stock shot back up. During this same period, the company narrowed its focus to two areas: chemicals and machinery. In 1996 FMC Gold was reincorporated in Canada as Meridian Gold, Inc., and FMC Corporation then disposed of its shares in this firm through a secondary stock offering. In August of the following year, FMC completed its exit from the defense business by engineering the sale of United Defense to Carlyle Group for $850 million.

Despite the sale of United Defense, FMC still faced a lingering issue related to the Bradley Fighting Vehicle. A whistle-blower had alleged in a lawsuit that FMC had buried a report he had written calling into question the Bradleys safety in water. In April 1998 a jury returned a verdict against FMC, which then faced a penalty of as much as $375 million. A judge later reduced this judgment to around $110 million, but FMC filed an appeal of this ruling. Finally, in October 2000, the company ended a 14-year legal battle by agreeing to pay an $80 million out-of-court settlement. In the meantime, on the regulatory front, FMC agreed to pay $170 million to settle charges that it had repeatedly violated hazardous waste laws at its Pocatello, Idaho, phosphorus plant. The agreement called for the company to spend $93 million on cleanup efforts and $65 million to improve air quality and provide public health assessments. FMC also had to pay an $11.9 million civil penalty.

Several transactions in 1999 brought significant changes to FMCs chemical operations. The company bought the Norway-based Pronova BioPolymer alginate business of Norsk Hydro and combined it with the existing pharmaceutical and food ingredients business to create FMC BioPolymer. FMC also bolstered its soda ash business by acquiring Tg Soda Ash from Elf Atochem, thereby gaining a soda ash operation neighboring its own facilities in Wyoming. On the divestment side, FMC sold its process additives division to Great Lakes Chemical Corporation for $159 million. This division had produced flame retardants, specialty water-treatment chemicals, and lubricant additives. FMC also unloaded its bio-products division, which was the worlds largest producer of electrophoresis products, selling it to Cambrex Corporation for $25 million. Finally, FMC reached an agreement to form a phosphorus chemicals joint venture with Solutia Inc. This 50-50 venture, operating as Astaris LLC, combined all of the two companies phosphate assets in North and South America, creating a concern with annual sales of around $600 million. Excluded from the venture was FMC Foret, S.A., FMCs Spanish phosphate business. Business operations at Astaris officially began in the spring of 2000.

EARLY 21ST CENTURY: BECOMING A PURE CHEMICALS CONCERN

In 1999 FMC enjoyed its best earnings year since its 1986 recapitalization, while revenues totaled $4.11 billion. Long criticized for its status as a conglomerate, FMC in late 2000 announced plans to split itself into two public companies by spinning off the machinery side of its business. This move was aimed in part at addressing what the company believed was Wall Streets consistent undervaluing of its shares. To achieve this split, FMC first placed its machinery business within a wholly owned subsidiary called FMC Technologies, Inc. In June 2001 FMC Corporation completed an initial public offering of 17 percent of FMC Technologies shares. Then at the end of 2001 FMC completed the split by distributing all of its remaining FMC Technologies shares as a tax-free dividend to its shareholders. FMC Technologies remained based in Chicago, while FMC Corporation moved its headquarters to Philadelphia, where the chemical business had been based since 1974.

FMC Corporation began its new era as a chemical-only concern with approximately $2 billion in annual revenues and three main areas of focus. It produced agricultural products, specifically insecticides and herbicides; specialty chemicals, namely those added to food and pharmaceutical products; and industrial chemicals, such as soda ash, hydrogen peroxide, and phosphates. Taking over as chairman and CEO of FMC was William G. Walter, who since joining the company in 1974 had worked his way up to executive vice-president. Among the various positions he had held along the way was head of specialty chemicals.

Cost-cutting and debt reduction took center stage in the initial years after the spinoff. Restructuring efforts significantly cut earnings in both 2002 and 2003, when net income amounted to only $65.8 million and $26.5 million, respectively. By 2004 long-term debt had been cut from $1.2 billion to $893 million. In 2003 Solutia sued FMC over the Astaris venture, accusing its partner of fraud in connection with the failure of a chemical technology that FMC had contributed to the joint venture. The two sides reached a settlement in April 2007 whereby FMC agreed to pay Solutia $22.5 million. In the meantime, in November 2005, the partners sold Astaris to Israel Chemicals Limited for $255 million.

Taking restructuring charges out of the equation, FMC in 2006 enjoyed its best year since the spinoff of the machinery operations. Earnings per share were up 25 percent, revenues increased more than 9 percent to $2.35 billion, and long-term debt was reduced further to $576 million. While continuing to invest in its existing operations and pursue organic growth, FMC also remained vigilant for additional opportunities to cut costs. In June 2007, for instance, the company announced plans to phase out production at its Baltimore agricultural chemicals plant by March 2008. Pretax restructuring charges for this closure were expected to total as much as $135 million, while the company aimed to generate annual cost savings of between $25 million and $35 million from the move. FMC was also seeking avenues of external growth, including product acquisitions in agricultural products and bolt-on acquisitions in specialty chemicals, but was taking a careful approach to such opportunities.

