Part IX
MY LIFE STORY
My Great Lakes Carbon Years
(1984-1990)
Another change in my career path -
In the middle
of 1984, I was approached by a HBS ’65 classmate and fellow
study group member,
Bill Gould, who was an executive search executive.
He was recruiting candidates for a Senior
Vice President of Manufacturing, Research and Engineering
position with a $1 billion in sales privately held New York City
based company.
The company
was Great Lakes Carbon (GLC), a manufacturer of carbon products.
The company was founded
in 1919 by the George Skakel Sr. along with a partner,
William Gramm who held a 25% ownership.
The company was formed to market carbon fine powder/dust
from coal processing operations to companies which used these
fines as a source of carbon in their chemical processes. As he
travelled about Illinois,
somewhat later Skakel observed immense piles of petroleum
coke, essentially
carbon left from
processing of crude oil into its various fractions, on the
refinery sites.*
The refining industry had recently introduced the coking process
to their refinery operations to improve the total value of the
refined products from the petroleum.
Gasoline production is maximized with this additional
process thereby increasing the total value of the petroleum
products.
However, the
refiners had not developed a market for petroleum coke, a
residue of the process and consequently stored the “coke” on the
refinery site until a market/use was identified.
Mr. Skakel who was
already marketing coal fines as a source of carbon, reasoned
that the petroleum coke could also be sold as a source of carbon
or as an alternate fuel.
He began contracting to purchase a number of refineries’
total production of petroleum coke.
Concurrently, he began calling on various manufacturing
operations, e.g., cement processing kilns, power plants and
other major users of fuel, and convinced those
prospective customers to incorporate this petroleum coke
into
*Crude oil is
“fractionally distilled” into its various marketable components
in the refining process.
The
components are separated based on their volatility.
Typically, the most volatile components are petroleum
gasses/solvents/chemicals, next is gasoline (the most valuable
component because of quantity and price), then kerosene/jet
fuel, then diesel fuel, then industrial heating fuel and then
asphalt. In a
process called coking, the heavy fractions, i.e., what is
typically the very heavy fuel oil and asphalt, are further
processed by “cracking” this portion of the petroleum into more
volatile products, principally gasoline with a residual solid
product called petroleum coke.
This coke is almost exclusively carbon with very minor
amounts of metals/solids as impurities.
It is a valuable source of carbon and fuel for industry.
their fuel
usage. He was so
successful that the Securities and Exchange Commission filed a
complaint that Mr. Skakel’s had created a monopoly in petroleum
coke. They settled
with an agreement that Mr. Skakel would not contract to purchase
petroleum coke from any other Midwest refineries.
Mr. Skakel was so successful in this endeavor that he was
wealthy within ten years.
The company
expanded its sales into calcined petroleum coke in which all of
the volatiles remaining in the raw petroleum coke were vaporized
and the calcined coke was essentially pure carbon.
This product found a very large market as the principal
ingredient in the manufacture of anodes for the electrolytic
manufacture of aluminum metal.
The carbon in the anodes reacted with the molten aluminum
oxide (alumina) to create carbon dioxide which escaped the bath
of molten alumina, while the aluminum metal attached itself to
the aluminum sheet cathodes thereby plating out relatively pure
aluminum metal. The
aluminum market expanded significantly during WWII, particularly
for the manufacturing of airplanes.
During WWII
the U.S. Government undertook the manufacturing of many
materials that were critical to the war effort by financing some
manufacturing plants and contracting with various companies with
the management expertise to build and to operate these plants.
One of those materials was graphite which was critical to
the immense nuclear bomb program.
Graphite use was also increasingly needed for electrodes
in the recycling steel from scrap steel.
After WWII, the U.S. Government sold
these plants which were no longer needed for the war
effort. Great Lakes
Carbon purchased two graphite facilities at that time and
entered into the graphite electrode market and selling specialty
graphite for various other processes.
Thus, GLC had
three major businesses, the resale of petroleum coke, the
calcining of petroleum coke and the sale of graphite, primarily
graphite electrodes for the recycling of steel.
Such was their business at the time Karen and I
considered interviewing with GLC for the position of Senior Vice
President of Manufacturing.
We decided that a change in careers, hers and mine and a
change in geography might be appropriate at this time in our
lives. I accepted
the offer of visiting with the GLC management at their Park
Avenue, New York City offices.
I met with the
GLC senior management, which was led
by Dr. John Sacks the CEO, an engineer who had joined GLC
in 1966 succeeding George
Skakel, Jr., the previous CEO, who was killed in a plane
accident in 1966*.
Sachs was recruited from Union Carbide where he served in their
carbon business, including graphite, of which Union Carbide had
the largest market share.
Also, among the interviewers was George Skakel III, the
son of George Skakel Jr., who was the GLC treasure and part
owner of GLC, Mike
Wrotniak, Sr. Vice President of Marketing and Jim MacKenzie a
young attorney who was GLC’s in-house counsel.
I also met with the retiring Sr. Vice President of
Manufacturing a long time GLC executive who was retiring to a
life of enjoying sailing his recently purchased sail boat.
He had a scheduled trip planned from Montreal, Canada
through the Great Lakes, down the Mississippi River and back up
the east coast of the U.S.
He had a firm retirement date
with not much time to orient his replacement.
During the
interview I learned that GLC was to be sold as the current
owners, especially the seven Skakel children or their heirs in
the case of George Skakel Jr., had large families most of whom
lived large off their share of the GLC earnings.
They wanted more
funds from GLC than were being generated by the GLC operations.
