Olin Corporation

120 Long Ridge Road
Stamford, Connecticut 06904
U.S.A.
(203) 356–2000

Public Company
Incorporated: August 13,1892 as Mathieson Alkali Works
Employees: 14,900
Sales: $2.29 billion
Market value: $1.097 billion
Stock Index: New York

According to the frontispiece of its 1985 annual report, the Olin Corporation manufactures chemical products and metal products with emphasis on electronic materials for the defense and aerospace industries. Only three years before the company’s emphasis, after its chemical and metal production, was on cigarette papers, cellophane, skiing equipment, ammunition and homebuilding materials. Throughout its 26 year history Olin has been a protean corporation.

The Olin Corporation is the offspring of a merger between the Mathieson Chemical Company (which manufactured ammonia and caustic soda) and the munitions and brass business started by Franklin Olin. After World War II these previously conservative companies used their newly acquired fortunes to go on a corporate spending spree, and purchased numerous small businesses in new fields. In 1954 Tom Nicholls, the youthful president of Mathieson, and John Olin, Franklin’s sixty year old son, decided to merge their two companies. This merger formed the fifth largest chemical company in the U.S. Within a few years it became apparent that this union exacerbated the tendency of both companies to overextend themselves.

At the time of the merger Olin Industries was a promising corporation which manufactured gun powder. It had been founded in 1892 by a conservative ex-baseball player named Franklin Olin. In 1909 Olin was nearly replaced by the Du Pont family and their Gunpowder Trust, which acquired 49% of Franklin’s company, then known as the Western Powder Company. Franklin scrambled for the remaining 51% and retained control. This incident, however, subsequently shaped Franklin’s approach to conducting business.

Franklin deliberately kept his company small. Western’s first acquisition, Winchester Arms, was a defensive move against Du Pont, which might have purchased the company in order to deprive Western of a customer for its gunpowder. During World War I, Franklin refused to expand his production capacity to keep up with wartime demands, although in World War II, as one of the country’s larger armaments producers, he had no choice but to expand. The Winchester plants, famous for “the guns that won the West,” acquitted themselves admirably during the war. For instance, they put an important new gun, the M1 Carbine, into production in just 13 days. Besides the gunpowder and munitions factories, Western Powder also operated a brass works at that time. This remains one of the operations that keeps the present Olin Corporation solvent.

After the war Franklin found himself with a large company, something he did not want. Consequently, he retired and kept most of the Western Powder Company stock for himself and divided the rest between his two sons, Spencer and John. They consolidated all Western’s properties and renamed the new enterprise Olin Industries. Soon Olin Industries began to diversify into paper, rocket fuel, petrochemicals, cellophane and lumber.

After Franklin’s departure Olin was managed by John and Spencer Olin and Bill Hanes. All three were in their 60’s and the lack of a suitable candidate to succeed John, who was president, was the major concern of a company that was otherwise in excellent shape. While Olin Industries had high growth potential, the best and brightest of the nation’s corporate elite were not eager to become Olin’s president-in-training. For one thing, it was not likely that the strong-minded president would retire early. And when he did retire, he would not be the kind to easily relinquish his power.

The lack of a logical successor was an important factor in John’s proposal to Tom Nicholls, the 44 year old president of Mathieson and a rising star in the chemical industry. Starting in 1947 Nicholls, with the help of his friend John Leppart, had transformed Mathieson, a small regional chemical company which concentrated on a few commodity chemicals, into a company with $366 million in sales. This represented a 600% increase over Mathieson’s performance before Nicholls took over. This dramatic turnaround was accomplished by a diversification towards less cyclical products and companies with strong marketing organizations. One of the factors which had slowed the growth of Mathieson was the narrowness of its market i.e., it sold only to manufacturers. Through the acquisition of feed companies, however, it was able to bring its ammonia and phosphate products directly to farmers.

John Olin and Tom Nicholls were friends, in fact, they often went hunting together. The idea of a merger was first broached in 1951, but discarded because a satisfactory division of power did not seem possible. Nicholls headed a company almost equal to Olin in size, and neither he nor John Olin wanted to be subordinate to the other. Nevertheless, a merger remained tempting because it would further Olin’s new expansion into chemicals and bring Mathieson closer to consumers. The companies had previously cooperated on a rocket fuels venture which proved they could work together.

During the initial discussions of a merger between the two corporations, Mathieson purchased Squibb, a company only slightly smaller than itself. Nicholls seemed possessed by a drive for mergers that would eventually prove ill-advised, though the purchase of Squibb, a well-known manufacturer of pharmaceuticals, did not seem like a bad idea at the time.

In 1953, while on a hunting trip, Olin finally convinced Nicholls that a merger was possible. Within a matter of days Bill Hanes had arrived at a satisfactory division of power. The new Olin-Mathieson would be run by a triumverate of John Olin, Nicholls and Hanes. Olin would be chairman, Nicholls president and Hanes would be in charge of finance.

Although it was later to condemn the merger, the press offered its congratulations in 1953 when the agreement took place. Many analysts remarked on the compatability of the Olin and Mathieson operations: Mathieson made many products of the commodity chemicals Olin Industries used. Furthermore, the direction in which the two companies were moving appeared to dovetail: Mathieson was moving from basic chemicals to consumer goods while Olin, a manufacturer of consumer goods, was moving into basic chemicals. The only indication of trouble came from inside the company. Said an Olin-Mathieson executive soon after the merger, “We’ll have to keep Tommy (Nicholls) from expanding for the present; this is a time to digest.”

