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Lubrizol puts big emphasis on personal care business: key acquisitions give the company a solid foundation in personal care.

IT'S A WIDELY STATED corporate mantra: "A commitment to personal care." A lot of companies pay lip service to this concept--executives at The Lubrizol Corporation prefer to pay cash. Two years ago, Lubrizol--a 75-plus-year-old, multinational corporation that produces additives and other fluid technologies for a variety of industries--purchased Chemron Corporation, a maker of specialty surfactants used in the formulation of products for the personal care industry. In addition, Chemron expanded its product portfolio last year with the acquisition of several product lines from Amerchol, including methyl glucoside derivatives, and lanolin and lanolin derivatives. Both moves support a grand plan to build a strong partnership with personal care companies.

"Several years ago, we realized that we had some strong fundamental core competencies in problem-solving and putting formulations together, as well as a significant global infrastructure that gave us competitive advantages," recalled Mark Sutherland, global general manager of personal care and president of Chemron, a wholly-owned subsidiary of Lubrizol.

This wealth of personal care materials and know-how will be housed under the Chemron name, as part of Lubrizol's strategy to expand its business into new markets, while applying its several decades' worth of knowledge and expertise in fluid technology.

"Chemron can bring new technology to the personal care business, especially in areas of surface interaction, rheology and emulsification," said Debra Light, marketing and business development manager, Chemron.

"For example, Chemron's Chemccinate emulsifiers enable formulators to create water-in-oil, oil-in-water or water-in-oil-water (WOW) emulsions, which is significant because that allows our customers to formulate with ingredients that might otherwise be incompatible."

Big Presence in Hair and Skin

Executives say the acquisitions give Chemron a solid foundation in skin, hair and sun care. For skin care applications, the company offers a wide range of products. Ms. Light noted that Chemron's methyl glucoside and lanolin derivatives both have good moisturizing, thickening, emulsifying and conditioning properties, and that the ingredients are derived from natural sources.

"We also have an extensive line of surfactant technology and we can make specialized, naturally-sourced (soy) blends to meet the customer's requirements for foaming and mildness," said Ms. Light.

Ms. Light told Happi that Chemron continues to develop its line of methyl glucoside derivatives to create greater efficacy in anti-aging products.

When it's all added up, the company has created a multi-million-dollar personal care business in less than two years. Moreover, it's a business that is growing more than 10% a year, compared to Lubrizol's traditional automotive fluid markets which are growing at about 1-2%.

To harness its overall growth, Lubrizol created two divisions--the Fluid Technologies for Transportation (FTT) group, which accounts for 75% of sales, and the Fluid Technologies for Industry (FTI) group, which includes personal care, coatings, inks and defoamers. FTI represents the remaining 25% of the company's sales.

A Proactive Partner

Chemron executives say they've built a solid business model that can take some of the R&D burden off their personal care partners.

"Multinationals are seeking a strong, financially-viable supplier, and our investments in technology and people are fundamentally good for the industry and for serving our customers," said Mr. Sutherland, who noted that Lubrizol commits 8% of annual sales to R&D efforts.

He also pointed out that the acquisitions have captured the attention of executives at several personal care companies who are beginning to notice the depth of the Chemron product lines and organization.

"They see that there are real opportunities for proactive partnering for product development that will help them differentiate their brands and add value in the marketplace by working with Chemron."

A Global Approach

In addition to boosting sales in personal care, the recent acquisition of several Amerchol product lines gives Chemron access to global markets. "Chemron has a very strong presence in North America," observed Ms. Light. "Lubrizol's acquisition of these additional product lines from Amerchol, however, will give Chemron access to the existing global distribution network that Amerchol used to sell these products."

Chemron has created a presence in Europe, since Amerchol's lanolin and methyl glucose derivatives and plant at Vilvoorde, Belgium was also included in the deal.

As Chemron puts together the pieces of this fast-growing personal care business, it has also created a strong organizational infrastructure with a global business team dedicated to personal care. The physical infrastructure is getting a boost too, with the startup of a new technology center in Cleveland, OH. Company executives note that the facility includes a wide range of testing equipment to develop innovative and effective ingredients for personal care products. For example, for hair care applications, the center boasts a Mini-Instron to measure combability, volume and abrasion, as well as an environmental scanning electron microscope and atomic force and scanning, tunneling microscopy equipment to study hair deposition and morphology.

For skin care applications, the center features an in-vitro irritancy analyzer to measure skin and eye irritation, a CK Electronics device to record sebum levels, transepidermal water loss and skin surface hydration measurements and a modified UV Spectrophotometer to measure water resistance.

In just two short years, the company has created a powerful personal care business, but company executives project there is more to come. "We continue to look for other opportunities in specialty ingredients that provide opportunities for differentiation within the hair and skin care segments," said Mr. Sutherland.

"We have a superb R&D center, a vigorous acquisition integration process, a strong organic growth agenda and people dedicated to the personal care industry," added Ms. Light. "There will be more strategic acquisitions down the road. At the same time, we have products in development, some of which involve transferring technology from other parts of Lubrizol's business to Chemron products and vice versa."

Acquisitions, technology transfer, expanding R&D capabilities--they're all part of a long-term commitment to personal care by Lubrizol that should pay dividends for the company and Chemron customers for years to come.
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Title Annotation:Industry News
Publication:Household & Personal Products Industry
Geographic Code:1USA
Date:Apr 1, 2004
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