Updated, April Dougal Gasbarre
David E. Salamie

PRINCIPAL SUBSIDIARIES

Electro Quimica Mexicana, S.A. de C.V. (Mexico); Energias de Villarrubia, S.L. (Spain); FMC Agricultural Products International AG (Switzerland); FMC Agroquimica de Mexico S.A. de C.V.; FMC Asia Pacific Inc. (Hong Kong); FMC BioPolymer AS (Norway); FMC BioPolymer Germany G.m.b.H.; FMC BioPolymer France SAS; FMC Chemicals Netherlands BV; FMC Chemical International AG (Switzerland); FMC Chemicals (Malaysia) Sdn. Bhd.; FMC Australasia Pty. Ltd. (Australia); FMC Chemicals (Thailand) Limited; FMC Chemicals Italy Srl; FMC Chemicals KK (Japan); FMC Chemicals Limited (U.K.); FMC Chemical S.p.r.l. (Belgium); FMC de Mexico, S.A. de C.V.; FMC Foret, S.A. (Spain); FMC France SAS; FMC India Private Limited; FMC Korea Ltd.; FMC Manufacturing Limited (Ireland); FMC of Canada Limited; FMC Quimica do Brasil Limitada (Brazil); FMC (Shanghai) Chemical Technology Consulting Co. Ltd. (China); FMC (Shanghai) Commercial Enterprise (China); FMC United (Private) Ltd. (Pakistan); Foraneto, S.L. (Spain); Forel, S.L. (Spain); Forsean, S.L. (Spain); Minas El Castellar S.L. (Spain); Minera Del Altiplano S.A. (Argentina); P.T. Bina Guna Kimia (Indonesia); Suzhou Fu Mei-Shi Crop Care Company, Ltd. (China).

PRINCIPAL DIVISIONS

Agricultural Products Group; Specialty Chemicals Group; Industrial Chemicals Group.

PRINCIPAL COMPETITORS

Syngenta AG; Bayer AG; Monsanto Company; BASF Aktiengesellschaft; The Dow Chemical Company; E. I. du Pont de Nemours and Company; Danisco A/S; J.M. Huber Corporation; Kerry Group plc; Cargill, Incorporated; DGF Stoess AG; Tate & Lyle PLC; J. Rettenmaier & Söhne GmbH; Yeu Ming Tai Chemical Industrial Co., Ltd.; Asahi Kasei Corporation; Blanver Farmoquímica Ltda.; Rockwood Holdings, Inc.; Sociedad Química y Minera de Chile S.A.; OCI Chemical Corporation; Solvay SA; General Chemical Industrial Products Inc.; Searles Valley Minerals; Akzo Nobel N.V.; Arkema; Degussa AG; Kemira Oyj; Thermphos International BV; Prayon Rupel S.A.

FURTHER READING

Andreoli, Tom, Bargain or Bustup? The Puzzle at FMC, Crains Chicago Business, June 24, 1996, p. 1.

Bennett, Elizabeth, Chemical Giant FMC Relocating to Phila., Philadelphia Business Journal, March 2, 2001.

Berss, Marcia, FMC Corp.: Marching to Its Own Drummer, Forbes, September 17, 1990, pp. 95, 98.

Brown, Robert, FMC Signs Letter to Buy Tg Soda Ash, Chemical Market Reporter, January 18, 1999, p. 3.

________, FMC Upgrades Its Core Industrial, Specialty Chemicals, Chemical Market Reporter, September 13, 1999, pp. 32, 37.

Chang, Joseph, FMC to Split Up Its Chemicals and Machinery Businesses, Chemical Market Reporter, November 6, 2000, p. 1.

Daniels, Steve, FMC to Scrap Its Lackluster Business Units, Crains Chicago Business, April 26, 1999, p. 1.

Giesen, Lauri, FMC Will Ax Less Profitable Specialty Units, American Metal Market, February 18, 1985, pp. 4+.

Gomes, Lee, A Whistle-Blower Finds Jackpot at the End of His Quest, Wall Street Journal, April 27, 1998, p. B1.

Growing Orbit: The Story of FMC Corporation, Chicago: FMC Corporation, 1992, 239 p.

Jarvis, Lisa, Astaris JV Starts Up Linking Phosphates of FMC and Solutia, Chemical Market Reporter, April 24, 2000, p. 3.

Keefe, Lisa M., FMC Will Keep on Fighting, Crains Chicago Business, May 7, 1990, p. 70.