However, the desire to diversify continued to triumph over prudence. Within 18 months of its incorporation the Olin Mathieson Chemical Company had purchased three new businesses: Marquardt Aircraft, Blockson Chemical and the Brown Paper Mill Company. This last purchase alone cost 90 million dollars. By 1958 Olin Mathieson was producing one of the widest assortments of products of any company in the United States, yet their strategy was unsuccessful. Sales for that year were a disappointing $20 million, although Bill Hanes had said in 1956 that sales would soon be hitting $1 billion. The causes of Olin Mathieson’s poor performance were manifold.

The August 1958 issue of Fortune magazine accused the company of allowing itself to be constantly side-tracked. Indeed, Olin Mathieson seemed to lack direction. Part of the problem lay in its strategy of diversification and part in the structure of the new company itself. Olin and Nicholls had thought that their companies could be joined like two halves of an apple although, in fact, it was an apple and an orange that were combined. This led to insufficient communication between the two. Again, Fortune magazine called the management of Olin Mathieson “a loose confederation of tribal chieftains.” This charge was born out by a 1958 meeting where the 36 research chiefs met for the first time and two of them discovered that they had been doing identical research on a fuel additive.

The lack of communication and poor diversification strategy led to the 1957 purchase of an aluminum plant. The aluminum industry was an expensive one to enter and the purchase of the aluminum works put Olin Mathieson into debt. In addition, the timing of the purchase could not have been worse because of the imminent soft market. The business community was surprised at the poor planning of the aluminum operation because Olin Mathieson had not secured a source of bauxite, a principal ingredient in aluminum manufacture and one that was frequently in short supply. For the next two decades Olin Mathieson would find its fortunes rising and falling with the profitability of aluminum.

After this had occurred Nicholls was soon “promoted” to the board, John Olin became chairman of the executive committee, and Stan Osborne became president. Osborne was a fiesty but accessible administrator. He was also a Spanish history buff; in fact, he was engaged in writing a book on that very subject when he was promoted. Determined to avoid the corporate equivalent of the sinking of the Spanish Armada, he began to dispose of unprofitable and incompatible product lines. Moreover, a bauxite supply was assured. Cost control measures were also undertaken, including a $20,000 cut in his own salary. The business press praised his damage control.

After the two bad years of 1957 and 1958 when sales declined, the balance sheet began to improve. In 1959 profits increased 17% over the previous year, but that rate of growth did not continue. Although Osborne’s cost-cutting measures kept the company from disaster, he was obviously frustrated with the company’s slow progress. He resigned in 1963 for a career in banking.

Throughout the 1960’s Olin Mathieson continued to be plagued by the same problems that had come to light in 1958. In 1967 the new president, a man named Grand (the fourth president in the company’s 14 year history), initiated a program that sounded similar to Osborne’s recovery plan. Unprofitable divisions were ordered to show an 8% yearly increase in profits. This was not an unattainable figure for most of the divisions. Even Squibb, which was responsible for a quarter of the company’s sales, was producing a mediocre 5% return on assets. In 1967 Grand planned a program of expansion into recreation, housing, lumber and chemicals that was to have either unexciting or negative results for the company. In 1969, the company adopted its present name of Olin Corporation.

In what was developing into a disheartening pattern, Olin celebrated the new decade with a decline in profits. The prolonged strike by American autoworkers decreased the market for aluminum. Furthermore, the new pollution regulations were expensive. Two plants, one manufacturing DDT and the other soda ash, had to be shut down because they could not meet environmental protection standards. These closings resulted in a $26 million loss. The timing of Olin’s new housing venture recalls the aluminum disaster since the market went into a depression soon after Olin entered it.

Sporting goods, sold through the Winchester division, became one of the company’s priorities. Olin ski equipment was marketed and sold quite successfully, though another product, Wingo, did not fare as well. Wingo was a game in which a player shot at hollow balls of ice released by a computer operated by the opposing player. Played in a building the size of a forty lane bowling alley, it was symbolic of management strategy that characterized Olin at the time.

In 1974 the new Olin president, James Towey (Grand had died suddenly in 1971), was able to boast an 80% jump in earnings. This increase was brought about largely through the sale of the aluminum operations and the polyester film factories which had been depressing earnings. The aluminum works had earned $19 million over a 10 year period and had lost $32 million. It’s disappearance from the balance sheet was salutary. The chemicals division, always a company mainstay, performed well, and the agricultural products division prospered. Brass and paper, steady sources of income, held their ground. In 1975 the company continued to sell unprofitable product lines such as the parka business it had bought a few years before.

In the late 1970’s housing and Winchester Arms took on the role of the ill-fated aluminum works in suppressing profits. Winchester’s operating profits plunged 37% in one year, despite the quality of its guns and their name recognition. Olin has a history of watching quality products yield mediocre financial gains. In 1968, for example, the head of Squibb convinced Olin to sell that division so that it could realize its full earnings potential.

Forbes magazine once referred to Olin as the world’s longest running garage sale. Indeed, the company had, and still has, a habit of buying unprofitable businesses and then selling them within a few years, often at a loss. In 1985 the profitable but slow growing paper division was sold, along with the last of the home-building concerns. The company’s most recent round of divestment caused shareholders equity to drop 25%, although its shares went up three points.

At present Olin is looking to metal and chemical products, especially chemicals that are used by the electronics industry, to reinvigorate the company. This began with the expansion in electronics and aerospace during 1980. In 1985 Olin acquired Rockcor Inc., which produces rockets, gas generators and data systems for battlefield intelligence, as well as devices to measure the strength of underground nuclear tests. It has also offered to produce nerve gas for the government, if the liability issue can be resolved. Another anticipated growth area is water purification, a logical extension of their chlorine products for swimming pools. Ultra-purified water is used in the electronics and defense industries.

