It was 1926 in the North East of England when Tommy Swan had his eureka moment. He was packing down slag waste from iron production with his steamroller when he realized that road tar could be replaced with a cheaper mixture of tar and slag.
He launched a road materials business, and then sold his first chemical: a surfactant named Nostrip for ensuring that paving materials adhere to the ground. Almost 90 years later, his company, Thomas Swan, has evolved into a specialty chemical firm with annual sales of about $43 million, a workforce of 168, no debt, and one owner: Tommy’s grandson Tom Swan.
Thomas Swan makes chemicals such as tire additives, agrochemicals, and cosmetic ingredients at a single site in Consett, England. It has a reputation for being a pioneer of risky new technologies that many larger firms wouldn’t touch with a barge pole. Harry Swan, Tommy’s great-grandson, who became managing director of Thomas Swan in 2006, is confident that one of the firm’s biggest technology bets, a project started in 2002 to make carbon nanomaterials, will help achieve a goal of doubling the firm’s sales in the coming years.
“We love innovation and new technologies, and if we think they are interesting, we will back them,” Harry Swan says. In recent years, Thomas Swan has created or backed several start-ups—or step-outs as the family calls them—including a photonics and optical switching business. Some were sold off, and some failed. “But on the whole, we have been more successful than not,” Harry Swan says.
In 2006, just as Harry Swan became managing director, he and his father, Tom Swan, who had led the firm for 33 years, decided to explore whether it made sense to sell the company and become a family-based angel technology investor instead. “The surprising answer that came back was that it was a good time to invest in chemicals,” Harry Swan says. “So we’ve stopped using the chemical business as a cash cow to fund step-out firms and made the chemical business the core priority with the majority of the profit being reinvested there,” he says. Today, the firm invests about 5% of its sales in R&D.
Thomas Swan still invests in start-ups, if its earnings allow. A recent example is an investment of almost $1 million for a majority stake in Cella Energy, an England-based hydrogen storage technology start-up.
In-house technology forays include the world’s first continuous chemical synthesis process to use supercritical carbon dioxide as a solvent. “It is an elegant process,” Harry Swan says. But it’s also a relatively expensive one, and the facility at the Consett site is currently mothballed.
The company hopes it will fare better with technologies for carbon nanotubes and graphene recently commercialized by its advanced materials business. “We’ve kept these going because there is plenty of opportunity there,” Harry Swan says. Even though the business now offers multikilogram quantities of single- and multiwalled nanotubes, it has yet to turn a profit. “We are still waiting,” he admits. Potential applications include printable electronics and energy storage. “We are now on the shoulder of commercialization. So either it will go up or it dies,” he says.
Harry Swan’s outlook for graphene is more positive. Last month, the firm opened a plant with the capacity to make up to 1 kg per day of “good quality” graphene, which is proving attractive to customers, he says.
“We initially held back investing in graphene because we didn’t see a scalable route or a method to stabilize the product once it was made,” Harry Swan says. But that all changed when Thomas Swan partnered with Trinity College Dublin professor Jonathan Coleman. Coleman’s simple but elegant approach is to “make graphene in the industrial equivalent of a food blender,” Harry Swan says.
Industry analysts have mixed views about Thomas Swan’s prospects. Paul Hodges, chairman of consulting firm International eChem, is confident that the company’s long-term approach to R&D investment will enable it to outgun many of its competitors. Thomas Swan’s nanotechnology and graphene businesses are “good long-term technology bets,” he says.
In the near term, however, there is oversupply of carbon nanotubes, and potentially also oversupply of graphene resulting from aggressive Chinese expansions, warns Ross Kozarsky, senior analyst at the technology consulting firm Lux Research.
Thomas Swan is also developing novel chemistries for its biggest-selling products, such as tire additives. “We’ve got a lot going on there,” Harry Swan says. The firm plans to develop biobased chemicals.
The company lost money during the 2008 recession. But with better market conditions, “we are making a healthy profit again,” Harry Swan says. The goal is to drive annual sales up to $100 million with a pretax profit margin of 12%. “We could sit back. But I am the custodian of the business, so I need to hand it on in better shape,” Harry Swan says. He is hoping that all his new technologies take off, so that he can pass a healthy company on to the fifth generation of Swans.