The Motley Fool Discussion Boards
Books & Writing / Book Club (Nonfiction)
|Subject: Out of Thin Air: Air Product Co.||Date: 7/27/2009 11:05 PM|
|Author: pauleckler||Number: 579 of 758|
“Out of Thin Air: A History of Air Products and Chemicals, Inc., 1940-1990,” by Andrew J. Butrica, Praeger, NY, 1990. This 319-page hardback tells of the company founded by Leonard Pool. Pool was an experienced salesman with background in compressed gases who believed that customers could be supplied more economically with leased air separation units. Air is separated into components, oxygen and nitrogen by distillation of liquified air. Oxygen, used especially in welding and metal processing, is the traditional product. Nitrogen is usually used to cool incoming air and discarded. Other gases such as carbon dioxide and argon can also be recovered, but they are minor components.
Air separation was discovered by Carl von Linde of Munich, Germany in about 1900. Linde and partners formed Linde Air Products with a plant in Buffalo, NY in 1907, which became the leading US supplier. Linde was merged into the newly formed Union Carbide and Carbon Corp., in 1917. (Other divisions of Union Carbide made carbon electrodes for electric furnaces used to make calcium carbide for acetylene.) The other major competitor was Air Reduction Company, which was organized in 1915 as a licensee of French Air Liquide technology. Both companies supplied oxygen gas in heavy steel cylinders from centrally located air separation plants.
Air Products was little more than an idea at the start of World War II, but it prospered supplying compact air separation units to the military especially for high altitude flying. A total of 241 such units were built, and those supplied by Air Products proved to be efficient and reliable. The company began in Detroit, and moved to Chattanooga, TN for more space. At the end of the war, the company moved to Emmaus, PA, in the Lehigh Valley. The company went public in May, 1946. After the war, Air Products went through lean years as military contracts ended. Gradually the lease concept was accepted. The company gradually entered the medical market leasing plants to hospitals.
The Frankl process from Germany, made low cost, 90-95% purity oxygen, suitable for tonnage plants used in the steel and chemical industries. In 1947, the company contracted to build a first large plant based on patents licensed from the Alien Property Custodian on a cost plus basis for Weirton Steel. The plant was completed in April, 1951, giving Air Products a position in this new market.
In 1944, the company entered the cylinder gas business by buying up small regional operators. The first one was in Saginaw, MI. A plant in Walkerton, IN followed supplying Studebaker in South Bend and providing access to the Chicago cylinder business. In 1946, KG Welding of New York City was acquired for its catalog of welding supplies. By 1950, the company had 4% of the cylinder oxygen business. Helium and argon were added to the cylinder business.
The jet age brought more high altitude flying and increased military requirements. Air Products got contracts for second generation portable generators. The company also entered the liquid oxygen business (which Linde had dominated) for liquid fuel rockets. In 1957, the company built its first liquid hydrogen plant at Painesville, OH to supply government requirements. A second Air Force plant was built near the Pratt & Whitney engine test facility in West Palm Beach, FL. Another plant was built nearby in 1959. After Sputnik the Air Force became interested in liquid fluorine as a rocket fuel. Air Products developed technology, but the Air Force decided against this technology.
Leased tonnage plants became the hallmark of the era, but piggy back plants soon followed. They were built on customer sites under take-or-pay contracts, but with surplus capacity used to supply the merchant market in the area.
Other gas processes came of interest. A plant to remove nitrogen from natural gas was built for Diamond Alkali. Oxygen/nitrogen plants for ammonia synthesis began in 1954. Hydrogen purification units for ammonia synthesis followed. Tonnage oxygen plants were also supplied to the chemical industry, e.g., Dow Chemical at Freeport and Celanese at Bishop, TX.
Liquified natural gas, LNG, also came of interest in the '50s. Projects proposed to supply gas from Venezuela, Borneo, or New Guinea to Europe, Japan or Australia. Air Products developed technology but decided prices were too uncertain. When the government decided to privatize the helium business, Air Products supplied over 80% of the equipment used to recover crude helium from natural gas pipelines.
In 1961, AP entered the chemicals business in a JV to make oxo-alcohols (using carbon monoxide and hydrogen) with Tidewater Oil in Delaware City, DE. The products were mostly sold to Reichhold Chemicals. Houdry, a supplier of petroleum processing catalysts was acquired from Sun Oil. Their Litol process recovered purified benzene, toluene, and xylene from coke oven gases; the Pyrotol process recovered benzene from ethylene cracker off gases; the Catadiene process recovered ingredients for synthetic rubber. Houdry also invented Dabco, a remarkably active urethane foam catalyst.
In the '70s, changes in metals processing provided new opportunities. The basic oxygen furnace increased oxygen demand; annealing switched from natural gas