Olin’s future may look like its past. The company has again shifted its focus to an industry (electronics) that almost immediately went into a slump. Chemicals, Olin’s largest business, will have to contend with a weak world economy and tough foreign competition. In addition, the company’s product mix is not particularly strong. The company’s major commodity chemicals are ammonium and sodium phosphate, two products that have had problems with low prices, over-capacity and high production costs. In 1985 Olin lost twice as much money as it made the previous year. Industry analysts maintain that if the present president and chief executive officer, J.M. Henske, is to revive the company, he must find a stable product line and stick with it.

Principal Subsidiaries

Olin Hunt Speciality Products, Inc.; Rockcor, Inc.; Larse Corp.; Pacific Electro-Dynamics, Inc.; Physics International Co.

Olin Corporation

120 Long Ridge Road
Stamford, Connecticut 06904-1355
U.S.A.
(203) 3562000
Fax: (203) 356-3595

Public Company
Incorporated: 1892 as Western Powder Company
Employees: 12,800
Sales: $2.66 billion
Stock Exchanges: New York Pacific Chicago
SICs: 2812 Alkalies & Chlorine; 2842 Polishes & Sanitation Goods; 3351 Copper Rolling & Drawing; 3483 Ammunition except for Small Arms

Olin Corporation is a Fortune 200 company whose businesses are concentrated in chemicals, materials and metals, defense, sporting ammunition, and aerospace. Olin Corporation has been a protean organization throughout its history, with a product list ranging from cigarette papers and cellophane to snow skis and home-building material.

Olin Industries was founded in 1892 as the Western Powder Company by a former baseball player named Franklin Olin. The Du Pont family and their Gunpowder Trust acquired 49 percent of Olin’s company in 1909, and they nearly replaced Olin, who scrambled for the remaining 51 percent and retained control.

Western’s first acquisition after the incident, Winchester Arms, was a defensive move against Du Pont, which might have purchased the company to deprive Western of a customer for its gunpowder. The Winchester plants, famous for “the guns that won the West,” acquitted themselves admirably during the two world wars; for example, they put an important new gun, the Ml Carbine, into production in just 13 days. Besides the gunpowder and munitions factories, Western Powder also operated a brass works at that time.

When Franklin Olin retired, he kept most of the Western Powder Company’s stock for himself and divided the rest between his two sons, Spencer and John. They consolidated Western’s properties and renamed the new enterprise Olin Industries. Soon Olin Industries began to diversify into paper, fuel, petrochemicals, cellophane, and lumber. The company was managed by John and Spencer Olin along with Bill Hanes. All three were in their sixties, and the lack of a suitable candidate to succeed John, who was president, was the major concern of a company that was otherwise in excellent shape.

The lack of a logical successor was an important factor in John Olin’s proposal to Tom Nicholls, the 44-year-old president of Mathieson Chemical Company, which manufactured ammonia and caustic soda, to merge their companies. Starting in 1947 Nicholls, with the help of his friend John Leppart, had transformed Mathieson, a small regional chemical company that concentrated on a few commodity chemicals, into a company with $366 million in sales—a 600 percent increase over Mathieson’s performance before Nicholls took over. This dramatic turnaround was accomplished by a diversification into less cyclical products and the acquisition of companies with strong marketing organizations.

John Olin and Tom Nicholls were friends; in fact, they often went hunting together. The idea of a merger was first broached in 1951, but discarded because a satisfactory division of power did not seem possible. Nicholls headed a company almost equal to Olin in size, and neither he nor John Olin wanted to be subordinate to the other. Nevertheless, a merger remained tempting because it would further Olin’s new expansion into chemicals and bring Mathieson closer to consumers. The companies had previously cooperated on a rocket fuels venture which proved they could work together.

During the initial discussions of a merger between the two corporations, Mathieson purchased Squibb, a well known manufacturer of Pharmaceuticals that was only slightly smaller than itself. In 1953, while on a hunting trip, Olin finally convinced Nicholls that a merger was possible. Within a matter of days Bill Hanes had arrived at a satisfactory division of power. The new Olin-Mathieson would be run by a triumvirate of John Olin, Nicholls, and Hanes. Olin would be chairman, Nicholls president, and Hanes head of finance.

The press offered its congratulations in 1953 when the agreement took place. Many analysts remarked on the compatibility of the Olin and Mathieson operations and the apparent dovetailing of their strategic directions. Mathieson was moving from basic chemicals to consumer goods while Olin, a manufacturer of consumer goods, was moving into basic chemicals. The only indication of trouble came from inside the company. Said an Olin-Mathieson executive soon after the merger, “We’ll have to keep Tommy (Nicholls) from expanding for the present; this is a time to digest.”

However, the desire to diversify triumphed over prudence. Within 18 months of its incorporation the Olin Mathieson Chemical Company had purchased three new businesses: Mar-quardt Aircraft, Blockson Chemical, and the Brown Paper Mill Company. This last purchase alone cost $90 million. By 1958 Olin Mathieson was producing one of the widest assortments of products of any company in the United States, yet its strategy was not proving successful. Sales for that year were a disappointing $20 million, although Bill Hanes had said in 1956 that sales would soon be hitting $1 billion. The causes of Olin Mathieson’s poor performance were manifold.

The August 1958 issue of Fortune magazine accused the company of allowing itself to be constantly sidetracked. Indeed, Olin Mathieson seemed to lack direction. Part of the problem lay in its strategy of diversification and part in the structure of the new company itself. Fortune called the management of Olin Mathieson “a loose confederation of tribal chieftains.” This charge was borne out by a 1958 meeting where the 36 research chiefs met for the first time and two of them discovered that they had been doing identical research on a fuel additive.

