To grow, a venerable industrial-lubricants firm looks to Ohio
Back in the 1860s, before there was a Sun Oil Co., Philadelphia was home to a disruptive, fast-growing petroleum sector, including the industrial-lubricants firm now known as Houghton International Inc.
/arc-anglerfish-arc2-prod-pmn.s3.amazonaws.com/public/A7KRYXZOEBFNZB3ZXRCC3OSJXE.jpg)
Back in the 1860s, before there was a
Sun Oil Co.
, Philadelphia was home to a disruptive, fast-growing petroleum sector, including the industrial-lubricants firm now known as
Houghton International Inc.
Houghton is still here, along with publicly traded rival Quaker Chemical Co. of Conshohocken. Houghton boss Michael Shannon says they're "like Villanova and St. Joe's," friendly neighborhood rivals.
But the business - and its owners - have left petroleum behind and gone profoundly international. Houghton now employs 2,000 at plants in Europe, Asia, and the Americas, including 140 at its headquarters and R&D labs outside Norristown. It makes and recycles speciality machine lubes for Alcoa, ArcelorMittal, Boeing, Daimler, Ford, Toyota, and U.S. Steel, among other blue-chip giants.
Last week, Houghton bought Wallover Enterprises, a 153-year-old lubricant-maker in Strongsville, Ohio, from descendants of its founding family.
Shannon won't say what his company paid. I expect it was more than Wallover's $35 million in yearly sales. The firm's 70 workers staff plants in Ohio and Ontario, with customers including stainless-steel makers in several countries.
The deal is part of Houghton's plan to double its own sales, from $855 million in 2015 to about $1.7 billion by 2020, Shannon says.
The business, which also includes players in Germany, Japan, and China, is fast consolidating, driven in part by strict European rules requiring chemical manufacturers to prove their components are safe, not just show that they haven't been found to be toxic.
Houghton is owned by Hinduja, the billionaire-family-owned India- and London-based industrial, energy and banking conglomerate that also owns Gulf Oil International.
Hindjua paid a little more than $1 billion for Houghton in 2012 to its previous private-equity owner, AEA Investors L.P. Under AEA, Houghton closed more than half its plants, including one in Allentown, consolidating at 11 sites, with more staff now stationed at customer factories.
In March, Hinduja bought out partner Kyodo Yushi and its joint industrial-grease operations in Japan, which it will use as a base for expanding sales to Asia and Latin America. A plan to buy a company in Turkey was canceled.
Houghton's internationally minded owners have helped expand its markets, Shannon says. For example, Indian-European steelmaking giant ArcelorMittal, which owns the former Lukens Steel in Coatesville and Alan Wood Steel in Conshohocken, among others, also has offices in India.
"Their owners have a meal with our owners once a month," Shannon says. "That can open doors for us."
The Philadelphia region remains a chemical center, despite consolidation at Sunoco Chemicals, DuPont Co., and Dow Chemical (including the former Rohm and Haas), and the region's pill factories.
Cutbacks mean there are more talented chemists and managers looking for jobs, Shannon says: "They don't want to move to North Jersey or Midland, Mich.," Dow's home. He also pointed to chemical consolidators such as Avantor, the firm started by Rohm and Haas' final CEO, Raj Gupta.
Shannon says Houghton already has staffed up its management team to become a larger company.
"We will evolve to something larger," he says. "We have the skills to do that. All three of our regional presidents [Jeewat Bijlani in the Americas, Marcello Boldrini in Asia, Kevin Smith in Europe-Middle East-Africa] have run larger companies."
215-854-5194 @PhillyJoeD