C&EN Northeast News Bureau

Nearly 12 years ago, after having its business news bureau in New York City for many years, C&EN looked around and found no chemical producers left there. So the bureau was moved to New Jersey, an area where there were still chemical producers and that provides fairly easy access to Connecticut, Philadelphia, and Wilmington, Del.--where there are even more--as well as New York City, where major press conferences are held.

This episode is recalled as C&EN compiles its ranking of the largest U.S. chemical producers, based on 1998 chemical sales. Just as the number of chemical companies in New York City dwindled in the 1980s, so has the number of "major" U.S. chemical producers now. So C&EN has taken the difficult step of retrenching to publish the Top 75 U.S. chemical producers.

Mergers and acquisitions have taken their toll on large and medium-size chemical producers--the very ones that have always made up the C&EN list. Of companies on the list last year, Amoco has been acquired by British Petroleum, Arco Chemical by Lyondell Chemical, BetzDearborn by Hercules, Courtaulds by Akzo Nobel, and Fina by Total.

Sidebar: Compiling the Top 75

In addition, Borden Inc. is now privately owned and no data are available, National Starch has been fully integrated into ICI, Mallinckrodt has completely exited chemicals, Petrolite has disappeared completely into Baker Hughes, and Geon has reformed its polyvinyl chloride operations as a joint venture with Occidental Chemical.

Already there are at least four more companies that were included in last year's ranking that almost certainly will be gone by this time next year--Mobil to be acquired by Exxon, Morton International to be acquired by Rohm and Haas, Albright & Wilson will probably be acquired by either Rhodia or Albemarle, and AstraZeneca --the new name of Zeneca--has put its specialty chemical operations on the auction block.

Thus, C&EN lost some 10 companies from the list published last year and stands to lose more. Nobody likes to retrench, but the erosion of the chemical companies was going to put the cutoff point for the bottom of the list at the low $200 million or high $100 million level. This would cause two problems. The first is that at that level, C&EN would be missing a lot more privately held companies than it already is. As one chemical executive noted, "This is the enterprise level." The second problem is that, the way things are going, sooner or later a cutback was inevitable, and it might as well be sooner.

So the Top 100 has become the Top 75. But some things haven't changed. DuPont still leads the list--as it did last year and the year before. And it has widened its margin over second-ranked Dow Chemical, although it must be noted that, in addition to some acquisitions, there seems to be a significant amount of nonchemical sales in DuPont's numbers.

There is no change in the first five places on the list. In addition to DuPont's staying at number one, with chemical sales of $26.2 billion, and Dow at number two, with chemical sales at $17.7 billion, Exxon remains third ($10.5 billion), General Electric fourth ($6.63 billion), and Union Carbide fifth ($5.66 billion).

Table: More than half of the the Top 75 chemical producers posted sales declines (part I, #1-40)

Table: More than half of the the top 75 chemical producers posted sales declines (part II, #41-75)

Rounding out the first 10, Huntsman Chemical moves to sixth from seventh, with chemical sales of $5.20 billion; ICI Americas rises to seventh from 13th, with sales of $4.90 billion; Praxair is eighth, up from 10th, with chemical sales of $4.83 billion; BASF, with its chemical sales of $4.80 billion, retains ninth place; and Eastman Chemical rises two places to 10th, with $4.48 billion in chemical sales.

Then comes the biggest jump on the list. The acquisition of Amoco by British Petroleum created the 11th-place company BP Amoco, up 60 places from BP's rank of 71st in last year's ranking. The next greatest jump is by Kerr-McGee, rising 17 places to 57th, with chemical sales of $933 million. Kerr-McGee's chemical sales improved 23% as a result of titanium dioxide--better pricing, more U.S. capacity, and the acquisition of Bayer's European operations.

The biggest decline in rank among the chemical producers is that of W.R. Grace, which falls 20 places to 42nd largely as a result of the sale of its packaging division. Grace had chemical sales of $1.46 billion.