The lack of communication and poor diversification strategy led to the 1957 purchase of an aluminum plant. The aluminum industry was an expensive one to enter and the purchase of the aluminum works put Olin Mathieson into debt. In addition, the timing of the purchase could not have been worse, as a soft market was imminent. The business community was surprised at the poor planning of the aluminum operation because Olin Mathieson had not secured a source of bauxite, a principal ingredient in aluminum manufacture and one that was frequently in short supply. For the next two decades Olin Mathieson would find its fortunes rising and falling with the profitability of aluminum.

Nicholls was soon promoted to the board, John Olin became chairman of the executive committee, and Stan Osborne became president. Osborne was a feisty but accessible administrator. He was also a Spanish history buff; in fact, he was engaged in writing a book on that very subject when he was promoted. Determined to avoid the corporate equivalent of the sinking of the Spanish Armada, he began to dispose of unprofitable and incompatible product lines and assure a supply of bauxite. Osborne undertook cost control measures, including a $20,000 cut in his own salary. The business press praised his damage control.

After the two bad years of 1957 and 1958 when sales declined, the balance sheet began to improve. In 1959 profits increased 17 percent over the previous year, but that rate of growth did not continue. Although Osborne’s cost-cutting measures kept the company from disaster, he was clearly frustrated by the company’s slow progress. He resigned in 1963 for a career in banking.

Throughout the 1960s Olin Mathieson continued to be plagued by the same problems that had come to light in 1958. In 1967 the new president, a man named Grand, initiated a program not unlike Osborne’s recovery plan. Unprofitable divisions were ordered to show an eight percent yearly increase in profits. This was not an unattainable figure for most of the divisions. Even Squibb, which was responsible for a quarter of the company’s sales, was producing a mediocre five percent return on assets. In 1967 Grand planned a program of expansion into recreation, housing, lumber, and chemicals. In 1969 the company adopted the name Olin Corporation.

In what was developing into a disheartening pattern, Olin celebrated the new decade with a decline in profits. A prolonged strike by American autoworkers decreased the market for aluminum. Furthermore, new environmental regulations were expensive. Two plants, one manufacturing DDT and the other soda ash, had to be shut down because they could not meet environmental protection standards. These closings resulted in a $26 million loss. The timing of Olin’s new housing venture recalled its venture into aluminum, since the market went into a downslide soon after Olin entered it. Sporting goods, sold through the Winchester division, became one of the company’s priorities. Olin ski equipment was marketed and sold successfully.

Grand died suddenly in 1971. In 1974 the next president of Olin, James Towey, was able to boast an 80 percent jump in earnings, largely due to the sale of the aluminum operations and polyester film factories which had been depressing earnings. The aluminum works had earned $19 million over a ten-year period and had lost $32 million. The chemicals division, always a company mainstay, performed well, and the agricultural products division prospered. Brass and paper, steady sources of income, held their ground. In 1975 the company continued to sell unprofitable product lines, such as a parka business it had bought a few years before.

In the late 1970s housing and Winchester Arms took on the role of the ill-fated aluminum works in suppressing profits. Winchester’s operating profits plunged 37 percent in one year, despite the quality of its guns and their name recognition.

Forbes once referred to Olin as the world’s longest-running garage sale. Indeed, the company had, and still has, a habit of buying unprofitable businesses and then selling them within a few years, often at a loss. In 1985 the profitable but slow-growing paper division was sold, along with the last of the home-building concerns. The company’s most recent round of divestment caused shareholders’ equity to drop by 25 percent, although its shares went up three points.

To reinvigorate the company, Olin looked to metal and chemical products, especially chemicals used by the electronics industry. This began with the expansion in electronics and aerospace during 1980. In 1985 Olin acquired Rockcor Inc., which produces rockets, gas generators, and data systems for battlefield intelligence, as well as devices to measure the strength of underground nuclear tests. In 1985 Olin lost twice as much money as it made the previous year.

The leaders of the company, John Johnstone, Jr., and chairman John Henske, cut back programs that cost the company a $330 million pretax charge in 1985, including car and boat flares, cellophane, skis, cigarette paper, and photographic chemicals. In 1991 Johnstone announced another round of streamlining, divesting several under-performing chemical lines and its European sporting ammunition business.

Olin vowed to focus on three core businesses: metals, chemicals and defense, and sporting ammunition. In 1992 the company established a new aliphatic diisocyanate (ADI) unit in Lake Charles, Louisiana, which prepared it for a major push into the area of performance urethanes, used in coatings for products on cars and appliances. The investment built on Olin’s $450-mil-lion per year position in the urethane-based toluene diisocyanate (TDI) market. In order to expand its supply operations to the microelectronics industry, Olin built a new 211,000-square-foot plant in Mesa, Arizona, to produce a chemical used in the production of semiconductors, which was scheduled to open in the fourth quarter of 1995.

Strategic investments made over several years, combined with reductions in salaried personnel and other operating costs, enabled Olin to increase earnings as the economy strengthened. In early 1994 Olin acquired GenCorp’s Aerojet medium caliber ammunition business, making Olin one of only two U.S. producers of medium caliber ammunition. Also during that year, the Brass, Electronic Materials, and Winchester divisions earned record operating profits, while Chlor-Alkali Products, biocides, pool chemicals, Ordnance, and Aerospace showed significant improvements. Under the leadership of Johnstone as chairman and CEO and Donald W. Griffin as president and COO, Olin posted record sales of $2.7 billion and earnings of $91 million, an important increase from 1993 sales of $2.4 billion and earnings of $40 million before a $132 million after tax-charge to income, which resulted in a net loss of $92 million that year.

