Issue Date: March 8, 2010
Always Looking Ahead
Leaders of the U.S. chemical industry will gather in New York City this week to celebrate one of their own: Michael E. Campbell, chairman, president, and chief executive officer of specialty chemical maker Arch Chemicals. Campbell will receive the Chemical Industry Medal from the Society of Chemical Industry’s America International Group at a dinner in his honor.
Campbell is the 77th recipient of SCI’s medal, which he will receive just as the economy and the chemical industry start to recover from a bruising slowdown. But dinner attendees won’t hear words of woe from Campbell. He tells C&EN he is confident the chemical industry will continue to thrive domestically and internationally as long as its business and research leaders embrace innovation and change.
London-based SCI advocates the application of chemistry and related sciences for the benefit of society. The America International Group awards the Chemical Industry Medal to recognize leaders whose foresight and contribution to applied chemistry have been responsible for growth of the chemical industry.
Andrew N. Liveris, SCI America chairman and CEO of Dow Chemical, explains that Campbell will receive the award because he “has not only successfully guided his company through times of significant change, but he has been a tireless spokesman for the chemical industry, encouraged education, and provided perspective on U.S. trade policy.” Recent medal recipients include retired Praxair chairman Dennis H. Reilley, former Rohm and Haas CEO Raj Gupta, and Huntsman Corp. founder Jon M. Huntsman.
Campbell, 62, is a former chairman of the American Chemistry Council, the U.S. chemical industry’s leading trade group, where he still serves on the board of directors. In addition, he is currently serving the second year of a two-year term as chairman of the National Association of Manufacturers, the primary voice of the U.S. manufacturing sector. He also serves as an adviser to the Office of the U.S. Trade Representative.
Campbell has led Arch since 1999, when it was spun out of the diversified chemicals, ammunition, and metals maker Olin. At Arch, he has overseen a firm that has grown internally and through acquisitions from $900 million a year in sales to $1.4 billion 11 years later.
As deeply engaged as he is today in the chemical industry, Campbell didn’t originally plan on a career there. But when opportunities to change direction opened up, he embraced them.
A native of Portsmouth, N.H., Campbell went to college to become a lawyer. He received a bachelor’s degree in 1968 from the University of New Hampshire, Durham, where he majored in history and took a lot of literature courses “because command of language is so important for a lawyer.”
He subsequently joined the Navy, where he picked up leadership skills that would serve him well in the future. Next came law school at George Washington University, in Washington, D.C. After graduating in 1974, he got a job at Howrey, a firm that specializes in antitrust law.
Antitrust law requires a deep understanding of market dynamics, Campbell says. He and his colleagues helped open up the copier market, which Xerox then dominated, for Japanese clients. He also defended oil firms such as Shell and Texaco against a variety of Federal Trade Commission and private lawsuits. While working at Howrey, he got his first inkling that he “really enjoyed business,” he says.
In 1978, after four years with Howrey, Campbell joined Olin’s chemical group as an attorney defending the firm’s HTH-brand swimming pool chemicals, which were then the subject of a number of lawsuits. Improperly stored oil might leak into pool chemicals stored in a garage, for instance, and the subsequent thermal reaction could cause a fire.
“They were small cases, but we wanted to make sure we defended them in a consistent fashion,” Campbell remembers. Arch still sells HTH, he notes, but today’s product is buffered to help prevent fire, and its packaging and labeling are better than they were.
Campbell eventually headed the chemical group’s legal department. As a way of gaining business experience, he also took on responsibility for the group’s human resources function. In the mid-1980s, John W. Johnstone Jr., Olin’s CEO, spotted Campbell and helped advance the younger man’s career.
Although Campbell says Johnstone “was absolutely key to my success,” he almost turned down Johnstone’s offer to lead human resources for all of Olin because he wanted a business position. But Campbell quickly realized Johnstone’s offer would boost his career, so he took the job. There he also did strategic work for the office of the chief executive and advanced his knowledge of Olin’s business.
In 1994, Campbell got the chance to head Olin Microelectronic Materials, a supplier of chemicals to semiconductor makers. “Management saw that position as an opportunity to put me in charge of a complex global operation. They saw it as a challenge for me and a test of my skills,” he says. The business included two joint ventures: one with Ciba, now part of BASF, and the other with Japan’s Fujifilm.
“It was a fascinating, complex, fast-paced position, and I really enjoyed that opportunity,” he says. He moved on in 1995 to become executive vice president of Olin. He also became part of the team, including Donald W. Griffin, then Olin’s CEO, that decided in 1999 to spin off Olin’s specialty chemical business in a bid to create shareholder value.
