The Little Giant

Many people believe that the chemical industry is dominated by a few giant companies whose research laboratories have a virtual monopoly on new chemical wonders. The man who has disproved this is Henry Reichhold, the world's biggest maker of paint & protective-coating resins. Last week Reichhold Chemicals uncorked one of the biggest chemical advances that the paint industry has seen in years.

Ever since Du Font's quick-drying lacquer (Duco) revolutionized automobile painting in the 1920s, chemists have tried to find a similar paintmaking resin which could be dissolved in water, instead of in costly, inflammable solvents. But almost anything that water would dissolve could also be washed away by water after it dried. Last week Reichhold introduced a water-soluble resin which is the base for a paint that, after baking, can't be washed off. Moreover, it also withstands weathering, salt water and corrosion. For automakers, Reichhold's resin may mean an end to flash fires in paint shops, less expensive fire prevention, and elimination of costly solvent-recovery systems. For industrial users generally, it means a cheaper finish coating.

Boiling Kettle. Henry Reichhold has never worried about the difficulty of competing with giants. He has been doing it since he first went into business in 1925 in a one-car garage in Detroit. Son of a German paint manufacturer, Reichhold had come to the motor capital a year earlier, attracted by the exciting new Du Pont auto finishes. He spent three years as supervisor of Ford's paint manufacturing plant, but on the side, with a $10,000 stake from his father, began boiling synthetic resins experimentally in a kettle in a friend's garage. He used a formula developed by his father's chemist, Dr. Herbert Hoenel, to make the base for a fast-drying paint which hardened without heat.

Once he got his resin on the market, Reichhold vexed competitors by trimming prices, taking as little as 3% profit on sales, where others got as much as 10 or 20%. He built volume on small margins, plowed all earnings back into the company, thus kept expanding. By 1942 his sales were up to $10 million. In the next ten years, they jumped tenfold. He now has ten plants in the U.S. and 19 others around the world, with subsidiaries in England, France, Australia and Canada.

By now, Reichhold has branched out into other fields. A few years ago he went into the manufacture of bonding resins (for plywood, plastics, foundry cores). His chemicals go into refrigerators, glass wool, food boxes, bubble gum.

Merry Fiddle. Reichhold, who draws a $100,000-plus salary, has seen his plowed-back profits build him a personal fortune which he puts at $30 million, most of it in his company. But despite his wealth, he has no use for show. He drives his own Ford, eats $1 lunches, goes hatless to avoid hatcheck tips. But he is not penurious. A lover of music (he plays the violin), he was one of the main supports of the Detroit Symphony Orchestra for six years with donations totaling more than $2,000,000. At 52, Reichhold, who now makes his headquarters in New York, is giving away his company's stock--to friends, relatives outside his immediate family, and favorite charities. He has so far distributed 2 1/2% of the stock, plans to pass out a total of 49% in five years.

But Reichhold has not taken his eyes from his main objective: running his company to keep prices low. With his new resin, developed by the same Dr. Hoenel who perfected his original resin, he expects to help automakers trim $5 from the cost of painting an average car (now about $15 to $20). If his sales grow as fast as he thinks they will, Reichhold plans to cut his profits to 1%. Says he: "We want to be the A & P of the chemical industry."

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