As the company faced the new century, Olin planned to sharpen its cost-effectiveness, capitalize on global growth opportunities, fine-tune its business mix, and take actions needed to build on its strong market positions. For example, Olin Brass planned investments in 1995 and 1996 at its Indianapolis plant to modernize production equipment, improve efficiency, and broaden product capabilities for seamless copper alloy tubes used in specialized applications. Olin also focused on strengthening its position in pool chemical brands, including HTH, Pace, and Sock It brands. In 1994 Olin sold over 40 percent of its dry sanitizer pool chemical outside the United States as demand increased abroad. Olin’s zinc Omadine biocide, used in antidan-druff shampoos, held a leading position in the market for a long time, and the company exported a significant amount overseas to meet the increased demand for personal care products in the Far East.

Olin’s letter to shareholders in its 1994 annual report stated: “While we were gratified by our progress, we’re not at all satisfied with it. Our earnings may now be at respectable levels, but we’re still a long way from where we want to be.” Focusing on its core businesses and refining corporate objectives, the company continued to position itself for its next 100 years of business.

Principal Subsidiaries

Aegis, Inc. (50%); Bridgeport Brass Corporation; Bryan Metals, Inc.; G.D. International, Ltd.; General Defense Corporation; Hi-Pure Chemicals, Inc.; Hunt Foreign Investment Corp.; Image Technology Corporation; OCG Holdings, Inc. (50%); Olin-Asahi Interconnect Technologies (50%); Olin Export Trading Corporation; Olin Fabricated Metals Products; Olin Far East, Limited; Olin Hunt Specialty Products Inc.; Olin Hunt Sub. I Corp.; Olin Pantex, Inc.; Olin Specialty Metals Corporation; A.J. Oster Company; Pacific Electro-Dynamics, Inc.; Physics International Co.; Ravenna Arsenal, Inc.; Rocket Research Company; Superior Pool Products, Inc.; Niachlor (50%); OCG Microelectric Materials, Inc. (50%); Aquachlor (Proprietary) Limited (South Africa; 50%); Asahi-Olin Ltd. (Japan; 50%); Etoxyl, C.A. (Venezuela; 48.9%); Fuji-Hunt Electronics Technology Co. Ltd. (Japan; 24.5%); Hy-drochim, S.A. (France; 63%); Judd-Olin (U.K.) Limited (50%); Kyodo TDI Limited Company (Japan; 40%); Langenberg Kup-fer und Messingwerke GmbH (Germany; 49%); Nordesclor S.A. (Brazil; 50%); Nutmeg Insurance Limited (Bermuda); OCG Microelectronic Materials (Switzerland—50%; Germany—50%; United Kingdom—50%; France—50%; Italy— 50%); Olin Australia Limited; Olin Brazil Ltda.; Olin Canada Inc.; Olin Chemicals, B.V. (Ireland); Olin Corporation N.Z. Limited (New Zealand); N.V. Olin Europe S.A. (Belgium); N.V. Olin Hunt Specialty Products (Belgium); N.V. Olin Hunt Trading (Belgium); Olin Hunt Specialty Products S.r.i. (Italy); Olin Industrial (Hong Kong) Limited; Olin Japan, Inc.; Olin (Proprietary) Limited (South Africa); Olin Pte., Ltd., Singapore; Olin Quimica, S.A. (Venezuela); Olin Quimica, S.A. de C.V. (Mexico); Olin S.A. (France); Olin UK Ltd.; Olin GmbH (Germany); Productora de Alcoholes Hidratados C.A. (PRALCA) (Venezuela; 25%); Schwermetall Halbzeugwerk, GmbH & Co., KG (Germany; 24.5%); Yamaha-Olin Metal Corporation (Japan; 50%); OCG Microelectronic Materials N.V. (Belgium; 50%).

Further Reading

Burrough, D. J., “Olin Building $30 Million Mesa Plant,” Business Journal, October 28, 1994, pp. 1 (2).

Caney, Derek J., “Olin’s Plans $132M Corporate Restructuring, Job Cutbacks,” American Metal Market, December 20, 1993, p. 8.

Highlights in the History of Olin Corporation, Stamford, Connecticut: Olin Corporation, 1992, 21 p.

Hunter, David, “Olin Adds Value with Performance Urethanes Unit,” Chemical Week, May 20, 1992, p. 8.

Lubove, Seth, “No More Adventurism,” Forbes, December 7, 1992, pp. 122 (2).

“Olin Draws Black Ink in 1st Qtr. with Earnings of $23.6 Million,” American Metal Market, April 27, 1992, p. 6.

“Shhh! Olin Plans New Brass Mill but Don’t Tell Anyone,” St. Louis Business Journal, April 5, 1993, p. 4.

Thomas, Jr., Robert M., “Spencer Truman Olin, Executive for Olin Corporation, Dies at 96,” New York Times, April 17, 1995, p. B9.

—updated by Beth Watson Highman

Olin Corporation

190 Carondelet Plaza, Suite 1530
Clayton, Missouri 63105-3443
U.S.A.
Telephone: (314) 480-1400
Fax: (314) 862-7406
Web site: http://www.olin.com

Public Company
Incorporated: 1892 as Western Powder Company
Employees: 5,800
Sales: $1.997 billion (2004)
Stock Exchanges: New York
Ticker Symbol: OLN
NAIC: 325181 Alkalies and Chlorine; 325998 All Other Miscellaneous Chemical Product Manufacturing; 331421 Copper (Except Wire) Rolling, Drawing, and Extruding; 331492 Secondary Smelting, Refining, and Alloying of Nonferrous Metals (Except Copper and Aluminum); 332993 Ammunition (Except Small Arms) Manufacturing; 334419 Other Electronic Component Manufacturing

Olin Corporation, based in Clayton, Missouri, is involved in three business lines: chlor alkali products, brass, and Winchester Ammunition. Olin is one of the largest producers of chlorine and caustic soda, the former used in swimming pool and spa sanitizers and the production of polyvinyl chlorides plastics (PVS), the latter a basic ingredient in household and institutional cleaning products, and the fabric and pulp and paper industries. Olin Brass produces copper and copper alloy strip used to mint coins and found in a wide variety of automotive, housing, electronics, and ammunition products. Olin's Winchester Ammunition unit is an offspring of the legendary arms manufacturer, Winchester Repeating Arms Company. Olin sold the firearms business in 1981 and now only produces ammunition under the Winchester name. Olin is a public company listed on the New York Stock Exchange.

