The once-mighty chemical company has been gobbled up by another interest. What that means for Delaware remains to be seen.
(page 2 of 2)
The biggest of those units was Betz, which Hercules sold to GE in 2001—at the cost of almost 4,000 jobs. Yet from the sale, the company began making steady progress back into black. Debt that had reached $3 billion in 2001 as a result of the Betz purchase was reduced to about $800 million through the first quarter of 2008. Most important for the legacy and future of the 30,000 Hercules pensioners, the pension fund is now fully funded and secure.
“Bankruptcy would have meant abandoning our commitment to our pensioners,” Rogerson says. “That was one of the big reasons we chose not to declare it.”
That decision is a reflection of the company’s culture and commitment to its employees, Rogerson says.
“The average age of our current employees is 48, with most having 25 years or more of service,” says Rogerson, whose own 29-year career with Hercules began right out of college in 1979. “There was a feeling among us all that we could dig ourselves out.”
In accepting the fate of acquisition, Hercules pensioners remain cautiously optimistic about their security. As for Ashland, it will take over a compact and efficient facility.
There are 700 employees in Delaware: 225 at the headquarters on Market Street in Wilmington, and 475 at the Research Center off Lancaster Pike. Having begun its life in 1931 as the Experiment Station (the site was discovered by an executive riding horseback), the Research Center was renamed in 1956. It has been revitalized since 2004.
“We reduced the original footprint, which housed some 1,200 employees, to just over 450,” says Steve Prescott, head of the research unit. “With a $15 million capital investment program, we’ve reduced the number of buildings here from 50 down to 15, even as we have added some 60 new research jobs.”
Some of those jobs resulted from a consolidation of Hercules’ research facilities in Jacksonville, Florida. That action was subsidized by a $2.5 million grant from the Delaware Office of Economic Development. “Delaware made it clear they wanted us to remain, and the area is a great hub for chemical research talent,” Rogerson says.
we did to make ourselves more attractive to an Ashland were
the things we had to do anyway just to survive.”
The question is how much of that hub will remain of interest to Kentucky-based Ashland. Though spokesman Jim Vitak says the company plans to maintain a “significant presence” in Wilmington, how much of a presence is no longer under Hercules’ or Delaware’s control.
Ashland’s interest in Hercules dates to 1996, according to Vitak. “We’ve always prized Hercules’ research capabilities, as well as its international footprint in specialty chemicals.” Interest declined during the BetzDearborn debacle. It returned when Rogerson turned things around.
The irony is that a company that had so gallantly raised itself by its own bootstraps only made itself attractive to a larger enterprise. “Ashland had been looking to establish a stronger presence in specialty chemicals, which Hercules will help us achieve,” Vitak says.
Hercules operates in two major business categories. Paper Technologies supplies chemicals to the paper industry. (Developments emerge out of the company paper mill at the Research Center.) Aqualon supplies industrial and consumer specialty products, including pharmaceuticals and cosmetics.
With a new $3.8 million natural gas-fired plant that serves all the Research Center’s steam power needs, Hercules is primed to make Ashland a major player in the global specialty chemical market.
Former CEO Brown says that making a larger company out of two smaller players in the specialty chemical business just makes good sense. “Ten billion is big enough to be successful now,” says Brown.
Hercules spokesman John Riley says there is little overlap between the two companies, which should help employees and the larger community maintain an optimistic outlook.
“We hate to see our run come to an end,” says Riley, “but what we did to make ourselves more attractive to an Ashland were things we had to do anyway just to survive.”