Ampacet Corporation History

Company Perspectives:

Managing the elements of success. Ampacet makes it happen.

Key Dates:

1937:

The company is founded as American Molding Powder & Chemical Corp.

1954:

Norman Alexander acquires the company.

1965:

The name is changed to Ampacet Corporation.

1972:

The Terre Haute, Indiana, plant opens.

1987:

A Belgian plant opens.

1990:

The Corporate Technical Center opens.

1999:

Equistar Chemicals' Color & Compound division is acquired.

2000:

A Thailand plant opens.

Company History:

In terms of volume, Ampacet Corporation is the world's largest provider of color compounds and concentrates used by plastic manufacturers to produce consistent colors and chemical characteristics. Each year the Tarrytown, New York-based company produces about 900 million pounds of utility and specialty white, black, and additive masterbatches, and custom and stock colorants. The products, sold to more than 80 countries, can be used by almost all plastic processing methods, including extrusion coating, blown and cast films, blownware, injection molding, wire and cable, pipe and conduit, and fiber spinning. Industries served include agricultural, consumer, fiber, industrial, packaging, pipe and conduit, and wire and cable. In North America, Ampacet operates manufacturing facilities in Terre Haute, Indiana; Cartersville, Georgia; DeRidder, Louisiana; Crockett, Texas; Heath, Ohio; and two plants in Canada. The company also maintains a research and development center in Terre Haute. In South America, Ampacet operates plants in Argentina, Brazil, and Chile. In Europe, facilities are found in the United Kingdom, Italy, and Belgium. The company also maintains a strong sales presence in Asia, with offices located in India, Malaysia, Australia, and China. Ampacet is owned by Norman E. Alexander, chairman and CEO of Sequa Corporation. Alexander, who turned 90 in 2004, has never considered taking Ampacet public and has taken steps to allow the company to continue on as a private concern after his death.

The Company's Founding in the 1930s

Ampacet was founded in Brooklyn, New York, in 1937 as American Molding Powder & Chemical Corp. It was acquired by Anton Bamberger, well known in the plastics field at the time, and a group of investors in 1941. During the war years the company recycled acetate from nylon stockings, which was then used to make parachutes for the military. For the next 25 years the company acted as a recycler, using scrap to produce products such as injection-molded combs, brushes, toys, and houseware items. In 1954 Norman Alexander bought the business.

Alexander was born in New York City in 1914 and grew up in the South Bronx. His father ran a business making spats, and when they went out of style he switched to children's leggings. Alexander attended Columbia University, where he earned an undergraduate degree in 1934 and a law degree two years later. Because of the Great Depression, finding work as a lawyer was difficult, and he joined the family business instead of practicing law. Rather than focusing entirely on the garment trade, he began investing in New York and Florida real estate. In 1947 he became involved in the entertainment field, acquiring the rights to old films produced by Universal Studios, and three years later he and his partners began making their own movies.

During this period he bought a more mundane business, Ansbacher-Siegel Corp., a Staten Island manufacturer of organic pigments, which were used to make inks, paints, plastics, cosmetics, and textiles. One of its customers was American Molding Powder & Chemical Corp., which Alexander added to his portfolio in 1954. He would then take control of Sun Chemical Corp. in 1957 and merge it with Ansbacher-Siegel. Sun eventually changed its name to Sequa Corporation and exited the ink and pigment business in the 1980s in favor of aerospace. The running of it consumed much of Alexander's time, as did his real estate speculation and other business interests. Because he was always striving to become the market leader in whatever industry he was involved, Alexander supported American Molding Powder & Chemical, investing profits to grow the business. But he essentially took a hands-off approach, allowing the executives he hired to run the show.

In 1958 the man who would lead the company for close to two decades, David Weil, joined American Molding Powder & Chemical. After a three-year stint in the military he earned a degree from the City College of New York, then became an export manager at Raven Mills Corp. in New York City. At first he was also an export manager at American Molding Powder & Chemical, then from 1960 to 1970 he served as executive vice-president and general manager. In 1970 he became president and chief executive officer. When Weil went to work for the company it was doing around $450,000 in annual sales, but with Alexander's backing the company began to produce steady growth.

