From agricultural chemicals to chemical manufacturing
The business transformed
Marks grew steadily during the more prosperous years of the 1980s. Increased production and continuing improvements to manufacturing processes resulted in higher turnover. But the level of profits fluctuated for a number of reasons.The company faced the rising cost of meeting tougher quality, safety and environmental standards. It also remained true, as the annual report pointed out once again in 1990, that ‘Much of our business is cyclical in that elements such as exchange rates and the weather can impact severely on the Company’s performance’.
Thanks to rising sales, the company ploughed back more than £18 million into the business between 1982-83 and 1989-90, when sales reached their peak of £46 million. Exports were worth £32.6 million and accounted for 70 per cent of sales, with the company’s greatest success coming in Europe and North America, the Far East and South America. While phenoxy herbicides were sold mainly overseas, the new oxynil formulations found success in the UK. So dramatic was the growth in the company’s profits in the first half of the 1980s that one business magazine described it in 1984 as ‘an excellent example of all that is good in independent companies: flexibility, high motivation, innovation and the ability to deliver just what the customer wants when he wants it’. As a result, the company was able to invest more capital in the site than at any previous time in its history.
While continuing to improve the production of its traditional herbicidal products, the company wanted to reduce its reliance upon agricultural chemicals and invested heavily in its fine chemical capabilities as well as in research and development. By the late 1980s Marks was supplying speciality chemicals not only to the pharmaceutical and textile industries but also to the printing, perfumery, fuel additive and other industries. Part of this side of the business included the production of LCPA (otherwise known as optically resolved ACPA and an important ingredient for phenoxy herbicides) in collaboration with ICI.This continued after the reorganisation of ICI in 1993 when Marks began supplying British Zeneca which had been spun out of ICI. The arrangement was complex and inefficient, with ACPA produced at Wyke, shipped to the Zeneca site in Huddersfield for conversion into a crude form of LCPA, which was then returned to Wyke for purification and despatch to Zeneca customers in Germany and Japan.
But the most remarkable technical achievement made by Marks in the 1980s came in the field of agricultural chemicals. This was the development of optically active herbicides through the production of optically resolved ACPA by 1985. When this was reacted with chlorophenols, it produced single isomer active phenoxy herbicides.This process had the enormous environmental advantage of removing the herbicidally inactive isomer from the compound, leaving behind the biologically active isomer, allowing half the herbicide application with the same effect. This development, affecting 2,4-DP, CMPP and their derivatives, enabled the applied volume of these weedkillers to be reduced from 4 million to 2 million litres a year in the UK alone and secured for Marks a future as a major manufacturer of phenoxy herbicides.The magnitude of this achievement for a company with so little technical tradition cannot be understated. Ian McRobbie, the company’s technical director, recalled attending one conference where the audience provided a standing ovation for a Japanese professor who had just announced that he had made 10 milligrams of optically pure material. McRobbie’s neighbour asked him why he was still seated and was astonished to hear that Marks was preparing batches of two tons of such material every eight hours.
For most of the 1980s the firm also maintained that part of its strategy was ‘to remain a major supplier of oxynils in the world market’.This view began to change when Union Carbide took the decision to sell its agricultural products division to one of Marks’s major competitors, Rhone Poulenc, in 1986. Although Marks supplied phenoxies to Union Carbide and its licensees in North America, and oxynil formulations to Union Carbide in both North America and Europe, Rhone Poulenc and its British subsidiary, May & Baker, were also major producers of oxynils. Marks realised that upon the expiry of the existing supply agreement with Union Carbide, it was likely that Rhone Poulenc would no longer require oxynils made by Marks. As it was, the firm gained some breathing space when a short-term agreement was signed with Rhone Poulenc in 1989 but a question mark remained over the long-term future of the oxynil business.
The forward march of the business suffered a jolt in 1985-86. An adverse exchange rate between the dollar and sterling combined with poor spring weather in Europe to create a drop in sales and a net loss of nearly £1.2 million. Borrowings soared during the year, which worried the bank, and a hundred jobs had to be shed to cut overheads.This led the company to commission Coopers & Lybrand, the major accountancy firm, to review the financial position, structure and future development of the company.
One conclusion was that that the financial growth of the company had not been accompanied by an adequate expansion of management expertise. The existing directors, John Walker, John Norris and Rhys Marks, had recruited additional managers in the early 1980s, including Michael Walmsley, appointed works director in 1981, Richard Goodier as chief engineer and Ed Sharkey as commercial director, both appointed in 1983, then finally Malcolm Braithwaite who became marketing and technical director in 1985.
