272 Buffalo Avenue
Freeport, New York 11520
Fax: (516) 868-8824
Incorporated: 1953 as Lea-Ronal, Inc.
Sales: $210.3 million (1997)
Stock Exchanges: New York
SICs: 2899 Chemicals & Chemical Preparations, Not Elsewhere Classified
LeaRonal, Inc. develops, produces, sells, and distributes specialty chemical additives and other products used by the connector, printed circuit board, semiconductor, and metal-finishing industries, both in the United States and abroad. Its electroplating processes, in which a metal in solution is deposited onto another metal object with the use of an electric current, account for the bulk of its sales. The company’s product line also includes specialty chemicals used in the fabrication of printed circuit boards and other electronic components.
Lea-Ronal, Inc. was incorporated in New York in 1953 by Barnet D. Ostrow (who started from scratch in a Brooklyn garage just after World War II), Fred I. Nobel, and the Lea Manufacturing Co. of Waterbury, Connecticut. The name was taken from Lea and from Ronal Chemicals, Inc., a firm jointly owned by Ostrow and Nobel. The formation of Lea-Ronal was based on a development for a bright cyanide copper-plating solution, which was subsequently patented. This new process served as a substitute for nickel in the plating industry during a period when this metal was in short supply because of the Korean War.
Competition from other businesses cut prices, so in 1958 Lea-Ronal decided to direct its research and development efforts to develop proprietary gold-plating solutions, since the company felt that the electronics industry was an expanding market requiring proprietary gold electroplating processes. Lea-Ronal further decided to concentrate its major efforts within this field on the semiconductor industry. Gold electroplating over base metals was being used to achieve desirable chemical and metallurgical properties such as resistance to corrosion, solder-ability, conductivity, and heat emissivity for semiconductors—and also for printed circuit boards and electrical contacts. By 1968, 80 percent of Lea-Ronal’s sales were related to gold electroplating, by selling compounds and proprietary processes to customers.
Originally based in Jamaica, a community in New York City’s borough of Queens, Lea-Ronal moved its headquarters farther east to Nassau County in 1968, settling into a new 30,000-square-foot plant in Freeport-Hempstead Industrial Park. It also opened a manufacturing, warehouse, and laboratory facility in Los Angeles in 1964. Another facility was located in Buxton, England, where a British subsidiary had been established in 1965. Net sales rose from $3 million in fiscal 1963 (the year ended February 28, 1963) to $16.7 million in fiscal 1967. Net income increased from $124,586 to $455,065 over this period. The company went public in 1967, offering a minority of its shares at $10.50 a share.
Lea-Ronal was buying gold in the form of bars, sheets, scrap, or jewelry, and converting it to potassium gold cyanide salts, which it then sold to its customers. These customers included many of the largest electronics and electrical equipment manufacturers in the world, but also manufacturers of watches, bracelets, cigarette lighters, pens and pencils, and costume jewelry. Lea-Ronal also was developing, producing, and marketing a diversified line of electroplating processes and compounds used in the plating of nickel, copper, zinc, silver, brass, and other metals. It was working on developing cyanide-free processes for these metals so that the waste materials would be nonpoisonous and require none of the expensive cyanide-destruction equipment and treatment otherwise needed to comply with antipollution laws. Lea-Ronal decided to concentrate on zinc, because it constituted the largest volume of plating solutions in use, and it developed the first bright zinc process that was free of cyanide.
By 1973 Lea-Ronal had developed more than 24 metal-plating processes in the past ten years, licensing some of them to foreign developers. One of these processes substituted Aurall 292M for the gold needed for gold plating, thereby cutting customer costs. The company’s Tinglo Culmo process also helped reduce gold costs for printed circuit boards, semiconductor manufacturers, and other electronic users. Jewelers and watchmakers also saved money on gold costs with the introduction of the company’s Endura Glo series.
