The Top 100 Chemical Distributors
By Staff -- Purchasing, 5/6/1999
For the fourteenth year, the CPI Edition of Purchasing Magazine presents the annual rankings of the Top 100 North American chemical distributors. This annual compilation and analysis of data is based on a survey of chemical distributors and is part of our ongoing effort to serve the informational needs of purchasing professionals in the chemical and process industries.This year, for the first time, distribution sales of plastic resins are counted in the annual rankings (see box). The addition of plastic resin sales has resulted in a change at the very top of the distributor rankings.
Ashland Chemical is now the top-ranked North American chemical distributor, with total 1998 distribution sales of $2.7 billion. Last year, Ashland was ranked #2, with 1997 sales of $1.53 billion. Sales of plastic resins comprise about 48% of Ashland's total distribution sales.
Note that Ashland recently was reorganized into two separate divisions: Ashland Distribution Co. and Ashland Specialty Co. According to David D'Antoni, senior vice president of Ashland, Inc., the split is not a structural or operational change, and "customers won't notice a change at all in operations. They will continue to get the same good service."
Van Waters & Rogers, #1 last year and most of the years that Purchasing's CPI Edition has been ranking distributors, fell to #2 this year, with 1998 distribution sales of $1.9 billion, up slightly from 1997 sales of $1.85 billion. Van Waters & Rogers' ranking was affected by including plastic resin sales in the rankings; VW&R has no sales in this area.
Another national distributor helped by our rule change this year is Ellis & Everard (US Holdings) Inc. E&E moved up from #4 in last year's rankings--with 1997 distribution sales of $700 million--to #3 this year, with 1998 sales of $900 million. Twenty-percent of E&E's distribution sales are comprised by plastic resin sales. Last August E&E acquired Performance Polymers, a $180 million/year distributor of plastic resins. Last year E&E also acquired The Truesdale Co. (Brighton, Mass.), which reported 1997 sales of $36.6 million.
This year ICC Chemical Corp. came back into the rankings at #7, with $480 million in '98 distribution sales. ICC declined to participate in our survey last year.
Other notes to this year's rankings:
* In addition to the acquisition of Truesdale by E&E, there were other acquisitions of regional distributors by nationals. Last year Ashland Chemical acquired Inland Leidy, which was ranked #76 last year with '97 sales of $27 million; and #6 HCI USA Distribution Companies Inc. acquired Worum Chemical, which was ranked #47 last year with '97 sales of $52 million.
* Holtrachem was acquired by a company called Basic Chemical Solutions. The Holtrachem main office declined to participate in the survey this year. Other companies that declined to participate were L.V. Lomas Ltd., which was ranked #23 last year with '97 sales of $85.1 million; and Young Chemical, which was ranked #73 last year with '97 sales of $28.8 million.
* Despite repeated attempts, we were unable to receive sales and other data from several distributors who were ranked last year. These include Biddle Sawyer (#21 last year with '97 sales of $100 million); K.A. Steel Chemicals (#30 last year with '97 sales of $65 million); Gallard-Schlesinger Industries (#45 last year with '97 sales of $53 million); McCullough & Benton (#89b last year with '97 sales of $17.5 million); and ChemServ Inc. (#98a last year with '97 sales of $13 million).
Distribution goes global
For several years we've been hearing from buyers in many industries that one of their long-term strategic supply goals was to have a truly global purchasing approach. Now we're beginning to see some signs of strong action in globalization, both by large purchasers and large distributors.
As you can read in the story on page 70, #3-ranked Chemcentral Corp. has entered into an alliance with Hayes Chemical of the U.K. and Penta, which distributes chemicals throughout continental Europe with 10 distributor partners. The "Global Chemical Distribution Alliance" was formed with the intent to simplify service, streamline business processes, and reduce overall costs for multinational customers, according to Bill Hough, VP and director of marketing at Chemcentral.
The alliance will enable Chemcentral and its partner distributors to coordinate suppliers, pricing, delivery, and warehousing. Global customers will deal with one contact point, depending upon customer location. Electronic commerce will be used as much as possible, according to Hough, who also points out that global pricing will not be quoted. "There are too many factors influencing specific markets in various parts of the world," explains Hough.
Hough notes that other Chemcentral joint ventures in Latin America, Mexico, and India also were efforts to improve service for global customers.
Expect more globalization efforts by major chemical distributors. Large buying organizations of all types of products, including chemicals, are looking to consolidate distribution supplies as much as practical. Witco Corp. is an example of such a company.
In April, 1997, Witco completed a major step in an effort to consolidate distribution supplies in North America. Brenntag--formerly Soco--was chosen to supply 12 Witco locations.
"The program has been a great success," says David Jenne, manager of purchasing operations for Witco's performance chemicals group. "In addition to taking several percentage points off the cost of raw materials, we literally took hundreds of thousands of dollars out in administrative costs by going to consolidated monthly bills at each location." Witco now wants to have Brenntag manage inventory and automatically replenish when needed, a project that's slated for this year.
When corporate management saw the success of the consolidation program, a preliminary proposal was created for European supplies. Jenne's counterparts in Europe are creating a consolidated list of all the materials they buy through distribution. "We're hoping to get over to Europe in June, 1999," says Jenne. "We'll present the U.S. program to the European sites and aid them in setting the program up there." The ultimate goal is to create a global supply agreement with Brenntag.
Jenne expects savings in Europe to surpass savings achieved here. "A lot of what is procured in Europe is done on a quarterly basis," he says. "We will aim for longer-term contracts. There probably is more low-hanging fruit in Europe than there was in the U.S."
Jenne gives Brenntag a lot of credit for making the program successful thus far. "The Brenntag people have been real easy to work with," he says. "They have tailored the program to meet our needs."
A change: Plastic resins sales count!
For the first time, sales of plastic resins are included in our distributor rankings. The reason for this is simple: Plastic resin sales are included in Standard Industry Classification (SIC) 28--chemicals and allied products. There is no logical reason not to include sales of plastic resins.
The original intent of not including plastic resin sales in the rankings was to exclude distributors who handle onlyplastic resins. We have therefore created a new rule: Plastic resins sales are included, so long as they don't comprise more than half of total distribution sales. Those who closely track the annual chemical distributor rankings published by the CPI Edition of Purchasing should note this rule change.
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