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The DuPont Years (1928 – 1985)
By: Jim Krimmel
The DuPont Chemical Company was started in 1802 when a French immigrant, E. I. duPont journeyed to America to manufacture gun powder. DuPont’s first gun powder plant was located on the Brandywine River near Wilmington Delaware. Later in the 19th century, DuPont expanded into other explosives like dynamite and nitroglycerin but remained an explosives company until 1902. That year, three young duPont cousins – T.Coleman, Pierre S. and Alfred I. – purchased the company from their older relatives and began to transform it from an explosives manufacturer into a broad, science-based chemical company. Entry into the paints and coatings industry marked DuPont’s first effort to diversify beyond explosives. Nitrocellulose, in addition to being a raw material of smokeless powder, was also used as a lacquer to coat brass fixtures. In 1904, DuPont acquired International Smokeless Powder & Chemical Company, a leading manufacturer of nitrocellulose lacquer. Then in the late 1910s, DuPont took a fateful leap into textile fibers with the introduction of synthetic silk and cellophane, both derivatives of cellulose. Still, DuPont did not have a portfolio of basic chemicals until its acquisition of the Grasselli Chemical company and its 23 manufacturing plants in 1928. One of those plants was Grasselli’s Cleveland plant – its corporate headquarters and its oldest operating plant.
DuPont Chemical purchased the Grasselli Chemical company for stock valued at $73 million. The addition of the Grasselli plants added a broad range of basic chemicals to DuPont’s portfolio and transformed it into a broad-based chemical company. The Grasselli Chemicals Department of DuPont was formed. At the time of the DuPont acquisition, Grasselli’s Cleveland plant was producing Sulfuric Acid (since 1866), Hydrochloric Acid (since 1869), Zinc Chloride – solutions and solids (since 1899), Ammonium Chloride Galvanizing Fluxes (since 1902), Cadmium and Cadmium Plating Compounds (since 1907), Globular Sodium Bisulfate - GBS (since 1914), Sodium Silicate (since 1915), Rubber Accelerators (since 1925), and Zinc Ammonium Chloride Galvanizing Fluxes (since 1926).
For the Cleveland Plant the period following 1928 became one of feverish activity. DuPont decided to stress research in organic chemistry – the chemistry of carbon compounds, and the synthetic creation of substances that occur biologically in nature. Research in this field during the 1930s resulted in hundreds of commercial possibilities. Between 1932 and 1942, the Pioneer Division of the Cleveland Plant began small scale manufacture of 112 new items. Among them were new breeds of biologically active farm chemicals – products which promised to increase farm efficiency to a substantial degree. Many of these products first produced in Cleveland were later moved to other locations or are no longer produced by DuPont, but over the years, the plant retained its share of new products and modernized the manufacturing processes for existing products.
Significant products of note that were added to the Cleveland Plant includes Inhibited Acids (started in 1929), Potassium Silicate (started in 1932), CZC Chromated Zinc Chloride (started in 1934), Zinc Plating Compounds (started in 1935), Tanning Agents (started in 1941), Halogen Tin Plating Compounds (started in 1947), Volan Bonding Agents (started in 1948), Spreader Sticker (started in 1949), “Quilon” Chrome Complexes (started in 1950), and “Torvex” Ceramic Honeycomb (started in 1965). Over the years, some of these product lines were sold or shut down by DuPont, but many are still produced at the Cleveland Plant.
From the 1940 through 1980, DuPont’s Cleveland Plant prospered and by 1980, employment had grown to over 300. The plant housed a large R&D group and became the Corporate Technology Center for Silicates and Zinc Products. In 1960, in recognition of its large market share and commitment to the industry, DuPont registered the ZACLON trademark for its line of Zinc Ammonium Chloride (ZAC) galvanizing fluxes.
In 1979, Cleveland Plant pre-tax earnings were $7,500,000 – an 18% return on sales. Then in 1980, the fortunes of the plant began to quickly change. By 1981, the plant’s return on sales dropped to 1% and in 1982 the Cleveland Plant lost $157,000. Losses continued to pile up through the mid-1980s. This, of course, was very alarming to corporate and plant management. There were many reasons for this change of fortunes but in the end, it came down to increased competition and the loss of the plant’s vertical integration.
Canadian Industries Limited opened a barge terminal in 1978 for reclaimed – by-product Sulfuric Acid across the Cuyahoga River and slightly downstream from DuPont’s Cleveland Plant. DuPont, who was burning molten sulfur to produce Sulfuric Acid on purpose could not compete with the lower priced by-product. DuPont’s Sulfuric Acid prices and profits collapsed. At the same time the Ohio Department of Transportation decided to go forward with a long-delayed plan to construct a new interstate bridge over the Cuyahoga River. The path of the bridge was directly over the plant’s Sulfuric Acid manufacturing facility. This was problematic to DuPont due to liability concerns.
In the early 1980s, Jones Hamilton built a plant near Toledo to produce Globular Sodium Bisulfide – GBS. This new competitor depressed GBS pricing and profits. Other competitors and producers also entered the Zinc Chloride and Zinc Ammonium Chloride markets. Prices in these markets also began to decline. Unfortunately, DuPont’s costs of manufacture did not decline. The plant also had to bear the allocated costs of the huge DuPont entity. Profits were squeezed further. By 1985, Dupont’s Cleveland Plant was losing $2,000,000 per year.
Through the years, the Cleveland Plant had been a nicely vertically integrated plant. Waste heat from the Sulfuric Acid production unit was used to make low-cost steam for the plant’s energy intensive units producing Zinc Chloride and Zinc Ammonium Chloride. Low-cost Sulfuric Acid produced on the site was used to produce Globular Sodium Bisulfide – GBS. A co-product of the GBS process is low-cost Hydrochloric Acid. This low-cost Hydrochloric Acid was used to produce Zinc Chloride and Zinc Ammonium Chloride. The dominoes began to fall when DuPont decided to shut down the Cleveland Plant’s Sulfuric Acid unit. With that, the plant lost its waste heat low-cost steam and its low cost Sulfuric Acid which had been produced on the site since 1866. This decision was quickly followed by decisions to shut down the GBS unit and the Sodium Silicate furnace. As a result of these decisions, the plant was now burning natural gas to produce steam and purchasing Hydrochloric Acid to produce Zinc Chloride and Zinc Ammonium Chloride.
Losses continued to pile up and DuPont became desperate to rid itself of the Cleveland Plant. They searched the globe to find potential buyers for the plant but found none. DuPont considered just shutting the plant down, but their commitment to their remaining customers and their 97 remaining employees coupled with the high legacy and decommissioning costs made that action undesirable. Then along came MTP!
In 1984, DuPont began investing in the training of all their salaried employees in a participative management system they coined the Management Training Process – MTP. All salaried employees were trained in the concepts and processes of participative management using a series of offsite two-day long sessions taught by trained leaders. The concepts being taught were aimed at promoting out-of-the-box thinking through encouraging engagement and participation at all levels. One group so trained were those involved locally and at the corporate level with products at the Cleveland Plant. Among them were Jim Krimmel (the Cleveland Plant’s Operations Manager located in Cleveland) and Joe Turgeon (the Cleveland Products Product Manager located in Wilmington Delaware). Once trained, the group turned itself to the “Cleveland Plant Problem”.
The concept that was eventually developed by the group was that we needed to operate the Cleveland Plant as if it were a standalone small business unburdened by the constraints and costs imposed by Corporate DuPont and the DuPont Marketing and Sales Organization. This eventually led to the birth of Zaclon, Inc. But there is a lot more to that story which we will cover in the next history blog.