None of the seven children, except Ethel who had married
into the Kennedy family fortune, had independently been
successful at a career or married into
wealth. The
only way to access more funds from GLC was to sell the company
and have one last windfall.
George Skakel III thought that he might be successful in
putting together a group to purchase GLC and shared with me his
thoughts and plans.
Each of the seven families descending from George Skakel Sr. had
a place on the board as did the Gramm family.**
George Skakel III represented his sister and himself the
only two descendants of George Skakel Jr.
*George Skakel
Sr. and his family moved to Greenwich, CT and moved GLC’s
corporate office to New York City.
They had seven children, including George Jr. and Ethel.
Ethel married Robert Kennedy as a testament to the
society that the Skakels joined when they moved to CT.
George Jr. was the only one of the seven children to
which George Sr. would entrust the business.
George, Sr. and his wife were killed in the crash of the
GLC corporate plane in 1955.
George Jr. became CEO and he was in turn killed in a
crash of a small plane in which he and several others of his elk
hunting party were traveling on their way to an Idaho hunting
site in 1966.
George Jr.’s son George, III was on the second plane flying the
rest of the hunting party to the site.
George III saw the plane his father was on crash into the
mountain. George
Jr.’s wife and mother of George III died shortly thereafter
choking on food while dining in her home.
**Each of the three other sons of George Skakel, Sr. served on
the board, with Rushton Skakel the oldest son being Chairman of
the Board. The
three daughters one
of whom was Ethel
Kennedy, Robert Kennedy’s wife - were not permitted to serve on
the board and were required to nominate a male representative
for the board.
George III explained to me that “the men in the Skakel family
get the company and the women in the family get the silver
ware!”
My all-day interview went well.
John Sachs was a low key executive, clearly walking a
fine line in trying to satisfy the varying, sometimes
conflicting interests of the board and the individual Skakel
families. The
company was reasonably profitable, served several major markets
with high quality products and was clearly destined for
transition from a private company managed to maximize the owners
needs to probably a company owned by a private equity group.
The next day, Bill Gould phoned me that GLC was preparing an
offer for me for the position.
I received the offer via FedEx the day following at home.
Karen and I discussed the offer, the pros and cons of
leaving AOI, which at some future date might require us to
relocate to Ashland, KY. That and the possibility of living
in/near New York City with all of the new adventures that this
might represent were enticing.
A move would require her to sell or liquidate The
Needleworks. I was
somewhat disenchanted with my AOI position
and with the prospects of becoming AOI CEO or any other
AOI position in the very senior management ranks as other
contemporary officers seemed to have inside tracks.
I was interested in a new challenge.
The prospects of possibly joining George Skakel III in
purchasing GLC was intriguing.
After sleeping on the offer and further discussing it,
Karen and I decided to take the offer and go to New York City.
I gave my two week notice to Bill Seaton who accepted it with
grace and gratitude for my employment with AOI.
I was particularly pleased that John Hall the man in AOI
senior management whom I most admired, came to my office,
congratulated me and said that he would miss me at AOI.
Two weeks later I was off to New York City to begin
working with GLC.
Great Lakes Carbon had an apartment in NYC close to the office
which I was assigned to for our transition to NYC.
I was able to spend just two weeks with the executive I
was replacing before he entered retirement.
I also spent some of
that time scouting out apartments in Manhattan for Karen and my
possible relocation.
Karen came to NYC the first
weekend to look at apartments with me.
We had not prepared well for the shock of NYC residing
and after looking at a number of apartments we came to the
conclusion that we were not prepared to pay the rents asked for
the apartments that we considered acceptable and decided to look
in nearby southwest Connecticut, where several GLC executives
lived, including John Sacks who lived in New Canaan, CT.
The following weekend, we were shown a number of houses
for purchase in Stamford, CT, also very much a commuting suburb
of NYC. We quickly
chose a new house, nearly completed in a new Stamford
development called Doral Farm.
It was a small wonderful community of 26 new homes on 15
acres very near the Merritt Parkway.
The house we purchased was a three bedroom two story
colonial style house in a very quiet development which was
nearly sold out and occupied.
We would have occupancy in two months, which provided
Karen time to wind down The Needleworks and me time to travel to
all of the GLC manufacturing and research facilities for which I
had responsibility.
Great Lakes Carbon had a company plane, a modernized DC 3, based
at the nearby private Westchester County Airport.
CEO Sacks scheduled a whirlwind
tour of five GLC plants using the company plane.
One of the plants we visited was the Morgantown, NC
graphite plant. At
the time we were in North Carolina, my parents were in
Greensboro, NC visiting my mother’s cousin, Willard Ware who was
dying of pancreatic cancer.
I asked CEO Sacks if we could spend a couple of hours in
Greensboro while I paid a short visit to tell Willard goodbye.
It was a difficult visit for my parents and for me to
tell such a great family member good bye.
On the trip we also visited GLC’s newest graphite
electrode plant in Ozark, AR just outside the Fort Smith.
The third stop was at the Enid, OK and the fourth in Port
Arthur to visit GLC’s two petroleum coke calcining plants.
It was a quick orientation to the old (Morganton) and new
(Ozark) graphite electrode manufacturing plants and to the coke
calcining plants.
The following several weeks I visited the two GLC
Canadian plants, an old and a new graphite electrode plant both
located near Montreal, the Niagara Falls, NY graphite plant, an
old style graphite manufacturing facility which produced various
sizes and shapes of graphite for specialty operations and the
GLC research and engineering center in Knoxville, TN. In
addition, GLC had a
graphite plant in northern England which utilized the same
graphite technology as the Niagara Falls graphite plant.