In 1964 the company opened a plant in Mount Vernon, New York, which also housed its headquarters. A year later the name changed to Ampacet, an acronym drawn from American Molding Powder & Chemical Corp. At this stage its primary business was in plastic compounding and scrap and regrind recycling. Yearly sales had reached the $1 million level, but in the mid-1960s Ampacet's management realized there was little future in scrap recycling and decided to shift the company's focus to color compounds and concentrates. It was a move that took advantage of new developments by pigment makers, such as sister company Sun, which produced pigments that were more forgiving when made in concentrates. Moreover, resin manufacturers increasingly turned to outside compounders like Ampacet that devoted their resources to color rather than maintain an in-house unit with less capability. The most important customer for Ampacet as it completed its transformation was Mobil Chemical Co., a large producer of polyethylene film, used to make trash can liners and other products. The film market was the most important reason that Ampacet prospered.

New Capabilities in the 1970s

Ampacet added other capabilities as well. In 1969 it developed color concentrates for extrusion coating, and a year later began to produce fire retardant concentrates. In 1976 it introduced multifunction concentrates and in 1979 began offering single pigment concentrates for engineering products. To serve its expanding business, the company opened its Terre Haute plant in 1972, and another manufacturing facility in DeRidder, Louisiana, in 1977. By 1980, 15 years after switching its focus from a $1 million a year plastic scrap business to the production of concentrate pigments, Ampacet had grown annual sales to $40 million.

The 1980s was a decade of international expansion for Ampacet and reorganization for its domestic manufacturing operations. In 1987 the company opened a manufacturing facility with 30 million pounds of capacity in Messancy, Belgium, to begin production for the increasingly important European market. The technology employed in this plant served as a starting point for a major $20 million expansion at Terre Haute, work that was completed in 1988 and 1989. The result was a pair of fully automated production lines and an additional 120 million pounds of capacity. Terre Haute now relied more heavily on statistical process controls, the need for which had increased as customers demanded more exact specifications in concentrate formulations. The plant's automated production lines could now store a customer's formulation to replicate exact batches of concentrate. As the Terre Haute lines became operational, the Mt. Vernon plant, Ampacet's oldest, was gradually decommissioned, and work was sent to Indiana as well as to a newer Louisiana facility. In addition, in 1987 the company headquarters was moved from Mt. Vernon to Tarrytown, New York. Ampacet closed the decade well entrenched in North America, gaining market share in Europe, and beginning to turn its attention to the Far East as an avenue for future growth. Malaysia and Indonesia looked especially promising because of their emerging plastics industries.

A key to the future would also be the ability to offer new and innovative solutions to customers, whose needs had grown more complicated because of more stringent environmental regulations. To beef up its research and development capabilities, Ampacet in 1990 opened the Corporate Technical Center in Terre Haute. By the early 1990s these efforts were a factor in the company's ability to maintain a 10 percent annual growth rate and top $300 million in revenues. In addition, in many industries, like automotive, metal parts were increasingly being replaced with plastic, which would require the services of colorant and pigment companies. Other growth markets for colorants included wire and cable, vinyl building products, and synthetic fiber. To improve profitability, Ampacet also began to offer high-performance specialty additives and high-gloss colors that commanded a much higher price than could commodity items. In 1995 Ampacet opened its $17.5 million Cartersville, Georgia, plant north of Atlanta, adding to its ability to enter new areas. It began offering pigment concentrates to color nylon, polyester, and other synthetic fibers. Cartersville also allowed Ampacet to become more involved in the engineering plastics market, in which previously the company had only been able to serve polypropylene.

