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Chemical Manufacturers Association John P. Connelly Director, Member Relations Corporate Secretary August 14, 1996 Dr. E. Gary Cook Chairman, President and CEO Witco Corporation One American Lane Greenwich. CT 06831-2202 Dear Dr, Cook: Congratulations on your new role with Witco Corporation. The purpose of this letter is to welcome you as CMA's Executive Contact for Witco. For your information and guidance, 1 am enclosing our Bylaws, User's Guide and Directory and Strategic Plan. In addition, I have enclosed a computer printout of Witco's participation in CMA activities. It notes program and issues contacts, committee and task group participants as well as those individuals on other newsletter and mailing lists. Your help in keeping this information up to date is greatly appreciated. Please contact me with any changes you might have. You will be added to Regional Executive Leadership Group Region 5 which includes the senior company representative from each of our member companies headquartered in the New York/New England region of the U.S. A list of the participants in your region is attached. The Regional Executive Leadership Group (ELGs) meetings are one of ten basic elements of the Responsible Care* initiative. The ELGs provide a forum for senior industry leaders to meet to discuss Responsible Care* and the progress each company is making in its implementation. Your region is chaired by Mr. Donald Griffin, Chairman. President and Chief Executive Officer of Olin Corporation. Mr. Griffin will be in touch with you regarding future meetings. As an ongoing commitment to our Responsible Care' initiative, we ask that new Executive Contacts sign the Responsible Care* Guiding Principles. Enclosed is a customized copy of the Guiding Principles for Witco Corporation. Please sign and return them to my office. I understand that you and Carl Soderlind will be visiting CMA on September 13 for a member company briefing. I look forward to seeing you then. Again, welcome and if I can be of help, please call me. Slprnrp.l v Enclosures CMA 175348 cc: Mr. Carl Soderlind, Witco Corporation Mr. Donald W. Griffin, Olin Corporation Mr. Frederick L. Webber Responsible Care* 1300 Wilson Boulevard, Arlington, VA 22209 Telephone 703-741-5120 Fax 703-741-6086 APublic Commitment BUSINESS (Tv , ifeo Witco Pursues Plan To Enlarge Specialty Chemical Business Purchase of OSi Specialties and planned sale oflubricants unit willfurther company's product, financial goals Witco at a glance Headquarters: Greenwich, Conn. Sales: $2.2 billion in 1994 Earnings: $107 million in 1994 Number of employees: 7,955 at the end of 1994 Marc S. Reisch, C&EN Northeast News Bureau Major businesses: Surfactants for agricultural, personal care, and laundry products; oleochemicals for he pending acquisition of OSi food emulsifiers and processing TSpecialties is just the second agents; polymer catalysts and addi phase of Witco's four-part plan tives for the manufacture of plas to sharpen its focus on specialty chemtics; polyurethane intermediates for icals. The Greenwich, Conn.-based coatings, footwear, and adhesives; company's future depends on its plans epoxy resins and hardeners to increase its sales of high-profit-mar Recent divestitures: Carbon black, gin, special-purpose chemicals, de specialty belting and coated fabric, clares Chairman and Chief Executive Officer William R. Toller. It was in 1992, two years into his ten ure as Witco's leader, that Toller guid metal finishing products, battery containers and parts, petroleum motor oil and industrial lubricants (pending) ed the company through its first multi- million-dollar expansion. Witco spent $440 million to acquire German phar bringing cash on hand to about $325 maceutical maker Schering's industrial million, says Toller. The company chemicals and natural substances divi plans to sell its lubricants unit next. sions. The acquisition added about Witco had piled up so much extra $600 million to Witco's sales. cash by early this year that it was wor Then last month. Toller, 65, said Wit ried a buyer might try to acquire the co would buy OSi, a Danbury, Conn.- company. So it established a "share based maker of silicone-based specialty holder rights plan" in March to "pro chemicals, for $486 million. OSi will tect Witco's shareholders against abu add a projected $450 million to Witco's sive takeover tactics." The plan sought more than $2 billion in annual sales. to limit any one person or company's Two weeks before the OSi announce stock ownership in Witco to 15%. of the ment, Toller told C&EN: "We will have outstanding common stock. Toller says, three major acquisitions between right "We were sensitive to our attractive now and the year 2000." So Witco has ness to others. I think that is just a fact two more big purchases to make before of life." So the plan "was a prudent ac the turn of the century, and "those pur tion taken for the protection ol our chases will occur about every other shareholders' value." The plan would year," says Toller go into effect "only in case ot a hostile The sale of low-profit-margin, com- takeover," he explains. modities-oriented businesses and bank Even as Witco amassed cash and borrowing will pay for OSi. Witco has took precautions against an unwanted sold its carbon black, battery parts, takeover, the decisions to sell what coated labrics, and metal finishing Witco considered "noncore" business businesse-. over the past two years, es were not always easy Toller was president of Continental Carbon when Witco purchased the carbon black pro ducer from Conoco in 1984. "It was a bit of an emotional issue tor me--com ing to the decision to sell that enter prise," says Toller, "but it made all the sense in the world." Witco already knows where it will get much of the money for its next ac quisition: Witco plans to sell its lubri cants business unit when it finds a buy er. The unit had 1994 sales of $404 mil lion. A number of brokerage house analysts were happy that Witco finally decided to sell the lubricants line. Prof it margins, they estimate, have general ly been below 4% in the lubricants business, compared with 9% or higher for the chemical businesses. Once it completes the sale of its lu bricants unit, Witco will no longer own any of what it can call commodity busi nesses. "It is not [that they] were bad businesses. But we felt they did not fit our philosophy [to focus on| specialty chemicals in the future," says Toller. Witco's goals are to achieve $5 bil lion in specialty chemical sales by 2000 and earnings as a percent of sales in the high single-digit range. Its 1994 total sales were $2.2 billion; profits were $107 million, or just about 5% of sales. Other specialty chemical makers do much better. For example, Great Lakes Chemical's earnings as a percentage of sales were nearly 14% in 1994, Loctite's were almost 12%, and Ethyl's were 9%. Toller says Witco will achieve sales and earnings growth partly through acquisitions and partly through inter nal growth. Acquisitions such as that of OSi and those that will follow "will be specifically focused on higher profit margins. They will certainly be more specialized chemicals. And they will expand our geographic horizons, par ticularly to areas like the Pacific Rim, where we did something on the order of $100 million in sales last year." A tew days after Witco said it would purchase OSi, Toller told C&F.N: "OSi it ix ion1 "'s: i &1 \ C M A 175349 Toller: complementanj acquisitions fits with our long-term objectives. It al lows us to move into markets where OSi already has infrastructure in place.'' For instance, OSi immediately gives Witco a platform to expand its sales and establish manufacturing ca pability in the rapidly industrializing countries of the Pacific Rim. OSi has live manufacturing facilities, 14 sales offices, and a research and develop ment facility in that area. Witco has only a sales office in the Pacific Kim. OSi also brings Witco a line of organofunctionnl specialty silicones, a business new to Witco However, OSi sells these specialty silicones to many of the same customers Witco already supplies with other critical manufactur ing ingredients, says Toller. Some cus tomers both firms serve include agri cultural chemicals, coatings, and fiber glass makers. It is the same sort of fit Witco has sought in past acquisitions. Toller characterizes OSi as a "com plementary" acquisition, because it does not "overlap any businesses we already have." And in fact. Poller says, Witco needs to avoid acquisitions that duplicate its existing product lines. "We would have antitrust problems if we added onto our principal product lines in the U.S." The acquisition makes sense to OSi, too "It is an excellent tit, agrees OSi's chairman, president, and ihiel execu tive otlicer, David 1 Barton. I he deal represents a better opportunity tor OSi than the "initial public offering ol stock that management always envisioned." The $186 million premium Witco paid to buy OSi must have been quite con vincing as well. Management, which owns 17% of OSi, and investors led by DLJ Merchant Banking Partners, New York City, bought the former Union Carbide business for $300 million in 1993. Barton also points out that Witco has the resources to finance the capital investments OSi's product lines will re quire to keep growing. Witco's acquisition of OSi and its recent round of divestments have changed the view on Wall Street that Witco was "a sleepy, low-growth, lowmargin company," as one analyst put it. Frank J. Mitsch, senior industry ana lyst with brokerage firm Merrill Lynch & Co., New York City, says the pur chase of OSi "is definitely a positive step for Witco." He points out that if Witco kept its money in the bank, it would only get a 5% return. However, in buying OSi, Witco is "getting a com pany with a 15 to 18% return on an an nual operating basis." John A. Conlon, an analyst with in stitutional broker Blackford Securities, Garden City, N.Y., agrees. He adds that the purchase of OSi combined with the planned sale of the lubricants business allows Witco to "tighten its focus on specialty chemicals." Witco wants to acquire other busi nesses with product lines related to those it now has. "We want to leverage our relationships with our customers," says Toller, "by giving them other products we are not now offering." The Schering acquisition broadened Witco's reach in oleochemicals, surfac tants, and organometallic compounds. As OSi does, Schering served many of the same customers Witco already sup plied in paints, adhesives, laundry, and personal care products. "It brought us into play with the same customers, but with an additional basket of comple mentary products. ... That is pretty much how we will look at acquisition ' candidates," says Toller. One analyst says he thinks Witco might soon acquire the specially chem ical division of a consumer product company. Toller says only that Witco is looking at any number of different businesses Ne\ ertheless, he says Witco hopes to increase its presence not only in Asm, but also in Pastern Hurope and Latin America. However, Witco will not "just go out and buy something for the sake of be ing a $5 billion company," says Toller. "It will take both acquisitions and good internal growth in existing businesses" to reach the $5 billion goal. To bolster internal growth, Witco will spend $144 million on expansion of existing facili ties in 1995, up nearly 35% from 1994. With the acquisition of OSi, Witco's capital budget could increase nearly 40Vf above 1995 spending levels and reach $200 million by 1996, says Toller. Another boost to internal growth is Witco's plan to increase research and development spending to nearly 4% of sales from the 3% or so it now devotes to the effort. Toller sees some other advantages in becoming a $5 billion company. "You only need one chairman for a $5 billion company, just as you need just one chairman for a $2.5 billion company. There are certain fixed costs you spread over a much broader base. That is where you get an advantage as you grow in size. You spread your fixed costs. The real issue is not just to be come a $5 billion company. The real is sue is to add to shareholder value." Still, Toller admits high profit mar gins, which help increase a company's stock price, are not always easy to come by in the specialty chemical busi ness. Prices of the commodity chemi cals the company buys as its raw mate rials started to increase about a year Witco sales posted steady growth over past decade $ Billions Source; Company data C M A 175350 iX lOlit K 2, IWSf&BN 15 Very aromatic ^ '"ftfe"' -vii-' 3 - FluofounllJnt Ik,. fi -' .C qj.i 9 - Fluoroph*not S^Bromofluototaiam* 2,5 - Offluorochforo b*nz&nA 3,5 * Ditluombromo* befutn* \r "f p 3,4,5 - TrtfWjorobromobtnzene O Oh, P ;,>" Nilj 1,4 - Dilluorobenzane 1 - Fluoronaphthilens 4 - Ruofo^anthranillc acid Expertise in Aromatic Specialities Meta substituted bromo- and fluoroaromatics, multifluorinated aromatic compounds, halogenated anthranilic acids and many more building blocks for your synthesis projects. CMA175351 Riedel-deHaen Riedel-de Haen Aktiengesellschaft P.O. Box D - 30918 Seelze Germany Fax (5137) 999-123 CIRCLE 9 ON READER SERVICE CARD 16 OCTOBER 2, !WS(&I\ BUSINESS ago. Those increases have hurt Witco's profit margins "through the current year." Still, Toller says, raw material prices recently have plateaued, and prices of some raw materials have come down. Raw material price increases earlier this year have already hurt Witco's fi nancial results. Although sales in this year's first half rose 6% from last year's first half to $1.2 billion, earnings before unusual gains from the sale of busi nesses declined 13% to $45 million. A "voluntary severance" program open to staff employees will also make Witco more profitable. Because Witco recently sold four businesses and plans to sell a fifth, the company does not need all of the people it now has on staff, says Toller. The program "should take between $5 million and $6 million of cost out of our structure," along with 125 to 150 jobs. The early retire ment program, the buying and selling of businesses, and the emphasis on profitability are "all about being more productive with all of our resources," he says. Toller also looks forward to retiring no later than December 1996. The com pany's board of directors is conducting a search now for a new chief executive. They are looking at both internal and outside candidates for the job, he says. The list of candidates may now include executives at OSi, all of whom Witco has invited to stay on. OSi Chairman Barton says he intends to join Witco, but did not say in what position. Toller says he cannot predict who will succeed him as Witco's CEO, and he "sees nothing at all that would pre vent" Witco's board of directors from finding a successor before December 1996. The board, he adds, is under no pressure to act quickly. Few industry sources want to com ment on a likely successor to Toller. Conlon of Blackford Securities says he is not worried about Witco's ability to find a successor. 'They already have good management depth," he says. The com pany's business managers "know their business." Toller does not operate Witco as "a one-man show," says Conlon. Al though Witco may lose some senior managers to retirement, several younger and experienced managers at Witco could step in, he believes. Nevertheless, whoever follows Toller will have some serious financial goals he or she must achieve. Q SEPTEMBER 12. 