Also, GLC had two
joint venture petroleum
coke calcining plants in India and a large new
joint-venture petroleum coke calcining plant in
Buenos Aires, Argentina.
The Knoxville, TN facility also included graphite fiber research
and a pilot plant facility, as graphite fiber was finding
increased market in a variety of applications because of its
tremendous tensile strength to weight ratio, e.g., as a
reinforcing member of reinforced plastics.
GLC was working hard to enter this growing new business.
I spent the following week visiting GLC’s Niagara Falls, NY
plant and graphite marketing and customer service offices, which
overlooked the Canadian portion of the
Niagara Falls and in getting to know the other officers
and employees in the NYC office.
I returned to Columbus, on the third weekend of my employment
with GLC. Karen was
making progress selling her inventory and winding down The
Needleworks. She
met me at the Columbus airport in her brand new Dodge Dart
convertible. It was
a glorious day weatherwise so she had the top down and was
beaming ear to ear.
I asked her about the car and she proudly told me she bought it
with the proceeds from liquidating The Needleworks inventory.
It was a whirlwind of a time, selling our Westerville
condo, winding down The Needleworks, arranging for the moving
our furnishings to Stamford, CT and saying good bye to our many
Columbus area friends.
The closing on the purchase of the Stamford house and the sale
of the Westerville condo, the move of our furnishings to
Stamford and the
occupancy of the new house all went reasonably smoothly.
We settled into the Stamford house very easily. We had
become familiar with Stamford and its surrounding area somewhat
in the several house hunting trips to Stamford and drives from
there into NYC.
Karen had decided that she was finished with retailing and was
going to take a crack at being a real estate agent.
She began researching the requirements and opportunities.
She enrolled in a class preparing prospective agents to
pass the required state exam for real estate agents.
She passed the exam, received her license and acquired a
position at local real estate agency which concentrated on
Stamford real estate.
She was excited with the opportunities to learn more
about the Stamford area and history, to meet people in our new
home town and to pursue a real estate sales career.
Karen continued her
smoking and drinking to a degree that was uncomfortable to me
and to her daughters, all of us whom discussed it with Karen to
the degree she would converse about it – which was very limited.
At this point she did not appear to have adverse health
effects from either and had no interest in changing these
habits.
Our new home location was an excellent choice, in part since
John Sacks who not only had a company car, had a personal driver
for commuting to the office. They
travelled the Merritt Parkway on this commute.
Even though I had a company car as part of my executive
compensation package, John told me that he would be delighted
for me to commute with him.
There was a carpool parking lot very convenient to the
Merritt Parkway where I would leave my car and ride to and from
NYC with him.
Great Lakes Carbon senior management met every Monday morning in
the NYC office to coordinate and plan GLC’s business.
Rushton Skakel, chairman of
the board, whose office was adjacent to mine, was in the
office most Monday’s and attended these meetings.
He never once made a comment in any of the meetings which
I attended. He may
have made his feelings known to CEO Sacks, but I never asked
Sacks.
The GLC board met quarterly only two of which I attended, as the
board had already retained advisors to
handle locating and qualifying prospective buyers of GLC.
There were no candidates making the final cut who were
competing in the carbon/graphite markets.
George Skakel III and I met
with the advisors and discussed the possibility of us
putting together a group to make a bid for GLC.
We were encouraged to do so,
however, George III had greatly overestimated his ability
to access the necessary funds to make a competitive offer. The
final candidates were entrepreneurial
firms which wanted to purchase the GLC assets and greatly
reduce what they considered the excess corporate costs, e.g.,
the Park Avenue office lease had some 15 years remaining at a
lease cost very much below the then current market, the
corporate airplane, the excessive number of company cars
- mainly in the Skakel family – and several entertaining
venues used for marketing purposes, but also used by the Skakel
family.
Bradley Jake Holub, our first grandchild is born –
On Sunday, November 4th, Karen and I received a phone
call from our daughter Cindie and her husband, Brian, announcing
that we were grandparents of a beautiful baby boy, whom they had
named Bradley Jake Holub.
Mother and son were doing fine they expected to be home
in a couple of days and wanted us to come to Nashua to see our
grandson. We agreed
and eagerly looked forward to seeing Bradley.
The week drug a bit waiting for Friday afternoon to drive
to Nashua. Karen
and I had visited Cindie and Brian several times since we both
arrived on the east coast, but this was a special trip.
On a previous trip Brian gave Cindie, Karen and me a tour of a
small zoo in Nashua for which he had veterinary responsibility.
He had treated a female elephant which had a small baby
for some malady a few weeks previously and when we entered the
building in which she and her youngster were housed, the female
elephant saw Brian and
immediately began bellowing and moving behind several
other full sized elephants.
She had remembered Brian.
It was a neat tour, as we saw a very young tiger kitten
along with the adult tigers and a number of other major animals
close up.
The weekend to meet Brad went quickly and we returned to
Stamford, so Karen could continue her real estate work and I
could get back to the GLC offices.
We traveled to Nashua for Thanksgiving and visited NYC
afterwards to see the Christmas decorations.
We decided that we would
celebrate Christmas with Cindie, Brian and Brad.
Cindie returned to her ambulatory veterinary practice,
carrying Bradley on her back as a papoose or letting him sleep
in the car cradle.
Brian’s work continued to go well; however, he didn’t
agree with a number of the management practices of the animal
hospital where he worked.
He kept his eyes open for an animal practice which he
might buy, as he wanted to be his own boss and to practice
veterinary medicine as he thought it should be practiced.
Early in 1985, I made my first trip to South America.
GLC had a joint venture petroleum coke calcining
operation in Buenos Aires, Argentina.
I was appointed to the joint venture board.