These appointments all benefited the company, in particular that of Ed Sharkey, whose success helped to free John Walker for other roles. But it was difficult for many managers to move away from the main problem the company had faced ever since the war – the constraints of limited cash resources, coupled with a dependency upon bank overdraft facilities, which had always limited Marks’s investment horizon. Rhys Marks described it as ‘an environment of restriction’. Coopers also concluded that, while the company had great potential, longer term plans needed to be drawn up to move the company away from the seasonal nature of its existing business.The report recommended that new performance reporting systems and financial management controls should be established and a financial director appointed. The organisational structure was revised, the responsibilities of the directors redefined and working groups set up to scrutinise various aspects of the company’s operations.
As it transpired, the company decided first of all to recruit a managing director rather than a financial director. In 1987 Shaun Bowden was appointed to the post. Rhys Marks took over the role of chairman while John Walker remained an executive director and became deputy chairman. John Norris retired after 31 years’ service as an executive member of the board but continued in a non-executive role for a further year. It was not an easy task to build up a successful management team to take the company forward and it was not surprising that there were a number of departures over the next few years. New appointments were made and in 1988 John Marsden was appointed financial director, followed in 1989 by Ian McRobbie as technical director, and in 1992 by Gary Duke, who had joined the company in the 1970s, as operations director.
The company was able to review and overhaul its management practices in a structured way. With the enthusiastic co-operation of all its staff it sought accreditation for the recognised quality standard BS5750 (part 1): 1987 (now BSEN ISO9001: 2008) which it obtained 1991.The commercial side of the business was split into two divisions, one for agricultural chemicals and the other for fine chemicals, which better reflected the operation of the business and removed a tendency to concentrate upon one aspect to the detriment of the other. A new emphasis was placed upon training. The company recognised the importance of attracting potential employees and developed contacts with a number of local schools.Training programmes from City & Guilds to MBA courses were made available to every employee. Links were established with several universities, from a Teaching Company Scheme with Leeds University to consultancy support from Washington University at St Louis.
Soon after Shaun Bowden was appointed, he told the board that in his view the company should focus on two main aims. Firstly, it should increase the profits of the agricultural products business by reducing costs through greater efficiency. Secondly, given doubts about the future of the oxynil business, the development of new products should be accelerated, even though this would require capital expenditure for production and Marks had been supplying phenoxy herbicides to ICI for some years to supplement the latter’s own production. As with May & Baker, this relationship, together with the marketing at a time when the economic prospect was looking bleaker.
The Marks family, as shareholders, were entirely in agreement. Mrs Marks pointed out that while an acceptable return on capital was important, it was not the intention of the shareholders to seek any increase on the modest annual dividend payment. Rhys Marks emphasised that ‘the shareholders’ main interest was in expanding the Company’s product line, turnover and profitability for the benefit of both shareholders and employees’.
The company made several attempts during the next year or two to consolidate its manufacture of agricultural herbicides by the acquisition of other businesses or plants. There were protracted negotiations with the firm of J D Campbell which fell through when Marks was outbid by MTM, the star performer in the chemical sector during the 1980s. An offer by Marks for ICI Farm Protection’s formulation plant at Barton-on-Humber also failed when MTM again put in a higher bid.A number of other attempts to expand the company by acquisition came to nothing. As a result, the board decided that the company should concentrate upon the development of production at Wyke Lane.
There was one successful acquisition which strengthened Marks’s position as a phenoxy manufacturer. In 1989 the company bought the plant and technology of the Danish firm, KVK, with which it had enjoyed a long-standing relationship.The idea for the deal came about through a conversation between Marks’s commercial director, Ed Sharkey, and his neighbour in Liverpool who was a director of KVK.The technical information acquired by the company led to another important decision at the end of 1989. To safeguard supplies of Marks’s major raw material, parachloroorthocresol or PCOC, the company decided to proceed with plans for its own PCOC plant. Costing some £3 million, the plant became operational in 1992.
The KVK agreement was only one way in which the company set about strengthening its technical expertise. Marks recruited more scientists and agreed to raise the level of expenditure on research and development.The technical department was reorganised to reflect the new emphasis on the development of new products.Additional resources were made available for new products, process development and production support. Production processes throughout the site were investigated and some remarkable improvements in process efficiency were achieved.