1995 Uhfcd s }tL( THE WALL STREET JOURNAL. Witco to Buy Chemical Maker, Plans to Sell Lubricants Group By Jonathan Averbach Staff Reporter of The Wall Street Journal Witco Corp. said it agreed to buy chemi cal maker OSi Specialties Inc. for S4S6 million and plans to sell its lubricants group, including its Kendall motor oil operations, as it continues to focus on its specialty-chemical business. OSi. based in Danbury. Conn., would be Witco's first acquisition since it began a big push into chemicals with the 1992 acquisition of Schering AG's industrial chemicals and natural substances units. Since then, Witco has been shedding non core assets, including its entire diversified products division, which included battery casings. The sale of the lubricants opera tion is expected to raise about S250 million, according to Witco. Witco's stock rose S2, or 5.97c, to close at S35.625 a share in composite trad ing yesterday on the New Vork Stock Exchange. Witco. based in Greenwich, Conn., is buying OSi from DU Merchant Banking Partners L.P., an affiliate of Donaldson, Lufkin & Jenrette Inc., which acquired Osi for about S300 million in 1993. The acquisi tion is expected to close in November. The company said OSi, which produces silicone-derivative products, is expected to have sales of about S450 million this year and would help boost sales of existing product lines in Asia, South America and Eastern Europe. Witco's chemical division had operat ing profit of S127 million on sales of SI.34 billion last year, or more than half of Witco's overall sales of S2.22 billion. Witco's 1994 net income was S107.1 million, or SI.92 a share. The company said it.has interests but no offers for the lubricants group, which could be sold as a whole or broken up. The company hopes to complete any sale in the first half of 1996. The lubricants group had sales of $404 million last year, Witco previously said rising raw material costs have hurt recent earnings for the group. SEPTEMBER 12, 1995 THE WALL STREET JOURNAL. Work Week A Special News Report About Life On the Job--and Trends Taking Shape There THE GOP'S MOVE to slash OSHA would mean less-frequent workplace inspections. Joseph Dear, chief of the Occupational Safety and Health Administration, says that at 1994 staffing levels, each workplace would be inspected on average once every 62 years But that would climb sharply under the 33'reduction in the enforcement budget ap proved by the House. The AFL-CIO calcu- tes that m more than half the s,uos. ould take more than 100 years to mspen ich workplace. Rep. John Porter, an Illinois Repuh r hose subcommittee came up with the cuts, otes that the House boosts the budget for umpliance assistance by 19'.. lie want' ISHA to work with businesses and ,;si nforcement only against "repeated and ilatant violators." OSHA s Mr. Dear says he s building business partnerships, but that raditional enforcement "provides the basti iredibility for the whole program." The House bill would ban OSHA iron, recording and reporting" wdn on reuftlitr moliou injuries such ns nr-\m'-tun nel syndrome. CMA 175352 WITCO u.s. Research $28.38 INVESTMENT APPEAL Potential for resumption of stronger earnings growth * currency * Europe; ex-US * reversal of raw material squeeze * some pricing flexibility Above-average yield, balance sheet. Cash hoard + that from operations available for potential shareholder-enhancing moves. ________ KEY ISSUES________ Cyclical risk. Semi-commodity products. Currency risk. Ability to improve margins absent cyclical kick. Management succession. Cash hoard has been around a while. cma n5353 IflU O l'U U B SEP-06-1995 17:02 SH&EA W H CnA EXECUTlUE OFFICE "1/211 /wr> P at-if Fax Note 7671 Te /**?ovA /~/(ALL coroep; _f~i ft Phone # Dais <Zf / g (pages* Ff0mJo*VAr /\(CE&*-4ES_ Co' LlS f rt o Phone * j F"Vo j.- h'cj- inx. F"iD)-rn- isr<- Chesteel Hanufeoturar* Association Keefear Company Profile (s,~c* S'/**) I'M* Hitoo Corporation MB hod aon <iww-- Mmt Verh, W lna8-4M*-- <?/s/# *T ft i *-* ** _ /t AS *'**'*( j C-~?~ ^?68J/ 1 The list belaw describes your cnapany's mtaroct Ion with CHI. It is organised Into major prognta and issue areas. Subsector* of each area ere; corpony designated contacts, coisait t* and task grow participants, and nail list recipient*- A hey to tha cades la listed on the bach page, to make changes, oonteel CHA Header Halations; 20Z/887-1110 Hr, A. Ill Plant hanager Witco Corporation *52 Doranus Avanut MaHari. nj mes-tue hr. Jo A11i facility hanager tfitco Corporation Sharex Chemical Canaany Howto 24 Fatlory Head Napleton, 11 OIM7 hr. Kan ilati Plant Manager Pi too Canada, Ii. 46-5* Alice Street Brantford, OH! HIT CANADA 5P9 Hr. Paul Merger RAD Manager Witco Corporation 1200 Brookfield Street Houston, TX 77Q45-S296 FACILITIES Facility hanagars List FACILITIES Facility Managers List FACILITIES Facility Managers List FACILITIES Facility Managers List IL Those facilities that manufacture produots contributing to the member's CflA due* base. Vary United mailings fron CNA. 5 times per year. IL Those facilities that manufacture produets contributing to the member's CM* dues base. Vary limited nailing* froa CM*. 5. tines par year. XL Those facilities that nanufeeture products contributing to the neater's Chi dues base. Very limited mailings Iron CM*. S tines per peer. IL Those feoillties that nanutaeture products contributing to the adbar's ChA dues base. Very United mall ins* froa CHA. 5 times per year. U/Ut>/5 17: Uti J203 552 2556 202 463 1592 P .02 nr <minn t" < % U oqo? rc c on7.0. r w vtowc 900 rnn(?i SSCSII VWD 9/06/95 iQ-SS-tt1) ACT622 -C- Chaeical Hanufoetvirori Association Kwbr Caopany Trof il fir. Richard P. llcssndan Kltco Corporation Huadto Cheaical Facility 652 Dor-anus Avan us Newark* HJ 071CS-9B1B FACILITIES facility Hanagars List IL Those facilitias that aanufaeturo products esntributing to ths esabar's CHA dust bass. Vary 1 initad Mil1a pi from CHA. 6 tlMi par yaar. C. C. Loflln Facility nanagar Mtw Canparatiaiw Concert) Facility Star loute 1 Sum-ay, TN 790B6-B015 fir, Paul flirt in Plant Nanagsr Kitco Corporation Hay 59 3 Nilas North Bussoy Hoad hershall, TX 7K7C facilities Facility Hanagars list S'**.* FACILITIES Facility Kona oars List IL Ihosc facilitias that aanufacture products contributing to tha aonbar's CHA duas base. Wary 1suited milinjt froa CHA. 5 tiaas par yaar. IL Those facilitias that aanufacture products contributing to tha anbar's CffA duas bass. Vary liaitad nailing* Iron CHA. S tiaas par yaar. Carl Hasen Facility Nanagar tfitco Corporation Bluo Island Facility 11000 South Saalay Avaou* Blue Island, tt 60906-6116 FACILITIES Facility Himpars List IL Thosa facilitias that aanufacture products contributing to the snbtr*s CHA dues bass. Vary liaitad nailing* fren CHA. 5 tinas par yaar. Nr. Hobart ft. HeBraper Facility Nsntpsr ditto Corporation IADS S, Harrison Olathe, KS 66011 FACILITIES Facility Hanagars List IL Those facilitias that canutaetura products contributing ta tha aasdtar's CHA duas baia- Vary liaitad milings trow CIU. 5 tlnat par year. Hr. Haris Henghini Refinery ftanager n tfiteo Corporation * 1136 Honor Straat 3 Dll dels, CA 933BB 36 O FACILITIES Facility Hanagars List IL Thosa facilitias that aanufaetura products contributing to tha aaaAar's CHA duas base Vary liaitad callings free CHA. 5 tiaas par year. 202 463 1592 CMA EXECUTIUE O FFIC E S E P -06-1995 17:03 ' 8 vv-'uo/vo l/:u b 'ar2U5 552 2555 SM EA H5H 10003 006 9SSL\ VVi3 6/96/95 10:56:6* AET622 -C- Mr. Pat Roare flan< Meragar Mitcp Corporation 2*36 Hlllyard ilreet Klemath Foil*, D* 97**1-9369 Chemical Manufacturers A* secletion Haatwr Coapany Profile Page FAC rums Facility Hanpgprs Hat IL Those facilities that eanufeeture products contrite*tiny to the matter's CPA duas basa. Vary Halted nailings ire* CRA. 5 tines par year. H. ttuggard Facility Manager Ultoo Corporation baxsndsn, AS, Fulbyeej 2 Pertersborg 91*6 SOSO DEHHHK FACILITIES Facility Managers List IL Those facilities that yanufeeture product* contributing to tha uember's CM* duas bate. Very 1 ini tod me i lings Frca CM. S tines per yaar. Hr. K, ffeft FacLLily Hanagtr Witco Corporation *10 bright Avenue RichMnd, CA *9*09-3690 FACILITIES Facility Managers Lift IL Those facilities that manufacture products contributing to the mnber's CPA dues basa. Very limited nailing* fraa CM A. 5 tiass per year. ttr. Robert MW facility Huafir Hi too Corporation Clearing Facility 6209 V. Slat Street Chicago. IL *0*36-13*5 FACILITIES Facility Managers List IL Those facilities that eanufecture products contributing (o the pnbir'* CNA dues base. Very lieltecf mailings tree CNA. 5 times per year. Plant Manager VItoo Corporation 7000 E Sleusan Avenue Los Angela*, CA *0090-3621 FACILITIES Facility Managers List II Those faoUitie* that aanufacture products contributing to the aeaber's CRA duet base. Vary limited Railings fraa CMA. 5 tiaes per year. Mr. Thames Pounds Facility Manager / Vitae Copparalioa Co nearb Facility 1096 lurgall Reed Ponce City, OK 76602-9551 FACILITIES facility Managers List 5~g> u :_( ___ IL Those facilities that nenufacture products contributing to the meaibar 1 CMA duas beas. Very linited aeilings free CRA5 times per year. 6 202 463 1592 P .07 CMP EXECUTIUE OFFICE S E P -06-1995 17--03 ifflUU-t UU S E P -06-1995 17:04 9/OA/PS 10i59)l9 ACU22 -C- D. Rocersdal Plant Hsrvagar Niton Corporation Nasalstroat Koc g non *fa Zoan m NETHERLANDS &r. H. Snlvi (files Corporetlon Lss frs Ciradi .P. 51 SI. Amour FRANCE F39E10 Chen teal ftanufacturer* Ansocialion H--bar Ceecany Prof II a tSSLl VIM3 Fgc f ACUITIES Facility Managers List II Those facilities that anufoetura proBuols contribirtinfl to the Motor's CHA duos tasa. Vary Hosted nailing* fraa CIU. & tioas par yoar. FACILITIES Facility hanagars List It. Those facilities that aanulactur. products contributing Id the oatstor's CHA dues baas. Vary United aollings Iron CtlA. E Iinas par year. SH&EA VittH C rifl EXECUTIUE OFFICE Or- If- Silva VJtco Corporalion SI TECH VU1* Lndusirli, 29 Geotolo ITALV 17(1S facilities Facility Homagers List , Hr. George Soith / Facility Mamagar / sNjtoo tempoaatie* Richardson Rattary Dlv. Fscil. Highaeny 19 North Phi ladalphls, US SPUR FACILITIES Facility Martegei-r List CfcOJgA_______l ^ IL Those facilitias that manufacture products contributing to the oifcer's CHA dues baa*. Vary liaitad mailings tram CHA. & tlmas par yaer. IL Thosa facilitias that aonufecture products contributing to tha naator's CtlA duos base. Vary I ini tad nailing* from CHA. 5 tioas par year. 09/015/95 17: U7 2 0 3 552 25b 202 463 1592 P .09 hr- Laa Seith Facility Kanmger Vitco Cersoratlon 2SiS River Read Phillipsburp, HJ 0ME5 FACILITIES Facility Hanogor* List IL Thosa facilities that oanufaetur-e products eoniributing to tha motor's CHA duas basa. Vary Lloltad nailing* fro* CHA. S tines par year. 1^1005 0U6 8SSil V1MD SEP-06-1S95 17:0 4 9/06/95 ACT622 10:5ArA9 -C- Henry 5ns* Facility Manager Mlteo Corporation Ft. Worth Facility ill Call Worthida Drive Ft. Worth, TX 76106 Chealeal Manufacturers Association Keeker CoapaAy Profile Page FACILITIES Facility Managers Liri IL Those facilities that nanufaetura products contributing to the neober' s CHA dues base. Vary Halted sailings troa CHA. 5 tin** par year. SH&EA HHH CMA EXECUTIUE O FFIC E A. C. Snyder Facility Manager 'Hbtea Ceapoaatioa Richardson battery 8,v. Facil. J500 E. 20th Street Indianapolis, IN 962)9 FACILITIES Facility Wan*gars List S'oc.a IL Those Facilities that aemifacturr products contributing to the aaabar's Cftt dues basa. Vary 1 mi tad railings Iron CHA. 5 tiaas par year. H. St. Calais Vitoo Canada, Inc. 1903 Rue Horeeo Hentreal, Quebec H1W CAMADA 2L9 J. Stevenson Facility Manager Witco Carporation 56S Coronation Drive Waal HiU, OHT HIE 2K3 CAKADA FACILITIES Facility Managers List FACILITIES Facility Manager* List IL Those facilities that sianufeetur* products contributing to the aenbor' s CHA duo* basa. Vary United wailings iron CHA. 5 tiaai par year. IL Thoaa tacilitlas that itamrtaetur-e products contributing to the nenber't CHA dues baaa. Vary United naslings iron CHA. S tires per year. U9/U6/95 17:07 t?203 552 2856 2 0 2 4 6 3 1 5 9 2 P.10 Hr. Alan Taylor Hitco Corporation Paragon Works, lexandan Lancashire, Engltnd bbs 2SL ENGLAND, HEAT BRITAIN FACILITIES Facility Ranagara List IL Those facilities that emufesturn products contributing to the amber's CHA dues baaa. Vary United railing* Iran CHA. S tiaas par year. Hr. Hon Taylor Facility Manager Hitco Corporation B Wright Way Oakland, HJ 1706-3121 FACILITIES Facility Managers List IL Thcea tacilitlas that t snufoctura products contributing to tha Masker's CHA dues baaa. Vary I ini tad palling* free CMA. & tines par year. IfiUOb/UUG S E P -06'1995 1 ? :0 5 9/Ot/K 10.SB.-49 ACrfc22 -C- Chaaioal Manufacturers Association Hwhar Coepany Profile 6sesz,l VWD r9* n Hr. Toats Mebber NitbD Corporation Call# Cuadaluoe MB C.P. 5<<M9 Cuautjtlan Edo da Hasaeo MEXICO FACILITIES Facility Managers Uit TL Thee# facilities that naftufaetur* products contributing to the Berber's CftA duos hasa. Vary linitad Mailings from CMA. 5 tines par year. CMfi EXECUTIUE O FFICE Dr . M . Vetiner Hi too Corporation Industrlngebiet Wait (lax-boll Steal** 7 Sttinau GERMANY D-li3*b FACILITIES Facility Manager* List Cl Those faciiitias that eenufaciur* products contributing to the heather's CttA dues base, Very Halted rollings fren CMA. 5 tines par year SH&EA (tr . Frad A. Herb* Facility Hangar Hitco Corporation 1951 S. Alanada .taneho Doainguaz, CA 99221 FACILITIES Facility (tanagars List j nr. Kan Wilder Plant Manager ^BiUa Chaaiael faap 1500 E*t Stata Dock* Road fhsniu City, AL SASA8-1J27 FACILITIES Facility (tanagars List _ To*, a - //Ttr IL Those facilities that nanufocture product* contributing to the robber's CMA dues be**. Vary Linitad milingi from CMA. i tine* par yaar. IL Those faciiitias that ranufaoture products contributing to the Matter's CMA dues base. Vary linitad sailings from CMA. tine* par yaar. tar^OJ 552 2555 Hr. Robert K. Killian* Flaivt Manager Hitco Corporation 10S5 Fourth Street Harvey, LA 7BCSR FACILITIES Facility (tanagars List IL Those faciiitias that nenuf actur* products contributing to the Bender's CMA dues base. Vary linitad Bailings from CMA. 5 tines par year. U/Ub/W0 l i : u i E t'd 15101 202 463 1592 P .12 Activity Type Legend Type Paperlot ion AR Toole Araa PC Board Ceamittpe BB Beard of Directors CO Carolttee CT Contact EC Eaecu-' Contact rt infort in L let 11/24/99 WHO 09:01 K4.V 20 0 aid 2600 h\t(2Linb UhHU Attachment A CMA EXECUTIVE CONTACT SURVEY PRIORITY ADVOCACY ISSUES CMA FY 2000/01 The purpose of this survey is to enable CMA Executive Contacts to provide input on their priorities to the CMA Executive Committee as it develops CMA's plans and budgets for CMA's issue advocacy efforts next fiscal year. Please indicate the importance of each issue listed by checking the appropriate box on the survey form. The issues on the survey have been suggested by our issue teams, If there are issues that you feel affect your business and which CMA could impact but which are not on the list please note them in the space provided at the end of the form. We also ask you to indicate your view of the appropriate CMA role and the degree to which your company would be willing to participate in CMA efforts on the issue. The three issue priorities and the consequences of the rankings are set out below. Please check one of these priorities for each issue on which you believe CMA should engage. In this year's survey of priority advocacy issues, respondents are asked to assign: no more than 3 issues as Critical: no more than 6 issues as Extremely Important: and no more than 8 issues as Significant. You may also characterize an issue as "not important," and you need not rank each listed issue. Critical issues are those receiving the very highest budget priority for resources. (In the aggregate, we would expect 60-70% of total resources to be allocated to these issues.) Extremely Important issues receive the second highest budget priority. (In the aggregate, we would expect 15-25% of total resources to be allocated to these issues.) Significant issues are those receiving very limited resource access. (In the aggregate, we would expect 5-10% of total resources be allocated to these issues.) A more detailed description of these categories is attached (Attachment B) to the survey form. Company Name CK Witco Corporation Executive Contact Signature _ Contact Person (if different) v. A, Calarco/Michelle Formica Telephone Number 203-573-2210 Fax this form and the survey by December 6,1999, to: Romelda H. Guglielmo Office of the Executive Vice President Phone: 703/741-5112 Fax: 703/741-6086 VW3 i/EOO 3DVd b7.