1892 ORIGINS

Olin Industries was founded in 1892 as the Western Powder Company by a former baseball player named Franklin Olin. The Du Pont family and their Gunpowder Trust acquired 49 percent of Olin's company in 1909, and they nearly replaced Olin, who scrambled for the remaining 51 percent and retained control.

Western's first acquisition after the incident, Winchester Arms, was a defensive move against Du Pont, which might have purchased the company to deprive Western of a customer for its gunpowder. The Winchester plants, famous for "the guns that won the West," acquitted themselves admirably during the two world wars; for example, they put an important new gun, the M1 Carbine, into production in just 13 days. Besides the gunpowder and munitions factories, Western Powder also operated a brass works at that time.

When Franklin Olin retired, he kept most of the Western Powder Company's stock for himself and divided the rest between his two sons, Spencer and John. They consolidated Western's properties and renamed the enterprise Olin Industries. Soon Olin Industries began to diversify into paper, fuel, petrochemicals, cel-lophane, and lumber. The company was managed by John and Spencer Olin along with Bill Hanes. All three were in their sixties, and the lack of a suitable candidate to succeed John, who was president, was the major concern of a company that was otherwise in excellent shape.

The lack of a logical successor was an important factor in John Olin's proposal to Tom Nicholls, the 44-year-old president of Mathieson Chemical Company, which manufactured ammonia and caustic soda, to merge their companies. Starting in 1947 Nicholls, with the help of his friend John Leppart, had transformed Mathieson, a small regional chemical company that concentrated on a few commodity chemicals, into a company with $366 million in sales—a 600 percent increase over Mathieson's performance before Nicholls took over. This dramatic turnaround was accomplished by a diversification into less cyclical products and the acquisition of companies with strong marketing organizations.

John Olin and Tom Nicholls were friends; in fact, they often went hunting together. The idea of a merger was first broached in 1951, but discarded because a satisfactory division of power did not seem possible. Nicholls headed a company almost equal to Olin in size, and neither he nor John Olin wanted to be subordinate to the other. Nevertheless, a merger remained tempting because it would further Olin's new expansion into chemicals and bring Mathieson closer to consumers. The companies had previously cooperated on a rocket fuels venture which proved they could work together.

During the initial discussions of a merger between the two corporations, Mathieson purchased Squibb, a well known manufacturer of pharmaceuticals that was only slightly smaller than itself. In 1953, while on a hunting trip, Olin finally convinced Nicholls that a merger was possible. Within a matter of days Bill Hanes had arrived at a satisfactory division of power. The new Olin-Mathieson would be run by a triumvirate of John Olin, Nicholls, and Hanes. Olin would be chairman, Nicholls president, and Hanes head of finance.

MAJOR 1953 MERGER TRANSFORMS COMPANY

The press offered its congratulations in 1953 when the agreement took place. Many analysts remarked on the compatibility of the Olin and Mathieson operations and the apparent dovetailing of their strategic directions. Mathieson was moving from basic chemicals to consumer goods while Olin, a manufacturer of consumer goods, was moving into basic chemicals. The only indication of trouble came from inside the company. Said an Olin-Mathieson executive soon after the merger, "We'll have to keep Tommy (Nicholls) from expanding for the present; this is a time to digest."

However, the desire to diversify triumphed over prudence. Within 18 months of its incorporation the Olin Mathieson Chemical Company had purchased three new businesses: Marquardt Aircraft, Blockson Chemical, and the Brown Paper Mill Company. This last purchase alone cost $90 million. By 1958 Olin Mathieson was producing one of the widest assortments of products of any company in the United States, yet its strategy was not proving successful. Sales for that year were a disappointing $20 million, although Bill Hanes had said in 1956 that sales would soon be hitting $1 billion. The causes of Olin Mathieson's poor performance were manifold.

COMPANY PERSPECTIVES

Olin is committed to long-term growth and prosperity for all those connected with us. Customers must grow and prosper from the superior value of products, services and solutions that we offer, or they will go elsewhere. Customers are essential to our long-term prosperity. Good employees will commit to Olin if they grow professionally, personally and financially. For us to be successful in the competitive environment in which we operate, Olin must attract, develop and hold the best people. Stockholders expect a superior total return on their investment in Olin over the long term. The commitment and support of our stockholders is essential for us to renew Olin through continued investment. Communities want Olin to act responsibly and to contribute to social and economic prosperity. Therefore, for Olin to be able to operate and prosper, we must be a good neighbor. Over time, none of those connected with us can be advantaged at the expense of the others. All must prosper or none will prosper.

The August 1958 issue of Fortune magazine accused the company of allowing itself to be constantly sidetracked. Indeed, Olin Mathieson seemed to lack direction. Part of the problem lay in its strategy of diversification and part in the structure of the new company itself. Fortune called the management of Olin Mathieson "a loose confederation of tribal chieftains." This charge was borne out by a 1958 meeting where the 36 research chiefs met for the first time and two of them discovered that they had been doing identical research on a fuel additive.