A Swiss subsidiary was formed in 1971 and a Chicago office and laboratory opened in 1972. The company formed a joint venture with a Japanese firm in 1970 and one with a French firm in 1972. The latter became a subsidiary in 1974. In 1977 Lea-Ronal acquired a majority stake in a German company and a minority stake in a Dutch company, each acting as distributors. It exchanged its stock in the Dutch company in 1983 to purchase the remaining share of the German company.
Lea-Ronal’s sales reached $30.9 million in fiscal 1970, and its net income passed $1 million for the first time. By the end of fiscal 1975 its annual sales had reached $67 million. Of this total, sales of gold to customers who chose to use the company as their purchasing agent accounted for 86 percent, with almost all the remainder coming from sales of electroplating processes. Aside from gold processes, sold to about 375 customers, the company was marketing copper, nickel, silver, brass, zinc, tin, and palladium processes to nearly 700 customers. In 1976 Lea-Ronal announced a new electroplating process for applying zinc without the use of either cyanide or ammonia chemicals, which were also undesirable pollutants. In addition, the company formed a new division to manufacture many of the organic chemicals that it had been purchasing.
Continued Prosperity, 1978–96
The company dropped the hyphen from its name in 1978. Net sales rose from $77.4 million in fiscal 1978 to $114.4 million in 1979 and then shot up to $198.8 million in 1980. Net income rose from $2.9 million to $6.1 million over these years. Gold electroplating (including the value of the gold content) still was accounting for about 85 percent of sales. LeaRonal also was producing about 61 other processes and additives relating to the plating of other metals. Foreign sales now were accounting for more than one-fourth of net income. In 1979 the company began marketing what it believed to be the only palladium-free catalyst system for plating printed circuit boards.
One of LeaRonal’s long-standing, but unprofitable, ventures was an attempt to develop processes for the plating of plastics. Research began in 1965 but was stymied by the realization that the company could not overcome pollution problems in the near term. In 1978 it renewed its efforts, seeking sales to the automotive market, which was demanding more plated plastic parts. LeaRonal’s Ronabond APT process, announced in 1980, was said to be applicable to a wide range of plastics formerly considered difficult or even impossible to electroplate and to eliminate the generation of pollutants. The process, however, like LeaRonal’s prior attempt in plastics, failed to reach the marketplace.
LeaRonal’s revenues fluctuated during the 1980s, chiefly because of sharp rises and falls in the price of gold. In fiscal 1981, for example, net sales reached $234.2 million—triple the 1978 level—but fell in fiscal 1986 to only $105 million. Since the company was buying the metal for customers and passing on the cost rather than engaging in speculation, these fluctuations ultimately had little effect on the bottom line. LeaRonal’s net income never fell below $6 million or rose much above $8 million for most of the decade, although it reached $11.2 million in 1989. The firm’s customers, however, were starting to meet their plating needs with silver, palladium, or tin instead of gold, and components like semiconductors and circuit boards were growing smaller, requiring less of any kind of metal. Barnet Ostrow’s son Ronald succeeded his father as chief executive officer in 1989.
LeaRonal was marketing gold electroplating processes to several hundred customers in 1990, with the majority of sales made to the electronics industry and the balance to manufacturers of watches, jewelry, appliances, and automotive components. It also had several silver-plating processes and other processes for palladium and palladium nickel. About 100 nonprecious-metal processes and chemical additives were being distributed to more than 1,000 customers in a wide range of industries, including electronics, electrical equipment, and metal finishing. These related to the plating of nickel, tin, copper, zinc, brass, and other metals. Foreign subsidiaries, which now included one in Southeast Asia, accounted for 42 percent of revenue and 53 percent of operating profit in fiscal 1990.
During fiscal 1992 revenues fell to a five-year low of $129.1 million, in part due to lower gold prices, in part due to lower gold sales. The company remained quite profitable, however, and even in 1992 net income came to $7.9 million. LeaRonal was transforming itself from a domestic company with a limited customer base to an international concern with more than 2,000 customers around the world. By 1993 half of LeaRonal’s sales and three-quarters of its operating profits were coming from abroad. Instead of depending on the resale of precious metals, it was increasingly sustained by the more profitable sale of its patented processes and proprietary chemistry. In fiscal 1993, for the first time, revenues from proprietary chemistry outstripped those from precious-metal content.
