On Mars-Evans City Road outside Pittsburgh in rural Evans City, Pennsylvania, a sign informs drivers that litter cleanup is sponsored by BASF. True for 13 years, it’s no longer the case.
Litter removal is now in the hands of Callery, the revived name for a chemical facility set back on that quiet stretch of road. BASF, the world’s largest chemical company, acquired Callery in 2003 from Mine Safety Appliances (MSA) with big plans to grow it, but in the end it achieved little. Now a small, stand-alone operation controlled by private investors, Callery is out to prove that growth is still very much possible.
▸ Headquarters: Evans City, Pennsylvania
▸ Owner: Edgewater Capital Partners
▸ Founded: 1939
▸ Employees: 101
▸ Annual sales: Not disclosed
▸ Main businesses: Specialty boranes and alkyl metal alkoxides
▸ Claim to fame: Produces a reducing agent once used to make Pfizer’s Lipitor (reaction step is now conducted enzymatically)
When BASF paid $65 million for Callery, its executives were no doubt intrigued by the unique Evans City site. Callery calls itself the world’s largest producer of both alkali metal alkoxides and specialty borane complexes. Both types of chemicals are typically used by Callery’s customers as reagents in complex, multistep syntheses such as drug manufacturing. They are highly reactive, air- and water-sensitive compounds.
A visit to the plant on Mars-Evans City Road illuminates how the small Pennsylvania company achieved this unusual leadership status.
The two lines of business have roots in US government contracts. MSA formed Callery in 1939 to make potassium superoxide (KO2) as a source of oxygen for respirators. At the time, the US was dependent on Germany for KO2, and the US government tapped MSA to become a domestic source. In the 1950s, the government again turned to MSA, this time to produce n-hexyl carborane, a high-energy chemical being considered as a rocket fuel component.
Callery doesn’t produce KO2orn-hexyl carborane anymore. But thanks to these early contracts, Callery is the only US producer of potassium metal, made by reacting potassium chloride—a salt used mostly as a fertilizer—with sodium metal at extremely high temperatures. On a plant tour, Bill Atkins, Callery’s manager of product stewardship, likens the metal conversion to alchemy.
To make alkali metal alkoxides, also known as alcoholates, Callery combines potassium and other reactive metals with an alcohol. “We can take any metal and react it with any alcohol,” Atkins says.
The company is also the only US firm to make and cryogenically store diborane in bulk. Diborane is the starting point for specialty boranes such as methyl oxazaborolidine, otherwise known as the Corey-Bakshi-Shibata catalyst, used in the enantioselective reduction of ketones. Triethylborane, another key product, was originally used to synthesize the blockbuster Pfizer drug Lipitor.
Overall, about 75% of Callery’s sales are to the life sciences industry, and fully 80% of its output is exported.
In 2002, when MSA decided to put Callery up for sale, BASF saw a good fit. Callery’s alcoholates line would be a specialty complement to sodium methylate, a commodity alcoholate BASF makes as a biodiesel catalyst. And the German firm figured the boranes would aid its push into the pharmaceutical chemical business.
By all accounts, the acquisition went well—at first. Evans City became the North American headquarters for BASF’s inorganic chemical business, and several top executives set up shop there. “It was all centered here,” recalls Paul Bruzinski, a chemist who is senior global product manager for the alcoholates business at Callery. “We were fairly autonomous and could make a lot of decisions autonomously.”
But that changed with a 2013 global reorganization at BASF that, among other things, dissolved the inorganics business and transferred the Callery facility into the firm’s intermediates business. Seventeen people lost their jobs in Evans City, Atkins says, when BASF moved customer service and planning functions to another location.
At the same time, BASF’s customer focus waned, Atkins says. Several niche products were cut from the Callery catalog, and the emphasis shifted to more transactional sales of high-volume products. Meanwhile, BASF reversed course on its push into pharmaceutical chemicals, selling most of the business in 2015 to the Swiss firm Siegfried.
Callery gained a lot from the BASF years, Atkins emphasizes, including a heightened focus on plant security and process safety. But little cross-fertilization with the rest of BASF took place, and few capital investments were made. Over the 13 years that BASF owned Callery, its annual sales barely budged beyond the $30 million reported in 2003.
So employees weren’t surprised in 2016 when they learned that Callery had been sold again, but they were a little concerned that the new owner was a private equity firm, Edgewater Capital Partners. “Either they come in and strip you down,” Atkins says of private equity firms, “or they grow you through investment.”