Lashinsky, Adam, FMC Fighting Flatliner Rep, Crains Chicago Business, April 18, 1994, p. 42.

Lazorko, Lisa, FMC Chemicals: A Low-Cost Producer Makes High Profits, Chemical Week, June 10, 1987, pp. 30+.

Machan, Dyan, The Strategy Thing, Forbes, May 23, 1994, pp. 113-14.

McCoy, Michael, FMC Bullish on Basic Chemicals, Chemical and Engineering News, February 14, 2000, pp. 26-27.

Melcher, Rachel, Tel Aviv Company Will Buy Astaris, St. Louis Post-Dispatch, September 2, 2005, p. B1.

Merrick, Amy, FMC Says It Will Divide Itself into Two Publicly Traded Firms, Wall Street Journal, November 1, 2000, p. B2.

Miller, James P., FMC Drilling for Share-Price Gusher, Chicago Tribune, March 7, 2001, Business sec., p. 1.

________, FMC to Pay $80 Million in Bradley Whistle-Blower Case, Chicago Tribune, October 14, 2000, Business sec., p. 1.

Nielsen, Karol, FMC to Focus on Chemicals, Chemical Week, November 8, 2000, p. 13.

Pasztor, Andy, Carlyle Beats Out Dynamics for United Defense, Wall Street Journal, August 27, 1997, p. A3.

Quintanilla, Carl, FMC to Pay $310.8 Million for Moorco, Wall Street Journal, June 13, 1995, p. A4.

Schmitt, Bill, Great Lakes Buys FMCs Additives Division, Chemical Week, May 12, 1999, p. 12.

Slutsker, Gary, The Leveraged Cashout, Forbes, April 7, 1986, p. 58.

Smith, Geoffrey, Hard Choices, the Hard Way, Forbes, November 7, 1983, pp. 108+.

U.S. District Court Cuts Damage Award in Case Against FMC, Wall Street Journal, December 17, 1998, p. B17.

Westervelt, Robert, FMC Announces Refinancing Plan, Chemical Week, September 25, 2002, p. 10.

Wood, Andrew, FMC: Expanding Its Chemical Universe, Chemical Week, December 2330, 1992, pp. 2426.

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FMC Corporation

FMC Corporation

200 East Randolph Drive
Chicago, Illinois 60601-6401
U.S.A.
(312) 861-6000
Fax: (312) 861-6148

Public Company
Incorporated:
1928 as the John Bean Manufacturing
Company
Employees: 20,696
Sales: $2.08 billion
Stock Exchanges: New York Boston Cincinnati NASDAQ Philadelphia Pacific
SICs: 3795 Tanks and Tank Components; 3812 Search and
Navigation Equipment; 2812 Alkalis and Chlorine; 3523
Farm Machinery and Equipment; 3061 Mechanical Rubber
Goods; 2879 Agricultural Chemicals, Not Elsewhere
Classified; 1041 Gold Ores; 3599 Industrial Machinery,
Not Elsewhere Classified; 3711 Motor Vehicles and
Passenger Car Bodies; 2819 Industrial Inorganic
Chemicals, Not Elsewhere Classified; 3556 Food Products
Machinery; 3489 Ordnance and Accessories, Not
Elsewhere Classified

FMC Corporation is a leading producer of industrial and specialty chemicals and maintains interests in defense systems, gold mining, and its historical base, machinery and equipment. Having grown to include a diverse group of products and industries in the early 1990s, the conglomerate was struggling to achieve better organization and healthier returns from its businesses.

The roots of the FMC Corporation lie in the John Bean Spray Pump Company established in California in 1884 when Bean invented the hand spray pump. Over the next 34 years, he built his product into the preferred pump in the region. Another prosperous local firm in the 1920s was Frank L. Burrells cannery. The two merged in 1928 to form the John Bean Manufacturing Company, which changed its name to the Food Machinery Corporation the next year. From this manufacturer of simple food production equipment the diverse FMC was to grow.

Bean, not a businessman by nature, passed the management of the company on to his son-in-law, David Christian Crummey, at a fairly early point in time. Upon the merger, control passed on to his son, John David Crummey. While the younger Crummey was a strong voice leading the firm, the hand of another man was evident in the companys actions. This man was Paul L. Davies, Crummeys son-in-law, who left a banking vice-presidency to become vice-president of Food Machinery. The policies of growth which Davies put into effect kept the company financially healthy throughout the Depression. Davies recognized the cyclical nature of purely agricultural businesses; they depended too much on crop fluctuations. In 1933, therefore, the firm began to expand by purchasing the Peerless Pump Company, whose inexpensive pumps were in high demand during these lean years. This was the beginning of a policy of diversification which was to bring the company into increasingly varied and prosperous areas.

