Market Topics

From Hen House to Penthouse


Little did Robert Cohen and his father know that the business they started in a converted chicken house in 1949 would grow into the largest producer of chlorinated paraffins and the second-largest liquid phosphite producer in North America, as well as a leading supplier of metalworking fluid additives.

Shortly after World War II, the Cohens bought 1,000 drums of distressed Army-surplus chlorinated paraffin for $1 apiece and sold the reclaimed material for a nice profit. By the time the surplus material ran out, they had an established customer base and purchased a small reactor to keep the business running.

Nearly 60 years later, Dover Chemical is a thriving enterprise that encompasses a 54-acre site in Dover, Ohio (about an hours drive south of Cleveland) and a six-acre site in Hammond, Ind. Dover and its New York City-based parent company, ICC Industries Inc., have followed a strategic course of expansion that includes acquisition, product development and investment in new plants and equipment to steadily grow the company.

Dovers acquisition by ICC in 1974 enabled us to grow from a regional business, concentrated in a five-state area, into an international company, said Dwain Colvin, who has spent his entire career at the company and became its president in 1999. They brought a stable ownership, willing to invest in long-term development, as well as a global infrastructure that opened markets for us around the world.

In the last five years alone, ICC has invested more than $50 million to increase plant capacity and install new equipment at the Dover, Ohio, site. Says Colvin, ICC has reinvested most of the earnings back into the company, allowing us to develop new products and build the capacity to manufacture them.

Building Blocks

To a large degree, Dovers growth has been fueled through the strategic acquisition of companies to both strengthen the chlorinated paraffins business and to diversify its product offerings. The acquisitions started in 1987 when the company acquired Neville Chemicals chlorinated paraffins product line. This was followed in 1992 with the purchase of Occidentals solid chlorinated paraffins business. Chlorinated paraffin is an extreme pressure agent widely used in metalworking fluids – from straight oils to semisynthetics to synthetics.

Dover expanded its metalworking product line in 1994 with the acquisition of DeMille Chemical, bringing a series of functional additives for metalworking fluids. The solid chlorinated paraffins offerings got a boost in 1997 and 2000 with the purchase of product lines formerly owned by Hoechst AG and OxyChem.

Then in 2002 and 2003, Dover scored a coup by acquiring Mayco from Castrol and Keil Chemical from Ferro Corp. The Mayco purchase broadened Dovers line of metalworking fluid products by adding sulfurized chemistry and functional fluids. The Keil acquisition added much-needed manufacturing capacity in the form of the Hammond site, since the Mayco acquisition did not include a plant. The deal also brought additional products that were compatible with the Mayco metalworking fluid additive line and further strengthened Dovers position in the North American market for chlorinated paraffins.

The latest deal came in 2005 with the purchase of the chlorinated paraffins business of Pioneer Chemical, its last North American rival. This deal also increased Dovers penetration into the rubber, plastics and paints industries, which use chlorinated paraffins as plasticizers and flame retardants.

As a result of all this activity, Dover is now the largest manufacturer of chlorinated paraffins, olefins and esters in North America, and the sole producer of resinous chlorinated paraffins outside China. Its brands, including Paroil liquid chlorinated paraffins, Chlorowax, Chlorez and Hordaresin resinous chlorinated paraffins, and Doversperse water-dispersed chlorinated paraffins, are sold around the world.

Despite Dovers aggressive acquisition strategy, it would be a mistake to attribute the companys success solely to buying market share. Dovers product development team has also been very active through the years, and the company has invested heavily in new plant capacity.

To help diversify its product line, Dover developed a line of liquid organophosphites in 1986 and solid organophosphites in 1990. The solid products are used in engineered plastics and polyolefins, while the liquid materials are used to stabilize vinyl during production.

As noted above, the company currently ranks as the second-largest liquid phosphite producer in North America, with its organophosphite plant and Doverphos product line. The 1997 construction of an on-site alkylphenol plant enables Dover to serve as its own supplier and to participate in the market with para-nonylphenol and other alkylphenols.

Dover recently built a new unit to manufacture Doverphos S-9228, a plastic additive with FDA and global approvals for use in indirect food contact applications. The company ensured an uninterrupted supply of raw materials for these products by building a para-cumyl/di-cumyl phenol plant in 2000. In addition, a blending operation allows Dover to offer various forms of Doverphos S-9228 in combination with other blend components. Further investments enabled Dover to expand its polymer additive offerings with Doverlube and Tri-Cal calcium and zinc metallic stearates in 2003.