-7.-r eiR /ct / tt CMA i75360 EJWCuttnoPfUcI Survey 200QQ001 Advocacy luun l-'AUt, 0 0 4 /7 CMA Isiuas Importance of Issue to my Company (Check Onst s 15P | *1 1S 2 5 (0 2 3 0 < 1B 1. Air Advocacrv fnclurfina malar air (Okies, risk and Dermittino raaiilaBona ImDlemenfation of the NAAQa. targeted legislative reforms, education and congressional oversight to build a record for reauthorize(ion of the Clean Air Act. 2. Water Advociev. Influence EPA'i National Mtaino Zone Ban Initiative. EPA'a Total Maximum Dallv Load (TMOL) program, targeted Clean Water Act reforms, water quality and content Inated sediment regulations. 9. Waste Ntanaoemenl Advocacy fflCRA A Related Issues! Includes maintainma the vtabithr of hazardous waste combustion; revising hazardous waste regulation, recycling issues and high and tow risk waste identification; and risk- and performance-based state-run non-hazardous waste programs. 4. Wafts Remediation Advocacy, (rvdudlna RCRA reform sa that deanuos are risk-based, cost-effective, and managed by states; Superfutd reform; including assuring any exemptions from Suparfund liability are not paid by Industry parlies; preserving or enhancing the availability of recent Suparfund administrative remedy reforms; and limiting the Inappropriate expansion of the Superfund, 5. Product Stewardshlo Advocacv. includfha the hlah oroductian volume 1HPY1 testfna issues, trade use reduction, product bans and restrictions, TSCA issues, testing harmonization, hazard oommurUcaUont, PTB Initiatives, Implementation of the CMA Product Risk Management Strategy; mote consistent regulatory regimes in the US and ESJ (including tasting and the introduction of new chemicataj; exposure characterization and assessment issues; and harmonization of International chemical regulations. 6. Information Manaoamant and RlaftMo-Know Advocacy, inriudtno ortnciDles and oradices for the development and dissemination of information products, risk-based changes In the Toxic Release Inventory, and promotion of ChemlcaiQultle.com as the preferred source ol Information on the performance and benefits of chemical plants. 7. Public Health Advocacy, orimarfiv endocrine disruoiion and children's health issues, fnciutflrw davolookm and implementing an overall strategy on these Issues as well as addressing testing, communication, and riak-based targeting of public and private sector resources. 8. Reoutatorv Reform and Risk Advocactc to seek reaufalorv flexibility for superior EH&S performance, and improved risk and coot/bsrefrt concepts in legislation and regulation, promotion of the use of research, science and risk in policy making. 9. Chemical Distribution Comoelttlvenaas end Efficiency Advocacy Incfudina oro-comDetittvB rail advocacy, and promotion erf regulatory and commercial practices that foster global harmonization and remove or mitigate impediments to safe and efficient distribution, both domestically and internationally. 10. Enercv Advocacy indudina access to electricity thrauah customer choice of Droviders and preservation and expansion of cogenetattoo opportunities. 11. Global Cllmale Issues, includira voluntary enerav efficiency tmciovement. recocnition ot voluntary early action to reduce greenhouse gas emissions, and opposition to mandatory greenhouse gas emission reduction schemes. CMA 175361 Page 1 1 CMA Rale fCheck One! d 1 i e 1a3m. TD a 2 II < ao i i ? 5 1 Koz 0 G0O3. < oa Company Rote (indicate Y=Yes; B- p Hk m }V] *u=! a5 1 1 /1 9 /9 9 1 2 :2 4 PAGE 0 0 5 /7 CMA Eiritva Contact Survey 2000/2001 Advoeacy Iuum Importance of Issue to my Company CMA Role Company Role (Check One) (Check One) (Indicate YkYss; M=No: IMJnknown) * i liauss i1 if f i m& i 1 3a V1<X 2 tf &s. *ATmaaI3B3 5< l t **aom50 uXf % X -il3-l 15 , i a3O < 3 6lb-a Sg |u2 li S5 i if! aS | M*cam*12 Market and Trade Controls Advocacy tnctudfoa efforts to fecit(fate alobal market access in lha chemical Industry through the reduction and harmonization of tariffs, alignment of regulations through global and regional trade negotiations, and reforming and Implementing trade controls. &/ yy 13. Tea Advocacy. inciudlna work on domestic tax issues te a.. R&D credit Suoerfund. environmental and enerov taxes, and depredation and capital formulation Issues] and foreign tax issues (eg, export source rule and tax treatment of foreign operations and U.3. companies and toraljpi safee). 14. tJabilftv and Leoel Reform Advocacy. IncUxflno federal and state llabllltv reform and toxic tort Woelion: educetlng Industry lawyers and judges on emerging scientific Issues. IS. Environmental Justice Advocscv. inciudlna imolementatton of civil riattts laws while matntalnlna the primaev and viability of state environmental permitting; assuring new EJ programs rstiect key CMA principles; and providing guidance to help members respond to claims regarding environmental Justice. 16. Occupational Safety and Health Advocacy Inctudinn leaMaflve and administrative reforms to OSHA and OSHA implementing regulations eddrss8ing Issues such as flammable and oombuatlble liquids, ergonomics, audit policies and safety and health programs. 17. Process Safety Menaasment issues, indudlna accidental releases. Chemical Salatv Board, chsmical Incident / data systems, chemical reactive safely, electrics! codes and physlcal/cyber site security Issues. 18.' to.* 20.* 21.* ' Please describe of Issues important fo your company and on which you believe CMA should be an advocate which are not Included In the survey. '* This survey seeks feedback on potential CMA advocacy issues. If does not oover CMA programs such as Responsible Ceres and the research Initiative. Ql^j 62 Pag* 2 business CK WITCO TO BUILD ON SYNERGIES President, CEO, and now Chairman Vince Calarco uses hands-on approach as he meets wide range of challenges Marc S. Reisch C&EN Northeast News Bureau ince he took over as head of SCrompton & Knowles in 1985, Vin cent A, Calarco, 56, has had a string of successes: first in putting C&K's house in order, then in acquiring Uniroyal in 1996. But now, this chemical engineer faces a whole new set of daunt ing challenges as president, CEO, and now chairman of a new company, CK Witco, formed on Sept. 1. by the merger of C&K and Witco. Most industry observ ers think he'll be able to navigate the treacherous road and capitalize on the markets in which the formerly separate companies have overlapping businesses. And what a road he will have to face. It will be tougher because he does not have direct knowledge of Witco's opera Calarco: firm has entrepreneurial heritage tions, as he did with Uniroyal. Calarco was president of Uniroyal Chemical be sights of E. Gary Cook, former CK Witco tween 1979 and 1984. It also will be chairman and one-time Witco chairman, more difficult because, as Calarco him president, and CEO. Cook, 54, retired ear self acknowledges, Witco was ailing af lier this month with a $1.5 million annuity ter having gone through a recent re for life. Now Calarco has to deal with pay structuring that caused it to be "inter ing down long-term debt of $1,5 billion, nally focused and lose business," he equivalent to about 45% of the $3.3 billion says. "Getting business back is tough." in 1998 sales of the new company. In addition, Calarco will have to work He'll also face the task of boosting op through merger issues without the in- erating profit of the combined businesses CK Witco at a glance Headquarters: Greenwich, Conn. Sales: $3.3 billion in 1998, $2.5 bil lion in first nine months 1999" Operating income: $439 million in 1998*, $239 million in first nine months 1999" R&D spending: $123 million in 1998, $79 million in first nine months 1999 Employees: 10,000 Manufacturing facilities: 58 in 20 countries Products: From Witco--organosilicones, industrial surfactants, petroleum additives, polymer heat stabilizers, urethane chemicals. From Crompton & Knowles--ethylene-propylene rub ber, castable urethanes, rubber chem icals, lubricant additives, crop protec tion chemicals, textile dyes, polymer extrusion equipment a Pro forma results. Excludes Witco oleochemicals business sold Aug. 31, CMA 175363 in the current difficult operating environ ment for specialty chemical companies. Traditional C&K businesses have been hurt as demand weakened recently for crop protection products, ethylenepropylene rubber, and polymer process ing equipment. The competitive color dyes business--which made up 43% of C&K's sales before the Uniroyal combi nation, 15% after, and 7% following the CK Witco merger--is still suffering from weak pricing. Rumors are rampant that CK Witco will sell the dyes business, a C&K unit since the 1950s, but company officials have no comment just yet. Calarco has already seen some rough riding when CK Witco issued a warning to shareholders in mid-October that earn ings for the third and fourth quarter would be well below expectations. CK Witco's stock nosedived $41Vle points to close at $913/i just after the announce ment. CK Witco stock traded at $17M shortly after the two companies merged. Calarco was visibly chagrined a few days after the earnings announcement. Distressed at the market's reaction to the company's earnings shortfall warning, Calarco says the stock dive "was an overreaction, and that is a significant under statement. The opportunities this corpo ration has going forward are significant. Investors lost sight of those opportunities because of some basically nonrecurring issues. For all intents and purposes, the businesses have not lost market share and have not had major disruptions. It's a short-term third-quarter event, and we expect that we will recover shortly," Calarco adds, "We have called it as we see it. And we are doing everything we know to deal with it. Going into 2000, that will be behind us." And Calarco pledges that CK Witco will achieve $60 million in postmerger savings that the company originally expected to achieve by 2001. About $40 million of that will come from the elimination of 500 salaried positions by Dec. 31. The remaining $20 million in savings will come from consolidating plants and of fices, implementing purchasing and lo gistic efficiencies, and eliminating out side services and consultants. Those savings "should give confi dence to the investing community that we understand what we need to do," Ca larco says. After the job cuts, CK Witco will have about 9,500 employees. "We want to make sure we have a lean and ag gressive organization in place," he adds. Also, as C< i i 1 sees it, the chemical industry "is an industry out of favor. I NOVEMBER 29.1999 C&EN 15 business think what we want to be able to do is to return to the consistency of earnings that C&K has been known for." The events leading to the earnings warning "were far beyond anybody's control." Among those events were poor weather conditions and a soft farm economy that hurt the crop protection business and a cyclical downturn in demand for poly mer processing equipment that hurt the company's Davis-Standard extrusion machinery business, Calarco says. For the third quarter, sales slipped 4% to $782 million, compared with the similar pro forma quarter in 1998, and operat ing income dropped 4496 to $49 million. If he had his way, Calarco might have planned the merger of Wltco and C&K at a less difficult time. "You know, you never have perfect timing on anything," he muses. C&K had just managed to "fairly well integrate" the Uniroyal busi nesses with its own when informal talks with Witco's Cook began in February. In today's specialty chemical busi ness, companies need a critical financial mass to survive, especially when compet itors are global, significant, and ever-larger presences. The formation of Clariant from the specialty businesses of Sandoz and Hoechst and the combination of Rohm and Haas and Morton Internation al are recent examples. As for CK Witco, "Gary and I had known each other for a while," Calarco explains. "We sat next to each other at the Chemical Manufactur ers Association board meetings. We had some discussions, and we got to the point where we had, in fact, developed a shared vision of what we saw the new company could be like, and that became increas ingly compelling to us. We felt this really was a unique opportunity, and we wanted to be able to take advantage of it" The two companies reached an agreement in June and finalized it in September. Divestments may also be in the offing for CK Witco. Calarco says he and senior executives are assessing "all the busi nesses to make sure we have a fair sense as to the potential for growth and earn ings capabilities. We haven't finished that analysis yet" Some businesses may not remain with CK Witco for the long term. `We feel no particular business is sacred," he says, but he gives no clue about which businesses are likely candidates to go. Comments like these may lead peo ple to think Calarco has put a for-sale sign out by the road. Not so fast, Calar co says. "I would say, for sure, there will be some changes. It may be a joint ven ture. It may be a swap of some sort. It CK Wltco is weighted toward poiym rs Other1 22% Sale* Operating Income Other* Polymer additives 26% Crop protection 21% Crop protect! 13% Polymers .J3S, equipment 10% OrganosHIcones equipment 11% 1998 eelee = $3.31 billion 1998 operating Income = $439 million Not*: Pro form* 1998 rHutti. Includss ttym, f8n#d protfocr*. gfyniln* *nd tatty *ekta, and p*trol*um *nd kibdowt addittv*. 8ouf0! Company d*t* may be a transaction that enhances the remaining businesses and not necessar ily a divestment. That all remains to be seen." However, any additional cash CK Witco realizes in a potential divestment might be committed to repurchasing shares. "When you see the share price where it is now, we'd have to consider how share repurchases come into play," Calarco says. CK Witco's shares were trading around $10% at press time. John E. Roberts, first vice president at New York City-based stock broker age Merrill Lynch, notes that C&K, and now CK Witco, management "has a his tory of using nonoperating cash for share buyback." If the company sells its dyes business, it "could be the first of $300 million to $500 million in divest ments." CK Witco's plan to divest, swap, or set up joint ventures with assets and its plan to cut employment and costs show that "although the company has fallen, it can get up," Roberts says. Analyst Richard J. Sporrer of Pitts burgh-based brokerage firm Parker/ Hunter, says when C&K and Witco combined forces most analysts expect ed the new company would be much more aggressive at cutting costs than it originally was. Moving up the time table to achieve $60 million in cost savings beginning in 2000 "makes more sense." Sporrer agrees that CK Witco is likely to sell textile dyes--a business that has been deteriorating for the past three to four years. "They are actively shopping it around now. I expect they will sell it by years' end." CK Witco's current headquarters campus in pricey Greenwich, Conn., is certainly more luxurious than C&K's Stamford, Conn., offices by the commut er rail station connecting to New York City. Although the Stamford office is now history, CK Witco has two fairly sizable corporate facilities: one in Greenwich and one in Middlebury, Conn., where the Un iroyal businesses are located. "Our objec tive at some point down the road is to con solidate as much as possible," Calarco says. Neither the Middlebury nor the Greenwich site will accommodate all the business offices. In the meantime, the firm is "looking at what it will take to re furbish" an additional building in Middle bury to accommodate CK Witco staff now in Greenwich. Also likely to change is CK Witco's long-term debt structure. `We've been conservative in our financial structure over the years," he says. "That changed rather dramatically when we did the Uni royal transaction. The dark side of that transaction was that we took on $1.1 bil lion in debt Over three years, we were able to pay down about $430 million of that debt I think that was a rather signifi cant accomplishment. We were