John Sachs, Mike Wrotniak and I traveled to BA in
February. The plant
was only three years old and was based on GLC’s calcining
technology. The
Argentinian customers were aluminum companies several of which
were associated with U.S. based aluminum producers and were
customers of GLC in the U.S.
Some of the BA joint venture’s product was exported
to overseas aluminum plants.
The joint venture was performing satisfactorily and on
target financially. The visit to BA was eye opening.
It is the first city where the population was so crowded
that electrical power lines and telephone lines were strung
across many streets from one building to another.
The city however was clean, modern and well laid out.
The habit of early afternoon naps and very late heavy
dinners however, never for me.
The year 1985 was a very busy year for our family, approximately
eight months after my joining GLC, a private company Horsehead
Industries (HI), which was organized in 1981 by employees of
Gulf and Western (G&W) to purchase selected portions of New
Jersey Zinc’s operations from G & W purchased GLC.
New Jersey Zinc was a 1965 acquisition of G &W.
Horsehead Industries was formed by Bill Flaherty, its CEO
along with David Carpenter, its President and COO, and some
silent partners to make this purchase from G &W.
Horsehead Industries embarked on a prompt cost cutting
program and liquidated assets to repay much of the borrowing
incurred for the
purchase of New Jersey Zinc. Horsehead
Industries intended to do the same with GLC.
Horsehead Industries asked John Sacks and several other
executives to retire and
organized GLC into two divisions.
Mike
Wrotniak was named Sr. VP of GLC with responsibility for the
Petroleum Coke Division and I was named Sr. VP of GLC with
responsibility for the Graphite Division.
The administrative portion of GLC was reorganized and
partially integrated into the HI administrative functions.
Horsehead Industries immediately began looking for a less
expensive location for the GLC offices and found office space in
Bryn Mawr, NY. We
promptly moved GLC offices out of the 410 Park Ave. building and
HI was rewarded with a very nice bonus, as the owner of the
building re-leased the space at a much higher rent.
Horsehead Industries also sold the corporate plane,
recovered the company vehicles from the Skakel families, sold
the entertainment venues used by GLC for customer entertainment,
sold surplus real estate and slashed excess inventory.
All of which enabled HI to significantly reduce the debt
used to finance the GLC acquisition.
The remaining
key employees of GLC scrambled to adopt the GLC operations into
a mode acceptable to HI.
This involved a considerable amount of travel for me
which also including meeting our major customers and suppliers.
The national economy was reasonably strong and the
graphite business was good. Since recovering steel from scrap
was less expensive than refining iron ore,
many steel producers were expanding their operations with
electric arc furnaces and retiring or mothballing their
traditional blast furnaces.
It was a hectic transition for those of us in GLC but a
strong graphite electrode market helped in the transition.
During this
transition, I travelled to Europe to review the acquisition of
GLC by HI with our
graphite plant operations and our European graphite sales
manager, who was based in London.
The weekend that I was in Europe, I planned to take a
quick trip to Switzerland to do some European skiing, however
the weather was unseasonably warm and the skiing was not good.
Instead, I took a quick trip to Berlin to visit the city
and to see the Berlin Wall.
It was an eye-opening trip, as one afternoon I took a
commercial tour of East Berlin, which was still under Soviet
control. The
difference between East and West Berlin, was literally the
difference between day and night.
West Berlin was bustling, streets full of pedestrians,
shoppers and vehicles, store windows full of merchandise for
sale, cranes idle for the weekend, but poised to continue
building the many new buildings and so on.
East Berlin was a ghost town.
There were very few pedestrians, empty store windows, no
sign of new construction, few vehicles in the streets and many,
many buildings in disrepair or abandoned.
The hotel in which I stayed overlooked the Berlin Wall.
I could see the East German military patrolling the east
side of the wall.
People on the west side of the wall were using heavy mauls and
other manual equipment to knock holes in the wall while the East
Berlin patrols stared at them but took no action.
I picked up several pieces of concrete which had been
knock loose. I
still have one of those pieces.
It was two years later that President Reagan in an
address to the Berliners that he said “Mr. Gorbachev, tear down
this wall!” Two
years later, on November 9, 1989 the wall was officially down.
In July, Cindie and Brian exercised their option to purchase the
house they were renting in Nashua, as the local housing market
had appreciated substantially.
Later, Brian
found a small animal practice for sale in Chelmsford, MA a
Boston suburb located about 25 miles south of Nashua.
Brian was impressed with the possibilities of purchasing
this practice.
The practice, Countryside
Animal Hospital was
for sale at a price of about $100,000 or one-time the claimed
annual revenue. They
sold the Nashua house and walked away with a bit of cash. They
negotiated a purchase contract for Countryside Animal Hospital,
including a five year covenant for the seller to not
compete in a veterinary practice within a 25 mile radius
of Countryside. The purchase closed December 23, 1985.
The practice had been owned by a veterinarian who
employed a second veterinarian.
Brian was convinced that he could single handedly cover
the veterinarian needs for Countryside’s business, at least
initially. Cindie
and Brian rented a house in Westford,
MA which bordered Chelmsford.
Cindie transitioned her ambulatory veterinarian practice
to another equine veterinarian near Nashua.
She stopped practicing veterinary medicine as they were
planning to have a second child in the near future.
However, she continued to be active working with Brian in
getting Countryside into the type of
animal practice that Brian wanted.
For my 50th birthday,
Karen surprised me with a gold Rolex watch which she purchased
with the commission from her first real estate transaction as a
broker. I had
always thought that the Rolex watches were too ostentatious for
me, but I had never told her that.