Beyond Chlorine

New product development has also been part of Dovers growth strategy. The company has a long history of developing ways to address customer problems and to address changing industry needs.

The newest product is NCEP, a chlorine-free extreme pressure additive for metalworking fluids. Introduced in May at the STLE meeting and exhibition in Philadelphia, NCEP has been a hit with customers, Colvin says. Tests indicate that it outperforms chlorinated EP agents in machining operations, especially with hard-to-machine materials such as hard-chrome steels and titanium. NCEP is particularly useful in machining titanium, which is being more widely used in modern aircraft, because the metal is prone to stress-corrosion damage by chlorinated additives.

NCEP is the first unique product for metalworking fluids developed in many years, says Duong Nguyen, R&D senior chemist, and the man Colvin largely credits with its development. NCEP is used at a 10 percent treat rate in soluble oil and water-based metalworking fluids. Besides hard materials, it performs well on aluminum and softer nonferrous materials to reduce chip size and scuffing, tests show.

Don Stevenson, vice president technical, reports, In preliminary tests, NCEP increased draw bead performance by 60 percent. It outperforms chlorinated EP additives as well as phosphorus- and sulfur-containing additives, in terms of tool life and surface finish. This new chemistry can also be used in conjunction with phosphorus- and sulfur-containing additives to provide a performance boost.

Another recent product development is Doverlube DA-8506XS chlorinated methyl ester for drawing, stamping and machining fluids. The additive provides improved efficiency and lubricity with EP performance equivalent to that of chlorinated paraffins. It provides good adherence to metal surfaces, improved corrosion resistance and has no regulatory restrictions.

PIBSA – polyisobutylene succinic anhydride – is another new product area for Dover. The additive is used in dispersants, mainly for gear oils. Dover is also looking to develop specialty oil-based and water-based dispersants to disperse pigments in inks and coatings as well as powders in coatings.

Past and Future

When asked what were the biggest industry trends that Dover has been watching over the past 10 years, Curtis Lege, business unit manager, responded, Regulatory issues, or more precisely, perceived regulatory issues. Chlorine has been under attack for over 10 years, and it looked for a long time like the future would be chlorine-free. Lege has nearly 30 years of lubricants industry experience, and came to Dover in 2002 when it acquired Mayco.

During the 1990s, both the United States and Europe heard proposals to ban the use of chlorinated paraffins in metalworking operations, due to health concerns. However, consultant and former Dover employee David Rankin, of 36 Consulting Ltd. in Strasburg, Ohio, reports that evaluation of risk assessment data by the U.S. EPA resulted in only two regulatory requirements. First, short-chain chlorinated paraffin and olefin with C10 to C13 chain lengths at all chlorination levels are reportable under the Toxic Release Inventory (TRI), along with some 600 other chemicals. And second, short-chain chlorinated paraffin with average C12 chain length and 60 percent average chlorination level was determined to be carcinogenic and, therefore, requires a warning label. These requirements are applicable to only short-chain chlorinated paraffin. Longer chain length chlorinated paraffins, the bulk of Dovers product line, are not EPA listed.

Rankin goes on to explain that in the European Union, the only regulation concerning chlorinated paraffins is a manufacturing and use restriction on short-chain products in only two areas: Formulations containing greater than 1 percent short-chain additive cannot be used in metalworking fluids or in the leather industry.

In addition, all chlorinated paraffins, regardless of chain length, are undergoing health and environmental risk assessments under The International Council of Chemical Associations. Short-chain assessments are complete and carry the same manufacturing and use restrictions as in the EU. Mid-chain products (C14 to C17) are expected to carry a requirement for personal protective equipment (gloves) for workers handling oil-based metalworking fluids. Risk assessments for long-chain products are in progress.

Another major trend affective Dovers business is the move of metalworking facilities out of the United States, especially to Southeast Asia and China. In response, Dover has established a sales office in Shanghai, staffed by sales engineers charged with determining which products are suitable for these markets.

Showing the same determination that has fueled the companys growth over the years, Colvin says, Dover will follow our customers migration to maintain business, and once we develop a critical mass of sales to the area, we expect to locate a facility to manufacture and sell products in the local market.

He adds, We are looking for strategic acquisitions in the area and think that will happen in the next three to five years.