Food Machinery not only survived the Depression, it prospered, and emerged in the early 1940s prepared for the consistent growth which was to characterize it under Davies. An aggressive and energetic man who worked 12 hour days, Davies used diversification as both a means of expanding the companys market and a hedge against cyclical weakness in any one branch. In 1943, the company made its first foray into the chemical market by acquiring the Niagara Sprayer and Chemical Company, a strong independent manufacturer of insecticides and fungicides. This move was followed by the 1948 acquisition of Westvaco Chemical Corporation, which produced industrial chemicals. The Niagara merger left Food Machinery in the position of producing not only sprayers and pumps, but the chemicals to put through them; the later merger, upon which the company became the Food Machinery and Chemical Corporation, expanded their chemical product line even more.

Alongside this chemical expansion, Food Machinerys equipment division prospered in the 1940s due to the Second World War. Some months before the United States entered the war, Food Machinery began producing the Water Buffalo, an amphibious tank which provided important troop mobility over the next crucial years. Other products were adapted for wartime uses as well, such as the orchard sprayer, which was to be used for decontamination purposes if necessary, and nailing machines which produced ammunition boxes at an exceedingly high rate.

After the war, the companys production line returned to its earlier emphasis, although defense contracts continued to play an important role in FMCs operations throughout the twentieth century. With the war ended, however, the company was at no loss for customers. Wartime reductions produced a market for expensive and technologically advanced food processing equipment, and Food Machinerys business grew. Other existing products were adapted to peacetime uses as they had been in war, with sprayers, for example, being turned to firefighting uses. A drop in earnings occurred the year after the Westvaco acquisition, but by 1950 the company was back on its prosperous track. Davies continued to put money both into diversification and into research and engineering which led to new products and continued growth.

Every year between 1950 and 1966 the Food Machinery and Chemical Corporation (which changed its name to the FMC Corporation in 1961) showed a financial gain, and the company was a favorite of investors. Their trend toward diversification continued, most notably with the purchase of the American Viscose Corporation in 1963, despite opposition from the antitrust division of the Justice Department. Davies vigor, vision, and talent for profitable purchases provided a strong center for the companys rather loose management through 1966. In this year, Davies decided to retire. His strategy was to avoid overstaying his productive years and to leave a strong successor. The man who replaced him as chief executive officer, who had assumed the presidency some few years back, was engineer James M. Hait. It was Davies intent to leave this hand-picked officer to continue the companys expansion and growth.

In 1967, FMCs financial growth came to an abrupt halt. While Hait would remain chairperson until 1971, he was replaced as chief executive officer in 1967 by Jack M. Pope. This year also marked the companys relocation of its headquarters to Chicago and its acquisition of the Link-Belt Corporation, an equipment manufacturer which quickly proved to have antiquated plants and serious financial difficulties. This purchase, along with the 1963 Avisco acquisition, became a draining point for FMCs finances, instead of increasing its profitability.

In 1968, with Pope as its leader, FMC did show a brief resumption of its upward growth trend. However, this improvement on the books proved largely due to an accounting change, and the health of the company was not restored. The growth which had paid off so strongly for Paul Davies was too much for his successors. Even toward the end of Davies administration, the loose reins under which he had run the company had been a bit too loose for its ever-increasing size. Now, under new management, the control necessary for an improved financial condition was lost. The status of the company declined among investors as its finances weakened. By 1973, FMC stock had fallen from $44 per share to $15.

By the end of the decade, Paul Davies company was experiencing severe financial difficulties. Its management was unable to maintain profitability. The synthetic fiber branch was losing money, and the recession of 1970-71 caused even the strong machinery division to suffer. FMCs profits fell to $39 million from their 1968 level of $75 million. It was at this point that the company appointed a third successor to Davies, one who would finally bring FMC back to financial prosperity. This successor was a Harvard Business School graduate who had been with FMC for 20 years, Robert H. Malott.

From the time that Malott took control of FMC, it was clear that it would not be an easy task to revive the company. Obviously a change in management strategy was called for in order to turn around the companys decline. For Malott, that change began with a recentralization of management. The companys size and relatively loose management procedures had contributed to its decline, so Malott reorganized FMC by consolidating the many branches of the company into two groups for better administrative control.

Realizing that the mere continuation of former company policy was an unworkable strategy, Malott approached his first years as chief executive officer with a different set of policies. Between 1972 and 1978, FMC disposed of 20 product lines that were either immediate financial drains or were soon to be in danger. This was one step that Hait and Pope had apparently been unwilling to take, but it gave new life to the company. Chief among these sales and closings was the 1976 sale of the fiber division. Price cutting in the synthetics market and competition from cotton and polyester (FMC produced primarily rayon) had made this one of the chief money drains and one of Davies few untimely purchases. Malott ended this losing struggle by selling the division to the newly-formed Avtex Fibers Inc. He also made other timely decisions, such as the 1976 closing of a pulp mill in Alaska, in the face of strict environmental controls that were about to be imposed. His evaluation of these branches and concentration on the three core areas of industrial chemicals, defense equipment, and machinery provided the first step toward FMCs recovery.

