BUSINESS
MELDING RUTHERFORD Cambrex has combined specialties to form a cohesive, and hopefully successful, company
H
OW DO YOU MANAGE A BUSI-
ness unit when your bosses say it's for sale? In the case of Rutherford Chemicals, the fine and specialty chemicals subsidiary of Cambrex, it is done by ignoring what seems to be the inevitable and taking a business-as-usual approach. This means increasing productivity, developing new products and markets, creating partnerships, and setting goals for future growth. Rutherford was formed on Jan. 1 by combining five Cambrex subsidiaries: • CasChem processes castor oil into derivatives for personal care, telecommunications, coatings, inks, lubricants, biomedical, and electronics markets. • Heico Chemicals manufactures highpurity organic and inorganic salts, pharmaceutical intermediates, and a variety of alkenyl succinate anhydrides. • Nepera is a pyridine chemistry expert making vitamin B-3 and specialty chemicals for pharmaceutical intermediate and nutrition applications. • Seal Sands Chemicals, based in the U.K., makes intermediates for pharmaceutical, agrochemical, polymer, and photographic uses. • Zeeland Chemicals custom manufactures products for the pharmaceutical,
photographic, and personal care industries with capabilities in chiral resolution and reductive animation. Some operations have strong pharmaceutical ties, but Cambrex says they don't fit into its plans to become a life sciences company Unfazed, Rutherford President Keith Henderson says he hopes to increase the subsidiary's annual sales to $500 million five years from now, up from less than $ 150 million currently Sales for the first half of this year totaled $65.1 million, down almost 18% from the same period a year ago. The recent sales decline is little different from that experienced by a number of chemical companies in the past couple of years. With the recession, sales have slowed in various markets, such as performance-en- Henderson hancing chemicals sold to ~~ ~~ markets like polymers, agrochemicals, and, particularly products used by the telecommunications industry Fine chemicals and intermediates have also suffered, according to Henderson. "There is no doubt that last year was disastrous for the fine chemicals business,"
he says. In intermediates, "there is a lot of capacity out there chasing a smaller piece of the pie as drug companies have cut back on outsourcing." However, Henderson is confident that Rutherford can achieve its sales goal through internal growth, new technologies, partnerships with other companies, and strategic acquisitions. "We have consolidated back to our base to get the platform from which we can grow," he says. Planning for the combined organization actually began about two years before it was officially created. Cambrex was built by acquiring businesses, and executives left many of them as stand-alone operations.
Gagliardo
Sal Gagliardo, Rutherford vice president and general manager, says: "It was challenging for us to figure out the right organization to take better advantage of operational, technical, product development, and commercial resources. In the past, each group had all of these functions." Under
complete
crystallization J 1 control
It's a fact. Almost every chemical process contains at least one crystallization step. Now, for the first time, you have the power to take complete crystallization control with c3 technology™ from Accentus.
Learn more at CPhl I Booth Y40
c3 technology from-
O w w w l LfLfO ^w.accentus.co.uK/c
34
C&EN
/ SEPTEMBER
23, 2002
HTTP://PUBS. ACS.ORG/CEN
the new structure, Gagliardo has responsibilityforall North American operations. Sales and marketing also is now operating under a matrix organization, according to Susan Ostrowski, vice president of sales and marketing. Previously, because of common products among the units, Cambrex might have had two or three sales representatives calling on the same customer. The same type of organization is seen in research and product development, according to R&D Director Brian Tarbit. "Products may now be developed in units that don't make those products," he says. And it is only recently Gagliardo adds, that the company has begun to bring technical people and product people together. "We're starting to grow up as an integrated company," he says, "but we've still got a long way to go." Don't look for names such as Nepera or CasChem to disappear, though. They have such strong brand recognition, Henderson says, that they will remain. WHILE HENDERSON hasn't made an ac quisition since starting his job early this year, Rutherford has reached some important marketing agreements. In July, it named BASF as distributor of its niacinamide and niacin products (vitamin B-3) in the U.S., Mexico, and Canada. This agreement extends Rutherford's reach and also fills a gap in BASF's line: B-3 was the only vitamin that BASF did not have. At the same time, Rutherford is completing a continuous-process niacinamide plant in Harriman, N. Y, that will raise its capacity for USP-grade and animal health products by 30%. And it has signed a three-year agreement with Nutrition 21, a marketer of nutritional products formulated with chromium and other trace minerals, to supply chromium picolinate, which has applications as anutritional supplement for human and animal feed use. Rutherford is also supplying a key intermediate to NutraSweet Co. for its next-generation sweetener Neotame, which recently received Food & Drug Administration approval. So Rutherford has restructured itself largely along the lines of a stand-alone company ready to be spun off But there are those who say that if it happens, Cambrex, which gets alot of cash from the operation, will retain a piece. And there are those who have even larger doubts. Lehman Brothers analyst Timothy Gerdeman recently wrote that investors increasingly believe Cambrex will never divest Rutherford, "despite promises to the contrary"—WILLIAM STORCK HTTP://PUBS.ACS.ORG/CEN
BORREGAARD SYNTHESIS, INC.
Your Source for Intermediates and Fine Chemicals • Flexible, Multi-Purpose Production
m Process Safety
m Dedicated Technical Support
m Process Development
m Environmental Responsibility
m Custom Synthesis y^M^^M^groU^M^^^^
^^^^^^B
\ r =
= 2rArpmt^yr|tit