Going Global in the 1990s

In addition to new products, Ampacet in the 1990s was eager to become more of a global company, in essence to follow the market for its products. By the middle of the decade North America accounted for 35 percent of the world masterbatch market, followed by Europe with 33 percent, Asia with 27 percent, and other markets with 5 percent. Ampacet claimed a 13 percent market share on world masterbatch sales and established a target of 20 percent within five years. A sales target of $700 million to be reached by 2002 also was set. In 1993 Ampacet established a sales office in Kuala Lumpur. Ampacet then bolstered its position in the European market with the 1996 acquisition of Tisco S.R.L. in Telgate, Italy, maker of engineering grade thermoplastic compounds. In addition, Ampacet forged alliances with Pomini S.R.L., an Italian maker of continuous extrusion and compounding equipment, and with the Israeli firm of Kafrit Industries to develop and sell value-added agricultural film masterbatches. Ampacet was especially active in 1998 when it created a joint venture in Argentina with Biblos Color to serve the fast-growing South American market. Ampacet also acquired a Canadian company in 1998, Baron Colour Concentrates Ltd., a masterbatch supplier that mostly served the flexible packaging sector. In addition, Ampacet added 33 million pounds of capacity to its Belgian plant. Also of note in 1998 was David Weil stepping down as Ampacet's president, turning over the position to David DeFalco, who had spent eight years heading the European operation from Luxembourg. At this stage the company had reached $400 million in yearly revenues. Three years later Weil retired, making DeFalco CEO of the company as well.

Ampacet completed a major acquisition in 1999, buying Equistar Chemicals' Color & Compound division. Ampacet picked up manufacturing plants in Crockett, Texas, and Heath, Ohio, and added 160 million pounds of capacity. The acquisition also brought Ampacet into the compounding business, which primarily served the wire and cable industry. Also of great importance was the addition of Equistar's Cincinnati research and development center, a smaller affair than Terre Haute but one that was well equipped and employed five researchers experienced in developing concentrates for the wire and cable, foam, and rotational molding markets.

Ampacet opened a plant with 30 million pounds of capacity in Thailand in 2000 to produce biaxially oriented polypropylene (BOPP) films similar to cellophane used in food and snack packaging, which was a strong product area in the region despite problems in the Asian economy. The company also expanded capacity in its Italian plant and in 2003 opened a blow molding facility in its Heath plant. A poor economy that emerged in 2001 hurt business somewhat, leading to a minor reduction in Ampacet's worldwide workforce, but cutbacks were essentially accomplished through attrition rather than layoffs. The company also underwent a minor restructuring of reporting responsibilities, so that regional managers more directly reported to DeFalco. The company's business was strong enough that it was able soon to complete three acquisitions and begin work on expansion projects at six other plants. In position to take advantage of a poor global economy, Ampacet bought Polimaster S.R.L. of Italy and PolyColour Ltd. of England, both of which produced specialty color concentrates for the blow molding and injection molding markets, and Corland of Brazil, maker of commodity-grade white concentrates. Ampacet also built a replacement plant in British Columbia, expanded its facility in Thailand, and broke ground on a new plant in China, scheduled to open in late 2005 or early 2006. On the research side, Ampacet continued to focus its efforts on increasing the number of higher-margin, value-added products the company offered.

For half a century the company had prospered under the private ownership of Norman Alexander, free from the pressures that accompany a public company. Although Alexander turned 90 in 2004 there was little concern about the fate of Ampacet after his death. His estate was set up to allow Ampacet to continue conducting business in the way that had proved so successful for so many years.

Principal Divisions: North America; South America; Europe; Asia.

Principal Competitors: A. Schulman, Inc.; Ciba Specialty Chemicals Holding Inc.; Spartech Corporation.

Further Reading:

• Bernstein, Peter W., "Norman Alexander Just Won't Go Away," Fortune, January 28, 1980, p. 82.
• Esposito, Frank, "Alexander Shapes Ampacet Present, Future," Plastic News, July 15, 2002, p. 13.
• Schmitt, Bill, "Ampacet Weathers a Slowdown," Chemical Week, October 2, 2002, p. 37.
• Tullo, Alex, "Ampacet Pushes for Aggressive Growth," Chemical Market Reporter, June 28, 1999, p. 4.

Source: International Directory of Company Histories, Vol.67. St. James Press, 2005.

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