Grace is followed by a 13-place decline by Lyondell Chemical to 44th. However, this is essentially a new company. The old Lyondell Petrochemical--having placed its petrochemical operations into Equistar, the joint venture it holds with Millennium Chemical and Occidental--acquired Arco Chemical, which is now its only wholly owned chemical operation. Lyondell Petrochemical then changed its name to Lyondell Chemical, which had chemical sales of $1.45 billion.

Millennium Chemical falls 11 places to 36th as a result of joint venturing its petrochemical operations into Equistar. It had 1998 chemical sales of $1.60 billion.

Overall, of the 75 companies on the list, 54 have raised their rankings, eight have stayed the same, and 10 have dropped. The reason for the skew toward moving up in the ranks is that for this year of transition from the Top 100 to the Top 75, C&EN is reporting the rankings for those companies that were listed below 75th place last year--for instance, 75th-place Mississippi Chemical ranked 86th in last year's ranking.

Three companies are new or newly returned to the ranking this year. Rhodia is back on at 41st place with chemical sales of some $1.50 billion. Last year, Rhodia was caught in the Rhône-Poulenc restructuring and could not provide data for its U.S. operations.

Clariant, the Switzerland-based specialty chemical company, is new to the list with $1.20 billion in chemical sales and a 51st-place rank.

And Arch Chemicals, the newly formed and spun off specialty chemical operations of Olin Corp., ranks 61st with $863 million in sales. After the spin-off of Arch, Olin does not have sufficient chemical sales to attain a ranking on this year's reduced list.

Table: The Top 75 in terms of chemical sales, operating profits and profitability (part I)

Table: The Top 75 in terms of chemical sales, operating profits, and profitability (part II)

Besides the ranking by sales, C&EN ranks the companies that make up the Top 75 four other ways--by chemical operating profits, operating profit margin for chemicals, chemical assets, and return on chemical assets.

For operating profits, the top 10 are DuPont first, the same rank as last year, with $3.03 billion in chemical operating profits; Dow, second again, at $2.55 billion; General Electric, also third last year, at $1.58 billion; Praxair, up from fifth last year, at $856 million; Air Products, eighth last year, at $827 million; Union Carbide, fourth last year, at $803 million; Monsanto, sixth last year, $737 million; Rohm and Haas, 11th last year, $734 million; AlliedSignal, 13th last year, $634 million; and American Home Products, 20th last year, $592 million.

For operating profit margin, the top 10 are first American Home Products, 27.0%, up from 10th last year; General Electric, 23.9%, up from 77th; PPG Industries, 23.2%, up from seventh; IMC Global, 21.5%, up from 23rd; Rohm and Haas, 19.7%, up from 28th; Hercules, 19.6%, up from 49th; Potash Corp. of Saskatchewan, 19.3%, up from 39th; NL Industries, 19.1%, up from 16th; Air Products, 18.6%, up from 18th; and Monsanto, 18.3%, down from third.

For chemical assets, the top 10 are DuPont, $19.0 billion, the same rank as last year; Dow, $18.8 billion, unchanged from last year; Monsanto, $10.3 billion, up from 12th; Praxair, $8.10 billion, down from third; Union Carbide, $7.29 billion, down from fourth; IMC Global, $6.67 billion, up from 11th; Air Products, $6.65 billion, down from sixth; Eastman Chemical, $5.88 billion, down from seventh; Hercules, $5.83 billion, up from 24th; and Dow Corning, $5.65 billion, unranked last year.

Finally, in terms of return on chemical assets (operating profits divided by assets), the top 10 are PPG Industries, 29.8%, up from fourth; Ferro, 23.8%, up from 13th; Crompton & Knowles, 21.0%, up from 14th; Rohm and Haas, 20.1%, up from 26th; Georgia Gulf, 19.4%, up from seventh; FMC, 18.6%, up from 58th; Stepan, 16.4%, up from 24th; DuPont, 15.9%, up from 12th; Vulcan Materials, 15.3%, up from 21st; and GenCorp, 15.2%, down from sixth.

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Copyright © 1999 American Chemical Society