Malotts financial policies also began to revive FMC during this period. One such policy was his refusal to reduce prices when faced with competition. Instead, Malott cut production, keeping profit margins up. Another keynote of Malotts financial management was his aggressive capital spending. His outlays in research and development made it possible for new products to be developed. In addition, in the two years prior to 1976, FMC put $400 million into high growth areas, such as petroleum equipment and specialty chemicals. The profitability of Malotts policies was almost immediately apparent; by the spring of 1976, with a personnel increase of only 1,000 workers, Malott raised sales from $1.3 billion to $2.3 billion, a much-needed $1 billion increase.

By 1976, FMCs great comeback was obvious. In an April article, Forbes magazine called the corporation a stronger, better run company than it was in its heyday. Even with the company well on the road to full recovery, however, Malott continued to revise FMC policy. In 1977, Malott began to decentralize the administrative control of the company in order to facilitate faster growth. The diversification of the company itself suggested somewhat decentralized management, now that it was financially stable. Malott divided the company into nine well-defined groups, centering around their chemical, equipment, and specialty products. The situation differed from earlier times in that final decisions still rested with top management and close communication was to be maintained. Lower managers were being trained to think in terms of a world-wide market. This restructuring was to lead the company into its next significant period of growth and expansion.

The years between 1977 and 1980 were not, however, marked solely by unchecked growth. As in any industry, fluctuations were seen in the demand for FMC products. Four of the nine groups remained the strongest: defense equipment, petroleum equipment, industrial chemicals, and agricultural chemicals. Much of the strength of this last category came from the sales of Furadan, a popular pesticide for protecting corn, sugar cane, and some 18 other crops. Fluctuations in chemical markets were one reason that FMC, by 1980, was not reporting a financial return at hoped-for rates.

While management was bringing FMC back to prosperity, there were also periods of intense public scrutiny. As the government became more interested in environmental issues, for example, some of FMCs procedures were called into question. Alleged pollution from such chemicals as carbon tetrachloride gave rise to cease-and-desist orders and plant closings throughout the mid- to late 1970s. FMC was also involved in the major controversy over phosphates during the first half of the decade. In 1970, the company was the second largest producer of the chemicals, which caused premature aging of natural water sites. Court battles on the subject continued through 1975, when a Chicago ordinance banning the chemicals was upheld. Such environmental conflicts, while not damaging the company directly, forced additional internal changes in production.

FMC also became the primary contractor for an advanced armed personnel carrier called the Bradley Fighting Vehicle, developed during the 1970s to counter the introduction of a similar but less sophisticated Soviet model called the BMP. In the early 1980s, the Bradley was criticized for a lack of battlefield survivability. FMC and Pentagon officials responded that even the most heavily armored tanks were not impervious to attack, but nonetheless began to investigate ways to improve the Bradley. About 3,000 Bradleys were delivered, each capable of defeating enemy tanks and other fighting vehicles while moving at high speeds in any kind of weather.

Despite such conflicts, FMC continued its growth and expansion during the 1980s. Plans for new acquisitions were announced in 1984, and, the following year, FMCs stock standing was upgraded to attractive by an analyst specializing in chemicals firms, who had for a decade seen the field as only a fair risk. Profits and returns increased to record levels and long-term debt was insubstantial, an equation that drew the attention of corporate raiders in the 1980s. Amid concerns about a possible hostile takeover, CEO Malott planned a general restructuring of the entire company. Managements recapitalization effected a leveraged buyout. The company borrowed $1.8 million against its own assets, and paid public shareholders (who owned about 82 percent of FMC) $80 cash each in exchange for a 15 percent stake in the company. Management declined the cash to raise their cumulative share to 35 percent. The plan, which was okayed by shareholders in May 1986, saved FMC from outside takeover but saddled it with debt.

At the same time, FMC became embroiled in the insider trading scandal of 1986, when investor Ivan Boesky used illegally gained information about FMCs restructuring to turn a profit of $975,000. In the process, according to the company, his influence cost FMC some $225 million in additional recapitalization costs.

In the late 1980s, Malott expanded FMC into gold mining. While prospecting for antimony, a flame retardant chemical, the corporation discovered gold and elected to develop the resources under a new subsidiary, FMC Gold. In 1989, the company acquired Meridian Gold from Burlington Resources through an exchange of stock. By the end of the decade, FMC Gold contributed 25 percent of the conglomerates annual revenues and helped offset declining defense income as the Cold War ended.