getting close to our objective of being investment grade. As we come together as CK Witco, we have on a combined basis approximate ly $1.5 billion worth of debt And we are equally committed to paying that down." The plan now is to pay down debt at a rate of $100 million to $125 million a year. To make those payments, Calarco has a plan for the future of CK Witco. With the Uniroyal acquisition, C&K broadened its portfolio of businesses with enterprises such as rubber and crop protection that are unrelated to the 16 NOVEMBER 29,1999 C&EN C M A 175364 dyes and polymer-extrusion equipment businesses it already had. But in CK Witco, more than 80% of the former C&K and Witco businesses "have this synergy by which they serve the same end-use markets. And they serve them with products that are not competing. I think that is a significant plus because it really lends itself to opportunities for cross selling," Calarco says. Three of CK Witco's business seg ments, equal to about 51% of 1998 pro for ma sales and 55% of profits, center on file polymer business. "In polymer additives, I think we have a unique combination of offerings for customers," he explains. "Not only do we have a leadership posi tion in polyvinyl chloride additives, we also have a combination of olefin and styrenics additives that is significant. When you look at what we have on the rubber chemicals side--polymer additives of an other nature--and when you put them all together with the Davis-Standard plastics-extrusion equipment operations, you are dealing with the same customer base. The polymer industry in the broadest sense is going to be a real focus for us as a corporation." The company is also in volved in polymers through its ethylenepropylene rubber business and through its organosilicones business, which sup plies silanes for the manufacture of tires. In addition to poor weather and cycli cal downturns, weak pricing has hurt CK Witco's businesses. Weak pricing is a function of overcapacity, particularly among European specialty chemical makers such as Clariant, Calarco opines. Among European companies, the social costs for shutting down uncompetitive fa cilities are so high that it appears to be cheaper to keep those facilities running. "Because of the size of these facilities, you need the volume to keep them going, and that leads to a pricing strategy that has a negative impact on the industry overall," Calarco says. `That puts the pressure on everybody else to make sure they constantly find ways to do things better to reduce costs and to keep an or ganization as lean as possible." Competition from the specialty chemi cal giants such as Ciba Specialty Chemi cals and Clariant means CK Witco needs to endorse small-business values. "I think we are really a summation of small busi nesses, which means we have to be very focused, and we have to be fast. That en trepreneurial approach will always hold us in good stead. It's the heritage that both Witco and C&K bring to the new company," C&K dates back to 1840, whereas the Tumpeer and Wishniek fam ilies formed Witco in 1921. CK Witco's top executives come from the C&K side, with one exception. "We talked to all our managers and everybody in Witco top management chose to leave," he says. Only Mary Gunn, a Witco manager with the organosilicones busi ness, was promoted to executive vice president and heads that business. Calar co hastens to add that many former Wit co employees continue to operate strate gic business units and are "very capable and very able individuals. 1 think every body knew that C&K didn't have the depth of management to take on all the businesses. We said at the beginning that it was going to be a combination." Employees will be expected to help CK Witco meet its goal of increasing op erating earnings of 10% a year above infla tion. Meeting that goal over the long term "is going to deliver the kind of sharehold er value that we should have. And I think that means that we have to make sure businesses tire going to deliver top-line growth. And they will have to keep costs in line," Calarco says. To be sure they do so, he says he'll take a hands-on approach as he has done in the past, reviewing business segments on a quarterly basis. "I think it is important for all of us to be involved. I don't think there is any getting away from that." At the moment, about 44% of CK Wit co's sales are outside the U.S., although only 32% of sales are derived from prod ucts manufactured outside the U.S. About $1 billion in foreign sales is in Eu rope, $300 million in Asia, and $200 mil lion in South America. "Asian businesses are doing the best in terms of year-to-year change, but that is coming off a year that wasn't particularly good," he says. "Latin America also has the potential for good annual growth for us despite some of the difficulties that we see in Latin American economies. Europe seems to be coming around right now, and we hope that as we go into next year we will see enhanced performance from Europe." Product lines with the greatest growth opportunities include organosil icones and silanes. Silanes, in particular, are in great demand because European tire makers are consuming them in place of carbon black for the production of low-rolling-resistance, longer lasting tires--so-called green tires. In fact, CK Witco plans to spend $50 million to ex pand silanes capacity in Termoli, Italy. Polymer additives and the castable ure thanes businesses have also been "sig- PllbS.a$.ar9/Cen SSSS^nline He* Art***> CMnnOttt Cartort 6 Errx>oym*rt ttfto*at Sfvfnjo - Why wait for the mail when (here's a faster and easier way to receive the latest news of the chemical world: Chemical & Engineering News Online.You can now view and search the complete editorial contents of Chemical & Engineering News...Onllne. With COEN Online you'll enjoy... Instant access to each issue-the day it's published! ' -i Direct links to university, company, and government agency web sites worldwide. Full-text searching. links to referenced ACS journal articles. B Archive library of C&EN back issues. With its speed and unlimited information capabilities. Chemical & Engineering News Online is the perfect complement to C&EN magazine. Don't miss out! Subscribe way and ensure tUh.SeAlaCiip#emnbeewrs<3>o5f15th* e' c'h e'mical U.5. Nonrnember @118* ,1, X;if NorvUS. to SvAsoriba oiHhta at hf ilttiUfj/tWl or call 800-333-9511 (within u.s.) 614-447-3376 (outside u.S.) C M A 175365 NOVEMBER 29,1999 C&EN 17 business nificant and growing businesses around the world," Calarco says. R&D spending figured as a percent of sales is likely to slip a ted. Calarco says he expects R&D spending in the neighbor hood of 3% of sales in 1999, down from the 3,7% pro forma, or $123 million, spent in 1998. For the first nine months of 1999, pro forma R&D spending has been 3.2% of sales, or just about $79 million. New product development is particularly im portant for the organosilicone and poly mer additive businesses. But when it comes to the crop protection business, Calarco says, "we supplement what we spend with the licensing in of products from companies that have greater techni cal resources in research. Those compa- nies don't have the access to some of the smaller niche markets that we do." He promises "a comprehensive technical re view" of CK Witco's R&D spending effort "to make sure we are spending those technical resources appropriately." With many details still to be worked out for CK Witco, Calarco says what he and Cook did was "put together a prime company that has significant potential, notwithstanding the short-term bumps. I really don't think we have all the answers yet. We are still evaluating the business es. But we are getting the organization in place, and we're very much geared to a customer-first strategy," he says. "I think that's where it all begins, and frankly, that's where it all ends."4 Environment in Central, Eastern Europe improves, but problems remain A combination of economic, political, and environmental reforms has resulted in a decided improvement in the environ ment of countries in Central and Eastern Europe over the past decade, as these countries have begun their transition from centrally planned to market economies. That is one of the major conclusions in "Environment in the Transition to a Mar ket Economy," just published by the Par is-based Organization for Economic Co operation & Development (OECD). The report examines the past 10 years' experi ences in what it calls "the emerging dem ocratic, market-based societies of the Central and Eastern European Coun tries" and what OECD terms the New In dependent States (NIS) of the former So viet Union--more commonly referred to as the Commonwealth of Independent States--a category that includes the Rus sian Federation. It does this by examining the prog ress made under the Environmental Ac tion Program for Central and Eastern Europe, adopted by environment minis ters at the Environment for Europe Min isterial Conference in Lucerne, Switzer land, in April 1993. In his foreword to the report, OECD Secretary-General Donald J. Johnston points out that "while economic reforms have provided a crucial stimulus for envi ronmental improvements leading to re ductions in high pollution levels, many serious problems remain. Others have grown worse over the transition period. Continued efforts through partnerships between a wide range of actors will be es sential to reinforce the environmental im provements achieved so far." However, the overall results during the past decade have been encouraging, OECD concludes. Economic reforms have generated the resources for invest ment in newer, cleaner technologies to replace older and more polluting ones; at the same time, the overall share of pollu tion-intensive heavy industries in the countries' economies has decreased. Meanwhile, political reforms have given citizens more freedom to demand improvements in environment, "decou pling" pollution levels from economic output, as OECD puts it. In fact, the re port notes, reductions in emissions of key air pollutants have been greater than decreases in output in the region. The efforts have not been easy, OECD concedes. Particularly with the economic and social problems that have beset coun tries in Central and Eastern Europe dur ing the decade, the publication points out, the environment has not been terri bly high on the political agenda. Environment ministries in some countries "have recorded important achievements," according to the report. However, in other countries, particular ly in the NIS, what it sees as "poorly functioning government institutions" have become a major impediment to re form across all sectors. Depending on the pace of restructur ing, the report adds, it may take the countries currently negotiating to join the European Union 20 years or more to meet all current EU environmental re quirements. 'Phis includes five countries currently in the first tier for accession-- the Czech Republic, Estonia, Hungary, Poland, and Slovenia--as well as five in the second tier--Bulgaria, Intvia, Lith uania, Romania, and Slovakia. Moreover, the even more severe prob lems in the NIS represent a serious chal lenge for both domestic action and inter national cooperation, the report cautions. International aid for environmental as sistance peaked in 1994 and has fallen slightly since then, the report says. Most financing and technical assistance have gone to the countries bordering what his torically was considered "western" Eu rope. The Czech Republic, Hungary, Po land, and Romania have been major recip ients, as has Russia; these five countries have received about half of all technical assistance and investment finance. Environmental investments in the ad vanced reform countries, as a percentage of gross domestic product, compare fa vorably with those in OECD countries. These countries include Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia. In slower reform countries--which in clude Albania, Bulgaria, Macedonia, Ro mania, and the NIS--economic conditions have stifled environmental investments. For example, in many NIS countries, out put is at about half the level of former times. "Environmental policies rarely pro vide sufficient incentives for action, while environmental funds have been small compared to those in advanced reform countries," the report says. In a few NIS countries, in fact, environmental invest ments "appear to be negligible." The OECD report also pulls together data on the environmental institutions of various countries in the region. For example, it points out that in Slovenia, the Ministry of Environment & Physical Planning grew from 300 staff members in 1991 to 1,200 in 1995. That total in cludes the Nature Protection Authority, created in 1993, which implements many of the ministry's environmental and biodiversity protection programs. And the ministry's work has expanded from a focus on water management to other areas of pollution control and bio diversity protection. By contrast, in the NIS, the main na tional environmental authority in Russia, which had been designated a ministry in 1992, was downgraded in 1996, losing its responsibilities for natural resources management. Over that period, staff was 18 NOVEMBER 29,1999 C&EN C M A 175366 Crompton & Knowles Grow the M&A way Uniroyal Chemical, a subsidiary of Crompton & Knowles, is a leading world supplier of high-performance speciality chemicals and polymers. Simon Robinson discusses its business plans rompton & Knowles' (C&K) impending merger with Witco is Cset to find its way back into the headlines. Shareholdei approvals, due in September, will once again draw the world's attention to the new addition to C&K's portfolio. But there is more to C&K than the Witco union. The business grew dramatically in 1996 with CEO Vincent Calarco's purchase of Uniroyal Chemical. In fact, this acquisition laid the foun dations for much of the synergy that the com pany will realise through the acquisition. Uniroyal Chemical's operations are split into performance chemicals, which accounted for 28% of C&K's $1.58bn sales in 1998; poly mers, which accounted for 19%; and crop pro tection, which accounted for 17%. The balance is made up of C&K's polymer processing equipment and dyes businesses. The Witco deal is not. however, C&K's only strategy for its chemicals businesses The company has plans for an ethylene propylene diene monomer (EPDM) plant in Europe within the next three years and various plant expan sions and acquisitions are under discussion. One of the significant post-merger chal lenges for the company will be sharing techni Calarco: laying the foundations for growth cal knowledge. To facilitate this, Calarco holds regular meetings with the technical board. company also competes in the EPDM rubber Uniroyal Chemical also has a company-wide market under the Royalene brand. e-mail experts forum which documents techni The nitrile move is significant because it has cal problems across the organisation It has shifted production from Painesville, Ohio, to greatly enhanced problem solving, says Altamira, Mexico, and has doubled capacity Joseph Eisenberg, executive vice president from 20 000 tonne/year Its partner, INSA, is a Rubber chemicals major player in the Latin American polymer industry. It has a solution polymer joint venture Uniroyal's rubber chemicals business is a with Repsol of Spain and is a major producer of respectable size - one of the three largest in carbon black, which is widely used as a rubber the world. It produces a range of additives from reinforcement. accelerators - including ultra-fast thiurams and The new Altamira plant is the world's largest workhorses such as cyclohexyl benzthiazole purpose-designed NBR plant, says Eisenberg suplhenamide (CBS) - to antioxidants, antiozo- `Most nitrile rubber is made in styrene butadi nants and bonding agents ene rubber plants which can swing production. Uniroyal has long been an innovator in this We have carried out cost studies and, except sector Its latest plan is to commercialise a low- for exceptional events, this is probably the cost route to paraphenyldiamine antiozonants. world's lowest-cost NBR plant,' he adds. This The firm is building a pilot plant at Elmira, was the clinching argument for moving produc Ontario which should be complete by year-end. tion from the ageing Ohio plant In the field of solid elastomers, a recent joint The Ohio plant used a batch process and, venture with Industrias Negromex (INSA) to although it was close to customers in the US build a new plant in Mexico has doubled the rubber fabrication business, Umroyal decided it size of Uniroyal's nitrile rubber business. The was impossible to lower production costs to acceptable levels, says Eisenberg The decision to put the: NBR business m a joint venture with INSA came out of Uniroyal's long-term relationship with tho company which kicked off when C&K bought INSA's NBR busi ness in Mexico, INSA then toll-produced the oil-resistant rubber for three yeais. 