She had help on the purchase from David whose association
with JB Robinson’s Jewelers enabled him to purchase the watch at
cost. I am wearing
this watch as I write this autobiography now some 36 years
later. It has been
cleaned only once and
had only one minor repair.
They are indeed good values with that life span.
Brian operated a very lean practice initially and took all of
his client’s emergency needs including all hours of the day and
weekends. He
quickly expanded the business and hired additional veterinarians
and other necessary staff as justified.
He was very pleased
with the transition from the previous owner.
Within six months Cindie and Brian found a house in
Westford to purchase.
It was only a few hundred yards up the street from where
they were renting and was an ideal house for a young family.
It had three stories, with four bedrooms and two
bathrooms upstairs, a kitchen-dining area, a formal dining room,
a living room, a den and a powder room on the main floor.
The full basement was eventually finished off with about
one-half as service area and the other one-half as a rec room.
It was located on a fairly large lot, with a big swimming pool
immediately out the back door.
As year-end 1985 approached, Cindie and Brian were well on their
way with a successful small animal hospital and now owned a nice
home in Westford, MA.
Horsehead was making good progress with the integration
of GLC into HI’s business.
Karen and I decided that we would return to Iowa for
Christmas. Cindie,
Brad and Brian and Kim and Dave were all attending as well.
It was Brad’s first Iowa Christmas.
We enjoyed the usual Iowa family Christmas with too much
food, especially ice cream and other deserts, good pheasant and
rabbit hunting and a wonderful time in the folks relatively new
house. We learned
later that Cindie was pregnant with Andrew who would arrive in
July 1986.
In August 1986, Dave’s company, JB Robinson Jewelers was
purchased by Kays Jewelers, a UK company.
As a result of this purchase, JB Robinson and Kays
organizations were integrated and reorganized.
Dave was the only JB Robinson executive to receive a
promotion as a result of this business combination.
He was promoted to Regional Manager, Southern Region of
the U.S. of the combined companies and they were relocated to
Atlanta, GA. They
sold their Houston, TX home and moved to Marietta, GA, an
upscale Atlanta suburb north of Atlanta. Kim joined Saks
Department Store where she served as the women’s casual clothes
buyer.
Prior to buying GLC, HI had a small NYC office and one principal
plant operation in Palmerton, PA, a small town mid-way between
Bethlehem and Scranton.
While digesting GLC, HI continued its growth and
acquisition program, forming a new business in early1986 which
processed electric arc furnace dust, a hazardous waste to
recover the valuable zinc, lead and cadmium contained this dust.
The lead and cadmium in the dust caused this material to
be classified as hazardous waste.
The steel companies were required to dispose of this dust
at a considerable cost
plus incurring a possible long-term environmental exposure if
the landfill in which the dust was disposed ever became a
hazardous waste problem.
The dust typically contained up to 20% zinc metal and
smaller quantities of lead and cadmium.
Horsehead Industries recovered the zinc, lead and cadmium
from the dust, rendering the remaining portion of the material,
mainly calcium, iron and other inert metals a non-hazardous
solids waste. The
recovered zinc, lead and cadmium was fumed – evaporated from the
other metals utilizing a large rotary gas fired kiln. - The
vaporized zinc, lead and cadmium were immediately oxidized into
zinc oxide, lead oxide and cadmium oxide, which was sold to
recovery plants that refined these metal oxides into
purified metal oxides or recovered the material as metal.
This new business was named Horsehead Resources Development
Company (HRD) and it utilized the zinc refining process employed
by New Jersey Zinc previously to refine zinc oxide ores into
zinc oxide. The
business was profitable as a result of charging the steel
companies a processing fee for handling their hazardous waste
and selling the recovered metal oxides to metal processing
companies. However,
the metal prices sometimes varied widely as they are commodities
and react to the worldwide supply and demand of each.
David Carpenter, also served as President of HRD, as he
had been the primary supporter of this business opportunity.
Almost concurrently, Horsehead Industries was given the
opportunity to negotiate exclusively for the purchase of seven
specialty chemical and manufacturing businesses of ARCO, a large
petroleum and copper metal company.
Because of my background in the chemical
industry, Horsehead Industries hired a friend of CEO
Flaherty to be the President of GLC Graphite and transferred me
to the acquisition and subsequent management team of the
chemical businesses being purchased from ARCO.
The six businesses were (1) Chemlink Petroleum, (2) Chemlink
Water, (3) Sartomer, (4) Ceramic Products US and (5) two Alsco
businesses.
Chemlink Petroleum was a petroleum production chemicals company
whose products were used to improve the production and
transportation of crude oil. Its most important product was a
patented high molecular weight organic polymer which when added
to crude oil in microscopic amounts significantly reduced the
viscosity of crude oil.
It found a large market for crude oil transported through
the Alyeska Pipeline, between the Alaska North Slope and
Alaska’s seaport on its southern coast.
The addition of small amounts of this product
increased the amount of crude oil that could be
transported through the pipeline by 20% thereby eliminating the
need for a very expensive major capital expansion of the
pipeline. This
business was headquartered in Plano, TX with a
manufacturing facility in Oklahoma City, OK.
Chemlink Water was a supplier of chemicals and water treating
services for industrial and commercial water systems, primarily
for process and air conditioning cooling water systems.
Its major competitors were Nalco and Culligan.
It was headquartered in ARCO Chemical’s headquarter
office building in downtown Philadelphia, PA.
Sartomer was a specialty chemical company which made smaller
volume acrylic polymers used by many chemical companies
formulating specialty products, e.g., adhesives, and other
manufacturing companies,
e.g., golf ball manufacturing companies.
