Common Market Lures Interchemical - C&EN Global Enterprise


Packages and inks go hand in hand and so do Interchem, a major ink producer, and the expanding packaging industry in Common Market countries. Chem...
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Common Market Lures Interchemical Packages and inks go hand in hand and so do Interchem, a major ink producer, and the expanding packaging industry in Common ITALY. At plant of FICIS, which Interchemical now owns, employee adjusts roller mill

Interchemical Corp., for many years riding on the coattail of the packaging industry in the U.S., is getting set to take advantage of the packaging boom in the European Common Market. Within the past two years, the company has acquired the largest printing ink company in Italy and 70% of a French ink company. And now Interchem is negotiating for a West German ink company. Why the interest in printing ink? About 34% of the company's business is with the packaging industry, accounting for about $47 million in sales in 1962. Interchem's printing inks, organic coatings, and adhesives account for a major portion of its sales to this industry. In 1961, a 70% interest in Lafleche Fils, S.A., located just outside Paris, was acquired. Then in the fall of 1962, Interchem gained 100% interest in Fa*bbrica Italiana Colori Inchoistri Stampa, S.p.A. FICIS has its main plant just outside Milan and has annual sales of about $3 million. Purchase price was about $3.5 million. Along with this acquisition, Interchem gained the more than 50% interest held by FICIS in a Spanish ink company. William N. Davies, executive vice president of Interchem, says the two companies have long supplied inks to European users. Now, Interchem is gearing the companies to offer a full range of products to the European packaging industry and other expanding graphic arts. Consumer Spending Up. Mr. Davies points out that the packaging

FRANCE. Ink output at Lafleche, in which Interchemical owns 70%

industry in Common Market countries is at a point comparable with that of U.S. packaging in the early 50's. Increased economic activity makes it possible for European consumers to spend more. This, he declares, naturally results in an increase in the use of packaged consumer products (latest report is that even the French have begun to package bread), publications, and textiles—for all of which Interchem supplies products. Participating in the Common Market is also a fine way to get a wider market for products coming from the research labs, he adds. Some figures show this growth. From 1955 to 1960, private consumption expenditures in Belgium and Luxembourg increased 18%, in France 20%, in Germany 37%, in Italy 24%, and in the Netherlands 19%. Mr. Davies and Kenneth B. Lane, vice president of Interchemical International, point out that the two foreign acquisitions operate on a fairly autonomous basis. Both, over the years, have developed strong marketing lines within their countries. Mr. Davies adds, though, that exports of their products has been small. Now, with trade barriers being reduced, these marketing lines can be extended to neighboring countries within ECM. Mr. Lane states that although Interchem has many standard products in its line, printing inks are very nearly specialty items. That is, the inks are formulated to meet specific characteristics of a plant, ecmipment, and the paper stock on which they will be used. Therefore, he points out, ink companies must be located near customers to

Market countries provide on-the-spot technical service needed to sell these products. ECM Entry Not Complete. This need to be near customers, coupled with the probable increase in intercountry sales, would indicate that Interchem has not yet finished its entry into Common Market countries. Mr. Davies' remarks along these lines would appear to indicate that this is, indeed, the case. He says Interchem's long-range planning would indicate possible further expansion in the Common Market through acquisition. The West German ink company might be the next of these acquisitions. Negotiations are going on which would give Interchem a majority interest in the West German firm with a contract to purchase the balance at a later date. Interests Elsewhere. Although, at present, Interchem's overseas interests are in the Common Market, other areas of the globe have received considerable attention. Interchem has about a 50% interest in a large Canadian ink company with an option to pick up the balance. A wholly owned, fully integrated ink subsidiary operates in Mexico and another ink plant in Venezuela. About 1951, the company acquired a 20% interest in Toyo Ink Mfg. Co. of Japan. Interchem has about 20% interest in an Australian ink company. In the Philippines, Ault & Wiborg Co. (a subsidiary of the old Ault & Wiborg Co., Cincinnati, Ohio) covers the Far East. Mr. Davies says these areas also have a great potential for Interchem's products. But, he adds, the packaging industry APRIL

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in many of these countries is still a few paces behind the European situation. Interchem's world-wide activities are closely tied to the packaging industry. Sales of the company have increased about 4.7% per year since 1952— about equal to the growth rate of the packaging industry. Besides the 34% of its products which go to the packaging industry, Interchem's sales go to these industries: publishing, 14%; textiles and plastics, 1 3 % ; printing and lithographing, 10%; intermediate processing materials, 7%; transportation equipment and services, 7%; and 15% to various other industries. The company's sales hit $139.5 million this past year, a 6.7% increase over 1961. About 10% of its total business came from overseas sales. Although this figure should be about the same in 1963, Mr. Da vies feels growth of foreign sales has a good chance of outpacing the U.S. sales growth rate. Interchem's ratio of capital spending to sales gain for the past nine years is about 0.5—better than that of the chemical industry as a whole. Mr. Davies explains that, as a chemical compounder, Interchemical doesn't have the heavy-equipment expense characteristic of a basic chemical producer. Capital expenditures of Interchem came to about $4 million in 1962. This year the figure will reach nearly $6 million—about 10% of which is earmarked for overseas use. Part of this $6 million will go into the completion of Interchem's research and development center, which is scheduled for completion this September at Clifton, N.J. Interchem has been spending about 2% of sales on research. Mr. Davies says that the new lab in Clifton will not only carry on the company's basic research lines but will be used to back up its ECM subsidiaries. A statement of H. B. Woodman, president of Interchemical, before security analysts earlier this year sums up the types of research in which the company is involved. These include the "whole field of electrostatic printing and coating, other new methods of printing, new polymers, new or expanded applications of plastics, new treatments and colorants for synthetic fibers." Mr. Davies adds that, with the new types of packages such as polyethylene-coated milk containers and fiber-foil cans, Interchem is involved in a never-ending search to find inks and coatings to be applied to these new surfaces. 26

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Allied Buys Times Tower, Will Turn It into Showcase Allied Chemical has acquired the Times Tower on Times Square in New York City and plans to transform it into an exhibit of the chemical and allied industries' new products and developments. Above, Allied president Chester M. Brown poses between a model of the present building (left) and one showing how Allied plans to remodel it (right). The first three floors of the 26-story landmark will be glass enclosed and devoted to exhibits. The company's nylon fiber marketing department and its product publicity and advertising staffs will use part of the building for offices. A distinctive restaurant and radio and television studios will also occupy some of the building. The electronic news sign encircling the building will be in operation once again under a contract to Life magazine. The remodeling is scheduled to be completed late next year. Long the headquarters of the New York Times, the building was completed late in 1904.