Issue Date: March 12, 2012
As one of his first assignments as a young chemical engineer at American Cyanamid, David N. Weidman researched the market potential of a new technology for which top management had great hope. However, he and his colleagues found customers just weren’t willing to pay for it. Weidman’s job was to tell his bosses that if they went ahead they would likely lose tens of millions of dollars on a concept that customers weren’t ready for.
Weidman, now chairman and chief executive officer of Celanese, will receive the Chemical Industry Medal at a dinner in his honor on March 13 at the Waldorf-Astoria Hotel in New York City. He says bringing the bad news to his bosses helped shape his career. The lesson he took away from the experience, he says, was that “you don’t always get it right sitting in the corner office. The more information you have from customers and markets, the better decisions you make.”
Weidman, 56, earned a chemical engineering degree from Brigham Young University in 1978 and then an M.B.A. from the University of Michigan in 1980. But even before college, he says, his goal had been to “solve the problems of the world through the practical application of science.”
And it is because of the ability he developed to guide science-driven businesses through difficult circumstances that the Society of Chemical Industry’s America International Group selected Weidman as its medalist this year. “Dave Weidman has shown tremendous business leadership in an evolving, and often volatile, global economy,” says Stephanie A. Burns, chairman of the group.
Others who have received the medal, which recognizes leadership, foresight, and contributions to applied chemistry, include former Eastman Chemical CEO J. Brian Ferguson, former Arch Chemicals CEO Michael E. Campbell, and former Praxair CEO Dennis H. Reilley.
Weidman developed an interest in science when he was in high school in Brigham City, Utah. At that time he also started taking college classes at nearby Weber State University, in Ogden, including one in organic chemistry. The course led to a project studying the kinetics of an esterification process with a professor at Weber. As a result, Weidman became one of 40 finalists in the Westinghouse Science Talent Search. Today Intel sponsors the search, which recognizes outstanding scientific research by high school seniors.
His early success in science research set him in pursuit of a chemical engineering degree. However, he interrupted his studies to go on a two-year humanitarian and proselytizing mission in Japan on behalf of the Church of Jesus Christ of Latter-Day Saints. There he picked up a working knowledge of the Japanese language and an appreciation for Asian culture that he says helped him years later to expand Celanese’s business reach into Asia.
After completing his chemical engineering degree and M.B.A., Weidman went to work for American Cyanamid. Among the jobs he held was leading sales and marketing teams pitching Cyanamid products to customers in the water treatment, mining, paints and coatings, pharmaceuticals, and medical device industries. In 1990, he became general manager of the firm’s acrylic fiber business, competing against Monsanto, DuPont, and other then-big synthetic fiber makers.
At the time, textile makers were moving to China in droves because of lower labor costs. U.S.-based synthetic textile fiber makers were losing their customers. Weidman and his team found ways to reduce raw material costs, license Cyanamid technology, and increase exports.
The business went from being a money loser to a moneymaker in the four years during which he ran it, Weidman says. However, the textile industry was moving east, and Cyanamid wasn’t moving east with it. In 1997 Cyanamid successor Cytec Industries sold the fiber unit to Sterling Chemicals.
As a result, Weidman says, he learned another valuable lesson. “If your customer base shifts geographically, you have to shift geographically too.” Since he joined Celanese in 2000, the firm has beefed up its production base in Asia with an acetic acid complex in Singapore and an integrated chemical site in Nanjing, China. About 40% of the firm’s sales are now in Asia, up from “the low double digits” 12 years ago, he points out.
But before Weidman got to Celanese, he joined AlliedSignal, now Honeywell, in 1994 as general manager of the firm’s performance additives business. In 1995, he took over as general manager of its fluorine products business as the Montreal protocol altered industry dynamics. The international agreement set the stage for a shift from the chlorofluorocarbons (CFCs) widely used as refrigerants and foam-blowing agents to a new generation of fluorocarbons that were kinder to Earth’s protective ozone layer.
While others in the industry looked for drop-in replacements for workhorse CFC molecules, Weidman says AlliedSignal took a market approach. AlliedSignal scientist Ian Shankland, who won the 2008 Perkin Medal for innovation in applied chemistry, guided the design of replacements specifically for the needs of home air-conditioning, foam-blowing, supermarket freezers, and a host of other markets.
