MacDermid Incorporated

245 Freight Street
Waterbury, Connecticut 06702-0671
U.S.A.
Telephone: (203) 575-5700
Fax: (203) 575-5630
Web site: http://www.macdermid.com

Public Company
Incorporated: 1922
Employees: 1,900
Sales: $382.6 million (1999)
Stock Exchanges: New York
Ticker Symbol: MRD
NAIC: 32551 Paint and Coating Manufacturing; 325612 Polish and Other Sanitation Good Manufacturing; 32591 Printing Ink Manufacturing; 42183 Industrial Machinery and Equipment Wholesaling; 42261 Chemicals and Allied Products, Not Elsewhere Classified

MacDermid Incorporated develops, acquires, manufactures, markets, and services specialty chemicals and systems for the chemical treatment, surface preparation, and finishing of metals, plastics, and other materials. Its principal products are more than 5,000 chemical compounds manufactured by the company and used in finishing metals and non-metallic surfaces, printing, and offshore-drilling lubricants. MacDermid also produces equipment in support of the chemical business and markets supplies and equipment related to the use of these chemicals but produced by other companies. It maintains manufacturing facilities in six countries and sells its products in more than 25 countries. A flurry of acquisitions in the late 1990s was expected to almost double MacDermid’s annual sales, to $750 million, in fiscal 2000.

MacDermid Through the 1970s

MacDermid was founded by Archibald J. MacDermid, a Scot who had worked on the construction of the Panama Canal. He left a sales position with a chemical distributor to found the company in 1922 and, with a grubstake of $4,000, began producing and marketing an electrolytic brass cleaner, in Waterbury, Connecticut, a major center of the brass industry in the United States. Sales reached an annual $391,000 by 1929, only to fall by more than half in the depths of the Great Depression, but were back on track by 1935.

Harold Leever—coincidentally also of Scottish extraction—joined the firm in 1938 as a research chemist, developed another lucrative product, and succeeded to the presidency in 1954. Archibald MacDermid sold his firm to 57 employees in 1959. Net sales rose rapidly in the 1960s, increasing from $4.8 million in fiscal 1962 to $16.8 million in fiscal 1966. MacDermid became a public company in that calendar year, selling less than 20 percent of its outstanding common stock at $17.50 per share. In addition to its Waterbury headquarters, laboratories, and manufacturing and warehouse facilities, the firm operated a smaller plant in Ferndale, Michigan, and leased sales offices and warehouse facilities in Dallas, Denver, Kansas City, Los Angeles, and St. Louis. It also held a majority interest in production companies in Spain and Australia.

By the 1970s MacDermid believed it was providing the most complete line of proprietary chemical compounds and supporting services in the fields of industrial metal and plastics finishing and plating on plastics. It was producing and marketing more than 250 proprietary chemical products used for these purposes and selling them to more than 6,000 companies. Additional plants had been established in Dallas and St. Louis. Typical end products finished by MacDermid chemical processes included office equipment, automobiles, cameras, refrigerators, and plumbing hardware, as well as engineering applications in aerospace and printed circuitry. Related chemicals, supplies, and equipment were being sold in New England and the Southwest. A subsidiary was manufacturing and selling tanks and other equipment to withstand chemical corrosion and other forms of attack, such as radiation.

In fiscal 1973 MacDermid purchased Occidental Petroleum Co.’s share in a joint venture that was manufacturing and selling the company’s products abroad. This acquisition gave MacDermid full control of the Australian company and 90 percent control of the Spanish one, plus full ownership of subsidiaries in Switzerland and Hong Kong. A German subsidiary was established as well, and manufacturing plants in Spain and England came into operation. MacDermid also took a majority interest in Plastron Systems Inc., a developer of a new technology for printed circuit boards, and increased its interest in the firm to 94 percent in fiscal 1974. This subsidiary became Etched Plastics Inc. the following year. MacDermid’s sales continued to grow throughout the 1970s, and its net earnings declined only during the recessionary period of fiscal 1975 and 1976.