The lack of communication and poor diversification strategy led to the 1957 purchase of an aluminum plant. The aluminum industry was an expensive one to enter and the purchase of the aluminum works put Olin Mathieson into debt. In addition, the timing of the purchase could not have been worse, as a soft market was imminent. The business community was surprised at the poor planning of the aluminum operation because Olin Mathieson had not secured a source of bauxite, a principal ingredient in aluminum manufacture and one that was frequently in short supply. For the next two decades Olin Mathieson would find its fortunes rising and falling with the profitability of aluminum.

Nicholls was soon promoted to the board, John Olin became chairman of the executive committee, and Stan Osborne became president. Osborne was a feisty but accessible administrator. He was also a Spanish history buff; in fact, he was engaged in writing a book on that very subject when he was promoted. Determined to avoid the corporate equivalent of the sinking of the Spanish Armada, he began to dispose of unprofitable and incompatible product lines and assure a supply of bauxite. Osborne undertook cost control measures, including a $20,000 cut in his own salary. The business press praised his damage control.

After the two bad years of 1957 and 1958 when sales declined, the balance sheet began to improve. In 1959 profits increased 17 percent over the previous year, but that rate of growth did not continue. Although Osborne's cost-cutting measures kept the company from disaster, he was clearly frustrated by the company's slow progress. He resigned in 1963 for a career in banking.

Throughout the 1960s Olin Mathieson continued to be plagued by the same problems that had come to light in 1958. In 1967 the new president, a man named Grand, initiated a program not unlike Osborne's recovery plan. Unprofitable divisions were ordered to show an 8 percent yearly increase in profits. This was not an unattainable figure for most of the divisions. Even Squibb, which was responsible for a quarter of the company's sales, was producing a mediocre 5 percent return on assets. In 1967 Grand planned a program of expansion into recreation, housing, lumber, and chemicals. In 1969 the company adopted the name Olin Corporation.

In what was developing into a disheartening pattern, Olin celebrated the new decade with a decline in profits. A prolonged strike by American autoworkers decreased the market for aluminum. Furthermore, new environmental regulations were expensive. Two plants, one manufacturing DDT and the other soda ash, had to be shut down because they could not meet environmental protection standards. These closings resulted in a $26 million loss. The timing of Olin's new housing venture recalled its venture into aluminum, since the market went into a downslide soon after Olin entered it. Sporting goods, sold through the Winchester division, became one of the company's priorities. Olin ski equipment was marketed and sold successfully.

SUDDEN DEATH CHANGES MANAGEMENT RANKS IN 1971

Grand died suddenly in 1971. In 1974 the next president of Olin, James Towey, was able to boast an 80 percent jump in earnings, largely due to the sale of the aluminum operations and polyester film factories which had been depressing earnings. The aluminum works had earned $19 million over a ten-year period and had lost $32 million. The chemicals division, always a company mainstay, performed well, and the agricultural products division prospered. Brass and paper, steady sources of income, held their ground. In 1975 the company continued to sell unprofitable product lines, such as a parka business it had bought a few years before.

In the late 1970s housing and Winchester Arms took on the role of the ill-fated aluminum works in suppressing profits. Winchester's operating profits plunged 37 percent in one year, despite the quality of its guns and their name recognition. Olin elected to focus its attention on ammunition and in 1981 divested the firearms portion of Winchester.

KEY DATES

1892:

Olin Industries founded by Franklin W. Olin.

1931:

Olin acquires Winchester Repeating Arms Company.

1954:

Olin and Mathieson Chemical merge to form Olin Mathieson Chemical Corporation.

1969:

The company's name is changed to Olin Corporation.

1981:

Winchester's firearms operations are sold off but the ammunition business remains.

1996:

Primex Technologies is spun off.

1999:

Arch Chemicals is spun off.

2002:

Chase Industries Inc. is acquired.

Forbes once referred to Olin as the world's longest-running garage sale. Indeed, the company had a habit of buying unprofitable businesses and then selling them within a few years, often at a loss. In 1985 the profitable but slow-growing paper division was sold, along with the last of the home-building concerns. The company's divestment caused shareholders' equity to drop by 25 percent, although its shares went up three points.

To reinvigorate the company, Olin looked to metal and chemical products, especially chemicals used by the electronics industry. This began with the expansion in electronics and aerospace during 1980. In 1985 Olin acquired Rockcor Inc., which produced rockets, gas generators, and data systems for battlefield intelligence, as well as devices to measure the strength of underground nuclear tests. In 1985 Olin lost twice as much money as it made the previous year.

The leaders of the company, John Johnstone, Jr., and chairman John Henske, cut back programs that cost the company a $330 million pretax charge in 1985, including car and boat flares, cellophane, skis, cigarette paper, and photographic chemicals. By the late 1980s these changes resulted in Olin achieving record earnings, but a recession in the early part of the 1990s wiped out any gains. In 1991 Johnstone announced another round of streamlining, divesting several under-performing chemical lines and its European sporting ammunition business. All told, Olin sold or closed down 18 non-strategic businesses and product lines that were failing to live up to expectations.

