Witco Corporation

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Witco Corporation

520 Madison Avenue
New York, New York 10022
U.S.A.
(212) 805 3800

Public Company
Incorporated: May 6, 1920 as Wishnick-Tumpeer
Chemical Company
Employees: 8,009
Sales: $1.355 billion
Market value: $1.013 billion
Stock Index: New York

Witco Corporation, the highly successful manufacturer of specialty chemicals, petroleum products, and engineered materials, began in 1920 as a small Chicago area chemical distributor. Since that time, Witco’s consistent expansion through both acquisitions and internal developments have made the company one of the strongest, if not the largest, chemical companies in the industry.

The company was founded as Wishnick-Tumpeer Chemical Company by Robert I. Wishnick in association with the brothers Julius and David Tumpeer. Wishnick was president, owning 51% 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% 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 make something of himself. 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 towards 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 present position in the chemical industry. His company sold a floor wax which complemented its product line of magnasite floor materials. However, Wishnick thought that the company should produce its own floor wax, rather than reselling floor wax originally purchased elswhere. 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, set up Wishnick-Tumpeer 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 have been consistently successful for Witco and have been used to great effect whenever the company suffered from changes in the market. It also helped the company record a profit during its first year, despite the recession.

In 1922 the company was able to buy a 20% 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 which had marked the company from its beginnings continued through the 1920’s 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 1930’s. 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 Witco’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. This effort was only the beginning of what are today extensive overseas holdings. Witco now has 12 wholly owned foreign manufacturing operations and part interest in 17 others.

The company’s last important move before World War II was to build its first chemical plant in Chicago to produce industrial chemicals and asphalt products. The war brought large amounts of business for Wishnick-Tumpeer. However, 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.

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 Wishnick was accustomed to buying from were developing their own competing sales forces. In 1944 Wishnick changed the name of his company to Witco Chemical Incorporated. 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 was also 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% of that was from its own manufacturing operations. Some major acquisitions were on the horizon, but not until after a management reorganisation. 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 long-time 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% 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 mid1960’s. In 1960 the Sonneborn Chemical and Refinery Company was acquired, bringing sales up to the $100 million mark. International expansion was accelerated as well, with new acquisitions in Belgium, France, and Canada.

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 Company at a price of $22 million. This provided Witco with a new plastics operation and one of its senior managers, Bill Setzler. 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%. 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. Witco kept its 20% interest in the company, but did not renew its licensing contract with the company. Witco now sold only Witcomanufactured products.

The recession in 1974 brought the traditional costcutting measures at Witco. The recession also brought a fourth-quarter drop of 50% in sales compared to 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%. 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.

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.

The period from 1975 to 1986, half of it spent without the founder’s presence, was characterized by a marked drop in acquisitions for Witco. The new administration, led by William Wishnick, continued to emphasize expansion of existing operations, research and development, and modernization of equipment and methods. This strategy resulted in slow but steady growth, especially in the Argus division which expanded its operations and opened up new markets for its plastics. By 1985 75% of the $70 million used for reinvestment went to plant modernization.

In October of 1985 Chemical was again dropped from the company name, leaving it as Witco Incorporated. At that time specialty petroleum products made up 53% of the company’s business, while specialty chemical products accounted for only 41%. The remaining 6% consisted of engineered materials for special applications.

In 1986 Thomas J. Bickett took over as president and chief executive officer 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.

The chemical market in the latter half of the 1980’s is good for Witco. The company maintains a low profit margin but boasts one of the highest returns on stockholder equity in the business. William Wishnick has less and less to do with the direct management of Witco, but still maintains control over the direction of the company, even if he owns only 7.5% of the company shares. William feels that the future of Witco will be determined by its acquisition strategy. “We are an operating company—not an investment company,” he said. “Anything we have a minority interest in is for sale.” It remains to be seen if Witco will remain successful without a Wishnick directing the day-to-day operations of the company. However, if Thomas Bickett can continue the Wishnick’s traditional emphasis on expansion and frugality, Witco’s prospects for the future are very good.

Principal Subsidiaries

Witco Canada Inc.; Baxenden Chemical Co., Ltd. (53 1/2%); Witco SA; Witco Ltd. (60%); Argus Quimica Mexicana SA de CV; Witco BV; Jonk BV; Surpass Chemicals Ltd.; Witco Chemical Australia Pty. Ltd.; Continental Carbon Co.; Enenco, Inc.; Witco International Sales Corp.; Witco Investment Corp.; Witco Foreign Sales Corp.; Witco Nencorp, Inc.; Witco Oil & Gas Corp.