Marks also strengthened its agrochemical business by membership of various Task Forces in the USA. At the same time, registration for products which had been previously held by customers were now held by Marks. The company not only secured the longer term future of phenoxy products but also began to control their marketing. The emphasis in the company changed from that of an agronomy group to that of a regulatory affairs group capable of participating at a technical level throughout the world. At the same time the company’s expenditure on Task Forces and registration increased to £2 million a year.
Better yields and better quality produced better profits. Quality reached a standard which rivalled that of competitors’ products for the first time.
This success could not have been achieved without a parallel programme of environmental improvements for the site. While much of this had to be implemented in order to satisfy ever more stringent environmental regulations, the company also recognised the concerns of local residents had to be met head on. A local liaison group comprising residents and company managers was established. The general public was invited to tour the plant on open days. A massive landscaping scheme was undertaken, involving the planting of 11,000 trees around the perimeter of the site. The company was successful in persuading the local council that the land immediately surrounding the factory should not be zoned as suitable for development. The generation of waste, the consumption of water and energy, the level of noise and atmospheric emissions were all reduced as a result of measures implemented by the company. A microbiology laboratory was established in October 1993 and a pilot plant for the biological treatment of effluent followed shortly afterwards as the prelude to the installation of full scale facilities. A major drain management scheme was opened in the autumn of 1994.
Intensive process development coupled with substantial capital expenditure for new plant and equipment helped the company to compete effectively. The company continued to develop optically active phenoxies and in 1991 introduced its own range under the brand name Optica.
At the same time a move was made to bulk handling, the advantages of which soon overcame any reservations held by customers and employees. More finished product bulk storage was added atWyke following the growth of the company’s phenoxy ester business, especially in Canada.With the collapse of Eastern Europe’s command control economics, which had favoured multi-national businesses, Marks took the opportunity to expand its agricultural chemical exports and the company obtained a foothold in countries like Hungary and Poland.
In 1990 Marks’s involvement in oxynils finally came to an end when the business was sold to Rhone Poulenc for £5.5 million. Part of this cash injection was committed to the further development of the fine chemicals business.The oxynil plant was demolished and additional facilities for the production of fine chemicals developed on the site.Work had already begun on a new multi-purpose manufacturing plant to support the company’s diversification plans.
The company also realised it was even more crucial to safeguard supplies of its PCOC raw material. But there were serious delays in commissioning new plant, including the PCOC plant, coinciding with the worst year of the recession which plagued the country in the early 1990s. A number of factors, including high interest rates, adverse exchange rates with North America and the Gulf War, led to a trading loss of £2.8 million.The company was forced to cut 60 jobs as part of cost reductions. At a time when other companies were experiencing similar problems, Marks modified its strategy to ensure that the fine chemicals business was not developed to the detriment of the agricultural chemicals business which provided the company with a regular income.
The original plan to rebuild the phenoxy plant was superseded by a phased programme of refurbishment ending in 1995. This built upon earlier successes made by the firm in improving output, productivity and quality. Greater demand for and greater production of the firm’s products led to the provision of additional storage on site. Customers were persuaded to take their orders earlier and this allowed production to take place all year round.
In the very competitive market of the early 1990s, the company had responded to the accelerating rationalisation of the agricultural chemical industry around the world, stemming partly from the recession, partly from the sustained downturn in world agriculture as commodity prices dropped and partly from the impact of genetically modified crops which no longer relied on herbicides. Prices fell, margins diminished and the industry sought greater economics of scale in order to sustain research and development. The number of manufacturers and, equally importantly, distributors shrank in total but increased in individual size. Not only was Marks faced with larger aggressive competitors, it also had to alter long-standing distribution arrangements as existing distributors were acquired by rivals.
The market became very unpredictable yet the company succeeded in sustaining its overall level of sales and in increasing turnover in a number of key areas, with profits restored to respectable levels.
The company’s achievements during an often economically difficult period had come not only through the improved quality and range of products. They owed much to the very personal relationship maintained between the company and its world-wide network of customers and the combined efforts of a tightly knit management team and a committed and enthusiastic workforce. Shaun Bowden had played a key role in these successes. In 1993, believing he had done as much as he could, he left the company to take up another challenge elsewhere in the industry. Rhys Marks now took over the role of chief executive in addition to the chairmanship.