Stagnant Earnings in the 1980s

MacDermid reported record net sales of $56.8 million and earnings of $5.3 million in fiscal 1980. By this time it had acquired two more companies, Specialty Polymers Inc., located in Leominster, Massachusetts, and Vapocure International Pty. Ltd. (which it sold in 1983), and had established a Canadian subsidiary. MacDermid opened a larger English manufacturing plant in fiscal 1981 and a research and development center in Waterbury in 1982. In fiscal 1983 it acquired 3M’s Plating Systems department, which included a factory in Vernon, Connecticut. A research laboratory also was established in Israel.

In 1981 MacDermid started marketing the chemical products it had begun developing four years earlier for a niche market in the microelectronics industry called submicron technology, geared to customers’ particular needs as printed circuits shrank in size. MacDermid claimed to be the only company manufacturing all three essential chemical processes for making printed circuit boards: plating solutions, etchants, and resists.

MacDermid continued to expand in the latter part of the decade. It opened a copper recovery plant in West Germany in fiscal 1985 and a factory and laboratory in Taiwan in fiscal 1986.

A technical center was opened in Japan in 1986 to develop special chemicals for electronics. Another technical center opened in Hong Kong in fiscal 1987. MacDermid also opened a Nashville factory and laboratory in fiscal 1989. During 1989 the company acquired Circuit Services-W.R. Hatch Corp., a maker of chemicals for the electronics market; Henkel Corp.’s electroplating chemical-supply business; and ELNIC Corp., a producer of electroless nickel chemicals. In 1990 MacDermid swapped its semiconductor proprietary chemical sector in exchange for Dynachem Electronic Materials’ electroless copper and screen resist businesses.

MacDermid’s net sales almost tripled during the 1980s, but its net earnings peaked at $7.6 million in fiscal 1984. Fiscal 1986 saw a drop in revenues of 15 percent and in earnings of over 40 percent, which the company attributed in its annual report to the “most difficult electronics business climate in recent memory.” Nevertheless, MacDermid, in contrast to many other suppliers to the electronics industry, did not lay off workers; indeed, it invested $11 million in new plant and equipment. During this decade of mergers, leveraged buyouts, and hostile takeovers, stagnant or falling profits might have resulted in wrenching changes. However, with a majority of its stock in the hands of company officers, directors, and present or retired workers—both individually and through an employee profit-sharing plan—MacDermid stuck to old-fashioned values. Each year, for example, company officers presided over an awards ceremony in which, clad in kilts, they presented service pins to employees honored for special contributions.

One investment manager told Kathleen S. Failla of Chemical Week in 1987, “The company thinks the way Japanese do. They run the business with a view to the long-term success of the company, and most companies are prone to short-term pressures.” Failla quoted Chairman Leever in these words: “My goals are still very simple. Take care of the people and the people will take care of the stockholders.” Arthur J. LoVetere, who had replaced Leever as chief executive officer in 1982, told her: “There is more to life than the almighty dollar.” The two men were said to know each of the 650 employees by first name.

Aggressive Growth in the 1990s

This era of paternalism ended in 1990, when LoVetere accepted a demotion to devote more time to Roman Catholic lay activities. In Harold Leever’s son Daniel, who succeeded him, MacDermid got a chief with his eye firmly fixed on the bottom line. Leever closed six facilities, including the Leominster, Nashville, and Vernon plants, in fiscal 1992, and cut the U.S. workforce by 30 percent. He made company executives share rooms in Best Western hotels and even eliminated the office water coolers. “If I see waste of even five dollars, it makes my guts churn,” he told Silvia Sansoni of Forbes in 1998. Leever raised MacDermid’s profits in spite of a sales drop during the recessionary fiscal year 1992 and reduced corporate debt from $26.2 million in fiscal 1990 to $8.5 million in fiscal 1994. A new earnings record of $7.7 million was set in fiscal 1993.