So far, Callery executives say, Edgewater is falling into the growth camp. Atkins sees it in the kilogram-scale lab that is being installed in Callery’s pilot plant and in the new vacuum pan dryer that is going in at the alcoholates facility.
Under Edgewater, Bruzinski adds, Callery is reviving smaller-volume products that BASF discontinued. One of them, sodium tert-amylate, is coming back at the request of the pharmaceutical chemical maker CordenPharma.
Kevin Moos, sourcing specialist for CordenPharma’s Boulder, Colorado, facility, says the firm needed the intermediate to make a new cholesterol drug active for a pharmaceutical industry customer, and he found Callery happy to oblige.
CordenPharma’s customer was happy too, since Callery is charging less than the Chinese company that was its supplier. “A cost savings plus production in the US—it made everyone happy,” Moos says.
Harry Rathore, whom Edgewater hired in May 2017 to be Callery’s CEO, says such changes are just the beginning of what’s in store.
A PhD medicinal chemist, Rathore spent 30 years in the pharmaceutical chemical industry. He formed the specialty drug chemical company Polyorganix and stayed on for several years after Borregaard Synthesis acquired it. He also worked for the pharmaceutical services giant Lonza for almost 12 years.
For starters, Rathore says, Edgewater is injecting $5.6 million into Callery. About half has already been spent on productivity improvement measures and a reaction-automation system. The balance is going into projects such as the new kilo lab and pilot-plant enhancements.
Rathore says he sees a lot of opportunity to increase sales simply by being more proactive than BASF was. For example, one of Callery’s core products, methoxydiethylborane, is an air-sensitive liquid sold in cylinders. A generic-drug industry customer in India wanted a stabler, easier-to-handle solid, so Callery is pursuing a partnership to instead provide di(3-pyridyl)borane, which is two steps downstream in the customer’s synthesis.
Rathore, who was born in India and worked there for 4 years with Lonza, was recently in India to advance this and other projects. Thanks to such efforts, he says, Callery’s sales in India are on track to reach $5 million this year—triple what they were in the BASF era. Overall, he adds, the firm’s sales have grown at double-digit rates every year since the sale.
Rathore and Edgewater have a bigger plan up their sleeves as well. From his days in the drug services industry, Rathore says, he knew Callery as a supplier of reagents that are generally consumed while facilitating chemical transformations. One of his goals as CEO is to create a third leg of products with value of their own.
One such product is aluminum trihydride, an air- and water-sensitive reducing agent known as alane. The San Francisco–based start-up Ardica is developing an alane-containing hydrogen fuel cell as a lightweight alternative to lithium-ion batteries for powering mobile devices. Ardica raised $15 million in financing last year to scale up production of alane for use first by the US military and later by commercial customers.
Rathore says the US Department of Defense has allocated $25 million to develop commercially viable production of alane. A presentation released in April by an army development team suggests that demand for alane in soldier, ground-vehicle, and underwater-vehicle applications could reach 47,000 metric tons per year at a cost of up to $1 million per metric ton.
But alane isn’t currently manufactured in the US, and Rathore wants to change that. Working with Ardica, he wants to expand Callery’s capacity in Evans City for lithium borohydride, which is used to purify alane, and to build a plant for alane itself with the help of $7 million–$8 million that will be available from Ardica and the Department of Defense if pilot-scale production is successful.
Alane isn’t a sure thing, Rathore concedes. “The biggest challenge for alane is, ‘Can you scale up the process safely on a large scale and at a viable price?’ ” he says. “If we can, I feel comfortable that it will be commercial.”
Alane isn’t the only “third leg” project at Callery. The company is providing adhesives makers with samples of alkylboranes that are made nonpyrophoric by complexing with amines. When deblocked, the alkylborane becomes a radical initiator that can be used to make two-part adhesives for auto manufacturing and other applications. The firm is looking to apply its organometallic compound production expertise to make thin-film precursors for the semiconductor industry.
Callery also wants to do projects with two other Edgewater-owned chemical companies, Texas-based ChemQuest and Virginia’s DanChem. In general, Callery executives say, they want to extend the culture of safety and quality that prevailed under BASF while instilling a new culture of entrepreneurialism.
Edgewater won’t own Callery forever, Rathore acknowledges, but while it does, the goal is growth. “We swung the pendulum from the reactive approach of BASF to a proactive approach,” he says. “Right now they are supporting every way possible to grow this business.”