Runcorn mourns decline ... and sale of chemical giant ICI

Aug 15 2007 by Tony McDonough, Liverpool Daily Post

SEVERAL well-known British companies have fallen into foreign hands but few are as iconic as ICI which this week agreed an £8bn takeover by Dutch rival Akzo Nobel.

The sadness at ICI’s decline and subsequent sale will be particularly felt in Runcorn, where for many years it was the town’s biggest employer, providing jobs for more than 6,500 people in its 1970s heyday.

In 1984, ICI became the first British company to post more than £1bn in full-year pre-tax profits under the chairmanship of Sir John Harvey-Jones, who later found television fame as a business trouble-shooter.

Runcorn’s association with the chemical industry actually pre- dates the formation of ICI, which was created in 1926, by almost a century.

By the 1840s, the town was already becoming an industrial powerhouse with shipyards, a steam mill, a brewery, acid and slate works and a timber yard.

At that time, the skyline was dominated by two giant chimneys – the largest being 100m high – and these belonged to the two soap and alkali factories of Hazlehursts and Johnson.

As the 19th century progressed, the chemical industry grew in importance and by 1863 Johnsons had switched from soap manufacture to heavy chemicals and changed its name to Runcorn Soap & Alkali Co.

The three Runcorn firms producing Leblanc alkali were part of a significant merger in 1890 when the United Alkali Co was formed.

In 1895, the Aluminium Co of Oldbury decided to use the inventions of Castner and Kellner in a new works at Weston Point which came on stream in 1897.

The Castner Kellner works were aided by market developments in the 1920s.

In 1916, the company became associated with Brunner Mond & Co, both of which became part of ICI in 1926. In all, four companies merged to form the new group. ICI, which reported profits of £4.5m in its first year of trading, would, at its peak, be a global giant spanning plastics, chemicals, pharmaceuticals, paints and fibres, employing around 110,000 people in the UK.

The company has been behind revolutionary advances. Following a laboratory accident in 1933, its scientists created polythene, the first plastic – now used in items ranging from food wrapping to squeezy bottles.

Another famous name was soon to follow with the development of perspex, first used in windscreens for cars and aircraft.

Meanwhile, the company’s bulk chemicals and drugs business was at work creating the first effective treatment against malaria.

Other life-changing product innovations followed as ICI entered the 1960s, including polyester fibres, as the firm spread its reach across Europe and then entered the US market for the first time in 1971 with the acquisition of Atlas Chemicals.

But following the recession of the early 1990s, the group overhauled its strategy, seeking to reduce its dependence on oil prices and cyclical demand for bulk chemicals and pesticides.

The agricultural chemicals and pharmaceuticals business, Zeneca, was demerged in 1993 – later merging with Astra – and over the next five years the firm would make around 50 disposals.

It also sought to refocus a smaller ICI on higher margin speciality chemicals and paints businesses by spending nearly £5bn on Unilever’s chemicals operation in 1997.

The group’s chemical operations were finally old in late 2000 to Belgian chemical company, Ineos, for £325m. Ineos Chlor still provides work for around 2,000 people in the town.

In 2000, ICI’s laboratories and offices were also sold off to managers of the former ICI Site Operations Group who formed a company called SOG. They have built The Heath, one of the UK’s most successful business and technical parks which employs around 1,900 people.

SOG managing director Peter Cook spent 36 years at ICI rising to a senior level. He was saddened to see the company sold.

"I was very sad," he said. "ICI was a bellwhether of British industry and was a great name that was respected across the world.

"But ICI’s downfall was caused by its inability to adapt to a changing global marketplace. It failed to compete with overseas firms who were operating from a lower cost base. It could have stayed in chemicals, but in the end, it wobbled."

How a chemicals giant rose, fell and then rose again

* ICI, which stands for Imperial Chemical Industries, was formed in 1926 through the merger of four British chemical companies.

* The firm was the first to coin the word "plastics" in 1927.

* Scientists at ICI created polythene – the world’s first plas- ic – after a laboratory accident in 1933.

* It later created Perspex acrylic sheet, which was first used in windscreens for cars and aircraft, but now has applications from neon signs and furniture to lenses used in cataract surgery.

* In the 1940s, the company’s pharmaceutical department invented Paludrine, the first synthetic treatment against malaria. Paludrine would prove the most effective anti-malarial available for more than four decades.

* The company launched a Dulux paints advert featuring an Old English sheepdog in 1963. as the firm tried to appeal to the newly emerging DIY market.

* ICI entered the US market in 1971 with the acquisition of Atlas Chemicals.

* It was the first British company to achieve pre-tax profits of £1bn in 1984.

* Following the group’s fateful acquisition of Unilever’s chemical business In the 1990s, ICI found itself straddled with debts of more than £5bn. - greater than the value of the company.

* Last year, the company reported sales of £4.8bn, with profits of £407m.