BizAims

OM Group looked forward to reaping the benefits of increased capacity, a strategic partnership, and acquisitions in the mid- to late 1990s. In 1994, the company invested $19.7 million in a physical plant, increasing its capacity to produce specialty chemicals vital to the manufacture of rechargeable nickel-hydride and lithium-ion batteries for the growing array of portable electronic cellular phones, laptop computers, and cordless tools. The mid-1995 creation of D&O Inc., a Japan-based joint venture between OM and Dainippon Ink & Chemicals Inc., was a key component of this strategy. OM hoped that its cooperative enterprise would capture 15 percent of the $470 million Japanese market for cobalt-nickel inorganic compounds by the dawn of the 21st century.

OM Group also boosted its capacity to manufacture polyvinyl chloride (PVC) heat-stabilizers. These specialty chemicals composed of barium and calcium zinc were an environmentally correct additive used to help PVC plastics retain their color and strength during manufacturing. These highly specialized substances ended up in mundane household items such as shower curtains, garden hoses, and toys. In the fall of 1995, OM entered the chemical recycling industry through the acquisition of Hecla Mining Co.'s Apex mining division in Utah. Born of the 1976 Resource Conservation & Recovery Act, companies like Apex recycle used electroplating solutions and chemical and petroleum catalysts and extract the valuable cobalt, nickel, and other metals. These materials can then be reused in (and resold to) the oil refining and electroplating industries.

Although OM's array of products had increased to more than 350 items for more than a dozen industries by the mid-1990s, more than two-thirds of those chemicals were still derived from the company's core metal, cobalt. An estimated one-fifth of OM's revenues continued to be derived from paint ingredients and another fifth was generated by petroleum refining catalysts. The remaining 60 percent of sales was distributed among the plastics, ceramics, rubber, glass, and adhesives industries.

After nearly a quarter-century with the company, James Mooney set up an orderly plan of succession with the promotion of North American operations head Eugene Bak to the dual offices of president and chief operating officer in 1995. Despite all of the changes endured by the company and the industry, this realigned management team faced many of the same challenges and enjoyed several enduring corporate strengths nurtured throughout OM's history. Potential pitfalls included high capital expenses; ongoing turbulence in the cobalt market due in part to upheaval in supplier countries like Zaire; and currency fluctuations, especially against the Finnish markka. OM Group faced these hazards armed with high levels of vertical integration and productivity, a conservative balance sheet, and a zeal for innovation.---Source: referenceforbusiness.com