Incorporated: 1994
NAIC: 325211 Plastics Material and Resin Manufacturing; 325188 All Other Inorganic Chemical Manufacturing
Albemarle Corporation is a leading producer of polymer and fine chemicals. The company's products are used as additives to or intermediates for a wide range of products manufactured by pharmaceutical companies, cleaning product manufacturers, water treatment companies, agricultural companies, and paper and photographic companies. These companies are Albemarle's customers. The company operates on a global scale, serving customers in North America, Europe, the Middle East, Africa, and Asia. Albemarle operates several production plants in the United States, maintaining a presence in Houston, Texas; Orangeburg, South Carolina; Magnolia, Arkansas; Tyrone, Pennsylvania; and Dayton, Ohio. In Europe, Albemarle production plants are located in Thann, France; Teesport, England; Port-de-Bouc, France; Bergheim, Germany; and St. Jakobs/Breitenau, Austria. In Asia, the company operates a plant in Osaka, Japan, as well as offices and warehouses in China and Singapore.
The history of Albemarle involved the development of two companies and the legacy of one family. The earliest predecessor organization of Albemarle that existed in the 21st century began operating in 1887 as Albemarle Paper Manufacturing Company. The company was small, employing less than ten workers who produced Kraft and blotting paper. The first signal moment in the paper manufacturer's development occurred in 1918, when Floyd D. Gottwald joined the firm. Gottwald was hired to work in the company's export department, beginning as a clerk. From his modest station as a clerk, the young Gottwald began his climb toward distinction, eventually becoming Albemarle's leader. Gottwald's influence over the fortunes of Albemarle extended to another much larger company, Ethyl Corporation, whose early history was instrumental to the development of the modern-day Albemarle.
Against the backdrop of Gottwald's rise from clerk to company president--a 30-year climb--Ethyl, then known as Ethyl Gasoline Corporation, was enjoying its own steady rise in the petroleum industry. Ethyl's principal product for nearly a half-century was discovered in 1921, three years after Gottwald joined Albemarle. In 1921, a General Motors research chemist named Charles Kettering discovered a way to reduce the engine "knock" produced by gasoline. Kettering's discovery led to the revelation of the antiknock properties of tetraethyl lead (TEL) as a gasoline additive. In 1923, a joint venture between General Motors and Standard Oil was formed to develop and to produce TEL. One year later, the name of the joint venture became Ethyl Gasoline Corporation.
Although TEL served as the foundation for Ethyl for decades, the company diversified into a range of related businesses. In the early 1940s, the name of the company was changed to reflect its broader interests. Ethyl Gasoline Corporation became Ethyl Corporation at roughly the same time Gottwald completed his ascent from clerk to president at Albemarle. It was through Gottwald that the corporate lives of Albemarle and Ethyl became intertwined, a union that was predicated upon Ethyl's diversification beyond TEL. During the 1950s, Ethyl hit its stride, using the market success of TEL to expand physically and operationally. The company opened a plant in Pasadena, Texas, in 1952, a facility that complemented its TEL production site in Baton Rouge, Louisiana, which was opened in 1937. One year after the Pasadena plant opened, Ethyl acquired a specialty chemical plant from Wannamaker Chemical Company.
The acquisition of the plant, located in Orangeburg, South Carolina, marked a pivotal juncture in the development of the Gottwald family's business interests. Specialty chemicals eventually became the chief business of the Gottwalds and of the later version of Albemarle. The foray into specialty chemicals also built the bridge that connected Albemarle and Ethyl. Ethyl's diversification answered a need of Albemarle's, serving as the nexus of a company founded as a paper manufacturer and a company founded to produce gasoline additives. Gottwald was the protagonist, his actions stemming from the pressures of his position as the leader of a paper manufacturer that was well known as a maker of premium blotting paper.
During the late 1950s, the development of new materials such as polyethylene film posed a threat to paper makers such as Gottwald's Albemarle. Gottwald had orchestrated the expansion of Albemarle during his tenure, guiding the company toward an emphasis on converting its paper production into finished products, but the emergence of new materials asked new questions of paper makers. The threat demanded one of two responses: either embrace new technological advancements or dismiss the advancements as justification for investment. Gottwald chose to bank the future health of Albemarle on the development of novel materials and began looking for a partner to help him stay on the vanguard of technology. During his search for assistance in producing polyethylene, Gottwald discovered Ethyl. Gottwald's discovery and his desire to obtain Ethyl made business history. Gottwald became the figure behind the largest leveraged buyout ever completed at the time. It was a deal that newspaper headlines described as "Jonah Swallows the Whale," according to Ethyl's web site-published history.