Malott retired in 1991 at the age of 65, turning over a business he regarded as dull to FMC President Robert Burr. In the 1990s, industrial chemicals (26 percent of 1993 revenues and 17 percent of operating income) were sluggish, as detergent manufacturers continued to remove FMCs phosphates from their products. The defense segment (25 percent of sales and 43 percent of income) continued to suffer as well, as competition from a cheaper Russian tank combined with Defense Department cutbacks to herald FMCs halting exit from that industry. Early in 1994, FMC created United Defense, L.P., a joint venture with Harsco Corporations Combat Systems, to control its defense unit. FMC Golds primary mine played out in 1993, and in spite of the precious metals strong performance that year, the subsidiary ran in the red, losing $50 million on operations. FMCs remaining machinery business contributed 23 percent of revenues but just two percent of operating income in 1993.

Specialty or performance chemicals were FMCs mainstay, contributing 23 percent of sales and 25 percent of operating income. FMC continued to lead the world in the production of cellulose gel, a fat replacement for food products marketed under the Avicel and Novagel brands. The company was also the leading manufacturer of agarose, a product used in genetic research, as well as phosphate ester flame retardants.

In May 1994, Dyan Machan, writing for Forbes, characterized FMC as an untidy conglomeration of disparate businesses. She also quoted analyst Paul Rayman, of S.G. Warberg Securities, who called FMC a hangover from the 1960sa company with little strategic focus, betting on losing businesses. Nevertheless, Burt outlined three fundamental strengths and future strategies in his 1993 letter to shareholders: strong positions in attractive markets; high returns and excellent cash flow through the economic cycles of the markets in which we operate; and a long-term strategy to increase FMCs historic growth rates by making investments that will increase growth in our major markets at returns above the cost of capital.

Principal Subsidiaries

FMC Foret, S.A.; FMC Gold; United Defense, L.P. (60%); Kongsberg Offshore Services, a.s.; SOFEC, Inc.

Further Reading

Berss, Marcia, FMC Corp.: Marching to Its Own Drummer, Forbes, September 17, 1990, pp. 95, 98.

Machan, Dyan, The Strategy Thing, Forbes, May 23, 1994, pp. 113-114.

Wood, Andrew, FMC: Expanding Its Chemical Universe, Chemical Week, December 23-30, 1992, pp. 24-26.

updated by April Dougal Gasbarre

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FMC Corporation

FMC Corporation

200 East Randolph Drive
Chicago, Illinois 60601
U.S.A.
(312) 8616000

Public Company
Incorporated: August 10, 1928 as the John Bean
Manufacturing Company
Employees: 28,064
Sales: $3.229 billion
Market Value: $1.407 billion
Stock Index: New York

The billion-dollar FMC Corporation began as a plant sprayer manufacturer toward the end of the 19th century. This manufacturer of defense, industrial and agricultural equipment, and chemicals fell upon hard times some two decades ago, but two extraordinary leaders have shaped it into the strong multinational corporation that it is today.

The roots of the FMC Corporation lie in the John Bean Spray Pump Company established in California in 1884 when Bean invented the hand spray pump. Over the next 34 years he built his product into the preferred pump in the region. Another prosperous local firm in the 1920s was Frank L. Burrells cannery. The two merged in 1928 to form the John Bean Manufacturing Company, which changed its name to the Food Machinery Corporation the next year. From this manufacturer of simple food production equipment the diverse FMC was to grow.

Bean, not a businessman by nature, passed the management of the company on to his son-in-law, David Christian Crummey, at a fairly early point in time. Upon the merger, control passed on to his son, John David Crummey. While the younger Crummey was a strong voice leading the firm, the hand of another man was evident in the companys actions. This man was Paul L. Davies, Crummeys own son-in-law, who left a banking vice-presidency to become vice-president of Food Machinery. The policies of growth which Davies put into effect kept the company financially healthy throughout the Depression. Davies recognized the cyclical nature of purely agricultural businesses; they depended too much on crop fluctuations. In 1933, therefore, the firm began to expand by purchasing the Peerless Pump Company, whose inexpensive pumps were in high demand during these lean years. This was the beginning of a policy of diversification which was to bring the company into increasingly varied and prosperous areas.

Food Machinery not only survived the Depression, it prospered, and emerged in the early 1940s prepared for the consistent growth which was to characterize it under Davies. An aggressive and energetic man who worked consistent 12 hour days, Davies used diversification as both a means of expanding the companys market, and a hedge against cyclical weakness in any one branch. In 1943 the company made its first foray into the chemical market by acquiring the Niagara Sprayer and Chemical Company, a strong independent manufacture/of insecticides and fungicides. This move was followed by the 1948 acquisition of Westvaco Chemical Corporation, which produced industrial chemicals. The Niagara merger left Food Machinery in the position of producing not only sprayers and pumps, but the chemicals to put through them; the later merger, upon which the company became the Food Machinery and Chemical Corporation, expanded their chemical product line even more.

