Business: Allied Chemical’s Secret

There is no more secretive publicly-owned corporation in the U. S. than Allied Chemical & Dye Corp. Stockholders are told that the corporation is prosperous; but they are never given enough facts to enable them to break down the earnings for a real study. Stockholders know that Allied has some $92,000,000 in investments; they have never been told what these investments are. Because Allied deals not with the public but with companies, some reason for its general aloofness is evident—yet no company’s products are of greater importance to the public. Because its business is founded on secret formulas, and, more important, because its success depends upon having more efficient manufacturing processes than its competitors, many of whom are foreign, its secretive attitude is somewhat more understandable. But the heavy silence which shrouds Allied like some dark cloud is a matter of deeper policy than is explained by these facts. It is part and parcel of the company’s very life.

Last week there was evidence of big events happening behind the dark cloud. Finally there emerged a terse announcement : Orlando Weber, president, has been granted a leave of absence. Weber. Orlando Franklin Weber is an impressive man. Six feet tall, massive, he has the poise of the physically strong and the alertness of the mentally agile. He likes to go to prizefights and he smokes big black cigars. Other businessmen fear him as sparring partners fear a champion. He is thought of as implacable—and fair. Mr. Weber’s life has been as reticent as that of his company. He lives quietly, refuses to be photographed, has never made a public statement beyond that which the annual report of his company demands. In 1916 he left his position as executive vice president of sickly Maxwell Motors to enter the chemical field, in which his good friend Eugene Meyer had large investments. In 1920 he reluctantly assumed presidency of the new Allied Chemical & Dye Corp. He ran it with a harsh discipline. His phenomenal success in creating for the U. S. a chemical company greater than any to be found in Europe is one of the supremely important industrial achievements of the decade. Lately it has been known that he has thought of retiring. Why he was granted a leave of absence last week, for how long it will last, are questions which remain unanswered.

The Nichols. Already aged, in 1920 Dr. William Henry Nichols, a skilled chemist with an eye for business, helped form Allied and was its chairman until his death last year. In 1921 his son, Charles Walter Nichols, was made president of Nichols Copper Co. (long rumored about to merge with Phelps-Dodge Corp.). Previous to that, the son had worked in many of his father’s chemical plants, added to the knowledge of chemistry he acquired in Cornell (1898-1902). In 1928 the son was made a director of Allied. Last week it was announced that, during Mr. Weber’s absence, Mr. Nichols will serve as chairman of the executive committee. Acting Chairman Nichols is tall, handsome, congenial, likes to talk of the 1,800 purebred Leghorns and 20 Jerseys on his West Orange, N. J. farm. If it were known how much stock the Nichols family controls, what its relation with other big stockholders has been, the mystery of what went on behind the cloud might be solved. Another executive change occurred last week when Clinton Stephen Lutkins, who left Allied to join the New York Stock Exchange firm of R. W. Pressprich & Co., was recalled to become an Allied director and executive vice president.

The Company.Allied is a holding company whose operations may be divided into five groups: The Solvay Process Division produces soda ash and caustic soda, in both of which products there was unexpected price-cutting during December when 1931 contracts were being made. Earnings from this division are thought to be running 40% below last year. Its big competitor is Mathieson Alkali Works, Inc. When it was absorbed by Allied, the Solvays of Belgium, one of Europe’s richest families, acquired much Allied stock. They also have a big interest in Imperial Chemistry Industries of Britain.

The General Chemical Division makes sulphuric acid, nitric acid, hydrochloric acid, acetic acid and related products. The business of this division is steady, does not promise great expansion, must be considered a valuable backlog.

The Barrett Division is primarily in the coal tar business. Coal tar is used for dyestuffs, drugs, synthetic plastics, wood preservatives. The residue goes into roads and roofs. This division makes Tarvia, one of the few Allied products known to the public.

The National Aniline & Chemical Division makes dyestuffs. It is thought to contribute little to Allied’s net. Its big competitor is E. I. du Pontde Nemours.

The Atmospheric Nitrogen Division. A justification of all of Allied’s policies is the success it has had in the production of synthetic nitrogen. The War found the world dependent upon Chile’s naturalnitrate. Germany met the problem by developing synthetic nitrogen, and Allied’s accomplishments in the same direction have made the U. S. independent of other countries for this chemical valuable in peace, invaluable during war.

Allied’s place in the world nitrogen industry is typical of its attitude. It would have none of the recent Nitrogen Cartel by which Germany and the united producers of Chile endeavored to stabilize the industry (TIME, Aug. 18, FORTUNE, October). It remained independent, silent, giving no quarter, asking none. To understand Allied’s secrecy, Allied’s independence, one need only consider the big Allied nitrogen fixation plant at Hopewell, Va. It is said that even Mr. Weber has never visited this plant to which, certainly, no other director has ever been. Only five men are credited with being able to interpret the reports from Hopewell. How much nitrogen is produced and by exactly what process is not revealed.

Around this Hopewell plant hinges Allied’s future. How much has been invested there is not known. One low guess was $30,000,000. But then $100,000,000 has also been mentioned. It is certain that the big Nitrate Cartel will fight hard to prevent Allied from extracting profits from its Hopewell investment; it is certain that in Hopewell Allied will muster every corporate war-machine which it has assembledbehind the dark cloud.

Typical of Orlando Weber was his action when Dr. Carl Bosch of I. G. Farbenindustrie invited him to inspect the big nitrogen fixation plant at Leunawerk, Germany. To Leunawerk went Mr. Weber, but he refused to inspect the plant except from the outside. This was neither modesty nor lack of grace, but unwillingness to accept a courtesy he could not return. All the world knows about Leunawerk; it may not know about Hopewell.