Quaker Weighs Ohio Expansion


Quaker Chemical has decided to consolidate blending in Detroit and Middletown, Ohio, and is leaning toward expanding the latter to make it the companys primary production facility in the United States.

An executive with the industrial lubricant supplier said yesterday that the company plans to make a final decision on the project by the end of this year and would complete the expansion within 18 months.

We still have a few hurdles to clear, but were certainly getting closer to deciding to expand Middletown plant, Vice President and Chief Financial Officer Neal Murphy said. This is really going to be our main facility for the U.S., so its a pretty big project for us.

Quaker Chemical has a small plant in California, but most of the metalworking fluids and steel manufacturing lubricants that it sells in the United States are produced in Detroit and Middletown. Murphy said the company wants to consolidate the latter two operations to gain efficiencies and streamline costs.

Management is considering a $30 million plan that would expand the Middletown plant from 40,000 square feet to 100,000 square feet and increase its workforce from 40 to approximately 85. If the company proceeds with that plan, it would close the Detroit plant.

The Middletown Journal reported last week that Quaker Chemical, which is based in Conshohocken, Pa., decided on Middletown after approval of a grant and loan from the state government and additional assistance from the western Ohio town. Murphy maintained that a final decision has yet to be made, but added that the company is leaning toward Middletown for several reasons.

We just acquired the Middletown plant four or five years ago, and we have room for an expansion there, he said. There is really no opportunity to expand in Detroit. Also, because this is going to be our main plant in the United States, we want a state-of-the-art facility thats centrally located for better logistics.

Quaker acquired the facility in early 2002 when it purchased the assets of United Lubricants Corp., the former owner, for approximately $14 million, according to Quaker’s 2002 annual report. Last year Quaker Chemical reported sales of $424 million and net income of $1.7 million.

According to the Journal, Ohio has approved a $3.5 million loan for the Middletown project and agreed to give a 55-percent tax credit for 10 years. In exchange, Quaker Chemical must promise to stay put for 20 years. Middletown has approved a 10-year tax abatement of 75 percent.

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