By this time MacDermid was producing more than 1,200 chemical compounds, with manufacturers of printed circuit boards accounting for two-thirds of its business. These chemicals were being used for cleaning, plating, and otherwise preserving the metal surfaces of these boards. More than half of all sales were coming from other countries, at least partly because MacDermid’s main customers were moving manufacturing operations to East Asia. By mid-1993 the company had 22 foreign subsidiaries.

Company Perspectives:

We will create an industry image that automatically causes people in the industries we serve to think first of Mac-Dermid.

We will justify their action by first thinking of the customers’ needs—what’s right for them makes it right for MacDermid—by supplying a total system including processes, know-how, and services that assist in meeting all their needs.

In 1992 Olin Corp. sold its European- and Singapore-based printed wireboard chemical operations to MacDermid and its worldwide exclusive rights to Olin’s “black hole” technology for metal plating the holes in the boards, a carbon-based chemical system that could possibly replace electroless copper plating in circuit board manufacturing. Replacement of the conductive copper plating usually used would result in fewer toxic byproducts in the manufacturing process and protect MacDermid against lawsuits for violations of hazardous-substance laws.

MacDermid was also entering the field of photolithography, a $500-million-a-year chemical photoimaging process being used to define the image of a circuit on a printed board. Much of the necessary technology was being developed at the research and development facility in Israel. The company enhanced its capabilities in 1995, when it purchased, for $130 million, a unit of Hercules Inc. making photoresists, used to imprint electrical patterns on circuit boards, and a photopolymer printing-plate system, including solvent inks, to reproduce graphics for package printing.

The company was not neglecting its metal-cleaning market among traditional manufacturers in the United States and Europe. This market consisted of chemicals used to coat metal and plastic surfaces for the application of chrome or corrosion-protective coatings. “Just about everything under the hood of a car is protected against corrosion by the chemicals we make,” Leever told Daniel J. McConville of Chemical Week in 1994. He was placing hopes for the future on Viatek electroless nickel, a plating technique that he said offered a cheaper, better coating than the electrolytic process, but that did not debut until 1999. Also in 1994, MacDermid established an Industrial Cleaners Group. Among its products were cleaners provided by Allied-Kelite Co., a metal-finishing business recently purchased from Witco Corp.

By the end of fiscal 1999 MacDermid could point to outstanding gains. Net sales had more than doubled in the five-year period starting in fiscal 1995, and net income had more than tripled, with a new record set in each year. Company stock rose roughly tenfold over this period. Debt increased from $22.6 million to $258.7 million, but the money was used for acquisitions in order to increase market share. After purchasing Canning, a British firm, for about $150 million in 1998, MacDermid became the world leader in metal-treatment chemicals, according to both companies. MacDermid was prepared to sell some of Canning’s other operations but intended to keep its unit for synthetic offshore-drilling lubricants. MacDermid had just finished acquiring Ytema, a Swedish firm, and earlier in the year had taken a 30 percent share in Galvanevet, Italy’s largest producer of metal-finishing chemicals.

MacDermid enhanced the graphic arts sector of its business by purchasing Polyfibron Technologies International, a producer of photopolymers with annual sales of about $245 million a year, in early 1999. By adding photopolymers to MacDermid’s production of water-based inks, the company would nearly double the sales of its graphic arts segment, increasing this sector to 38 percent of its total, compared to 31 percent each for electronics and industrial products. It also would make MacDermid the leader in the flexographic printing market in North America and second in the world. MacDermid issued seven million shares of stock and assumed $155 million of Polyfibron’s debt to finance the purchase, which was valued at about $392 million. But as of November 1999 the transaction still had not closed because of an antitrust review by the Federal Trade Commission.

In fiscal 1999 MacDermid’s revenue came 84 percent from proprietary chemicals, nine percent from equipment in support of the chemical business, and seven percent from the resale of chemicals and supplies manufactured by others. About 20 percent of its sales of proprietary chemicals derived from products covered by patents owned by the company or produced under patent licensing agreements. Members of the Leever family held about 20 percent of the company’s stock in 1999, while an employee stock-ownership plan held about 15 percent.