Its headquarters and only manufacturing plant was located
in a Philadelphia, PA suburb.
Sartomer also had partnered with a major Japanese
chemical company to build a small joint venture acrylic polymers
plant on the Japanese company’s plant site.
Ceramic Products US was start-up ceramic powder manufacturing
business to manufacture this material for a new but growing
industry of making ceramic products from the new material.
The material was resistant to all chemicals and to
significant wear action and therefore ideal for parts needing
these characteristics.
This operation was located in Tucson, AZ where the
president of that company started the business.
Alsco was a combination of two businesses both competing
primarily in the residential construction products industry.
These businesses supplied vinyl products to the siding
and the roofing
markets.
Flaherty hired a retired building products manufacturing
executive to evaluate and
subsequently manage the two Alsco businesses.
Therefore, I was less involved with the due diligence and
evaluation of these two businesses.
My responsibility was due diligence of the other four
businesses. I had
the help of a financial analyst for the analyses of these
business’ financial performance.
I spent the bulk of my time reviewing the manufacturing,
and marketing functions of as many of these businesses as
possible, to assess their strengths and weaknesses, including
their management, to identify any possible hazardous waste
issues and to bring these issues to the negotiating table. One
part of the due diligence included a trip to Japan with Flaherty
to meet with the executives of the Sartomer joint venture
partner. It was a routine trip and it was an excellent time to
get to know Bill Flaherty. Bill
Flaherty handled the negotiations at the senior level primarily
with the CEO of ARCO, however the details were handled by our
lawyers and me. The
acquisition of the ARCO chemical businesses completed rather
quickly, as ARCO was willing to totally indemnify HI for any
existing environmental exposure.
Upon closing this acquisition this new HI business was
named Pony Industries.
I was assigned to be Sr. VP of Pony Industries with
responsibility for overseeing Pony’s operations.
Almost immediately, Flaherty received an unsolicited
expression of
interest for the ceramic business from a major Japanese ceramics
manufacture which resulted in this business being quickly spun
off to that company.
Flaherty also received unsolicited interest in the two
building products businesses and these businesses were also spun
off.
In May 1986, Karen and her sister-in-law, Lee Swanson, planned
an 80th Birthday Party for her mother.
They included mom Swanson
in the planning and in determining who would be invited
to attend. Some
fifty friends of hers, primarily from her and dad’s church and
another dozen or so family toasted her wonderful life.
Her sister Joyce and Joyce’s husband, Matt, and her
brother Reece and his wife Flo, all of whom lived in southern
CA, and her baby brother, George who still lived in Buckeye, AZ
all attended.
Cindie, Brian, Brad, and Kim
all attended as did Karen and I.
Cindie was seven months pregnant with we soon learned was
son number two. It
was a wonderful celebration and mom Swanson thoroughly enjoyed
it.
Andrew Karl Holub grandson number two is born -
Two months later, Kim, David, Karen and I were in Westford
awaiting the birth of Andrew.
On Saturday afternoon, July 19th, Cindie
announced it was time for her to go to the hospital.
Kim and David agreed to accompany Cindie and Brian to the
hospital. Karen and
I stayed at Cindie and Brian’s home and watched Brad.
Later that day Andrew was born, again without any
complications. Kim
and David were able to witness first-hand Andrew’s birth and it
almost convinced them to not have children.
In 1986 J B
Robinson’s Jewelers was purchased by Kays Jewelers of the United
Kingdom. The new
U.S. operations of Kays was organized into four regions.
Three of Kays regional managers were assigned to be
regional managers within the new organization.
David was the only J B Robinson manager to be promoted to
manage a region.
David and Kim moved to Marietta, GA, a suburb of Atlanta.
In December 1986, the president of Chemlink Petroleum was
traveling to the Alaska North Slope to call on the crude oil
production companies producing crude oil from that frozen
tundra. He invited
me to travel with him on this customer visit and I gladly
accepted. It was an
enlightening trip.
The production facilities were immense with as much of the
machinery located within buildings as possible.
We stayed overnight, ate in the cafeteria for the workers
and slept in a sleeping room shared by a number of visitors to
the facility. The
temperature was moderate for the time of the year pretty much
around zero Fahrenheit.
We observed the station where the Chemlink viscosity
reducer was injected into the crude oil.
This product was shipped in 20,000 gallon rail cars from
OK to the North Slope.
Chemlink Petroleum also sold the production companies
other oilfield production chemicals which were supplied in 55
gallon drums and shipped in containers to the North Slope..
Mother Ruth Swanson dies -
Mom, Swanson was diagnosed with inoperable colon cancer in
February 1987. She
rather quickly needed near continual bedrest.
She wanted to remain in her home so care was arranged for
her and she remained home until she died on April 9, 1987.
She was 81 years old and had enjoyed a good life.
My sister Beverly, a registered nurse kindly spent
several weeks caring for
Mom Swanson in her final weeks.
At the end Karen and I were there as well.
Sister-in-law, Lee was teaching school but spent as much
time with Mom as she could when not teaching.
Mom was eulogized, as was Dad Swanson some nine years
earlier in the church they helped build and was buried with Dad
Swanson.
Karen and Lee had the unenviable task of selling mom Swanson’s
home and otherwise liquidating her small estate.
The house sold quickly.
Karen and our girls, Lee and her girls wanted a few
pieces of furniture and some other memorabilia but the remainder
of mom’s belongings were given away or sold.
Lee carried most of this burden as she was located
nearby. Karen did
what she could from some 2000 miles away.