The marriage of Albemarle and Ethyl occurred in 1962. Gottwald borrowed $200 million and acquired a company 13 times larger than Albemarle, creating a new, Virginia-registered concern named Ethyl Corporation that embodied the assets of the Delaware-registered Ethyl Corporation and Albemarle Paper Manufacturing Company. Gottwald was appointed chairman of the new company he had created. Under his leadership, the company expanded. In 1964, Ethyl S.A. was formed as a European subsidiary to ease the company's entry into foreign markets. In 1968, Gottwald's son, Floyd D. Gottwald, Jr., replaced his father as chairman and continued to spearhead Ethyl's diversification and expansion.
Under Floyd Gottwald, Jr., Ethyl developed into a multifaceted concern, directing its growth in four directions. The company followed the general corporate trend that emerged during the late 1960s. Industrial concerns of all types diversified their operations in a new era of holding companies and sprawling conglomerates, assembling a number of different, sometimes eclectic, business interests. Ethyl chose to concentrate on four business areas: chemicals, plastics, aluminum, and energy. Conspicuous by its absence was the company's original business, paper manufacturing. In 1969, a portion of the company's paper making properties was sold to a group of employees who used the assets as the foundation for a new company, James River Corporation. In 1976, after nearly 90 years in the business, the company exited paper manufacture entirely when it divested Oxford Paper.
In paper's place, Ethyl built a presence in its four business groups. In 1968, when Floyd Gottwald, Jr., took the helm as chairman, the company strengthened its interests in plastics by acquiring IMCO Container Company. In 1975, the company purchased a global supplier of lubricant additives named Edwin Cooper, adding to its chemicals portfolio. During the 1980s, Ethyl continued to build on four foundations, making two important acquisitions. In 1986, the company announced that it had reached an agreement to acquire the bromine chemicals business belonging to Dow Chemical, an agreement of significant importance to the future of Albemarle. (Bromine is a nonmetallic liquid element used in producing gasoline antiknock mixtures, fumigants, dyes, and photographic chemicals.) The acquisition, completed in 1987, included Dow Chemical's plant in Magnolia, Arkansas, where bromine production had begun in 1969. The addition of bromine production capabilities, which became a central component of Albemarle's flame retardant business, was followed in 1989 by the acquisition of Russ Pharmaceuticals, Inc., based in Birmingham, Alabama.
By the time the Russ Pharmaceuticals acquisition was completed, Ethyl had begun to adopt a profoundly different operating strategy. The change mirrored the actions of many companies as the 1990s neared. After years of diversifying their operations, corporations embraced a new mindset toward streamlining their operations. A sharpened focus on core businesses became the ideal, prompting companies to divest businesses that distracted their attention. Ethyl's actions typified the general corporate trend, as the company spun off several divisions into separate companies. The first such instance of the company's move toward consolidation occurred in 1989, when the company spun off its aluminum, plastics, and energy units, forming a new company named Tredegar Industries, later renamed Tredegar Corporation. In 1994, the company spun off its specialty chemicals business, the divestiture that created Albemarle Corporation. The spinoff left Ethyl focused on fuel additives and Albemarle focused on Ethyl's polymer and fine chemicals business, which included olefin and derivative chemicals, specialty chemicals, and brominated chemicals. Starting out on its own, Albemarle operated a publicly traded concern with more than $900 million in annual revenue.
In the wake of the spinoff from Ethyl, Albemarle tailored its operations to suit its future as a company that would be focused on polymer and fine chemicals. The adjustments resulted in divestitures and acquisitions, as the company took charge of shaping its own identity. In 1995, Albemarle sold its electronic materials business. The following year a major divestiture was completed when the company sold its alpha olefins, polyalphaolefins, and synthetic alcohols assets to Amoco. The transaction netted $500 million for Albemarle. Although the divestitures stripped the company of some of its financial
Further Reading
"Albemarle Outlines Ambitious Plans for Major Global Growth," Chemical Market Reporter, March 29, 1999, p. 4.
Chang, Joseph, "Albemarle Launches $900 MM Bid for A&W," Chemical Market Reporter, March 15, 1999, p. 1.
Mirasol, Feliza, "Albemarle Targets Growth in Pharma, Fine Chemicals," Chemical Market Reporter, December 20, 1999, p. 5.
Scheraga, Dan, "Albemarle to Buy A&W Garners Praise from Analysts," Chemical Market Reporter, March 15, 1999, p. 1.
Walsh, Kerri, "Albemarle: Slow and Steady Wins the Race," Chemical Week, January 22, 2003, p. 14.
------, "Albemarle to Acquire ChemFirst's Fine Chemicals Business," Chemical Week, June 20, 2001, p. 14.
— Jeffrey L. Covell