'We were very impressed with its management and pro duction methods,' Eisenberg says. `There are clear synergies between us,' ho adds, pointing to the benefit of having a low cost continuous process for commodity grades and batch pro duction for speciality NBRs Even with the Ohio plant operating at capacity, there has been little product development in the nitrile rubber busi ness but, with the start-up of the new Mexican plant on 1 July 1999, this is likely to change. Committed to chemicals Umroyal Chemical is committed to ZeiglerNatta polymerisation technology for EPDM. It has three plants in Louisiana with capacity to make 93 000 tonne/year and is extending its Z-N technology with a group of EPDM poly mers called Royaledge These target the medium- to high-voltage cable insulation mar ket and the sponge weatherseal market. Royalene EPDM is also used in automotive under-bonnet applications, as well as in hose, cable and wire, rooting and moulded and mechanical goods The company has decided to invest moder ately in metallocene catalysed EPDMs but believes its predominantly Z-N approach is fundamentally sound It is easier to control branching properties with Z-N catalysts, says Eisenberg. Metallocenes give EPDM rubber much less branching and one competitor has had difficulty matching the properties of con ventionally Z-N catalysed EPDM rubber with metallocene catalysed grades. The market for EPDM is growing well, at around twice the rate of GDP overall. In some sectors, such as the roofing market, it is grow ing much faster In the automotive sector, which has long used EPDM for items such as door seals and underbonnet hoses, the mater ial has been holding its own against thermo plastic vulcamsates (TPVs) Eisenberg says that in the automotive sealing market the speed and extent of penetration of thermoplastic vulcanisates is an open question. This does not page 45 42 16-29 August 1999 European Chemical News C M A 175367 Crompton & Knowles ***%****- page 42 mean, however, that Uniroyal rules them out. In the plastics sector, the company has recently launched a stable free radical poly 'We are working on TPVs and are considering merisation inhibitor for polystyrene. The mater different ways of improving our market position ial has better performance than dimtrophenols, * We could have an announcement by the end of says Stephenson. The division has also devel the year,' he suggests. oped polymer modifiers based on function Uniroyal's level of innovation is reflected by alised polypropylene, polyethylene and EPDM, its revenue in that 30-40% comes from prod which are used to make dissimilar materials ucts that are less than five years old. such as glass-fibre blends compatible. The company will also build a pilot facility in The business strategy is to focus on spe Louisiana by the end of the year to demon ciality niches, avoiding the high-volume plastics strate new technology. Uniroyal is also keen to additives markets which have become com reinforce its European position in EPDM `We moditised. These niches can include wire and have been building our position there for five or cable segments and additives for reinforced six years,' Eisenberg says. 'And we intend to systems. Stephenson aims to generate 30% of build a European plant. There will be a formal revenue from products that are under five years announcement next year and we hope to have old. The current level is about 20%, he says. the plant online by 2002.' But C&K does not The firm produces a range of polyurethane have any ethylene in Europe, so the plant Eisenberg: offering alternative solutions products for the hot-cast urethanes market, would need to be located either on a site with surplus ethylene or on a pipeline. Specialities and additives which represents approximately 1% of the global polyurethane market of around 6 800 A tough market Uniroyal's specialties division supplies additives tonne/year. The average account is, worth to the plastics, petrochemical and lubrication oil around $70 000/year. 'We provide a total solu Rubber chemicals is a tough market, not businesses and high-performance urethane tion to the manufacturers who use urethane because customers are closed to new ideas prepolymers to the hot-cast market. prepolymers, curatives and other materials. We and the benefits of new additives, but because Additives are growing at about the same also supply customer support and technical cost is king. `It is not that they don't want new rate as the world economies and faster than application development,' Stephenson adds. technology, but we have to be able to deliver it the group average. They have recovered from In the polyurethane sector, Uniroyal's strat at the same cost,' explains Eisenberg. last year's slow-down and are expecting egy is also to be a niche player. It does not Uniroyal could realise considerable syner growth of 5-8%/year, around twice GDP. compete in the high-volume, low-margin MDI gies with Witco in this area: Witco bought OSI Urethane prepolymers accounted for sales and TDI space, where the large producers are (the organic silicones business) in September of around $150m and additives which include good at dnving cost out of the market. In the 1995 for $486m. This type of additive is used in speciality antioxidants, polymer modifiers and past, Uniroyal has grown this business by green tyres and `eventually we hope to be able synthetic fluids had sales of $200m in 1998. acquisition, buying Adiprene from DuPont and to offer several different solutions', he says. `It is Speciality additives originally grew out of the Solithane from Morton International in the one area where we can really add value.' rubber chemicals business, when non-rubber 1980s and, more recently, Betathane from Uniroyal is also negotiating to buy one or applications of technology were identified. The Essex Chemicals, a division of Dow. more European rubber chemicals businesses, need to modify products to make them accept The urethanes group includes two Ph.D. says Eisenberg. He hopes to be able to make able in different markets was the key initial task. mechanical engineers to assist customers on an announcement by year-end. Finally developing new market-focused prod part and mould design for parts as diverse as Uniroyal's polymer growth strategy focuses ucts based on core chemistries has become wheels for in-line skates and mineral separation around a new business development group. the division's focus, says William Stephenson, screens. `The business is not capital-intensive, This takes products such as a solid executive vice president of this division. it is people-intensive, he explains. We have a 1 - polyurethane rubber, which can be processed The US generates 65% of its business. 800 (free phone] number to our technical cen like a traditional rubber, out of the polyurethane There are lots of opportunities for geographical tre and deal with around 50 calls daily. It's not group and looks at it as an elastomer instead. expansion and several acquisitions are under the kind of business which large chemical com The division's goal is to find pockets of way, of which two candidates are in Europe, panies can handle cost effectively,' he says. growth in an otherwise slow-moving area. It Stephenson says. The business is centred on prepolymers aims to do this in both the chemicals and poly produced by reacting polyols with isocyanates. mer areas and will look beyond the existing ' C&K AT A GLANCE - 1998, SM Polyols include polyester, polyether or poly- business It will research and develop a market for new products which it hopes will form Total sales* 1785.6 caprolactones reacted with diisocyanates such as MDI and TDI. It also supplies a parapheny- stand-alone businesses in the future. But if they don't reach the 50%/year growth rate they will be returned back to their original divisions. One of the key future products for this busi ness is Tnlene, a liquid EPDM rubber that can be used as a non-staining antiozonant in tyre sidewalls. It is also used in potting compounds or as a reactive plasticiser for polymer process ing. A business director heads the group from Sales by segment Performance chemicals Crop protection Colours Polymers Polymer equipment Others Operating profit 441.8 348.0 229.7 342.5 334.5 89.6 22.0 lene diisocyanate prepolymer family. PPDI is used to make parts for dynamic applications, such as fork-lift truck wheels, which need low hysteresis to minimise heat build-up. The company is also developing and selling prepolymers that yield polyurethanes with low levels of free isocyanate which have better dynamic properties, improved processability and safer handling than standard materials. Uniroyal, and a long-serving polymer technolo gist heads the technical development side. Eisenberg will expand the group's experience base by hiring from outside the organisation. Overall, the group will have 12 full-time staff. 'all figures include businesses subsequently joint-ventured SOURCE CROMPTON 4 KNOWLES Demand for speciality isocyanates is grow ing. The company has built two plants at Gastonia, North Carolina, and is planning to have a third plant on stream in Latina, Italy, in the second quarter of next year. CMA 175368 45 cover story Crompton & Knowles After the Uniroyal Wedding INCENT A. CALARCO, CHAIRMAN, second quarter, operating profits rose 15%, president, and CEO of Cromp to $78 million, and net income jumped Vton & Knowles (C&K; Stam 30%, to $31.8 million, on sales 5% high ford, CT), surprised analysts last er, at $494 million. Strong growth in addi year with his acquisition of tives and pesticides lines offset sluggish Uniroyal Chemical, a firm twice performance in dyestuffs and lower sales in as large as C&K but with no overfloaopdpininggredients following plant rational businesses. At first, the deal seemed itzoamtioank.e little sense: Wedding C&K's dyes, food "It's encouraging ingredients, and equipment businesses with that Crompton Uniroyals rubber, rubber chemicals, pesti can continue to cides, and additives offered little chance convert modest for cost cutting. sales growth into But with a heavy reliance on the poorly significant earnings performing dyestuffs sector, the union increases," says offered C&K a convenient way to expand Timothy Gerde- its portfolio into more profitable and faster- man, specialty growing specialty markets. Most impor chemicals analyst tant, as a former Uniroyal Chemical pres at Salomon Broth ident, Calarco was uniquely placed to see ers. "The primary potential synergies between the compa driver of earnings nies, particularly the use of Uniroyals inter growth relates to national network to expand C&K's oper management's ations overseas. resolve to remove "This combination is a great way to build redundant costs, value," Calarco says, with his trademark controlling selling, enthusiasm. "Uniroyals position is helping general and admin us expand Crompton & Knowles's product istrative expenses, lines internationally, and we're finding plen and a lowering of ty of opportunities for cost reduction." interest expense Already, the company has beaten Calarco's related to debt $ 10-million cost reduction target and has reduction." been able to pay down debt much faster Under the deal, than originally anticipated. accounted for as a Calarco has pleased Wall Street with a pooling-of-interests strong uptick in C&K's quarterly earn merger, C&K ings growth in 1997 {chart, p. 29). In the assumed Uniroy als $1-billion debt and said it would reduce that by $75 million/year. Repayments in 1997 had reached $68 million by the end of the second quarter, and Calarco hopes to exceed $100 million for the full year. In addition, the company is expected to lower its interest costs substantially by restructuring CMA 175369 CHEMICAL WEEK. OCTOBER IS, 1997 27 r cover story debt callable in May 1998, More than 50% of the company's dye co says that he "wouldn't be averse" to a "We have $340 million of high-priced products are used by the apparel market, joint venture in this business, where it is bonds with coupons of 11% and 12%. with the remainder going mainly into car widely speculated that DSM is a willing We can probably borrow at closer to 7%," peting and paper applications. With the suitor. Calarco says. That would further improve company's focus on niche markets, analysts "To its credit, the company has dodged a cash flow and help with debt repayment. estimate C&K's dyestuffs margins at a bullet on EPDM," says Mark R. Gulley, spe However, Calarco will not comment on the reasonable 11 %. Sales were knocked back cialty chemicals analyst at Morgan Stanley Dean Witter and a fen of Uniroyal's spe C&K, BEFORE AND AFTER cialties portfolio. "Calarco saw that a lot of cost could come out of Uniroyal and that 1995 sales: $666 million 1996 sales: $1.82 billion there was a great deal of potential in the busi nesses. Most of the company's earnings growth is coming from the Uniroyal oper ations rather than from the Crompton busi nesses," Gulley says. Uniroyal's nitrile rubber business has been more stable than EPDM and was strength ened by a jv with Mexico's Industrias Negromex signed in late 1995. Under that deal, Negromex will use Uniroyal technol ogy and will produce nitrile rubber exclu 1) Rubber and rubber chemicals. Source: Crompton & Knowles sively for Uniroyal. Rubber chemicals sales, however, have been declining, with pricing possibility of using asset sales for debt by 2% in the second quarter, but slack and foreign exchange pressures cited as neg reduction, since C&K is disallowed from demand in the domestic apparel markets ative factors. making any divestments for two years was partially offset by better European While rubber chemicals are sluggish, addi under SEC rules governing pooling-of- demand. tives were the company's star sales per interest mergers. Before the Uniroyal deal, analysts had former in the second quarter, with a 12% C&K had to take its food ingredients speculated that C&K would makes a dyes increase driven by gains in lubricant and plas business off the block to comply with that acquisition amid the industry restructuring tic additives, polymerization inhibitors, and rule, and analysts have speculated that it will in Europe that created Clariant and DyS- urethane prepolymers. Calarco says sales again offer it for sale when the two-year peri tar and that expanded BASF's business. growth will be helped by new inhibitors for od is up in August 1998. Calarco is now Calarco admits that the company was styrene and acrylics. He is concerned, how happier with its performance, however. "within days" of a major pur We've consolidated operations, and we've seen an improvement in profitability," he says. Still, with estimated operating margins chase. But C&K is now less reliant on dyestuffs, and analysts think it would be the business EARNINGS REBOUND (in millions of dollars) of6% it remains C&K's poorest-perform most likely to go on the block. ing unit (chan, p. 30). Competition is also heating Cost-saving measures related to the merg up in Uniroyal's rubber business. er have included eliminating redundant The company has seen prices for headquarters staff in the U.S. and com ethylene propylene diene bining offices in Europe and Asia. C&K is monomer (EPDM) rubber fell looking at ways to share production units in anticipation of the startup of and gain the cost benefits of combining EPDM plants being built by purchasing and distribution functions. Union Carbide and DuPont The company is making use of Uniroyal's Dow Elastomers, challenging offices, for example, and has expanded its the U.S. lead held by Uniroyal's Source: Crompion & Knowles, dyes salesforce in Mexico and Brazil into Royalene brand. Analysts were concerned ever, that "like most specialty markets, there Uniroyal offices. that the addition of new players could are still pricing problems." Dyestuffs is still difficult, however, and pric spark a price war and put a dent in C&K's Uniroyal's pesticides and seed treatment ing "has been a disaster," says Calarco. He earnings. business, originally an outgrowth of its rub says the competition between the large Startup of both EPDM units has been ber chemicals business, is also performing European and Asian producers has forced delayed by technical problems, however, strongly. It turned in a 10% sales increase in prices down by as much as 30% in some and with existing units running at capac the second quarter, and margins of close to commodity businesses. The company's strat ity, Calarco says, pricing has stabilized; a 20% make it the company's most prof egy has been to focus on higher-margin 4%-5% increase for the fourth quarter is itable sector. Calarco says the business is being niches, often where it is the only supplier. in the works. He says the company's R&D driven by strong miticide sales in the U.S. "We've been aggressive about taking out process work has "substantially narrowed" and generally strong demand for its prod costs, and we've remained profitable," he says. the cost advantage of new entrants. Calar ucts worldwide. CMA 175370 CHEMICAL WEEK. OCTOBER 15. 