Karen however did drive to Brea, CA by way of Houston, TX
to pick up Kim with
plans to bring back to Kim’s and to our homes a few pieces of
furniture that they wanted to keep as remembrances of our
wonderful Swanson parents/grandparents.
They rented a small enclosed trailer in CA and trailed
these important pieces to TX and then CT.
At the 1987 ISU Spring Commencement, ISU recognized a number of
alumni for their achievements. I was honored as one of the
Engineering College achievers in the commencement bulletin.
Several petroleum and chemical companies reached out to HI
expressing interest in the Sartomer Company which was highly
profitable and well placed in a growing specialty plastics
market. One of
those companies was Total, a large French petroleum and chemical
company, which was also in the acrylic plastic monomers and
polymers business.
Total had ambitious plans to expand in the chemical marketplace.
Bill Flaherty encouraged these companies to make an offer
for Sartomer, which several did. Total made an aggressive offer
and Bill tasked me with negotiating with the Total
representative.
Total was quite familiar with the Sartomer business
as they were a major
supplier of these products in Europe and elsewhere.
It needed no information on the marketplace or supply
issues. Their focus
on negotiating the deal was the technology that Sartomer was
employing and the Sartomer personnel.
A purchase agreement was soon hammered out and a deal
finalized for the sale of Sartomer in mid - 1988.
Kevin James Holub grandson number three is born -
Cindie and Brian added Kevin James Holub, grandson number three,
to our growing family on March 26, 1988.
Cindie was now a pro at giving birth as she no longer
stayed in the hospital a minute longer than absolutely
necessary. Cindie,
Brian and family decided to not attend our resumed Davis Family
summer reunion held in July 1988 when we returned to the
Sportsman Resort at Lake of The
Ozarks. Dick
and Judy were also unable to attend as they were in Italy on a
three year assignment.
Nancy and Neal plus Colin, who had just graduated from
Kent, WA high school attended.
It was particularly good to see them.
Kyle James Holmberg grandson number
four is born -
While all of this was proceeding, Kim and Dave were beginning
their family with the birth of Kyle James Holmberg, born June
29, 1988. Kim and
Kyle were both doing well and were soon home.
Kim very much like Cindie was a natural mother.
Kyle was a good baby.
Karen and I traveled to Marietta to visit them shortly
after she and Kyle were home.
A month later the Davis family summer reunion resumed
after several years of no reunions because of other summer
events, e.g., Denise and Keith’s wedding in August 1986 to which
many of our family attended.
Earlier that spring, I was asked by President John Wagoner,
William Penn University (WPU)
to join the board of the university, which I readily
accepted. I had not
been supporting WPU financially nor been at all close to the
university. I was
vaguely familiar with the university from conversations with my
cousin Willard Ware a graduate of WPU, a long time board member
and a financial donor.
I was also aware that both my Aunt Bea and Uncle Lisle
and his wife Helen, all graduated from the university.
Finally, my third cousin John Wagoner had a long
association with WPU and was now serving as President of WPU.
The board met quarterly in Oskaloosa, IA however, John
advised me that if I could make at least one meeting a year that
I would be welcomed to the board.
With my acceptance of this responsibility, I began some
Ware family research on its relationship with WPU.
That somewhat extensive relationship is covered in some
detail in Appendix One – The Ware Family.
That fall, Karen and I made a $50,000 donation to WPU to
establish The Davis Ware Endowed Scholarship at WPU.
The occasion was celebrated by my parents, my aunts Bea
and Helen (who happened to be in Iowa visiting her nearby
relatives) and Karen and I in a private reception at the
university.
Ronald Reagan’s term as our 40th president was coming
to a very successful conclusion.
His administration had a rocky start however, he
accomplished a lot, including the
downfall of the Soviet Union, as the president was able
to convince the leaders of the Soviet Union that they could not
compete militarily and economically with the U.S.
The fall of the Berlin Wall was just the beginning.
Reagan’s vice-president, George Herbert Walker Bush was
the Republican nominee to succeed Reagan.
Bush may have been the best prepared person to serve as
the president of the U.S.
He was vice-president or eight years, CIA Director, U.S.
Ambassador to the United Nations and four years as a U.S.
Representative to the U.S. Congress from Texas.
The Democrats nominated the ex-governor of
Massachusetts, Michael Dukakis.
George Bush won handily.
Bill Flaherty and the board of HI, began developing a
company incentive program for three of we HI/Pony
officers who were not part of the HI ownership.
Bill Flaherty and David Carpenter, held a meeting with
Harry Walters President of GLC Graphite, Bill Quirk, Executive
Assistant to Flaherty and me outlining HI’s plans for an
incentive compensation program, including both annual bonuses
and some type of equity compensation.
The three of us were quite excited and interested in
learning the particulars of this program.
A second meeting of this same group several months later
with more teases about the progress being made in developing the
program. The
program was never finalized or implemented.
In part possibly because GLC Graphite was sold to
a German graphite manufacture, Sigri and
Harry Walters, probably received a bonus as a result of
that sale and a year later when Pony Industries was totally
liquidated, I received a generous bonus.
I suspect Bill Quirk was well compensated with bonuses
and possibly some equity, I don’t know.
Our beloved Mother, Ruth L. Ware Davis dies -
Mom’s health continued to trouble her and us as her cardiac
issues continued.
She had a long history of high blood pressure. In March
she had fallen and crushed a vertebrae for which she was
hospitalized. A serious bout of flu was superimposed on her
recovery from the fall. In November she felt badly for several
days. Her doctor prescribed an EKG which indicated she
had experienced a heart
attack. She was
hospitalized in Marshalltown for two weeks and when she did not
improve, her doctor referred her to the Methodist Medical Center
(MMC) in Des Moines, The
doctor there did another EKG and scheduled her for an angiogram
on the following Monday. I kept in touch, principally
with brother Bob, who kept in very close contact with mom and
dad.
