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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 738  
Subject: Story of Monsanto: Faith, Hope & $5000 Date: 2/16/2009 6:49 PM
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“Faith, Hope & $5000: The Story of Monsanto: Trials and Triumphs of the first 75 years,” by Dan J. Forrestal, Simon and Schuster, NY, 1977. This 285 page paperback tells the story of Monsanto Chemical Company from its formation in 1901 by John F. Queeny to manufacture saccharin. Queeny had no technical background but had been sales manager for Merck & Co., and came to St. Louis as purchasing agent for Meyers Brothers Drug Company. Vanillin and caffeine were soon added to the product line followed by phenol in 1915.

To have competitive cost structure, chemical companies tend to build world scale plants and then sell the product in every possible market. This results in the “original conglomerate” label for companies. It also gives exposure to multiple markets where growth can be pursued. Hence, opportunities develop in parallel markets. For Monsanto phthalic anhydride, initially produced as a raw material for laxative phenolphthalein and phenol (for aspirin) set the company path in the direction of plastics and functional fluids. Ultimately plastics led to styrene (for WWII synthetic rubber), polystyrene, acrylonitrile, Acrilan, and the first license of Dupont Nylon technology. Functional fluids dovetailed with other interests to plasticizers, hydraulic fluids, and transformer fluids including PCBs.

The appendix lists 17 pages of products and the year of introduction through 1975, further emphasizing the breadth of product lines produced by large chemical companies. Trained MBAs often have difficulty getting their arms around the “there was an old lady who lived in a shoe . . .” nature of the business. Details, hundreds of details.

A series of acquisitions grew the company. Commercial Acids (1918) in East St. Louis added sulfuric acid and later resulted in the invention of the vanadium contact process for sulfuric acid, a world standard. Rubber Service Laboratories (1929) added rubber chemicals; Merrimac Chemicals (1929) added leather chemicals; and Swan (1933/5) added elemental phosphorus. Ultimately Monsanto became the world's largest producer of phophorus, and was an early producer of phosphate detergent builders (1937), a key ingredient of Proctor & Gamble's Tide breakthrough in 1946. Detergent builders and surfactants (1946) came from the Thomas and Hockwalt Labs of Dayton, OH, founded by former researchers in General Motors central research labs under Charles Kettering, when it moved to Detroit in 1925. Monsanto acquired it in 1936.

In 1947, a ship loaded with ammonium nitrate caught fire and exploded in Texas City, TX, near the styrene monomer plant operated by Monsanto to supply the government's wartime synthetic rubber venture. The damage was extensive killing 512 including 145 Monsanto employees and damaging 3400 residences. The book has a chapter on the event, and Monsanto's efforts to deal with the tragedy. Eventually the plant was rebuilt and became a major site for petrochemical operations.

The book takes Monsanto through a series of transitions. In management, the company founded by John F. Queeny in 1901, passed to his son Edgar (who had been groomed for the position with a degree in chemistry from Cornell) in 1928. It was Edgar who ran the company through much of its growth phase retiring in 1960, and indirectly until his death in 1968. Management gradually passed to outsiders, but these were also the days of many challenges in the chemical industry. Textiles began to move off shore, new environmental laws came into effect, antitrust limited growth by acquisition, and competition intensified. Monsanto realized the need to reinvent itself, but the story ends essentially in 1972, before that effort came about.

In brief, the rest of the story is that GD Searle invented NutraSweet, the synthetic, low calorie sweetener with no aftertaste and now preferred in many diet soft drinks. But they feared they would be unable to invent yet another blockbuster, and put the company up for sale. Monsanto accepted the challenge and bought GD Searle in 1985. NutraSweet proved to be highly profitable as expected. Monsanto invested those profits in the new biotechnologies. After several miss-starts, they finally identified seed modifications like Round-up Ready soybeans and BT corn as promising products. Meanwhile their drug research division invented Celebrex a promising analgesic, thought to be a blockbuster. This attracted attention from Pharmacia & Upjohn who merged with Monsanto under the Pharmacia name in 2000. But they had no interest in the chemicals business. Hence, the various heavy chemical operations were sold off (mostly as Solutia). Pharmacia ultimately became part of Pfizer in 2003, and the Monsanto name was revived as the new biotechnology company formed around the Agriculture division, its Round-up herbicide and the biotechnology operations.

In many respects Monsanto's history is typical of large chemical companies in their heyday. Few of the largest US chemical companies of 1960 have survived. Most made the transition to drugs, biotechnology, or whatever, or were acquired. Dow and Rohm & Haas come to mind as the last of the Mohicans. Students of the chemical industry will find this a fascinating read. Author Forrestal also wrote the story of AE Staley. The book is highly readable. Appendices name executives and products. Indexed.
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