1997 29 cover st ry "The operations have performed well recently because of expansion outside the U.S. as well as the seed treatment sector ben efiting from the distribution of licensed-in products," says John McDougall, an analyst at Wood Mackenzie. "The product line should be strengthened with the develop ment of a new acaracide--although this isn't expected to reach the market until 2001--and of the wheat and sugarcane herbicide flupropacil." After a setback in 1996, C&K's plastics extrusion equipment business, Davis Stan dard, is performing better this year. "We had our first down year in 10 after a record in 1995, but the business is back strongly this year," he says. In the second quarter sales were ahead 7%, and there was a 27% jump in operating profit. Calarco says business has been tough, especially in 4 TREMENDOUS BUSINESS OPPORTUNITIES Great Savings Over the Cost Of New Equipment Plants Immediately Available 15 Ton/Hour (50% Dry Substances) SLUDGE DRYING PLANT Still Installed Excellent Condition Available for Relocation Europe, where the company is trying to build a bigger presence. With a focus on debt repayment, Calar co is keeping a tight rein on spending. In the company's $60-million/year capital budget, there arc no individual projects larg er than $10 million. "Our ftcilities are operating well, and we're focusing on pro jects to optimize them," Calarco says. C&K is about one-third of the way through installation of a $30-million SAP software system that it hopes will yield more effi ciency gains. R&D is also an area for synergies between C&K and Uniroyal, Calarco says. One example is Gustafson, Uniroyals seed treat ment unit, "Gustafson is talking to our food ingredients people about using their controlled coatings on seeds." The com pany has "dozens of similar programs at work all over the company. I'm even more excited now than I was at the time of the mixed margins 40,000 Metric Ton/Year SURFACTANTS PLANT Alkoxylates (EO/PO) Refurbished 1995 Available for Relocation 50 Acres Complete with Equipment SPECIALTY CHEMICAL PUNT Still Installed Located in Northern New Jersey Metropolitan Area Access to All Major Transportation Routes Close Proximity to New York City UPE is also offering equipment from a Powder Detergent Plant which is immediately available for sale. For additional information on these plants, please contact Mr. Michael Joachim. UNIVERSAL PROCESS EQUIPMENT, INC. i _ a WORLD HEADQUARTERS: P.O. Box 338, Roosevelt, New Jersey 08555 U.S.A. U PE I USA PLANT SITE: 1180 Route 130 South, Robbinsville, New Jersey 08691 ' TEL: (609) 4434545 TELEFAX: (609) 259-0644 EMAIL: upe@upe.com WEB SITE: http://www.upe.com ...serving the equipment needs of process industries worldwide! 30 CHEMICAL WEEK. OCTOBER 15, 1997 CMA 175371 Source: Salomon Brother? estimates. merger about how well we can work togeth er," Calarco says. "This merger was never predicated on success through massive cost reduedons, layoffs, or plant closings," Calarco says. "We're dedicated to building the new Crompton & Knowles through growth, effective asset management, and effective incentive programs for employees. We're seeking to blend the best of our corporate cultures." Although overseas offices have been com bined, U.S. offices--and the identities--arc still separate. In fact, with Uniroyal boast ing the better-performing business, ana lysts see it emerging over time as the stronger partner. Calarco, who divides his time between the two offices, much prefers the shorter drive from his home to Uniroyal's leafy campus in Middlebury, CT. "Even though I was away a long time, now I feel like I never left." --ANDREW WOOD in Middlebury CT business A MATCH MADE IN CONNECTICUT Crompton & Knowles' CEO Calarco sees Uniroyal acquisition as adding balance Marc S. Reisch Uniroyal. He served five years as presi C&EN Northeast News Bureau dent of Uniroyal Chemical between 1979 and 1984 and then served a year as vice ive years ago, Crompton Sc Knowles president of strategy and development Fwas the darling of Wall Street Then for the corporation before moving on to its dyes business went into a rut and Crompton & Knowles in 1985. "The fret its pharmaceutical and food ingredienthtsat 1 knew Unfroyal helped us in the businesses floundered. The Stamford, whole due diligence process," he says. Conn.-based company was dying to ex Although he was careful not to rely only pand, and it discovered the ideal expan on his personal knowledge of the frets sion opportunity in its own backyard-- about Uniroyal, Calarco says, "knowing Middlebury, Conn.-based Uniroyal. the people, the managers, having With the addition of $ 1.1 billion in debt worked with them all before, was even and issuance of $354 million in stock to more significant." Uniroyal shareholders, Uniroyal put Because he knows the people of Uni Crompton into businesses such as rubber royal and what they do, Calarco says he and rubber chemicals, crop protection, does not plan to make changes in the and urethane prepolymers when the deal operating personnel. He did, however, dosed last August. It also more than dou realize personnel and overhead savings bled Crompton's sales from $666 million through the consolidation of corporate to $1.8 billion per year. And the acquisition functions at Crompton's Stamford office. put Crompton's chairman, president, and And because "you don't need two gener chief executive officer, Vincent A. Calarco, al counsels and two chief financial officers" 54, back on some familiar turf--he had and other duplicative corporate personnel, been at Uniroyal 12 years earlier. Only this he realized total corporate overhead sav time, he is in a commanding position and ings of about $10 million. Crompton still has a more personal stake in the outcome. Including options, Calarco owns al most 2.4% of Crompton's shares, making his stake in the company worth about Crompton & Knowles at a glance $34 million based on the recent price of $2016 of Crompton stock on the New Headquarters: Stamford, Conn. York Stock Exchange. If the Uniroyal ac Sales: $1.8 billion in 1996 quisition does what Calarco hopes it will do, then he will have reason, as he puts it, to "feel good" about the acquisition. Net income: $65 million R&D spending: $52 million The stock price has already climbed sev en points, or 50%, since Crompton an nounced the acquisition in May. Capital spending; $39 million Employees: 5,700 Because Uniroyal "broadened the base of the businesses" Crompton was involved in, "it made a big difference for us," says Calarco. "For example, the ac quisition took the dyes business from roughly 50% of the corporation to 15% of the corporation. The acquisition gives a greater sense of stability to the corpora tion than we had before. I think it gives Major products: Ethylene-propylene rubber, nitrile rubber, rubber chemi cals; agricultural chemicals such as milicldes, herbicides, fungicides, and seed treatments; specialty chemicals such as plastic additives and urethane prepolymers; textile dyes; food and ,, pharmaceutical ingredients; plastic extrusion and processing equipment us good balance." And it did not hurt at all that Calarco, a chemical engineer, had a history with a Aftertax earnings from continuing operations, excluding sgnifkam nonrocuning and extraordinary items. 14 MARCH 17, 1997 C&EN CMA 175372 has 34 people running the corporate of fice--as it did before the purchase of Uni royal, says Calarco. Another thing Calarco is not planning to do, at least not immediately, is to sell any of the Crompton or Uniroyal business es. One reason is that the merger of the two companies is organized as a tax-free pooling of interests. Thus, any significant sale of businesses could jeopardize the taxfree status of the merger during the first two years of the new company. But is he looking at the businesses with an eye to ward asset sales? Before the Uniroyal deal, Crompton had hired an investment banker to shop around its food ingredients busi ness. Calarco says: "There may be oppor tunities for a portfolio shuffle. But Td say it's frr too early to make that judgment. When we evaluated the combination of the businesses, it was never predicated on the divestment of assets. We feel good about the businesses." But Crompton might consider joint ventures for some of its businesses if the right opportunity were to come along. "We are going through a strategic review of the businesses and we are looking at what really makes sense for the individu al businesses. I approach the whole thing with a very open mind." Calarco says he will do what needs to be done "to en sure the long-term growth and profitabil ity of the businesses. Does that mean a joint venture makes sense? That remains to be seen." Like Crompton's dyes business, some of the Uniroyal businesses are old and creaky, but they may still have a spark to them. For instance, Uniroyal brings Crompton ethylene-propylene rubber and nitrile rubber businesses in which it holds the number one and number three positions, respectively, in North Ameri ca. Wall Street analyst Christopher M. Bodnar with the investment banking firm of Bear Steams & Co., New York City, points out that rubber is a slow-growth business. For ethylene-propylene rubber in particular, price pressures and substi tute products threaten Uniroyal's lead. A fiirther threat is the new capacity com ing onto the North American market from Union Carbide and from DuPont/ Dow Elastomers, a joint venture of the two big namesake chemical makers. Likewise, the Uniroyal rubber chemi cals business is a little weak in the knees, at least domestically. The company has the number two spot worldwide for robber chemicals, such as vulcanization accelera tors, antiozonants, and chemical blowing agents. Flexsys, Monsanto's joint venture PhoSo try Marc Raise] with Dutch chemicals producer Akzo, troduces seed to grow high holds the top position. Rubber chemicals er value added oil corn is "a lower growth business in the U.S.," crops, and Monsanto comes admits Calarco, but "it is a faster growth out with cotton resistant to business offshore in other areas of the insect attack, the seed is world. I think we are well positioned in more valuable, and thus that sense with facilities in Taiwan, Korea, more costly. Someone will Thailand, and Brazil.'' have to protect that seed He is counting on growth in interna from damage, and Gustaf tional sales to boost not only rubber son's executives hope to chemicals but other businesses as well. sell the products to do just Before the acquisition, Crompton de that. Similar good growth rived less than 30% of its sales from mar opportunities exist for the kets outside the U.S. With the Uniroyal Uniroyal urethane prepoly acquisition, Crompton now gets 40% of mer businesses and its plas its sales from overseas markets--about tic additives businesses, says half of that in Europe and die balance Calarco. split between Asia and South America. Analyst Jaine L Mehring By 2000, half of Crompton's sales should of the New York City stock come from overseas. brokerage house Smith Bar But Crompton is not just involved in ney is confident of Calarco's older technologies newly resurgent be ability to "maximize the val cause of demand from developing econo ue" of the Uniroyal busi Calarco: businesses tie together nicely mies. Real growth opportunities lie ahead nesses. She points out that for the company's crop protection busi although "earnings have stalled at Cromp franchise in the marketplace," he says. "It ness, Calarco says. In the crop protection ton since 1993, Calarco has enabled is known in crop protection, specialties, business, Uniroyal has a line of miticides, Crompton to outperform competitors in and chemicals and polymers in a manner herbicides, fungicides, and growth regula its severely depressed apparel dye end not unlike that of Crompton's Davis & tors. But the real opportunities for the markets." Calarco's familiarity with Uni Standard equipment business, which is crop protection business are in biotech royal, "combined with the feet that the known in its marketplace, and Crompton nology--although not in any biotechnolo Crompton team includes several other & Knowles, which is known in the dyes gy developments the Uniroyal businesses former Uniroyal people," she says, "in marketplace. It all ties together very nicely. will develop. It is "probably not in the creases my confidence that management And we very much intend to keep those cards" for Crompton to make the kind of understands the Uniroyal businesses and names and the franchises they have." investment in biotechnology that Monsan assets and can operate them effectively." Uniroyal will thus continue to operate to and DuPont are making, says Calarco. But Calarco does not intend to fold the as a subsidiary of Crompton. But Calarco But Uniroyal's Gustafson seed treatment Uniroyal businesses into Crompton to run says he intends to imprint some of Cromp business will benefit from advances in bio them more effectively. "Each of the busi ton's style of doing business on Uniroyal. technology, he says. nesses has a franchise in the marketplace Although the Uniroyal people bring "a As biotechnology companies "en that is valuable," he says. "We want to phenomenal sense that the customer hance crop seed, the tendency is to treat maintain that." As a result, the Uniroyal comes first" to Crompton, Calarco says he the seed'' against insect, mite, and fun units will keep their name and product wants Uniroyal to take more of "a market gus attack, says Calarco. So as DuPont in identities. "Uniroyal has a phenomenal segmentation approach to things." He wants to organize the Uniroyal businesses in a way to "get them as freestanding as Dyes dropped from 43% to 15% of Crompton & Knowles' sales after acquisition of Uniroyal Specialty food ingredients 15% \ S,,pec.ial,ty chemicals 16% Dyes 15% Specialty food ingredients 6% possible to give them full accountability in the business and have them responsible for all elements of the business." Another way in which he hopes to motivate Uniroyal is to get more of the employees to become shareholders in the corporation. The employees have not worked for a very stable business for at least 10 years. First, Uniroyal was sold to a leveraged buyout firm. Then, parent Plastic processing " - * * ' equipment 42% Plastic processing equipment 16% Crop protection 20% Rubber chemicals & polymers 27% Uniroyal Inc.