In the United States, MacDermid was maintaining manufacturing plants in Waterbury; Ferndale; Middletown, Delaware; and Waukegan, Illinois. It maintained laboratories in Water-bury, Middletown, Waukegan, and New Hudson, Michigan. Factories abroad were in Panyu, China; Birmingham, Telford, and Wigan, England; Eure and Villemeux, France; Dusseldorf and Zulpich, Germany; Barcelona, Spain; and Hsin Chu, Taiwan. Laboratories were in Barcelona, Birmingham, Eure, and Telford, and also in Sheffield, England, and Hong Kong.

Principal Subsidiaries

MacDermid Asia, Ltd. (Hong Kong); MacDermid Benelux BV (Holland); MacDermid Chemicals, Inc. (Canada); MacDermid Equipment, Inc.; MacDermid Equipment Asia, Ltd. (Taiwan); MacDermid Equipment GmbH (Germany); MacDermid Española, S.A. (Spain); MacDermid Europe, Incorporated; MacDermid France, S.A. (France); MacDermid G.B., Ltd. (U.K.); MacDermid GmbH (Germany); MacDermid Hong Kong, Ltd. (Hong Kong); MacDermid Imaging Technology Asia (Hong Kong); MacDermid Imaging Technology Belgium NV (Belgium); MacDermid Imaging Technology Europe BV (Holland); MacDermid Italiana SRL (Italy); MacDermid New Zealand, Ltd. (New Zealand); MacDermid Overseas, Asia, Incorporated; MacDermid Scandinavia (Sweden); MacDermid S.A. (Pty.) Ltd. (South Africa); MacDermid Singapore, Pte. Ltd. (Singapore); MacDermid Suisse, S.A. (Switzerland); MacDermid Taiwan, Ltd. (Taiwan); Nippon MacDermid Co., Inc. (Japan); W Canning, MacDermid UK Ltd. (U.K.).

Key Dates:

1922:

Company is founded by Archibald J. MacDermid.

1966:

MacDermid becomes a publicly owned company.

1981:

MacDermid introduces chemicals for submicron technology.

1991:

Numerous plants are closed and employees dismissed.

1993–94:

New annual earnings record of $7.7 million is set.

1998:

MacDermid is now world leader in metal-treatment chemicals.

1999:

Acquisition makes MacDermid the leader in the North American flexographic printing market.

Principal Competitors

Atotech USA Inc.; Ethone-OMI Inc.; E.I. duPont de Nemours & Company; Minnesota Mining & Manufacturing Company; Rohm and Haas Company.

Further Reading

Faillía, Kathleen S., “MacDermid Is ‘Following the Road Less Traveled,’” Chemical Week, August 26, 1987, pp. 53, 56-57.

Galle, William, “Chemical Products Natural Profits Catalyst at MacDermid,” Investment Dealers’ Digest, March 2, 1971, pp. 17–18.

“Hercules Inc. Agrees to Sell a Unit to MacDermid,” New York Times, September 29, 1995, p. D3.

“Industry Activities,” Metal Finishing, July 1994, p. 89.

“International All-Stars,” International Business, June 1993, pp. 55–56.

McConville, Daniel J., “MacDermid Charts Expansion to Hike Profits,” Chemical Week, June 1, 1994, pp. 37, 40.

Moore, Samuel K., “MacDermid Boosts European Profile with Canning Purchase,” Chemical Week, November 4, 1998, p. 18.

——, “MacDermid Clan’s Balancing Act,” Chemical Week, September 22, 1999, pp. 68–69.

——, “MacDermid Sharpens Its Graphic Arts Focus,” Chemical Week, March 3, 1999, p. 18.

Sansoni, Silvia, “‘Waste Makes My Guts Churn,’” Forbes, November 2, 1998, p. 228.

Walsh, Kerri, “MacDermid Modifies Polyfibron Deal,” Chemical Week, November 10, 1999, p. 15.

Wyatt, Edward A., “Battling the Giants,” Barron’s, April 26, 1993, p. 14.

—Robert Halasz