Alongside this chemical expansion, Food Machinerys equipment division prospered in the 1940s due to the Second World War. Some months before the United States entered the war, Food Machinery began producing the Water Buffalo, an amphibious tank which provided important troop mobility over the next crucial years. Other products were adapted for wartime uses as well, such as the orchard sprayer which was to be used for decontamination purposes if necessary, and nailing machines which produced ammunition boxes at an exceedingly high rate.

After the war, the companys production line returned to its earlier emphasis, although defense contracts continue to play an important role to this day. With the war ended, however, the company was at no loss for customers. Wartime reductions produced a market for expensive and technologically advanced food processing equipment, and Food Machinerys business grew. Other existing products were adapted to peacetime uses as they had been in war, with sprayers, for example, being turned to firefighting uses. A drop in earnings occurred the year after the Westvaco acquisition, but by 1950 the company was back on its prosperous track. Davies continued to put money both into diversification, and into research and engineering which led to new products and continued growth.

Every year between 1950 and 1966 the Food Machinery and Chemical Corporation (which changed its name to the FMC Corporation in 1961) showed a financial gain, and the company was a favorite of investors. Their trend toward diversification continued, most notably with the purchase of the American Viscose Corporation in 1963, despite opposition from the antitrust division of the Justice Department. Davies vigor, vision, and talent for profitable purchases provided a strong center for the companys rather loose management through 1966. In this year, Davies decided to retire. His strategy was to avoid overstaying his productive years, and to leave a strong successor. The man who replaced him as chief executive officer, who had assumed the presidency some few years back, was engineer James M. Hait. It was Davies intent to leave this hand-picked officer to continue the companys expansion and growth.

Perhaps the choice was an unfortunate one; perhaps certain market trends made some decline inevitable. What is certain is that, in 1967, FMCs financial growth came to an abrupt halt. While Hait would remain chairman of the company until 1971, he was replaced as chief executive officer in 1967 by Jack M. Pope. This year also marked the companys relocation of its headquarters to Chicago, and its acquisition of the Link-Belt Corporation, an equipment manufacturer which quickly proved to have antiquated plants and serious financial difficulties. This purchase, along with the 1963 Avisco acquisition, became a draining point for FMCs finances, instead of increasing its profitability.

In 1968, with Pope as its leader, FMC did show a brief resumption of its upward growth trend. However, this improvement on the books proved to be largely due to an accounting change, and the health of the company was not restored. The growth which had paid off so strongly for Paul Davies was too much for his successors. Even toward the end of Davies administration, the loose reins under which he had run the company had been a bit too loose for its ever-increasing size. Now, under new management, the control necessary for an improved financial condition was lost. The status of the company declined among investors as its finances weakened. By 1973 FMC stock had fallen from $44 per share to $15.

By the end of the decade Paul Davies company was experiencing severe financial difficulties. Its management was unable to maintain profitability. The synthetic fiber branch was losing money, and the recession of 197071 caused even the strong machinery division to suffer. FMCs profits fell to $39 million from their 1968 level of $75 million. It was at this point that the company appointed a third successor to Davies, one who would finally bring FMC back to financial prosperity. This successor was a Harvard Business School graduate who had been with FMC for 20 years, Robert H. Malott.

From the time that Malott took control of FMC, it was clear that it would not be an easy task to revive the company. Obviously a change in management strategy was called for in order to turn around the companys decline. For Malott, that change began with a recentralization of management. The companys size and relatively loose management procedures had contributed to its decline, so Malott reorganized FMC by consolidating the many branches of the company into two groups for better administrative control.

Realizing that the mere continuation of former company policy was an unworkable strategy, Malott approached his first years as chief executive officer with a different set of policies. Between 1972 and 1978, FMC disposed of 20 product lines which were either immediate financial drains or were soon to be in danger. This was one step that Hait and Pope had apparently been unwilling to take, but it gave new life to the company. Chief among these sales and closings was the 1976 sale of the fiber division. Price cutting in the synthetics market and competition from cotton and polyester (FMC produced primarily rayon) had made this one of the chief money drains and one of Davies few untimely purchases. Malott ended this losing struggle by selling the division to the newly-formed Avtex Fibers Inc. He also made other timely decisions, such as the 1976 closing of a pulp mill in Alaska, in the face of strict environmental controls which were about to be imposed. His evaluation of these branches provided the first step toward FMCs recovery.

Malotts financial policies also began to revive FMC during this period. One such policy was his refusal to reduce prices when faced with competition. Instead, Malott cut production, keeping profit margins up. Another keynote of Malotts financial management was his aggressive capital spending. His outlays in research and development made it possible for new products to be developed. In addition, in the two years prior to 1976, FMC put $400 million into high growth areas, such as petroleum equipment and specialty chemicals. The profitability of Malotts policies was almost immediately apparent; by the spring of 1976, with a personnel increase of only 1000 workers, Malott raised sales from $1.3 billion to $2.3 billion, a much-needed $1 billion increase.