--seeking a means to sur vive in the consolidating tire businesssold its Uniroyal chemical operations to Avery in 1986 for more than $700 mil lion. In 1989, Uniroyal management bought out the company, and then in 1995 sales = $666 million 1996 sales = $1.8 billion March 1995, Uniroyal Chemical went public. The Crompton purchase com- CMA 175373 MARCH 17, 1997 C&EN 15 Explore the business m-- depths! diate access to our more than 800 organic DOS PC 486/Windows 3.1 and later systems, intermediates. Whether you know exactly which organic intermediate you want, or Plunge into our new communication concept, whether you have a certain idea you want to the Bayer organica database, and discover the put into effect, our inter-active program will depths of our comprehensive product range. Bayer AG Organic Chemicals Business Group Marketing D-51368 Leverkusen Fax: +49 214 30-55729 Bayer on the Internet: http://www.bayer.com CIRCLE 2 ON READER SERVICE CARD 16 MARCH 17, 1997 C&EN CMA 175374 plcted in October was the fifth change of ownership in more than 10 years. "One of my objectives is to be sure as many employees as possible become shareholders,'' says Calarco. "We feel that is very important, because then all of our objectives are aligned." Currently, very few of Uniroyal employees own company stock. On the other hand, about 90% of Crompton's domestic em ployees own stock in the company. Calarco needs those employees to help him pay down the debt Crompton took on to acquire Uniroyal. His goal, for instance, is to increase operating earn ings at 10% a year above inflation. In four to five years' time, Crompton wants to have paid down its $1.1 billion debt to about $400 million, giving the company an investment grade rating once again and proving, says Calarco, "there really is life after debt." But even as Crompton intends to pay down its debt at a furious pace, Calarco says he does not intend to starve the businesses for the types of investments they need to grow. "We've allocated about $60 million in capital expenditures for the corporation, and we feel that is appropriate for the needs of the busi nesses at this point. It probably will not enable us to do many acquisitions at this point--we know that, and understand that, and will deal with it." Research and development spending tar gets for the company in 1997 are around $55 million. And despite the concern over paying down the debt, Crompton is hiring new research personnel. That hiring, says Calarco, is fix-used on specific programs and not a general sense that the company needs to hire more staff. The Uniroyal R&D staff in particular "is very creative, innovative, and discovery oriented. Cou pling those skills with Crompton's applica tion skills" should make for strong re search capabilities at the combined com pany, he says. Calarco will need all the skills honed during his 12-year tenure at Crompton. Over that time he integrated 12 acquisi tions, cut costs, and put in place the fi nancial controls that allowed, as Bear Steam's Bodnar puts it, "an annualized return of 24%" to shareholders. This comeback kid has taken a gamble in re turning to his old haunts at Uniroyal. How ever, he is familiar with the company, its products, and its people. And although he paid an enormous price--more than $1 bil lion, to bring Uniroyal home to him--he is still smiling and says he "feels very good about the prospects. Peter Bama Crompton fc Knowles Corporation (203)353-5432 Alexander R- Castaldi Uniroyal Chemical Corporati n (203) 573-3239 Yanis Bibelnieks Bibelnieks Associates (212)949-2295 Gene Donati Clark & Weinstock (212)953-2550 CROMPTON & KNOWLES AND UNIROYAL CHEMICAL AGREE TO MERGE STAMFORD, CT. AND M1DDLEBURY, CT., May 1,1996 -- Crompton 6c Knowles Corporation and Uniroyal Chemical Corporation announced today that they had signed a definitive merger agreement. Hie transaction has been approved by the boards of directors of Crompton & Knowles and Uniroyal Chemical, and is subject to the approval of shareholders of both companies. The combined company will have sales of approximately $17 billion Under the terms of the agreement, each share of Uniroyal Chemical common stock will be exchanged for common stock of Crompton & Knowles valued at $15.00 per Uniroyal Chemical share based on the average price of Crompton & Knowles's stock over a 20-day period prior to the mailing of proxy materials. However, Crompton & Knowles will issue no more than 1.1111 shares, nor less than 0.9091 shares, for each share of Uniroyal Chemical common stock. The tax-free transaction CMA 175375 1'IHI Idi yb l-K LKUnHlUN & KNUWLfcb 203 353 5423 TO 917037416086 P.03 will be accounted for as a pooling of interests and is expected to dose in this year's third quarter. The aggregate value of the transaction is approximately $1.4 billion. The combined company will be known as Crompton & Knowles, and will be led by Vincent A. Calarco, chairman, president and chief executive officer of Crompton & Knowles. Kobert J. Maaaika, Uniroyal Chemical's chairman, president and chief executive officer, is retiring from active management and wifi become Crompton 4c Knowles's vice chairman. In announcing the agreement, Mr. Calarco said: 'The combination is additive to shareholder value immediately. Prior to any merger related synergies, we expect double digit improvements in earnings per share in 1996 and 1997. The transaction will greatly enhance the company's long-term growth from a broadened business base and balance sheet deleveraging." "All constituencies wifi benefit in this transaction -- shareholders, lenders, associates, customers and suppliers," stated Mr. Mazaika, chairman of Uniroyal Chemical "With the combined strengths of the two companies, led by proven management, the outlook is excellent." Crompton & Knowles said that in view of the combined company's debtposition, it has concluded that shareholders, lenders, employees, customers and suppliers wifi be best served by repaying debt in order that investment grade status may be achieved as rapidly as possible. To this end, Crompton & Knowles has stated that it intends to reduce its dividend to five cents per share annually, payable in May. The combination with Uniroyal Chemical will enable Crompton & Knowles to expand its role as an industry leader in specialty chemicals. Crompton 4c CMA 175376 P.04 Knowles, with 1995 sales of $666 million, is North America's largest producer of dyes for textiles, and also produces specialty food and pharmaceutical ingredients. It is a recognized world leader in extrusion systems, industrial blow molding equipment and related electronic controls for the plastics industry. Uniroyal Chemical had sales of $1.1 billion in 1995 and has three core lines of business with leading market positions. Chemicals and polymers include rubber chemicals, EPDM and nitrile rubber for automotive, industrial and construction applications. Crop protection chemicals include miticides, seed treatment, growth regulants and fungicides. Specialties indude additives for plastics, petroleum and petrochemical industries and urethane pxepolymers for abrasion resistant applications in industrial and consumer markets. ### CMA 175377 ** TOTAL PAGE04 ** CROMPTON & KNOWLES CORPORATION t0^0 *Ti < u Goldman, Sachs & Co. The Third Annual Chemical Investor Forum May 24, 1995 New York Net Sales and Earnings Per Share $ Millions 600 r f""l0 Nhientt SDanllenos 59ofiJT$1.00 EPS - Continuing Operations 500 $0.80 400 $0.60 300 $0.40 200 $0.20 100 C M A 175379 $0.00 Return on Average Equity oo 85 86 87 88 89 90 91 92 93 94 C M A 175381 Strategic Focus Products sold to selected niche markets with leadership positions Technical support and customer service to solve problems Value-added products improve performance cjc C M A 175382 Dyes - Domestic Lower-quality imports C&K sole producer of 40% manufactured Focus on U.S. textile markets less affected by imports Pricing down 5-6% in 1994 Price increases posted May/June 1995 inventory reductions in 1995 C M A 175383 Dyes - Industry Developments European majors retrenching Capacity reductions in Europe yjv "" Environmental enforcement closing production in China and India Apparel recession in U.S. slowed dyes demand and lowered prices CJC Specialty Niche Strategy Dyes Food Ingredients Equipment Specialty Food Ingredients Miracle Middles No-fat, low water activity, heat stable filling Shipping commercial quantities New contracts signed Additional potential customers evaluations $ millions potential 15% growth market Specialty Food Ingredients Designer Syrups Complements position as leading U.S. producer of molasses Unique flavor coatings for cereals 10% to 15% growth market v 00 mmr- 1 C M A 175387 Specialty Food Ingredients Two-Pronged Success Strategy Respond to customer needs Anticipate market needs with new proprietary developments C M A 175388 Specialty Process Equipment & Controls Acquisitions 4 completed in 12 months Added $60 million annualized sales Fulfill strategy to expand market niches, introduce new products, increase technical value added to support margin expansion C M A 175389 Specialty Process Equipment & Controls International sales averag - more growth Domestic growth to continue -- thermoplastic resin consumption rising 10% per year C M A 175390 Outlook Acquisition Strategy Enhance existing operations Add new "leg" to business utilizing management's proven abilities to optimize performance in specialized chemical markets Many opportunities being pursued Outlook Strong operations Focused management Consistent strategy Fundamentals for success in place C M A 175392 Outlook -- 1995/Long-Term Dyes - maintain margins; pending price increases; strategy to take advantage of industry changes Food ingredients - new products; new contracts; pending developments; grow sales and earnings 10%+ * Equipment -- Annualized sales rate of more than $260 million; operating profit margin 15%+; geographic expansion with new products C M A 175393 Specialty Process Equipment & Controls Acquisitions Egan - added large systems, cast film and precision coating NRM McNeil - increased service and maintenance business - now 15% Repiquet - platform to expand in Europe Killion -- added specialized small extruders for laboratories oc Specialty Process Equipment & Controls First quarter 1995 sales increas Base business growth across all markets^ Acquisition growth First quarter backlog at record $78 million C M A 175394 1v:w.iJr C M A 175395 Specialty Food Ingredients Pharmaceutical Additives DMV marketing success in Europe Commence sales in Far East in second quarter Specialty Food Ingredients Savory Flavors Rotisserie and grilled flavors Convenience and snack food markets Expanding margins 9% to 15% growth markets Specialty Food Ingredients Operations, technical developments customer service coming together Significant products in marketplace Sales and earnings growth potential C M A 17S398 Dyes - Opportunities for C&K Market share gains in U.S., Europe and Far East Strong marketing Efficient production 20% of products developed within last 5 years Improved production planning tied to order entry system Non-apparel sales focus on home furnishings and industrial markets CJC C M A 175399 Dyes - International Improved volume with economic turnaround in Europe Pricing issue in Europe Far East growth through Hong Kong OX C M A 175400 Key Issues 1) Defend and expand niche markets 2) Develop new products and applications 3) Expand margins with added value technology and service First Quarter -1995 $ Millions Amount Sales $168 Net Income 13 Earnings Per Share 270 % Increase 26% 3 8 CJC C M A 175401 C M A 175402 Operating Profit Margin -1994 Specialty Chemicals Specialty Process Equipment & Controls 15.4% 15.9 Sales $590 MM 1994 Operating Profit $92 MM EH Specialty Chemicals EH Specialty Process Equipment & Controls i 7 1993 INTEGRATED HEALTH CARE Wilmington, Delaware 19898 VICE PRESIDENT March 11, 1993 V* Mr. Morton L. Mullins Chemical Manufacturers Association 2501 M Street, N.W. Washington, D.C. 20037 Dear Mort: As we discussed at the last CMA VP Advisory Committee meeting, Paul Tebo is now the DuPont vice president of safety, health and environment. I recommend him to replace me on the Advisory Committee. His telephone number is (302) 774-4060 and his address is DuPont Company, 1007 Market Street, 3408 Nemours Building, Wilmington, Delaware 19898. I know Paul will make a significant contribution to your activities. Very truly yours /del copy: Mr. Paul V. Tebo nice W. Karrh Better Things for Better Living CMA 175404 Eft-4054 REV. 12^90 CHEMICAL MANUFACTURERS ASSOCIATION Charles W, Van Vlack Senior Vice President-Secretary May 7, 1993 Mr. Robert v.d. Luft Senior Vice President DuPont Chemicals DuPont 17235 Brandywine Building Wilmington, DE 19898 Dear Bob: Attached is some additional information on the UNEP APELL position in Paris. If your potential candidate needs further information, he should contact Garrity Baker on our staff at 202-887-1338 who is very familiar with the assignment and the arrangements. Sincerely, Attachment cc: R.G. Baker CMA- 2501 M Street. NW. Washinaton. DC 20037 202-887-1108 Panafax 202-887-1237 Telex fiRfil 7 rC.MA WSHI Request for a Loaned Executive Job Description APELL PROCESS MANAGER 1. Develop and manage the overall UNEP APELL program to promote and help implement the APELL process. 2. Establish goals for implementation of APELL. 3. Prepare and organize promotional materials for APELL. 4. Establish training programs for APELL in various UNEP regions. 5. Develop training materials. 6. Organize and attend meetings to promote implementation of APELL. 7. Provide assistance to interested parties on how to implement APELL and respond to inquiries about the program. 8. Establish network for communication around world on progress of APELL and for exchange of information on technological accidents. 9. Organize Core Group meetings and, in particular, coordinate activity with CMA and CEFIC. 10. Travel as appropriate to countries when personal input is important to success of program, 11. Be the focal point for APELL within the United Nations family and elsewhere in the world. 12. Coordinate UNEP/IE0 work with other activities in the field of technological accidents, in particular the project of the Organization for Economic Cooperation and Development (OECD). 13. Solicit sponsorship and funds for the APELL Program. 