Yushiro, QualiChem Form Partnership

Japan-based Yushiro Chemical Industry Co. and American metalworking fluid supplier QualiChem Inc. announced an agreement yesterday for Yushiro to acquire a stake in QualiChem and for the companies to help each other enter new markets.

QualiChem officials confirmed that Yushiro received Qualichem stock but declined to say how much.

Described as a global partnership, the deal will provide both companies with sales and distribution channels into new markets and expand on each others research and development efforts.

Yushiro is the largest metalworking fluids supplier in the Asia-Pacific region, and one of the largest globally. Yushiro has strength in Japanese automotive, which is a hard market for most companies to penetrate, QualiChem Global Marketing Manager John Wiley said in a phone interview. The Tokyo-based company also supplies fluids to the aerospace, metals, mining, machinery, die cast, solar, electronics and glass industries.

QualiChem, which is based in Salem, Virginia, is a metalworking fluids and water treatment chemical developer and manufacturer. Its metalworking fluids segment makes up 80 percent of the companys revenue and water treatment chemicals the other 20 percent. Our approach to the market has been innovation. The [metalworking fluids] industry had stagnated from a technology standpoint, and we stepped in and innovated and became one of the fastest-growing companies in the industry, Wiley said.

Yushiros interest in the agreement is to increase sales in North America. QualiChems sales are largely in North America, but it has no Japanese customers. One of the key aspects of this deal was how little overlap there will be between our businesses, which is uncharacteristic of partnerships in our industry, he explained.

Sales growth is expected by the synergies brought together through Yushiro product sales utilizing QualiChems sales network in the U.S., said Yushiro Chemical Industry President and CEO Eiichi Ogo in a press release from both companies.

Wiley said the partnership will also provide QualiChem with sales and distribution channels into the Asian, South American and Indian markets.

Yushiros extensive R&D capabilities and complementary sales channels will help us to better serve our existing customer base, Qualichem President Glenn Frank said in the press release. Additionally, Yushiros twelve manufacturing plants throughout Asia, North America and South America will provide immediate entry into new markets for our metalworking fluids and water treatment products.

Though metalworking fluids is QualiChems main revenue stream, the companys water treatment segment will also benefit from the use of Yushiros sales and distribution channels. This water treatment market in the U.S. and globally is projected to grow significantly, and we look forward to working with QualiChems Water Treatment team to expand its manufacturing base globally through Yushiros existing network, said Yushiro Manufacturing America Inc. President and CEO Takuya Ishikawa.

Frank and QualiChem Executive Vice President Dennis Butts will retain their current positions as part of the deal.