1990 AND BEYOND

Olin elected to focus on three core businesses: metals, chemicals and defense, and sporting ammunition. In 1992 the company established a new aliphatic diisocyanate (ADI) unit in Lake Charles, Louisiana, which prepared it for a major push into the area of performance urethanes, used in coatings for products on cars and appliances. The investment built on Olin's $450-million per year position in the urethane-based toluene diisocyanate (TDI) market. In order to expand its supply operations to the microelectronics industry, Olin built a new 211,000-square-foot plant in Mesa, Arizona, to produce a chemical used in the production of semiconductors. Strategic investments made over several years, combined with reductions in salaried personnel and other operating costs, enabled Olin to increase earnings as the economy strengthened. In early 1994 Olin acquired GenCorp's Aerojet medium caliber ammunition business, making Olin one of only two U.S. producers of medium caliber ammunition. Also during that year, the Brass, Electronic Materials, and Winchester divisions earned record operating profits, while Chlor-Alkali Products, biocides, pool chemicals, Ordnance, and Aerospace showed significant improvements. Under the leadership of Johnstone as chairman and CEO and Donald W. Griffin as president and COO, Olin posted record sales of $2.7 billion and earnings of $91 million, an important increase from 1993 sales of $2.4 billion and earnings of $40 million before a $132 million after tax-charge to income, which resulted in a net loss of $92 million that year.

With most of the cutbacks completed, Johnston stepped down as CEO, turning over the reins to Griffin, but Olin still remained a collection of incongruous assets, a company that had difficulty generating much excitement on Wall Street. More pruning ensued. In 1996 the TDI and ADI isocyanates business was sold to Arco Chemical for $565 million in cash, and the Ordnance and Aerospace divisions were spun off to shareholders as Primex Technologies. A few smaller non-strategic assets were also divested over the next two years, but the most significant step taken occurred in early 1999 when Olin spun off its specialty chemical business as a separate publicly traded company called Arch Chemicals, Inc., with every Olin stockholder receiving one share of Arch Chemical for every two shares of Olin stock held.

Arch took with it nearly $900 million in annual sales, leaving Olin with about $1.4 billion in business, but one more narrowly focused. Olin's first year without its specialty chemical business proved difficult, however, as sales from continuing operations dipped to $1.3 billion and earnings per share fell from $.79 to $.36. The company rebounded in 2000, as sales totaled $2.5 billion and earnings per share jumped to $1.80.

The company then grew its core businesses through the $49 million acquisitions of Monarch Brass & Copper Corp. in June 2001. Later in the year Griffin turned over the president and CEO positions to 51-year-old Joseph D. Rupp, although Griffin stayed on as chairman. The company then added Chase Industries Inc. in 2002, paying $176 million in stock. Chase, based in Montpelier, Ohio, produced brass rods for plumbing fixtures, heating and air conditioning products, industrial valves, and was especially strong in the housing and construction industries.

With the U.S. economy struggling, Olin had to weather difficult conditions in the early 2000s, prompting some cost-cutting measures. In early 2004 the company decided to move its headquarters from Connecticut to its East Alton, Illinois, facility, home of Winchester Ammunition, a switch that along with a cut in corporate staff saved about $6 million a year. The company also moved 150 jobs from a Winchester Rimfire production line in East Alton to a more efficient plant in Oxford, Mississippi. Olin's national headquarters would stay in East Alton for just a short period, as the company moved its corporate offices to an office tower in Clayton, Missouri, close to St. Louis. In the meantime, business was booming for Olin. A surge in demand for chlorine drove business in 2004, and then in 2005 the global metals markets experienced its own rally, due primarily to the need to feed China's fast-growing economy. As a result, Olin's brass division prospered and the company's balance sheet was flush. Sales approached $2 billion in 2004 and improved to $2.4 billion in 2005, while net income increased from $.80 per share to $1.86 per share.

                           Updated, Beth Watson Highman

                                  Updated, Ed Diager

PRINCIPAL SUBSIDIARIES

A.J. Oster Caribe, Inc.; A.J. Oster Foils, Inc.; A.J. Oster West, Inc.; Bridgeport Brass Corporation; Chase Industries Inc.; Monarch Brass & Copper Corp.; Olin Chlor Alkali Products; Winchester Ammunition.

PRINCIPAL COMPETITORS

Alliant Techsystems Inc.; Blount International, Inc.; Ryerson, Inc., Inc.

FURTHER READING

Burrough, D. J., "Olin Building $30 Million Mesa Plant," Business Journal, October 28, 1994, p. 1.

Caney, Derek J., "Olin's Plans $132M Corporate Restructuring, Job Cutbacks," American Metal Market, December 20, 1993, p. 8.

Chang, Joseph, "Olin Is Coming Under Pressure to Pick Up restructuring Pace," Chemical Market Reporter, April 20, 1998, p. 1.

Elliott, Alan R., "Manufacturer Turns In Record Results, Thanks To High Copper Prices," Investor's Business Daily, May 2, 2005, p. A08.

Highlights in the History of Olin Corporation, Stamford, Conn.: Olin Corporation, 1992, 21 p.

Hunter, David, "Olin Adds Value with Performance Urethanes Unit," Chemical Week, May 20, 1992, p. 8.

Lubove, Seth, "No More Adventurism," Forbes, December 7, 1992, p. 122.

"Norwalk, Conn.-Based Metals Firm To Cut Jobs," Waterbury Republican-American (Connecticut), June 27, 2001.

"Olin Draws Black Ink in 1st Qtr. with Earnings of $23.6 Million," American Metal Market, April 27, 1992, p. 6.

"Shhh! Olin Plans New Brass Mill but Don't Tell Anyone," St. Louis Business Journal, April 5, 1993, p. 4.

"St. Louis-Based Olin Has New National Headquarters at The Plaza In Clayton," Daily Record (St. Louis), April 15, 2005.

Thomas, Jr., Robert M., "Spencer Truman Olin, Executive for Olin Corporation, Dies at 96," New York Times, April 17, 1995, p. B9.

Westervelt, Robert, "Olin: Change For The Better," Chemical Week, February 7, 1996, p. 26.