Griffin stayed with Olin to manage the remaining ammunition, brass, and chlor-alkali businesses. Campbell, then second-in-command at Olin, was chosen to head Arch, the name chosen for the specialties business. “We could have recruited someone from the outside, but you are better off with the devil you know than the devil you don’t know,” he says modestly.
Many people outside of Arch thought the firm “would be picked off very quickly” by a larger company, Campbell says. At the time Arch had what he calls “a huge diversity of businesses.” They included not only biocides and pool chemicals, but also microelectronics, performance chemicals such as polyols, and a sulfuric acid regeneration business.
Back in 1999, Campbell estimates, 30–40% of Arch’s businesses were biocide-related. “We felt megatrends were going to favor biocide-related businesses. So we set about buying more biocides businesses and selling off non-biocides-related businesses,” he says. Today, the firm is about 80% biocides. And any acquisitions in the future are likely to be biocides-related, too, Campbell says.
The firm sold the sulfuric acid business in 2003 and the microelectronics business to partner Fujifilm in 2004. It recently agreed to sell its Italy-based furniture coatings business to paint maker Sherwin-Williams. Although he says it was emotionally difficult to exit microelectronics, from a business point of view it was an easy decision to make. Fuji had deeper pockets to make the investments in technology that the business required, he says.
Along the way, Arch acquired U.K.-based Hickson Chemicals in 2000, entering the business of chemicals used to pressure treat wood to stave off rot. That same year, Arch bought Brooks Industries, giving it a stake in the personal care ingredients market and allowing it to extend its biocides expertise into cosmetics. In 2004, Arch acquired Avecia’s biocides business. And in 2008, the firm acquired Advantis Technologies, a pool and water treatment chemicals business, from Rockwood Holdings.
The economic slowdown caused Arch’s sales to shrink by about 7% to $1.4 billion last year; however, Campbell says, “the breadth of our geographic footprint reduced the risk.” More than half of the firm’s sales, employees, and assets are outside North America, he points out. Excluding unusual charges, earnings were down by 23%—better than the average drop of nearly 40% for 20 U.S. chemical firms tracked by C&EN (Feb. 22, page 21).
And even though Campbell expects Arch’s overseas ventures and sales will grow, he is still bullish on the U.S. as a manufacturing base. “The U.S. is evolving into a more high-tech, more value-added manufacturer,” he says. But, noting his position as chairman of the National Association of Manufacturers, he says, U.S. government officials should take steps to strengthen manufacturing by “coming up with a tax regime that doesn’t put us at a disadvantage.”
Lower corporate taxes, Campbell argues, would remove the advantage companies in other developed countries have over their U.S. competitors. And lower taxes, he argues, would encourage manufacturers to expand in the U.S., thus increasing government revenues. Also helpful, he continues, would be U.S. ratification of trade agreements negotiated with Panama, Colombia, and South Korea.
For U.S. chemical manufacturers, and especially for midsized specialty chemical firms, Campbell says, the future depends on innovation. As individuals and organizations, “we need to embrace innovation as a core value.”
For Arch, innovation “is going to be a huge part of our future.” The emphasis is not going to be on big spending for “blue sky” research but on “finding new applications for existing technologies and bringing in new technologies that reinforce our existing core competencies.”
As an industry, Campbell says, “we’ve done an excellent job in terms of R&D investments.” He points out that the industry’s insulation products save energy and reduce carbon emissions. Lightweight plastics do the same. But midsized firms like Arch can’t compete with deep-pocketed chemical industry majors like Dow, DuPont, and Honeywell, which can afford big R&D budgets, he notes. “For us, the challenge is finding a more cost-effective way to do it.”
That approach could include reaching out to companies that, in Arch’s case, have technology that might be useful in biocides but that is not used in that application. In fact, Arch just struck such a deal to develop a Syngenta crop fungicide for paint and coating applications.
This type of approach could also include outreach to start-ups by providing them with seed money, signing licensing deals with them, or even acquiring them. And it could include expanding work with academic institutions doing cutting-edge research. “We want to make sure that we open our minds to technology that exists outside the formal R&D function within the company,” Campbell says.
If individuals and corporations don’t innovate throughout their lives, they will not be able to deal with changes that come their way, Campbell says. “Do you embrace innovation or do you fight it? Fighting change is not going to succeed in the long run. So you might as well embrace it,” he says.
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