When Steven B. Hedrick was a youngster, the Kanawha County, W.Va., parks department treated him to science demonstrations at Union Carbide’s South Charleston research campus.
“I was a little boy on a yellow school bus, and we walked like ducks in a row into the cafeteria,” he recalls. “The guys in the white coats were up front and froze bananas and made clear liquids change colors.”
Hedrick, 43, went on to earn a degree in chemical engineering at West Point and become a cavalry officer before returning to West Virginia’s “chemical valley” to work for Lyondell and then Bayer. He now heads the Mid-Atlantic Technology, Research & Innovation Center (MATRIC), a nonprofit chemical contract research outfit based in the same R&D facilities that inspired him as a boy.
The chemical industry’s research presence in West Virginia is a shadow of what it was when Hedrick visited Union Carbide more than 30 years ago, but MATRIC has made steady progress keeping chemistry and chemical engineering alive in South Charleston. And Hedrick and company are eager to do more.
Carbide was already well established in the Kanawha Valley when it opened the research campus in 1949. Indeed, the petrochemical industry itself can trace its origins to Carbide’s construction of the world’s first ethylene cracker, in Clendenin, W.Va., in 1920.
For years, South Charleston was Carbide’s largest R&D center, employing more than 2,000 people and occupying 650 acres. In the half-century Carbide occupied the space, its scientists and engineers filed an estimated 30,000 patents.
Carbide’s Meteor ethylene oxide/ethylene glycol technology and its groundbreaking Unipol gas-phase polyethylene process were developed there, notes Parvez Wadia, MATRIC’s chief technology officer and a 30-year Carbide veteran. Carbide technologists in South Charleston also researched surfactants, oxo alcohols, polyethylene glycols, heat transfer fluids, ethylene amines, ethanolamines, and other chemicals.
In 2001, however, Dow Chemical acquired Union Carbide. Dow did its chemistry and engineering elsewhere and no longer needed such a heavy footprint in South Charleston.
Gradually Dow shed 150 Ph.D. scientists and 900 other staffers at the West Virginia facility. “It was a continuous downsizing, particularly where there were overlapping businesses between Dow and Carbide,” Wadia recalls. “There were highly qualified people that were either unemployed or underemployed.”
This brain drain was the impetus for Keith Pauley to found MATRIC in 2003. The firm originally worked out of a small office at the Charleston Area Alliance business incubator. Without access to labs, the first employees—Wadia was staffer number two—took on tasks that they could do using computers, pencils, paper, and their brains. Those jobs included technology assessments, consulting, computer modeling, and expert testimony in patent suits.
MATRIC began to occupy former Carbide laboratory space in 2005. Dow donated equipment such as glass distillation columns and provided some financial support. But other than the glassware and other small items MATRIC could salvage from Dow, the labs were barren.
“Most of the equipment was purchased based on retained earnings by doing projects,” Wadia says. “We had to bootstrap our way up one dollar at a time. There was no godfather out there that said, ‘Here are five fully equipped labs.’ ”
MATRIC learned how to scrounge for equipment. “Some of our customers today are amazed by how we can find used and reconditioned equipment at 10 cents on the dollar that serves their needs beautifully,” Wadia says.
The laboratory allowed MATRIC to take on small-scale work for customers, such as evaluating new processes or testing catalysts. In 2012, MATRIC got its hands on a former Union Carbide facility made for housing pilot plants. Now upgraded, the facility boasts infrastructure such as blowout walls, a process control system, steam, nitrogen, and waste remediation facilities. The company can run as many as 10 pilot plants in the building and is currently operating three.
Meanwhile, the former Carbide research campus has undergone broader changes. In 2010, Dow donated 258 acres to the state, and the site became the West Virginia Regional Technology Park.
MATRIC, spread out among three buildings, is one tenant.
Kanawha Valley Community & Technical College is another. West Virginia’s community college system just completed a technology center in the park. Marshall University graduate school programs are adjacent. Dow and its polymer technology affiliate Univation Technologies run labs and pilot plants nearby.
What MATRIC has amassed in only a decade is substantial. The company had $9.4 million in revenues in 2012. It had an operating surplus—analogous to net income in a for-profit firm—of $720,000.
The organization boasts a research staff of 100, a third of whom have Ph.D.s. The average researcher has 25 years of experience. Two on MATRIC’s staff, George Keller and Madan Bhasin, are members of the National Academy of Engineering.
Dow, Saudi Basic Industries Corp., Air Products & Chemicals, and ExxonMobil all have been clients. Greg Babe, the former head of Bayer MaterialScience in the U.S. and now MATRIC’s volunteer chairman, says MATRIC fills a niche created by consolidation in the chemical industry and subsequent cuts in R&D spending—the very mechanism that led to MATRIC’s formation in the first place.
“Many big players used to drive innovation and were out there developing new polymers and discovering new chemicals and processes,” Babe says. “A lot of that has been pulled back.”
MATRIC also gets smaller customers that need access to big-time facilities and experience. For instance, the start-up BioAmber tasked the company to develop a new separation process for biobased succinic acid.
“We had just established ourselves,” says BioAmber’s vice president of engineering, Dilum Dunuwila. “We had limited internal R&D capabilities for doing what we wanted to do, and the MATRIC facility came up.”
MATRIC worked for another firm—MATRIC officials won’t name it—with a microorganism that converts a renewable raw material into a specialty chemical. MATRIC helped it develop and pilot a process. The client has since won a Presidential Green Chemistry Challenge Award and is building a commercial-scale plant, Wadia says.
A Florida-based specialty chemical supplier, AKJ Industries, was looking for an economical side release agent—a chemical that prevents coal from sticking to the sides of railcars in the winter. MATRIC’s scientists were able to successfully tackle the problem in part because some of them had worked for Carbide, which had a strong aircraft and runway deicing business.
MATRIC will turn down business on occasion. For instance, one firm came in having already spent nearly $10 million on a project. “There were a lot of holes in the technology and smoke and mirrors in the way that the data were generated,” Wadia says. Moreover, he notes, the technology wouldn’t turn a profit even if it did work. The firm was disappointed but ended up bringing another project to MATRIC a few months later.
MATRIC has also spun off companies based on technologies it developed. The most famous of them is Aither Chemicals, which has a catalytic process for making ethylene and acetic acid from ethane. The company boasts that the process uses 80% less energy than steam cracking. In 2012, Aither set out to raise $750 million in capital for a plant, but it has been quiet since then.
Losses associated with subsidiaries were a drag on MATRIC’s balance sheets to the tune of $570,000 in 2012. And with prodding, officials acknowledge that they plan fewer spin-offs in the future. “Our focus is really on investing in our uncommon expertise and infrastructure to allow our innovation partners to mitigate risk and efficiently use capital,” says Greg Clutter, MATRIC’s chief operating officer. In other words, its core business is contract R&D.
MATRIC’s next phase of growth will further this end. It aims to occupy another former Carbide facility where it will be able to construct what Clutter calls “larger-scale, market-development-sized pilot plants.” Already, he says, MATRIC has toured the facility with three prospective clients.
Thanks in large part to former Carbide facilities and employees, MATRIC seems to be on a growth path. Yet CEO Hedrick bristles a bit when asked one too many questions about MATRIC’s Union Carbide heritage. He’s proud of the history but doesn’t want MATRIC to be seen as a living fossil.
“We are not racing back to the good old days,” Hedrick says. “The good old days are in front of us.”