In 1993 LeaRonal was placing its hopes of future growth primarily on two processes: Conductron DP and Ronstan TP. The first was a way to directly metallize a printed circuit board through holes, a process that did not require formaldehyde or other carcinogens. The second was said to be the first new tin-plating technology offered to the steel industry in more than 40 years, one that required less energy and substituted a biodegradable organic acid for ferrocyanide or carcinogenic phenol vapors.
LeaRonal was offering more than 300 formulations for gold, silver, palladium, nickel, copper, tin, and zinc in 1996. For the printed circuit board industry, it now offered not only plating processes, but also processes for the preparation chemicals, the dry film, and the final protective coatings. Net sales reached a record $211.6 million in fiscal 1996 and net income a record $15.6 million. Although revenues dipped slightly the following year, to $210.3 million, net income rose to $16.5 million. The company had a long-term debt of $3 million and a cash balance of $40 million, which the president called “our security blanket.” Directors and officers of LeaRonal owned 29 percent of the common stock, with Nobel holding ten percent and Barnet Ostrow holding nine percent.
LeaRonal in 1997
During fiscal 1997 metal electroplating processes accounted for 52 percent of LeaRonal’s sales, precious-metal content for 43 percent, and other products for five percent. Of metal-process sales, precious-metal processes accounted for 17 percent and nonprecious-metal processes for 83 percent. The number of customers for these processes was about 2,500. Precious-metal sales consisted of gold, silver, and palladium as a component of the process. In most of the other processes offered for sale, LeaRonal supplied only the specialized chemical additives needed.
LeaRonal’s patented electroplating processes included Palladure (palladium), Pallamet (palladium-nickel), Silverjet (silver), Copper Gleam (copper), SLZ (zinc), SLZ Plus (zinc), Millenium (zinc), Zincal (zinc), Tinglo Culmo (tin), Ronaston TP (tin), Plutin LA (tin-lead), Solderon PC, Solderon SC, and Solderon LG (tin and tin-lead alloy). Royalties from patented processes exceeded $1.9 million in fiscal 1997.
LeaRonal’s British and Swiss subsidiaries each had complete laboratory and manufacturing facilities for the manufacture and sale of substantially all of the company’s products and processes. Certain of its products also were being manufactured at its other European and Asian facilities. Aside from its four European subsidiaries, LeaRonal had subsidiaries in Hong Kong, Singapore, South Korea, and Taiwan. In the United States, Freeport remained the firm’s center of operations, but it also maintained a laboratory and sales office in Addison, Illinois, and a manufacturing facility in Orange, California, with full technical services and sales capability.
LeaRonal (UK) pic; LeaRonal AG (Switzerland; 93%); LeaRonal Asia Ltd. (Hong Kong; 80%); LeaRonal France (France; 85%); LeaRonal GmbH (Germany); LeaRonal Korea, Inc. (South Korea; 80%); LeaRonal Pacific Corp.; LeaRonal Singapore Pte, Ltd. (Singapore; 86%); LeaRonal Taiwan (Taiwan; 80%); Lea-Ronal Export Sales, Inc.; Ronal Foreign Sales Corp. (U.S. Virgin Islands).
Berell, D.J., “Gold Business Is a Glittering Success for Lea-Ronal, Inc.,” Investment Dealers’ Digest, May 6, 1968, pp. 28d–28e.
Brammer, Rhonda, “The Right Chemistry,” Barron’s, November 15, 1993, p. 14.
“Lea-Ronal, Inc.,” Wall Street Transcript, June 18, 1973, p. 33,432.
McConville, Daniel J., “The Midas Touch at LeaRonal,” Chemical Week, September 4, 1996, p. 56.
“New Specialties Seller,” Chemical Week, August 11, 1976, p. 21.
“New Ways to Metallize Items—At Less Cost,” Modern Plastics, December 1980, p. 45.