14. Handle other UNEP/IEO duties related to technological accidents as assigned. Office/Travel -- The person on detail would have an office in the IEO office in Paris, France. IEO would provide the office, administrative support, and travel money. UNEP/IEO estimates that the person would be on travel from the Paris office for 25% to 50% of the time. Annual leave will be provided in accordance with UNEP/IEO policies and the holidays usually granted by UNEP/IEO will be granted. CMA 175406 UNITED NATIONS ENVIRONMENT PROGRAMME PROGRAMME DES NATIONS UNIES POUR L'ENVIRONNEMENT IE/PAC CAP/IE INDUSTRY AND ENVIRONMENT PROGRAMME ACTIVITY CENTRE Telephone: (33-1) 40 58 88 50 Telex: 204 997 F Cables. UNITERRA PARIS Fax : (33-1) 40 58 88 74 CENTRE D'ACTIVITE DU PROGRAMME INDUSTRIE ET ENVIRONN ` `=.NT t Tour Mirabeau 39-43, quai Andre Citroen 75739 PARIS CEDEX15 France UNEP IE/PAC AWARENESS AND PREPAREDNESS FOR EMERGENCIES AT LOCAL LEVEL (APELL) PROGRAMME Following various Industrial accidents In both highly Industrialized and industrializing countries, which resulted In adverse Impacts on the environment the United Nations Environment Programme s Paris-based Industry and Environment Programme Activity Centre (UNEP IE/PAC) launched the Awareness and Preparedness for Emergencies at Local Level (APELL) programme. APELL was undertaken In late 1968 In co operation with governments and Industry. Its main goal Is to prevent technological accidents and their Impacts. This Is achieved by assisting decision-makers and technical personnel to Increase community awareness of hazardous installations and to prepare response plans In case unexpected events at these Installations should endanger life, property or the environment. APELL has received full support from the UNEP Governing CounclL THE APELL HANDBOOK The APELL Handbook Is designed to create and/or Increase public awareness of possible hazards within a community and to stimulate the development of co-operative plans to respond to any emergency that might occur. Since Its publication, more than 6.000 copies of the Handbook in English. French and Spanish have been distributed throughout the world. It Is also available In Arabic. Chinese. Czech. Hindi. Hungarian, Indonesian. Italian. Portuguese, Russian and Turkish, and Is being translated Into Thai. APELL ON-GOING ACTIVITIES Parallel to the dissemination of the APELL Handbook. UNEP IE/PAC Is currently undertaking four primary activities. CMA 175407 Training Courses APELL training Seminar/Workshops have been held In Bahrain (November 1989), Brazil (February 1990), the Philippines (May 1990), Mexico for Latin America and the Caribbean (July 1990), Colombia (November 1990), Turkey (September 1991), Tunisia (October 1991), Russia for the former USSR (December 1991). Egrpt (June 1992). Yemen (July 1992). Hungary (September 1992). Czechoslovakia (September 1992), India (October 1992) and Brazil (November 1992). These Seminar/Workshops have been structured for senior-level participants from Industry, government, academia and non-govemmental organizations. The Seminar Introduces the APELL process. This Is followed by case studies from developed and developing countries, presented Jointly by representatives of the local Industry and community concerned. Core material Is thus provided, from which the Workshop participants can then develop their collective Ideas into programme plans for their own country or area of Influence. APELL Newsletter The APELL Newsletter, first published In 1989. keeps readers Informed of on-golng APELL or APELLrelated activities, as well as national and regional programmes and major events. It Is published twice a year and appears as a supplement to the UNEP IE/PAC Industry and Environment review. UNITED NATIONS ENVIRONMENT PROGRAMME PROGRAMME DES NATIONS UNIES POUR L'ENVIRONNEMENT Summary Report on the 17/02/93 Srmorid / Su mrrp APELL Senior Level Expert Advisory Group Meeting 30 November-2 December 1992, Paris As per Governing Council Decision 16/32, the Awareness and Preparedness for Emergencies at Local Level (APELL) programme has been further developed to prevent accidents and to limit their impact through emergency preparedness. The progress of the APELL programme was reviewed by a group of experts on 30 November-2 December 1992 in Paris. This meeting was convened four years after the first Senior Level Expert Meeting reviewed the APELL concept and launched the APELL Handbook and programme. The first biennial review of the work programme was conducted in December 1990. This third meeting of Senior Level Experts was attended by 60 experts from 25 countries coming from governments, industry associations and enterprises, as well as representatives of international organizations. Financial support to the meeting was received from the Commission of the European Communities. The Governments of Canada and the Netherlands sponsored travel expenses of 6 participants. The meeting started by reviewing APELL's field of activities over the last two years 1991-1992. Country reports from twelve countries ranging from Latin America to the Middle East, Eastern Europe, Russia as well as India, Indonesia, the Philippines and China, were presented by APELL Programme leaders in each country. The country reports revealed two main developments: the introduction of the APELL process to an increasing number of countries. Experience gained in previous years was reflected in fine tuning the approach, content and methods of delivery in the Seminar/Workshops introducing the APELL process. An increasing number of requests are currently being received from countries all over the world. Further improvements were discussed by the group, and it was recommended that a small working group of the experts involved in the Seminar/Workshops be entrusted with the task of formalizing these improvements in draft guidelines, an operation manual that would ensure continuity and maintenance of the APELL philosophy and character as the numbers and backgrounds of speakers in the Seminar/Workshops build up (so far, no fewer than 180 speakers have taken part in APELL promotion activities). In several countries, progress has been made in establishing an APELL process on the ground. IE/PAC and other donors were able to provide expertise in specific fields to meet particular needs. However, it was clear that much higher levels of financial resources, technical assistance and capacity building are needed if these encouraging developments are to continue to bear fruit and match the expectations and commitment in those countries where establishing APELL is moving ahead. It was recommended that a publication describing the more successful country experiences be prepared from the country reports and circulated widely by UNEP IE/PAC. CMA 175408 2 3. The group noted with particular satisfaction the follow-up visit of a UNEP expert to support APELL implementation at Barranquilla in Colombia. The support of the WEC/LAMP project was also welcomed. It is clear that there is an urgent need, in an increasing number of similar cases where the programme is moving ahead, for substantial resources possibly on a regional or bilateral basis to satisfy this essential demand for technical assistance in setting up an effective APELL Programme on the ground. 4. The group was also informed of the extension of the network of APELL focal points to 71 countries, receiving regularly the APELL Newsletter, published twice yearly, and all other APELL publications. It was felt that the role of the UNEP Regional Offices in developing and maintaining the programme within countries should be further developed. In particular, it was recommended that the UNEP Regional Offices be called upon to activate the focal points and establish links that would enhance their contribution towards identifying hosts for APELL activities/Seminars workshops and strengthen their relations with IE/PAC. 5. The group noted with satisfaction the publication of "Hazard Identification and Evaluation in a Local Community" (N* 12 in IE/PAC's Technical Report Series, prepared with support from the Swedish Government) and of an International Directory of Emergency Response Centers (in co operation with OECD); and the internationalization of the CAMEO Software for APELL use (with the support of the US government). The group endorsed the policy of selecting suitable publications, of value in implementing APELL, and editing them to relate clearly to the APELL Handbook (now available in 14 languages), while giving credit to the original sources. In this respect, it emphasized the importance of publishing as soon as possible the APELL Annotated Bibliography. 6. In view of Agenda 21's commitment to improved co-operation between organizations concerned with environment and development issues, the group noted with approval the following examples of joint working by the APELL programme: Interagency Risk Management Programme for Large Industrial Areas, with IAEA, UNIDO and WHO, activity to develop guidance for the health sector on chemical accident prevention, preparedness and response, with IPCS, OECD and WHO (EURO), co-operation at country level with UNDRO, co-operation with the UN Centre for Urgent Environmental Assistance, work to develop material supplementary to the OECD's "Guiding Principles for Chemical Accident Prevention, Preparedness and Response" prior to its distribution by UNEP. 7. The meeting discussed at length past experience in implementing the APELL Programme and particularly the difficulties encountered in the different phases of operation. Several valuable suggestions were made by the participants and IE/PAC was recommended to incorporate them in implementing the programme for the coming biennium. 175409 3 8. The 1993-1994 draft programme was next presented and discussed. A number of changes, additions, and offers of support and co-operation from governmental and non-governmental sources were proposed. The draft would now be revised in the light of the discussion and circulated to the participants in due course. 9. Finally, the group noted that the increasing and diversifying level of activity has so far been coordinated in 1E/PAC by a senior expert seconded for a 2-year term by an industrial association (the first from the USA and the second from Europe). The programme should receive additional resources to ensure the continuity essential at this stage of expanding and diversifying activity, particularly since UNCED's "Agenda 21" - besides expressing strong support for APELL - now calls upon governments, with the co-operation of international organizations, to undertake: developing national and local capability to prepare for and respond to accidents by taking into account the UNEP APELL Programme (19.59(e)); promoting UNEP's APELL Programme (19.60(e)); inviting UNEP to promote principles for accidents prevention, preparedness and response for governments, industry and the public (19-60<i)). 10. The group noted that the total resources, in cash and in kind, devoted to the programme in 19911992 were of the order of US $ 13 million. Participants acknowledged that .of this total, approximately one third was provided by governments (including counterpart contributions from Canada, France, the Netherlands, Sweden, the United States of America and the Commission of the European Communities); approximately one quarter by industry (particularly the secondment of a full-time Senior Industry Consultant through the International Council of Chemical Associations); and less than one half directly by UNEP. 11. It is abundantly dear that for the programme to match expectations in the coming years to even a minimum acceptable level, considerably greater continuity in personnel and a substantial increase in funding are needed. The group requests UNEP Governing Council to give this matter due consideration in its forthcoming meeting, particularly in view of UNCED's recommendations for APELL implementation, and suggests a draft decision be submitted to the Governing Coundl. Attachments: Outline of APELL Programme Achievements 1991-1992 APELL Provisional Work Programme 1993/1994. CMA^54t0 UNITED NATIONS ENVIRONMENT PROGRAMME PROGRAMME DES NATIONS UNIES POUR L'ENVIRONNEMENT APELL Programme Outline of Achievements and Future Activities WQ2/3 Seniond/OutUn* Outline of Achievements 1991-1992 1.1 Publications completed APELL Handbook available in 13 languages (Arabic, Chinese, Czech, English, French, Hindi, Hungarian, Indonesian, Italian, Portuguese, Russian, Spanish and Turkish). International Directory of Emergency Response Centers available in English, French, Spanish, jointly published with OECD. CAMEO (Computer Aided Management of Emergency Operations), available for international dissemination (with support of US/EPA). Hazard Identification and Evaluation in a Local Community Handbook, available in English (with support of Sweden). APELL Newsletter n* 3,4,5, in English. 12 Awareness raising and training activities Seminar/workshops 1991 * 2 national (Tunisia, Russia) * 1 local (Izmit in Turkey) Seminar/workshops 1992 * 3 national (Hungary, Czechoslovakia, Yemen). * 3 local (Alexandria, Egypt; Madras, India; Maceio, Brazil). All reports of the Seminar/workshops are available. In addition to the local support from host governments and organizers, in kind contribution has been given by many companies and financial support provided by US/EPA, the Commission of the European Community, France and the Netherlands. APELL has been introduced in many international conferences dealing with environment and safety issues. CMA 175411 2 1.3 Networking 71 countries have named an APELL Focal j^int for the technological accidents prevention network. Regular exchanges with this Stwork, to inform them of the c ous APELL experiences and provide them with technical material, are taking place. Follow-up activities in countries where workshops were organized in 1990 have taken place, in particular in Colombia, the Philippines, Brazil, Mexico. Co-operation is going on with other international organizations and in particular IAEA, ILO, OECD, WHO, ECO/PAHO, 1PCS, WEC. The APELL Programme was reviewed in December 1992 by a Senior Level Group of experts. II. Proposed Activities 1993-1994 II.1 Publications finalization of material supplementary to the OECD "Guiding Principles on Chemical Accident Prevention, Preparedness and Response" "Hazard Identification and Evaluation in a Local Community" in French and Spanish finalization of Code of Practice and Checklist on Plant Safety finalization of APELL "Annotated Bibliography" a publication on health service preparedness for chemical accidents a publication on APELL in ports a publication on APELL and pipeline safety CAMEO in Spanish publication of Case studies of successful implementation of APELL preparation of an APELL training manual APELL Newsletters 6-10. II.2 Awareness raisins and training activities 2 regional workshops (Asia and Arabic speaking countries or Africa) 7 national or local workshops training on CAMEO. II.3 Networking continued operation of the network of focal points, with an emphasis on regional networking follow-up and demonstration activities in countries where APELL has been launched . increased co-operation with other international organizations review of APELL Programme in December 1994 by Senior Level Group of Experts. SENT BY'INEP 22- 3-93 : 9:04 : LNEP- 33 1 40388874-= l' 2 UNITED NATIONS ENVIRONMENT PROGRAMME ^ If 1 PROGRAMME DES NATIONS UNIES POUR LENVIRONNEMENT 3T UNITERRA NAIROBI S* 230800 or 520800 Fu 254 - 2 226880/215787 23 22068 UNEP KE P O. 80* 30552 Nairobi. Kenya Your Reference Our Reference FP/9101-91-63 JdeL/ED/sm 19 March 1993 Dear Kr. Lever, During a recent visit to familiarize myself with the activities of our Industry and Environment Programme Activity Centre in Paris, I was briefed about the Awareness and Preparedness for Emergencies at Local Level (APELX) programme . I was delighted to learn of the tripartite partnership between industry, government and UNEP, which has successfully developed APELL over the last four years. I should like to put on record UNEP's gratitude for the ICCA's support to APELL through the secondment of senior consultants from industry, first Mr. Bob Young and more recently. Dr. David Thwaitea. I understand that it was announced at the meeting of the APELL Senior Lev 1 Expert Advisory Group, held on 30 November to 2 December 1992 in Paris, that ICCA would continue this support. I accordingly look forward to hearing the news that a replacement for Dr. Thwaites has been found, who will be able to make e contribution of similarly high quality to the APELL programme. I also hope that ICCA members will continue to take part in APELL training activities. Am you are of course aware, APELL is explicitly mentioned in Chapter 19 of UNCED Agenda 21, where governments are asked to develop APELL as part of their national policies for accident prevention, preparedness and response. This programme is indeed a successful example of the partnership also called for by Agenda 21. Mr. Hugo Lev r Chairman International Council of chemical Associations (ICCA) Av. E van Nieuvenhuyse 4, bte 1 B-1160 Brussels Re 1 ilia , cma1754ij SENT BY L\EP 22- 3-93 : 9-05 : LNEP- 33 1 40588874- United Nations Environment PmUnuntitt - Programme des Nations Units pour I'enviwnnemetK I look forward to our continued co-operation in the development of accident prevention and emergency preparedness. With best wishes. Yours sincerely. Elizabeth Dowdeswell Executive Director CMA 175414