“Shankland was brilliant. He not only understood the molecule, but he also understood the market,” Weidman says. As a result, “AlliedSignal vaulted its position from an ‘also-ran’ in fluorine chemistry to one of two or three leading fluorine organizations in the world.”
Weidman says the experience taught him yet another lesson. “You have to spend time not just to understand the stated needs of the market, you have to understand the fundamental needs of the market too. The effort often involves people with strong technology skills as well as strong commercial skills.”
Weidman came to Celanese in 2000, a year after it spun out of Hoechst as a German firm. “The company was underperforming at the time,” Weidman says. “And I was always attracted to turnaround opportunities.” Weidman also saw a company that had much underlying strength with good market positions and strong technology in acetyl chemicals and high-performance engineering polymers.
At first he ran Celanese’s chemical operations. But then as chief operating officer starting in 2002, he was a significant player in the transaction that sold the company to private equity firm Blackstone Capital Partners in 2004. And he was also a significant player in another transaction less than a year later that took Celanese public again as a U.S.-based firm.
Celanese started as a U.S.-based corporation in 1918; Hoechst bought the company in 1987. “We needed to find a way to be domiciled in the U.S. again,” Weidman says, because of the easier U.S. operating environment.
Celanese considered a few ways to make the transition from Germany back to the U.S., including through a move to the U.S. or via a merger with a U.S.-based firm. “The fastest and surest way, and the least risky way for shareholders, was through private equity,” he says.
“We took a strategic plan to Blackstone a long time before the transaction went public,” Weidman says. With Blackstone’s support, Celanese made the transition to the U.S., strengthened its pension plan, and built up its assets in Asia. Blackstone also helped to put Celanese in a position to purchase businesses such as acetyl chemicals firm Acetex and ICI’s Vinamul Polymers emulsion polymers business.
For Weidman and Celanese, the Blackstone transaction was transformational, and the numbers prove it, he says. When he joined Celanese, its shares traded at $3.00 to $5.00, and annual sales were about $4.7 billion. Investors valued Celanese shares at $16 when it went public in 2004. And today the firm’s shares trade around $50, and sales are $6.8 billion.
One way that the world has changed significantly since Weidman started working in 1980 is that chemical companies compete on a global stage. “When I joined the industry, you could be strong in one region and weak in others,” Weidman says. “Today, that is a sure recipe for bankruptcy. Companies that are successful today are global.”
But a U.S. base of operations is still preferable to any other, Weidman says. “There’s no other business model in the world that is as successful at creating value as the U.S. model,” he says. He cites the entrepreneurial zeal of business operators, the availability of capital for new products and businesses, and “the way we reward innovation and innovators.”
So strongly does he believe in the U.S. model that a year ago he and his wife, Rachel, donated $10 million to establish the Weidman Center for Global Leadership at Brigham Young University’s Ira A. Fulton College of Engineering & Technology. “We have to graduate engineers who have global agility and are capable of leading. Being good at technology is essential, but it is not enough,” he says.
Weidman says he’s a strong believer in research that leads to world-changing technology. “Innovation research is core to Celanese’s strategy and is fundamental to who we are today and who we will be going forward,” he says.
One of the fruits of that research is TCX technology, unveiled a little more than a year ago, to make low-cost ethanol from coal or natural gas. Celanese plans to spend millions to build a developmental plant in Clear Lake, Texas, and commercial-scale ethanol plants in China using the technology.
Whereas other firms might slowly scale up a new process, Celanese is moving headlong into ethanol on the basis of Weidman’s belief in the transformational power of technology. “To me, TCX is an example of what technology should do. It should take science and solve problems that the world faces. And what greater problem do we face today than sustainable energy?” he asks.
Weidman promises other technology advances from Celanese soon, but he won’t be there to announce them. He will retire next month, to be succeeded by Mark C. Rohr, formerly CEO of specialty chemical maker Albemarle. Over the next three years, Weidman says, he and his wife will supervise 150 to 250 young men and women on a Mormon mission in the San Francisco area.
After that mission, Weidman says, he is likely to be involved in the chemical industry again. “My heart will always be in the industry,” he says. “After I complete my service, I’ll find a way of participating in the industry again.”
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