By 1976, FMCs great comeback was obvious. In an April article Forbes magazine called the corporation a stronger, better run company than it was in its heyday. Even with the company well on the road to full recovery, however, management policy did not rest with contentment. In 1977, Malott began to decentralize the administrative control of the company in order to facilitate faster growth. The diversification of the company itself suggested somewhat decentralized management, now that it was financially stable. Malott divided the company into nine well-defined groups, centering around their chemical, equipment, and specialty products. The situation differed from earlier times in that final decisions still rested with top management, and close communication was to be maintained. Lower managers were being trained to think in specific terms, those of a world-wide market. This restructuring was to lead the company into its next significant period of growth and expansion.

The years between 1977 and 1980 were not, however, marked solely by unchecked growth. As in any industry, fluctuations were seen in the demand for FMC products. Four of the nine groups, however, remained the strongest: defense equipment, petroleum equipment, industrial chemicals, and agricultural chemicals. Much of the strength of this last category came from the sales of Furadan, still the most popular pesticide for protecting corn, sugar cane, and some 18 other crops. Fluctuations in chemical markets were one reason that FMC, by 1980, was not reporting a financial return at hoped-for rates.

While management was bringing FMC back to prosperity, there were also periods of intense public scrutiny. As the government became more interested in environmental issues, for example, some of FMCs procedures were called into question. Alleged pollution from such chemicals as carbon tetrachloride gave rise to cease-and-desist orders and plant closings throughout the mid-to-late 1970s. FMC was also involved in the major controversy over phosphates during the first half of the decade. In 1970 the company was the second largest producer of the chemicals, which cause premature aging of natural water sites. Court battles on the subject continued through 1975 when a Chicago ordinance banning the chemicals was upheld. Such environmental conflicts, while not damaging the company directly, forced additional internal changes in production.

FMC is also the primary contractor for an advanced armed personnel carrier called the Bradley Fighting Vehicle, developed during the 1970s to counter the introduction of a similar but less sophisticated Soviet model called the BMP. In the early 1980s the Bradley was criticized for a lack of battlefield survivability. FMC and Pentagon officials responded that even the most heavily armoured tanks are not impervious to attack, but nonetheless began to investigate ways to improve the Bradley. About 3000 Bradleys have been delivered, each capable of defeating enemy tanks and other fighting vehicles while moving at high speeds in any kind of weather.

Despite such conflicts, FMC continued its growth and expansion during the 1980s. Plans for new acquisitions were being announced in 1984, and the following year FMCs stock standing was upgraded to attractive by an analyst specializing in chemicals firms, who has for a decade seen the field as only a fair risk. Profits and returns increased to record levels. In 1986, however, the picture began to change. Amid concerns about a possible hostile takeover, FMC began to plan a general restructuring of the entire company. Drops in income, due to some declining defense revenues, left the company vulnerable. Managements recapitalization plan, which cleared with stockholders in May, was formulated to shift the distribution of stock away from the public to company employees. The negative side of the plan was the $2 billion in new debt required to finance the program. FMCs stock declined in desirability due to this move, and management admits that it does not expect its stock to recover until 1991.

Another factor in the recent history of FMC involved the insider trading scandal of 1986. Investor Ivan Boesky used illegally gained information about FMCs restructuring to turn a profit of $975,000. In the process, according to the company, his influence cost FMC some $225 million in additional recapitalization costs. This economic stress has laid an even heavier burden on the threatened company.

The future of FMC is now more dependent than ever before upon fluctuations in interest rates and commodity prices, problems with its defense markets, and possible ill effects of the new debt load. While some Wall Street analysts have doubts, the companys management expresses confidence that it can retain its financial viability. The FMC Corporation faces a period of more uncertainty in the next five years than at any other time in its history. However, if a diversified yet structured product line and the kind of firm, creative management exhibited by Robert Malott offer hope for success, FMC has a promising basis for revival.

Principal Subsidiaries

B S & B Engineering Co., Inc.; Intermountain Realty Corp.; Intertrade Corp.; Wayne Inter-American Corp.; Lithium Corp. of America; Marine MCI Corp. The company also lists subsidiaries in the following countries: Argentina, Australia, Austria, Belgium, Brazil, Cameroon, Canada, France, Gabon, Greece, Guatemala, Italy, Lebanon, The Netherlands, Norway, Philippines, Singapore, South Africa, Spain, Switzerland, Thailand, United Kingdom, and Venezuela.

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"FMC Corporation." International Directory of Company Histories. . Encyclopedia.com. 20 Aug. 2017 <http://www.encyclopedia.com>.

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"FMC Corporation." International Directory of Company Histories. . Retrieved August 20, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/fmc-corporation-0