On December 12 Mom reported to the MMC for an angiogram.
On that day she was stable but was fearful of what the
test would find.
The test confirmed she had a heart blood vessel blockage and was
she was scheduled for prompt surgery.
Bob alerted Dick and Janie, who drove to Des Moines
together, arriving on Monday after mom’s angiogram.
Prior to the surgery, she had a heart attack and was
placed in the ICU. Bob, Beverly, Dick and Janie were with dad
and mom. Bob called
Nancy who made arrangements to fly to Des Moines. Bob called me
on December 14th and advised me to come as mom was in
serious condition.
Dad, Bob, Beverly and Dick were at the hospital when mom died.
Janie was picking Nancy up at the airport at that time. Karen
and I flew to Des Moines on December 15th, where Bob
picked us up and told us that mom had died..
We all visited mom one
last time and attempted to console dad and each other. It was a
very sad time. Mom
died on brother Bob’s 52nd birthday!
When we left the hospital, dad asked Bob and me to go
with him to tell, mom’s sister, Aunt Bea.
At that time Aunt Bea was living in her retirement home,
alone having lost her lifetime partner,
Ethel. Aunt
Bea took it quite hard although she knew mom had a challenging
heart issue.
Mom’s services were at 1:30 Saturday afternoon with Reverend
John Wagner and Reverend Edward Zelly (Hartland Church’s then
paster) officiating.
She was buried in the Davis family Plot in the Heartland
Cemetery, adjacent to the Ware family plot, where her parents
and one brother and one sister rested.
Her other sister, Aunt Bea would be buried in this same
family plot after her death of natural causes on April 3, 1990
at the age of 89.
We again gathered at dad’s for our unusual usual Davis Iowa
family Christmas.
The loss of mom ten days earlier was a severely negative impact
on the Christmas
celebration. Even
the normal very happy Hartland Church Christmas program was
somber with the loss of her so recently. Aunt Bea was with us
for our Christmas celebration, although she was clearly
incurring failing health.
All of my siblings and family were able to make it for
Christmas except Nancy who was residing in Seattle, WA a long
way from Marshalltown.
She of course, was in Iowa for mom’s service.
The following summer we again gathered at the Sportsman
Resort for the Davis family summer reunion.
The ARCO acquisition was now down to the two Chemlink businesses
for which there was only mild interest, so Flaherty decided to
do an Initial Public Offering (IPO) of these two units as a
combined company.
The president of Chemlink Petroleum was appointed president of
The Chemlink Group which included both Chemlinks.
We worked with the new organization to further improve
its financial
performance and to strengthen its organization. The market for
the sale of the crude oil flow enhancer was strong as the
producing companies on the North Slope wanted to maximize the
production of crude oil which required pushing as much crude oil
through the Alyeska Pipeline as possible.
This improved the profitability of the Chemlink Group.
The IPO was scheduled for mid 1989.
Brett David Holmberg, grandson number five is born –
In August, Dave was approached by a privately owned regional
jewelry chain, Reeds Jewelers, based in Wilmington, NC about
becoming Vice President of Store Operations for Reeds.
He was offered attractive compensation and responsibility
compared to his perceived future at Kays.
On July 29th, Kim gave birth to her and Dave’s
second son, Karen and my fifth grandson (and to Karen’s mild
disappointment our no granddaughters!).
Karen and I, visited Kim and her growing family shortly
after she and Brett came home. One
year old Kyle and new born, Brett along with Dave’s business
responsibilities, including frequent travel, challenged the
family. As a result
of all this Kim, David and family were unable to attend our
Davis Family summer reunion which was again held at the
Sportsman Resort. Kim
decided not to rejoin the corporate merchandising world, but
instead to follow her mother and open a needle works store in
Wilmington. Kim
named her store Quilter’s Heaven.
She sold sewing machines and quilting supplies and taught
quilting classes.
The Chemlink Group IPO included a road show with
presentations to a number of security analysts and
financial advisors.
I made the presentations of the of the Chemlink business. The
IPO was reasonably successful, however, considering the total
return that Pony was able to generate for HI from the
acquisition of the ARCO Chemical business units, this
acquisition was a home run for HI.
Bill Flaherty and the owners of HI did extremely well,
but importantly for me, we key employees were well rewarded. My
bonus was some $555,000 in cash and shares of Chemlink valued at
$210,000! It was a very nice October 1989 surprise.
I shared this bonus with
William Penn University in establishing the Davis Ware Family
Endowed Scholarship, with an initial $50,000 contribution.
In December, Brian completed a significant renovation of
Countryside Animal Hospital adding needed exam rooms and
operating/treatment space. His
practice was very strong financially and was expanding rapidly.
Brian was active on the board of the American Feline
Foundation , particularly lending his veterinary expertise to
the review and approval of research grants made by the
Foundation. We
again celebrated our usual Davis family Christmas.
The loss of mom just over a year ago continued to depress
our Christmas joy.
Dad insured that Aunt Bea was with us, despite her frail health.
I had attended four of the WPU’s board meetings since joining
the board and was assigned to the recruiting committee and met
with the recruiting staff members to discuss recruiting strategy
and enrollment issues.
It was an interesting assignment, however, despite
reasonable recruiting success, WPU was suffering from a
significant financial squeeze and the financial emphasis
deserved and received primary attention.
Early in 1990, I was
promoted to President of HRD, with a salary of $200,000 and a
mission of taking HRD public via an IPO.
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